Collection of State Commodity Assessments, 33043-33045 [05-11199]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 70, Number 108 (Tuesday, June 7, 2005)]
[Proposed Rules]
[Pages 33043-33045]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-11199]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 70, No. 108 / Tuesday, June 7, 2005 / 
Proposed Rules

[[Page 33043]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1405

RIN 0560-AH35


Collection of State Commodity Assessments

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule, if adopted, would provide that the 
Commodity Credit Corporation (CCC) will deduct from marketing 
assistance loan proceeds an amount equal to any assessment required 
under State or Federal law to be paid by a producer who markets the 
commodity, or by the first purchaser of the commodity. This 
discretionary action is authorized by Public Law 108-470.

DATES: Comments on this rule must be received on or before July 7, 2005 
in order to be assured of consideration. Comments received after that 
date may be considered to the extent practicable.

ADDRESSES: The Commodity Credit Corporation (CCC) invites interested 
persons to submit comments on this proposed rule. Comments may be 
submitted by any of the following methods:
     E-Mail: Send comments to Kimberly--Graham@wdc.usda.gov.
     Fax: Submit comments by facsimile transmission to (202) 
690-3307.
     Mail: Send comments to Grady Bilberry, Director, Price 
Support Division (PSD), Farm Service Agency (FSA), United States 
Department of Agriculture (USDA), STOP 0512, Room 4095-S, 1400 
Independence Avenue, SW., Washington, DC 20250-0512.
     Hand Delivery or Courier: Deliver comments to the above 
address.
     Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting 
comments.
    Comments may be inspected in the Office of the Director, PSD, FSA, 
USDA, Room 4095-S, 1400 Independence Avenue, SW., Washington, DC, 
between 8 a.m. and 4:30 p.m., Monday through Friday, except holidays. A 
copy of this proposed rule is available on the PSD home page at https://
www.fsa.usda.gov/dafp/psd. All comments will become a matter of public 
record, including the name, mailing address, and e-mail address of the 
commenting party.

FOR FURTHER INFORMATION CONTACT: Kimberly Graham, 202-720-9154, email: 
Kimberly.Graham@wdc.usda.gov. Persons with disabilities who require 
alternative means for communication (Braille, large print, audiotape, 
etc.) should contact the USDA Target Center at (202) 720-2600 (voice 
and TDD).

SUPPLEMENTARY INFORMATION:

Background

    Many States have enacted statutes that provide for the levy of 
assessments with respect to marketings of agricultural commodities. The 
assessments, generally, are paid by the producer of the commodity or by 
the first purchaser of the commodity. Similarly, there are a limited 
number of assessments collected pursuant to Federal statutes. Both the 
State and Federal assessments are used to increase domestic and 
international demand of the commodity through a variety of activities 
including product promotion; consumer information; and research related 
to product improvement, safety, health and production technology. In 
most instances, the collection of the assessment occurs at the point of 
the first marketing of the commodity.
    When the first State assessments were authorized, CCC commodity 
loans were non-recourse loans that could be satisfied through either of 
two ways: the payment of the principal amount of the loan plus accrued 
interest; or through the forfeiture to CCC of the commodity which had 
been pledged as collateral for the loan. Accordingly, if the market 
price of the commodity exceeded the amount necessary to repay the loan, 
it was to the producer's advantage to redeem the loan collateral. 
Conversely, when market prices were below the loan rate, it would be 
more advantageous for the producer to forfeit the loan collateral to 
CCC. In those instances when there were prolonged periods of low 
prices, CCC would acquire substantial quantities of commodities as 
opposed to the commodity being marketed in the marketplace by the 
producer. This resulted in a situation where there were reduced 
collections of commodity assessments since the commodity was not 
marketed. In order to alleviate some of these concerns, CCC agreed in 
many instances to collect these assessments when CCC price support 
loans were disbursed, and in order to assure that the producer received 
the Congressionally-mandated level of price support obtained through 
the nonrecourse loan, the State was required to agree to refund the 
assessment to the producer if requested.
    Beginning with changes by Congress in the late 1980's, the 
repayment mechanism for most CCC commodity loans was changed in order 
to eliminate the acquisition of large stocks of commodities by CCC. 
This change, generally, allowed producers to repay loans at the lesser 
of the normal redemption price (loan principal plus interest) or the 
market price as determined by CCC. These types of loans are referred to 
as ``marketing assistance loans.'' As a result of these changes, CCC 
now obtains minimal quantities of commodities as forfeitures. Thus, CCC 
determined that it was no longer prudent to enter into agreements to 
collect assessments at loan making since the commodities were being 
marketed, thus assessments were being collected when the commodity 
entered the market. In reviewing whether the assessment collection 
activities of CCC were still needed, it also became clear to CCC that 
there was no clear statutory authority for the reduction in the loan 
rate that occurred as a result of the collection activity. Accordingly, 
CCC ceased to enter into new agreements to collect such assessments. 
Recently, as a part of a wider examination of its loan-making actions, 
CCC found that in crop year 2003 only 112 of 37,246 farm-stored loans 
with a principal amount of $25,000 or less were satisfied by forfeiture 
to CCC (0.30 percent).
    In order to remove any questions regarding the authority of CCC to 
engage in the collection of commodity program assessments, Public Law 
108-470 was enacted, which provides:

    (a) Collection From Marketing Assistance Loans.--The Secretary 
of Agriculture may collect commodity assessments from the proceeds 
of a marketing assistance loan for a producer if the assessment is 
required to be paid by the producer or the first purchaser of a 
commodity pursuant to a State law or

[[Page 33044]]

pursuant to an authority administered by the Secretary. This 
collection authority does not extend to a State tax or other revenue 
collection activity by a State.
    (b) Collection Pursuant to Agreement.--The collection of an 
assessment under the subsection (a) shall be made as specified in an 
agreement between the Secretary of Agriculture and the State 
requesting the collection.

    In proposing to implement Public Law 108-470, CCC considered its 
past experience in collecting such assessments and the magnitude of 
commodity forfeitures to CCC. Accordingly, the provisions of the 
proposed rule are substantially similar to the process used in the past 
by CCC.
    With respect to the collection of State assessments, the major 
provisions of the proposed rule are: (1) A request for CCC to engage in 
the collection activity must initially be submitted by the Governor of 
the State; (2) such request must identify the entity that the Governor 
has designated to enter into the collection agreement with CCC; (3) a 
statement from the Attorney General, at any time prior to final 
execution of the agreement, that the agreement is in compliance with 
applicable State laws and the provisions of section 1(a) of Public Law 
108-470; (4) collection of the assessment, as requested by the 
Governor, may be at either the time the marketing assistance loan is 
disbursed to the producer or at the time of forfeiture of the commodity 
to CCC, but not both; and (5) the State agrees to indemnify CCC for any 
costs incurred in collecting the assessment, including costs relating 
to resolution of disputes arising from the requested collection of the 
assessment.
    With respect to assessments collected under Federal statutes, the 
proposed rule provides that collections will be made as provided in 
such manner as may be agreed upon by CCC and the entity to whom the 
Secretary has delegated responsibility to otherwise engage in 
collection activities.

Executive Order 12866

    This proposed rule is issued in conformance with Executive Order 
12866, was determined to be not significant, and has not been reviewed 
by the Office of Management Budget.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is 
applicable to this proposed rule.

Environmental Assessment

    The environmental impacts of this proposed rule have been 
considered consistent with the provisions of the National Environmental 
Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of 
the Council on Environmental Quality (40 CFR parts 1500-1508), and the 
FSA regulations for compliance with NEPA, 7 CFR part 799. FSA concluded 
that the rule requires no further environmental review because it is 
categorically excluded. No extraordinary circumstances or other 
unforeseeable factors exist which would require preparation of an 
environmental assessment or environmental impact statement.

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988. If a final rule is published for the subject of this 
proposed rule, that rule will preempt State laws that are inconsistent 
with the final rule. Before any legal action may be brought regarding a 
determination under this rule, the administrative appeal provisions set 
forth at 7 CFR parts 11 and 780 must be exhausted.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the notice related to 7 CFR part 3014, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates Reform Act of 1995

    The rule contains no Federal mandates under the regulatory 
provisions of title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, Local, and tribal governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of the UMRA.

Paperwork Reduction Act

    Section 1601(c) of the 2002 Act provides that the promulgation of 
regulations and the administration of title I of the 2002 Act shall be 
made without regard to chapter 5 of title 44 of the United States Code 
(the Paperwork Reduction Act). Accordingly, these regulations and the 
forms and other information collection activities needed to administer 
the program authorized by these regulations are not subject to review 
by OMB under the Paperwork Reduction Act.

Executive Order 12612

    This rule does not have sufficient Federalism implications to 
warrant the preparation of a Federalism Assessment. The provisions 
contained in this rule will not have substantial direct effect on 
States or their political subdivisions or on the distribution of power 
and responsibilities among the various levels of government.

Federal Assistance Programs

    The title and number of the Federal assistance program found in the 
Catalog of Federal Domestic Assistance to which this final rule applies 
are Commodity Loans and Loan Deficiency Payments, 10.051.

List of Subjects in 7 CFR Part 1405

    Agricultural commodities, Feed grains, Grains, Loan programs-
agriculture, Oilseeds, Price support programs, Reporting and record 
keeping requirements.

    For the reasons set out in the preamble, 7 CFR part 1405 is 
proposed to be amended as follows:

PART 1405--LOANS, PURCHASES, AND OTHER OPERATIONS

    1. The authority citation continues to read as follows:

    Authority: 7 U.S.C. 1515; 7 U.S.C. 7991(e); 15 U.S.C. 714b and 
714c.

    2. Amend part 1405 by adding Sec.  1405.9 to read as follows:


Sec.  1405.9  Commodity assessments.

    (a) CCC will deduct from the proceeds of a marketing assistance 
loan an amount equal to the amount of an assessment otherwise required 
to be remitted to a State agency under a State statute by the producer 
of the commodity pledged as collateral for such loan or by the first 
purchaser of such commodity subject to the requirements of paragraph 
(b) of this section.
    (1) The assessment will be collected in one of the following ways, 
as requested by the State, but not both:
    (i) When the proceeds of the loan are disbursed, or;
    (ii) When the commodity pledged as collateral for the loan is 
forfeited to CCC, in which case CCC will collect from the producer the 
amount of the assessment submitted by CCC to the State.
    (2) CCC will deduct from the proceeds of a marketing assistance 
loan an amount equal to the amount of an assessment otherwise 
authorized to be remitted to a Federally authorized entity under a 
Federal statute by the producer of the commodity pledged as collateral 
for such loan or the first purchaser of such commodity in the manner 
agreed to by CCC and the entity to whom the Secretary of Agriculture 
has authorized to collect such assessments.

[[Page 33045]]

    (b) CCC will collect commodity assessments authorized under a State 
statute when:
    (1) The Governor of the State has:
    (i) Requested that the assessment be collected;
    (ii) Identified whether the assessment is to be collected at the 
time the loan proceeds are disbursed or at the time the commodity is 
forfeited to CCC; and
    (iii) Identified the person who may enter into an agreement with 
CCC that sets forth the obligations of the State and CCC with respect 
to the collection of the assessment;
    (2) The Attorney General of the State, or a person authorized to 
act on behalf of the Attorney General, has provided to CCC an opinion 
that the collection activity is authorized by State law and otherwise 
complies with the provisions of section 1(a) of Public Law 108-470;
    (3) The agreement described in paragraph (c) of this section has 
been executed by the appropriate State official and CCC.
    (c) CCC will enter into an agreement with an authorized State 
official to collect commodity assessments when the actions set forth in 
paragraphs (b)(1) and (2) of this section have been completed. Such 
agreement will contain the obligations and responsibilities of the 
State and CCC. All such agreements will include provisions that 
provide:
    (1) The State will indemnify CCC for any costs incurred in the 
collection of the assessment including costs incurred with respect to 
resolution of disputes arising from the requested collection of the 
assessment;
    (2) A producer may request from the State a refund of the 
assessment collected from the producer's marketing assistance loan;
    (3) The agreement may be terminated by either party upon 30 days 
notice.

    Signed in Washington, DC, on May 25, 2005.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 05-11199 Filed 6-6-05; 8:45 am]
BILLING CODE 3410-05-P