Storage Requirements for Grain Security for Marketing Assistance Loans, 37857-37862 [E6-10368]
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Federal Register / Vol. 71, No. 127 / Monday, July 3, 2006 / Proposed Rules
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economic impact on a substantial
number of small entities.
Small agricultural service firms,
which include producers, handlers, and
accredited certifying agents, have been
defined by the Small Business
Administration (SBA) (13 CFR 121.201)
as those having annual receipts of less
than $6,500,000 and small agricultural
producers are defined as those having
annual receipts of less than $750,000.
This proposed rule would have an
impact on a substantial number of small
entities.
The U.S. organic industry at the end
of 2001 included nearly 6,949 certified
organic crop and livestock operations.
These operations reported certified
acreage totaling more than 2.09 million
acres of organic farm production. Data
on the numbers of certified organic
handling operations (any operation that
transforms raw product into processed
products using organic ingredients)
were not available at the time of survey
in 2001; but they were estimated to be
in the thousands. By the end of 2004,
the number of certified organic crop,
livestock, and handling operations
totaled nearly 11,400 operations. Based
on 2003 data, certified organic acreage
increased to 2.2 million acres.
U.S. sales of organic food and
beverages have grown from $1 billion in
1990 to an estimated $12.2 billion in
2004. Organic food sales are projected to
reach $14.5 billion for 2005; total U.S.
organic sales, including nonfood uses,
are expected to reach $15 billion in
2005. The organic industry is viewed as
the fasting growing sector of agriculture,
representing 2 percent of overall food
and beverage sales. Since 1990, organic
retail sales have historically
demonstrated a growth rate between 20
to 24 percent each year. This growth
rate is projected to decline and fall to a
rate of 5 to 10 percent in the future.
In addition, USDA has accredited 94
certifying agents who have applied to
USDA to be accredited in order to
provide certification services to
producers and handlers. A complete list
of names and addresses of accredited
certifying agents may be found on the
AMS NOP Web site, at https://
www.ams.usda.gov/nop. AMS believes
that most of these entities would be
considered small entities under the
criteria established by the SBA.
D. Paperwork Reduction Act
No additional collection or
recordkeeping requirements are
imposed on the public by this proposed
rule. Accordingly, OMB clearance is not
required by section 350(h) of the
Paperwork Reduction Act of 1995, 44
U.S.C. 3501, et seq., or OMB’s
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implementing regulations at 5 CFR part
1320.
AMS is committed to compliance
with the Government Paperwork
Elimination Act (GPEA), which requires
Government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible.
E. General Notice of Public Rulemaking
This proposed rule reflects
recommendations submitted to the
Secretary by the NOSB. The 2
substances proposed to be added to the
National List were based on petitions
from the industry. The NOSB evaluated
each petition using criteria in the OFPA.
Because these substances are critical to
organic production and handling
operations, producers and handlers
should be able to use them in their
operations as soon as possible. A 30 day
period for interested persons to
comment on this rule is provided.
List of Subjects in 7 CFR Part 205
Administrative practice and
procedure, Agriculture, Animals,
Archives and records, Imports, Labeling,
Organically produced products, Plants,
Reporting and recordkeeping
requirements, Seals and insignia, Soil
conservation.
For the reasons set forth in the
preamble, 7 CFR part 205, subpart G is
proposed to be amended as follows:
PART 205—NATIONAL ORGANIC
PROGRAM
1. The authority citation for 7 CFR
part 205 continues to read as follows:
Authority: 7 U.S.C. 6501–6522.
2. In § 205.601 a new paragraph (e)(9)
is added to read as follows:
§ 205.601 Synthetic substances allowed
for use in organic crop production.
*
*
*
*
*
(e) * * *
(9) Sucrose octanoate esters (CAS #s—
42922–74–7; 58064–47–4)—in
accordance with approved labeling.
*
*
*
*
*
3. In § 205.603 a new paragraph (b)(7)
is added to read as follows:
§ 205.603 Synthetic substances allowed
for use in organic livestock production.
*
*
*
*
*
(b) * * *
(7) Sucrose octanoate esters (CAS #s—
42922–74–7; 58064–47–4)—in
accordance with approved labeling.
*
*
*
*
*
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37857
Dated: June 26, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E6–10393 Filed 6–30–06; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1421
RIN 0560–AH52
Storage Requirements for Grain
Security for Marketing Assistance
Loans
Commodity Credit Corporation,
USDA.
ACTION: Proposed rule.
AGENCY:
SUMMARY: This rule proposes changes to
the regulations governing the Marketing
Assistance Loan Programs of the
Commodity Credit Corporation (CCC)
that are authorized by the Farm Security
and Rural Investment Act of 2002 (2002
Act). CCC is proposing to no longer
require a Federally-licensed warehouse
operator, or in a State with a warehouse
licensing programs, a State-licensed
warehouse operator to execute a CCC
storage agreement. Nothing in this
proposed rule will affect the
administration of the United States
Warehouse Act by USDA.
DATES: Comments should be received on
or before August 2, 2006.
ADDRESSES: CCC invites interested
persons to submit comments on this
proposed rule and on the collection of
information required to administer the
affected regulations. 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) 690–1536.
• Mail: Send comments to: Director,
Price Support Division, Farm Service
Agency, United States Department of
Agriculture (USDA), Room 4095–S,
1400 Independence Avenue, SW.,
Washington, DC 20250–0512.
• Hand Delivery or Courier: Deliver
comments to the above address.
• Federal Rulemaking Portal: Go to
https://www.regulations.gov. Follow the
online instructions for submitting
comments.
All written comments will be
available for public inspection at the
above address during business hours
from 8 a.m. to 5 p.m., Monday through
Friday.
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Federal Register / Vol. 71, No. 127 / Monday, July 3, 2006 / Proposed Rules
FOR FURTHER INFORMATION CONTACT:
Kimberly Graham; phone: (202) 720–
9154; e-mail:
kimberly.graham@wdc.usda.gov, or fax:
(202) 690–1536.
SUPPLEMENTARY INFORMATION:
Background
Since the enactment of the
Agricultural Act of 1949, the major
activity of CCC has been the
administration and implementation of
nonrecourse marketing assistance loans
to producers of major agricultural
commodities. Generally, Congress
established loan rates for certain
commodities, e.g. $1.95 per bushel for
corn, for the 2004 through 2007 crop
years. Under nonrecourse loan
provisions, the producer may satisfy the
loan obligation through forfeiture to
CCC of the commodity pledged as
collateral for the loan.
Since 1949, the commodities pledged
as collateral for these loans could be
stored on the producer’s farm or in
approved warehouses. Historically,
approved warehouses have been
warehouse operators who entered into
storage agreements with CCC that set
forth terms and conditions regarding: (1)
Financial aspects of the warehouse; (2)
rates that are applicable to the storage of
CCC owned inventory and CCC loan
collateral; (3) handling and delivery
charges with respect to these
commodities; and (4) related storage
issues.
Most States, as well as the Department
of Agriculture (USDA), have a
warehouse licensing regime for the
storage of agricultural commodities. In
these States, generally, an entity must
have a State or Federal license to engage
in storing these commodities. These
licensed entities issue warehouse
receipts that evidence ownership of
commingled commodities. In general,
those non-licensed entities in States
with licensing programs may not store
agricultural commodities on behalf of
producers but are free to purchase
commodities from producers.
Accordingly, in such States, commercial
feed lots, ethanol plants, wool pools,
and other entities that are the ‘‘end
users’’ of the commodity are not
licensed warehouses and, therefore, may
not store commodities on behalf of
producers. In those States that do not
have such a licensing regime,
warehouses must still follow State laws
relating to bailment and storage. The
State laws relating to bailment and
storage may vary from State to State.
As a result of the accumulation of
large quantities of commodities forfeited
under nonrecourse loans, in the mid1980’s Congress instituted a
fundamental change to CCC loan
programs when market prices are below
the CCC loan rate. The change allows
producers the opportunity to repay the
nonrecourse loan at a price determined
by CCC and to retain any difference
between the amount of the loan value
and the repayment value. Under these
‘‘marketing assistance loans (MAL),’’ the
producer still has the option of
forfeiting the loan collateral to CCC.
MAL’s accomplish two objectives. First,
they provide producers with interim
financing to continue farming
operations without having to market
Production
bil. bushels
Commodity year
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their crop during a period of low market
prices. Second, these loans facilitate the
orderly marketing and distribution of
commodities throughout the year.
The three largest amounts of acreage
planted to agricultural commodities for
which marketing assistance loans are
available are devoted to corn, soybeans
and wheat. The following chart shows
the estimated production of these
commodities, as determined by the
National Agricultural Statistics Service
of USDA, and the quantity of such crops
forfeited to CCC in the 2000 through
2004 crop years. With respect to the
2004 crop, the increase in forfeitures
was attributable to the disruption in
marketing channels caused by
Hurricane Katrina. This hurricane
occurred when a significant number of
corn and soybean marketing assistance
loans matured in the upper Midwest.
The closing of the Mississippi River in
the New Orleans area and damage to
grain handling facilities in that area
caused significant reductions in
commodity prices. As a result, there was
an abnormal increase in forfeitures to
CCC; however, to mitigate this impact,
CCC provided producers with farmstored loans the opportunity to store
these CCC-owned stocks on their farm
for up to 60 days with the option of
purchasing the commodity at a price
CCC would use in completing a
marketing loan transaction.
Accordingly, while CCC took title to a
larger quantity of 2004 crops compared
to the previous two years, such stocks
moved into commercial distribution as
soon as was practicable in as normal a
way as possible.
Corn:
2000 ......................................................................................................................................
2001 ......................................................................................................................................
2002 ......................................................................................................................................
2003 ......................................................................................................................................
2004 ......................................................................................................................................
Soybeans:
2000 ......................................................................................................................................
2001 ......................................................................................................................................
2002 ......................................................................................................................................
2003 ......................................................................................................................................
2004 ......................................................................................................................................
Wheat:
2000 ......................................................................................................................................
2001 ......................................................................................................................................
2002 ......................................................................................................................................
2003 ......................................................................................................................................
2004 ......................................................................................................................................
CCC’s ownership interest in these
major commodities is insignificant. The
percentage of other marketing loan
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commodities owned by CCC as a
percentage of total production is similar
to these commodities. When a
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Forfeitures
mil. bushels
Percent of
production
forfeited
9.915
9.502
8.966
10.089
11.807
26.596
0.017
1.892
1.037
24.382
0.2682
0.0002
0.0211
0.0103
0.2065
2.757
2.890
2.756
2.453
3.123
5.704
0.054
0.205
0.122
0.483
0.2069
0.0019
0.0074
0.0050
0.0154
2.228
1.947
1.605
2.344
2.158
12.749
0.442
1.507
2.480
9.401
0.5722
0.0227
0.0939
0.1058
0.3247
comparison is made with the quantities
of commodities forfeited to CCC as a
percentage of the quantities pledged as
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Federal Register / Vol. 71, No. 127 / Monday, July 3, 2006 / Proposed Rules
collateral for such loans, CCC takes
possession of less than 0.4 percent of
the commodities pledged as collateral
for marketing assistance loans.
The amount of the monetary gain
producers may obtain by repaying CCC
marketing assistance loans at repayment
rates below their loan rate can be
substantial. Therefore, there is a
significant incentive for a producer to
obtain these loans solely for this benefit.
However, both the producer and CCC
incur costs in completion of the loan
transaction due to costs associated with
lien searches and lien filing fees as well
as USDA personnel costs incurred in
processing these loans. To reduce the
costs associated with the delivery of this
benefit, producers may simply request
that a payment be made to them in an
amount equal to what would be realized
if the loan had been made and
immediately repaid at the lower
repayment rate. In return for the
payment, referred to as a ‘‘loan
deficiency payment (LDP)’’, the
producer agrees that the commodity for
which the LDP was provided will not be
pledged as collateral for a CCC
marketing assistance loan. The LDP
amount is equal to the established loan
rate for the applicable loan commodity
less the repayment rate multiplied by
the eligible quantity of the commodity.
With respect to commodities such as
wheat, rice, feed grains, minor oilseeds,
wool, mohair and pulse crops, section
1205 of the 2002 Act provides that these
payments are made with respect to
‘‘producers on a farm that, although
eligible to obtain a marketing assistance
loan under section 1201 with respect to
a loan commodity, agree to forgo
obtaining the loan for the commodity in
return for loan deficiency payments.
* * *’’ A similar provision is set forth
in section 1307 of the 2002 Act for
producers of peanuts.
With the advent of marketing
assistance loans and LDP’s in the mid1980’s, producers’ use of these benefits
has shifted substantially from the
marketing loan option to the LDP
option. The following chart sets forth
the number of marketing assistance
loans and LDP’s approved by CCC as of
March 31, 2006, for the 2003, 2004, and
2005 crops.
Warehouse
loans
Commodity year
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Corn:
2003 ......................................................................................................................................
2004 ......................................................................................................................................
2005 ......................................................................................................................................
Soybeans:
2003 ......................................................................................................................................
2004 ......................................................................................................................................
2005 ......................................................................................................................................
Wheat:
2003 ......................................................................................................................................
2004 ......................................................................................................................................
2005 ......................................................................................................................................
Generally, in those years in which
market prices remain below the CCC
loan rate, there is a significantly greater
use made of LDP’s than marketing
assistance loans. However, as
demonstrated by the issuance of only 7
loan deficiency payments with respect
to the 2003 crop of soybeans, and the
issuance of approximately 22,000
marketing assistance loans, producers
still avail themselves of the loan
program for financing purposes.
The CCC storage payment with
respect to peanuts and upland cotton
pledged as collateral for marketing
assistance loan programs encourages the
use of such loans instead of loan
deficiency payments; thus, the
percentages of loan placements for these
commodities are statistically larger than
for other commodities. Similarly, the
use of commodity certificates under
section 166 of the Federal Agriculture
Improvement and Reform Act of 1996,
as amended, (the 1996 Act) also
encourages the use of these loans in lieu
of loan deficiency payments for several
reasons, further skewing the distribution
of these benefits. The use of these
certificates by large marketing
cooperatives facilitates the repayment of
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marketing assistance loans because the
benefits attributable to the use of these
certificates do not count against the
statutory payment limitation provisions
of the Food Security Act of 1985, as
amended, which would otherwise limit:
(1) The amount of a gain that a producer
would be able to receive through a
marketing assistance loan; and (2) the
amount of loan deficiency payments
that would be made to the producer.
Thus, the number of warehouse-stored
loans made with respect to upland
cotton and rice is greater, and the use of
loan deficiency payments less, than
would otherwise be anticipated in the
absence of section 166 of the 1996 Act.
The manner in which agricultural
commodities are marketed and used has
changed substantially since the
enactment of the Agricultural Act of
1949. Changes in commodity marketing
and use have been driven in part by the
dramatic consolidation in farm
operations since the middle 1900’s.
Advances in agronomics and
technology, including biotechnology,
have allowed producers to significantly
expand the sizes of their operations and
benefit from crop specialization and
economies of scale. Coincident to this
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Farm loan
Loan
deficiency
payments
3,465
6,952
4,594
47,933
50,684
34,031
99,617
1,079,690
1,155,137
3,256
15,258
14,239
18,538
40,318
39,587
7
463,338
86,170
5,749
5,440
3,596
8,295
9,569
8,464
103,418
55,725
17,571
have been structural changes in the
livestock and poultry feeding sectors
and the remarkable growth in ethanol
production. These changes have pushed
larger and larger quantities of
agricultural commodities into
commercial marketing channels and
away from the primary on-farm uses of
the early 1900’s.
Based on the U.S. Census of
Agriculture, the number of U.S. farms
dropped from 5.4 million in 1950 to 2.1
million in 2002. Much of the loss in
farm numbers, however, occurred by the
mid-1970’s. The 1974 Census of
Agriculture reported 2.3 million farms.
Despite the slowing decline in farm
numbers, the size of farm operations
continues to grow. In 1974, there were
32,752 farms with 1,000 acres or more
land. In 2002, there were 176,990 farms
with 1,000 acres of more land. The
number of farms with 2,000 acres or
more increased more than 13 fold
during this time, going from only 5,862
farms in 1974 to 77,970 farms in 2002.
Accompanying this consolidation in
farm numbers and growth in farm size
has been a similarly dramatic
consolidation in the livestock and
poultry feeding sectors. Based on the
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U.S. Census of Agriculture, 3 out of
every 4 farms had cattle and 1 out of
every 2 farms had hogs in 1950. In 2002,
only 1 in every 2 farms had cattle, and
only 1 in every 25 had hogs. Numbers
are just as dramatic for poultry. In 1950,
4 of every 5 farms had chickens or
turkeys. In 2002, only 1 out of every 14
farms had chickens or turkeys. The
consolidation of cattle, hog, and poultry
feeding into fewer and larger capital
intensive operations has shifted feed use
away from the farms where grains and
oilseeds are produced. This has left
grain and oilseed producers increasingly
reliant on commercial grain marketing
channels as outlets for their production
and sources of their revenue. These
structural changes have had a
significant impact on the amount of
grain used on the farms where it is
produced. During the 1949/50
marketing year just more than half of all
grain and oilseed (wheat, corn, barley,
oats, rye, sorghum, rice, and soybeans)
production was consumed on the same
farms where it was produced. Since
then, while production of these
commodities has increased more than
three-fold, the amount used on the same
farm where it was produced has
dropped by more than one-third. The
bulk of this decline in on-farm use
reflects consolidation in livestock and
poultry feeding and specialization in
grain and oilseed farming. It also reflects
the phenomenal expansion in fuel
ethanol production which has grown
from a negligible share of domestic corn
use in the 1970’s to more than 12
percent of domestic use during the
2004/05 marketing year. Less
significant, but also affecting this
decline in on-farm use has been the shift
away from bin-run seed in the small
grains and soybean sectors as
commercial seed varieties have become
ever more dominant.
The decline in on-farm use has
substantially increased the volume of
grain moving through commercial
marketing channels. In the early 1950’s,
50 percent of all grain and oilseed
production was sold commercially. In
recent years, 90 percent of all grain and
oilseed production has been sold
commercially. As on-farm use has fallen
since 1949/50, the volume that is
marketed commercially has increased
six-fold, twice the rate of increase in
production.
CCC nonrecourse loan provisions
have been modified over the years to
better reflect the needs of producers
who must respond to these changes in
commodity marketing and use.
Particularly important in this regard has
been the marketing assistance loan
provisions that have given CCC tools
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like alternative marketing loan
repayment rates and the LDP which
have significantly reduced the quantity
of loan collateral forfeited to CCC. With
greater ability to minimize forfeitures,
CCC inventories and quantities of grains
and oilseeds otherwise controlled by
CCC have dramatically declined since
the 1980’s.
Producers who do not have storage
facilities on their farms, and who desire
to obtain a marketing assistance loan,
may deliver the commodity to a CCCapproved warehouse and tender to CCC
as collateral for a loan a warehouse
receipt that reflects the quantity and
quality of the commodity produced and
delivered to such facility. Commodities
delivered to other non-CCC-approved
warehouses and to facilities that
commingle the commodity with the
commodities of other persons may not
be tendered to CCC as loan collateral,
except as provided in section 1201(c) of
the 2002 Act.
To be a CCC-approved warehouse the
warehouse must enter into a CCC
storage agreement and meet certain
financial requirements. This agreement
was required because, prior to
authorization and use of marketing
assistance loans, in some years,
producers tendered to CCC over 75
percent of the annual production of
some crops. If market prices remained
below the CCC loan rate, the producers
would forfeit the commodity to CCC.
CCC required producers with
warehouse-stored loans to store the loan
collateral in CCC-approved warehouses
to protect CCC’s interest in the
commodity by storing the commodity
where CCC could readily assume
ownership. CCC takes title from a
warehouse according to its agreement
upon maturity of the loan with no
action needed on the part of the
producer. The warehouse receipt is
simply endorsed in blank to vest title in
the holder, which is CCC. If a farmstored loan was involved, CCC would
direct the producer to deliver the
commodity to a CCC-approved
warehouse. Other statutes precluded the
sale of CCC-owned commodities unless
market prices reached certain levels,
thus requiring CCC to own commodities
for prolonged periods of time. Thus,
CCC was dependent upon commercial
warehouses for the storage of large
quantities of grain, and, in the event of
collateral forfeiture, the approved
warehouse could continue to store the
commodity for extended periods. CCC
still requires the storage of its loan
collateral only in CCC-approved
warehouses regardless of its license
status.
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Proposed Changes
The first change proposed by this rule
is that CCC will no longer require a
Federally-licensed warehouse operator
also to maintain a CCC storage
agreement. With respect to warehouses
licensed by USDA under the United
States Warehouse Act, the conditions
that a warehouse operator must meet for
obtaining a Federal license exceed those
that must be met for obtaining a CCC
storage agreement. While the CCC
storage agreement, unlike a Federal
warehouse license, specifies storage
rates that CCC will pay in the unlikely
event the commodity is forfeited to CCC,
CCC has maintained a policy since the
late 1980’s to move commodities it
obtains as forfeitures into the market
place as quickly as possible. Thus,
minimal storage costs are incurred by
CCC. Accordingly, CCC has determined
that requiring a Federally-licensed
warehouse operator to also maintain a
CCC storage agreement provides no
additional protection to CCC’s interests
as a lender in the administration of the
marketing assistance loan programs and
CCC will no longer require such
warehouse operators to also maintain a
storage agreement. CCC may, however,
continue to utilize storage agreements in
those instances where it is engaged in
the long-term storage of commodities for
use in CCC domestic and international
feeding programs, i.e. wheat stored
under the Bill Emerson Humanitarian
Trust.
Second, in a State with a warehouse
licensing program, CCC will no longer
require the use of a CCC storage
agreement for a State-licensed
warehouse. In such States, especially
those with grain indemnity funds that
provide cash payments to depositors in
the event of the insolvency of the
warehouse operator, CCC has adequate
protection as a secured lender. There are
redundant costs to the warehouse
operator in meeting, and maintaining,
compliance with both the State license
and the CCC storage agreement. Even
without the storage agreement CCC will
still have clear title to the commodity in
the event of the insolvency of the
warehouse operator. If the loan is
repaid, CCC has no interest at stake.
Thus, for State-licensed warehouses, a
CCC storage agreement will not be
required, except possibly in the case of
the long term storage of CCC-owned
grain.
A small number of States do not have
warehouse licensing programs. In these
States, warehouse operators must still
comply with State laws pertaining to
storage and bailment. CCC will not
require these entities to execute a CCC
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storage agreement before a producer
may obtain a marketing assistance loan
with respect to commodities stored in
such warehouse, but may require that
the warehouse be approved in advance
by CCC as a location where CCC loan
collateral may be stored using the same
general criteria currently used in the
administration of CCC storage
agreements. In making these
determinations, CCC may require that
the storing warehouse meet certain
financial requirements and that the
structure in which the commodity is
stored meets conditions needed to
protect CCC’s interest in these States. A
list of approved warehouses may be
obtained from FSA State and county
offices.
These changes will allow producers to
obtain warehouse-stored loans at all
warehouses, both State and Federallylicensed, thus expanding the amount of
storage available for use by producers
who wish to obtain such loans. This is
particularly beneficial since commercial
warehouse capacity has declined over
the past 15 years while the amount of
commodities produced in that time has
increased—9.4 billion bushels of
commercial storage available in the
United States in 1990, compared to 8.5
billion in 2005. Production of wheat,
corn, soybeans, rice, grain sorghum, and
barley during that same time increased
from 13.9 billion bushels to 17.3 billion
bushels. Marketing patterns have
changed during this time, for example,
many buyers have turned to a ‘‘timedto-arrive’’ basis and do not maintain
large stocks of commodities at their
facilities. The proposed regulatory
changes are intended to compliment
these changing patterns.
This proposed rule will have no
impact on the administration of the U.S.
Warehouse Act.
Notice and Comment
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Section 1601(c) of the 2002 Act
provides that the regulations needed to
implement Title I of the 2002 Act,
which include those involved here, may
be promulgated without regard to the
notice and comment provisions of 5
U.S.C. 553 or the Statement of Policy of
the Secretary of Agriculture effective
July 24, 1971 relating to notices of
proposed rulemaking and public
participation in rulemaking.
Executive Order 12866
This 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.
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Regulatory Flexibility Act
It has been determined that the
Regulatory Flexibility Act is not
applicable to this rule because CCC is
not required by 5 U.S.C. 533 or any
other law to publish a notice of
proposed rulemaking for the subject
matter of this rule.
Environmental Assessment
The environmental impacts of this
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 rule has been reviewed in
accordance with Executive Order 12988.
This rule will preempt State laws that
are inconsistent with it. 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
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Sfmt 4702
37861
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.
Government Paperwork Elimination
Act
CCC is committed to compliance with
the Government Paperwork Elimination
Act (GPEA) and the Freedom to E-File
Act, which require Government
agencies in general and FSA in
particular to provide the public the
option of submitting information or
transacting business electronically to
the maximum extent possible. The
forms and other information collection
activities required for participation in
the program are available electronically
through the USDA eForms Web site at
https://www.sc.egov.usda.gov for
downloading. The regulation is
available at FSA’s Price Support
Division Internet site at https://
www.fsa.usda.gov/dafp/psd.
Applications may be submitted at the
FSA county offices, by mail or by FAX.
At this time, electronic submission is
not available. Full development of
electronic submission is underway.
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 1421
Agricultural commodities, Feed
grains, Grains, Loan programsagriculture, Oilseeds, Price support
programs, Reporting and recordkeeping
requirements.
For the reasons set out in the
preamble, 7 CFR part 1421 is amended
as follows:
PART 1421—GRAINS AND SIMILARLY
HANDLED COMMODITIES—
MARKETING ASSISTANCE LOANS
AND LOAN DEFICIENCY PAYMENTS
FOR THE 2002 THROUGH 2007 CROP
YEARS
1. The authority citation for part 1421
continues to read as follows:
E:\FR\FM\03JYP1.SGM
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37862
Federal Register / Vol. 71, No. 127 / Monday, July 3, 2006 / Proposed Rules
Authority: 7 U.S.C. 7231–7237 and 7931 et
seq.; 15 U.S.C. 714b and 714c.
NUCLEAR REGULATORY
COMMISSION
Subpart A—General
10 CFR Parts 20 and 32
2. Revise § 1421.13 to read as follows:
§ 1421.13 Special marketing assistance
loans and loan deficiency payments.
(a) Commodities stored in an
unapproved storage facility may be
pledged as collateral for a marketing
assistance loan if the producer:
(1) Makes request of the marketing
assistance loan and obtains the
commodity certificate to immediately
exchange for the requested loan
collateral at the same time at the county
office that, under part 718 of this title,
is responsible for administering the
programs for the farm on which the
commodity was produced.
(2) Submits the marketing assistance
loan request and the commodity
certificate exchange before or on the
date of delivery to the unapproved
facility.
(b) Eligible producers of hay and
silage derived from an eligible loan
commodity as provided in § 1421.5 are
eligible to request hay and silage
quantities for a loan deficiency payment
in accordance with § 1421.200.
Subpart B—Marketing Assistance
Loans
3. Revise § 1421.103(c) to read as
follows:
§ 1421.103
Approved storage.
*
*
*
*
(c)(1) Approved warehouse storage
consists of warehouses that are:
(i) If Federally-licensed, in
compliance with 7 CFR part 735; or
(ii) If not Federally-licensed, in
compliance with State laws and is a
warehouse that issues a warehouse
receipt that meets the criteria set forth
in § 1421.107.
(2) CCC may, on a case-by-case basis,
require a warehouse operator that is not
Federally-or State-licensed to enter into
an agreement with CCC that sets forth
requirements to adequately protect
CCC’s security interest in commodities
pledged as collateral for a loan in
accordance with this part.
4. Remove §§ 1421.5551 through
1421.5559.
rwilkins on PROD1PC63 with PROPOSAL_1
*
Signed in Washington, DC, on June 16,
2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity
Credit Corporation.
[FR Doc. E6–10368 Filed 6–30–06; 8:45 am]
BILLING CODE 3410–05–P
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RIN 3150–AH48
National Source Tracking of Sealed
Sources: Extension of Comment
Period
Nuclear Regulatory
Commission.
ACTION: Proposed rule: Extension of
comment period.
AGENCY:
SUMMARY: On June 13, 2006, the Nuclear
Regulatory Commission (NRC)
published for public comment a
proposal to change the basis for the
national source tracking rule from the
NRC’s authority to promote the common
defense and security to protection of the
public health and safety. The comment
period for this proposed rule was to
have expired on July 3, 2006. Senator
Hillary Rodham Clinton and
Representative Edward Markey
requested an extension to the comment
period. The NRC has decided to extend
the comment period for an additional 25
days.
DATES: The comment period for the
proposed rule published on June 13,
2006 (71 FR 34024), has been extended
and now expires on July 28, 2006.
Comments received after this date will
be considered if it is practical to do so,
but the Commission is able to ensure
consideration only for comments
received before this date.
ADDRESSES: You may submit comments
by any one of the following methods.
Please include the following number
(RIN 3150–AH48) in the subject line of
your comments. Comments on
rulemakings submitted in writing or in
electronic form will be made available
to the public in their entirety on the
NRC rulemaking Web site. Personal
information will not be removed from
your comments.
Mail comments to: Secretary, U.S.
Nuclear Regulatory Commission,
Washington, DC 20555–0001, ATTN:
Rulemakings and Adjudications Staff.
E-mail comments to: SECY@nrc.gov. If
you do not receive a reply e-mail
confirming that we have received your
comments, contact us directly at (301)
415–1966. You may also submit
comments via the NRC’s rulemaking
Web site at https://ruleforum.llnl.gov.
Address questions about our rulemaking
website to Carol Gallagher (301) 415–
5905; e-mail cag@nrc.gov. Comments
can also be submitted via the Federal
Rulemaking Portal https://
www.regulations.gov.
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Hand deliver comments to: 11555
Rockville Pike, Rockville, Maryland
20852, between 7:30 a.m. and 4:15 p.m.
Federal workdays. (Telephone (301)
415–1966).
Fax comments to: Secretary, U.S.
Nuclear Regulatory Commission at (301)
415–1101.
Publicly available documents related
to this rulemaking may be examined
and copied for a fee at the NRC’s Public
Document Room (PDR), Public File Area
O1 F21, One White Flint North, 11555
Rockville Pike, Rockville, Maryland.
Selected documents, including
comments, can be viewed and
downloaded electronically via the NRC
rulemaking Web site at https://
ruleforum.llnl.gov.
Publicly available documents created
or received at the NRC after November
1, 1999, are available electronically at
the NRC’s Electronic Reading Room at
https://www.nrc.gov/NRC/ADAMS/
index.html. From this site, the public
can gain entry into the NRC’s
Agencywide Document Access and
Management System (ADAMS), which
provides text and image files of NRC’s
public documents. If you do not have
access to ADAMS or if there are
problems in accessing the documents
located in ADAMS, contact the NRC
Public Document Room (PDR) Reference
staff at 1–800–397–4209, 301–415–4737
or by e-mail to pdr@nrc.gov.
FOR FURTHER INFORMATION CONTACT:
Merri Horn, Office of Nuclear Material
Safety and Safeguards, U.S. Nuclear
Regulatory Commission, Washington,
DC 20555–0001, telephone (301) 415–
8126, e-mail, mlh1@nrc.gov.
Dated at Rockville, Maryland, this 28th day
of June, 2006.
For the Nuclear Regulatory Commission.
Annette Vietti Cook,
Secretary of the Commission.
[FR Doc. E6–10422 Filed 6–30–06; 8:45 am]
BILLING CODE 7590–01–P
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563
[No. 2006–24]
RIN 1550–AC06
Subordinated Debt Securities and
Mandatorily Redeemable Preferred
Stock
Office of Thrift Supervision,
Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:
E:\FR\FM\03JYP1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 127 (Monday, July 3, 2006)]
[Proposed Rules]
[Pages 37857-37862]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-10368]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1421
RIN 0560-AH52
Storage Requirements for Grain Security for Marketing Assistance
Loans
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This rule proposes changes to the regulations governing the
Marketing Assistance Loan Programs of the Commodity Credit Corporation
(CCC) that are authorized by the Farm Security and Rural Investment Act
of 2002 (2002 Act). CCC is proposing to no longer require a Federally-
licensed warehouse operator, or in a State with a warehouse licensing
programs, a State-licensed warehouse operator to execute a CCC storage
agreement. Nothing in this proposed rule will affect the administration
of the United States Warehouse Act by USDA.
DATES: Comments should be received on or before August 2, 2006.
ADDRESSES: CCC invites interested persons to submit comments on this
proposed rule and on the collection of information required to
administer the affected regulations. 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)
690-1536.
Mail: Send comments to: Director, Price Support Division,
Farm Service Agency, United States Department of Agriculture (USDA),
Room 4095-S, 1400 Independence Avenue, SW., Washington, DC 20250-0512.
Hand Delivery or Courier: Deliver comments to the above
address.
Federal Rulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting
comments.
All written comments will be available for public inspection at the
above address during business hours from 8 a.m. to 5 p.m., Monday
through Friday.
[[Page 37858]]
FOR FURTHER INFORMATION CONTACT: Kimberly Graham; phone: (202) 720-
9154; e-mail: kimberly.graham@wdc.usda.gov, or fax: (202) 690-1536.
SUPPLEMENTARY INFORMATION:
Background
Since the enactment of the Agricultural Act of 1949, the major
activity of CCC has been the administration and implementation of
nonrecourse marketing assistance loans to producers of major
agricultural commodities. Generally, Congress established loan rates
for certain commodities, e.g. $1.95 per bushel for corn, for the 2004
through 2007 crop years. Under nonrecourse loan provisions, the
producer may satisfy the loan obligation through forfeiture to CCC of
the commodity pledged as collateral for the loan.
Since 1949, the commodities pledged as collateral for these loans
could be stored on the producer's farm or in approved warehouses.
Historically, approved warehouses have been warehouse operators who
entered into storage agreements with CCC that set forth terms and
conditions regarding: (1) Financial aspects of the warehouse; (2) rates
that are applicable to the storage of CCC owned inventory and CCC loan
collateral; (3) handling and delivery charges with respect to these
commodities; and (4) related storage issues.
Most States, as well as the Department of Agriculture (USDA), have
a warehouse licensing regime for the storage of agricultural
commodities. In these States, generally, an entity must have a State or
Federal license to engage in storing these commodities. These licensed
entities issue warehouse receipts that evidence ownership of commingled
commodities. In general, those non-licensed entities in States with
licensing programs may not store agricultural commodities on behalf of
producers but are free to purchase commodities from producers.
Accordingly, in such States, commercial feed lots, ethanol plants, wool
pools, and other entities that are the ``end users'' of the commodity
are not licensed warehouses and, therefore, may not store commodities
on behalf of producers. In those States that do not have such a
licensing regime, warehouses must still follow State laws relating to
bailment and storage. The State laws relating to bailment and storage
may vary from State to State.
As a result of the accumulation of large quantities of commodities
forfeited under nonrecourse loans, in the mid-1980's Congress
instituted a fundamental change to CCC loan programs when market prices
are below the CCC loan rate. The change allows producers the
opportunity to repay the nonrecourse loan at a price determined by CCC
and to retain any difference between the amount of the loan value and
the repayment value. Under these ``marketing assistance loans (MAL),''
the producer still has the option of forfeiting the loan collateral to
CCC. MAL's accomplish two objectives. First, they provide producers
with interim financing to continue farming operations without having to
market their crop during a period of low market prices. Second, these
loans facilitate the orderly marketing and distribution of commodities
throughout the year.
The three largest amounts of acreage planted to agricultural
commodities for which marketing assistance loans are available are
devoted to corn, soybeans and wheat. The following chart shows the
estimated production of these commodities, as determined by the
National Agricultural Statistics Service of USDA, and the quantity of
such crops forfeited to CCC in the 2000 through 2004 crop years. With
respect to the 2004 crop, the increase in forfeitures was attributable
to the disruption in marketing channels caused by Hurricane Katrina.
This hurricane occurred when a significant number of corn and soybean
marketing assistance loans matured in the upper Midwest. The closing of
the Mississippi River in the New Orleans area and damage to grain
handling facilities in that area caused significant reductions in
commodity prices. As a result, there was an abnormal increase in
forfeitures to CCC; however, to mitigate this impact, CCC provided
producers with farm-stored loans the opportunity to store these CCC-
owned stocks on their farm for up to 60 days with the option of
purchasing the commodity at a price CCC would use in completing a
marketing loan transaction. Accordingly, while CCC took title to a
larger quantity of 2004 crops compared to the previous two years, such
stocks moved into commercial distribution as soon as was practicable in
as normal a way as possible.
----------------------------------------------------------------------------------------------------------------
Percent of
Commodity year Production Forfeitures production
bil. bushels mil. bushels forfeited
----------------------------------------------------------------------------------------------------------------
Corn:
2000........................................................ 9.915 26.596 0.2682
2001........................................................ 9.502 0.017 0.0002
2002........................................................ 8.966 1.892 0.0211
2003........................................................ 10.089 1.037 0.0103
2004........................................................ 11.807 24.382 0.2065
Soybeans:
2000........................................................ 2.757 5.704 0.2069
2001........................................................ 2.890 0.054 0.0019
2002........................................................ 2.756 0.205 0.0074
2003........................................................ 2.453 0.122 0.0050
2004........................................................ 3.123 0.483 0.0154
Wheat:
2000........................................................ 2.228 12.749 0.5722
2001........................................................ 1.947 0.442 0.0227
2002........................................................ 1.605 1.507 0.0939
2003........................................................ 2.344 2.480 0.1058
2004........................................................ 2.158 9.401 0.3247
----------------------------------------------------------------------------------------------------------------
CCC's ownership interest in these major commodities is
insignificant. The percentage of other marketing loan commodities owned
by CCC as a percentage of total production is similar to these
commodities. When a comparison is made with the quantities of
commodities forfeited to CCC as a percentage of the quantities pledged
as
[[Page 37859]]
collateral for such loans, CCC takes possession of less than 0.4
percent of the commodities pledged as collateral for marketing
assistance loans.
The amount of the monetary gain producers may obtain by repaying
CCC marketing assistance loans at repayment rates below their loan rate
can be substantial. Therefore, there is a significant incentive for a
producer to obtain these loans solely for this benefit. However, both
the producer and CCC incur costs in completion of the loan transaction
due to costs associated with lien searches and lien filing fees as well
as USDA personnel costs incurred in processing these loans. To reduce
the costs associated with the delivery of this benefit, producers may
simply request that a payment be made to them in an amount equal to
what would be realized if the loan had been made and immediately repaid
at the lower repayment rate. In return for the payment, referred to as
a ``loan deficiency payment (LDP)'', the producer agrees that the
commodity for which the LDP was provided will not be pledged as
collateral for a CCC marketing assistance loan. The LDP amount is equal
to the established loan rate for the applicable loan commodity less the
repayment rate multiplied by the eligible quantity of the commodity.
With respect to commodities such as wheat, rice, feed grains, minor
oilseeds, wool, mohair and pulse crops, section 1205 of the 2002 Act
provides that these payments are made with respect to ``producers on a
farm that, although eligible to obtain a marketing assistance loan
under section 1201 with respect to a loan commodity, agree to forgo
obtaining the loan for the commodity in return for loan deficiency
payments. * * *'' A similar provision is set forth in section 1307 of
the 2002 Act for producers of peanuts.
With the advent of marketing assistance loans and LDP's in the mid-
1980's, producers' use of these benefits has shifted substantially from
the marketing loan option to the LDP option. The following chart sets
forth the number of marketing assistance loans and LDP's approved by
CCC as of March 31, 2006, for the 2003, 2004, and 2005 crops.
----------------------------------------------------------------------------------------------------------------
Loan
Commodity year Warehouse Farm loan deficiency
loans payments
----------------------------------------------------------------------------------------------------------------
Corn:
2003........................................................ 3,465 47,933 99,617
2004........................................................ 6,952 50,684 1,079,690
2005........................................................ 4,594 34,031 1,155,137
Soybeans:
2003........................................................ 3,256 18,538 7
2004........................................................ 15,258 40,318 463,338
2005........................................................ 14,239 39,587 86,170
Wheat:
2003........................................................ 5,749 8,295 103,418
2004........................................................ 5,440 9,569 55,725
2005........................................................ 3,596 8,464 17,571
----------------------------------------------------------------------------------------------------------------
Generally, in those years in which market prices remain below the
CCC loan rate, there is a significantly greater use made of LDP's than
marketing assistance loans. However, as demonstrated by the issuance of
only 7 loan deficiency payments with respect to the 2003 crop of
soybeans, and the issuance of approximately 22,000 marketing assistance
loans, producers still avail themselves of the loan program for
financing purposes.
The CCC storage payment with respect to peanuts and upland cotton
pledged as collateral for marketing assistance loan programs encourages
the use of such loans instead of loan deficiency payments; thus, the
percentages of loan placements for these commodities are statistically
larger than for other commodities. Similarly, the use of commodity
certificates under section 166 of the Federal Agriculture Improvement
and Reform Act of 1996, as amended, (the 1996 Act) also encourages the
use of these loans in lieu of loan deficiency payments for several
reasons, further skewing the distribution of these benefits. The use of
these certificates by large marketing cooperatives facilitates the
repayment of marketing assistance loans because the benefits
attributable to the use of these certificates do not count against the
statutory payment limitation provisions of the Food Security Act of
1985, as amended, which would otherwise limit: (1) The amount of a gain
that a producer would be able to receive through a marketing assistance
loan; and (2) the amount of loan deficiency payments that would be made
to the producer. Thus, the number of warehouse-stored loans made with
respect to upland cotton and rice is greater, and the use of loan
deficiency payments less, than would otherwise be anticipated in the
absence of section 166 of the 1996 Act.
The manner in which agricultural commodities are marketed and used
has changed substantially since the enactment of the Agricultural Act
of 1949. Changes in commodity marketing and use have been driven in
part by the dramatic consolidation in farm operations since the middle
1900's. Advances in agronomics and technology, including biotechnology,
have allowed producers to significantly expand the sizes of their
operations and benefit from crop specialization and economies of scale.
Coincident to this have been structural changes in the livestock and
poultry feeding sectors and the remarkable growth in ethanol
production. These changes have pushed larger and larger quantities of
agricultural commodities into commercial marketing channels and away
from the primary on-farm uses of the early 1900's.
Based on the U.S. Census of Agriculture, the number of U.S. farms
dropped from 5.4 million in 1950 to 2.1 million in 2002. Much of the
loss in farm numbers, however, occurred by the mid-1970's. The 1974
Census of Agriculture reported 2.3 million farms. Despite the slowing
decline in farm numbers, the size of farm operations continues to grow.
In 1974, there were 32,752 farms with 1,000 acres or more land. In
2002, there were 176,990 farms with 1,000 acres of more land. The
number of farms with 2,000 acres or more increased more than 13 fold
during this time, going from only 5,862 farms in 1974 to 77,970 farms
in 2002.
Accompanying this consolidation in farm numbers and growth in farm
size has been a similarly dramatic consolidation in the livestock and
poultry feeding sectors. Based on the
[[Page 37860]]
U.S. Census of Agriculture, 3 out of every 4 farms had cattle and 1 out
of every 2 farms had hogs in 1950. In 2002, only 1 in every 2 farms had
cattle, and only 1 in every 25 had hogs. Numbers are just as dramatic
for poultry. In 1950, 4 of every 5 farms had chickens or turkeys. In
2002, only 1 out of every 14 farms had chickens or turkeys. The
consolidation of cattle, hog, and poultry feeding into fewer and larger
capital intensive operations has shifted feed use away from the farms
where grains and oilseeds are produced. This has left grain and oilseed
producers increasingly reliant on commercial grain marketing channels
as outlets for their production and sources of their revenue. These
structural changes have had a significant impact on the amount of grain
used on the farms where it is produced. During the 1949/50 marketing
year just more than half of all grain and oilseed (wheat, corn, barley,
oats, rye, sorghum, rice, and soybeans) production was consumed on the
same farms where it was produced. Since then, while production of these
commodities has increased more than three-fold, the amount used on the
same farm where it was produced has dropped by more than one-third. The
bulk of this decline in on-farm use reflects consolidation in livestock
and poultry feeding and specialization in grain and oilseed farming. It
also reflects the phenomenal expansion in fuel ethanol production which
has grown from a negligible share of domestic corn use in the 1970's to
more than 12 percent of domestic use during the 2004/05 marketing year.
Less significant, but also affecting this decline in on-farm use has
been the shift away from bin-run seed in the small grains and soybean
sectors as commercial seed varieties have become ever more dominant.
The decline in on-farm use has substantially increased the volume
of grain moving through commercial marketing channels. In the early
1950's, 50 percent of all grain and oilseed production was sold
commercially. In recent years, 90 percent of all grain and oilseed
production has been sold commercially. As on-farm use has fallen since
1949/50, the volume that is marketed commercially has increased six-
fold, twice the rate of increase in production.
CCC nonrecourse loan provisions have been modified over the years
to better reflect the needs of producers who must respond to these
changes in commodity marketing and use. Particularly important in this
regard has been the marketing assistance loan provisions that have
given CCC tools like alternative marketing loan repayment rates and the
LDP which have significantly reduced the quantity of loan collateral
forfeited to CCC. With greater ability to minimize forfeitures, CCC
inventories and quantities of grains and oilseeds otherwise controlled
by CCC have dramatically declined since the 1980's.
Producers who do not have storage facilities on their farms, and
who desire to obtain a marketing assistance loan, may deliver the
commodity to a CCC-approved warehouse and tender to CCC as collateral
for a loan a warehouse receipt that reflects the quantity and quality
of the commodity produced and delivered to such facility. Commodities
delivered to other non-CCC-approved warehouses and to facilities that
commingle the commodity with the commodities of other persons may not
be tendered to CCC as loan collateral, except as provided in section
1201(c) of the 2002 Act.
To be a CCC-approved warehouse the warehouse must enter into a CCC
storage agreement and meet certain financial requirements. This
agreement was required because, prior to authorization and use of
marketing assistance loans, in some years, producers tendered to CCC
over 75 percent of the annual production of some crops. If market
prices remained below the CCC loan rate, the producers would forfeit
the commodity to CCC. CCC required producers with warehouse-stored
loans to store the loan collateral in CCC-approved warehouses to
protect CCC's interest in the commodity by storing the commodity where
CCC could readily assume ownership. CCC takes title from a warehouse
according to its agreement upon maturity of the loan with no action
needed on the part of the producer. The warehouse receipt is simply
endorsed in blank to vest title in the holder, which is CCC. If a farm-
stored loan was involved, CCC would direct the producer to deliver the
commodity to a CCC-approved warehouse. Other statutes precluded the
sale of CCC-owned commodities unless market prices reached certain
levels, thus requiring CCC to own commodities for prolonged periods of
time. Thus, CCC was dependent upon commercial warehouses for the
storage of large quantities of grain, and, in the event of collateral
forfeiture, the approved warehouse could continue to store the
commodity for extended periods. CCC still requires the storage of its
loan collateral only in CCC-approved warehouses regardless of its
license status.
Proposed Changes
The first change proposed by this rule is that CCC will no longer
require a Federally-licensed warehouse operator also to maintain a CCC
storage agreement. With respect to warehouses licensed by USDA under
the United States Warehouse Act, the conditions that a warehouse
operator must meet for obtaining a Federal license exceed those that
must be met for obtaining a CCC storage agreement. While the CCC
storage agreement, unlike a Federal warehouse license, specifies
storage rates that CCC will pay in the unlikely event the commodity is
forfeited to CCC, CCC has maintained a policy since the late 1980's to
move commodities it obtains as forfeitures into the market place as
quickly as possible. Thus, minimal storage costs are incurred by CCC.
Accordingly, CCC has determined that requiring a Federally-licensed
warehouse operator to also maintain a CCC storage agreement provides no
additional protection to CCC's interests as a lender in the
administration of the marketing assistance loan programs and CCC will
no longer require such warehouse operators to also maintain a storage
agreement. CCC may, however, continue to utilize storage agreements in
those instances where it is engaged in the long-term storage of
commodities for use in CCC domestic and international feeding programs,
i.e. wheat stored under the Bill Emerson Humanitarian Trust.
Second, in a State with a warehouse licensing program, CCC will no
longer require the use of a CCC storage agreement for a State-licensed
warehouse. In such States, especially those with grain indemnity funds
that provide cash payments to depositors in the event of the insolvency
of the warehouse operator, CCC has adequate protection as a secured
lender. There are redundant costs to the warehouse operator in meeting,
and maintaining, compliance with both the State license and the CCC
storage agreement. Even without the storage agreement CCC will still
have clear title to the commodity in the event of the insolvency of the
warehouse operator. If the loan is repaid, CCC has no interest at
stake. Thus, for State-licensed warehouses, a CCC storage agreement
will not be required, except possibly in the case of the long term
storage of CCC-owned grain.
A small number of States do not have warehouse licensing programs.
In these States, warehouse operators must still comply with State laws
pertaining to storage and bailment. CCC will not require these entities
to execute a CCC
[[Page 37861]]
storage agreement before a producer may obtain a marketing assistance
loan with respect to commodities stored in such warehouse, but may
require that the warehouse be approved in advance by CCC as a location
where CCC loan collateral may be stored using the same general criteria
currently used in the administration of CCC storage agreements. In
making these determinations, CCC may require that the storing warehouse
meet certain financial requirements and that the structure in which the
commodity is stored meets conditions needed to protect CCC's interest
in these States. A list of approved warehouses may be obtained from FSA
State and county offices.
These changes will allow producers to obtain warehouse-stored loans
at all warehouses, both State and Federally-licensed, thus expanding
the amount of storage available for use by producers who wish to obtain
such loans. This is particularly beneficial since commercial warehouse
capacity has declined over the past 15 years while the amount of
commodities produced in that time has increased--9.4 billion bushels of
commercial storage available in the United States in 1990, compared to
8.5 billion in 2005. Production of wheat, corn, soybeans, rice, grain
sorghum, and barley during that same time increased from 13.9 billion
bushels to 17.3 billion bushels. Marketing patterns have changed during
this time, for example, many buyers have turned to a ``timed-to-
arrive'' basis and do not maintain large stocks of commodities at their
facilities. The proposed regulatory changes are intended to compliment
these changing patterns.
This proposed rule will have no impact on the administration of the
U.S. Warehouse Act.
Notice and Comment
Section 1601(c) of the 2002 Act provides that the regulations
needed to implement Title I of the 2002 Act, which include those
involved here, may be promulgated without regard to the notice and
comment provisions of 5 U.S.C. 553 or the Statement of Policy of the
Secretary of Agriculture effective July 24, 1971 relating to notices of
proposed rulemaking and public participation in rulemaking.
Executive Order 12866
This 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 not
applicable to this rule because CCC is not required by 5 U.S.C. 533 or
any other law to publish a notice of proposed rulemaking for the
subject matter of this rule.
Environmental Assessment
The environmental impacts of this 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 rule has been reviewed in accordance with Executive Order
12988. This rule will preempt State laws that are inconsistent with it.
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.
Government Paperwork Elimination Act
CCC is committed to compliance with the Government Paperwork
Elimination Act (GPEA) and the Freedom to E-File Act, which require
Government agencies in general and FSA in particular to provide the
public the option of submitting information or transacting business
electronically to the maximum extent possible. The forms and other
information collection activities required for participation in the
program are available electronically through the USDA eForms Web site
at https://www.sc.egov.usda.gov for downloading. The regulation is
available at FSA's Price Support Division Internet site at https://
www.fsa.usda.gov/dafp/psd. Applications may be submitted at the FSA
county offices, by mail or by FAX. At this time, electronic submission
is not available. Full development of electronic submission is
underway.
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 1421
Agricultural commodities, Feed grains, Grains, Loan programs-
agriculture, Oilseeds, Price support programs, Reporting and
recordkeeping requirements.
For the reasons set out in the preamble, 7 CFR part 1421 is amended
as follows:
PART 1421--GRAINS AND SIMILARLY HANDLED COMMODITIES--MARKETING
ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS FOR THE 2002 THROUGH
2007 CROP YEARS
1. The authority citation for part 1421 continues to read as
follows:
[[Page 37862]]
Authority: 7 U.S.C. 7231-7237 and 7931 et seq.; 15 U.S.C. 714b
and 714c.
Subpart A--General
2. Revise Sec. 1421.13 to read as follows:
Sec. 1421.13 Special marketing assistance loans and loan deficiency
payments.
(a) Commodities stored in an unapproved storage facility may be
pledged as collateral for a marketing assistance loan if the producer:
(1) Makes request of the marketing assistance loan and obtains the
commodity certificate to immediately exchange for the requested loan
collateral at the same time at the county office that, under part 718
of this title, is responsible for administering the programs for the
farm on which the commodity was produced.
(2) Submits the marketing assistance loan request and the commodity
certificate exchange before or on the date of delivery to the
unapproved facility.
(b) Eligible producers of hay and silage derived from an eligible
loan commodity as provided in Sec. 1421.5 are eligible to request hay
and silage quantities for a loan deficiency payment in accordance with
Sec. 1421.200.
Subpart B--Marketing Assistance Loans
3. Revise Sec. 1421.103(c) to read as follows:
Sec. 1421.103 Approved storage.
* * * * *
(c)(1) Approved warehouse storage consists of warehouses that are:
(i) If Federally-licensed, in compliance with 7 CFR part 735; or
(ii) If not Federally-licensed, in compliance with State laws and
is a warehouse that issues a warehouse receipt that meets the criteria
set forth in Sec. 1421.107.
(2) CCC may, on a case-by-case basis, require a warehouse operator
that is not Federally-or State-licensed to enter into an agreement with
CCC that sets forth requirements to adequately protect CCC's security
interest in commodities pledged as collateral for a loan in accordance
with this part.
4. Remove Sec. Sec. 1421.5551 through 1421.5559.
Signed in Washington, DC, on June 16, 2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. E6-10368 Filed 6-30-06; 8:45 am]
BILLING CODE 3410-05-P
