Marketing Assistance Loans and Loan Deficiency Payments, 15644-15657 [E9-7644]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 74, Number 65 (Tuesday, April 7, 2009)]
[Rules and Regulations]
[Pages 15644-15657]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-7644]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Parts 1421 and 1434

RIN 0560-AH87


Marketing Assistance Loans and Loan Deficiency Payments

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The Commodity Credit Corporation (CCC) is revising regulations 
as required by the Food, Conservation, and Energy Act of 2008 (the 2008 
Farm Bill) to administer the Marketing Assistance Loans (MAL) and Loan 
Deficiency Payments (LDP) programs for wheat, feed grains, soybeans, 
other oilseeds, peanuts, pulse crops, honey, wool and mohair. The 2008 
Farm Bill generally extends the existing programs with some changes 
that are implemented in this rule. The amendments in this rule will add 
large chickpeas, beginning with the 2009 crop year, to the list of 
pulse crops eligible for assistance and provide separate rates for long 
and medium grain rice beginning with the 2008 crop year. The addition 
of large chickpeas may increase the number of farmers and ranchers who 
may receive FSA and CCC program benefits. The amendments will also, in 
addition, to other amendments to the old rule and clarifications, allow 
producers to store collateral in Federally and State-licensed 
warehouses that do not have a CCC storage agreement, which may reduce 
redundant licensing costs for warehouse operators while allowing 
producers a greater choice of warehouses.

DATES: Effective Date: April 6, 2009.

FOR FURTHER INFORMATION CONTACT: Jose R. Gonzalez, Program Manager, 
Marketing Assistance Loans and Loan Deficiency Payment Programs or 
Tonye B. Gross, Program Manager, Peanut Program, Price Support 
Division, FSA/USDA, STOP 0512, 1400 Independence Ave. SW., Washington, 
DC 20250-0512; telephone (202) 690-2534; or (202) 720-4319, facsimile 
(202) 690-3307; e-mails: Jose.Gonzalez@wdc.usda.gov or 
Tonye.Gross@wdc.usda.gov. Persons with disabilities who require 
alternative means of communication (Braille, large print, audio tape, 
etc.) should contact the USDA Target Center at (202) 720-2600 (voice 
and TDD).

SUPPLEMENTARY INFORMATION:

Background

    The 2008 Farm Bill extends MAL and LDP programs for the 2008 
through 2012 crop years. The 2008 Farm Bill generally extends the 
existing programs, with some minor changes that are implemented in this 
rule. In some cases, the 2008 Farm Bill gives the Secretary discretion 
to select among different policy options; this rule implements such 
discretionary changes. This rule also makes numerous housekeeping 
changes to make administrative improvements, correct typographical 
errors, remove expired regulations, and improve organization.
    Producers of eligible commodities that are eligible for loans can 
request MALs or LDPs on their commodities. MALs and LDPs are available 
to eligible producers beginning with harvest or shearing season and 
extending through the marketing year. MALs are 9-month loans with the 
commodity pledged as collateral for the loan. MALs and LDPs must be 
requested on or before the final

[[Page 15645]]

loan availability date for the applicable commodity. Producers may 
repay the MAL at a rate that is the lesser of the loan rate plus 
interest or alternative repayment rates as determined and announced by 
the Department of Agriculture (USDA). MALs support America's farmers 
and ranchers in several ways. They provide producers with interim 
financing at and during the harvest or shearing season. They provide 
significant income support when market prices are below statutory loan 
rates. They facilitate the orderly marketing and distribution of loan 
eligible commodities throughout the year, giving the producer the 
flexibility on when to sell the crop. With MALs, the producer doesn't 
have to sell the crop immediately after harvest, when prices are often 
relatively low. Producers can settle their loan during the 9-month 
period by either selling the commodity and repaying the loan or by 
forfeiting the commodity to the CCC.
    As an alternative to MAL, if a producer agrees to forgo MAL, the 
producer may obtain LDP on their crop, if such LDP is currently 
available for the applicable commodity and the producer is eligible for 
MAL. LDPs allow the producer to receive a payment when the alternative 
repayment rate posted for a commodity is below the loan rate for that 
commodity. The payment is the established loan rate for the applicable 
loan commodity less the repayment rate multiplied by the eligible 
quantity of the commodity. Similar to the MAL program, LDPs provide 
price income support to producers so they do not have to sell their 
commodities when prices are low.
    The specific statutory changes required by the 2008 Farm Bill and 
discretionary changes affecting the MAL and LDP programs that are 
implemented in this rule are described below.

Eligible Loan Commodities

    Prior to the 2008 Farm Bill, MALs and LDPs were authorized for 
wheat, feed grains, soybeans, other oilseeds, peanuts, pulse crops, 
honey, wool and mohair. Feed grains included corn, grain sorghum, 
barley, oats and rice. Other oilseeds included sunflower seed, 
rapeseed, canola, safflower, flaxseed, mustard seed, crambe, and sesame 
seed. Pulse crops included lentils, dry peas and small chickpeas. The 
2008 Farm Bill reauthorizes MALs and LDPs for all the existing eligible 
commodities. However, it has further defined the feed grain category 
and expanded the pulse crop category. Rice is now further defined as 
long grain rice and medium grain rice, with rates listed by type. 
Medium grain rice also includes short grain rice. Beginning with the 
2009 crop year, large chickpeas will be included as an eligible pulse 
crop and will be eligible for MAL and LDP. This rule changes sections 
1421.1, ``Applicability,'' 1421.3, ``Definitions,'' 1421.5, ``Eligible 
Commodities,'' and 1421.9, ``Basic Loan Rates,'' to include large 
chickpeas beginning with the 2009 crop year. This rule changes sections 
1421.3, 1421.5, and 1421.10, ``Market Rates'' (renamed as ``Loan 
Repayment Rates''), to specify provisions for long grain and medium 
grain rice. This rule amends section 1421.7, ``Requesting Marketing 
Assistance Loans and Loan Deficiency Payments,'' to add a final loan 
availability date for crambe and sesame seed.

Other Eligibility Requirements for Producers

    The 2008 Farm Bill changes eligibility provisions by removing the 
eligibility of states, political subdivisions, and their agencies to 
receive MALs or LDPs. This rule removes those entities from section 
1421.4, ``Eligible Producers.''

Beneficial Interest

    As used in 7 CFR part 1421, beneficial interest in a commodity 
means that control of the commodity and title to the commodity remain 
with the producer. Beneficial interest requirements remain largely 
unchanged for all loan commodities in this rule, and producers must 
retain beneficial interest in the commodity offered as collateral for a 
MAL or LDP. We are amending section 1421.6, ``Beneficial Interest'', to 
clarify that delivery of a commodity to a feed or grain bank will 
result in the loss of beneficial interest. This rule also amends 
section 1421.6 to clarify that if deferred price, forward, or price-
later contract is used, fulfillment of the delivery requirements of the 
contract or receipt of payment for the contract will result in the loss 
of beneficial interest as of the earlier of those events.

Average Crop Revenue Election (ACRE) Program

    This final rule implements a provision of the new Average Crop 
Revenue Election (ACRE) Program established by the 2008 Farm Bill. 
Under the ACRE program, during each of the 2009 through 2012 crop 
years, the applicable MAL rates for wheat, feed grains, soybeans, other 
oilseeds, peanuts, and pulse crops, will be reduced by 30 percent for 
commodities on a farm where producers make the irrevocable decision to 
have the farm participate in ACRE. This rule amends section 1421.9, 
``Basic Loan Rates,'' to include provisions for this new program. The 
regulations for the ACRE program are being established through a 
separate rulemaking that will amend 7 CFR part 1412.

Commodity Certificate Availability Will Be Phased Out

    Commodity certificates are currently available to producers to 
exchange for collateral for MAL. The exchange rate is the applicable 
loan repayment rate on the date the commodity certificate is purchased. 
The 2008 Farm Bill reauthorizes commodity certificates only through the 
2009 crop year. The authority to make commodity certificates available 
to producers will terminate effective with the ending of the 2009 crop 
year. Therefore, this rule amends the regulations to remove provisions 
for the availability of commodity certificates for crop years after 
2009.

Adjusted Gross Income and Payment Limitations

    For the 2008 crop only, the current payment limit on marketing loan 
gains and LDPs remains at $75,000 per person and the three-entity rule 
is also retained. Under the current three-entity rule, an individual 
can receive a full payment directly and up to a half payment, 
indirectly, for each of two additional entities. Producers with annual 
adjusted gross income over $2.5 million, averaged over 3 years, are not 
currently eligible for payments, unless more than 75 percent of the 
adjusted gross income is from agriculture. For 2009 through 2012 crop 
years, payment limitation and adjusted gross income requirements will 
be modified as specified in sections 1603 and 1604 of the 2008 Farm 
Bill. Starting with the 2009 crop year, CCC will no longer limit the 
gains from marketing assistance loans and loan deficiency payments. 
(Note: Payment limitation rules are established in 7 CFR part 1400 and 
not within various commodity regulations, such as these regulations. 
CCC is implementing changes to the payment limitation provisions 
through a separate rulemaking.) This rule amends section 1421.409, 
``Monitoring Payment Limitations,'' to state that payment limitations 
are not applicable for the 2009 through 2012 crop years for designated 
marketing associations for peanuts.

Warehouse Licensing Requirements

    Current regulatory provisions require eligible commodities offered 
as collateral for MALs to be stored in an on-farm storage structure or 
a commercial warehouse approved by CCC. To be a CCC-approved warehouse,

[[Page 15646]]

warehouses must enter into a CCC storage agreement. This rule removes 
an exception that allowed the use of unlicensed warehouses in certain 
circumstances, because the 2008 Farm Bill removed that provision. 
However, this rule amends the regulations to allow the use of State and 
Federally licensed warehouses that do not have a CCC storage agreement. 
This change is not required by the 2008 Farm Bill; however, this will 
benefit warehouse operators and producers without increasing financial 
risk for CCC. This rule amends multiple sections to remove references 
to ``approved'' warehouses and add references to ``authorized'' 
warehouses instead.
    Historically, approved warehouses have been warehouse operators who 
have 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. These agreements were 
required to protect CCC interests because, prior to the authorization 
and use of MALs, producers tendered over 75 percent of the annual 
production of some crops to CCC in some years.
    Most States, as well as USDA, have a warehouse licensing program 
for the storage of agricultural commodities. In most States, an entity 
must have a State or Federal license to engage in storing these 
commodities. These licensed entities issue warehouse receipts that 
document ownership of commingled commodities. In those States that do 
not have a licensing program, warehouses must follow State laws 
relating to bailment and storage. The State laws relating to bailment 
and storage vary from State to State.
    In general, non-licensed entities in States with licensing programs 
may not store agricultural commodities on behalf of producers, but may 
purchase commodities from producers. Commercial feed lots, ethanol 
plants, wool pools, and feed banks that are typical end users of the 
commodity are not licensed warehouses. This rule removes a provision in 
the regulations that allows the use of unlicensed warehouses for 
storing MAL collateral, because, as indicated, that is no longer 
authorized under the 2008 Farm Bill.
    Starting with the 2009 crop year and throughout the remaining years 
covered by the 2008 Farm Bill, CCC will no longer require a Federally 
licensed warehouse operator to also maintain a CCC storage agreement, 
except for peanuts. Warehouses licensed by USDA under the United States 
Warehouse Act must meet conditions to obtain a Federal license, which 
exceed those that must be met for obtaining a CCC storage agreement. 
While the CCC storage agreement specifies storage rates that CCC will 
pay in the unlikely event the commodity is forfeited to CCC, CCC moves 
commodities it obtains when forfeited into the market as quickly as 
possible. Thus, CCC incurs minimal storage costs. As of July 2008, 
CCC's commodity inventories have been depleted. 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 MAL 
programs and, therefore, CCC will no longer require such warehouse 
operators to also maintain a storage agreement. However, CCC may 
reserve the right to continue to utilize storage agreements in those 
instances where it is engaged in the long-term storage of commodities.
    In a State with an operating 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 already 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. However, CCC 
may reserve the right to continue to utilize storage agreements in 
those instances where it is engaged in the long-term storage of 
commodities.
    For warehouse operators in the small number of States that do not 
have warehouse licensing programs, CCC may require these entities to 
execute a CCC storage agreement before a producer may obtain a MAL with 
respect to commodities stored in such warehouse, but may require that 
the warehouse be approved in advance. A list of approved local 
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, which expands 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. 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. These regulatory changes are 
responsive to changing market conditions.
    For peanuts, the 2008 Farm Bill requires that the facility in which 
peanuts for MAL are stored meets certain conditions set by the 
Secretary and that the facility agrees to provide storage on a non-
discriminatory basis.

Wool and Mohair

    The 2008 Farm Bill reauthorizes provisions allowing producers to 
pledge wool or mohair as collateral to secure a nonrecourse MAL. This 
rule makes minor changes specific to those items, including changing 
references to update specific crop years and changing the basis on 
which the Secretary will announce alternative repayment rates from 
``periodically'' to weekly in section 1421.10, ``Market Rates.'' This 
rule also changes the title of the section on ``Market Rates'' to 
``Loan Repayment Rates.''

Peanuts

    The 2008 Farm Bill reauthorizes most of the provisions for peanuts, 
with two major exceptions. First, the Farm Security and Rural 
Investment Act of 2002 (Pub. L. 107-171, commonly known as the 2002 
Farm Bill) required CCC for a time to pay for the storage, handling and 
other associated costs for peanuts pledged under a MAL. This authority 
terminated with the beginning of the 2007 crop of peanuts. Therefore, 
for the 2007 crop, CCC required a peanut warehouse receipt showing 
payment of storage charges through the loan period, and reduced the 
loan amount for any unpaid storage charges. The 2008 Farm Bill, 
beginning with the 2008 crop, requires CCC, at the time the peanuts are 
placed in MAL, to pay for handling and other associated costs (but not 
storage costs) for peanuts. The 2008 Farm Bill requires the repayment 
of these costs when MALs are redeemed. Second, the 2008 Farm Bill 
authorizes CCC to pay storage, handling, and other associated costs for 
all peanut MALs that achieved maturity and are forfeited to CCC as a 
settlement of the MAL. This rule makes changes to section 1421.10, 
``Loan Repayment Rates,'' to implement

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these specific provisions of the 2008 Farm Bill.

National Loan Rates

    The 2008 Farm Bill specifies the national loan rates for the 2008 
through 2012 crop years for the eligible loan commodities. The loan 
rates specified by the 2008 Farm Bill are as follows:

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            Commodity                    2008 Crop year            2009 Crop year         2010-2012  Crop years
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Wheat............................  $2.75/bu.................  $2.75/bu................  $2.94/bu.
Corn.............................  $1.95/bu.................  $1.95/bu................  $1.95/bu.
Grain Sorghum....................  $1.95/bu.................  $1.95/bu................  $1.95/bu.
Barley...........................  $1.85/bu.................  $1.85/bu................  $1.95/bu.
Oats.............................  $1.33/bu.................  $1.33/bu................  $1.39/bu.
Long Grain Rice..................  $6.50/cwt................  $6.50/cwt...............  $6.50/cwt.
Medium Grain Rice................  $6.50/cwt................  $6.50/cwt...............  $6.50/cwt.
Soybeans.........................  $5.00/bu.................  $5.00/bu................  $5.00/bu.
Other Oilseeds...................  $9.30/cwt................  $9.30/cwt...............  $10.09/cwt.
Peanuts..........................  $355.00/ton..............  $355.00/ton.............  $355.00/ton.
Dry Peas.........................  $6.22/cwt................  $5.40/cwt...............  $5.40/cwt.
Lentils..........................  $11.72/cwt...............  $11.28/cwt..............  $11.28/cwt.
Small Chickpeas..................  $7.43/cwt................  $7.43/cwt...............  $7.43/cwt.
Large Chickpeas..................  N/A......................  $11.28/cwt..............  $11.28/cwt.
Graded Wool......................  $1.00/lb.................  $1.00/lb................  $1.15/lb.
Nongraded Wool...................  $0.40/lb.................  $0.40/lb................  $0.40/lb.
Mohair...........................  $4.20/lb.................  $4.20/lb................  $4.20/lb.
Honey............................  $0.60/lb.................  $0.60/lb................  $0.69/lb.
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    The 2008 through 2009 crop year loan rates for MALs remained the 
same for wheat, feed grains, soybeans, other oilseeds, peanuts, wool 
and mohair from those established during the last year of the 2002 Farm 
Bill in 2007. The 2010 through 2012 loan rates for MALs for wheat, 
barley, oats, other oilseeds, graded wool and honey are increased as 
shown in the previous table. The 2008 Farm Bill establishes two loan 
rates for rice. Rice is divided into a long grain rice loan rate and 
medium short grain loan rate. We are amending section 1421.5, 
``Eligible Commodities,'' to reflect that the determination of class, 
grade, and other quality factors for rice will be based on the U.S. 
Standards for Rice. Large chickpeas, beginning with the 2009 crop year, 
are now included as a pulse crop. The 2008 Farm Bill removed a pulse 
crop loan rate provision requiring that the loan rates be based upon 
U.S. feed grade for dry peas and U.S. number 3 grade for lentils and 
small chickpeas. Effective with the 2008 crop (with the 2009 crop for 
large chickpeas), pulse crop loan rates will reflect values of U.S. 
grade number 1.

Adjustments of Loans (Premiums and Discounts)

    The 2008 Farm Bill reauthorizes the provisions authorizing 
adjustments of loan rates for any eligible loan commodity under this 
regulation, except for rice, for differences in grade, type, quality, 
location and other factors. Long grain and medium grain rice loan rates 
will only be adjusted for grade and quality (including milling yields). 
To the extent practicable, FSA will make adjustments to ensure that 
weighted average base county loan rates are consistent and reflect 
current market conditions. Specifically, for the 2008 crop year, USDA 
will continue to apply appropriate premiums and discounts to loan rates 
in the county where the commodity is stored. On a per-unit basis, 
premiums are added to and discounts are subtracted from the loan rate 
when the MAL is made for the 2008 crop year. If a producer chooses to 
repay a MAL, these same premiums and discounts applied to the loan rate 
at loan making are also applied to the loan repayment rate.
    Beginning with the 2009 crop year, except for peanuts, and 
throughout the remaining years of the 2008 Farm Bill, CCC will no 
longer apply premiums and discounts to loan rates at loan making time. 
CCC will apply premiums and discounts at the time of loan settlement or 
loan forfeiture instead. Producers will settle their outstanding 
nonrecourse MAL during the loan period by repaying MAL at applicable 
repayment rate or upon maturity by forfeiting the commodity to CCC. At 
forfeiture, the applicable loan rate in effect for the commodity will 
be adjusted by premiums and discounts. This rule amends sections 
1421.9, ``Basic Loan Rates,'' and 1421.112, ``Loan Settlement,'' to 
implement these changes that are required by the 2008 Farm Bill.

Loan Repayment Rates

    Currently, USDA permits eligible producers to repay MALs on wheat, 
feed grains (except rice), soybeans, other oilseeds (except 
confectionary and each other kind of sunflower seed (other than oil 
sunflower seed)) at any time during the loan period at a rate that is 
the lesser of: (1) Loan rate plus accrued interest or (2) a rate 
determined by the Secretary that would minimize forfeitures, 
accumulation of stocks, storage costs, impediments to the market and 
discrepancies in benefits across State and county boundaries. For rice, 
MALs are repaid at lesser of: (1) Loan rate plus accrued interest or 
the adjusted world price (AWP). The 2008 Farm Bill maintains the two 
existing loan repayment rate options, and mandates that the Secretary 
add a third loan repayment option that allows the loan repayment rate 
to be based on average market prices during the preceding 30-day-
period. For long grain rice and medium grain rice, the 2008 Farm Bill 
requires USDA to permit eligible producers to repay MALs at any time 
during the loan period at a rate that is the lesser of: (1) Loan rate 
plus accrued interest or (2) the prevailing world market price adjusted 
to U.S. quality and location, and often referred to as the adjusted 
world price or AWP. For peanuts, the 2008 Farm Bill requires USDA to 
permit eligible producers to repay MALs at any time during the loan 
period at a rate that was the lesser of: (1) Loan rate plus accrued 
interest or (2) a rate determined by the Secretary that would minimize 
forfeitures, accumulation of stocks, storage costs, and impediments to 
the market. For confectionary and other kinds of sunflower seeds, the 
2008 Farm Bill requires USDA to permit eligible producers to repay MALs 
at any time during the loan period at a rate that was the lesser of: 
(1) Loan rate plus accrued

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interest or (2) a repayment rate established for oil sunflower seed. 
This rule amends section 1421.10, ``Loan Repayment Rates,'' to reflect 
these changes required by the 2008 Farm Bill.
    Additionally, the 2008 Farm Bill provides authority to temporarily 
adjust loan repayment rates. In the event of a severe disruption to 
marketing, transportation, or related infrastructure, USDA may modify 
the loan repayment rate applicable to eligible commodities. Any 
adjustments made to the applicable eligible commodity loan repayment 
rate will be short-term and temporary basis, as determined by USDA. 
Such adjustments will be announced; they will not be in the 
regulations.

Payments In Lieu of Loan Deficiency Payments for Grazed Acreage

    The 2008 Farm Bill reauthorizes provisions for grazed acreage LDP. 
The 2002 Farm Bill provided a payment program for producers who grazed 
livestock on land that may otherwise be used to produce LDP eligible 
crops, also known as ``graze-out'' provisions. Producers who would be 
eligible for a wheat, barley, oats, or triticale LDP but instead use 
those planted crops to graze livestock will be eligible for LDPs if 
they agree to forgo harvesting of that acreage. We are making minor 
amendments to 1421.304, ``Payment Amount'', to clarify grazing payment 
provisions and to remove obsolete provisions for previous crop years.

Honey

    The 2008 Farm Bill reauthorizes and extends existing honey 
provisions. The existing way of determining honey producers' 
eligibility and beneficial interest is to require them to comply with 
the provisions in both 7 CFR parts 1434 and 1421. That policy is not 
changing, although we are clarifying that policy by stating it 
explicitly in the regulations. New provisions in this rule for 7 CFR 
part 1421 also apply to honey producers even if they are not 
specifically addressed under 7 CFR part 1434, for example, changes 
discussed in this preamble for other eligibility requirements for 
producers, beneficial interest, and adjusted gross income and payment 
limitations. The increase in the national loan rate effective for 2010 
through 2012 crop years (which is not in the regulations but is 
specified in this preamble and in the 2008 Farm Bill) and the provision 
allowing the Secretary to temporarily adjust loan repayment rates in 
the event of a severe disruption to marketing, transportation, or 
related infrastructure also apply to honey. This rule removes section 
1434.22, ``Handling Payments and Collections not Exceeding $9.99,'' to 
be consistent with part 1421. This rule also amends section 1434.15, 
``Personal Liability,'' to reduce liquidated damages (penalties) for 
violations to be consistent with similar provisions in part 1421.

Other Miscellaneous Changes

    This rule amends section 1421.104 to state that CCC will conduct 
lien searches on all commodities pledged as collateral for amounts 
greater than $50,000, which is an increase from $25,000 in the current 
regulations. Field offices should be able to process loan applications 
more quickly if lien searches are limited to loans over $50,000. CCC 
will still have the discretion to conduct lien searches for any loan 
amount when it is determined that CCC's interest may be at risk.
    This rule clarifies section 1421.104 about assessment authority 
language. Commodity assessments, if applicable, are deducted from MAL 
proceeds at loan making and furnished to appropriate National or State 
assessment authorities.
    CCC is also making a number of housekeeping changes to clean up the 
regulations. For example, we are consolidating all the definitions and 
abbreviations that are currently in separate sections for each subpart 
into one section for this part. In general, CCC is making changes to 
add clarity, make administrative improvements, correct typographical 
errors, add consistency with current CCC and industry practices, remove 
expired regulations, improve internal consistency, and improve 
organization. These changes do not represent substantive policy or 
administrative changes.

Notice and Comment

    These regulations are exempt from notice and comment provisions of 
the Administrative Procedure Act (5 U.S.C. 553), as specified in 
section 1601(c) of the 2008 Farm Bill, which requires that the 
regulations be promulgated and administered without regard to the 
notice and comment provisions of Section 553 of title 5 of the United 
States Code or the Statement of Policy of the Secretary of Agriculture 
effective July 24, 1971, (36 FR 13804) relating to notices of proposed 
rulemaking and public participation in rulemaking.

Executive Order 12866

    This final rule is economically significant according to Executive 
Order 12866 and has been reviewed by the Office of Management and 
Budget (OMB). A cost-benefit assessment of the changes made by this 
rule and is summarized below and is available from the contact above.

Summary of Economic Impacts

    The Cost-Benefit Assessment includes discussions of statutorily-
mandated changes as well as discretionary changes for the MAL and LDP 
Programs.\1\ The projected impacts from the use of discretionary 
authority are expected to be relatively minor. Projected outlays 
impacts were addressed in the cost benefit analysis completed for the 
final rule for the Direct and Counter-cyclical Payment and Average Crop 
Revenue Election Programs, which was published on December 29, 2008 (73 
FR 79284-79306). The impacts from the regulatory changes addressed in 
the two rules are inherently interrelated and not addressed as 
individual impacts.
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    \1\ Outlay impacts from 2008-Farm-Bill-mandated changes 
regarding MAL and LDP programs are discussed in the cost benefit 
assessment, but projected outlays impacts are addressed in the cost 
benefit assessment associated with the statutory and regulatory 
changes for the Direct and Counter-cyclical Payment and Average Crop 
Revenue Election Programs (7 CFR part 1412). In addition, the 
economic and budgetary impacts of mandatory changes, including 
changes in national average loan rates, are discussed in that cost 
benefit assessment as well. Statutory and regulatory changes 
associated with payment limitations, direct attribution, and 
adjusted gross income eligibility criteria are evaluated in the cost 
benefit assessment that accompanies that regulation (7 CFR part 
1400).
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    The discretionary changes are:
     Premiums and discounts: With exception of cotton and 
peanuts, discontinue applying premiums and discounts at the time 
warehouse-stored loans are made, and instead apply them only if loan 
quantities are forfeited;
     Loan repayment rates: For applicable commodities, 
discontinue using prices from a single day to establish loan repayment 
rates, and instead use the lesser of a statutorily-mandated 30-day 
moving average of market prices adjusted for location and a 
discretionary 5-day average of applicable terminal prices backed off to 
the local level to establish alternative loan repayment rates;
     Lien searches: Raise the minimum loan principal amount for 
which lien searches are required from $25,000 to $50,000; and
     Uniform Grain and Rice Storage Agreements (UGRSA's): 
Discontinue the widespread use of UGRSA's with applicable warehouse 
operators and instead apply such agreements on a case-by-case basis.
    The premium and discount, lien search, and UGRSA changes are 
expected to save some staff time, and the staff time will instead be 
devoted to new tasks (for example, administering the new ACRE program 
provisions) or

[[Page 15649]]

reducing backlogs (for example, inspecting all Federally-licensed 
warehouses at least once annually under provisions of the United States 
Warehouse Act (USWA)). Use of discretionary authority in implementing 
the new loan repayment rate provisions is expected to reduce the day-
to-day (or, as applicable, week-to-week) variability in loan repayment 
rates for wheat, feed grains, oilseeds, pulses, wool, and mohair. The 
use of a 30-day average price and a 5-day average price in loan 
repayment rate determinations is not expected to affect outlays. 
However, the mandated use of a 30-day average price will cause the 
repayment rate determination to be less transparent.

Federal Assistance Programs

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

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act because 
CCC is not required to publish a notice of proposed rulemaking for this 
rule.

Environmental Review

    The environmental impacts of this rule have been considered in a 
manner consistent with the provisions of the National Environmental 
Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations 
for compliance with NEPA (7 CFR part 799). FSA has determined that this 
rule would not constitute a major Federal action significantly 
affecting the quality of the human environment, and therefore, no 
environmental assessment or environmental impact statement will be 
prepared.

Executive Order 12988

    The final rule has been reviewed under Executive Order 12988. This 
rule preempts State laws that are inconsistent with its provisions. 
This rule is not retroactive and does not preempt State or local laws, 
regulations, or policies unless they present an irreconcilable conflict 
with this rule. Before any judicial action may be brought regarding the 
provisions of this rule the administrative appeal provisions of 7 CFR 
parts 11 and 870 must be exhausted.

Executive Order 12372

    This program is not subject to Executive Order 12372, which 
requires consultation with State and local officials. See the notice 
related to 7 CFR part 3015, subpart V, published in the Federal 
Register on June 24, 1983 (48 FR 29115).

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with the states is not required.

Unfunded Mandates

    This 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 government or the private sector. 
In addition, CCC was not required to publish a notice of proposed 
rulemaking for this rule. Therefore, this rule is not subject to the 
requirements of sections 202 and 205 of the UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

    Section 1601(c)(3) of the 2008 Farm Bill requires that the 
Secretary use the authority in section 808 of title 5, United States 
Code, which allows an agency to forgo SBREFA's usual 60-day 
Congressional Review delay of the effective date of a major regulation 
if the agency finds that there is a good cause to do so. This rule 
affects a large number of agricultural producers who are dependent upon 
these provisions for income support and need to know the details as 
soon as possible because it has a profound effect on their planting and 
marketing decisions. In any event, Section 1601 provides on its own 
basis for the finding a good cause. Accordingly, this rule is effective 
upon the date of filing for public inspection by the Office of the 
Federal Register.

Paperwork Reduction Act

    The regulations in this rule are exempt from requirements of the 
Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in section 
1601(c)(2) of the 2008 Farm Bill, which provides that these regulations 
be promulgated and administered without regard to the Paperwork 
Reduction Act.

E-Government Act Compliance

    CCC is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

List of Subjects

7 CFR Part 1421

    Barley, Feed grains, Grains, Loan programs--agriculture, Oats, 
Oilseeds, Peanuts, Price support programs, Reporting and recordkeeping 
requirements, Soybeans, Surety bonds, Warehouses, Wheat.

7 CFR Part 1434

    Honey, Loan programs--agriculture, Price support programs, 
Reporting and recordkeeping requirements.


0
For the reasons discussed above, this rule amends 7 CFR parts 1421 and 
1434 as follows:

PART 1421--GRAINS AND SIMILARLY HANDLED COMMODITIES--MARKETING 
ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS FOR 2008 THROUGH 2012

0
1. Revise the authority citation for part 1421 to read as follows:

    Authority:  7 U.S.C. 7231-7237 and 7931-7936; 15 U.S.C. 714b and 
714c, and Public Law 110-246.


0
2. Revise the part heading for 7 CFR part 1421 to read as shown above.

0
3. Amend Sec.  1421.1 as follows:
0
a. Revise the section heading to read as set forth below;
0
b. Revise paragraph (a) to read as set forth below; and
0
c. Remove paragraph (e).


Sec.  1421.1  Applicability and interest.

    (a) The regulations of this subpart are applicable to the 2008 
through 2012 crops of barley, small chickpeas, corn, grain sorghum, 
lentils, oats, dry peas, peanuts, rice, wheat, wool, mohair, oilseeds 
and other crops designated by Commodity Credit Corporation (CCC). 
Additionally, large chickpeas are authorized for coverage for the 2009 
through 2012 crop years. These regulations specify the general 
provisions under which marketing assistance loans (MAL) and loan 
deficiency payments (LDP) will be administered by CCC. Additional terms 
and conditions are in the note and security agreement and the loan 
deficiency payment application that must be executed by a producer to 
receive marketing assistance loans and LDPs. In any case in which money 
must be refunded to CCC in connection with this part, interest will be 
due to run from the date of disbursement of the sum to be refunded. 
This will apply,

[[Page 15650]]

unless waived by the Deputy Administrator, irrespective of any other 
rule.
* * * * *


Sec.  1421.2  [Amended]

0
4. Amend Sec.  1421.2 by removing paragraph (c)(1) and redesignating 
paragraphs (c)(2) and (c)(3) as (c)(1) and (c)(2), respectively.

0
5. Amend Sec.  1421.3 as follows:
0
a. Add new definitions, in alphabetical order, for the terms 
``Administrative County Office,'' ``CCC,'' ``chickpeas,'' ``CMA,'' 
``COC,'' ``Control or Recording FSA County Office,'' ``crop,'' ``crop 
year,'' ``current net worth ratio,'' ``Department,'' ``Deputy 
Administrator,'' ``DMA Service County Office,'' ``drawdown account,'' 
``electronic warehouse receipt (EWR),'' ``FSA,'' ``high moisture 
state,'' ``loan deficiency payment (LDP),'' ``loan settlement,'' 
``MAL,'' ``medium grain rice,'' ``rice,'' ``Secretary,'' ``security for 
DMAs,'' and ``STC'' to read as set forth below;
0
b. Remove the definitions of ``field direct loan deficiency payment,'' 
``high moisture commodities,'' ``loan deficiency payment,'' and ``small 
chickpea'';
0
c. Revise the definition of ``loan commodities,'' to read as set forth 
below;
0
d. Amend paragraph (1) of the definition of ``other crops designated by 
CCC'' by removing the word ``haulage'' and adding, in its place, the 
word ``haylage'';
0
e. Amend the definition of ``pulse crops'' by removing the word 
``small''; and
0
f. Amend the definition of ``wool'' by adding the words ``and includes, 
unless noted otherwise, graded and nongraded wool'' before the period 
at the end.


Sec.  1421.3  Definitions.

* * * * *
    Administrative County Office is the FSA County Office where a 
producer's FSA records are maintained.
* * * * *
    CCC means the Commodity Credit Corporation.
* * * * *
    Chickpeas means any chickpea that meets the definition of a 
chickpea according to the Grain Inspection, Packers and Stockyards 
Administration (GIPSA), Federal Grain Inspection Service (FGIS).
    (1) Small chickpea falls below a 20/64th sieve.
    (2) Large chickpea stays above a 20/64th sieve.
* * * * *
    CMA means a cooperative marketing association that is subject to 
regulations in Part 1425 of this chapter.
    COC means the FSA county committee.
* * * * *
    Control or Recording FSA County Office is the FSA County Office 
that controls subsidiary files for producers designated as multi-county 
producers.
    Crop means with respect to a year, commodities harvested in that 
year. That is, a reference to the 2009 crop of a commodity means 
commodities that when planted were intended for harvest in calendar 
year 2009.
    Crop year means any time relevant to the relevant crop for that 
year. Thus references to the 2009 crop year are used to include any 
activities relevant to the 2009 crop.
    Current net worth ratio means current assets minus current 
liabilities, divided by current liabilities, based on the financial 
statement provided in connection with a DMA application or a 
recertification for DMA status.
    Department means the United States Department of Agriculture.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency (FSA) or a designee of that person.
* * * * *
    DMA Service County Office is an FSA County Office designated by CCC 
to accept, process, and disburse bundled peanut MALs and LDPs to a DMA. 
In the absence of a centralized MAL and LDP processing system for 
peanuts, a service county FSA office is necessary for entering MALs and 
LDPs made by DMAs into CCC accounting systems.
    Drawdown account is an account titled to the DMA at a financial 
institution and funded at the discretion of CCC for the purpose of 
allowing the DMA to advance funds to producers who have applied for 
MALs and LDPs before a subsequent MAL or LDP is made to the DMA by an 
assigned FSA county office.
    Electronic warehouse receipt (EWR) means a receipt electronically 
filed in a central filing system by an approved provider as provided in 
an executed, ``Farm Service Agency Provider Agreement to Electronically 
File and Maintain Warehouse Receipts.''
    FSA means the Farm Service Agency of the United States Department 
of Agriculture.
    High moisture state means corn or grain sorghum having a moisture 
content in excess of CCC standards used to determine eligibility for 
marketing assistance loans made by the Secretary.
* * * * *
    Loan commodities means wheat, corn, grain sorghum, barley, oats, 
rice, soybeans, other oilseeds, peanuts, wool, mohair, dry peas, 
lentils, chickpeas, and other crops designated by CCC.
    Loan deficiency payment (LDP) means a payment received in lieu of a 
loan when the CCC-determined value is below the applicable county loan 
rate.
    Loan settlement means farm stored commodities delivered to CCC and 
warehouse stored commodities forfeited to CCC, effective with the 2009 
through 2012 crop years.
    MAL means marketing assistance loan.
    Medium grain rice for the purposes of this part includes both short 
and medium grain rice as defined by the U.S. Standards for Rice.
* * * * *
    Rice means, unless otherwise noted, long grain rice and medium 
grain rice.
    Secretary means the Secretary of the United States Department of 
Agriculture, or the Secretary's delegate.
    Security for DMAs means a certified or cashier's check payable to 
CCC, an irrevocable commercial letter of credit in a form acceptable to 
CCC, a performance or surety bond conditioned on the DMA fully 
discharging all of its obligations under this part, or other form of 
financial security as CCC may deem appropriate.
* * * * *
    STC means the FSA State committee.
* * * * *

0
6. Amend Sec.  1421.4 as follows:
0
a. Amend paragraph (a)(1) by removing the words ``State or political 
subdivision or agency thereof,'' and
0
b. Revise paragraph (a)(2) to read as set forth below.


Sec.  1421.4  Eligible producers.

    (a) * * *
    (2) Comply with all provisions of this part and, as applicable:
    (i) 7 CFR part 12--Highly Erodible Land and Wetland Conservation;
    (ii) 7 CFR part 707--Payments Due Persons Who Have Died, 
Disappeared, or Have Been Declared Incompetent;
    (iii) 7 CFR part 718--Provisions Applicable to Multiple Programs;
    (iv) 7 CFR part 996--Minimum Quality and Handling Standards for 
Domestic and Imported Peanuts Marketed in the United States;
    (v) 7 CFR part 1400--Payment Limitation & Payment Eligibility for 
2009 and Subsequent Crops, Programs, or Fiscal Years;
    (vi) 7 CFR part 1402--Policy for Certain Commodities Available for 
Sale;
    (vii) 7 CFR part 1403--Debt Settlement Policies and Procedures;

[[Page 15651]]

    (viii) 7 CFR part 1405--Loans, Purchases, and Other Operations;
    (ix) 7 CFR part 1412--Direct and Counter-Cyclical Program and 
Average Crop Revenue Election Program for the 2008 and Subsequent Crop 
Years; and
    (x) 7 CFR part 1423--Commodity Credit Corporation Approved 
Warehouses.
* * * * *

0
7. Amend Sec.  1421.5 as follows:
0
a. Amend paragraph (a)(1) by removing the words ``canola,'' and 
``small'';
0
b. Revise paragraph (c) to read as set forth below; and
0
c. Amend paragraph (f) by adding the word ``or'' immediately after the 
word ``gift,''.


Sec.  1421.5  Eligible commodities.

* * * * *
    (c)(1) To be an eligible commodity, the commodity must be 
merchantable for food, feed, or other uses determined by CCC and must 
not contain mercurial compounds, toxin producing molds, or other 
substances poisonous to humans or animals. A commodity containing 
vomitoxin, aflatoxin, or Aspergillus mold may not be pledged for a loan 
made under this part, except as provided by CCC in the marketing 
assistance loan note and security agreement.
    (2) The determination of eligibility for rice includes class, 
grade, grading factor, milling yields, and other quality factors and 
will be based upon the U.S. Standards for Rice as applied to rough rice 
whether or not such determinations are made on the basis of an official 
inspection.
    (3) The determination of eligibility for peanuts includes type, 
quality, and quantity.
    (4) With respect to barley, canola, corn, flaxseed, grain sorghum, 
oats, rice, soybeans, sunflower seed for extraction of oil, wheat, and 
other commodities designated by CCC, the determination of eligibility 
will be based upon the Official U.S. Standards for Grain: U.S. 
Standards for Whole Dry Peas, Split Peas, and Lentils for dry peas and 
lentils; and the U.S. Standards for Beans for chickpeas, whether or not 
such determinations are made on the basis of an official inspection.
    (5) With regard to hull-less barley, hull-less oats, mustard seed, 
rapeseed, safflower seed, flaxseed, and sunflower seed used for a 
purpose other than to extract oil, the determination of eligibility 
will be based on quality requirements established and announced by CCC, 
whether or not such determinations are made on the basis of an official 
inspection. The costs of an official quality determination may be paid 
by CCC. The quality requirements that are used in administering 
marketing assistance loans and loan deficiency payments for the 
oilseeds in this paragraph are available in USDA State and county FSA 
service centers.
    (6) With regard to farm-stored peanuts, the determination of 
eligibility will be determined at the time of delivery to CCC by a 
Federal or State Inspector authorized or licensed by the Secretary.
* * * * *

0
8. Amend Sec.  1421.6 as follows:
0
a. In paragraphs (b)(5), (c)(5), and (h)(2) remove the word 
``approved'' and add, in its place, the word ``authorized'' each time 
it appears;
0
b. In paragraph (a), revise the second sentence to read as set forth 
below;
0
c. In paragraphs (b)(5) and (c)(5), add the words ``feed or grain 
bank'' immediately after the words ``feed mill,'' each time they 
appear;
0
d. In paragraph (c)(5), remove the word ``unapproved'' and add, in its 
place, the word ``unauthorized'';
0
e. In paragraph (h)(1)(i), add the words ``the earlier of receipt of 
any payment or'' immediately before the word ``once'' and add the words 
``of the delivery requirements'' immediately after the word 
``fulfillment'';
0
f. In paragraph (h)(2), add the words ``if CCC determines such a 
provision is required'' before the period at the end; and
0
g. In paragraph (i), remove the words ``loan and'' and add, in their 
place, the words ``loan or'' and remove the words ``or payment'' and 
add, in their place, the words ``or LDP''.


Sec.  1421.6  Beneficial interest.

    (a) * * * For the purposes of this part, the term ``beneficial 
interest'' refers to a determination by CCC that a person has title to 
and control of the commodity that is tendered to CCC as collateral for 
a marketing assistance loan or of the commodity that will be used to 
determine a loan deficiency payment.
* * * * *


Sec.  1421.7  [Amended]

0
9. Amend Sec.  1421.7 as follows:
0
a. In paragraph (c), remove the words ``a crop of a'' and add, in their 
place, the words ``an eligible'';
0
b. In paragraph (c)(1), add the words ``crambe, sesame seed'' 
immediately after the word ``rapeseed,'';
0
c. In paragraph (c)(2), remove the word ``small''; and
0
d. Remove paragraph (d).


Sec.  1421.8  [Amended]

0
10. Amend Sec.  1421.8 as follows:
0
a. In paragraph (a)(2), remove the reference ``Sec.  1421.106'' and 
add, in its place, the references and words ``Sec. Sec.  1421.9, 
1421.106, and 1421.107 as applicable'';
0
b. In paragraph (b)(1) introductory text, add the words ``loan 
availability'' immediately after the word ``final'';
0
c. In paragraph (c)(1), remove the word ``approved'' and add, in its 
place, the word ``authorized'' each time it appears;
0
d. Remove paragraph (c)(2) and redesignate paragraph (c)(3) as (c)(2); 
and
0
e. In newly redesignated paragraph (c)(2), remove the words ``an 
otherwise eligible commodity'' in the last sentence and add, in their 
place, the words ``otherwise eligible''.

0
11. Amend Sec.  1421.9 as follows:
0
a. Revise paragraph (a) to read as set forth below;
0
b. In paragraph (b), remove the words ``small chickpeas,'' and add the 
words ``chickpeas, crambe, sesame seed,'' in their place, and remove 
the word ``at'' and add the word ``to'' in its place;
0
c. Revise paragraph (c) to read as set forth below; and
0
d. Add paragraphs (d) through (g) to read as set forth below.


Sec.  1421.9  Basic loan rates.

    (a) Basic marketing assistance loan rates for a commodity may be 
established on a National, State, regional, county basis or other 
basis, will be at rates that comply with applicable statutes, and may 
be adjusted by CCC to reflect grade, type, quality, location and other 
factors applicable to the commodity and as otherwise provided in this 
section.
* * * * *
    (c)(1) Subject to adjustment under paragraph (g) of this section in 
case of forfeiture, for all 2009 through 2012 crop year commodities, 
except rice and peanuts, warehouse-stored loans will be disbursed at 
levels based on the basic county marketing assistance loan rate for the 
county where the commodity is stored. For the 2008 crop year only, 
warehouse-stored loans will be disbursed at levels based on the basic 
county marketing assistance loan rate for the county where the 
commodity is stored, adjusted for the schedule of premiums and 
discounts established for the commodity on the basis of grade, type, 
and quality factors set forth on warehouse receipts or supplemental 
certificates and for other factors, as determined and announced by CCC.
    (2) Subject to adjustment under paragraph (g) of this section in 
case of

[[Page 15652]]

forfeiture, for 2009 through 2012 crop years rice, warehouse-stored 
loans will be disbursed at levels based on the milling yields times the 
whole and broken kernel marketing assistance loan rates. For the 2008 
crop year of rice only, warehouse-stored loans will be disbursed at 
levels based on the milling yields times the whole and broken kernel 
marketing assistance loan rates, adjusted for the schedule of discounts 
on the basis of grade and quality factors set forth on warehouse 
receipts or supplemental certificates and for other factors, as 
determined and announced by CCC.
    (3) For peanuts, warehouse-stored loans will be disbursed at levels 
based on National loan rates by peanut type, adjusted for the schedule 
of premiums and discounts on the basis of grade, quality, and other 
factors set forth on warehouse receipts.
    (d) The Secretary will establish a single loan rate in each county 
for each kind of other oilseeds, such as but not limited to, sunflower, 
rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame 
seed, and other oilseeds as designated by the Secretary.
    (e) Adjustments by the Secretary to establish loan rates for loan 
commodities, except rice, on a county basis will not be lower than 95 
percent of the national average loan rate, if those loan rates do not 
result in an increase in outlays. Adjustments in this section will not 
result in an increase in the national average loan rate for any year.
    (f) For the 2009 through 2012 crops, producers on farms in the 
Acreage Crop Revenue Election program under part 1400 of this title 
will receive a 30 percent reduction in loan rate as established under 
this section for all loan commodities from the farm, except honey, 
wool, and mohair.
    (g) For the 2009 through 2012 crop years, premiums and discounts 
will not be applicable for all eligible loan commodities, except for 
peanuts, at loan disbursement; however, premiums and discounts will 
apply if the eligible loan commodities are forfeited and delivered to 
CCC and any deficiency must be repaid to CCC.

0
12. Revise Sec.  1421.10 to read as follows:


Sec.  1421.10  Loan repayment rates.

    (a) For the 2008 through 2012 crops of barley, corn, grain sorghum, 
oats, wheat, dry peas, lentils, chickpeas, oilseeds, wool, mohair, and 
other crops as designated by CCC (other than peanuts, long grain rice, 
medium grain rice, and confectionery and each other kind of sunflower 
seed (other than oil sunflower seed)), a producer may repay a 
nonrecourse marketing assistance loan at a rate that is the lesser of:
    (1) The loan rate established for the commodity under Sec.  1421.9, 
plus interest;
    (2) A rate (as determined by the Secretary) that is calculated 
based on average market prices for the loan commodity during a 
preceding 30-day period and that the Secretary has determined will 
minimize discrepancies in marketing loan benefits across State 
boundaries and across county boundaries; or
    (3) A rate that the Secretary may develop using alternative methods 
for calculating a repayment rate for a loan commodity that the 
Secretary determines will: Minimize potential loan forfeitures; 
minimize the accumulation of stocks of the commodity by the Federal 
Government; minimize the cost incurred by the Federal Government in 
storing the commodity; allow the commodity produced in the U.S. to be 
marketed freely and competitively, both domestically and 
internationally; and minimize discrepancies in marketing loan benefits 
across State boundaries and across county boundaries.
    (b) To the extent practicable, CCC will determine and announce 
repayment rates under paragraphs (a)(2) and (a)(3) of this section 
based upon market prices at appropriate U.S. markets as determined by 
CCC and these repayment rates may be adjusted to reflect grade, type, 
quality, location, and other factors for each crop of a commodity as 
follows:
    (1) On a weekly basis in each county for oilseeds, except canola, 
flaxseed, soybeans, and sunflower seed;
    (2) On a daily basis in each county for barley, canola, corn, 
flaxseed, grain sorghum, oats, soybeans, sunflower seed and wheat; and
    (3) On a weekly basis regionally for dry peas, lentils, chickpeas, 
wool and mohair.
    (c)(1) For the 2008 through 2012 crops of peanuts, a producer may 
repay a nonrecourse loan at a rate that is the lesser of:
    (i) The loan rate established for the commodity under Sec.  1421.9, 
plus interest; or
    (ii) A rate that the Secretary determines will: Minimize potential 
loan forfeitures; minimize the accumulation of stocks of the commodity 
by the Federal Government; minimize the cost incurred by the Federal 
Government in storing the commodity; and allow the commodity produced 
in the United States to be marketed freely and competitively, both 
domestically and internationally.
    (2) To the extent practicable, CCC will determine and announce 
weekly alternative repayment rates for peanuts.
    (d) For the 2008 through 2012 crop of peanuts, the Secretary will 
require the repayment of handling and other associated costs paid under 
Sec.  1421.104 for all peanuts pledged as collateral for a loan that 
are redeemed under this section.
    (e) The Secretary will permit producers to repay a marketing 
assistance loan for long grain rice and medium grain rice at a rate 
that is the lesser of:
    (1) The loan rate established for the commodity under Sec.  1421.9, 
plus interest; or
    (2) The prevailing world market price for the commodity, as 
determined and adjusted by the Secretary in accordance with this 
section.
    (f) For purposes of this section, the Secretary will prescribe--
    (1) A formula to determine the prevailing world market price for 
long grain rice and medium grain rice and
    (2) A mechanism by which the Secretary will announce periodically 
those prevailing world market prices.
    (g) Adjustments will be made to the prevailing world market price 
for long grain rice and medium grain rice.
    (1) The prevailing world market price for long grain and medium 
rice determined under paragraph (f) of this section will be adjusted to 
U.S. quality and location.
    (2) In making adjustments under this subsection, the Secretary will 
establish a mechanism for determining and announcing the adjustments in 
order to avoid undue disruption in the U.S. market.
    (h)(1) The prevailing world market price for a class of rice will 
be determined by CCC based upon a review of prices at which rice is 
being sold in world markets and a weighting of such prices through the 
use of information such as changes in supply and demand of rice, tender 
offers, credit concessions, barter sales, government-to-government 
sales, special processing costs for coatings or premixes, and other 
relevant price indicators, and will be expressed in U.S. equivalent 
values F.O.B. (free on board) vessel, U.S. port of export, per 
hundredweight as follows:
    (i) U.S. grade No. 2, 4 percent broken kernels, long grain milled 
rice;
    (ii) U.S. grade No. 2, 4 percent broken kernels, medium grain 
milled rice; and
    (iii) U.S. grade No. 2, 4 percent broken kernels, short grain 
milled rice.
    (2) Export transactions involving rice and all other related market 
information will be monitored on a continuous basis. Relevant 
information may be

[[Page 15653]]

obtained for this purpose from USDA field reports, international 
organizations, public or private research entities, international rice 
brokers, and other sources of reliable information.
    (3) The prevailing world market price for a class of rice adjusted 
to U.S. quality and location, the adjusted world price (AWP), as 
determined under paragraph (h)(5) of this section, will apply to this 
section.
    (4) The adjusted world price for each class of rice will equal the 
prevailing world market price for a class of rice (U.S. equivalent 
value) as determined under paragraphs (h)(1) and (h)(2) of this section 
and adjusted to U.S. quality and location as follows:
    (i) The prevailing world market price for a class of rice will be 
adjusted to reflect an F.O.B. mill position by deducting from such 
calculated price an amount that is equal to the estimated national 
average costs associated with:
    (A) The use of bags for the export of U.S. rice, and
    (B) The transfer of such rice from a mill location to F.O.B. vessel 
at the U.S. port of export with such costs including, but not limited 
to, freight, unloading, wharfage, insurance, inspection, fumigation, 
stevedoring, interest, banking charges, storage, and administrative 
costs.
    (ii) The price determined under paragraph (h)(4)(i) of this section 
will be adjusted to reflect the market value of the total quantity of 
whole kernels contained in milled rice by deducting the world value of 
broken kernels it contains, with the value of the broken kernels 
determined by multiplying a formulaic quantity of broken kernels (4 
percent per hundredweight) by the world market value of broken kernels. 
The world market value of broken kernels will be based upon the 
relationship of whole and broken kernel world prices as estimated from 
observations of prices at which rice is being sold in world markets.
    (iii) The price determined under paragraph (h)(4)(ii) of this 
section will be adjusted to reflect the per-pound market value of whole 
kernels by dividing the price by the quantity of whole milled kernels 
contained in the milled rice (96 percent per hundredweight).
    (iv) The price determined under paragraph (h)(4)(iii) of this 
section will be adjusted to reflect the market value of whole kernels 
contained in 100 pounds of rough rice by multiplying such price by the 
estimated national average quantity of whole kernel rice by class 
obtained from milling 100 pounds of rough rice.
    (v) The price determined under paragraph (h)(4)(iv) of this section 
will be adjusted to reflect the total market value of rough rice by:
    (A) Adding to such price:
    (1) The market value of bran contained in the rough rice, computed 
by multiplying the domestic unit market value of bran by the estimated 
national average quantity of bran produced in milling 100 pounds of 
rice; and
    (2) The market value of broken kernels contained in the rough rice, 
computed by multiplying the estimated world market value of broken 
kernels by the estimated national average quantity of broken kernels 
produced in milling 100 pounds of rice;
    (B) Deducting from such price an estimated cost of milling rough 
rice; and an estimated cost of transporting rough rice from farm to 
mill locations.
    (5) The adjusted world price for each class of rice, loan rate 
basis, will be determined by CCC and announced, to the extent 
practicable, on or after 7 a.m. Eastern Standard Time each Wednesday or 
more frequently as determined necessary by CCC, continuing through the 
later of:
    (i) The last Wednesday of July in the year in which the crop rice 
loan matures;
    (ii) The last Wednesday of the latest month the crop rice loans 
mature, or
    (iii) In the event that Tuesday is not a normal business day, the 
determination may be made on the next work day, on or after 7 a.m. 
Eastern Standard Time.
    (i) The producer may repay a marketing assistance loan under this 
section for confectionery and each other kind of sunflower seed (other 
than oil sunflower seed) at a rate that is the lesser of:
    (1) The loan rate