Cotton Board Rules and Regulations: Amending Importer Line-Item De Minimis, 38893-38894 [2016-14174]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 81, Number 115 (Wednesday, June 15, 2016)]
[Rules and Regulations]
[Pages 38893-38894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14174]



[[Page 38893]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1205

[Doc. No. AMS-CN-14-0037]


Cotton Board Rules and Regulations: Amending Importer Line-Item 
De Minimis

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Agricultural Marketing Service (AMS) is amending the 
Cotton Board Rules and Regulations to remove the cotton import de 
minimis provision. The Cotton Research and Promotion (R&P) Program 
assesses U.S. cotton producers and importers of cotton and cotton-
containing products. Importers are exempt from paying the cotton import 
assessment (known commonly among importers as the ``cotton fee'') if a 
line item on U.S. Customs and Border Protection (CBP) documentation is 
$2.00 or less. The exemption was initially established to lessen the 
administrative burden of collecting an import assessment, which was 
originally estimated to be $2.00 per line item, in instances in which 
the transactions costs of the collection would exceed the actual value 
of the assessment; however, technological advances in the CBP 
documentation process significantly reduced the transactions costs 
associated with collecting import assessments, and CBP has since 
stopped charging USDA for the processing and collecting of assessments. 
Given that transactions costs no longer exceed assessment rates of 
$2.00 or less, AMS is removing this de minimis provision from the 
regulations. In addition, the definition of cotton with respect to 
procedures for conducting the sign-up period is being modified.

DATES: Effective Date: July 15, 2016.

FOR FURTHER INFORMATION CONTACT: Shethir M. Riva, Chief, Research and 
Promotion Staff, Cotton and Tobacco Program, AMS, USDA, 100 Riverside 
Parkway, Suite 101, Fredericksburg, Virginia, 22406, telephone (540) 
361-2726, facsimile (540) 361-1199, or email at 
Shethir.Riva@ams.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to access all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This action has been designated as a ``non-significant regulatory 
action'' under section 3(f) of Executive Order 12866 and therefore has 
not been reviewed by the Office of Management and Budget.

Executive Order 13175

    This action has been reviewed in accordance with the requirements 
of Executive Order 13175, Consultation and Coordination with Indian 
Tribal Governments. The review reveals that this regulation would not 
have substantial and direct effects on Tribal governments and would not 
have significant Tribal implications.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. The 
Cotton Research and Promotion Act (7 U.S.C. 2101-2118) (Act) provides 
that administrative proceedings must be exhausted before parties may 
file suit in court. Under section 12 of the Act, any person subject to 
an order may file with the Secretary of Agriculture (Secretary) a 
petition stating that the order, any provision of the plan, or any 
obligation imposed in connection with the order is not in accordance 
with law and requesting a modification of the order or to be exempted 
therefrom. Such person is afforded the opportunity for a hearing on the 
petition. After the hearing, the Secretary would rule on the petition. 
The Act provides that the District Court of the United States in any 
district in which the person is an inhabitant, or has his principal 
place of business, has jurisdiction to review the Secretary's ruling, 
provided a complaint is filed within 20 days from the date of the entry 
of ruling.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS has examined the economic impact of this rule on small 
entities. The purpose of the RFA is to fit regulatory actions to the 
scale of businesses subject to such action so that small businesses 
will not be unduly or disproportionately burdened. The Small Business 
Administration defines, in 13 CFR part 121, small agricultural 
producers as those having annual receipts of no more than $750,000 and 
small agricultural service firms (importers) as having receipts of no 
more than $7,500,000. An estimated 17,000 importers are subject to the 
rules and regulations issued pursuant to the Cotton Research and 
Promotion Order. Most are considered small entities as defined by the 
Small Business Administration.
    This rule only affects importers of cotton and cotton-containing 
products whose calculated assessment for any line item entry of cotton 
appearing on a CBP entry document is two dollars ($2.00) or less. While 
data allowing for estimates of the number of importers that will be 
impacted does not exist, it is estimated that a very small portion of 
the estimated 17,000 importers will be affected by eliminating the de 
minimis exemption. The additional burden placed on those importers will 
be limited to two dollars ($2.00) per line item entry that would 
otherwise have qualified for the exemption. Importers were already 
required to self-report on all line items being imported, therefore no 
additional transactions costs or administrative burden will be borne by 
these importers. Such importers may now be eligible to participate in a 
sign-up period to determine whether they and eligible producers favor 
the conduct of referendum on the continuance of the 1991 amendments to 
the Order.
    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR part 1320) which implement the Paperwork Reduction 
Act (PRA) (44 U.S.C. chapter 35) the information collection 
requirements contained in the amended regulation have been previously 
approved by OMB and were assigned control number 0581-0093, National 
Research, Promotion, and Consumer Information Programs. This rule does 
not result in a change to the information collection and recordkeeping 
requirements previously approved.

Background

    Amendments to the Cotton Research and Promotion Act (7 U.S.C. 2101-
2118) (Act) were enacted by Congress under Subtitle G of Title XIX of 
the Food, Agriculture, Conservation, and Trade Act of 1990 (Pub. L. 
101-624, 104 stat. 3909, November 28, 1990). These amendments contained 
two provisions that authorize changes in the funding procedures for the 
Cotton Research and Promotion Program. These provisions provide for: 
(1) The assessment of imported cotton and cotton products; and (2) 
termination of refunds to cotton producers. (Prior to the 1990 
amendments to the Act, producers could request assessment refunds.)

[[Page 38894]]

    As amended, the Cotton Research and Promotion Order (7 CFR part 
1205) (Order) was approved by producers and importers voting in a 
referendum held July 17-26, 1991, and the amended Order was published 
in the Federal Register on December 10, 1991, (56 FR 64470). A proposed 
rule implementing the amended Order was published in the Federal 
Register on December 17, 1991, (56 FR 65450). Implementing rules were 
published on July 1 and 2, 1992, (57 FR 29181 and 57 FR 29431, 
respectively).
    The total value of assessment levied on cotton imports is the sum 
of two parts. The first part of the assessment is based on the weight 
of cotton imported--levied at a rate of $1 per bale of cotton, which is 
equivalent to 500 pounds, or $1 per 226.8 kilograms of cotton. The 
second part of the import assessment (referred to as the supplemental 
assessment) is based on the value of imported cotton lint or the cotton 
contained in imported cotton products--levied at a rate of five-tenths 
of one percent of the value of domestically produced cotton. The 
current assessment on imported cotton is $0.012013 per kilogram of 
imported cotton.
    The Act provides that ``Any de minimis figure as established under 
this paragraph shall be such as to minimize the burden in administering 
the assessment provision but still provide for the maximum 
participation of imports of cotton in the assessment provisions of this 
chapter.'' 7 U.S.C. 2116(c)(2). The Import Assessment Table in 
paragraph (b)(3) of Sec.  1205.510 of the Cotton Research and Promotion 
Rules and Regulations indicates the total assessment rate ($ per 
kilogram) due for each Harmonized Tariff Schedule (HTS) number that is 
subject to assessment. Subparagraph (i) of this same paragraph provides 
for an exemption from assessment for any line item entry of cotton 
appearing on U.S. Customs and Border Protection (CBP) entry 
documentation whose calculated assessment is two dollars ($2.00) or 
less. This de minimis exemption was established to minimize the 
administrative burden of collecting import assessments, which was 
originally estimated to be $2.00 per line item, where administrative 
costs would exceed the actual value of the assessment.
    The de minimis figure is an estimate of administrative burden, 
which is equivalent to the transactions costs of collecting the cotton 
fee. The de minimis provision was necessary to avoid instances where 
the transactions costs of collecting the cotton fee exceeded the cotton 
fee being collected.
    In January 2014, AMS became aware of CBP's automation processes in 
connection with documenting and collecting assessments. CBP indicated 
that the documentation and collection process is automated and costs 
have been significantly decreased. Taking into account technological 
advancements in the fee collection process, CBP no longer charges USDA 
for the collection of assessments on agricultural commodities. This has 
eliminated the administrative burden associated with the collection of 
assessments.
    AMS is striking subparagraph (i) under paragraph Sec.  
1205.510(b)(3) of the Cotton Research and Promotion Rules and 
Regulations and appending to the paragraph section the language 
currently in subparagraph (ii). This action reflects the technological 
efficiencies of the CBP import documentation process by eliminating the 
de minimis provisions in the regulations, and, therefore, helps to 
ensure that the assessments collected on imported cotton and the cotton 
content of imported products will be the same as those paid on 
domestically produced cotton. In addition, AMS is modifying the 
definition of cotton in Sec.  1205.12 to include imported cotton that 
previously was exempted due to the de minimis exemption. With this 
action, importers who previously imported de minimis amounts of cotton 
may now be eligible to participate in the sign-up period for a 
continuance referendum that would determine whether a continuance 
referendum is favored.

Summary of Comments

    A proposed rule was published in the Federal Register on December 
16, 2014, with a comment period of December 11, 2015, through January 
11, 2016 (80 FR 76873). No comments were received by AMS. The proposed 
rule may be viewed at www.regulations.gov.

List of Subjects in 7 CFR Part 1205

    Advertising, Agricultural research, Cotton, Marketing agreements, 
Reporting and Recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 1205 is 
amended as follows:

PART 1205--COTTON RESEARCH AND PROMOTION

0
1. The authority citation for part 1205 continues to read as follows:

    Authority: 7 U.S.C. 2101-2118.


0
2. Revise Sec.  1205.12 to read as follows:


Sec.  1205.12  Cotton.

    The term cotton means all Upland cotton harvested in the United 
States and all imports of Upland cotton, including the Upland cotton 
content of products derived thereof.

0
3. In Sec.  1205.510, paragraph (b)(3) is revised to read as set forth 
below (the Import Assessment Table remains unchanged):


Sec.  1205.510  Levy of assessments.

* * * * *
    (b) * * *
    (3) The following table contains Harmonized Tariff Schedule (HTS) 
classification numbers and corresponding conversion factors and 
assessments. The left column of the following table indicates the HTS 
classifications of imported cotton and cotton-containing products 
subject to assessment. The center column indicates the conversion 
factor for determining the raw fiber content for each kilogram of the 
HTS. HTS numbers for raw cotton have no conversion factor in the table. 
The right column indicates the total assessment per kilogram of the 
article assessed. In the event that any HTS number subject to 
assessment is changed and such change is merely a replacement of a 
previous number and has no impact on the physical properties, 
description, or cotton content of the product involved, assessments 
will continue to be collected based on the new number.
* * * * *

    Dated: June 10, 2016.
Elanor Starmer,
Administrator.
[FR Doc. 2016-14174 Filed 6-14-16; 8:45 am]
 BILLING CODE 3410-02-P