Delivery and Shipping Standards for Cotton Warehouses
| Published date | 05 April 2019 |
| Citation | 84 FR 13562 |
| Record Number | 2019-06699 |
| Section | Proposed rules |
| Court | Commodity Credit Corporation |
Federal Register, Volume 84 Issue 66 (Friday, April 5, 2019)
[Federal Register Volume 84, Number 66 (Friday, April 5, 2019)]
[Proposed Rules]
[Pages 13562-13565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06699]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1423
[Doc. No. AMS-FTPP-18-0085]
Delivery and Shipping Standards for Cotton Warehouses
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Proposed rule.
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SUMMARY: The U.S. Department of Agriculture's (USDA) Commodity Credit
[[Page 13563]]
Corporation (CCC) proposes to amend the regulations that specify the
requirements for CCC-approved warehouses storing and handling cotton.
The amendment would change how warehouse operators account for bales
made available for shipment (BMAS) and how CCC determines BMAS
compliance. The current regulation allows bales that are made available
for shipment by the warehouse operator but not picked up (BNPU) by the
shipper to count for up to two reporting weeks when calculating and
reporting BMAS for the reporting week. This amendment proposes to limit
BNPU to be counted for one week, with BMAS to include only bales
actually shipped or not picked up for that reporting week. CCC also
proposes to allow two additional options for the warehouse operator to
meet the 4.5% cotton flow requirement by averaging either the BMAS for
the reporting week and the week prior to the reporting week, or by
averaging the BMAS for the reporting week and the week after the
reporting week. In addition, CCC proposes to amend the regulations to
reflect the transfer of warehouse programs and activities from USDA's
Farm Service Agency to AMS in 2018.
DATES: Comments must be received by May 6, 2019.
ADDRESSES: Comments should be submitted electronically at
www.regulations.gov. Comments may also be submitted to: Dan Schofer,
AMS, 1400 Independence Ave. SW, Stop 3061, Room 2555 South Building,
Washington, DC 20250-3061. Comments will be made available for public
inspection at Room 2530-S of the above address during regular business
hours or electronically at www.regulations.gov. Comments received will
be posted without change, including any personal information provided.
All comments should reference the docket number AMS-FTPP-18-0085, the
date of submission, and the page number of this issue of the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Dan Schofer at
[email protected] or 202-690-2434.
SUPPLEMENTARY INFORMATION: In order to provide cotton warehouse
operators the flexibility to address real-time scheduling changes and
market demands faced by cotton merchants and shippers, CCC would use a
two-week rolling average of BMAS to determine a warehouse operator's
compliance with the minimum cotton flow rate of 4.5% of applicable
storage capacity.
For example, a cotton warehouse operator has scheduled 4.5% of the
warehouse's applicable storage capacity to be available for shipment
for several consecutive weeks. The week before a load is scheduled to
be picked-up, a shipper requests to change its load out date to an
earlier load out date in the preceding week, for an amount representing
0.25% of the warehouse's applicable storage capacity. If the warehouse
operator has that specific load (0.25% of licensed capacity) already
staged for a scheduled delivery the following week, that load could be
picked up earlier, in the week preceding the original load out date.
Without using a two-week rolling average and without making any
additional bale adjustments, the warehouse operator would be considered
to have delivered cotton without unnecessary delay for the first week
because its BMAS is 4.75%, which is greater than the required 4.5%.
However, the warehouse operator would not be considered to have
delivered cotton without unnecessary delay during the second week
because its BMAS is 4.25%, which is less than he required 4.5%. In this
example, the option to calculate BMAS compliance using the rolling
average of the reporting week and the week preceding the reporting week
would result in a determination by CCC that the cotton warehouse
operator is in compliance with a BMAS of 4.5% for the reporting week.
In another example, one that illustrates the third option of
meeting the cotton flow requirement, a cotton warehouse operator
schedules 4.5% of the applicable storage capacity for delivery in each
of three consecutive weeks. During the first week, the cotton warehouse
operator actually makes available for shipment 6.0% of the applicable
storage capacity. During the second week, the cotton warehouse operator
only makes 2.0% of applicable storage capacity available for shipment.
During the third week, the cotton warehouse operator makes 7.0% of
applicable storage capacity available for shipment. In this example,
the cotton warehouse operator is considered to have delivered cotton
without unnecessary delay during the first and the third weeks. During
the second week however, the CCC will use the two-week rolling average
of either the applicable week and the immediately preceding week, which
results in an average BMAS of 4.0%, or the two-week rolling average of
the applicable week and the immediately succeeding week, which results
in an average BMAS of 4.5% to make its compliance determination for the
second week. Using the two-week rolling average of the second and third
week to calculate the BMAS for the second week allows the CCC to
consider the cotton warehouse operator to have delivered cotton without
unnecessary delay for that second week because the 4.5% average met the
cotton flow requirement.
This proposed rule change would continue to require warehouse
operators to report their BMAS each week based upon the revised
definition of BMAS. CCC would determine compliance on an individual
reporting week, or if needed, use an option of one of the rolling
average calculations of BMAS for two consecutive reporting weeks. In
the event that CCC uses the average of the applicable week and the
immediately succeeding week, CCC would determine compliance for the
applicable week after it receives the data from the immediately
succeeding week. These options would allow cotton warehouse operators
to meet the cotton flow requirements of the regulation while being
flexible to the needs of the shipping and merchant industries.
Executive Orders 12866 and 13771, and Initial Regulatory Flexibility
Analysis
This rule does not meet the definition of a significant regulatory
action contained in section 3(f) of Executive Order 12866 and is not
subject to review by the Office of Management and Budget (OMB).
Additionally, because this rule does not meet the definition of a
significant regulatory action it does not trigger the requirements
contained in Executive Order 13771. See OMB's Memorandum titled
``Interim Guidance Implementing Section 2 of the Executive Order of
January 30, 2017, titled `Reducing Regulation and Controlling
Regulatory Costs' '' (February 2, 2017).
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) [5 U.S.C. 601 et seq.], CCC has considered the
economic effect of this action on small entities and has determined
that this proposed rule would not have a significant economic impact on
a substantial number of small business entities. The purpose of the RFA
is to fit regulatory actions to the scale of businesses subject to such
actions in order that small businesses will not be unduly burdened.
Currently, there are 326 CCC-approved warehouses that store cotton.
The U.S. Small Business Administration's Table of Small Business Size
Standards matched to the North American Industry Classification System
(NAICS) Codes identifies small business size by average annual receipts
or by the average number of employees at a firm. This information can
be found
[[Page 13564]]
at 13 CFR parts 121.104, 121.106, and 121.201. CCC estimates that 50
CCC-approved warehouses that store cotton would be considered small
businesses according to SBA standards.
Sizes of cotton warehouses vary in size as well as business type,
including small, independent country warehouses, small to large sized
warehouses owned by cooperatives of producers, and small to large sized
warehouses owned by corporate shippers/merchants. The effects of this
proposed rule are not expected to be disproportionately greater or
lesser for small businesses than for large businesses.
USDA is committed to complying with the E-Government Act of 2002 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. Accordingly, CCC
developed options for companies requesting service to do so
electronically.
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 proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This proposed rule is not intended to have
retroactive effect. The USDA has not identified any relevant Federal
rules that duplicate, overlap, or conflict with this proposed rule.
The warehouse operator may resolve any claim for noncompliance from
any entity, such as a merchant or shipper, other than CCC with the
cotton shipping standard in a court of competent jurisdiction or
through mutually agreed upon arbitration procedures. CCC does not have
authority to limit an entity from filing suit in a court of law against
another entity.
The warehouse operator may request that CCC reconsider adverse
actions when the warehouse operator establishes that the reasons for
the action have been remedied or requests reconsideration of the
action.
Paperwork Reduction Act
The cotton information covered in this proposed rule is the weekly
reporting of BMAS by cotton warehouses. BMAS is reported through the
Electronic Warehouse Receipt Inc. (EWR Inc.) system, to which AMS has
access. EWR Inc. is a USDA licensed provider company and generally
contains information that is exempt from the Paperwork Reduction Act
(44 U.S.C. Chapter 35) because it is usual and customary business
information. The proposed change in the regulation would not change the
burden associated with reporting BMAS, which is required to be reported
weekly.
Background and Proposed Revisions
AMS administers the CCC-approved warehouse program for CCC. This
responsibility includes entering into contracts for the storage and
handling of CCC-interest commodities with warehouses. The operators of
those approved warehouses are required to comply with CCC regulations,
which include reporting information about the stored commodities to
CCC. The specific requirements that operators of approved warehouses
must meet are specified in the regulations at Sec. 7 CFR 1423
``Commodity Credit Corporation Approved Warehouses'' and in the signed
storage agreement between CCC and the warehouse operator for each type
of commodity.
Operators of CCC-approved cotton warehouses are currently required
to report BMAS, among other data, to the CCC on a weekly basis. Under
the current rule at Sec. 7 CFR 1423.11(b)(1)(ii), bales that were
scheduled and ready for delivery in a previous week, but not picked up
by the shipper, remained available for loading and for which another
shipping date had not been established could be counted toward BMAS for
up to two weeks. This proposed rule would clarify that bales scheduled
and ready for delivery during a week but not picked up by the end of
that reporting week can only be reported as BMAS for that one week that
such bales were made available for shipment. The National Cotton
Council, on behalf of the U.S. cotton industry, requested this change
in order to increase the cotton flow rate to domestic and foreign
manufacturers, to more quickly respond to domestic and international
market needs, and to optimize performance by approved cotton warehouse
operators. This change is being made to simplify the calculation of
BMAS so that certain bales do not need to be accounted for beyond the
applicable reporting week. The proposed rule would change how BNPU are
counted in the weekly report to CCC. It would not change any warehouse
tariffs or fees.
A conforming change would also be made to CCC's Cotton Storage
Agreement (Form CCC-823). The storage agreement is the agreement
between CCC and the cotton warehouse operator on the requirements that
the warehouse operator must meet for storing and handling CCC-interest
cotton. The standard cotton storage agreement form and the subsequent
amendments are available on the USDA website at: https://forms.sc.egov.usda.gov//efcommon/eFileServices/eForms/CCC823.PDF.
There is no expected cost to warehouses or CCC of reporting BMAS as
specified in this proposed rule. The proposed rule would only change
how bales made available but not picked up by the shipper or merchant
are reported by the warehouse operator to CCC in the weekly report. It
does not change warehouse tariffs or restocking fees.
This change is intended to improve the efficiency of cotton flow
from U.S. producers and cotton warehouses to shippers, and ultimately
to cotton manufacturers, by more accurately reporting cotton that is
available for shipment. Under the current rule, it has become apparent
that certain bales may have been scheduled and ready for shipment but
were never picked up for two weeks or more, potentially inflating BMAS
calculations. This proposed rule change is meant to more accurately
reflect how the cotton industry actually makes bales available for
shipment during that one week. Availability and consistent supply of
cotton are crucial for the U.S. cotton industry in order to compete
with other cotton producing nations and having accurate information
about bales made available for shipment contributes to more efficient
and effective marketing of U.S. cotton.
List of Subjects in 7 CFR Part 1423
Agricultural commodities, Cotton, Honey, Oilseeds, Reporting and
recordkeeping requirements, Surety bonds, Warehouses.
For the reasons stated in the preamble, the Commodity Credit
Corporation proposes to amend 7 CFR part 1423 as follows:
PART 1423--COMMODITY CREDIT CORPORATION APPROVED WAREHOUSES
0
1. The authority citation for part 1423 continues to read as follows:
Authority: 15 U.S.C. 714b and 714c.
0
2. Amend Sec. 1423.2 by revising it to read as follows:
Sec. 1423.2 Administration.
On behalf of CCC, the Agricultural Marketing Service (AMS) will
administer this part under the supervision of the AMS Administrator.
[[Page 13565]]
0
3. Amend Sec. 1423.3 by removing the definition for ``KCCO.''
0
4. Amend Sec. 1423.7 by revising paragraph (d) to read as follows:
Sec. 1423.7 Net Worth Alternatives.
* * * * *
(d) Other alternative instruments and forms of financial assurance
as the AMS Administrator determines appropriate to secure the warehouse
operator's compliance with this section.
0
5. Amend Sec. 1423.8 by revising paragraph (b) to read as follows:
Sec. 1423.8 Approval or rejection.
* * * * *
(b) CCC will notify the warehouse operator of rejection under this
part in writing. The notification will state the causes for rejection.
CCC will reconsider a warehouse for approval when the warehouse
operator establishes that the reasons for rejection have been remedied
or requests reconsideration of the action and presents to the Director,
Warehouse and Commodity Management Division, AMS, in writing,
information in support of such request. The warehouse operator may, if
dissatisfied with the Director's determination, obtain a review of the
determination and an informal hearing by submitting a request with the
AMS Administrator. Appeals shall be as prescribed in part 780 of this
title.
0
6. Amend Sec. 1423.11 by revising paragraphs (a)(2) and (b)(1) to
read as follows:
Sec. 1423.11 Delivery and shipping standards for cotton warehouses.
(a) * * *
(2) Be considered to have delivered cotton without unnecessary
delay if the warehouse operator has made available for shipment at
least 4.5 percent of its applicable storage capacity in effect,
measured as the BMAS:
(i) During the relevant week of shipment, or
(ii) Calculated as the two-week, rolling average of the BMAS for
the relevant week of shipment and the BMAS for the immediately
preceding week, or
(iii) Calculated as the two-week, rolling average of the BMAS for
the relevant week of shipment and the BMAS for the immediately
succeeding week.
(b) * * *
(1) Bales made available for shipment (BMAS) during such week is
defined as any cotton bales that have been delivered or are scheduled
and ready for delivery but not picked up during such week.
* * * * *
0
7. Amend Sec. 1423.13 by revising paragraph (a) to read as follows:
Sec. 1423.13 Appeals, suspensions, and debarment.
(a) After initial approval, warehouse operators may request that
CCC reconsider adverse actions when the warehouse operator establishes
that the reasons for the action have been remedied or requests
reconsideration of the action and presents to the Director, Warehouse
and Commodity Management Division, AMS, in writing, information in
support of such request. The warehouse operator may, if dissatisfied
with the Director's determination, obtain a review of the determination
and an informal hearing by submitting a request to the AMS
Administrator. Appeals shall be as prescribed in part 780 of this
title, and under such regulations the warehouse operator shall be
considered as a ``participant.''
* * * * *
Dated: April 2, 2019.
Robert Stephenson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2019-06699 Filed 4-4-19; 8:45 am]
BILLING CODE 3410-02-P
