User Fees for 2010 Crop Cotton Classification Services to Growers

Summary:

The Agricultural Marketing Service (AMS) is proposing to maintain user fees for cotton producers for 2010 crop cotton classification services under the Cotton Statistics and Estimates Act at the same level as in 2009. These fees are also authorized under the Cotton Standards Act of 1923. The 2009 crop user fee was $2.20 per bale, and AMS proposes to continue the fee for the 2010 cotton crop at that same level. This proposed fee and the existing reserve are sufficient to cover the costs of providing classification services for the 2010 crop, including costs for administration and supervision.

Table of Contents

Dates:

Comments must be received on or before May 12, 2010.

Addresses:

Interested persons may comment on the proposed rule using the following procedures:

Internet: http://www.regulations.gov.

Mail: Comments may be submitted by mail to: Darryl Earnest, Deputy Administrator, Cotton and Tobacco Programs, AMS, USDA, Rm. 2637-S, STOP 0224, 1400 Independence Avenue, SW., Washington, DC 20250-0224. Comments should be submitted in triplicate. All comments should reference the docket number and the date and the page of this issue of the Federal Register. All comments received will be available for public inspection during regular business hours at the above office in Room 2637—South Building, 1400 Independence Avenue, SW., Washington, DC. Comments can also be reviewed on:http://www.regulations.gov. A copy of this notice may be found at:http://www.ams.usda.gov/cotton/rulemaking.htm.

For further information contact:

Darryl Earnest, Deputy Administrator, Cotton and Tobacco Programs, AMS, USDA, Room 2637-S, STOP 0224, 1400 Independence Avenue, SW., Washington, DC 20250-0224. Telephone (202) 720-3193, facsimile (202) 690-1718, or e-mail darryl.earnest@usda.gov.

Supplementary information:

Executive Order 12866

This proposed rule has been determined to be not significant for purposes of Executive Order 12866; and, therefore has not been reviewed by the Office of Management and Budget (OMB).

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule.

Regulatory Flexibility Act

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this action on small entities and has determined that its implementation will not have a significant economic impact on a substantial number of small businesses.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be disproportionately burdened. There are an estimated 25,000 cotton growers in the U.S. who voluntarily use the AMS cotton classing services annually, and the majority of these cotton growers are small businesses under the criteria established by the Small Business Administration (13 CFR 121.201). Continuing the user fee at the 2009 crop level as stated will not significantly affect small businesses as defined in the RFA because:

(1) The fee represents a very small portion of the cost-per-unit currently borne by those entities utilizing the services. (The 2009 user fee for classification services was $2.20 per bale; the fee for the 2010 crop would be maintained at $2.20 per bale; the 2010 crop is estimated at 14,500,000 bales);

(2) The fee for services will not affect competition in the marketplace;

(3) The use of classification services is voluntary. For the 2009 crop, 12,400,000 bales were produced; and, almost all of these bales were voluntarily submitted by growers for the classification service; and

(4) Based on the average price paid to growers for cotton from the 2008 crop of 0.5520 cents per pound, 500 pound bales of cotton are worth an average of $276 each. The proposed user fee for classification services, $2.20 per bale, is less than one percent of the value of an average bale of cotton.

Paperwork Reduction Act

In compliance with OMB regulations (5 CFR part 1320), which implement the Paperwork Reduction Act (PRA) (44 U.S.C. 3501), the information collection requirements contained in the provisions to be amended by this proposed rule have been previously approved by OMB and were assigned OMB control number 0581-AC43.

Fees for Classification Under the Cotton Statistics and Estimates Act of 1927

This proposed rule would maintain the user fee charged to producers for cotton classification at $2.20 per bale for the 2010 cotton crop. The 2009 user fee charged to was calculated using new methodology, as was required by section 14201 of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-234) (2008 Farm Bill). Prior to the change in the 2008 Farm Bill, the fee was determined using a user-fee formula mandated in the Uniform Cotton Classing Fees Act of 1987, as amended (Pub. L. 100-108, 728) (1987 Act). This formula used the previous year's base fee that was adjusted for inflation and economies of size (1 percent decrease/increase for every 100,000 bales above/below 12.5 million bales with maximum adjustment being ±15 percent). The user fee was then further adjusted to comply with operating reserve constraints (between 10 and 25 percent of projected operating costs) specified by the 1987 Act.

Section 14201 of the 2008 Farm Bill provides that:(1) The Secretary shall make available cotton classificationservices to producers of cotton, and provide for the collection of classification fees from participating producers or agents that voluntarily agree to collect and remit the fees on behalf of the producers; (2) classification fees collected and the proceeds from the sales of samples submitted for classification shall, to the extent practicable, be used to pay the cost of the services provided, including administrative and supervisory costs; (3) the Secretary shall announce a uniform classification fee and any applicable surcharge for classification services not later than June 1 of the year in which the fee applies; and (4) in establishing the amount of fees under this section, the Secretary shall consult with representatives of the United States cotton industry. At pages 313-314, the Joint Explanatory Statement of the committee of conference for section 14201 stated the expectation that the cotton classification fee would be established in the same manner as was applied during the 1992 through 2007 fiscal years. The classification fee should continue to be a basic, uniform fee per bale fee as determined necessary to maintain cost-effective cotton classification service. Further, in consulting with the cotton industry, the Secretary should demonstrate the level of fees necessary to maintain effective cotton classification services and provide the Department of Agriculture with an adequate operating reserve, while also working to limit adjustments in the year-to-year fee.

Under the provisions of section 14201, a user fee (dollar per bale classed) is proposed for the 2010 cotton crop that, when combined with other sources of revenue, will result in projected revenues sufficient to reasonably cover budgeted costs—adjusted for inflation—and allow for adequate operating reserves to be maintained. Costs considered in this method include salaries, costs of equipment and supplies, and other overhead costs, such as facility costs and costs for administration and supervision. In addition to covering expected costs, the user fee is set such that projected revenues will generate an operating reserve adequate to effectively manage uncertainties related to crop size and cash-flow timing while meeting minimum reserve requirements set by the Agricultural Marketing Service, which require maintenance of a reserve fund amount equal to four months of projected operating costs.

Extensive consultations regarding the establishment of the classification fee with U.S. cotton industry representatives were held during the period from September 2009 through January 2010 during numerous publicly held meetings. Representatives of all segments of the cotton industry, including producers, ginners, bale storage facility operators, merchants, cooperatives, and textile manufacturers were addressed in various industry-sponsored forums.

The user fee proposed to be charged cotton producers for cotton classification in 2010 is $2.20 per bale which is the same fee charged for the 2009 crop. This fee is based on the pre-season projection that 14.5 million bales will be classed by the United States Department of Agriculture during the 2010 crop year.

Accordingly, § 28.909, paragraph (b) would reflect the continuation of the cotton classification fee at $2.20 per bale.

As provided for in the 1987 Act, a 5 cent per bale discount would continue to be applied to voluntary centralized billing and collecting agents as specified in § 28.909(c).

Growers or their designated agents receiving classification data would continue to incur no additional fees if classification data is requested only once. The fee for each additional retrieval of classification data in § 28.910 would remain at 5 cents per bale. The fee in § 28.910(b) for an owner receiving classification data from the National database would remain at 5 cents per bale, and the minimum charge of $5.00 for services provided per monthly billing period would remain the same. The provisions of § 28.910(c) concerning the fee for new classification memoranda issued from the National Database for the business convenience of an owner without reclassification of the cotton will remain the same at 15 cents per bale or a minimum of $5.00 per sheet.

The fee for review classification in § 28.911 would be maintained at $2.20 per bale.

The fee for returning samples after classification in § 28.911 would remain at 50 cents per sample.

A 15-day comment period is provided for public comments. This period is appropriate because it is anticipated that the proposed fees, if adopted, would be made effective for the 2010 cotton crop on July 1, 2010.

List of subjects in 7 cfr part 28

Administrative practice and procedure, Cotton, Cotton samples, Grades, Market news, Reporting and record keeping requirements, Standards, Staples, Testing, Warehouses.

For the reasons set forth in the preamble, 7 CFR part 28 is proposed to be amended to read as follows:

Part 28—[amended]

1. The authority citation for 7 CFR part 28, Subpart D, continues to read as follows:

Authority:

7 U.S.C. 471-476.

2. In § 28.909, paragraph (b) is revised to read as follows:

§ 28.909 * * * * *

(b) The cost of High Volume Instrument (HVI) cotton classification service to producers is $2.20 per bale.

* * * * *

3. In § 28.911, the last sentence of paragraph (a) is revised to read as follows:

§ 28.911

(a) * * * The fee for review classification is $2.20 per bale.

* * * * *
Dated: April 22, 2010. Rayne Pegg,

Administrator, Agricultural Marketing Service.

References

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