General Price Support Regulations for Honey

SUMMARY: This interim rule amends the regulations with respect to the

Honey Price Support Loan Program which is conducted by the Commodity

Credit Corporation (CCC) in accordance with section 207 of the

Agricultural Act of 1949, as amended (the 1949 Act). The amendments

made by this interim rule will provide price support loan rates for

1991 and subsequent crop years; revise the limitation on the total

amount of payments a producer may receive; revise the provisions of the

honey marketing assessment; lessen the administrative actions CCC

imposes on producers who violate the loan and loan deficiency payment

(LDP) agreements; provide more authority to State and county committees

in administering the program; eliminate obsolete provisions, and

incorporate the provisions of the Agriculture, Rural Development, Food

and Drug Administration, and Related Agencies Appropriations Act, 1994

and the Omnibus Budget Reconciliation Act of 1993.

DATES: Interim rule effective May 9, 1994. Comments must be received on

or before June 8, 1994 in order to be assured of consideration.

ADDRESSES: Submit comments to Director, Cotton, Grain, and Rice Price

Support Division, Agricultural Stabilization and Conservation Service

(ASCS), United States Department of Agriculture (USDA), P.O. Box 2415,

Washington, DC 20013-2415; telephone 202-720-7641. Comments received

may be inspected between 9 a.m. and 4:30 p.m., Monday through Friday,

except holidays, in room 3623, South Agriculture Building, USDA, 14th

Street and Independence Avenue, Washington, DC.

FOR FURTHER INFORMATION CONTACT: James Tegeler, Program Specialist,

Cotton, Grain, and Rice Price Support Division, ASCS, USDA, P.O. Box

2415, Washington, DC 20013-2415; telephone 202-720-3110.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be significant for purposes of

Executive Order 12866 and has been reviewed by OMB.

Federal Assistance Program

The title and number of the Federal Assistance Program, as found

in the Catalog of Federal Domestic Assistance, to which this rule

applies are Commodity Loans and Purchases--10.051.

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not

applicable because the CCC is not required by 5 U.S.C. 553 or any other

provision of law to publish a notice of proposed rulemaking with

respect to the subject matter of these determinations.

Environmental Evaluation

It has been determined by an environmental evaluation that this

action will have no significant impact on the quality of human

environment.

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372, which requires intergovernmental consultation with State and

local officials. See the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115 (June 24, 1983).

Executive Order 12778

This interim rule has been reviewed pursuant to Executive Order

12788. To the extent State and local laws are in conflict with these

regulatory provisions, it is the intent of CCC that the terms of the

regulations prevail. The provisions of this interim rule are not

retroactive. Prior to any judicial action in a court of competent

jurisdiction, administrative review under 7 CFR part 780 must be

exhausted.

Paperwork Reduction Act

Public reporting burden for the information collections contained

in this regulation with respect to price support programs is estimated

to average 15 minutes per response, including time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collections of information. The information collections have previously

been cleared under the current regulations by the Office of Management

and Budget (OMB), and assigned OMB Nos. 0560-0087 and 0560-0129.

Comments

Since producers are currently making decisions regarding honey

which may be pledged as collateral for CCC price support loans, it has

been determined that it is impractical and contrary to the public

interest for CCC to comply with any further rulemaking requirements

with respect to amending the eligibility requirements. Accordingly, the

provisions of this interim rule are effective upon publication in the

Federal Register. Comments are requested, however, and will be taken

into consideration when developing the final rule. This interim rule

will be scheduled for review so that a final document discussing

comments received and any amendments required can be published in the

Federal Register as soon as possible.

Background

The 1949 Act sets forth the statutory authority for CCC price

support programs. CCC price support programs are intended to stabilize

market prices and provide interim financing and assistance to producers

in the orderly marketing of eligible commodities. Section 207 of the

1949 Act was amended by the Omnibus Budget Reconciliation Act of 1993,

Public Law 103-66 (Budget Act). In addition, the Agriculture, Rural

Development, Food and Drug Administration, and Related Agencies

Appropriations Act, 1994, Public Law 103-111 (Appropriations Act)

provides special provisions that affect the operation of the honey

price support program in fiscal year 1994. This interim rule amends the

regulations for the price support program for honey to reflect these

legislative changes. In addition, this interim rule amends the

regulations to provide more authority to State and county committees in

administering the programs, lessen the administrative actions CCC

imposes on producers who violate the loan and LDP agreements, and make

minor changes for the correction of errors and omissions as specified

herein.

The Budget Act amended the 1949 Act to:

(1) Provide price support loan rates for the crop years 1991

through 1998;

(2) Eliminate the marketing assessment for the 1994 and subsequent

crops of honey; and

(3) Limit the total amount of payments that a person may receive.

The Appropriations Act provides that no funds made available by

that Act may be used to support the price of honey which results in the

following:

(1) Elimination of payments to producers during the 1994 fiscal

year for the 1994 crop of honey; and

(2) Limiting the amount of forfeitures of 1994-crop honey loan

collateral during 1994 fiscal year to support the price of honey to

zero pounds of honey.

Accordingly, this interim rule amends: (1) Sections 1434.1(a),

1434.25(a)(1) and 1434.27(c)(3) to exclude, for the 1994 fiscal year

for the 1994 crop year of honey, the provisions that allow a producer

to:

(a) Repay a loan at less than the principal loan amount plus

charges and interest;

(b) Request and obtain a LDP by agreeing to forego a loan on that

quantity of honey; and

(c) Deliver the quantity of honey pledged as collateral for loan to

CCC in settlement for such loan;

(2) Section 1434.6(b) to incorporate the price support loan rates;

(3) Section 1434.7 to add paragraphs (c)(1) and (c)(2) which were

inadvertently omitted in the CCC final rule published on November 4,

1993, (58 FR 58739);

(4) Section 1434.13(b) to update the provisions of the marketing

assessment for honey to specify that such assessment applies only to

the 1991 through 1993 crops of honey;

(5) Section 1434.14 by removing and reserving the section because

administrative offsets are currently provided in part 3 of this title

and part 1403 of this chapter;

(6) Section 1434.16(a)(1) to correct the title of Form CCC-666 LDP;

(7) Section 1434.17 to revise the provisions of the payment

limitation to specify such limitation for the 1994 through 1998 crop

years; and

(8) Section 1434.27(c) by adding paragraph (3) to provide that if

the amount of the loan indebtedness for 1994-crop year loan during the

1994 fiscal year is not repaid and CCC forecloses on the honey in

accordance with Sec. 1434.28, the settlement value of the honey shall

be determined by CCC to be the proceeds received as a result of the

sale of such honey.

In addition to the amendments provided by the Budget Act and

Appropriations Act, the following regulatory revisions are intended to

make the price support program for honey more user friendly.

Producers who violate the loan note and security agreement by

moving farm-stored loan collateral from the structure designated for

the storage of such loan collateral, without prior written consent of

the county committee, are subject to liquidated damages. In some cases,

collateral is moved to other structures on the farm which makes it

possible for CCC to perfect its security on such collateral. CCC has

determined that when such security can be established, producers should

not be subject to such liquidated damages. Accordingly, this interim

rule amends Sec. 1434.23(b)(2) to clarify that unauthorized removal

only includes cases where CCC cannot obtain the first lien on the

collateral.

It is difficult to prove the amount of damages to CCC for loan and

LDP violations committed by producers; however, 20 and 50 percent of

the loan and LDP rates, as applicable, were established for first and

second offenses, respectively, when the county committee determined

that the producer acted in good faith. CCC has determined that the

liquidated damages can be reduced without affecting the administration

of the loan and LDP programs. Accordingly, this interim rule amends

Sec. 1434.23 to: (a) Decrease the liquidated damages amounts; and (b)

add paragraph (k) to provide that any or all of the liquidated damages

may be waived under certain conditions.

In addition, under certain conditions, producers who violated loan

and LDP provisions may be denied loans and LDP's on commodities stored

on the farm. CCC has determined that this penalty is severe and should

only be assessed when the county committee determines that such action

is necessary to protect the interest of CCC. Accordingly, in

Sec. 1434.23, paragraphs (d)(2)(i), (d)(2)(ii), and (e) have been

amended to remove the requirement for denial of farm-stored loans or

LDP's.

In addition, in Sec. 1434.23, paragraphs (a)(2), (a)(3), and (c),

and in Sec. 1434.26, paragraph (b)(3) have been amended to delete the

references to Forms CCC-700 and CCC-701 and include the Form CCC-666

LDP.

This interim rule amends Sec. 1434.24 by adding paragraph (f) to

provide if a producer moves honey from storage without prior approval

on a nonworkday, the producer will not be subject to administrative

actions providing the producer notifies the county office on the next

workday that the honey has been moved and such movement is approved by

CCC.

List of Subjects in 7 CFR Part 1434

Honey, Loan programs/agriculture, Price support programs, Reporting

and recordkeeping requirements, Warehouses.

Accordingly, 7 CFR part 1434 is amended as follows:

PART 1434--HONEY

1. The authority citation for 7 CFR part 1434 continues to read as

follows:

Authority: 7 U.S.C. 1421, 1423, 1425a, 1446h, 4601 et seq; 15

U.S.C. 714b and 714c.

2. Section 1434.1 is amended by revising paragraph (a) to read as

follows:

Sec. 1434.1 Applicability.

(a) The regulations of this part are applicable to the 1991 and

subsequent crops of extracted honey, except that

Secs. 1434.24(a)(2)(ii), (e)(1)(ii), and (e)(2); 1434.25(a)(2);

1434.26; and 1434.27 are not applicable for the 1994 crop in fiscal

year 1994. These regulations set forth the terms and conditions under

which price support loans shall be entered into and loan deficiency

payments made by the Commodity Credit Corporation (CCC). Additional

terms and conditions are set forth in the note and security agreement

or the loan deficiency payment application which must be executed by a

producer in order to receive a price support loan or loan deficiency

payment. Purchase agreements shall not be offered for the 1991 and

subsequent crops of honey.

* * * * *

3. Section 1434.6 is amended by revising paragraph (b) to read as

follows:

Sec. 1434.6 Availability, disbursement, and maturity.

* * * * *

(b) Price support loans at a national average price support rate of

53.8 cents per pound for 1991 through 1993; 50 cents per pound for 1994

and 1995; 49 cents per pound for 1996; 48 cents per pound for 1997; and

47 cents per pound for 1998 crops of honey are available to producers

as soon as announced by CCC, but not earlier than April 1 of the year

in which the honey is produced and extracted and not later than March

31 of the year following the year in which the honey is produced and

extracted. However, whenever the final date of availability falls on a

nonworkday for county offices, the applicable final date shall be

extended to include the next workday. Price support loans mature on

demand but not later than the last day of the ninth calendar month

following the month in which the loan application is approved. However,

when the final date of maturity falls on a nonworkday for county

offices the final date shall be extended to include the next workday.

* * * * *

4. Section 1434.7 is amended by adding paragraphs (c)(1) and (c)(2)

to read as follows:

Sec. 1434.7 Eligible honey.

* * * * *

(c) * * *

(1) The 5-gallon containers must hold approximately 60 pounds of

honey and shall be new, clean, sound, uncased, and free from

appreciable dents and rust. The handle of each container must be firm

and strong enough to permit carrying the filled container. The cover

and can opening must not be damaged in any way that will prevent a

tight seal. Cans which are punctured or have been punctured and

resealed by soldering will not be acceptable.

(2) Steel drums must be open-end type and filled no closer than 2

inches from the top of the drums. In addition, such drums must be new

or must be used drums which have been reconditioned inside and outside.

Drums must:

(i) Be clean,

(ii) Be treated inside and outside to prevent rusting,

(iii) Be fitted with gaskets which provide a tight seal, and

(iv) Have an inside coating suitable for honey storage.

* * * * *

5. Section 1434.13 is amended by revising paragraph (b) to read as

follows:

Sec. 1434.13 Fees, charges and interest.

* * * * *

(b) Effective only for each of the 1991 through 1993 crops of

honey, producers and producer-packers of honey as defined in paragraphs

(5) and (9), respectively, of section 3 of the Honey Research,

Promotion, and Consumer Information Act (7 U.S.C. 4602) shall remit to

CCC a nonrefundable marketing assessment. Such marketing assessment

shall be computed by multiplying an amount equal to one percent of the

national average price support loan rate by the loan quantity of the

crop. The assessment shall be collected from the loan deficiency

payments and loan proceeds for the crop of honey. However, producers

exempt from the payment of the honey research and promotion fee as

provided in paragraph (e) of this section are also exempt from this

marketing assessment.

* * * * *

Sec. 1434.14 [Removed and Reserved]

6. Section 1434.14 is removed and reserved.

7. Section 1434.16 is amended by revising paragraph (a)(1) to read

as follows:

Sec. 1436.16 Determination of quality.

(a)(1) Loans and loan deficiency payments on farm-stored honey will

be made on the basis of the floral source and color of the honey as

declared and certified by the producer on Form CCC-666 (Honey), Honey

Loan Certification and Worksheet for loans, and Form CCC-666 LDP, Loan

Deficiency Payment Application and Certification for loan deficiency

payments, at the time the honey is either pledged as collateral for a

loan or the loan deficiency payment application is made. The producer

is also required to declare and certify on Form CCC-666 (Honey) or Form

CCC-666 LDP the color and class (table or nontable) of the honey at the

time the honey is pledged as collateral for a loan or at the time the

loan deficiency payment application is made.

* * * * *

8. Section 1434.17 is amended by:

A. Revising paragraphs (a)(3) and (a)(4), and

B. Adding paragraphs (a)(5), (a)(6), and (a)(7) to read as follows:

Sec. 1434.17 Payment and forfeiture limitations.

(a) * * *

(3) $150,000 in the 1993 crop year;

(4) $125,000 in the 1994 crop year;

(5) $100,000 in the 1995 crop year;

(6) $75,000 in the 1996 crop year; and

(7) $50,000 in each of the 1997 and 1998 crop years.

* * * * *

9. Section 1434.23 is amended by:

A. Revising paragraphs (a)(2), (a)(3), (b)(1), (b)(2), and (c),

B. Revising introductory text to paragraph (d),

C. Revising paragraph (d)(2),

D. Revising paragraph (e), and

E. Adding paragraph (k) to read as follows:

Sec. 1434.23 Incorrect certification, unauthorized removal and

unauthorized disposition.

(a) * * *

(2) When signing Form CCC-666 LDP, Loan Deficiency Payment

Application and Certification that the producer will not provide an

incorrect certification of the quantity or make any fraudulent

representation for loan deficiency payment purposes.

(3) That violation of the terms and conditions of the Form CCC-677

or Form CCC-666 LDP, as applicable, will cause harm or damage to CCC in

that funds may be disbursed to the producer for a quantity which is not

actually in existence or for a quantity on which the producer is not

eligible.

(b) * * *

(1) Incorrect certification is the certifying of a quantity of a

commodity for the purpose of obtaining a commodity loan or a loan

deficiency payment in excess of the quantity eligible for such loan or

loan deficiency payment or the making of any fraudulent representation

with respect to obtaining loans or loan deficiency payments.

(2) Unauthorized removal is the movement of any farm-stored loan

quantity from the storage structure in which the commodity was stored

or structures which were designated when the loan was approved to any

other storage structure whether or not such structure is located on the

producer's farm without prior written authorization from the county

committee in accordance with Sec. 1434.24, if the movement of loan

collateral prevents CCC from obtaining the first lien on such

collateral.

* * * * *

(c) The producer and CCC agree that it will be difficult, if not

impossible, to prove the amount of damages to CCC for the violations in

accordance with paragraph (b) of this section. Accordingly, if the

county committee determines that the producer has violated the terms

and conditions of Form CCC-677 or Form CCC-666 LDP, as applicable,

liquidated damages shall be assessed on the quantity of the commodity

which is involved in the violation. If CCC determines the producer:

(1) Acted in good faith when the violation occurred, liquidated

damages will be assessed by multiplying the quantity involved in the

violation by:

(i) 10 percent of the loan rate applicable to the loan note or the

loan deficiency payment rate for the first offense; or

(ii) 25 percent of the loan rate applicable to the loan note or the

loan deficiency payment rate for the second offense, or

(2) Did not act in good faith with regard to the violation, or for

cases other than the first or second offense, liquidated damages will

be assessed by multiplying the quantity involved in the violation by 25

percent of the loan rate applicable to the loan note or the loan

deficiency payment rate.

(d) For liquidated damages assessed in accordance with paragraph

(c)(1) of this section, the county committee shall:

* * * * *

(2) If the producer fails to pay such amount within 30 days from

the date of notification, call the applicable loan involved in the

violation, or for loan deficiency payments, require repayment of the

entire loan deficiency payment and charges plus interest.

(e) For liquidated damages assessed in accordance with paragraph

(c)(2) of this section, the county committee shall call the loan

involved in the violation, or for loan deficiency payments, require

repayment of the entire loan deficiency payment and charges plus

interest.

* * * * *

(k) Any or all of the liquidated damages assessed in accordance

with the provisions of paragraph (c) of this section may be waived as

determined by CCC.

10. Section 1434.24 is amended by adding paragraph (f) to read as

follows:

Sec. 1434.24 Release of the honey pledged as collateral for a loan.

* * * * *

(f) If the honey is moved on a nonworkday from storage without

obtaining prior approval to move such honey, such removal shall

constitute unauthorized removal or disposition, as applicable, of such

honey unless the producer notifies the county office the next workday

that such honey has been moved and such movement is approved by CCC.

11. Section 1434.25 is amended by revising paragraph (a)(1) to read

as follows:

Sec. 1434.25 Liquidation of loans.

(a) * * *

(1) Repay the loan by payment of the amount of loan and any

charges, plus interest, or with the exception of 1994 crop in the 1994

fiscal year, an amount, without interest, which is less than the loan

level determined in accordance with 1434.24(e)(1)(ii), or,

* * * * *

12. Section 1434.26 is amended by revising paragraph (b)(3) to read

as follows:

Sec. 1434.26 Loan deficiency payments.

* * * * *

(b) * * *

(3) File and request payment on Form CCC-666 LDP;

* * * * *

13. Section 1434.27 is amended by adding paragraph (c)(3) to read

as follows:

Sec. 1434.27 Settlement.

* * * * *

(c) * * *

(3) If, during fiscal year 1994, CCC forecloses on 1994 crop honey

pledged as collateral for a loan, in accordance with Sec. 1434.28, the

settlement value will be determined by CCC to be the proceeds received

as a result of the sale of such honey.

* * * * *

Signed in Washington, DC on April 29, 1994.

Bruce R. Weber,

Acting Executive Vice President, Commodity Credit Corporation.

[FR Doc. 94-11016 Filed 5-6-94; 8:45 am]

BILLING CODE 3410-05-P