Cooperative Marketing Associations; Eligibility Requirements for Price Support

SUMMARY: The Commodity Credit Corporation (CCC) is proposing to amend

the regulations governing the participation of cooperative marketing

associations (CMA) in CCC price support programs to ensure: the

equitable treatment of CMA members and individual producers; the

Government does not accept undue risk in providing CMA price support

program benefits; and the efficient delivery of CMA price support

program benefits. This proposed rule: changes CMA bylaw requirements to

reflect current CMA organizational and operational procedures; requires

approved cotton CMA retention of services provided by servicing agent

banks; requires approved CMA monitoring of payments they receive on

behalf of their members to ensure that member payments do not exceed

payment limits; and makes other administrative changes.

DATES: Written comments must be received on or before September 30,

1994 in order to be assured of consideration.

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

Support Division, Agricultural Stabilization and Conservation Service

(ASCS), U.S. Department of Agriculture (USDA), P.O. Box 2415,

Washington, DC 20013-2415.

FOR FURTHER INFORMATION CONTACT: Richard M. Ackley, Chief, Cooperative

and Analysis Branch; Cotton, Grain, and Rice Price Support Division,

ASCS, USDA, P.O. Box 2415, Washington, DC 20013-2415.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be significant for

purposes of Executive Order 12866 and, therefore, 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 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,

into Federal Register at 48 FR 29115 (June 24, 1983).

Executive Order 12778

This proposed rule has been reviewed pursuant to Executive Order

12778. 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. Prior to any judicial action in a court of

competent jurisdiction, administrative review under 7 CFR part 780 must

be exhausted.

Paperwork Reduction Act

The information collection requirements for CMA participation in

the price support program on behalf of their members have been approved

for use by the Office of Management and Budget (OMB) through March 31,

1996, and assigned OMB No. 0560-0040. The amendments to 7 CFR part 1425

set forth in this proposed rule impose new or revised information

collection requirements in monitoring the application of statutory

payment limitation provisions to members of CMA when the CMA

participates in CCC price support program on behalf of their members.

ASCS will submit an addendum to OMB to revise the information

collection supporting statement for OMB No. 0560-0040.

Public reporting burden for all collections is estimated to average

from 1 to 2 hours per response, including time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and competing and reviewing the collection

of information. Send comments regarding this burden estimate or any

other aspect of this collection, including suggestions for reducing the

burden, to the Department of Agriculture, Clearance Officer, OIRM, P.O.

Box 7630, Washington, DC 20250-0001; and to the Office of Management

and Budget, Paperwork Reduction Project (OMB No. 0560-0040),

Washington, DC 20503.

Background

CMA participation in CCC price support programs on behalf of their

members must be approved by CCC. When approved, a CMA may participate

in price support programs in much the same way as individual producers.

The regulations at 7 CFR part 1425 contain the requirements for CMA

participation. This proposed rule amends those requirements.

In a previous amendment, canola, flaxseed, mustard seed, rapeseed,

safflower, and sunflower seed were added to the list of authorized

commodities for which a CMA may apply for price support. However, these

additional commodities were inadvertently omitted from Sec. 1425.3(d).

This proposed rule revises Sec. 1425.3(d) by adding these commodities

to the list of authorized commodities.

Regulations are being prepared to authorize price support for shorn

mohair and shorn wool to individual producers. This proposed rule adds

these commodities to the list of authorized commodities for an approved

CMA in Sec. 1425.3(d).

This proposed rule adds a new Sec. 1425.3(i) to provide that an

approved CMA may receive loan deficiency payments, when applicable, on

behalf of its members. This reflects an earlier decision to allow an

approved CMA to obtain loan deficiency payments on behalf of its

members in the same way individual producers participate in price

support.

This proposed rule defines, by reference, the terms ``person'' and

``producer'' by amending redesignated Sec. 1425.3(j) and (k) using the

definitions contained in part 1413 of this title. These are the same

definitions used for individual producers participating in various

price support programs.

This proposed rule revises Sec. 1425.4(a) to indicate that a CMA

must apply to ``participate in a price support program'' as defined in

added Sec. 1425.3(i).

This proposed rule revises Sec. 1425.4(b)(7) to change the

reference from Sec. 1425.17 to Sec. 1425.18.

The CMA annual recertification requirement is currently contained

in the title to Sec. 1425.5(c). This proposed rule places that

requirement in the text of Sec. 1425.4(c). An approved CMA may alter

its organizational structure or operations after its initial approval

in such a way to affect compliance with this regulation. This proposed

rule adds Sec. 1425.4(e) to require an approved CMA to resubmit

complete ``initial'' applications every 5 years, or more often, as

required by CCC. The information submitted will be used to evaluate the

continued compliance with these regulations by each approved CMA.

An approved cotton CMA may enter into a Form CCC-Cotton G, Cotton

Cooperative Loan Agreement, with CCC that allows the CMA to obtain

cotton price support through servicing agent banks that are agents of

CCC. This proposed rule adds Sec. 1425.4(f) to require the execution of

this agreement before a CMA can participate in the cotton price support

program.

A CMA requesting approval to participate in the price support

program on behalf of their members must comply with this regulation.

However, on occasion, a CMA may not be able to fully comply with the

all regulations for reasons beyond the control of the CMA, or because

the CMA articles of incorporation or bylaws may require amending. This

proposed rule revises Sec. 1425.6(b)(2) to authorize CCC to grant

conditional approval for a CMA that substantially meet all requirements

of this regulation to participate in a price support program:

(1) When failure to comply with the regulations is determined to be

beyond the control and not due to the negligence of a CMA, or

(2) When the articles of incorporation or bylaws of a CMA do not

comply with the regulations and the board of directors provide

resolutions agreeing to recommend the necessary revision of the

articles of incorporation or bylaws to the membership at the next

membership meeting.

An approved CMA may have members that are also a CMA. CMA members

must also abide with the provisions of this regulation. This proposed

rule revises Sec. 1425.7(a) to provide that CCC approval of a CMA to

participate in a price support program may be withdrawn if any member

CMA does not operate in accordance with representations made in the

application for approval.

The regulation provides that an approved CMA must be owned and

controlled by its active members to help ensure that the CMA is

operated for the benefit of its active members. Determinations of

active member ownership are based on a requirement that active members

must own more than 50 percent of an approved CMA allocated equity.

However, the amount of equity allocated to active members must not

include equity a member obtains as a result of a loan that is not

repaid within a reasonable time. Because the term ``reasonable time''

may be subject to varying interpretations, this proposed rule revises

Sec. 1425.8(b)(2) to require that any such loans not repaid in one year

shall be excluded from the amount of equity owned by active members of

the CMA.

This proposed rule revises Sec. 1425.8(e) to correct a

typographical error.

On occasion, a CMA requests for approval to participate in the

price support program on behalf of members and the CMA has amended its

articles of incorporation or bylaws to contain the verbatim article of

incorporation and bylaw provisions contained in this regulation. This

proposed rule amends Sec. 1425.9 to provide that approved CMA need not

amend their articles of incorporation and bylaws to contain the same

wording as the regulation. The articles of incorporation and bylaws

must only contain provisions that comply with the regulation.

The regulation provides that an approved CMA may only allow elected

directors to make nominations to fill officer positions. This is unduly

restrictive and more CMA's are now allowing members to make nominations

to fill officer positions. In addition, member nominations allow

individual members a more direct role in selecting officers. This

proposed rule revises Sec. 1425.9(d) to allow members to make

nominations to fill officer positions when the articles of

incorporation or bylaws of a CMA authorize the action.

The regulation, with one exception, prohibits voting by proxy or

under a power of attorney in the affairs of an approved CMA. Because

the limited prohibition of voting by proxy is also sufficient to

prohibit voting under a power of attorney, the specific prohibition of

voting under a power of attorney is redundant. Accordingly, this

proposed rule revises Sec. 1425.9(g) to remove the specific prohibition

against voting under a power of attorney.

The regulation provides that a CMA requesting approval to

participate in the price support program must have net worth that

exceeds a minimum amount based on the amounts of authorized commodities

handled by the CMA. The minimum calculated equity amount may exceed the

amount necessary because most approved CMA's handle authorized

commodities that are not included in their approval requests. For

example, a CMA may request approval to participate only in the price

support program for wheat and also handle corn and sorghum. The minimum

net worth would be based on the volume of wheat, corn, and sorghum

handled and not based solely on the volume of wheat.

This proposed rule revises Sec. 1425.10(b)(3)(i) to provide that

the minimum net worth requirement is based only on the authorized

commodities for which CMA is requesting approval.

This proposed rule also revises Sec. 1425.10(b)(3)(ii) to provide

the unit rates used to determine the minimum equity of a CMA requesting

approval to participate in the price support programs for shorn mohair

or shorn wool. This proposed rule revises Sec. 1425.11(c)(3) to change

the reference from Sec. 1425.17 to Sec. 1425.18 The regulation provides

that at least 80 percent of a crop of a commodity that an approved CMA

acquires for marketing must be produced by its members. However, CCC

may, for a period not to exceed two years, waive such requirement for a

CMA, if the CMA satisfy specific criteria. One of the criteria is that

a CMA must have a plan, approved by CCC, which will ensure that the CMA

is in compliance with this provision. This proposed rule revises

Sec. 1425.14(c) to provide that the plan must be in the CMA members'

best interests. This will prevent the CMA from taking action that would

be detrimental to their membership to satisfy this requirement.

The amount of payments producers may receive from participation in

the price support program is limited. This limitation also applies to

payments (marketing gains and loan deficiency payments) that an

approved CMA may receive on behalf of their member producers. Because

members of an approved CMA may obtain payments as individuals through a

county ASCS office and as members of an approved CMA, the CMA is

responsible for ensuring that maximum statutory payment limitations are

not exceeded by its members. This proposed rule adds a new Sec. 1425.16

to provide that an approved CMA must monitor the payments they receive

on behalf of members to ensure that the sum of such payments does not

exceed the assigned amount.

Individual producers must maintain beneficial interest in a

commodity for the commodity to remain eligible for price support. If

beneficial interest is lost, the commodity is immediately ineligible

for price support. This proposed rule amends the redesignated

Sec. 1425.17(a)(2) to provide that an approved CMA and their members

must maintain continued and uninterrupted beneficial interest in all

commodities included in an eligible pool. This action will allow

individual producers and CMA members to more equally participate in the

price support program.

An approved CMA may on occasion inadvertently include ineligible

commodity in their otherwise eligible pools. This may be the result of

receiving incorrect information, clerical errors, or other infrequent,

inadvertent actions. When this happens, it is inappropriate to

determine that the whole pool is ineligible for price support. This

proposed rule revises redesignated Sec. 1425.17(b)(2) to provide that

when CCC determines a quantity of ineligible commodity has been

inadvertently included in an eligible pool, it does not make the

remaining quantity of commodity in the pool ineligible for price

support.

This proposed rule revises redesignated Sec. 1425.17(b)(1)(ii)(B)

to change the reference from Sec. 1425.17 to Sec. 1425.18.

This proposed rule revises redesignated Sec. 1425.17(b)(1)(iii) to

indicate that the time limit is 15 workdays and change the reference

from Sec. 1425.17(a) to Sec. 1425.18(a).

Individual producers are allowed, with respect to some commodities,

to participate in the price support program with the eligible commodity

stored on the farm. To ensure that individual producers and CMA members

may participate in the price support program on an equal basis, this

proposed rule revises redesignated Sec. 1425.17(c)(2) to allow members

to deliver farm-stored commodity, except when prohibited for individual

producers not participating in a price support program as CMA members,

to an eligible pool. This will allow the efficient use of member farm

storage until the commodity is marketed or moved to other storage

facilities. Any unauthorized removal of farm-stored loan collateral

would be a violation of the regulations and subject the CMA to the same

sanctions applied to individual producers for unauthorized removal of

loan collateral.

Individual producers may only pledge otherwise eligible commodity

as collateral for a CCC loan that is free and clear of all liens and

encumbrances, or the producer must obtain a lien waiver where any lien

or encumbrance exists. While minimum financial requirements that an

approved CMA must maintain are sufficient to protect CCC's interest

from outstanding liens or encumbrances based on a CMA's member's

actions, the risk from liens and encumbrances resulting from the CMA

actions could be more severe. Therefore, this proposed rule adds

paragraph (c)(5) to redesignated Sec. 1425.17 to provide that a

commodity offered as collateral for a CCC loan shall be free and clear

of all liens and encumbrances based on the actions of the CMA or the

CMA shall obtain lien waivers for such liens. In addition, the CMA

shall not take any action that would create a lien or encumbrance on

the commodity while it is pledged as collateral for a CCC loan.

The regulation provides that net loan proceeds, less authorized

charges, from loans not repaid within 15 days must be distributed to

eligible pool members within 15 days. This is to ensure that members

promptly benefit from loans not redeemed within the time period.

However, this provision has not been extended to loan deficiency

payments. As a result, an approved CMA is under no obligation to

distribute loan deficiency payments to members in a timely manner. This

proposed rule revises redesignated Sec. 1425.18(a) to require that

proceeds from loan deficiency payments must be distributed within 15

days. In addition, the proposed rule clarifies that 15 days means 15

work days.

As a result of a producer's failure to fully comply with price

support regulations, disbursements to individual producers are not made

until such obligations are satisfied. This proposed rule extends this

procedure to CMA members by adding paragraph (b)(5) to redesignated

Sec. 1425.18 to require an approved CMA, when notified by CCC, to

refrain from making pool disbursements, based on the commodity

delivered to an eligible pool, to a member and to reimburse such funds

to CCC, as directed.

The regulation prohibits an approved CMA from discriminating

against or otherwise denying any producer's participation with respect

to any benefits resulting from its approval to obtain price support as

provided in applicable nondiscrimination statutes. The current

regulation does not specifically identify marital status, physical

disability, and mental disability as grounds for discrimination. This

proposed rule revises redesignated Sec. 1425.20 to prohibit

discrimination of an approved CMA member based on marital status,

physical disability, or mental disability.

Producers who participate in CCC price support program through an

approved CMA also may participate in the price support programs through

county ASCS offices. As a result, CCC must obtain member information

from an approved CMA that can be combined with information in county

ASCS offices to monitor a member's overall activity. Accordingly, this

proposed rule adds a new Sec. 1425.23 to provide that an approved CMA

shall:

1. Annually provide a report of the amount of commodity received

from members by farm numbers, and

2. At least annually, report by crop year and commodity the sum of

marketing loan gains and loan deficiency payments received on behalf of

each producer member. This information will help CCC monitor the amount

of the commodity delivered from a farm to an approved CMA in order to,

among other things, evaluate individual producer requests for commodity

disaster payments and to monitor producer payments.

List of Subjects in 7 CFR Part 1425

Cooperatives, Price support programs, Reporting and recordkeeping

requirements.

Accordingly, it is proposed that 7 CFR part 1425 be amended as

follows:

PART 1425--COOPERATIVE MARKETING ASSOCIATIONS

1. The authority citations for 7 CFR part 1425 is revised to read

as follows:

Authority: 7 U.S.C. 1421(a), 1441, 1444(a), 1446(d), and 1447;

15 U.S.C. 714b, 714c, and 714j.

2. Section 1425.3 is amended by:

A. Revising paragraph (d),

B. Redesignating paragraphs (i) and (j) as paragraphs (j) and (k)

respectively,

C. Adding a new paragraph (i), and

D. Revising newly redesignated paragraphs (j) and (k) to read as

follows:

Sec. 1425.3 Definitions.

* * * * *

(d) Authorized commodity means those commodities for which an

approved cooperative may apply for price support, including barley,

canola, corn, cotton, flaxseed, honey, shorn mohair, mustard seed,

oats, rapeseed, rice, rye, safflower, seed cotton, shorn wool, sorghum,

soybeans, sunflower seed, and wheat.

* * * * *

(i) Participate in a Price Support Program means the pledging, on

behalf of members, of an eligible commodity as collateral for CCC price

support loans, entering into purchase agreements, and, when applicable,

obtaining loan deficiency payments.

(j) Person means an individual, joint stock company, corporation,

estate or trust, association, or other legal entity, except that two or

more entities shall be combined as one person in accordance with:

(1) The regulations found at part 1497 of the chapter for the

purpose of administering maximum payment limitation provisions of the

Food Security Act of 1985;

(2) The regulations found at part 796 of this title for the purpose

of administering the provisions of the Food Security Act of 1985 with

respect to the production of controlled substances; and

(3) The regulations found at part 12 of this title pertaining to

the highly erodible land and wetland provisions (commonly know as

``sodbuster and swampbuster'' provisions) of the Food Security Act of

1985.

(k) Producer means a person who, as owner, landlord, tenant, or

sharecropper, shares in the risk of producing the crop, and is entitled

to share in the crops available for marketing from the farm, or would

have shared had the crops been produced.

3. In Sec. 1425.4, paragraphs (a), (b)(7), and the introductory

text of paragraph (c) are revised and paragraphs (e) and (f) are added

to read as follows:

Sec. 1425.4 Approval.

(a) Application. In order for a cooperative to participate in a

price support program with respect to the 1994 and subsequent crops of

authorized commodities, a cooperative must submit an application for

approval with respect to such authorized commodities to CCC.

(b) * * *

(7) A detailed description of the method by which proceeds from a

pool of eligible commodities for which price support is obtained will

be distributed as provided for in Sec. 1425.18.

* * * * *

(c) Annual recertification. An approved cooperative must submit, on

an annual basis, the following information to CCC:

* * * * *

(e) Reapplication. Approved cooperatives must submit revised

applications as required by this section instead of an annual

recertification every 5 years, or more often if CCC determines that

such application is necessary to determine if a cooperative has

implemented an organizational or operational change that would affect

compliance with the provisions of this part.

(f) Form CCC-Cotton G. Cooperative marketing associations applying

for approval to participate in the price support program for cotton

shall execute Form CCC-Cotton G, Cotton Cooperative Loan Agreement,

with CCC.

4. Section 1425.6 (b)(2) is revised to read as follows:

Sec. 1425.6 Approved cooperatives.

* * * * *

(b) * * *

(2) Conditionally approved. (i) A cooperative may be conditionally

approved if CCC determines that it has substantially met all the

requirements of this part, and the failure to meet the remaining

requirements is due to reasons beyond the control of the cooperative

and not due to the cooperative's negligence; and

(ii) Such cooperative must agree in writing to meet all

requirements for approval set forth in this part within the time period

specified by CCC. When a cooperative can only comply with the

regulations by amending its articles of incorporation or bylaws at a

membership meeting, CCC may accept a board of directors resolution

agreeing to recommend to the members at the next meeting of the members

the required changes to the articles of incorporation or bylaws as

compliance with the requirements for approval for purposes of this

section. Board resolutions in which the cooperative agrees to comply

with other provisions of this part may be accepted by CCC as compliance

with the requirements for approval for purposes of this section.

* * * * *

5. Section 1425.7 (a) is revised to read as follows:

Sec. 1425.7 Suspension and termination of approval.

(a) Suspension. An approved cooperative may be suspended by CCC

from further participation in a price support program if CCC determines

that the cooperative or a member cooperative, as specified in

Sec. 1425.19:

(1) Has not operated in accordance with the conditions specified in

such cooperative's application for approval;

(2) Has not complied with applicable regulations; or

(3) Has failed to correct deficiencies noted during an

administrative review or an audit of the cooperative's operations with

respect to a price support program. Such suspension may be lifted upon

the receipt of documents indicating that the cooperative has complied

with all requirements for approval. If such documents are not received

within one year from the date of the suspension, the cooperative's

approval for participation in a price support program shall be

terminated.

* * * * *

6. In Sec. 1425.8, paragraphs (b)(2) and (e) are revised to read as

follows:

Sec. 1425.8 Ownership and control.

* * * * *

(b) * * *

(2) The allocated equity of any active member that has acquired

equity as a result of a loan from the cooperative unless such member is

obligated to repay the loan within one year.

* * * * *

(e) Approved plan. An applicant or an approved cooperative not

under the ownership or control, or both, of its active members, may be

approved by CCC to participate in a price support program if the

cooperative is able to establish that, by retiring the equity of its

inactive members or by obtaining new members, the cooperative can vest

ownership and control in its active members, as required by this

section, by a date specified by CCC.

7. Section 1425.9 is amended by revising the introductory text and

paragraphs (d) and (g) to read as follows:

Sec. 1425.9 Charter and bylaw provisions.

The articles of incorporation, articles of association, or the

bylaws of the cooperative shall comply with each of the following

requirements:

* * * * *

(d) Nominations. (1) Nominations for election of delegates and

directors shall be made by members.

(2) Nominations for officers shall be made by elected directors or

by members when nomination by members is authorized in the

cooperative's articles of incorporation or bylaws.

(3) Nominations may be made by balloting, nominating committee,

petition of members, or from the floor, provided that nominations from

the floor shall be requested in addition to nominations made by a

nominating committee or by petition.

* * * * *

(g) Proxy. (1) Except as provided in paragraph (g)(2) of this

section, voting by proxy shall be prohibited.

(2) Voting by proxy may be permitted if a cooperative:

(i) Determines that it is necessary to amend the cooperative's

articles of incorporation, articles of association, or bylaws, and

(ii) Establishes to the satisfaction of CCC that the law of the

State in which the cooperative is incorporated permits voting by proxy,

but does not permit members to vote by mail, with respect to such

issue.

* * * * *

8. In Sec. 1425.10, paragraph (b)(3) is revised to read as follows:

Sec. 1425.10 Financial condition.

* * * * *

(b) * * *

(3)(i) The net worth of the cooperative. The cooperative shall be

considered to have a sufficient net worth if such net worth is equal to

the product of an amount per unit for a commodity (as set forth in

table 1) multiplied by the total number of such units of commodity for

which the cooperative is approved, or requesting approval, to

participate in price support and handled by the cooperative during the

preceding marketing year, or, if the cooperative is in its first full

marketing year of operations, the estimated quantity of such commodity

that it will handle during such year.

(ii) (A) If the amount of the net worth of the cooperative is

between 34 and 99 percent of the amount computed in accordance with

paragraph (b)(3)(i) of this section and the cooperative is determined

by CCC to be otherwise financially sound, CCC may determine that such

cooperative meets the requirements of this section. Such a

determination by CCC may be made if:

(1) The board of directors of the cooperative agrees to make a

capital retain in the amount set forth in table 2 with respect to each

unit of the commodity delivered to the cooperative until the net worth

of the cooperative is at least equal to the amount computed in

accordance with paragraph (b)(3)(i) of this section, and

(2) The cooperative agrees to deduct from pool proceeds the full

amount of the estimated expenses of handling the commodities received

by the cooperative.

(B) The failure to carry out such agreements shall be grounds for

suspending a cooperative's approval.

Table 1

------------------------------------------------------------------------

Amount per

Commodity Unit unit

------------------------------------------------------------------------

Barley....................... Bushel....................... 0.13

Canola....................... Hundredweight................ 0.62

Corn......................... Bushel....................... 0.13

Cotton....................... Bale......................... 6.40

Flaxseed..................... Hundredweight................ 0.62

Honey........................ Hundredweight................ 1.90

Mustard Seed................. Hundredweight................ 0.62

Oats......................... Bushel....................... 0.13

Rapeseed..................... Hundredweight................ 0.62

Rice......................... Hundredweight................ 0.52

Rye.......................... Bushel....................... 0.13

Safflower.................... Hundredweight................ 0.62

Seed Cotton (lint basis)..... Pound........................ 0.008

Shorn Mohair................. Pound........................ 0.16

Shorn Wool................... Pound........................ 0.38

Sorghum...................... Hundredweight................ 0.19

Soybeans..................... Bushel....................... 0.43

Sunflower Seed............... Hundredweight................ 0.62

Wheat........................ Bushel....................... 0.15

------------------------------------------------------------------------

Table 2

------------------------------------------------------------------------

Amount per

Commodity Unit unit

------------------------------------------------------------------------

Barley....................... Bushel....................... 0.07

Canola....................... Hundredweight................ 0.32

Corn......................... Bushel....................... 0.07

Cotton....................... Bale......................... 3.20

Flaxseed..................... Hundredweight................ 0.32

Honey........................ Hundredweight................ 0.95

Mustard Seed................. Hundredweight................ 0.32

Oats......................... Bushel....................... 0.07

Rapeseed..................... Hundredweight................ 0.32

Rice......................... Hundredweight................ 0.26

Rye.......................... Bushel....................... 0.07

Safflower.................... Hundredweight................ 0.32

Seed Cotton (lint basis)..... Pound........................ 0.004

Shorn Mohair................. Pound........................ 0.08

Shorn Wool................... Pound........................ 0.19

Sorghum...................... Hundredweight................ 0.10

Soybeans..................... Bushel....................... 0.22

Sunflower Seed............... Hundredweight................ 0.32

Wheat........................ Bushel....................... 0.08

------------------------------------------------------------------------

* * * * *

9. In Sec. 1425.11, paragraph (c)(3) is revised to read as follows:

Sec. 1425.11 Operations.

* * * * *

(c) * * *

(3) Require that all proceeds from the marketing operation be

distributed as provided in Sec. 1425.18.

10. In Sec. 1425.14, paragraph (c) is revised to read as follows:

Sec. 1425.14 Member business.

* * * * *

(c) The cooperative has a plan, approved by CCC, which CCC

determines to be in the cooperative members' best interest and will

bring the cooperative into compliance with the provisions of this

section. Commodities purchased or acquired from CCC and processed

products acquired from other processors or merchandisers shall not be

considered in determining the volume of member or nonmember business.

11. Sections 1425.16 through 1425.21 and Secs. 1425.22 and 1425.23

are redesignated as Secs. 1425.17 through 1425.22 and Secs. 1425.24 and

1425.25, respectively, and a new Sec. 1425.16 is added to read as

follows:

Sec. 1425.16 Payment limitation.

Approved cooperatives shall monitor marketing loan gains, loan

deficiency payments, and other payments they receive from CCC on behalf

of their members and ensure that the sum of the amounts received for

each member does not exceed the member's payment limitation determined

in accordance with part 1497 of this title that, for purposes of

administrating such part, is assigned by CCC to the cooperative.

12. Newly redesignated Sec. 1425.17 is amended by revising

paragraphs (a)(2), (b)(1)(i), (b)(1)(ii), (b)(1)(iii), (c)(2), and

adding paragraph (c)(5) to read as follows:

Sec. 1425.17 Eligible commodity and pooling.

(a) * * *

(2) PRICE SUPPORT WILL BE MADE AVAILABLE TO APPROVED COOPERATIVES

WITH RESPECT TO A QUANTITY OF AN ELIGIBLE COMMODITY INCLUDED IN AN

ELIGIBLE POOL AS PROVIDED IN PARAGRAPH (C) OF THIS SECTION AND THE

BENEFICIAL INTEREST PROVISIONS OF PARTS 1421, 1427, 1435, AND 1468

OF THIS CHAPTER.

(b) * * *

(1) * * *

(i) All of the commodity included in the pool is eligible for price

support, except as provided in paragraph (b)(2) of this section;

(ii) The eligible commodity in such pool was:

(A) Delivered to the cooperative for marketing for the benefit of

the members of the cooperative, and

(B) Delivered by members who retain the right to share in the

proceeds from the marketing of the commodity in accordance with

Sec. 1425.18.

(iii) Except with respect to a quantity of a commodity pledged as

collateral for a price support loan and which is redeemed within 15

work days from the date the cooperative receives the proceeds from CCC,

all of the commodity placed in such pool was delivered by members who

have agreed to accept a payment of the initial advances made available

to such producers by the cooperative with respect to such commodity in

accordance with Sec. 1425.18(a).

(2) If CCC determines that a cooperative has inadvertently included

in a pool a quantity of commodity which is ineligible for price support

because of grade, quality, bale weight or repacking in the case of

cotton, or other factors, the remaining quantity of commodity shall

remain eligible for price support.

* * * * *

(c) * * *

(2) Price support will be available to the cooperative for the

quantity of a farm-stored commodity that is, pursuant to such

cooperative's marketing agreement with a member, part of the

cooperative's pool.

* * * * *

(5) Commodities pledged as collateral for CCC price support loans

shall be free and clear of all liens and encumbrances based on an

approved cooperative's financial agreements or the cooperative shall

obtain a completed Form CCC-679, Lien Waiver. Approved cooperatives

shall not take any action to cause a lien or encumbrance to be placed

on a commodity after a loan is approved.

* * * * *

13. Newly redesignated Sec. 1425.18 is amended by revising

paragraphs (a) and (a)(1) and adding paragraph (b)(5) to read as

follows:

Sec. 1425.18 Distribution of proceeds.

(a) CCC loans, purchases, and loan deficiency payments. (1) If CCC

makes available price support loans, purchases, or loan deficiency

payments with respect to any quantity of the eligible commodity in a

pool, the proceeds from such loans, purchases, or loan deficiency

payments shall be distributed to members participating in such pool on

the basis of the quantity and quality of the commodity delivered by

each member which is included in the pool less any authorized charges

for services performed or paid by the cooperative which are necessary

to condition the commodity or otherwise make the commodity eligible for

price support. Except with respect to commodities which are pledged as

collateral for a price support loan and which are redeemed within 15

work days from the date the cooperative receives the loan proceeds from

CCC, such proceeds shall be distributed within 15 work days from such

date. Loan deficiency payments received from CCC shall be distributed

within 15 work days of receipt from CCC.

* * * * *

(b) * * *

(5) When notified by CCC that pool distributions to a member of any

eligible pool must be reduced for a program year, farm, or crop,

cooperatives shall refrain from making such pool distributions and

shall, if appropriate, reimburse CCC for such distributions.

* * * * *

14. Newly redesignated Sec. 1425.20 is revised to read as follows:

Sec. 1425.20 Nondiscrimination.

The cooperative shall not, on the basis of race, color, age, sex,

religion, marital status, national origin, physical disability, or

mental disability, deny any producer participation in, or otherwise

subject any producer to discrimination with respect to any benefits

resulting from its approval to obtain price support and shall comply

with the provisions of Title VI of the Civil Rights Act of 1964 and the

Secretary's regulations issued thereunder, appearing in Secs. 15.1-

15.12 of this title (29 FR 16274 and 29 FR 16966), and any amendments

thereto; section 504 of the Rehabilitation Act of 1973, as amended by

the Rehabilitation Comprehensive Services and Developmental

Disabilities Amendments of 1978; and provisions of the Age

Discrimination Act of 1975, as amended. The cooperative shall not

discriminate against employees under Title VII of the Civil Rights Act

of 1964, as amended, or the Equal Pay Act of 1963 or Title VI of the

Civil Rights Act of 1964 as administered by the Equal Employment

Opportunity Commission, and shall handle employee discrimination

complaints as provided for in 28 CFR part 42 and 29 CFR part 1691. The

United States shall have the right to enforce compliance with such

statutes and regulations by suit or by any other action authorized by

law. The cooperative shall submit a certification with its application

that the above cited regulations and rules have been read and

understood and that the cooperative will abide by them.

15. A new Sec. 1425.23 is added to read as follows:

Sec. 1425.23 Reports.

(a) Approved cooperatives shall annually provide CCC with a PSL-86R

report to applicable county ASCS offices. The report shall include all

eligible and ineligible commodity receipts by ASCS farm number for each

member.

(b) Approved cooperatives shall at least annually, report by

commodity and by crop the marketing loan gains, loan deficiency

payments, and any other payments received on behalf of each producer

member.

Signed at Washington, DC, on August 23, 1994.

Bruce R. Weber,

Acting Executive Vice President, Commodity Credit Corporation.

[FR Doc. 94-21509 Filed 8-30-94; 8:45 am]

BILLING CODE 3410-05-P