Payment Programs for Shorn Wool, Wool on Unshorn Lambs, and Mohair (1991-1995)

DEPARTMENT OF AGRICULTURE

7 CFR Part 1468

RIN 0560-AD68

Payment Programs for Shorn Wool, Wool on Unshorn Lambs, and

Mohair (1991-1995)

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: This interim rule amends the regulations that set forth the

1991-1995 wool and mohair payment programs as authorized by the

National Wool Act of 1954, as amended. This interim rule provides that

in determining net proceeds for shorn wool or mohair, effective for

1993 and subsequent marketing years, marketing charges for commissions,

coring, or grading shall not be deducted. This interim rule removes the

1 percent assessment on 1993, 1994, and 1995 marketings and revises

payment limitation for the 1995 marketing year. The changes

necessitated by the Omnibus Reconciliation Act, enacted August 10,

1993, were effective for the 1993 marketing year beginning January 1,

1993. Since the Act made changes that affect the 1993 and 1994

marketing years which are currently in effect with payments in process,

good cause is shown to make the changes effective immediately without

prior notice and comment. Comments will be received 60 days after the

effective date and be considered when the rule is to be made final.

DATES: Interim rule effective September 16, 1994. Comments must be

received on or before November 15, 1994 in order to be assured

consideration.

ADDRESSES: Submit comments to: Director, Emergency Operations and

Livestock Programs Division, Agricultural Stabilization and

Conservation Service (ASCS), United States Department of Agriculture

(USDA), P.O. Box 2415, Washington, DC 20013-2415.

FOR FURTHER INFORMATION CONTACT: Sharon Diel, Program Specialist,

Emergency Operations and Livestock Programs Division, ASCS, USDA, P.O.

Box 2415, Washington, DC 20013-2415, telephone 202-720-6605.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This interim rule is issued in conformance with Executive Order

12866. Based on information compiled by USDA it has been determined

that this interim rule:

(1) Would have an annual effect on the economy of less than $100

million;

(2) Would not adversely affect in a material way the economy, a

sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local, or tribal

governments or communities;

(3) Would not create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency;

(4) Would not alter the budgetary impact of entitlement, grants,

user fees, or loan programs or rights and obligations of recipients

thereof; or

(5) Would not raise novel legal or policy issues arising out of

legal mandates, the President's priorities, or principles set forth in

Executive Order 12866.

Environmental Evaluation

It has been determined by an environmental evaluation that this

action will not have a significant impact on the quality of the human

environment. Therefore, neither an Environmental Assessment nor an

Environmental Impact Statement is needed.

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: National Wool Act Payments--10.059.

Executive Order 12778

This interim rule has been reviewed in accordance with Executive

Order 12778. The provisions of this interim rule do not preempt State

laws and are not retroactive to 1992 and prior crop years. Before any

judicial action may be brought regarding the provisions of this

regulation, the administrative appeal provisions set forth at 7 CFR

part 780 must be exhausted.

Executive Order 12372

This program/activity is not subject to the provisions of Executive

Order 12372, which requires intergovernmental consultation with State

and local officials. See notice related to 7 CFR part 3015, subpart V,

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

Paperwork Reduction Act

The amendments to 7 CFR part 1468 set forth in this interim rule

will not result in any change in the public reporting burden or in the

application for payment. Therefore, the information collection

requirements of the Paperwork Reduction Act are not applicable to the

interim rule.

Request for Comments

Comments are requested with respect to this interim rule and such

comments shall be considered in developing the final rule.

Background

The regulations at 7 CFR part 1468 currently set forth the

provisions which are used to administer the wool and mohair programs.

These programs are authorized by the National Wool Act of 1954, as

amended (Wool Act).

The Omnibus Budget Reconciliation Act of 1993 amended the Wool Act

by:

(1) Requiring the Secretary of Agriculture not to deduct marketing

charges for commissions, coring, and grading in determining net sales

proceeds and national payment rates for shorn wool or mohair; and

(2) Revising the payment limitation for wool and mohair producers

for the 1995 marketing year from $125,000 to $100,000.

Also, the Wool Act authorizes the Secretary to deduct a 1 percent

assessment from Wool Act payments made to producers during the 1991 and

1992 marketing years. Such authority has not been renewed. Removing the

1 percent assessment will increase producer's Wool Act payments by the

1 percent that was withheld from the 1991 and 1992 marketing year

payments.

Not deducting marketing charges for commissions, coring, and

grading in determining net sales proceeds and national payment rates

for shorn wool and mohair will reduce total Wool Act payments by a

small amount. Producers who have marketing charges for commissions,

coring, and grading will have their payments increased slightly; but

the national payment rate will be reduced slightly. This action should

encourage more producers to core and grade their wool and mohair to

obtain a higher price for their wool or mohair.

The decrease in the payment limitation for the 1995 marketing year

from $125,000 to $100,000 will reduce payments slightly. The persons

affected by this change would be larger producers who earn over

$100,000 for a marketing year.

The statutory requirement not to deduct marketing charges for

commissions, grading, and coring in determining net sales proceeds

requires a change in definitions. All references to ``net sales

proceeds'' have been changed to ``net proceeds for payment purposes''.

A definition for ``net proceeds for payment purposes'' has been added

in Sec. 1468.3.

Section 1468.3 is amended by adding the definitions for (1)

commission; (2) coring; (3) deductible marketing charges; (4) grading;

(5) gross proceeds; (6) net proceeds; (7) net proceeds for payment

purposes; (8) nondeductible marketing charges; and (9) nonmarketing

charges.

Section 1468.4 is amended to reduce the payment limitation for the

1995 marketing year.

Section 1468.5 is amended to change the reference to net sales

proceeds.

Section 1468.6 is amended to exclude non-deductible marketing

charges in determining net proceeds for payment purposes. Section

1468.6 is also amended to change the reference to net sales proceeds.

Section 1468.8 is amended to exclude non-deductible marketing

charges in determining net proceeds for payment purposes. Section

1468.8 is also amended to change the reference for net sales proceeds,

and to remove the 1 percent assessment.

Section 1468.10 is amended to change the reference for net sales

proceeds.

Section 1468.13 is amended to change the reference for net sales

proceeds.

Section 1468.15 is removed to withdraw the provision for

assessments.

It is necessary that this regulation be placed in effect as soon as

possible. Since the Omnibus Reconciliation Act amendments went into

effect during the 1993 marketing year and assistance in process is

being affected by the statutory changes, these changes need to be

implemented immediately so as to impact the 1993 and 1994 marketing

years. Accordingly, good cause is shown for making this rule effective

without prior public notice and comment. Comments will be reviewed

after the interim rule is effective.

List of Subjects in 7 CFR Part 1468

Grant programs--agriculture, Livestock, Mohair, Reporting and

recordkeeping requirements, Wool.

Accordingly, 7 CFR part 1468 is amended as follows:

PART 1468--WOOL AND MOHAIR

1. The authority citation for 7 CFR part 1468 continues to read as

follows:

Authority: 7 U.S.C. 1781-1787; 15 U.S.C. 714b and 714c.

2. Section 1468.3 is amended to add ``commission,'' ``coring,''

``deductible marketing charges,'' ``grading,'' ``gross proceeds,''

``net proceeds,'' ``net proceeds for payment purposes,''

``nondeductible marketing charges,'' and ``nonmarketing charges''

definitions to read as follows:

Sec. 1468.3 Definitions.

* * * * *

Commission means fees or charges incurred to market shorn wool or

mohair on behalf of the producer. Examples of commissions include

charges for overhead charges, operating expenses, in and out charges,

insurance, advertising, association dues, or assessments.

Coring means obtaining a sample representative of a lot of grease

wool or mohair. The sample is tested for yield, diameter, and vegetable

matter content. The core sample may also be used to measure clean

color.

* * * * *

Deductible marketing charges means service fees or charges paid by

or for the account of the producer that are directly related to

marketing of shorn wool or mohair, such as, but not limited to,

transportation (freight), scouring, and carbonizing and are deducted

from a producer's gross proceeds to determine price support payments.

* * * * *

Grading (sorting and classing) means the grouping of like fleeces

by measurable characteristics, such as fineness, yield, vegetable

matter type and content, length, strength, and color. Skirting is not

considered to be part of the grading process.

* * * * *

Gross proceeds means the amount computed for the seller on a grease

basis before any marketing or nonmarketing charges have been

subtracted.

* * * * *

Net proceeds means the amount paid to the seller after all

marketing and nonmarketing charges have been subtracted.

Net proceeds for payment purposes means proceeds that are

determined by subtracting from the gross proceeds of the wool or mohair

all deductible marketing charges and any amount of nondeductible

marketing charges that exceeds the combined total nondeductible

marketing charges for price support payment established by CCC. This

figure is also used in establishing national payment rates and

individual producer payments.

Nondeductible marketing charges means service fees or charges paid

by or for the account of the producer for commission, grading, and

coring, and are not deducted from a producer's gross proceeds to

determine price support payments. CCC shall determine the combined

total charges for commission, grading, and coring on which price

support payments will be made.

Nonmarketing charges means charges paid by or for the account of

the producer that are not directly related to improving the

marketability of the shorn wool or mohair, such as, but not limited to,

storage, bags, advances, interest on advances, shearing, and

association dues, and are not deducted from the producer's gross

proceeds to determine price support payments.

* * * * *

3. Section 1468.4 is amended by:

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

B. Adding paragraph (c)(5) to read as follows:

Sec. 1468.4 Eligibility for payments.

* * * * *

(c) * * *

(3) $150,000 for the 1993 marketing year;

(4) $125,000 for the 1994 marketing year; and

(5) $100,000 for the 1995 marketing year.

* * * * *

4. Section 1468.5 is amended by revising paragraphs (b) and (d) to

read as follows:

Sec. 1468.5 Bona fide marketing within a specified marketing year.

* * * * *

(b) The price utilized for the purpose of computing net proceeds

for payment purposes under the provisions of Sec. 1468.8 shall not

exceed the fair market value of the wool or mohair as determined by

CCC.

* * * * *

(d) The exchange of wool or mohair for merchandise or services of a

nature other than wool or mohair or wool or mohair products will be

considered as a bona fide marketing if a definite price for the wool or

mohair is established by the parties prior to the exchange. Such price,

or whatever other price CCC determines is the fair market value for

such wool or mohair, whichever is lower, shall be used for the purpose

of computing the net proceeds for payment purpose under the provisions

of Sec. 1468.8.

* * * * *

5. Section 1468.6 is amended by revising paragraphs (b)(5) and

(b)(6) to read as follows:

Sec. 1468.6 Contents of sales documents.

* * * * *

(b) * * *

(5) The gross amount paid to the seller on a grease basis.

(6) The net amount paid to the seller after the deduction of all

marketing and nonmarketing charges have been subtracted.

(i) (A) The following is applicable to 1993 and prior marketing

years. Marketing deductions may be itemized or as a composite amount

for all marketing charges with an explanation of what services are

included in that amount. If it is the practice of a marketing agency to

show, on the sales document, only the net proceeds after marketing

deductions, the gross sales proceeds and the amount of the marketing

deductions need not be shown, provided the sales document contains a

statement reading substantially as follows:

``The net proceeds for payment purposes after marketing deductions

shown herein were computed by deducting from the gross proceeds charges

for the following marketing services: -- -- --. Details of these

charges will be furnished on request.''

(B) All services for which deductions are made shall be enumerated

in the blank space indicated. If a sales document shows charges without

specifying their nature, the charges will be considered deductible

marketing charges.

(ii) (A) The following is applicable to 1994 and subsequent

marketing years. Nondeductible marketing charges must be identified

separately from other deductible marketing charges and nonmarketing

charges and the amount of such specified. If commissions, grading, and/

or coring are identified as being included in marketing charges, the

services that are included in commissions and/or grading must be

specified. CCC shall determine the combined total for commission,

grading, and coring charges on which price support payments will be

made. Deductible marketing charges and nonmarketing charges may be

itemized or as a composite amount for all deductible marketing charges

and nonmarketing charges with an explanation of what services are

included in that amount. If it is the practice of a marketing agency to

show only the net proceeds paid to the seller; the gross sales

proceeds, the amount of deductible marketing charges, and nonmarketing

charges need not be shown, provided the sales document contains a

statement reading substantially as follows:

``The net proceeds paid to the seller were computed by subtracting

from the gross sales proceeds all marketing charges and nonmarketing

charges. Deductible marketing charges and nonmarketing charges deducted

from gross proceeds include: -- -- --. Details of these charges will be

furnished on request.''

(B) All the services for which deductions are made shall be

enumerated in the blank space as indicated. If a sales document shows

charges without specifying the nature, the charges will be considered

deductible marketing charges.

(iii) If a sales document contains a figure for net proceeds for

payment purposes, computed for a location other than the producer's

farm, ranch, or local shipping point, the person preparing the sales

document shall show thereon the name of the location for which the net

proceeds for payment purposes have been computed. If a marketing agency

has guaranteed a minimum sales price for the wool or mohair, is unable

to sell the wool or mohair for a higher price, and therefore settles

with the producer on the basis of such guaranteed minimum price, the

sales document shall be on the basis of guaranteed minimum price,

regardless of a lower price at which the agency may sell the wool or

mohair. In such a case, the marketing agency shall indicate on the

sales document that the price is the guaranteed minimum sales price.

* * * * *

6. Section 1468.8 is amended by revising paragraphs (a) and (b) to

read as follows:

Sec. 1468.8 Computation of payment.

(a) (1) The amount of the shorn wool or mohair price support

payment shall be computed by applying the rate of payment to the net

proceeds for payment purposes for the wool or mohair marketed during

the specified marketing year. For shorn wool payments, if there is a

purchase by the producer of unshorn lambs, the resultant amount shall

be reduced, by an amount resulting from multiplying the liveweight at

the time of purchase of such lambs reported in the application for

payment by the calculated wool on shorn lambs price support for such

marketing year. If the amount of the reduction exceeds the payment

computed on the shorn wool marketed, the liveweight of lambs which

corresponds to the excess amount shall be carried forward and used to

reduce payments on unshorn lambs marketed or slaughtered or shorn wool

marketed in the current or subsequent years.

(2) Except as provided in Sec. 1468.6 (b)(6) with respect to a

guaranteed minimum sales price, the net proceeds for payment purposes

for shorn wool and shorn mohair shall be determined by subtracting from

the gross sales proceeds of the shorn wool or mohair all deductible

marketing charges, and any amount of nondeductible marketing charges

that exceed the combined total nondeductible marketing charges for

price support payment established by CCC.

(b) The amount of the price support payment due a producer for wool

on unshorn lambs shall be computed by applying the rate of payment to

the liveweight of the lambs sold or moved to slaughter during the

specified marketing year, reduced, on account of the purchase or

importation by the producer of unshorn lambs, by the liveweight at the

time of purchase or importation of such lambs reported in the

application for payments. If the amount of the reduction exceeds the

liveweight of the unshorn lambs sold or moved to slaughter during said

marketing year, such excess liveweight shall be carried forward and

used to reduce payments on the wool on unshorn lambs marketed or

slaughtered or shorn wool marketed in the current or subsequent years.

* * * * *

7. Section 1468.10 is amended by revising paragraph (a) to read as

follows:

Sec. 1468.10 Preparation of application.

(a) Application for price support payments for shorn wool, shorn

mohair, and wool on unshorn lambs must be submitted by completing Form

CCC-1155, ``Application for Payment (National Wool Act)''. Marketing

agencies may assist producers in filling out applications by inserting

the information on sales of wool and mohair and sending sales documents

to the appropriate county office, but the producer must sign the

application and is responsible for the requirements as to the time and

manner of filing the application. If the producer paid marketing

charges not shown on the sales document, such charges shall be

considered in arriving at the net proceeds for payment purposes.

* * * * *

8. Section 1468.13 is amended by revising paragraph (a) to read as

follows:

Sec. 1468.13 Payment.

(a) Payments under this part shall be made only on the basis of the

net proceeds for payment purposes received for wool or mohair or the

calculated amount of wool grown on unshorn lambs sold or moved to

slaughter. No payment shall be made on that part of any sale which has

been canceled or on the basis of prices or weights which have been

fraudulently increased for the purpose of obtaining higher payments. No

payment shall be made on sales to a wool or mohair growers association,

which is not a cooperative marketing association, by its producer-

members on the basis of net proceeds for payment purposes in excess of

the fair market value of the wool or mohair (grease basis), as

determined by CCC.

* * * * *

Sec. 1468.15 [Removed and reserved]

9. Section 1468.15 is removed and reserved.

Signed at Washington, DC, on September 8, 1994.

Bruce R. Weber,

Acting Executive Vice President, Commodity Credit Corporation.

[FR Doc. 94-22921 Filed 9-15-94; 8:45 am]

BILLING CODE 3410-05-P