Daily Rules, Proposed Rules, and Notices of the Federal Government
The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect.
The Cotton Research and Promotion Act (7 U.S.C. 2101-2118) (Act) provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 12 of the Act, any person subject to an order may file with the Secretary of Agriculture (Secretary) a petition stating that the order, any provision of the plan, or any obligation imposed in connection with the order is not in accordance with law and requesting a modification of the order or to be exempted therefrom. Such person is afforded the opportunity for a hearing on the petition. After the hearing, the Secretary would rule on the petition. The Act provides that the District Court of the United States in any district in which the person is an inhabitant, or has his principal place of business, has jurisdiction to review the Secretary's ruling, provided a complaint is filed within 20 days from the date of the entry of ruling.
Amendments to the Act were enacted by Congress under Subtitle G of Title XIX of the Food, Agriculture, Conservation, and Trade Act of 1990 (Pub. L. 101-624, 104 Stat. 3909, November 28, 1990). These amendments contained two provisions that authorized changes in the funding procedures for the Cotton Research and Promotion Program.
These provisions are: (1) The authority to assess imported cotton and cotton products; and (2) the termination of the right of cotton producers to demand a refund of assessments.
As amended, the Cotton Research and Promotion Order (7 CFR part 1205) (Order) was approved by cotton producers and importers voting in a referendum held July 17-26, 1991, and the amended Order was published in the
This rule increases the value assigned to imported cotton in the Cotton Board Rules and Regulations (7 CFR 1205.510(b)(2)). The total value of assessments levied is determined using a two-part assessment. The first part of the assessment is levied on the weight of cotton imported at a rate of $1 per 500-pound bale of cotton or $1 per 226.8 kilograms of cotton. The second part of the assessment—known as the supplemental assessment—is levied at a rate of
Section 1205.510(b)(2) of the Cotton Research and Promotion Rules and Regulations provides for the calendar year weighted average price received by U.S. farmers for Upland cotton to represent the value of domestically produced cotton, imported raw cotton and the cotton content of imported cotton-containing products. Use of the same weighted average price ensures that assessments paid on domestically produced cotton and assessments on imported cotton are the same. The source of price statistics is
The current value of imported cotton as published in the
An example of the complete assessment formula and how the figures are obtained is as follows:
One bale is equal to 500 pounds.
One kilogram equals 2.2046 pounds.
One pound equals 0.453597 kilograms.
A 500-pound bale equals 226.8 kg. (500 × .453597).
$1 per bale assessment equals $0.002000 per pound or $0.2000 cents per pound (1/500) or $0.004409 per kg. or $0.4409 cents per kg. (1/226.8).
The 2011 calendar year weighted average price received by producers for Upland cotton is $0.880 per pound or $1.940 per kg. (0.880 × 2.2046).
The total assessment per kilogram of raw cotton is obtained by adding the $1 per bale equivalent assessment of $0.004409 per kg. and the supplemental assessment $0.009700 per kg. which equals $0.014109 per kg.
The current assessment on imported cotton is $0.012665 per kilogram of imported cotton. The new assessment is $0.014109, an increase of $0.001444 per kilogram. This increase reflects the increase in the average weighted price of Upland Cotton Received by U.S. Farmers during the period January through December 2011. The Import Assessment Table in section 1205.510(b)(3) indicates the conversion factors used to estimate cotton equivalent quantities and the total assessment per kilogram due for each HTS number subject to assessment. Since the weighted average price of cotton that serves as the basis of the supplemental assessment calculation has changed, total assessment rates reported in this table have been revised.
AMS also compared the current import assessment table with the U.S. International Trade Commission's (ITC) 2012 HTS and information from U.S. Customs and Border Protection and identified HTS statistical reporting numbers that have been updated and removed. In addition, AMS contacted USDA's Economic Research Service, who provided the updated cotton conversion factors for the new or updated HTS codes.
A proposed rule was published on June 12, 2012, with a comment period of June 12, 2012, through July 12, 2012 (77 FR 34855). AMS received three comments from interested organizations representing segments of the cotton or manufacturing industry. All comments received are available for public inspection at Cotton and Tobacco Programs, AMS, USDA, 100 Riverside Parkway, Suite 101, Fredericksburg, Virginia, 22406, during regular business hours. Comments may also be found at
One commenter, who represents the national trade organization representing the U.S. raw cotton industry and its membership includes producers, inners, warehousemen, cottonseed crushers and dealers, private and cooperative merchants, and textile manufacturers, supported the proposed rule and the formula developed by the Food, Agriculture, Conservation and Trade Act of 1990. This commenter urged AMS to expeditiously implement the new rate in order to properly assess imported cotton and cotton containing products at the new rate.
Two other commenters did not support the increased assessment. One of the opposing commenters, who represents 200 retailers, product manufacturers, and service suppliers, questioned the need for another increase after the increase in 2011 and stated that this increase would further escalate costs and unfairly burden many companies within the cotton supply chain. This commenter cited that this increase combined with the 2011 increase would add an additional 30 percent to the fee that retailers pay for imported cotton, costing up to hundreds of thousands of dollars a year per company.
Section 1205.510, “Levy of assessments,” provides “the rate of the supplemental assessment on imported cotton will be the same as that levied on cotton produced within the United States.” In addition, section 1205.510 provides that the 12-month average of monthly weighted average prices received by U.S. farmers will be used as the value of imported cotton for the purpose of levying the supplemental assessment on imported cotton. AMS used the 2011 price statistics found in Agricultural Prices, a publication of the National Agricultural Statistics Service of the Department of Agriculture, to calculate the average weighted price and convert it to arrive at the new rate of 1.4109 cents per kilogram. Therefore, AMS has made no changes to the proposed rule based on this comment.
The other opposing commenter, whose organization represents the entire spectrum of international trade across all industry sectors, stated its concern that the importer fee was paid into the U.S. Treasury where only a portion of the money collected is appropriated for its stated purpose. The commenter stated its belief that the balance of such funds is often used to offset budget deficits or designated for other uses. In addition, the commenter stated that it is difficult for companies to absorb any increased costs. No monies are transferred into the general fund of the U.S. Treasury. All funds collected by the Board are used for the Cotton Research and Promotion Program in accordance with the Act. Assessments on domestic cotton production and cotton imports are maintained by the Cotton Board, who is charged with administering the Cotton Research and Promotion Program.
In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 601-612], AMS examined the economic impact of this rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such action so that small businesses will not be unduly or disproportionately burdened. The Small Business Administration defines, in 13 CFR part 121, small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (importers) as having receipts of no more than $7,000,000. An estimated 13,000 importers are subject to the rules and regulations issued pursuant to the Cotton Research and Promotion Order. Most are considered small entities as defined by the Small Business Administration.
This final rule only affects importers of cotton and cotton-containing products, and it raises the assessments paid by the importers under the Cotton Research and Promotion Order. The current assessment on imported cotton is $0.012665 per kilogram, which is equivalent to 1.088 cents per kilogram, of imported cotton. The new assessment is $0.014109 which is equivalent to 1.4109 cents per kilogram and was calculated based on the 12-month average of monthly weighted average prices received by U.S. cotton farmers. Section 1205.510, “Levy of assessments,” provides “the rate of the supplemental assessment on imported cotton will be the same as that levied on cotton produced within the United States.” In addition, section 1205.510 provides that the 12-month average of monthly weighted average prices received by U.S. farmers will be used as the value of imported cotton for the purpose of levying the supplemental assessment on imported cotton. AMS used the 2010 price statistics found in
Under the Cotton Research and Promotion Program, assessments are used by the Cotton Board to finance
Importers with line-items appearing on U.S. Customs and Border Protection documentation with value of the cotton contained therein results of an assessment of two dollars ($2.00) or less will not be subject to assessments. In addition, imported cotton and products may be exempt from assessment if the cotton content of products is U.S. produced, cotton other than Upland, or imported products that are eligible to be labeled as 100 percent organic under the National Organic Program (7 CFR part 205) and who is not a split operation.
There are no Federal rules that duplicate, overlap, or conflict with this rule.
In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which implement the Paperwork Reduction Act (PRA) (44 U.S.C. chapter 35) the information collection requirements contained in the regulation that needed to be amended have been previously approved by OMB and were assigned control number 0581-0093. This rule does not result in a change to the information collection and recordkeeping requirements previously approved.
Advertising, Agricultural research, Cotton, Marketing agreements, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble 7 CFR part 1205 is amended as follows:
7 U.S.C. 2101-2118.
(b) * * *
(2) The 12-month average of monthly weighted average prices received by U.S. farmers will be calculated annually. Such weighted average will be used as the value of imported cotton for the purpose of levying the supplemental assessment on imported cotton and will be expressed in kilograms. The value of imported cotton for the purpose of levying this supplemental assessment is 1.4109 cents per kilogram.
(3) * * *
(ii) * * *