USDA Issues Rule on Classification of Foreign-Growth Cotton
Classification of Foreign-Growth Cotton
A Rule by the
Publication Date:
Agencies:
Dates: This direct final rule is effective
Effective Date:
Comments Close:
Entry Type: Rule
Action: Direct final rule.
Document Citation: 81 FR 7025
Page: 7025 -7031 (7 pages)
CFR: 7 CFR 28
Agency/Docket Number: AMS-CN-15-0051
Document Number: 2016-02461
Shorter URL: https://federalregister.gov/a/2016-02461
Action
Direct Final Rule.
Summary
The
DATES:
This direct final rule is effective
ADDRESSES:
Written comments may be submitted to the addresses specified below. All comments will be made available to the public. Please do not include personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publically disclosed. All comments may be posted on the
Comments, identified by AMS-CN-15-0051, may be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov. Please follow the instructions for submitting comments. In addition, comments may be submitted by mail or hand delivery to
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
A. Background
The
The new contract is intended to serve as a price discovery and risk management vehicle for a broad set of cotton traded internationally. Unlike the Cotton No. 2 futures contract, which prices the delivery of
To facilitate the participation of foreign-growth cotton in the World Cotton futures contract,
In anticipation that cotton merchants may want to use AMS cotton quality determinations to establish foreign-growth cotton as tenderable against the World Cotton futures contract, the
With foreign-growth cotton excluded from the provisions of the
Historically, very little foreign-growth cotton has been imported and, until recently, foreign-growth cotton was not able to be tendered against futures contracts offered by
Cotton classification data that is intended for commercial use is generated by a set of processes and procedures that have multiple safeguards that contribute to confidence in the data's accuracy. One prominent procedural safeguard specifically for commercial classification of cotton futures requires each sample submitted to be classed twice--an initial classification (a.k.a., set-up classification) and an automatic review classification (a.k.a., final classification). In the event that the initial and review classifications fail a statistical comparison, a third classification is performed and its measurements considered in the final quality measurements assigned. Furthermore, in instances where a merchant submits the bale's Permanent Bale Identification (PBI) number along with the futures sample, statistical comparisons are made between the original Smith-Doxey classification data and the futures classification data. None of these safeguards are included in the current regulations pertaining to foreign-growth cotton, making the quality data resulting from current foreign-growth cotton classification procedures unsuitable for commercial use. Therefore, AMS is amending regulations in 7 CFR part 28 to help assure that foreign-growth cotton is classified according to the same rigor as
Subpart A
Subpart A of part 28 defines the administrative and operational regulations pertaining to the classification of Form A determinations, Form C determinations, Form D determinations, and Micronaire reading services. Amendments in this subpart are limited to sections that are referenced in subpart B and are necessary to comply with recent administrative changes, to be consistent with current industry norms, and to add clarification.
The terms "Division", "Quality Control Section", and "Universal standards" and their definitions are amended in section28.2, paragraphs (g), (j) and (q), respectively. The terms "Division" and "Quality Control Section", were changed by administrative action. "Division" was changed to "Program" at the same time the Cotton Division and the Tobacco Division were merged into the Cotton and Tobacco Program. Therefore, the term "Division" in paragraph (g) of section28.2 is replaced by "Program" and the term "Cotton Division" is replaced by "Cotton and Tobacco Program" in the definition of "Program". Likewise, the term "Division" in sections28.121 and 28.177 is replaced by "Program". The "Quality Control Section" of the Cotton and Tobacco Program was changed to the "Quality Assurance Division" by administrative action. Therefore, the term "Quality Control Section" in paragraph (j) of section28.2 is replaced by "Quality Assurance Division". Likewise, the term "Quality Control" in section28.32(a) subparagraph (3) is replaced by "Quality Assurance" and "Quality Control Section" is replaced by "Quality Assurance Division" in section28.177. The Universal Cotton Standards are the official cotton standards of
Both Classing Offices and the Quality Assurance Division provide the services specified in part 28. Therefore, the authorities granted to the Area Director in sections28.36 and 28.37 are extended to the Quality Assurance Director also. For the same reason, the term "Classing Office" in section28.37 is replaced with the broader term, "Program".
It is generally accepted that the term "grade" specifically pertains to color or leaf quality measures. To more accurately reflect that differences in quality between two sub-samples drawn from the same bale may extend beyond just color or leaf grade and staple length, "grade" in the heading of section28.38 is replaced with "class" and the phrase "grade or shorter length" in this same section is replaced by the more generic term, "class".
The practice of reducing cotton in grade for the presence of extraneous matter or other irregularities was common when a "grade" reflected multiple quality characteristics. However, this practice has been replaced by the issuance of quality metrics for each individual quality characteristic. Therefore, the current language in section28.39 is removed and the section number is held in reserve.
Terms pertaining to cotton classification are defined in section28.40. Since these terms were last amended, several have become irrelevant or are in need of updating to comply with current industry norms and practices. Furthermore, several new terms have become commonplace within the industry and need to be added to the regulations. Amendments are made to paragraphs (a), (c), (d), (g), and (h). In paragraph (a), the definition of the obsolete term, "Cotton of perished staple", is replaced by the new term "Fire-Damaged Cotton" and its definition. The definition of the obsolete term, "Gin-cut cotton", in paragraph (c) is replaced by the new term, "Extraneous Matter", and its definition. Amendments to the definition of Re-ginned cotton in paragraph (d) are intended to add clarity to the definition and specify that the owner of the cotton or owner's agent are responsible for identifying re-ginned cotton. The definition of "Mixed-packed cotton" in paragraph (g) is updated to reflect current cotton classification terminology and to officially assign the designation for mixed-packed cotton that has become commonplace within the industry. "Water-packed cotton", which is defined in paragraph (h), is now more commonly called "water-damaged cotton". In addition to updating the term's name, the amendment provides additional instruction on how water-damaged cotton is marked on the classification record.
Amendments to section28.47 reflect a change in standard operating procedures, which were made possible by technological advances and motivated to provide complete information to customers. Specifically, the amendment eliminates the subjective rankings of samples ("better," "equal," or "deficient") submitted for comparison and, instead, provides objective quality measures for each sample being compared.
The term "Division", used in section28.121 to represent the Cotton and Tobacco Program, is replaced by "Program". This amendment more accurately reflects the current administrative structure, adding clarity to the language.
Subpart B
Subpart B of part 28 defines the administrative and operational regulations pertaining to the classification of foreign-growth cotton. Amendments to this subpart seek to clarify the existing language, update the terms and practices described to comply with today's industry norms and cotton classification technologies, and add procedural safeguards to the classification process that promote accuracy.
As previously stated, AMS is no longer authorized by the
The definition of "foreign-growth cotton" is clarified in section28.175 to include both cotton produced outside of the continental
Cotton classification terms as they pertain to section 203(h) of the Agricultural Marketing Act of 1946, as amended by Public Law 272, 84th
The administrative process for requesting the classification and/or comparison of foreign-growth cotton is specified in section28.177. Amendments update these procedures, specifying that an application provided by the Program is to be used and applications are to be filed with the Quality Assurance Division or the Classing Office designated by the Deputy Administrator of the Cotton and Tobacco Program.
Physical specifications for foreign-growth cotton samples and instructions for submitting these samples to
New regulatory language is added to subpart
New language, derived from sections28.28-28.30 under subpart A, is added to redesignated sections28.179-28.180. This language pertains to financial responsibility for lost or damaged samples and the return and subsequent ownership of
New language, based on section28.19 under subpart A, is added to redesignated section28.181. It states the right of applicants to withdraw a request for classification/comparison before classing begins and the obligation of applicants to pay for requested services if the classification/comparison process has already begun.
The terms for denial of services expressed in section28.31 in subpart A are revised and added to redesignated section28.182 in order to promote clarity.
Methods of foreign-growth cotton classification and comparison are stipulated in redesignated section28.183 and its paragraphs. New paragraph (a) is a modified version of section28.8, while new paragraph (b) refers directly to sections28.36 through 28.40 for additional procedures and methods pertaining to the classification of foreign-growth cotton samples. Newly designated paragraph (c) refers to sections28.45 through 28.47 for procedures and methods used for comparison of cotton samples.
Since cotton classification results are most commonly communicated electronically, new section28.184 is added to define the types of information to be included in electronic cotton classification reports. Reports must identify that classification records represent only the samples submitted rather than a particular bale of cotton. This information is necessary because the sampling procedures for foreign-growth cotton are not conducted by or under the supervision of a
Redesignated section28.185 defines the information to be included in an optional cotton classification memorandum. The amendment to this section includes the elimination of references to a Classing Office performing the classification. References to the Universal Cotton Standards are corrected in paragraph (d). New language in paragraph (e) explicitly states that classification data resulting from foreign-growth classification/comparison services applies only to the sample submitted. The amendment to new subsection (f) requires that the signature of the Director of the facility providing the classification service be applied to the memorandum rather than just the signature of the Area Director of the Classing Office. This amendment is appropriate since all classification/comparison of foreign-growth cotton may be conducted under the supervision of the Quality Assurance Division.
Amendments to redesignated section28.186 make immediate review classifications automatic for foreign-growth cotton. Immediate reviews to verify initial classifications are appropriate given that resubmitting samples for an optional review classification at some later date is cost prohibitive. The amendment also states that the cost of an automatic review is included in the classification fee for foreign-growth cotton.
Amendments clarifying to which entity memorandum are surrendered and who has the authority to request the surrender of memorandum are stated in the redesignated section28.187.
Amendments to redesignated section28.188 change which sections in subpart A are cited, limiting citations to only those that pertain specifically to fee amounts. Citations of sections28.115, 28.122-28.123 are removed since they do not apply to this subpart. Citations of sections28.120 and 28.121 are removed since they require language specific to foreign-growth cotton. Since similar language will exist in a new section of this subpart, citation of section28.125 is removed. Citation of section28.126 is removed since it does not exist in current regulations. References to "costs" and "method of payment" are removed from this paragraph as these issues are covered in other amendments. Lastly, the term "foreign-growth cotton" replaces the phrase "cotton produced outside the continental
New section28.189 is derived from section28.120, explicitly stating that expenses related to sampling and transporting samples are the financial responsibility of the owner of the cotton or the owner's agent. This section relieves the Program of any financial responsibility for the stated expenses.
New section28.190 refers back to section28.121 in order to define when advance deposits are required for services rendered under this subpart.
New section28.191 defines the acceptable methods of payment or advance deposit for foreign-growth cotton classification services.
New section28.192 is the same as section28.125 in subpart A. It is being restated in this subpart for clarity.
B. Good Cause Finding That Proposed Rulemaking Is Unnecessary
Rulemaking under section 553 of the Administrative Procedure Act (5 U.S.C.
As described in this
If AMS receives significant adverse comment during the comment period, it will publish, in a timely manner, a document in the
C. Regulatory Impact Analysis
Executive Order 13175
This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation would not have substantial and direct effects on Tribal governments and would not have significant Tribal implications.
Executive Order 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to access all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects, distributive impacts and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This action has been designated as a "non-significant regulatory action" under section 3(f) of Executive Order 12866, and therefore, review has been waived, and this action has not been reviewed by the
Executive Order 12988
The 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
Regulatory Flexibility Act
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this action on small entities and has determined that its implementation will not have a significant economic impact on a substantial number of small businesses.
The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be disproportionately burdened. There are approximately sixty cotton merchant organizations of various sizes active in trading
(1) The use of foreign-growth cotton classification services would be voluntary;
(2) The fee for this service will not affect competition in the marketplace;
(3) The per-sample user fee for foreign-growth cotton classification services, determined using standardized formulas established by
(4) The 2014 crop-year average "A" Index--a proxy for world price of cotton--was
In compliance with OMB regulations (5 CFR part 1320), which implement the Paperwork Reduction Act (PRA) (44 U.S.C. 3501), the information collection requirements contained in the provisions to be amended by this rule have been previously approved by OMB and were assigned OMB control number 0581-0008, Cotton Classing, Testing, And Standards.
A 30-day comment period is provided to comment on the amendments described herein. This period is deemed appropriate because this rule will enhance access to cotton marketing tools that assist cotton merchants in managing cotton price risk in a very competitive global fiber market. Reducing the transactional cost of cotton marketing will help cotton compete for market share with man-made fibers.
List of Subjects in 7 CFR Part 28
Commodity futures
Cotton
For the reasons set forth in the preamble, 7 CFR part 28 is amended to read as follows:
Editor's Note: Regulatory text omitted. It can be viewed at https://www.federalregister.gov/articles/2016/02/10/2016-02461/classification-of-foreign-growth-cotton.
Dated:
Associate Administrator,
[FR Doc. 2016-02461 Filed 2-9-16;
BILLING CODE 3410-02-P
[*Federal RegisterBF 2016-02-10]
22BalteroF 160210-1247222
BRIEF: One injured in parking lot accident
Advisor News
- NAIFA: Financial professionals are essential to the success of Trump Accounts
- Changes, personalization impacting retirement plans for 2026
- Study asks: How do different generations approach retirement?
- LTC: A critical component of retirement planning
- Middle-class households face worsening cost pressures
More Advisor NewsAnnuity News
- Ancient Financial Launches as a Strategic Asset Management and Reinsurance Holding Company, Announces Agreement to Acquire F&G Life Re Ltd.
- FIAs are growing as the primary retirement planning tool
- Edward Wilson Joins SEDA, Bringing Deep Expertise in Risk Management, Derivatives Trading and Institutional Prime Brokerage
- Trademark Application for “INSPIRING YOUR FINANCIAL FUTURE” Filed by Great-West Life & Annuity Insurance Company: Great-West Life & Annuity Insurance Company
- Jackson Financial ramps up reinsurance strategy to grow annuity sales
More Annuity NewsHealth/Employee Benefits News
- Data on Managed Care Reported by Researchers at Dartmouth College Geisel School of Medicine (Impact of the Medicare carotid stenting national coverage determination on procedure utilization and long-term stroke risk after carotid …): Managed Care
- New Managed Care and Specialty Pharmacy Findings Has Been Reported by Howard Weston Schmutz et al (Challenges of the Inflation Reduction Act for long-term care pharmacy: Examining impact and policy solutions): Drugs and Therapies – Managed Care and Specialty Pharmacy
- University of Washington Reports Findings in Managed Care (Too Sick to be True? Evaluating Potentially Problematic Diagnosis Coding Practices in Medicare’s Patient-Driven Payment Model): Managed Care
- Falling off the cliff: Loss of insurance subsidies hits Durango's middle class
- Universite Paris 1 Pantheon-Sorbonne Reports Findings in Science (Misperception, self-reported probabilities and long-term care insurance take-up in the United States): Science
More Health/Employee Benefits NewsLife Insurance News