[Federal Register Volume 88, Number 209 (Tuesday, October 31, 2023)]
[Rules and Regulations]
[Pages 74330-74336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23727]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 870

[Doc. No. AMS-FTPP-21-0055]
RIN 0581-AE26


Economic Adjustment Assistance for Textile Mills

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule with request for comments.

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SUMMARY: The Agricultural Marketing Service (AMS) revises the 
regulation providing guidance for domestic manufacturers that consume 
Upland Cotton and voluntarily participate in the Economic Adjustment 
Assistance for Textile Mills Program. The revisions add definitions and 
codify certain participant responsibilities currently outlined in the 
existing user Agreement. The changes made by this rule are intended to 
strengthen management controls that have been added into the Agreement 
to prevent fraud, waste, and abuse. This action provides the necessary 
legal support for program administration.

DATES: 
    Effective date: October 31, 2023.
    Comment date: We will consider comments that we receive by the 
close of business January 2, 2024. AMS may consider the comments 
received and may conduct additional rulemaking based on the comments.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this final rule. All comments must be submitted through the 
Federal e-rulemaking portal at https://www.regulations.gov and should 
reference the document number and the date and page number of this 
issue of the Federal Register. All comments submitted in response to 
this final rule will be included in the record and will be made 
available to the public. Please be advised that the identity of the 
individuals or entities submitting comments will be made public on the 
internet at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Dan Schofer, Cotton Program Manager, 
Warehouse and Commodity Management Division, Fair Trade Practices 
Program, AMS, USDA; Telephone: (202) 690-2434, or Email: 
<a href="/cdn-cgi/l/email-protection#a5e1c4cb8bf6c6cdcac3c0d7e5d0d6c1c48bc2cad3"><span class="__cf_email__" data-cfemail="b7f3d6d999e4d4dfd8d1d2c5f7c2c4d3d699d0d8c1">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: Section 1207(c) of the Food, Conservation, 
and Energy Act of 2008 (Pub. L. 110-234; May 22, 2008) directed the 
Secretary of Agriculture (Secretary) to provide economic adjustment 
assistance to domestic users of upland cotton under the Economic 
Adjustment Assistance to Users of Upland Cotton program. Under the 
program, domestic users of upland cotton may qualify for financial 
assistance that can be used to acquire, construct, install, modernize, 
develop, convert, or expand land, plant, buildings, equipment, 
facilities, or machinery used in the manufacture of final cotton 
products. Payments for such assistance are issued by the Commodity 
Credit Corporation (CCC). Recipients must use these funds within a 
certain timeframe and must maintain and provide, to program 
administrators, records related to their use of upland cotton and 
allowable capital expenditures under the program.
    Section 1203(b) of the Agriculture Improvement Act of 2018 (Pub. L. 
115-334; December 20, 2018) renamed the program ``Economic Adjustment 
Assistance for Textile Mills'' (EAATM). In a memorandum dated July 1, 
2019, the Secretary redelegated authority to administer EAATM from the 
Farm Service Agency to AMS. A final rule published in the Federal 
Register on October 15, 2020 (85 FR 65500), amended 7 CFR part 2 to 
reflect the redelegation. The amended 7 CFR 2.79(a)(23) authorizes the 
AMS Administrator to administer the EAATM program (7 U.S.C. 9037(c)). A 
final rule published in the Federal Register on October 1, 2021 (86 FR 
54339), removed the EAATM regulations from 7 CFR part 1427 and added 
them in a new 7 CFR part 870--Economic Adjustment Assistance for 
Textile Mills, in Sec. Sec.  870.1 to 870.9.
    For participation in the EAATM program, domestic users must enter 
into an Upland Cotton Domestic User Agreement (Form CCC-1045-DOM) 
(Agreement) and submit upland cotton consumption documentation to AMS's 
Warehouse and Commodity Management Division (WCMD) to receive financial 
assistance.
    AMS is now codifying the requirements specified in the Agreement as 
regulations. This final rule amends 7 CFR part 870 by reorganizing and 
revising existing sections and adding several new sections, supplying 
definitions of certain program terms, and clarifying current program 
practices to provide a better understanding of CCC requirements for 
program participants.
    Under this final rule, references in 7 CFR part 870 to the Upland 
Cotton Domestic User Program are revised to reflect the current name of 
the program, Economic Adjustment Assistance for Textile Mills. The 
final rule adds a new Sec.  870.2--Definitions, to provide the meaning 
of several terms used in program administration that have been subject 
to differing interpretations in the past. For example, the term 
domestic user is defined as a person regularly engaged in the business 
of opening bales of eligible upland cotton for the purpose of spinning 
such cotton into yarn, papermaking, or production of non-woven cotton 
products. This definition clarifies and enhances the use of other terms 
already defined in the current regulations. Eligible domestic users is 
defined as domestic users who have entered into an Agreement with CCC 
to participate in the program. Eligible upland cotton is defined to 
mean baled lint; loose samples used for classification purposes that 
have been re-baled; semi-processed motes that are suitable for 
spinning, paper making, or production of non-woven fabric; or re-ginned 
motes. Eligible upland cotton cannot be cotton for which previous EAATM 
payments have been made, unprocessed derivatives of the lint cleaning 
process, or textile mill wastes. Similarly, the term final cotton 
product is defined to mean a domestically manufactured final product 
that contains upland cotton to clarify those manufacturing purposes for 
which program assistance funds are eligible. Each of these definitions 
is intended to

[[Page 74331]]

clarify eligibility for program participation.
    The term capital expenditures is defined to mean a business's 
expenses related to the purchase or improvement of depreciable fixed 
assets, such as physical property, facilities, and equipment used in 
the manufacture of final products containing upland cotton. The terms 
equipment and facility or plant is defined to identify those fixed 
assets for which capital expenditures are recognized under the program. 
Equipment is defined to mean any machine used directly in the 
production of final cotton products in order to improve product 
quality, handling, and/or production efficiency, and facility or plant 
would mean the structures that house such equipment. Readily put into 
service is defined to mean facilities, equipment, and/or plants put 
into service within 24 months of purchase. The definition of operating 
expenses includes examples of funds expended that are not eligible for 
EAATM benefits, such as rent, salaries, supplies, utilities, insurance, 
taxes, and maintenance. Each of these definitions are necessary to 
clarify which expenses program participants can include in claims for 
assistance under the program.
    Terms including linters, pills, and raw motes are defined to 
clarify types of processing byproducts that are not considered eligible 
upland cotton for program purposes. Terms including agreement effective 
date, date of consumption, fiscal year, and marketing year would be 
defined to clarify various timeframes related to application and 
reporting deadlines for program participation.
    Terms used in the existing Agreement that are related to reporting 
and recordkeeping requirements also are defined in the regulations. The 
Upland Cotton Domestic User Agreement (Form CCC-1045 DOM) means the 
agreement between CCC and an EAATM program participant, which outlines 
general program provisions and responsibilities of the program 
participant. This agreement is required of all program participants. 
The Monthly Consumption Report refers to Form CCC-1045-UP-2--Monthly 
Consumption/Application for Payment Report, or other form as prescribed 
by CCC, that contains documentation of the baled cotton inventory 
consumed, the eligible domestic user's calculation of program payments 
for the month, and a signed certification regarding the documents 
submitted. Participants are required to maintain a supplemental ledger, 
which is defined as a line-item ledger of proposed capital expenditures 
for audit purposes. Statement of eligible claim certification is the 
document that identifies which domestic user in the manufacturing chain 
is eligible to claim financial assistance under the EAATM program for 
the use of specific semi-processed motes or re-ginned mote bales.
    Terms used in filling out records and reports are also defined in 
Sec.  870.2. Upland cotton means the widely cultivated American cotton 
plant (Gossypium hirsutum) that has short-to-medium staple fibers. 
Final cotton product is defined to mean domestically manufactured 
products containing upland cotton. Net weight means the gross weight of 
baled upland cotton consumed, less the weight of the bagging and ties.
    Finally, Sec.  870.2 includes definitions for other terms necessary 
for administration of the program as explained earlier, such as 
Agricultural Marketing Service, Commodity Credit Corporation, Director 
of AMS's Warehouse and Commodity Management Division, and the Economic 
Adjustment Assistance for Textile Mills program.
    Currently, Sec. Sec.  870.3 to 870.9 contain the definitions of 
upland cotton and domestic users eligible for program participation and 
provide instructions for filing applications for participation and 
payments under the program. Under this final rule, those sections are 
reorganized and revised to incorporate program provisions that are 
currently only provided in the Agreement, and other sections are added 
to ensure that all of the program's parameters are codified.
    Under the final rule, Sec.  870.3--Upland Cotton Domestic User 
Agreement, specifies how domestic users of upland cotton can enter into 
Agreements with CCC to participate in the EAATM program. Applicants are 
required to agree to use EAATM Program funds only in compliance with 
the program and to identify all manufacturing facilities under their 
operational control and for inclusion in the Agreement.
    Section 870.5--Eligible upland cotton, describes upland cotton 
eligible for payment under EAATM and specifies that only eligible 
cotton consumed by the user in the United States on or after the 
effective date of the Agreement is eligible for payment claims. 
Further, EAATM Program funds cannot be used for expenses incurred by a 
domestic user prior to signature by both parties to the Agreement.
    Section 870.7--Monthly Consumption Report, requires program 
participants to submit cotton consumption reports and supporting 
documentation to AMS during each month of the Agreement term, including 
those months in which no eligible upland cotton was consumed. Required 
reports would constitute participants' claims for payments under the 
program and include their calculations for such payments. Under the 
final rule, delinquent Monthly Consumption Reports are ineligible for 
payment for the applicable month. Section 870.7 further provides that 
AMS will not process reports/claims that contain errors or omissions. 
Finally, Sec.  870.7 requires that, in the event of a transfer of 
eligible upland cotton bales, both program participants involved report 
to AMS any transfers of eligible upland cotton bales between them and 
that such transactions must be accompanied by a statement of eligible 
claim certification. Submission of the Monthly Consumption Report 
allows for validation of active participants, enumeration of domestic 
consumption, and provides a baseline for verifying that duplicate 
claims are not submitted for program payments.
    Section 870.9--Payment, specifies that the current rate for payment 
under the EAATM program is 3 cents per pound of eligible cotton 
consumed, and that cotton is considered consumed on the date the 
eligible cotton user removes the bale's bagging and ties immediately 
prior to manufacturing it into final cotton products--without further 
processing. Section 870.9 further provides that payments are based on 
the bale's net weight and are made available upon the eligible cotton 
user's submission of the required reports and documentation.
    Section 870.11--Capital expenditures, specifies that eligible 
domestic cotton users can only use payments under the EAATM program to 
acquire or modernize land, buildings, or equipment in the United States 
which are directly attributable to the purpose of manufacturing upland 
cotton into final cotton products in the United States. Other uses, 
such as for operating expenses or other purchases are not allowed. 
Under Sec.  870.11, participants using EAATM program funds for 
disallowed purposes are required to repay the money to CCC with 
interest and are ineligible for program participation for one year 
after the year of violation. Section Sec.  870.11 further specifies 
that program participants must submit requests for pre-approval of 
capital expenditures under the program that exceed an amount specified 
in the Agreement and for any expenditures greater than $10 million on a 
single, allowable, fixed asset. The regulation outlines the elements 
required to be submitted in a pre-approval request.

[[Page 74332]]

The threshold value is specified in the latest Upland Cotton Domestic 
User Agreement, rather than in the regulations to allow the Agency to 
consider and respond to economic pressures.
    Under the final rule, participants are required to make capital 
expenditures equal to or greater than amounts received as EAATM program 
payments within 18 months of the end of the marketing year for which 
payments are made, unless participants apply for and are granted a 
Funding Utilization Extension, but in no case more than an additional 
36 months.
    Fixed assets acquired and/or modernized with EAATM Program funds 
must be in operation within 24 months after the date of delivery. If 
unforeseen difficulties prevent utilization within the 24-month period, 
written approval must be obtained from WCMD for an extension of time. 
The timeframes and increased communication about expenditures between 
the Agency and participants are expected to increase auditability and 
transparency. Finally, Sec.  870.11 provides that program participants 
cannot transfer--directly or indirectly--EAATM Program funds to another 
entity. Participants are required to complete an asset transfer 
certification in the event of a sale or transfer of assets to another 
program participant. Except for extenuating circumstances approved by 
AMS, fixed assets, purchased using EAATM Program funds, cannot be sold 
until they have been in operation for at least 36 months and cannot be 
purchased with EAATM Program funds again by another eligible domestic 
user.
    Section 870.13--Records and inspection, requires program 
participants to maintain all records and reports relating to their 
EAATM Agreement for a period of three years following termination of 
the Agreement. Detailed record requirements are intended to provide 
better guidance to the participants and expedite audits. These 
requirements include identifying elements of the monthly consumption 
listing, supporting documentation of purchased and consumed cotton, 
supporting documentation of used but ineligible cotton, inventory 
records, capital expenditures, and the supplemental ledger. Section 
870.13 requires program participants to provide copies of records 
supporting payment claims to AMS upon demand, and to make all records 
related to their Agreements accessible to AMS, USDA, and/or any other 
governmental unit needing access for audit or inspection purposes. The 
reporting and recordkeeping requirements are needed for oversight to 
safeguard program integrity.
    Section 870.15--Compliance, enforcement, and appeals, provides that 
AMS will notify appropriate investigating agencies--and that CCC may 
terminate an Agreement and demand full repayment plus interest--if a 
program participant is suspected of violating the Agreement, making any 
fraudulent representation, or misrepresenting any fact affecting a 
determination under the Agreement. Under the final rule, the 
participant could be barred from further government program 
participation as necessary to protect government interests. Further, 
CCC retains the authority to terminate an Agreement at any time. 
Section 870.15 also provides a process for appealing program 
administration decisions.

Required Regulatory Analyses

Paperwork Reduction Act

    The Economic Adjustment Assistance for Textile Mills Program is 
exempt from the requirements of the Paperwork Reduction Act 
(Agricultural Act of 2014 (Pub. L. 113-79, Title I, Subtitle F, 
Administration Generally, Section 1601(c)(2)). Accordingly, the 
information collection requirements of this final rule have not been 
reviewed by the Office of Management and Budget.

Executive Order 13175

    This final rule was reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions have 
Tribal implications. AMS has determined that this final rule is 
unlikely to have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes.

Executive Orders 12866 and 13563

    Executive Order 12866--Regulatory Planning and Review, and 
Executive Order 13563--Improving Regulation and Regulatory Review, 
direct agencies to assess 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, of reducing costs, of 
harmonizing rules, and of promoting flexibility. The Office of 
Management and Budget (OMB) designated this rule as not significant 
under Executive Order 12866. Therefore, OMB has not reviewed this rule.

Regulatory Flexibility Analysis

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601-612), the Agricultural Marketing Service 
(AMS) has considered the economic impact of the action on small 
entities, and, accordingly, has prepared this Regulatory Flexibility 
Analysis (RFA).
    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 
unduly or disproportionately burdened. AMS certifies that this rule 
will not have a significant economic impact or burden on small Textile 
Mill entities. In making this determination, AMS considered the current 
and possible participant base of the Economic Adjustment Assistance for 
Textile Mills (EAATM) Program and the nature of this action. The EAATM 
Program is authorized by the Farm Bill, first in 2008 (Food, 
Conservation, and Energy Act (Pub. L. 110-246)), reauthorized in 2014 
(Agricultural Act of 2014 (Pub. L. 113-79)) and 2018 (Pub. L. 115-334), 
and funded through Commodity Credit Corporation (CCC), with 
administrative oversight delegated to AMS.
    AMS used the Small Business Administration's (SBA) definition of 
small business in reference to Textile Mills, found at 13 CFR 121.201. 
The affected industry falls under the North American Industry 
Classification System (NAICS) as Subsector 313, with most current 
participants classified as code 313110--Textile Mills, Fiber, Yarn, and 
Thread Mills. This classification includes firms that process raw 
cotton into cotton products. SBA determines firm size for this industry 
by number of employees, but on a per firm basis, with small firms 
defined as having fewer than 1,500 employees. Current participants of 
the EAATM Program are required to be registered with the System for 
Awards Management; however, none of the current participants appear to 
have the small business registration denoted on their entity profile. 
EAATM participants do not disclose the number of employees in the 
agreements or applications submitted to CCC but based on familiarity 
with the industry and information from SBA's Dynamic Small Business 
Search Database, AMS estimates that 25 out of the 34 current

[[Page 74333]]

participants can be considered small entities.
    This action codifies existing requirements in the EAATM Domestic 
User Agreement and does not impose any new requirements. In analyzing 
the current economic impact on small entities, AMS could only deduce 
positive impact. The EAATM program has fewer than 40 participants, and 
AMS does not anticipate any surge in participation due to the action. 
Small Textile Mill participants in the EAATM Program will not be unduly 
or disproportionately burdened. Textile Mills of all sizes may benefit 
proportionately from the program, as it provides a payment per pound of 
cotton consumed to encourage domestic consumption of cotton.
    The definition of an eligible participant in reference to the EAATM 
Program is someone regularly engaged in opening bales of eligible 
upland cotton for the purposes of spinning cotton into yarn, paper 
making, or production of non-woven cotton products in the United 
States, who has entered into an agreement with the CCC to participate 
in the upland cotton user program. Participants may be public or 
private nonprofit entities. All entities that adhere to the eligible 
participant definition and submit a monthly application indicating 
consumed bales of upland cotton, regardless of size, can voluntarily 
participate and benefit from the EAATM Program. Program provisions are 
administered without regard for business size. The paperwork required 
to participate asks for information that is part of normal business 
records. The information collection burden for eligible participants is 
minimal as they must only compete the user application form with the 
Textile Mill's monthly consumption. The voluntary nature of the program 
allows any eligible participant to stop participating if they find 
program participation causes an undue or disproportionate burden.

E-Government Act

    USDA is committed to complying with the E-Government Act (44 U.S.C. 
3601 et seq.) by promoting the use of the internet and other 
information technologies to provide increased opportunities for citizen 
access to Government information and services, and for other purposes.

Executive Order 12988

    This final rule was reviewed under Executive Order 12988--Civil 
Justice Reform. This rule will not preempt State or local laws, 
regulations, or policies unless they represent an irreconcilable 
conflict with this rule. The final rule is not intended to have 
retroactive effect. Before any judicial actions may be brought 
regarding the provisions of this rule, administrative appeal provisions 
of 7 CFR parts 11 and 780 must be exhausted.

Exemption From Notice and Comment

    The EAATM program is authorized under Title I of the Agricultural 
Act of 2014. As such, regulations for EAATM may be made without regard 
to the notice and comment provisions of the Administrative Procedures 
Act at 5 U.S.C. 553. (See 7 U.S.C. 9091(C)(2)(a)) Nevertheless, AMS is 
interested in public feedback and invites comments on this final rule 
from interested persons that may inform future rulemaking. Comments are 
due January 2, 2024.
    Further, AMS finds there is good cause for making this rule 
effective immediately. Implementing the provisions of this final rule 
without a 30-day delay provides program continuity and enumerates 
participation requirements necessary for the industry to ensure access 
to program benefits.

List of Subjects in 7 CFR Part 870

    Cotton, EAATM, Payments, Reporting and recordkeeping, Textile 
mills, Upland Cotton Domestic User Agreement.


0
For the reasons set forth in the preamble, the Agricultural Marketing 
Service revises 7 CFR part 870 to read as follows:

PART 870--ECONOMIC ADJUSTMENT ASSISTANCE FOR TEXTILE MILLS

Sec.
870.1 Applicability.
870.2 Definitions.
870.3 Upland Cotton Domestic User Agreement.
870.5 Eligible upland cotton.
870.7 Monthly Consumption Report.
870.9 Payment.
870.11 Capital expenditures.
870.13 Records and inspection.
870.15 Compliance, enforcement, and appeals.

    Authority:  7 U.S.C. 9037(c).


Sec.  870.1  Applicability.

    (a) These regulations specify the terms and conditions under which 
the Commodity Credit Corporation (CCC) will make payments to eligible 
domestic users who have entered into an Upland Cotton Domestic User 
Agreement with the Agricultural Marketing Service to participate in the 
Economic Adjustment Assistance for Textile Mills Program.
    (b) The Agricultural Marketing Service will specify the forms to be 
used in administering the Economic Adjustment Assistance for Textile 
Mills program.


Sec.  870.2  Definitions.

    For the purposes of the regulations in this part:
    Agreement effective date means the date on which the Upland Cotton 
Domestic User Agreement takes effect or becomes operative and 
enforceable.
    Agricultural Marketing Service (AMS) means the Agricultural 
Marketing Service of the United States Department of Agriculture, which 
administers the Economic Adjustment Assistance for Textile Mills 
Program.
    Bale weight means the auditable weight of a bale of cotton as 
determined on a scale certified as accurate by an independent party.
    Baled lint means ginned or processed cotton lint, including but not 
limited to lint classified by the Agricultural Marketing Service as 
Below Grade, compressed into a standard-sized and weighed pack.
    Capital expenditures means funds expended by a business for 
modernization or acquisition of depreciable fixed assets such as 
property, fixtures, or machinery that are directly attributable to the 
improvement of productivity or efficiency of the domestic user in the 
manufacturing of final products containing upland cotton. Capital 
expenditures do not include debt service payments, even if such debt 
service payments are for debt used to finance capital expenditures.
    Commodity Credit Corporation (CCC) means the wholly owned 
government corporation within the U.S. Department of Agriculture, whose 
funds, facilities, and authorities are used to implement specific 
activities as authorized by Congress.
    Date of consumption means the date the bagging and ties are removed 
from the bale, as determined by AMS.
    Director means the Director of the Warehouse and Commodity 
Management Division (WCMD) part of the Agricultural Marketing Service's 
Fair Trade Practices Program.
    Domestic user means a person who is regularly engaged in the 
business of opening bales of eligible upland cotton in the United 
States for the purpose of spinning such cotton into yarn, papermaking, 
or production of non-woven cotton products also in the United States.
    EAATM Program funds means funds provided by CCC as Economic 
Adjustment Assistance for Textile Mills under the terms of the 
Agreement.
    Economic Adjustment Assistance for Textile Mills (EAATM) means the

[[Page 74334]]

program authorized by Congress under which eligible domestic users of 
eligible upland cotton can apply for and receive financial assistance 
to offset capital expenditures related to investments in the United 
States for the manufacturing of products containing cotton, as provided 
in this part.
    Eligible domestic user means a domestic user in the United States, 
who has entered into an agreement with CCC to participate in the 
Economic Adjustment Assistance for Textile Mills program.
    Eligible upland cotton means baled upland cotton, regardless of 
origin, that is opened by an eligible domestic user and is baled lint, 
re-baled loose samples, suitable semi-processed motes, or re-ginned 
motes.
    Equipment means any machine used directly in the production of 
final cotton products in order to improve product quality, handling, 
and/or production efficiency.
    Facility or Plant means the structure(s) that houses the necessary 
equipment for consuming and manufacturing eligible upland cotton into 
the final cotton product.
    Final cotton product means product manufactured domestically that 
contains upland cotton.
    Linters means lint produced from the cottonseed crushing process.
    Marketing year means the one-year period starting on August 1 and 
ending on the following July 31.
    Monthly Consumption Report means Form CCC-1045-UP-2, the Monthly 
Consumption/Application for Payment Report, or other form as prescribed 
by AMS, submitted by the eligible domestic user for program payment 
purposes that contains documentation of inventory consumed, payment 
amounts, and a signed certification.
    Net weight means the bale weight less the weight of the bagging and 
ties.
    Operating expenses means funds expended by a business in its normal 
activities, including but not limited to rent, salaries, supplies, 
utilities, insurance, taxes, and maintenance.
    Operational control means the domestic user has plenary control 
over the facility during the term of the Upland Cotton Domestic User 
Agreement.
    Person means any individual, partnership, corporation, association, 
public or private organization or governmental entity, or combination 
thereof.
    Pills means waste from the mote cleaning process.
    Raw motes means lint cleaner waste resulting from the ginning 
process.
    Readily put into service means facilities, equipment, and/or plants 
put into service within 24 months of delivery.
    Re-baled loose samples means loose samples of upland cotton that 
have been removed from cotton bales for classification purposes and 
subsequently re-baled.
    Re-ginned mote bales means baled cotton fiber that has been removed 
from small, broken, or immature cotton seeds by re-ginning.
    Statement of eligible claim certification means an official 
document identifying the entity eligible to claim EAATM financial 
assistance for their use of suitable semi-processed motes or re-ginned 
mote bales.
    Suitable semi-processed motes means small, broken, or immature 
cotton seeds with attached cotton fibers that are of a quality 
suitable, without further processing, for spinning, papermaking, or 
production of non-woven fabric.
    Supplemental ledger means a line-item record detailing qualifying 
capital expenditures that the eligible domestic user proposes to claim 
for program purposes.
    Upland cotton means a widely cultivated American cotton plant 
(Gossypium hirsutum) having short-to-medium staple fibers.
    Upland Cotton Domestic User Agreement (Form CCC-1045DOM or 
Agreement) means an agreement between CCC and an eligible domestic user 
regarding EAATM program participation.


Sec.  870.3  Upland Cotton Domestic User Agreement.

    (a) To be eligible for payment under the Upland Cotton Economic 
Adjustment Assistance for Textile Mills program, domestic users must 
apply for program participation by submitting a signed original copy of 
the version of the Upland Cotton Domestic User Agreement, then in 
effect, for approval and execution by the Agricultural Marketing 
Service on behalf of CCC. Upon approval, AMS will return an executed 
copy to the domestic user.
    (b) The domestic user must stipulate in writing that the intended 
use of all funds received under the EAATM program will be for the sole 
purpose of capital expenditures directly attributable to the purpose of 
manufacturing upland cotton into final cotton products in the United 
States.
    (c) The domestic user must identify all plants and/or facilities to 
be included as a part of the Upland Cotton Domestic User Agreement. The 
domestic user must have operational control of these plants and/or 
facilities.
    (d) Payments will be made available to eligible domestic users who 
have entered into the version of an Upland Cotton Domestic User 
Agreement with CCC, then in effect, and who have complied with the 
program requirements of this part.
    (e) Upland Cotton Domestic User Agreement forms may be obtained 
from the Warehouse and Commodity Management Division website.


Sec.  870.5  Eligible upland cotton.

    (a) Upland cotton eligible for payment under this part must be 
cotton that is consumed by the domestic user in the United States on or 
after the effective date of a signed Upland Cotton Domestic User 
Agreement, but not later than such date as may be set by the 
Agricultural Marketing Service.
    (b) The following are not eligible for payment under this part:
    (1) Cotton for which a payment under the provisions of this part 
has already been claimed or made available;
    (2) Raw (unprocessed) motes, pills, linters, or other derivatives 
of the lint cleaning process; or
    (3) Textile mill wastes.


Sec.  870.7  Monthly Consumption Report.

    (a) Eligible domestic users making applications for payment under 
this part must submit a Monthly Consumption Report to AMS. The Monthly 
Consumption Report must include the following:
    (1) Documentation of eligible upland cotton inventory consumed by 
the eligible domestic user;
    (2) The eligible domestic user's calculation of financial 
assistance claimed for payment under the program; and
    (3) The eligible domestic user's signed certification as to the 
accuracy of the Monthly Consumption Report.
    (b) The eligible domestic user must report to AMS the activity 
pursuant to paragraph (a)(1) of this section for each month beginning 
on the effective date of the Agreement.
    (1) If the eligible domestic user's facility is temporarily closed 
for any reason, the eligible domestic user must notify AMS and submit a 
Monthly Consumption Report prior to the end of the month following the 
plant closure.
    (2) Except as provided in paragraph (b)(1) of this section, the 
domestic user must submit Monthly Consumption Reports every month, even 
when no eligible upland cotton has been consumed.
    (c) Monthly Consumption Reports not submitted by the last business 
day of the following month will be considered late by AMS and are 
ineligible for payment.

[[Page 74335]]

    (d) AMS will not process for payment Monthly Consumption Reports or 
any other required documents from an eligible domestic user that 
contain errors or omissions.
    (e) Any transaction between two eligible domestic users involving 
the transfer of eligible upland cotton bales must be reported to AMS by 
both eligible domestic users with a statement of eligible claim 
certification as defined in Sec.  870.2.


Sec.  870.9  Payment.

    (a) The payment rate for purposes of calculating payments as 
specified in this part is 3 cents per pound.
    (b) The payment rate is the rate in effect on the date of 
consumption.
    (1) Baled eligible upland cotton consumption must take place in a 
building or collection of buildings where the cotton bale will be used 
in the continuous process of manufacturing the cotton into final cotton 
products in the United States, and as determined by AMS. Unbaled 
eligible upland cotton will be considered consumed by the domestic user 
on the date processed.
    (2) The quantity of eligible upland cotton with respect to which a 
payment is made available shall be determined based upon the net weight 
of each bale of eligible upland cotton.
    (c) Payments specified in this part will be determined by 
multiplying the payment rate by one of the following:
    (1) In the case of baled upland cotton, whether lint, loose 
samples, or re-ginned motes, but not semi-processed motes, the net 
weight of the cotton consumed;
    (2) In the case of unbaled re-ginned motes consumed, without re-
baling, for an end use in a continuous manufacturing process, the 
weight of the re-ginned motes after final cleaning; or
    (3) In the case of suitable semi-processed motes, 25 percent of the 
net weight of the semi-processed motes.
    (d) In all cases, the payment will be determined based on the 
amount of eligible upland cotton that an eligible domestic user 
consumed during the immediately preceding calendar month.
    (e) Payments specified in this part will be made available upon 
application for payment and submission of supporting documentation, as 
required by the provisions of this part.


Sec.  870.11  Capital expenditures.

    (a) All payments to eligible domestic users of upland cotton under 
this part shall be used only for capital expenditures that acquire, 
construct, install, modernize, develop, convert, or expand land, plant, 
buildings, equipment, or machinery in the United States. Capital 
expenditures must be directly attributable to the purpose of 
manufacturing upland cotton into final cotton products in the United 
States and certified as such by the domestic user. Expenditures that 
are not directly associated with manufacturing of upland cotton into 
final cotton products in the United States are outside the purpose and 
scope of the Economic Adjustment Assistance for Textile Mills Program 
and are not eligible expenditures for funds under this part.
    (b) Operating expenses are not eligible for purposes of this part.
    (c) If AMS determines, after a review or audit of the eligible 
domestic user's records, that economic adjustment assistance under this 
part was not used for the purposes specified in paragraph (a) of this 
section, the eligible domestic user shall be:
    (1) Liable to repay the assistance to CCC, plus interest, as 
determined by CCC; and
    (2) Ineligible to receive assistance under EAATM for a period of 
one year following AMS's determination.
    (d) Any specific capital expenditure exceeding an amount, as 
specified in the version of the Upland Cotton Domestic User Agreement, 
then in effect, must be submitted for pre-approval. The request for 
pre-approval must include:
    (1) The description of the proposed expenditure specified for the 
applicable marketing year;
    (2) Itemized purchase order and/or invoice number, if applicable;
    (3) Documentation of scheduled purchase date(s), installation date, 
and location (which facility); and
    (4) Any additional information required by AMS.
    (e) The eligible domestic user must make capital expenditures equal 
to, or greater than, any amounts received as EAATM Program funds, 
within 18 months following the end of the applicable marketing year. 
Equipment, facilities, and plants purchased with EAATM Program funds 
must be readily put into service as defined in Sec.  870.2. The 
eligible domestic user must:
    (1) Make capital expenditures that exceed the amount paid to the 
eligible domestic user for any marketing year. EAATM Program funds will 
not carry over to the following marketing year without a written 
Funding Utilization Extension from AMS.
    (2) Request a Funding Utilization Extension for approval from AMS 
to be considered for any capital expenditure exceeding a value of $10 
million on a single, allowable, fixed asset.
    (3) Request a Funding Utilization Extension at the time of a pre-
approval for a single item expenditure pursuant to paragraph (d) of 
this section.
    (4) Applications for a Funding Utilization Extension Request must 
include, but are not limited to:
    (i) Detailed plans for the expense;
    (ii) Timeline of construction;
    (iii) Schedule of payments;
    (iv) Estimated date of when the capital expenditure will be 
operational;
    (v) Explanation of how the expense meets the criteria for allowable 
purposes;
    (vi) Justification for the extension request; and
    (vii) Any other information or supporting documentation required by 
AMS.
    (5) WCMD will consider Funding Utilization Extension requests based 
on allowable purposes. In any event, the maximum time extension for 
EAATM Program funds to be used for capital expenditures will be 36 
months beyond the existing timeframe of 30 months (Marketing Year + 18 
months), for a total of 66 months.
    (6) EAATM Program funds will be reconciled against the eligible 
expense(s) specified in the Funding Utilization Extension until the 
approved time extension has expired or funds are exhausted.
    (f) Fixed assets acquired and/or modernized with EAATM Program 
funds must be in operation within 24 months after the date of purchase. 
If unforeseen difficulties prevent utilization within the 24-month 
period, written approval must be obtained from WCMD for an extension of 
time.
    (g) Direct or indirect transfer of EAATM Program funds to another 
entity is prohibited. In the event of a sale/transfer of an eligible 
domestic user's business or its assets, the eligible domestic user must 
sign a written verification certifying that no EAATM Program funds were 
transferred, either in cash or as an asset purchased exclusively to be 
transferred to the acquiring company.
    (h) Each eligible domestic user involved in an acquisition/merger/
transfer must notify AMS and provide AMS with an itemized ledger 
detailing specific equipment, building, facility, property, and/or 
plants bought with EAATM Program funds included with any acquisition/
merger/transfer. In the event of an acquisition/merger/transfer and 
without extenuating circumstances, equipment, facilities, and/or plants 
purchased with EAATM Program funds by an eligible domestic user must be 
operational for a minimum of 36 months prior to its sale and cannot be 
purchased

[[Page 74336]]

with EAATM Program funds again by another eligible domestic user.


Sec.  870.13  Records and inspection.

    (a) Required records. The eligible domestic user shall maintain all 
records and reports relating to their Upland Cotton Domestic User 
Agreement for a period of three years following termination of the 
Agreement. At a minimum, records must include those listed in 
paragraphs (a)(1) through (6) of this section.
    (1) A monthly consumption record including a detailed list of bales 
consumed, showing the bale numbers, net weights, date received, date 
consumed, type of eligible upland cotton, and a facility identifier. 
The consumption record must be accompanied by source documents such as 
purchase orders and invoices to verify the information provided.
    (2) Documentation supporting the receiving of cotton, including a 
register of contracts, amendments, and cancellations. Records must show 
the number of bales received each month by type of cotton, supported by 
invoices or waybills and weight sheets documenting the net weight when 
received at the user's facility.
    (3) Documentation tracing the consumed bale weight back to source 
documents showing the documented bale weight received at the user's 
facility.
    (4) Documentation supporting the acquisition, consumption, and 
disposition of ineligible cotton and other textiles.
    (5) A bale inventory record that summarizes, at least monthly, the 
eligible domestic user's beginning inventory, receipts, adjustments, 
consumption, and ending inventory.
    (6) Documentation of capital expenditures that are equal to or 
greater than payments received.
    (i) The eligible domestic user must record information about 
capital expenditures in a supplemental ledger as defined in Sec.  
870.2, including, but not limited to, detailed descriptions of each 
capital expenditure, acquisition date, date of payment, amount of 
payment, and proof of payment, serial number(s), invoice number, and 
location (applicable facility).
    (ii) Capital expenditures must be grouped by Marketing Year.
    (iii) Each line item must reflect only a single expense for an 
identifiable single expenditure.
    (b) Inspection of records. (1) Upon request from WCMD, the eligible 
domestic user must forward to WCMD copies of any and all records which 
support the domestic user's claims for payment.
    (2) Eligible domestic users must make records available at all 
reasonable times for an audit or inspection by authorized 
representatives of AMS, the United States Department of Agriculture, 
and/or any other governmental unit needing access for audit or 
inspection purposes.
    (3) Eligible domestic users shall permit, and assist without 
impediment, any AMS-authorized individual to inspect or audit, on any 
business day during the normal and customary hours of business, the 
books, papers, records, accounts, and other applicable documents 
relating to the Agreement. Failure to provide access or respond timely 
to requests for information and records will result in denial of 
benefits.


Sec.  870.15  Compliance, enforcement, and appeals.

    (a) AMS will notify the appropriate investigating agencies of the 
United States and CCC may terminate the Agreement and demand a full 
refund of payments plus interest and suspend and debar the offending 
company from further government participation as deemed necessary to 
protect the interests of the government, if the eligible domestic user 
is suspected by AMS to have knowingly:
    (1) Adopted any scheme or device which violates the Agreement;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a determination under the 
Agreement.
    (b) No Member or Delegate of Congress shall be admitted to any 
share or part of the Agreement or to any benefit to arise therefrom, 
except that this provision shall not be construed to extend to their 
interest in any incorporated company, if the Agreement is for the 
general benefit of such company, nor shall it be construed to extend to 
any benefit which may accrue to such official in their capacity as a 
party to an Agreement.
    (c) Eligible domestic users who dispute a WCMD program 
administration decision may request a review of the decision by the 
Director.
    (1) Requests for review must be in writing and contain the relevant 
facts upon which the review will be heard. Requests must be received by 
WCMD within 15 days from the date the eligible domestic user receives 
the disputed decision.
    (2) Requests must be directed to: Director, Warehouse and Commodity 
Management Division, Agricultural Marketing Service, U.S. Department of 
Agriculture, at <a href="/cdn-cgi/l/email-protection#3b7e7a7a6f76157e77687b4e485f5a155c544d"><span class="__cf_email__" data-cfemail="ffbabebeabb2d1bab3acbf8a8c9b9ed1989089">[email protected]</span></a>.
    (d) 7 CFR 2.79(a)(23) authorizes the AMS Administrator to 
administer the EAATM program (7 U.S.C. 9037(c)). In light of the 
aforementioned redelegation, AMS is considered a successor ``Agency'' 
under 7 CFR 11.1, and decisions made under EAATM, if deemed adverse, 
are subject to NAD jurisdiction. Accordingly, appeals under this 
program shall be heard by the USDA National Appeals Division.
    (e) Eligible domestic users who dispute a review decision by the 
Director must appeal such decision to the USDA National Appeals 
Division pursuant to 7 U.S.C. 6912(e) and 7 CFR 11. Such an appeal must 
be made within 30 days of receipt of a WCMD decision.
    (f) CCC may terminate the Upland Cotton Domestic User Agreement at 
any time.
    (g) When a new Agreement is executed for any reason, including but 
not limited to programmatic requirements, expiration of authorizing 
legislation, or exhaustion of funds, any previous Agreement between CCC 
and the eligible domestic user shall be null and void/terminated.
    (h) The Director may waive or modify deadlines and other program 
requirements in cases where timeliness or failure to meet such other 
requirements does not adversely affect the operation of the program.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-23727 Filed 10-30-23; 8:45 am]
BILLING CODE 3410-02-P


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