This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

64839 

Vol. 76, No. 202 

Wednesday, October 19, 2011 

DEPARTMENT OF AGRICULTURE 

Commodity Credit Corporation 

7 CFR Part 1435 

RIN 0560–AH86 

Sugar Program; Feedstock Flexibility 

Program for Bioenergy Producers 

AGENCY: Commodity Credit Corporation, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: The Commodity Credit 

Corporation (CCC) proposes regulations 

with respect to general sugar inventory 

disposition and the establishment of a 

new Feedstock Flexibility Program 

(FFP) that requires the Secretary to 

purchase sugar to produce bioenergy as 

a means to avoid forfeitures of sugar 

loan collateral under the sugar loan 

program. These regulations are as 

required by the Food Security and Rural 

Investment Act of 2002 (the 2002 Farm 

Bill), as amended by the Food, 

Conservation, and Energy Act of 2008 

(the 2008 Farm Bill). 

DATES: We will consider comments that 

we receive by December 19, 2011. 

ADDRESSES: Interested persons are 

invited to submit comments on this 

proposed rule. In your comment, 

include the volume, date, and page 

number of this issue of the Federal 

Register. You may submit comments by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

• Fax: (202) 690–1480. 

• Mail: Barbara Fecso, Dairy and 

Sweeteners Analysis Group, Economic 

Policy and Analysis Staff, USDA, FSA, 

Stop 0516, 1400 Independence Ave., 

SW., Washington, DC 20250–0516. 

• Hand Delivery or Courier: USDA 

FSA Economic Policy and Analysis 

Staff, Stop 0516, 1400 Independence 

Ave., SW., Washington, DC 20250–0516. 

FOR FURTHER INFORMATION CONTACT: 

Barbara Fecso, phone: (202) 720–4146; 

fax: (202) 690–1480. Persons with 

disabilities who require alternative 

means for communication (Braille, large 

print, audiotape, etc.) should contact the 

USDA Target Center at (202) 720–2600 

(voice and TDD). 

SUPPLEMENTARY INFORMATION: 

Background 

CCC proposes to establish new 

regulations for the sugar inventory 

disposition program and FFP for 

bioenergy producers mandated by Title 

IX of the 2008 Farm Bill (Pub. L. 110– 

246). 

Sugar Program 

The sugar program is designed to 

support the price of sugar above a 

legislatively specified threshold that has 

been established by successive Farm 

Bills. In adding FFP as a new element 

of the sugar program, it is helpful to 

understand certain aspects of the 

existing program and how certain 

components would relate to FFP. In the 

sugar program, the level of price support 

is determined by the sugar loan 

program. Sugar loans from CCC can be 

satisfied by repaying the loan or by 

giving CCC title to the loan collateral, 

also known as a ‘‘forfeiture’’ of 

collateral. The sugar program is 

required, to the maximum extent 

possible, to operate at no cost to the 

Federal government by avoiding 

forfeitures to CCC. To avoid forfeitures, 

the sugar program limits the domestic 

sugar supply through a program of 

marketing allocations and tariff-rate 

quotas, thereby usually resulting in 

higher domestic sugar prices than the 

floor created by the sugar loan program. 

Sugar Inventory Disposition 

CCC proposes new general sugar 

inventory disposition regulations that 

are required by the 2008 amendments to 

7 U.S.C. 8110. The 2008 amendments 

restrict the methods CCC may use to 

dispose of its sugar inventory in nonemergency situations. The purpose of 

the restrictions is to ensure that 

disposed inventory only goes to nonfood uses (for example, bioenergy 

production) and does not disrupt the 

market for sugar for human 

consumption. If there is an emergency 

shortage of sugar for human 

consumption, the Secretary can dispose 

of the inventory to fill that shortage. 

CCC proposes to add a new subpart E 

on General Disposition of CCC 

Inventory to 7 CFR 1435 to implement 

the 2008 amendments. Subpart E would 

apply to sugar in inventory that CCC 

acquired by means other than FFP, such 

as sugar obtained from forfeited loan 

collateral. 

General Disposition of CCC Inventory 

(Proposed New Subpart E) 

Section 9001 of the 2008 Farm Bill 

amends section 9010 of the 2002 Farm 

Bill establishing the methods CCC may 

use to manage inventory acquired by 

forfeiture or other authorities. Unless 

CCC has determined that there is an 

emergency shortage of sugar in the 

domestic market caused by war, flood, 

hurricane, other natural disaster, or 

similar event, CCC can only dispose of 

its sugar inventory using outlets that do 

not increase the net supply of sugar 

available for human consumption in the 

United States. 

The 2008 amendments specifically 

list methods of disposition as sales 

under FFP (proposed new Subpart G), 

the Processor Payment-In-Kind Program 

(Subpart F in the current regulations), 

and buybacks of Certificates of Quota 

Eligibility (identified in the 2008 

amendments as certificates of quota 

entry) issued by the Office of the U.S. 

Trade Representative, as set forth in 15 

CFR part 2011. The 2008 amendments 

do not limit CCC’s ability to dispose of 

its sugar for nonfood use (or uses that 

do not increase the supply of sugar for 

human consumption) under any 

authority. This is a change from the 

2002 Farm Bill (Pub. L. 107–171) as 

originally enacted and the regulations 

implementing the 2002 Farm Bill, 

which allowed CCC to dispose of 

surplus sugar into the domestic market, 

including the market for human 

consumption. Therefore, we are 

proposing new regulations to specify 

how CCC would dispose of sugar 

inventory. The existing Payment in 

Kind program, specified in subpart F, is 

one authority CCC uses to dispose of 

inventory. This proposed rule would 

not change subpart F. 

New subpart E would include general 

provisions for disposition of inventory 

that is not acquired through FFP. For 

example, subpart E would apply to 

disposition of sugar acquired through 

forfeiture of sugar loan collateral. 

Subpart E would specify the options 

CCC would use to dispose of inventory 


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64840 Federal Register / Vol. 76, No. 202 / Wednesday, October 19, 2011 / Proposed Rules 

in both normal and emergency shortage 

situations. 

The 2008 amendments to section 9010 

of the 2002 Farm Bill also specify the 

methods CCC may use to manage 

inventory acquired by forfeiture under 

the sugar loan program or other 

authorities. Unless, as specified in the 

2008 Farm Bill, CCC has determined 

that ‘‘there is an emergency shortage of 

sugar for human consumption in the 

United States market that is caused by 

a war, flood, hurricane, or other natural 

disaster, or other similar event,’’ CCC 

can only dispose of its sugar inventory 

by methods that do not increase the net 

supply of sugar available for human 

consumption in the United States. There 

should not be much inventory subject to 

this provision because the main sugar 

surplus management strategy in the 

recently amended statute is the removal 

of sugar surpluses through CCC sugar 

purchases and disposal through 

conversion to bioenergy. 

CCC can sell sugar for human 

consumption if an emergency shortage 

condition exists, and the event is caused 

by a war, flood, hurricane, or other 

natural disaster, or other similar event. 

By including the universe of causes— 

manmade, natural, and ‘‘other similar 

event,’’ CCC has great discretion in 

determining the cause triggering an 

emergency shortage. Therefore, the only 

practical limitation on CCC’s ability to 

sell sugar for human consumption 

depends on what constitutes the 

‘‘existence of an emergency shortage.’’ 

This concept is important because CCC 

is required under the sugar marketing 

allotment program and Harmonized 

Tariff Schedule to ensure an adequate 

supply of sugar for domestic 

consumption. Additionally, the sugar 

tariff-rate quota management provisions 

of the 2008 amendments require USDA 

to increase sugar supplies if an 

emergency shortage exists. 

CCC is requesting comment from the 

public on establishing a definition of an 

emergency shortage. Webster’s 

Dictionary defines an emergency as a 

sudden or unexpected occurrence 

demanding prompt action. Some recent 

examples of unexpected manmade or 

natural occurrences that reduced 

domestic refined sugar supplies are the 

late sugar beet crop of 2005, Hurricane 

Katrina, and the Imperial refinery 

explosion in Savannah, Georgia in 

February 2008. CCC determined that the 

delayed beet crop and Katrina resulted 

in sudden shortages that could not be 

resolved by redistributing available 

domestic supplies and took immediate 

action to increase supply. However, 

with respect to the February 2008 

refinery explosion, CCC delayed action 

until the following August when it 

contemplated the threat of a refined 

shortage, in recognition that shortages 

are most likely to occur in the August– 

September period when domestic sugar 

stocks are at their yearly lowest point. 

The law directs USDA to take action to 

increase supplies when an emergency 

shortage ‘‘exists,’’ not when it is 

‘‘contemplated.’’ CCC could define an 

emergency shortage as a supply failure 

affecting sugar deliveries and disrupting 

the ongoing operations of sugar product 

manufacturers, i.e., defaults or force 

majeure on contracts affecting 10 

percent of average monthly deliveries. 

Alternatively, CCC could determine an 

emergency shortage exists when sugar 

prices spike a certain percentage, i.e., 50 

percent above the loan level, or 10 cents 

above the loan level. Alternatively, CCC 

could also leave the term undefined so 

as to maintain maximum flexibility in 

meeting the needs of the domestic sugar 

market. 

Feedstock Flexibility Program 

(Proposed New Subpart G) 

Section 9001 of the 2008 Farm Bill 

amends section 9010 of the 2002 Farm 

Bill to require CCC to implement FFP to 

control the domestic sugar supply and 

avoid forfeitures. Under this program, 

CCC is required to buy surplus sugar as 

needed to avoid forfeitures of sugar loan 

collateral and sell that surplus sugar to 

bioenergy producers. Bioenergy, as 

defined by section 9001 of the 2008 

amendments, means fuel grade ethanol 

and other biofuel. The 2008 

amendments require the Secretary to 

annually notify eligible bioenergy sugar 

sellers and producers of the quantity of 

sugar to be made available for purchase 

and sale in the crop year following the 

date of that notification. The 2008 

amendments also require quarterly 

revised estimates and notification. 

CCC proposes to add a new subpart G 

to establish general provisions for 

operating FFP. Through FFP, CCC 

would buy and sell sugar for bioenergy 

production, based on predictions of 

sugar surplus conditions months into 

the future, a process that involves 

unavoidable uncertainty and risk. CCC 

proposes general provisions that are 

intended to provide flexibility in 

program administration. CCC requests 

comments on alternative methods to 

administer the program while meeting 

the requirements of the 2008 

amendments. 

FFP will be administered through 

contracts for the purchase and sale of 

sugar, and products that yield sugar, 

when CCC determines that sugar loan 

collateral is likely to be forfeited under 

the sugar loan program. The contracts 

will include the specific terms and 

conditions associated with each 

purchase and sale. CCC expects to 

amend its contract terms through time 

as it learns how to most effectively 

facilitate the diversion of sugar to 

ethanol and other bioenergy production. 

Surplus Determination 

As required by the 2008 amendments, 

each year CCC will estimate the 

likelihood of sugar forfeitures by 

September 1, for the following fiscal 

year, and announce the quantity of 

sugar to be purchased and sold for 

bioenergy production. In addition, CCC 

will make quarterly announcements of 

revised estimates. Quarterly revised 

estimates will be important because the 

USDA annual estimate reported on 

September 1 for the following fiscal 

year’s sugar market will potentially be 

subject to significant error due to 

uncertainties in making the estimate. 

The sugarcane and sugar beet harvest for 

making sugar in the following fiscal year 

does not normally begin until after 

September 1 of the prior year. Very little 

is known about the condition of the 

crop on September 1, when USDA is 

required by the 2008 amendments to 

make its annual estimate of sugar 

surplus. The harvest for sugar in Mexico 

begins in December; therefore, the 

uncertainties are aggravated by the 

effect of Mexican imports on the U.S. 

sugar market. Another major source of 

potential error is the fact that the 

current fiscal year is not over by 

September 1. Any changes to the current 

year automatically alter the current 

year’s ending stocks, and the next year’s 

beginning stocks and supply. CCC’s 

purchase and sale plans would be 

affected by the large degree of 

uncertainty in USDA’s sugar market 

projections on September 1. 

CCC requests comments on how CCC 

should calculate a sugar market surplus, 

particularly for the estimate by 

September 1, when uncertainties are 

greatest. For example, CCC could 

calculate the surplus by comparing the 

World Agricultural Supply and Demand 

Estimate (WASDE) ending stocks to the 

ending stocks for an adequately 

supplied market. In the past, an ending 

stock of 14.5 percent of expected annual 

use was considered to predict adequate 

supply for the following year. 

Alternatively, CCC could compare 

WASDE stocks to the stock level 

expected to result in forfeitures and 

declare any projected stocks above these 

amounts to be surplus. However, this 

method is inadequate for determining 

surplus by type of sugar, raw versus 

refined, because the WASDE is an 

amalgamation of both sugars. Certainly, 


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current WASDE tight ending stocks-touse ratios do not reflect the current raw 

sugar surplus. 

There are two possible types of errors 

with surplus determination: (1) Overestimating the surplus and buying and 

selling sugar for bioenergy that results 

in market shortages later in the year or 

(2) under-estimating the surplus 

resulting in excess supply later in the 

year. The consequences of these two 

types of errors are different. Sugar used 

to make bioenergy cannot be recovered 

to be marketed for human consumption 

if needed later; however, sugar not sold 

early in the year can later be sold for 

bioenergy production. The first type of 

risk, that of over-estimating the surplus, 

has more serious consequences and 

costs than the second type. CCC 

proposes to reduce the over-estimation 

risk by staggering purchases of sugar for 

bioenergy purchases, rather than making 

one purchase for the entire year. CCC 

plans to be more conservative in 

purchasing sugar for bioenergy early in 

the year than later in the year, when 

market factors are better known. CCC 

would calculate the surplus for the 

whole year as required by the 2008 

amendments, but then only tender a 

percentage of the estimated surplus for 

bid immediately. The percentage could 

change with each quarterly revised 

estimate. CCC would not retract 

accepted bids. 

CCC requests comments on 

appropriate methods to estimate the 

likelihood of forfeitures and to 

determine the quantity of sugar to be 

purchased in each quarter. How should 

CCC calculate the annual sugar market 

surplus and update that estimate? 

Should a minimum percentage of the 

expected surplus be tendered for bid 

each quarter, and should that minimum 

be set in the regulations? 

Eligible Sugar 

CCC is required to purchase raw, 

refined, or in-process sugar for FFP that 

would otherwise have been marketed 

for human consumption in the United 

States or could otherwise have been 

used for the extraction of sugar 

marketed for human consumption. The 

2008 amendments define all these forms 

of sugar as eligible commodities for FFP. 

For example, in-process sugar products 

such as beet thick juice or cane syrup 

are eligible. Since the program objective 

is to reduce forfeitures of CCC sugar 

loan collateral, CCC proposes that the 

in-process sugar products would be 

evaluated in terms of refined crystalline 

sugar yield in determining CCC’s unit 

purchase price. For example, if 

processing the thick juice would yield 

70 percent sugar for human 

consumption, then CCC would only 

consider 70 percent of the sugar in the 

thick juice in evaluating the per unit 

price. Likewise, raw sugar would be 

evaluated in terms of its refined 

equivalent to determine a sales price per 

unit. This reduction in price is not 

required by the 2008 amendments, but 

it is consistent with the 2008 

amendments’ goal of buying sugar for 

FFP to manage the market for sugar for 

human consumption. CCC requests 

comments on and proposed alternatives 

to this provision. 

CCC proposes that for FFP, it will 

only purchase sugar products that are 

eligible to be placed under loan with the 

federal sugar loan program. Sugar 

eligible to be placed under loan must be 

processed in the United States from 

domestically-grown sugarcane, sugar 

beets, in-process sugars, or molasses. As 

an alternative, CCC could allow FFP to 

purchase sugar products from all 

sources, including imported sugar and 

sugar products from eligible domestic 

sellers. Forfeitures are expected to occur 

when the total sugar supply for human 

consumption is greater than the level 

that can support domestic sugar prices 

above the price support loan proceeds. 

That surplus could be caused in part by 

Mexican imports or by sugar made 

domestically from non-domestic 

sources. CCC requests comments on 

whether eligible sugar for FFP should be 

limited to sugar located within the 

United States and derived from 

domestically produced sugarcane or 

sugar beets. 

Eligible Sugar Sellers and Buyers 

The 2008 amendments require that 

the entity selling sugar to CCC be 

located in the United States and that 

eligible buyers be bioenergy producers. 

The 2008 amendments define eligible 

sellers as entities located in the United 

States, but do not require that eligible 

buyers be located in the United States. 

CCC proposes to limit eligible buyers to 

those bioenergy producers who will use 

the purchased sugar to produce 

bioenergy in their facilities in United 

States. This restriction is intended to 

ensure that the increase in energy 

supplies from the program will benefit 

the American public paying for FFP. 

CCC requests comments on whether to 

include bioenergy producers located 

outside the United States as eligible 

buyers. 

Competitive Procedures 

CCC proposes to announce offers (also 

referred to as tenders) to the public 

outlining the terms and conditions of 

the sugar purchase and sale contracts. 

CCC also proposes to negotiate contracts 

directly with sellers or buyers if CCC 

determines that such negotiation will 

result in either reduced likelihood of 

forfeited sugar compared to alternative 

means or reduced costs of removing 

sugar from the market, which will 

reduce the likelihood of sugar forfeited 

to CCC. CCC proposes to try several 

contracting strategies to discover the 

most efficient and cost-effective strategy 

to subsidize the production of bioenergy 

with surplus sugar, given the 

restrictions specified in the 2002 Farm 

Bill. CCC requests comments on 

alternative contracting strategies and on 

whether those strategies should be 

specified in the regulation. 

CCC is required by the 2008 

amendments to store the sugar for no 

more than 30 days after CCC purchases 

the sugar. Realistically, this means that 

the purchasing bioenergy producer must 

be identified before CCC purchases 

surplus sugar. CCC does not propose 

specifically how it would do that, 

although CCC proposes to specify that 

the buyer must take delivery of the 

sugar within 30 days of purchase. CCC 

could identify (pre-qualify) bioenergy 

producers willing to take sugar or sugar 

products under specific terms (price, 

amount, type of sugar, etc.). 

Alternatively, CCC could require the 

sugar seller to identify the purchasing 

bioenergy producer and incorporate a 

contract of sale between CCC and the 

bioenergy producer specifying terms, 

including price, in their offer to sell 

sugar to CCC. CCC proposes to use both 

these strategies and evaluate which is 

more effective. CCC requests comments 

on alternative strategies. 

The 2008 amendments prohibit, to the 

maximum extent possible, CCC from 

paying storage fees under FFP. 

Therefore, as a condition of bid 

acceptance into FFP, CCC would not 

pay any storage fees. 

Sugar To Be Used for Bioenergy 

Production 

CCC expects that the selling price for 

sugar, with the restriction that it only be 

used for making bioenergy, will be 

considerably below the market price for 

sugar that can be used for human 

consumption. This price differential 

could create an incentive for FFP sugar 

to leak into the domestic human 

consumption market. Therefore, CCC 

will monitor the contracts to ensure that 

the FFP sugar is only being used for 

bioenergy production. CCC proposes to 

include an audit clause in the contracts 

to purchase sugar for bioenergy 

production. The auditors would view 

the records upon request, as specified in 

the contract, to verify that sugar 


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64842 Federal Register / Vol. 76, No. 202 / Wednesday, October 19, 2011 / Proposed Rules 

purchased for bioenergy production was 

only used for bioenergy production. 

In addition to auditing records, CCC 

would send an auditor to the bioenergy 

factory purchasing surplus sugar under 

FFP to verify that the quantity 

purchased is physically entering the 

factory as an input in accordance with 

the contract. Examination could be 

performed for every event or by random 

checks. In any case, substantial 

liquidated damages, to be determined, 

could be imposed for willfully 

furnishing false information to CCC. 

CCC requests comment on the auditing 

or monitoring methods that should be 

used. For example: 

• Are there alternative processes that 

CCC should use to ensure that the FFP 

sugar is not sold for human 

consumption? 

• What kinds of documentation, 

audits, and monitoring would be 

appropriate? 

• Should the methods of proof be 

specified in the rule, or in the contract 

between CCC and the bioenergy 

producer? 

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 

emphasized 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) initially designated this 

proposed rule as economically 

significant under Executive Order 12866 

and, therefore, OMB reviewed this 

proposed rule. Due to increases in sugar 

prices since the initial designation the 

current cost benefit analysis shows the 

annual regulatory impact to be less than 

the threshold of $100 million, therefore 

the rule is a significant regulatory 

action, but is no longer considered an 

economically significant regulatory 

action. A summary of the cost-benefit 

analysis of this rule is provided below 

and is available at http:// 

www.regulations.gov and from the 

contact listed above. 

Clarity of the Regulation 

Executive Order 12866, as 

supplemented by Executive Order 

13563, requires each agency to write all 

rules in plain language. In addition to 

your substantive comments on these 

proposed rules, we invite your 

comments on how to make them easier 

to understand. For example: 

• Are the requirements in the rule 

clearly stated? Are the scope and intent 

of the rule clear? 

• Does the rule contain technical 

language or jargon that is not clear? 

• Is the material logically organized? 

• Would changing the grouping or 

order of sections or adding headings 

make the rule easier to understand? 

• Could we improve clarity by adding 

tables, lists, or diagrams? 

• Would more, but shorter, sections 

be better? Are there specific sections 

that are too long or confusing? 

• What else could we do to make the 

rule easier to understand? 

Summary of Costs and Benefits 

FFP, along with the impact of higher 

sugar loan rates than in the 2002 Farm 

Bill, is expected to cost an average of 

$8.7 million per year for the next 10 

years. Because of uncertainty about 

future sugar markets and trade flows, 

the $8.7 million average annual cost of 

FFP is the composite of two scenarios 

which differ in their assumptions about 

the Mexican sugar market. The first 

scenario (with a 75 percent probability) 

assumes that Mexican sugarcane acreage 

does not increase and that high fructose 

corn syrup (HFCS) use in Mexico 

continues to be strong (but not as strong 

as in the second scenario), resulting in 

no FFP costs. The second scenario (with 

a 25 percent likelihood) assumes larger 

Mexican sugarcane acreage (partly due 

to higher U.S. sugar loan rates under the 

2008 Farm Bill) and lower Mexican 

sugar demand compared to the first 

scenario. With the resulting larger sugar 

shipments to the U.S., and lower U.S. 

sugar prices, this second scenario 

results in FFP activation and FFP costs. 

These additional costs are due to two 

factors. First, the higher U.S. sugar loan 

rates under the 2008 Farm Bill may 

encourage increased Mexican sugarcane 

acreage, as described in the second 

scenario above, and also mean that if 

surplus sugar is purchased to prevent 

forfeitures, the price at which it must be 

purchased is higher than previously. 

Second, the returns to the CCC 

associated with selling sugar for 

ethanol, if FFP is activated, are 

significantly lower than if sales could be 

made for human consumption (a prior 

mechanism for disposal of sugar 

inventory that was used but is no longer 

authorized). Increased sugar program 

loan rates account for $35.4 million and 

restricted CCC disposal options for 

surplus sugar account for $26.1 million 

of the total $61.5 million increase in 

over what disposal of excess sugar 

inventory would cost if the 2002 Farm 

Bill were still in effect. 

Regulatory Flexibility Act 

In accordance with the Regulatory 

Flexibility Act, 5 U.S.C. 601, the Agency 

has determined that there will not be a 

significant economic impact on a 

substantial number of small entities. 

The entities that would be affected by 

this rule are sugar producers and sugar 

bioenergy producers. The sugar 

producers are not small businesses 

according to the North American 

Industry Classification System and the 

U.S. Small Business Administration. 

There are currently no commercial 

bioenergy producers in the United 

States who use sugar as a feedstock. The 

bioenergy producers in the United 

States who use other commodities as a 

feedstock and might be expected to 

purchase sugar as a feedstock in the 

future are not small businesses. 

Environmental Review 

The environmental impacts of this 

rule have been considered in a manner 

consistent with the provisions of the 

National Environmental Policy Act 

(NEPA) (42 U.S.C. 4321–4347), the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500–1508), and Farm Service Agency 

(FSA) regulations for compliance with 

NEPA (7 CFR part 799). The changes to 

the sugar program required by Title IX 

of the 2008 amendments identified in 

this proposed rule are considered nondiscretionary. Therefore, FSA has 

determined that NEPA does not apply to 

this proposed rule and no 

environmental assessment or 

environmental impact statement will be 

prepared. 

Executive Order 12372 

This program is not subject to 

Executive Order 12372, 

‘‘Intergovernmental Review of Federal 

Programs,’’ which requires consultation 

with State and local officials. See the 

notice related to 7 CFR part 3015, 

subpart V, published in the Federal 

Register on June 24, 1983 (48 FR 29115). 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, ‘‘Civil Justice 

Reform.’’ The provisions of this 

proposed rule will not have preemptive 

effect with respect to any State or local 

laws, regulations, or policies that 

conflict with such provision or which 

otherwise impede their full 

implementation. The rule will not have 

retroactive effect. Before any judicial 


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Federal Register / Vol. 76, No. 202 / Wednesday, October 19, 2011 / Proposed Rules 64843 

action may be brought regarding the 

provisions of this rule, the 

administrative appeal provisions of 7 

CFR parts 11 and 780 must be 

exhausted. 

Executive Order 13132 

This rule has been reviewed under 

Executive Order 13132, ‘‘Federalism.’’ 

The policies contained in this rule will 

not have any substantial direct effect on 

States, the relationship between the 

Federal government and the States, or 

the distribution of power and 

responsibilities among the various 

levels of government. Nor would this 

proposed rule impose substantial direct 

compliance costs on State and local 

governments. Therefore, consultation 

with the States is not required. 

Executive Order 13175 

This proposed rule has been reviewed 

for compliance with Executive Order 

13175, ‘‘Consultation and Coordination 

with Indian Tribal Governments.’’ The 

policies in this rule do not have Tribal 

implications that preempt Tribal law. 

Unfunded Mandates 

Title II of the Unfunded Mandate 

Reform Act of 1995 (UMRA, Pub. L. 

104–4) requires Federal agencies to 

assess the effects of their regulatory 

actions on State, local, or Tribal 

governments or the private sector. 

Agencies generally must prepare a 

written statement, including a cost 

benefit analysis, for proposed and final 

rules with Federal mandates that may 

result in expenditures of $100 million or 

more in any 1 year for State, local, or 

Tribal governments, in the aggregate, or 

to the private sector. UMRA generally 

requires agencies to consider 

alternatives and adopt the more cost 

effective or least burdensome alternative 

that achieves the objectives of the rule. 

This rule contains no Federal mandates 

under the regulatory provisions of Title 

II of the Unfunded Mandates Reform 

Act of 1995 (UMRA, Pub. L. 104–4) for 

State, local, and Tribal government or 

the private sector. Therefore, this rule is 

not subject to the requirements of 

sections 202 and 205 of UMRA. 

Paperwork Reduction Act 

The information collection for FFP is 

currently approved under OMB control 

number 0560–0177. We anticipate that 

fewer than 10 sugar producers will 

participate in the bioenergy program in 

the next three years. Therefore, there are 

no changes to the current information 

collection as approved by OMB. 

E-Government Act Compliance 

CCC is committed to complying with 

the E-Government Act, to promote 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. 

List of Subjects in 7 CFR Part 1435 

Loan programs—agriculture, 

Penalties, Price support programs, 

Reporting and recordkeeping 

requirements, Sugar. 

For the reasons discussed above, FSA 

proposes to amend 7 CFR part 1435 as 

follows: 

PART 1435—SUGAR PROGRAM 

1. Revise the authority citation for 

part 1435 to read as follows: 

Authority: 7 U.S.C. 1359aa–1359jj, 7272, 

and 8110; 15 U.S.C. 714b and 714c. 

2. Add subpart E to read as follows: 

Subpart E—Disposition of CCC Inventory 

Sec. 

1435.400 General statement. 

1435.401 CCC sugar inventory disposition. 

Subpart E—Disposition of CCC 

Inventory 

§ 1435.400 General statement. 

(a) This subpart will be applicable in 

the event that an eligible commodity is 

owned and held in CCC inventory and 

not acquired through the Feedstock 

Flexibility Program as set forth in 

subpart G of this part. 

(b) An eligible commodity is raw, 

refined, or in-process sugar that is 

eligible to be marketed in the United 

States for human consumption or to be 

used for the extraction of sugar for 

human consumption. 

§ 1435.401 CCC sugar inventory 

disposition. 

(a) CCC will dispose of inventory in 

the following manner, if CCC has not 

determined there is an emergency 

shortage of sugar for human 

consumption in the domestic market: 

(1) By sale to bioenergy producers 

under the Feedstock Flexibility Program 

as set forth in subpart G of this part, 

(2) By transfer to sugarcane and sugar 

beet processors under the Processor 

Sugar Payment-In-Kind Program as set 

forth in subpart F of this part, 

(3) Buyback of certificates of quota 

eligibility, or 

(4) Using any other authority for the 

disposition of CCC-owned sugar that 

does not increase the net quantity of 

sugar available for human consumption 

in the United States. 

(b) CCC may use any authority for the 

disposition of CCC-owned sugar, if CCC 

has determined there is an emergency 

shortage of sugar for human 

consumption in the domestic market 

caused by war, flood, hurricane, or other 

natural disaster, or similar event, as 

determined by CCC. 

3. Add subpart G to read as follows: 

Subpart G—Feedstock Flexibility Program 

Sec. 

1435.600 General statement. 

1435.601 Sugar surplus determination and 

public announcement. 

1435.602 Eligible commodity to be 

purchased by CCC. 

1435.603 Eligible sugar seller. 

1435.604 Eligible sugar buyer. 

1435.605 Competitive procedures. 

1435.606 Miscellaneous. 

1435.607 Appeals. 

Subpart G—Feedstock Flexibility 

Program 

§ 1435.600 General statement. 

(a) This subpart will be applicable to 

any sugar seller located in the United 

States and any bioenergy producer 

located in the United States who 

contracts with CCC to sell or purchase 

surplus sugar, which may be sold in the 

United States for the production of 

bioenergy as set forth in this subpart or 

other purposes as set forth in subpart E 

of this part, when CCC determines that 

such action will reduce forfeitures of 

sugar pledged as collateral for CCC 

sugar loans. 

(b) [Reserved] 

§ 1435.601 Sugar surplus determination 

and public announcement. 

(a) The Secretary will estimate the 

quantity of sugar likely to be forfeited to 

CCC in the following fiscal year by 

September 1. 

(b) Not later than the January 1, April 

1, and July 1 of the fiscal year, the 

Secretary will re-estimate the quantity 

of sugar likely to be forfeited to CCC in 

the fiscal year. 

(c) The Secretary will announce by 

press release for the above dates a 

purchase and sale strategy, which 

includes the quantity and timing of the 

sugar to be purchased and sold to 

bioenergy producers, and that reflects 

the estimate of sugar likely to be 

forfeited to CCC and the uncertainty 

surrounding the estimate. 

§ 1435.602 Eligible commodity to be 

purchased by CCC. 

(a) CCC will only purchase raw sugar, 

refined sugar, or in-process sugar that is 

eligible to be used as collateral in the 

federal Sugar Loan Program. 

(1) Sugar may not have been 

processed from imported sugarcane, 


srobinson on DSK4SPTVN1PROD with PROPOSALS
64844 Federal Register / Vol. 76, No. 202 / Wednesday, October 19, 2011 / Proposed Rules 

sugar beets, in-process sugars, or 

molasses; and 

(2) Sugar must have been processed in 

the United States. 

(b) Sugar or in-process sugar 

purchased directly from any domestic 

sugar beet and sugarcane processor that 

made the sugar or in-process sugar must 

be credited against its sugar marketing 

allocation to be eligible for purchase 

under this program. 

(c) CCC will purchase sugar located in 

the United States. 

(d) CCC will only purchase an eligible 

commodity if the purchased commodity 

would reduce the likelihood of 

forfeitures of CCC sugar loans, as 

determined by CCC. 

(e) CCC will evaluate an offer to sell 

an eligible commodity to CCC based 

upon CCC’s estimate of the reduction in 

refined sugar supply available for 

human consumption due to the 

purchase. For example, if processing the 

thick juice would yield 70 percent sugar 

for human consumption, then CCC will 

only consider 70 percent of the sugar in 

the thick juice in evaluating the per unit 

sales price. 

§ 1435.603 Eligible sugar seller. 

(a) To be considered an eligible sugar 

seller, the sugar seller must be located 

in the United States. 

(b) [Reserved] 

§ 1435.604 Eligible sugar buyer. 

(a) To be considered an eligible sugar 

buyer, the bioenergy producer must 

produce bioenergy products, including 

fuel grade ethanol or other biofuels. 

(b) The bioenergy producer and its 

production facilities that use CCC sugar 

or in-process sugar must be located in 

the United States. 

§ 1435.605 Competitive procedures. 

(a) CCC will generally submit tenders 

for bids, before entering into contracts 

with any eligible sugar seller and buyer 

that minimize CCC net outlays. 

(b) CCC may, at times, negotiate 

contracts directly with sellers or buyers, 

if CCC determines that such negotiation 

will result in either reduced likelihood 

of forfeited sugar under the CCC sugar 

loan program or reduced costs of 

removing sugar from the market, which 

will reduce the likelihood of sugar 

forfeited to CCC. 

§ 1435.606 Miscellaneous. 

(a) As a sugar buyer, the bioenergy 

producer must take possession of the 

sugar or in-process sugar no more than 

30 days from the date of CCC’s 

purchase. 

(b) CCC, to the maximum extent 

practicable, will not pay storage fees for 

sugar or in-process sugar purchased 

under this program. 

(c) Each bioenergy producer that 

purchases sugar through FFP must 

provide proof to CCC that the sugar has 

been used in the bioenergy factory for 

the production of bioenergy. 

§ 1435.607 Appeals. 

(a) The administrative appeal 

regulations of parts 11 and 780 of this 

title apply to this part. 

(b) [Reserved] 

Signed at Washington, DC, on October 13, 

2011. 

Bruce Nelson, 

Executive Vice President, Commodity Credit 

Corporation. 

[FR Doc. 2011–26974 Filed 10–18–11; 8:45 am] 

BILLING CODE 3410–05–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2010–0068; Directorate 

Identifier 2010–NE–05–AD] 

RIN 2120–AA64 

Airworthiness Directives; General 

Electric Company Turbofan Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to supersede two 

existing airworthiness directives (ADs) 

that apply to General Electric Company 

(GE) CF6–45 and CF6–50 series turbofan 

engines with certain low-pressure 

turbine (LPT) rotor stage 3 disks 

installed. The existing ADs currently 

require inspections of high pressure 

turbine (HPT) and LPT rotors, engine 

checks, and surveys. Since we issued 

those ADs, GE has determined that the 

low-cycle fatigue (LCF) lives of the LPT 

rotor stage 3 disks affected by those ADs 

are below the current published engine 

manual life limits and has introduced a 

new LPT rotor stage 3 disk part number. 

This proposed AD would establish a 

new lower life limit for the LPT rotor 

stage 3 disks. We are proposing this AD 

to prevent critical life-limited rotating 

engine part failure, which could result 

in an uncontained engine failure and 

damage to the airplane. 

DATES: We must receive comments on 

this proposed AD by December 5, 2011. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, 

M–30, West Building Ground Floor, 

Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this AD, contact General Electric 

Company, GE-Aviation, Room 285, 1 

Neumann Way, Cincinnati, OH 45215, 

phone: 513–552–3272; e-mail: 

geae.aoc@ge.com. You may review 

copies of the referenced service 

information at the FAA, Engine & 

Propeller Directorate, 12 New England 

Executive Park, Burlington, MA. For 

information on the availability of this 

material at the FAA, call 781–238–7125. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 

9 a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Office 

(phone: 800–647–5527) is in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

FOR FURTHER INFORMATION CONTACT: 

Tomasz Rakowski, Aerospace Engineer, 

Engine Certification Office, FAA, Engine 

& Propeller Directorate, 12 New England 

Executive Park, Burlington, MA 01803; 

phone: 781–238–7735; fax: 781–238– 

7199; e-mail: tomasz.rakowski@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposed AD. Send your comments 

to an address listed under the 

ADDRESSES section. Include ‘‘Docket No. 

FAA–2010–0068; Directorate Identifier 

2010–NE–05–AD’’ at the beginning of 

your comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD because of those 

comments. 

We will post all comments we 

receive, without change, to http:// 


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