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

13546

Vol. 62, No. 55

Friday, March 21, 1997

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 723

RIN 0560–AE96

Amendment to the Tobacco Marketing

Quota Regulations

AGENCY: Farm Service Agency, USDA.

ACTION: Proposed rule.

SUMMARY: This rule proposes improving

the administration of the tobacco

marketing quota and price support

program by amending program

regulations to: provide for making quota

‘‘inequity adjustments’’ on a ‘‘common

ownership unit’’ basis rather than

strictly on a ‘‘farm’’ basis; eliminate

unduly restrictive deadlines for the

mailing of certain quota notices; permit,

for burley and flue-cured tobacco,

disaster transfers to be made by cash

lessees, from cash rented farms, without

the owner’s signature; provide greater

flexibility in the setting of penalty

amounts for burley and flue-cured

tobacco violations; eliminate a provision

that requires yearly publication in the

Federal Register of certain routine and

noncontroversial penalty computations;

remove regulations governing the 1994-

calendar year only ‘‘domestic marketing

assessment’’, which was applicable to

the use by certain cigarette

manufacturers of set percentages of

domestic tobacco; codify certain

statutory provisions concerning, and

penalties related to, setting burley and

flue-cured tobacco quotas; and add

several technical changes, including

changes to reflect a recent

reorganization of the Department of

Agriculture.

DATES: Comments must be received by

May 20, 1997 to be assured of

consideration.

ADDRESSES: Submit comments on the

proposed rule to: Director, Tobacco and

Peanuts Division, USDA, FSA, STOP

0514, P.O. Box 2415, Washington, DC

20013–2415. Comments may be faxed to

202–690–2298. All written submissions

made pursuant to this rule will be made

available for public inspection in Room

5750 South Building, USDA, between

the hours of 8:15 a.m. and 4:45 p.m.,

during regular Federal workdays.

FOR FURTHER INFORMATION CONTACT:

Verner Grise, Director, Tobacco and

Peanuts Analysis Staff, Tobacco and

Peanuts Division, USDA, FSA, STOP

0514, P.O. Box 2415, Washington, DC

20013–2415, telephone 202–720–5291.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been

determined to be not significant and

therefore was not reviewed by OMB

under Executive Order 12866.

Regulatory Flexibility Act

The Regulatory Flexibility Act is not

applicable to this proposed rule since

the Farm Service Agency (FSA) is not

required by 5 U.S.C. 553 or any other

provision of law to publish a notice of

proposed rule making with respect to

the subject matter of this rule.

Federal Assistance Program

The title and number of the Federal

Assistance Program, as found in the

Catalog of Federal Domestic Assistance,

to which this rule applies are:

Commodity Loans and Purchases—

10.051.

Environmental Evaluation

It has been determined by an

environmental evaluation that this

action will have no significant impact

on the quality of the human

environment. Therefore, neither an

environmental assessment nor an

environmental impact statement is

needed.

Executive Order 12372

This activity is not subject to the

provisions of Executive Order 12372,

which requires intergovernmental

consultation with State and local

officials. See the notice related to 7 CFR

part 3015, subpart V, published at 48 FR

29115 (June 24, 1983).

Executive Order 12988

This proposed rule has been reviewed

in accordance with Executive Order

12988. The provisions of this proposed

rule are not retroactive and preempt

State laws to the extent that such laws

are inconsistent with the provisions of

this proposed rule. Before any legal

action is brought regarding

determinations made under provisions

of 7 CFR part 723, the administrative

appeal provisions set forth at 7 CFR Part

780 and 7 CFR Part 711, as applicable,

must be exhausted.

Paperwork Reduction Act

This proposed rule does not contain

new or revised information collection

requirements that require approval by

OMB under the Paperwork Reduction

Act (44 U.S.C. 3507 et seq). The

information collections required in 7

CFR Part 723 have previously been

cleared under OMB control number

0560–0058.

Background and Discussion

The tobacco marketing quota and

price support program is operated by

the Department of Agriculture pursuant

to provisions of the Agricultural

Adjustment Act of 1938, as amended

(the 1938 Act) and the Agricultural Act

of 1949, as amended (the 1949 Act).

This proposed rule would, as described

below, modify tobacco marketing quota

regulations in 7 CFR Part 723. Related

price support regulations are codified in

7 CFR Part 1464.

1. Allocation of Inequity Adjustments

The 1938 Act permits the FSA, out of

limited national reserves, to make socalled ‘‘inequity adjustments’’ in old

farm allotments or quotas in order to

alleviate quota disparities between

farms in a county. Current rules, at

§ 723.210, call for those adjustments to

be made by ‘‘farm’’ as that term is

defined for FSA commodity support

purposes. However, for tobacco, there

may, in effect, be ‘‘farms’’ within a farm

when there are different common

ownership units within the farm. For

that reason, to allow for greater equity,

it is proposed that the rules be modified

to allow local FSA committees to

choose, at their discretion, to make

inequity adjustments by common

ownership units in which case the quota

adjustment would inure to the common

ownership unit rather than to the whole

farm. The rule would also add, in

§ 723.104, a definition of ‘‘common

ownership unit’’ to facilitate the

administration of the proposed change

for allocating inequity adjustments and

the transfer of quota by sale.
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13547

2. Mailing Notices of Farm Acreage

Allotments and Marketing Quotas

Current rules, in § 723.213, require

that quota notices be mailed by a certain

date if the quota is to be modified

because of a violation, a revision or

adjustment in the allotment or quota for

the farm, or a farm reconstitution. The

deadline is April 1 for farms in

Alabama, Florida, Georgia, North

Carolina, South Carolina and Virginia.

Otherwise, the deadline is May 1. Those

dates are not suitable in all instances

since there may be transfers affecting

the quota which have not occurred by

those dates. For that reason, and

because the regulation is strictly a

matter of agency procedure, it is

proposed that these deadlines be

removed from the regulations. Because

of the special considerations that

accompany reductions for violations, it

would remain the agency’s intention

with respect to notices concerning

reductions in quota because of

violations to meet the same deadlines as

those that are now in the regulations.

3. Approval of Disaster Lease and

Transfer Agreements—Cash Rented

Farms

Burley and flue-cured tobacco are

different from other kinds of tobacco in

that they are subject to quotas on a

poundage basis. All other tobaccos are

limited by acreage only. Burley tobacco

is limited by pounds only and fluecured tobacco is limited both by acres

and pounds. With respect to burley and

flue-cured tobacco, disaster transfers of

quota pounds can be made during the

harvest season if, despite the producer’s

best efforts, the quota is not fully

produced because of a natural disaster.

Currently, all such transfers require the

farm owner to sign the transfer

documents. This rule proposes

amending § 723.216 to provide that such

owner’s signature is not needed when

the farm is cash-rented or leased by the

farm operator. This would reflect that

the owner does not have an interest in

the current year’s tobacco crop or

marketing quota. This would effectively

and conclusively, presume that the farm

operator or tobacco producer has paid

for the quota for the current year to use

to market the crop or, as the case may

be, to disaster lease and transfer the

unused quota from the farm.

4. Producer Penalty Calculations

Penalties can be assessed against

producers under the 1938 Act for excess

marketings and other offenses. Section

314 of the 1938 Act provides that the

penalty rate is equal to 75 percent of the

average market price for the kind of

tobacco for the immediately preceding

marketing year. That rate is applied,

then, to the penalty quantity of tobacco.

Generally, under section 314, that

quantity is the amount of the excess

marketings. However, section 317(g) of

the 1938 Act provides, for the poundage

quota tobaccos (burley and flue-cured)

only, that no penalty shall be due or

collected until 103 percent of the

marketing quota has been marketed

except that where a producer falsely

identifies, or fails to account for the

disposition of any tobacco, the

Secretary, in lieu of assessing and

collecting penalties based on the actual

marketings of excess tobacco, may elect

to assess a penalty computed by

multiplying the full penalty rate by an

amount of tobacco equal to 25 percent

of the farm’s effective marketing quota

plus the farm yield for the number of

acres harvested in excess of the farm

acreage allotment. Thus for burley and

flue-cured tobacco, two possible

standards exist for determining the

penalty quantity: (1) The excess-over103-percent standard (‘‘the 103-percent

standard’’) and (2) the 25-percent-ofquota standard (‘‘the 25-percent

standard’’). In some cases, however, the

producer may have no excess

marketings, but may have mis-marketed

a small number of pounds on the farm’s

marketing card in which case the 25-

percent standard may produce a penalty

which a local FSA committee could feel

is too harsh. This could lead, by use of

the 103-percent standard, to no penalty

at all which could be too lenient. Given

that the use of the full 25-percent-ofquota standard is strictly discretionary,

it would appear to follow that, in cases

where the 25-percent standard could

otherwise be applied, the Secretary

could choose a penalty quantity ‘‘up to’’

25-percent. Changing § 723.409 to add

that flexibility is proposed in this

notice. This would, if adopted, allow

the penalty quantity to be, more

appropriately, the actual amount of

pounds in violation, which could better

reflect the relative significance of

different violations. This amendment

will not affect the penalty quantity for

buyers, dealers, or warehouse operators.

Tobacco buyers, dealers, warehouse

operators, and others will be required to

collect the full penalty rate for each

pound of invalid or suspicious

marketings. In the event of an overcollection, the penalty can be refunded.

5. Elimination of Publication in the

Federal Register of Certain

Mathematical Computations

Also, it is proposed, with respect to

penalties, that § 723.308 be modified to

remove the provision that requires

publication in the Federal Register of

the penalty rate calculations for the

individual kinds of tobacco. Those rates

are mathematical calculations based on

market prices and the amounts should

be, within a very close amount, well

known by interested parties based on

their knowledge of market conditions.

As in the past, effective notice will be

provided by press release. Further

information, if needed, can be obtained

by inquiry. For these reasons,

publication in the Federal Register does

not appear to be necessary.

6. Removal of Regulations Concerning

the 1994 Domestic Marketing

Assessment for Manufacturers Whose

Use of Domestic Tobacco Fell Below 75

Percent

This rule also proposes removing the

regulations that currently appear in

Subpart E, as those regulations deal

with an assessment that only applied

with respect to activities which

occurred in calendar year 1994.

Specifically, budget legislation enacted

in 1993 provided for a ‘‘domestic

marketing assessment’’ (DMA) to be

applied to certain manufacturers of

cigarettes if their use of domestic

tobacco did not, for certain cigarettes,

over a calendar year, amount to 75

percent of their total tobacco use. Later

legislation limited the application of the

DMA to activities occurring in calendar

year 1994. Accordingly, it does not

appear worthwhile to continue the

codification of the DMA regulations.

Removal of the rules will not, however,

affect liabilities with respect to the DMA

for activities occurring in calendar year

1994.

7. Codification of Regulations Dealing

With Establishing the National

Marketing Quotas for Burley and FlueCured Tobacco

It is also proposed that a new subpart

be added to codify provisions dealing

with the annual establishment of the

burley and flue-cured tobacco national

marketing quotas. The quotas for burley

and flue-cured tobaccos, unlike the

allotments for other supported tobaccos,

are set, as provided for by statute, in a

manner that takes into account preannounced purchase intentions of

certain cigarette manufacturers.

Specifically, the calculation takes into

account the purchase intentions of those

cigarette manufacturers who meet the

1938 Act definition of a ‘‘domestic

manufacturer of cigarettes’’ by

producing at least 1 percent of the

cigarettes produced and sold in the

United States. The 1938 Act provides,

under section 317 for flue-cured

tobacco, and section 319 for burley
13548 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

tobacco, that the quota for each kind is

the amount, computed separately

which, with an allowance for the

Secretary to make a discretionary

upward or downward adjustment of up

to 3 percent in the total, equals the sum

of: (1) The aggregate, for the upcoming

year, of the stated intentions of the

manufacturers to purchase eligible

tobacco of the relevant kind from

regular auction markets, producers, or

from the inventories of the relevant

producer loan associations; (2) the

average annual exports of that kind of

domestic tobacco for the past 3 years;

and (3) the amount the Secretary deems,

in his discretion, is needed to adjust the

current inventories of the producer loan

associations to establish stocks at the

reserve stock level for the respective

kind of tobacco. The reserve stock level

is defined in section 301 of the 1938 Act

to be, for burley tobacco, the greater of

50 million pounds or 15 percent of the

previous year’s quota. For flue-cured

tobacco that level is defined to be the

greater of 100 million pounds or 15

percent of the previous year’s quota.

Section 319 of the 1938 Act provides,

however, that the reserve stock level

downward adjustment for burley

tobacco may not exceed the greater of 35

million pounds or 50 percent of the

quantity by which loan inventories

exceed the reserve stock level. Section

320A of the 1938 Act requires that the

statement of purchase intentions be

filed by all manufacturers who meet the

‘‘domestic manufacturer of cigarettes’’

definition and provides that if a

manufacturer fails to file such a

statement the Secretary must estimate

the purchases for the manufacturer

based on the manufacturer’s previous

submissions. The statements of

intention are due before the marketing

year. Section 320A of the 1938 Act sets

December 1 as the deadline for fluecured purchase intentions. For burley,

section 320A sets January 15 as the

deadline. Also, section 320A contains

confidentiality provisions to protect the

statements filed by manufacturers.

Further, section 320B of the 1938 Act

provides that cigarette manufacturers

must report their tobacco purchases at

the end of the year so that a comparison

can be made with their statement of

intentions. Under section 320B, the

manufacturer must pay a per pound

penalty, equal to twice the purchaser’s

share of the no-net-cost assessment rate

for the relevant marketing year, if their

purchases do not amount to 90 percent

of their stated intentions. Section 320B

provides that the penalty will be

assessed on the full amount of the

shortage except that 320B also provides

that the statements of intention will be

adjusted downward if producers do not,

counting price support loan placements,

produce, in the aggregate, the total

national quota for the relevant kind of

tobacco (burley or flue-cured) for the

relevant marketing year.

These provisions have been in place

for many years. This rule proposes,

however, to codify current policy to

allow for comment and modification as

needed. As with current practice, the

rule provides for counting indirect and

direct purchases for statement of

purchase intentions and for calculations

of compliance with those intentions.

Also, the rule, for these purposes, as

with current practice, specifies that

purchases of leaf, stems, trimmings, and

scrap tobacco for export should be

excluded from the purchase intentions

and from the purchases that are

countable toward meeting the

manufacturer’s obligations.

8. Technical Changes in the Regulations

This rule would also make certain

technical changes, including changing

references from ‘‘ASC’’ to ‘‘FSA’’ to

reflect that under a recent

reorganization, many of the functions of

the former Agricultural Stabilization

and Conservation Service are now

handled by the USDA’s Farm Service

Agency.

List of Subjects in 7 CFR Part 723

Acreage allotments, Dealers, Domestic

cigarette manufacturers, Marketing

quotas, Penalties, Tobacco

Proposed Rule

For the reasons set forth in the

preamble, it is proposed that 7 CFR Part

723 be amended as follows:

PART 723—TOBACCO

1. The authority citation for 7 CFR

part 723 continues to read as follows:

Authority: 7 U.S.C. 1301, 1311–1314,

1314–1, 1314b, 1314b–1, 1314b–2, 1314c,

1314d, 1314e, 1314f, 1314i, 1315, 1316, 1362,

1363, 1372–75, 1377–1379, 1421, 1445–1 and

1445–2.

2. Section 723.104 is to be amended

by adding definitions for ‘‘common

ownership unit’’, ‘‘Farm Service

Agency’’, and ‘‘FSA’’ in their proper

alphabetical order to read as follows:

§ 723.104 Definitions.

Common ownership unit. A common

ownership unit is a distinguishable part

of a farm, consisting of one or more

tracts of land with the same owners as

determined by FSA.

Farm Service Agency. An agency

within the U.S. Department of

Agriculture.

FSA. The Farm Service Agency.

* * * * *

3. Section 723.210 is amended by

adding a new paragraph (d) to read as

follows:

§ 723.210 Corrections of errors and

adjusting inequities in acreage allotments

and marketing quotas for old farms.

* * * * *

(d) Making certain adjustments on a

common ownership unit basis.

Notwithstanding other provisions of this

section, inequity adjustments may be

allotted by common ownership unit

rather than by farm when it is

determined by the county FSA

committee that the making of the

determination on that basis provides

greater equity.

§ 723.213 [Amended]

4. Section 723.213 is amended by

removing paragraph (c) and

redesignating paragraph (d) as

paragraph (c).

5. Section 723.216(a) is amended by

revising paragraph (a) introductory text

and by revising paragraphs (a)(2)(ii)(A)

and (a)(2)(iii)(A), to read as follows:

§ 723.216 Transfers of tobacco acreage

allotment or marketing quota by sale, lease,

or owner.

(a) General. The allotment or quota

established for a farm may be

transferred to another farm to the extent

provided for in this section. For

transfers by sale, common ownership

units on a farm may be considered to be

separate farms. Transfers are not

permitted for cigar binder (types 54 and

55) tobacco allotments.

* * * * *

(2) * * *

(ii) * * *

(A) Leases. The owner and operator of

the transferring farm and the owner or

operator of the receiving farm. For

leases made under the disaster

provisions of this section, the signature

of the owner will not be required if the

FSA determines that the farm is cash

leased for the current crop year and that

the owner does not share in the crop.

* * * * *

(iii) * * *

(A) Leases. The owner of the

transferring farm and the owner or

operator of the receiving farm. For

leases made under the disaster

provisions of this section, the signature

of the owner will not be required if the

FSA determines that the farm is cash

leased for the crop year and that the

owner does not share in the crop.

* * * * *
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13549

§ 723.308 [Amended]

6. Section 723.308 is amended by

adding ‘‘and announced annually’’ after

‘‘determined’’ in the first sentence and

removing the second sentence.

7. Section 723.409 is amended by

revising paragraphs (a), (b), (e)(1), (e)(2)

introductory text, and (f) and by

removing paragraph (g), such that the

revised paragraphs in § 723.409 will

read as follows:

§ 723.409 Producer violations, penalties,

false identification and related issues.

(a) Generally—(1) Circumstances in

which penalties are due. A penalty shall

be due on all marketings from a farm

which are:

(i) in excess of the applicable quota or

allotment;

(ii) made without a valid marketing

card;

(iii) made under circumstances where

the buyer or dealer, or their agents,

know, or have reason to know, that the

tobacco was, or is, marketed in a

manner which by itself or in

combination with other marketings is

designed to, or has the effect of,

defeating the purposes of the tobacco

price support and production

adjustment program, avoiding marketing

quota limitations, or otherwise avoiding

provision of this part or part 1464;

(iv) falsely identified; or,

(v) marketings for which the producer

fails to make a proper account as

required by the provisions of this part.

(2) Amount of the penalty. The

amount of the penalty shall be the

amount computed by multiplying the

penalty rate by the penalty quantity.

(3) Penalty rate. The penalty rate for

purposes of this section is that rate

which is computed as the penalty rate

per pound for the applicable kind of

tobacco under § 723.308, except to the

extent that a converted penalty rate may

be used as provided for in this section.

(4) Penalty quantity. The quantity of

tobacco that is determined by the

county FSA committee to be subject to

penalty, provided further that:

(i) For burley and flue-cured tobacco,

the penalty quantity for purposes of this

section shall be the amount of

marketings from the farm in excess of

103 percent of the farm’s effective

marketing quota for that year, except

that if the violation involves false

identification or a failure to account for

tobacco, the FSA may, in its discretion,

depending on the nature of the

violations, use as the penalty quantity

an amount up to 25 percent of the farm’s

effective marketing quota plus 100

percent of the farm yield on any excess

acreage for the farm (acreage planted in

excess of the allotted acres, as estimated

or determined).

(ii) For tobaccos other than burley

and flue-cured tobacco, the penalty

quantity shall be the amount of

marketings from the farm in excess of

the farm’s marketing quota provided

further, that in order to aid in the

collection of the penalty the FSA shall

endeavor, to the extent practicable, to

apply the penalty to all of the farm’s

marketings by converting the full

penalty rate to a converted

proportionate penalty rate which rate

may be identified on the producer’s

marketing card and collected and

remitted accordingly. In making the

calculation of the converted penalty

rate, the agency shall take into account

any carryover tobacco applicable for the

farm. If an erroneous penalty rate is

shown on the marketing card, then the

producer of the tobacco and the

producer who marketed the tobacco

shall be liable for any balance due.

(5) Limitations on reduced penalty

quantities. No penalty shall, to the

extent that there is discretion to do

otherwise, be assessed at an amount

which is less than the amount equal to

the full penalty rate multiplied by the

full number of pounds that are, or are

estimated to be, subject to penalty,

unless it is determined by the county

FSA committee, with the concurrence of

the State FSA committee, that all of the

following exist with respect to such

violation:

(i) The violation was inadvertent and

unintentional;

(ii) All of the farm’s production has

been accounted for and there are no

excess marketings for which there are

penalties outstanding;

(iii) The records for all involved farms

have been corrected to show the

marketings involved; and

(iv) The false identification or failure

to account did not give the producer an

advantage under the program.

(6) Effect of improper, invalid,

deceptive or unaccounted for

marketings on penalty quantity

calculation. Any marketing made

without a valid marketing card, falselyidentified, or unaccounted for in

accordance with the requirements of

this part, or made under circumstances

which are designed to, or have the effect

of, defeating the purpose of the tobacco

marketing quota and price support

program, avoiding any limitation on

marketings, avoiding a penalty, or

avoiding compliance with, or the

requirements of, any regulation under

this part or under part 1464, shall be

considered an excess marketing of

tobacco. Further, such marketings shall,

unless shown to the satisfaction of the

county FSA committee to be otherwise,

be considered, where relevant, to be in

excess of 103 percent of the applicable

marketing quota for the farm, and shall

be subject to a penalty at the full penalty

rate for each pound so marketed.

(7) Pledging of tobacco by an

ineligible producer. In addition to any

other circumstances in which a penalty

may be assessed under this part, the

marketing or pledging for a price

support loan of any tobacco when the

producer is not considered to be an

‘‘eligible producer’’ under the

provisions of part 1464 of this title, shall

be considered to be a false identification

of tobacco and shall be dealt with

accordingly. This remedy shall be in

addition to all others as may apply.

(8) Failures to make certain reports. If

any producer who manufactures tobacco

products from tobacco produced by or

for such person fails to make the report

required by § 729.408, or otherwise

required by this part, or makes a false

report, the producer shall be deemed to

have failed to account for the

disposition of tobacco produced on the

farms(s) involved. The filing of a report

by a producer under § 723.408 of this

part which the State FSA committee

finds to be incomplete or incorrect shall

constitute a failure to account for the

disposition of tobacco produced on the

farm.

(b) Special provisions for tobacco

buyers, dealers, and warehouse

operators and others who acquire

tobacco.

(1) Notwithstanding the provisions of

paragraph (a) of this section, a dealer,

buyer or warehouse operator shall

collect an amount of penalty equal to

the applicable per pound penalty rate

times the quantity of tobacco acquired

or handled by the buyer, dealer or

warehouse operator when the tobacco is

not identified with a valid producer

marketing card, the tobacco is being

sold under suspicious circumstances, or

when there is any reason to suspect the

tobacco may be subject to penalty. The

provisions of this paragraph apply to all

purchases by a dealer, buyer or

warehouse operator including those

from another dealer, buyer or warehouse

operator. The dealer, buyer, warehouse

operator, or their agent, shall also

collect the full amount of the marketing

quota penalty for each pound of tobacco

involved in any case in which a buyer,

dealer or warehouse operator knows, or

has to reason to suspect, that the

marketing is, or has been, made without

a proper marketing card or is, or has

been, made with a card which the

dealer, buyer, warehouse operator, or

their agents have reason to suspect, is

not a valid marketing or is made under
13550 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

circumstances which give cause to

suspect that the marketing is not valid

or is made in derogation of the tobacco

marketing quota and price support

program.

(2) The amount of penalty collected

may be deducted from the proceeds of

the sale of the tobacco. All such penalty

collections shall be the responsibility of

each buyer dealer, or warehouse

operator involved, and their agents, and

shall be remitted to FSA as provided for

in this part.

(3) The collection and remittance of

penalty shall be in addition to any other

obligations that such person may have

to collect other amounts, including

other penalties or assessments due on

such marketings.

(4) If a penalty is collected and

remitted by a buyer, dealer, or

warehouse operator that is shown not to

be due or only partially due, then the

overpayment shall be refunded to the

appropriate party. It is the responsibility

of the person that collected the penalty

and the person that sold the tobacco

involved to show to the satisfaction of

the FSA that such penalty is not due in

the full amount collected.

* * * * *

(e) * * *

(1) For amounts of $100 or less, the

county FSA committee, and

(2) For amounts over $100, the county

FSA committee with approval of the

State FSA committee determines that

each of the following conditions is

applicable:

* * * * *

(f) Refusal to contribute required

assessments. A marketing penalty at the

full rate per pound is due on each

pound of tobacco marketed from a farm

when the farm operator or producers

refuse to pay no-net-cost or marketing

assessments as provided in part 1464 of

this title. In all such cases, the farm

from which the tobacco has been

produced shall be considered to have a

marketing quota of zero pounds and an

allotment of zero acres.

9. Part 723 subpart E is revised to read

as follows:

Subpart E—Establishing Burley and

Flue-Cured Tobacco National

Marketing Quotas

Sec.

723.501 Scope.

723.502 Definitions.

723.503 Establishing the quotas.

723.504 Manufacturer’s intentions;

penalties.

§ 723.501 Scope.

This subpart sets out regulations for

setting annual national marketing

quotas for burley and flue-cured tobacco

based on the purchase intentions of

certain manufacturers of cigarettes and

on other factors. It also sets out penalty

provisions for manufacturers who fail to

purchase, within the tolerances set in

this part, the amount of domestic

tobacco, by kind, reflected in the stated

intention as accounted for in accordance

with this subpart.

§ 723.502 Definitions.

In addition to the definitions set forth

at § 723.104, the definitions set forth in

this section shall be applicable for

purposes of administering the

provisions of this subpart.

CCC. The Commodity Credit

Corporation, an instrumentality of the

USDA.

Domestic manufacturer. A domestic

manufacturer of cigarettes.

Domestic manufacturer of cigarettes.

A manufacturer who, as determined by

the Director, produces and sells more

than 1 percent of the cigarettes

produced and sold in the United States

annually.

Price support inventory. The

inventory of tobacco which, with

respect to a particular kind of tobacco,

has been pledged as collateral for a price

support loan made by CCC through a

producer-owned cooperative marketing

association.

Producer-owned cooperative

marketing associations. Those

associations, or their successors, which

by law act as agents for producers for

price support loans for tobacco, and

which were, as of January 1, 1996, for

burley and flue-cured tobacco, the

Burley Tobacco Growers Cooperative

Association, the Burley Stabilization

Corporation, and the Flue-Cured

Tobacco Cooperative Stabilization

Corporation.

Unmanufactured tobacco. Stemmed

and unstemmed leaf tobacco, stems,

trimmings, and scrap tobacco.

§ 723.503 Establishing the quotas.

(a) General. Subject to the 3 percent

adjustment provided for in paragraph(b)

of this section, the annual marketing

quotas for burley and flue-cured tobacco

shall be calculated for each marketing

year for each kind separately as follows:

(1) Domestic manufacturer purchase

intentions. First, for each kind and year,

the Director shall calculate the aggregate

relevant purchaser intentions as

declared or set under this section.

(2) Exports. Next, the Director shall

add to the total determined under

paragraph(a)(1) of this section the

amount which is equal to the Director’s

determination of the average quantity of

exported domestic leaf tobacco of the

applicable kind for the past 3 marketing

years. For this purpose, exports include

unmanufactured tobacco only,

including, but not limited to, stemmed

and unstemmed leaf tobacco, stems,

trimmings, and scrap tobacco, and

excludes tobacco contained in

manufactured products including, but

not limited to cigarettes, cigars, smoking

tobacco, chewing tobacco, snuff and

semi-processed bulk smoking tobacco.

The quantity of exports for the most

recent year, as needed, may be

estimated.

(3) Reserve stock level adjustment.

The Director may then adjust the total

calculated by adding the sums of

paragraph(a)(1) and (a)(2) of this section,

by making such adjustment which the

Director, in his discretion, determines

necessary to maintain inventory levels

held by producer loan associations for

burley and flue-cured tobacco at the

reserve stock level. For burley tobacco,

the reserve stock level for these

purposes is the larger of 50 million

pounds farm sales weight or 15 percent

of the previous year’s national

marketing quota. For flue-cured tobacco,

the reserve stock level for these

purposes is the larger of 100 million

pounds farm sales weight or 15 percent

of the previous year’s national

marketing quota. Any adjustment under

this clause shall be discretionary taking

into account supply conditions;

however, for burley tobacco no

downward adjustment under this clause

may exceed the larger of 35 million

pounds (farm sales weight) or 50

percent of the amount by which loan

inventories exceed the reserve stock

level.

(b) Additional 3 percent adjustment.

The amount otherwise calculated under

paragraph(a) of this section may be

adjusted by the Director by 3 percent of

the total. This adjustment is

discretionary and may be made

irrespective of whether any adjustment

has been made under paragraph(a)(3), of

this section and may be made to the

extent the Director deems such an

adjustment is in the best interest of the

program.

(c) Dates of announcement. For fluecured tobacco, the quota determination

should be announced by December 15

preceding the marketing year. For

burley, the announcement should be

made by February 1 preceding the

marketing year.

§ 723.504 Manufacturers’ intentions;

penalties.

(a) Generally. Each domestic

manufacturer shall, for each marketing

year, for burley and flue-cured tobacco

separately, submit a statement of its

intended purchases of eligible tobacco
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13551

by the dates prescribed in paragraph

(d)of this section; further, at the end of

the marketing year, each such

manufacturer shall submit a statement

of its actual countable purchases of

eligible tobacco for that marketing year,

by kind, for burley and flue-cured

tobacco. For these purposes, countable

purchases of eligible tobacco shall be as

defined in, and determined under,

paragraph (b) of this section. If a

domestic manufacturer fails to file a

statement of intentions, the Director

shall declare the amount which will be

considered that manufacturer’s

intentions for the marketing year. That

declaration by the Director shall be

based on the domestic manufacturer’s

previous reports or such other

information as is deemed appropriate by

the Director in the Director’s discretion.

Notice of the amount so declared shall

be forwarded to the domestic

manufacturer. If the domestic

manufacturer fails to file a year-end

report or files an inaccurate or

incomplete report, then the Director

may deem that the manufacturer has no

purchases to report or take such other

action as the Director believes is

appropriate to fulfill the goals of this

section. Intentions and purchases of

countable tobacco will be compared for

purposes of determining whether a

penalty is due from the domestic

manufacturer.

(b) Eligible tobacco for statements of

intentions and countable purchases

toward those intentions. For reports and

determinations under this section,

eligible tobacco for purposes of

determining the countable purchases

under paragraph (a) of this section will

be unmanufactured domestic tobacco of

the relevant kind for use to

manufacture, for domestic or foreign

consumption, cigarettes, semi-processed

bulk smoking tobacco, and other

tobacco products. Eligible tobacco for

these purposes does not include tobacco

purchased for export as leaf tobacco,

stems, trimmings, or scrap. Countable

purchases of eligible tobacco shall

include purchases of eligible tobacco

made by domestic manufacturers

directly from the producers, from a

regular auction market, or from the price

support loan inventory and shall also

include purchases by the manufacturer

where the manufacturer purchases or

acquires the tobacco from dealers or

buyers who purchased the tobacco for

the domestic manufacturer during the

relevant marketing year directly from a

producer, at a regular auction market, or

from the price support loan inventory.

(c) Weight basis and nature of reports.

The weight basis used for all reports and

comparisons shall be a farm sales

weight basis unless the Director permits

otherwise and all reports will be

considered to have been made on that

basis unless the report clearly states

otherwise. Submitted reports shall be

deemed to cover countable purchases of

eligible tobacco only.

(d) Due dates and addresses for

reports. For flue-cured tobacco the

domestic manufacturer’s statement of

intentions shall be submitted by

December 1 before the marketing year

and the year-end report shall be

submitted by August 20 following the

end of the marketing year. Those dates

for burley tobacco are January 15 and

November 20, respectively. Reports

shall be mailed or delivered to the

Director, Tobacco and Peanuts Division,

STOP 0514, P.O. Box 2415, Washington,

DC 20013–2415.

(e) Penalties. A domestic

manufacturer shall be liable for a

penalty equal to twice the purchaser’s

no-net-cost assessment rate per pound

for the applicable kind of tobacco for the

relevant marketing year, if the

manufacturer’s purchases of either

burley or flue-cured tobacco for the

marketing year do not equal or exceed,

as determined by the Director, 90

percent of their stated purchase

intentions for that kind of tobacco for

the relevant marketing year. The

Director shall adjust the domestic

manufacturer’s intentions, however, to

the extent, that producers have not

produced the full amount of the

national quota for the relevant

marketing year for the particular kind of

tobacco. The burden of establishing all

purchases shall be with the domestic

manufacturer and the Director may, in

the case of indirect purchases for the

manufacturer, require that the

manufacturer obtain verification of the

purchases by the dealer who made the

purchase from the producer, at a regular

auction market, or from the price

support loan inventory, in order to

assure that the tobacco was countable

tobacco. The Director may require such

additional information as determined

needed to enforce this subpart.

(f) Penalty notice and penalty

remittance. Penalties will be assessed

after notice and an opportunity for a

hearing before the Director. Remittances

are to be made to the CCC and will be

credited to the applicable producer loan

association’s no-net-cost fund or

account as provided for in part 1464 of

this title.

(g) Maintenance and examination of

records. Each domestic manufacturer

shall keep all relevant records of

purchases, by kind, of burley and fluecured tobacco for a period of at least 3

years. The Director, Office of Inspector

General, or other duly authorized

representative of the United States may

examine such records, receipts,

computer files, or other information

held by a domestic manufacturer that

may be used to verify or audit such

manufacturer’s reports. The reasonable

cost of such examination or audit may

be charged to the domestic

manufacturer who is the subject of the

examination or audit. All records

examined or received under this part by

officials of the Department of

Agriculture shall be kept confidential to

the extent required by law.

§§ 723.1 through 723.504 [Amended]

10. Part 723 sections 723.1 through

723.504 are further amended by

removing ‘‘ASC’’ wherever it appears

and substituting ‘‘FSA’’ in its place.

Signed at Washington, DC, on March 11,

1997.

Bruce R. Weber,

Administrator, Farm Service Agency

[FR Doc. 97–6732 Filed 3–20–97; 8:45 am]

BILLING CODE 3410–05–M

Agricultural Marketing Service

7 CFR Part 1215

[FV–96–706PR]

Proposed Popcorn Promotion,

Research, and Consumer Information

Order; Referendum Order

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Proposed rule and referendum

order.

SUMMARY: This proposed rule would

establish an industry-funded promotion,

research, and consumer information

program for popcorn. An order for the

proposed program—the Popcorn

Promotion, Research, and Consumer

Information Order (Order)—was

submitted to the Department by the

Popcorn Institute. Under the proposed

Order, processors would pay an

assessment rate of 5 cents per

hundredweight of popcorn to the

proposed Popcorn Board (Board).

Composed of popcorn processors, the

Board would use the assessments

collected to conduct a generic program

of promotion, research, and consumer

information to maintain and expand

markets for popcorn. In addition, the

U.S. Department of Agriculture is

announcing that a referendum will be

conducted among eligible popcorn

processors to determine whether they

favor the implementation of the

program.