[Federal Register Volume 74, Number 64 (Monday, April 6, 2009)]
[Rules and Regulations]
[Pages 15359-15367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7633]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Rules 
and Regulations

[[Page 15359]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1435

RIN 0560-AH86


Sugar Program

AGENCY: Farm Service Agency and Commodity Credit Corporation, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Commodity Credit Corporation (CCC) is amending regulations 
as required by the Food, Conservation, and Energy Act of 2008 (the 2008 
Farm Bill) to administer the sugar loan and sugar marketing allotment 
program through 2012. The 2008 Farm Bill generally extends the existing 
sugar program with some changes, including new loan rates for raw cane 
sugar and beet sugar, new provisions to guarantee domestic suppliers an 
85 percent market share, and revised procedures for granting new 
allocations for new entrants.

DATES: Effective Date: April 6, 2009.

FOR FURTHER INFORMATION CONTACT: Barbara Fecso, Dairy and Sweeteners 
Analysis Group, Economic Policy and Analysis Staff, USDA, FSA, Stop 
0516, 1400 Independence Ave., SW., Washington, DC 20250-0516; phone: 
(202) 720-4146; e-mail: <a href="/cdn-cgi/l/email-protection#aecccfdccccfdccf80c8cbcdddc1eed9cacd80dbddcacf80c9c1d8"><span class="__cf_email__" data-cfemail="086a697a6a697a69266e6d6b7b67487f6c6b267d7b6c69266f677e">[email protected]</span></a>; or 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

    This rule implements all the changes to the sugar loan and sugar 
marketing allotment programs mandated by Title I of the 2008 Farm Bill 
(Pub. L. 110-246). The provisions of Title IX of the 2008 Farm Bill, 
concerning the Feedstock Flexibility Program for Bioenergy, will be 
implemented at a later date as a proposed rule. We are separating these 
regulatory provisions into two rules because the 2008 Farm Bill 
requires us to promulgate the regulations to implement the Title I 
changes and exempts the regulations from notice and comment rulemaking, 
while Title IX must be implemented subject to notice and comment 
rulemaking. Also, we need to implement the Title I changes now in order 
to provide sugar loans and marketing allotments for fiscal year (FY) 
2009. In contrast, it is unlikely given current supply and demand 
conditions that we will be required to implement provisions of the 
Feedstock Flexibility Program in FY 2009. The Feedstock Flexibility 
Program is triggered by the prospect of sugar forfeitures, which are 
unlikely to occur in FY 2009. The U.S. Department of Agriculture's 
(USDA) December 2008 World Agricultural Supply and Demand Estimate 
(WASDE) report projected sugar ending stocks for FY 2009 of 60 percent 
of the level USDA normally considers necessary to provide for a 
balanced domestic sugar market, making forfeitures quite unlikely.
    The sugar program is a collection of Federal programs designed to 
support the return from raising sugarcane and sugar beets above a 
threshold established by statute. The price of sugar, rather than the 
price of sugar beets and sugarcane, is supported, because the growers' 
return from the crop is proportional to the price of sugar and the 
crops are not storable, which makes them unsuitable loan collateral for 
CCC price support loans. The price level supported is determined by the 
sugar loan program. Regulations for this program are in subpart B in 7 
CFR part 1435. Sugar beet and sugarcane processors can receive loans 
from CCC on their sugar production, which can be fully satisfied by 
giving CCC title to their loan collateral, also known as a 
``forfeiture'' of collateral. Thus, sugar processors always have the 
opportunity to receive at least the loan proceeds from their crop, 
which becomes a floor on the market price of domestic sugar.
    The sugar program has had a mandate, since the Farm Security and 
Rural Investment Act of 2002 (Pub. L. 107-171, commonly known as the 
2002 Farm Bill), to avoid the federal costs associated with sugar loan 
collateral forfeitures. The sugar program minimizes forfeiture 
expenditures by limiting domestic supply, resulting in higher domestic 
sugar prices than the floor created by the sugar loan program. Thus, 
the cost of the program falls upon domestic purchasers of sugar, not 
the federal government. USDA can control supply by limiting the 
quantity of sugar that domestic sugar beet and sugarcane processors can 
sell under the Sugar Marketing Allotment program, and by limiting the 
quantity of foreign sugar on the domestic market via sugar tariff-rate 
quotas (TRQ), subject to the minimum access levels established by 
international treaties.
    While some price support aspects of the sugar program may not be 
needed in 2009 due to the predicted tight U.S. sugar market, other 
aspects of the Sugar Loan and Marketing Allotments for Sugar program 
will be implemented in FY 2009 and need this rule in order to operate. 
All of the changes in this rule are required by the 2008 Farm Bill, for 
which USDA has little or no discretion in when and how to implement. 
This rule makes changes to subparts A, B, C, D, and E of 7 CFR part 
1435, ``Sugar Program.'' The Payment in Kind Program in subpart E will 
be moved to a new subpart F. A new subpart E on General Disposition of 
CCC Inventory and subpart G will be added in the subsequent Title IX 
rule and used to implement the Feedstock Flexibility Program.

Changes to General Provisions (Subpart A)

    The extension of the domestic sugar program through the 2012 crop 
year is reflected in the revised section 1435.1, ``Applicability.'' 
Also added to this section is the administration of a program to 
dispose of surplus sugar to bioenergy fuels production.
    Section 1435.2, ``Definitions,'' is updated and modified to reflect 
changes required by the 2008 Farm Bill. The definition of beet sugar is 
revised to implement the requirement in the 2008 Farm Bill that sales 
of sugar processed from in-process beet sugar, such as thick juice, 
whether imported or domestic, used for domestic human consumption is 
subject to the processor's sugar marketing allocation. This change also 
resulted in changes to the definitions of ``in-process beet sugar,'' 
``in-process

[[Page 15360]]

cane sugar,'' ``overall allotment quantity,'' ``sugar,'' and ``sugar 
beet processor.'' A definition for ``human consumption'' is added, 
using the definition in the 2008 Farm Bill. A definition for 
``proportionate share State'' is added for clarification. The 
definition of ``marketing'' is revised to reflect the 2008 Farm Bill 
requirement that a sale of sugar to the Feedstock Flexibility Program 
is a marketing subject to a processor's sugar marketing allocation. A 
definition of ``cane sugar refiner'' is modified to be consistent with 
Foreign Agricultural Service (FAS) regulations.
    Section 1435.3, ``Maintenance and Inspection of Records,'' is 
modified to reflect that CCC has no authority to inspect processor 
records and has instituted a data audit process, in lieu of inspection, 
to verify processor records. This audit process is explained in section 
1435.200, ``Information Reporting.''

Changes to Sugar Loan Program (Subpart B)

    The regulations governing the Sugar Loan Program are modified to 
reflect the changes required by the 2008 Farm Bill.
    Section 1435.101, ``Loan Rates,'' sets forth the increased loan 
rates under the 2008 Farm Bill. The national average loan rate for raw 
cane sugar produced from domestically-grown sugarcane is unchanged for 
the 2008 crop year, at 18 cents per pound, but increases as follows for 
the subsequent years:
    <bullet> 18.25 cents per pound for the 2009 crop year;
    <bullet> 18.50 cents per pound for the 2010 crop year;
    <bullet> 18.75 cents per pound for the 2011 crop year; and
    <bullet> 18.75 cents per pound for the 2012 crop year.
    The national average loan rate for refined beet sugar produced from 
domestically-grown sugar beets remains unchanged for the 2008 crop 
year, but increases to 128.5 percent of the loan rate per pound of raw 
cane sugar for each of the crop years 2009 through 2012.
    The eligibility requirements in section 1435.102, ``Eligibility 
Requirements,'' are modified to exclude sugar processed from imported 
in-process sugars from eligibility for the loan program. The 2008 Farm 
Bill now treats in-process beet sugar just like sugar beets; that is, 
as an input into the production of sugar. Since sugar produced from 
imported beets is not eligible for the loan program, neither is sugar 
produced from imported in-process beet sugar. Section 1435.103, 
``Availability, Disbursement, and Maturity of Loans,'' is revised to 
reflect the change in loan rate for supplemental loans. Instead of 
getting the loan rate in effect at the time the supplemental loan is 
made, supplemental loans will receive the loan rate that was in effect 
at the time the original loan was made. Section 1435.105, ``Loan 
Settlement and Foreclosure,'' is updated to reflect that premiums or 
discounts may result from any differences in the sugar characteristics 
identified on the loan certification versus at the time of actual 
loadout of forfeited sugar. Storage payment rates paid by CCC on 
forfeited sugar loan collateral have also been added to section 
1435.105. The minimum rate set by the 2008 Farm Bill is 15 cents per 
hundredweight for refined sugar and 10 cents per hundredweight for raw 
sugar, significantly above the rates administratively set by USDA of 10 
cents per hundredweight for refined sugar and 8 cents per hundredweight 
for raw sugar.

Changes to Information Reporting and Recordkeeping Requirements 
(Subpart C)

    Subpart C, ``Information Reporting and Recordkeeping 
Requirements,'' is revised to reflect the 2008 Farm Bill's requirement 
that USDA publish Mexican supply data and use estimates in its monthly 
WASDE report. The 2008 Farm Bill also requires the WASDE report to 
include publicly available data on Mexican high fructose corn syrup 
production, consumption, and trade data. This rule also replaces the 
requirement in the regulation that all processors, refiners and 
importers must submit an annual audit to CCC. The new regulation allows 
CCC to select some, but not necessarily all, for audit.

Changes to the Flexible Sugar Marketing Allotment Program (Subpart D)

    The 2008 Farm Bill significantly modified the Flexible Sugar 
Marketing Allotment Program. All of the changes to subpart D in this 
rule described below are required to implement the 2008 Farm Bill. This 
section discusses the overall changes in the program and the 
implications of those changes first, then discusses the changes to 
specific sections of the regulations.
    The 2002 Farm Bill required USDA to set the overall allotment 
quantity (OAQ) by a formula that permitted domestic producers to 
receive a market share equal to the amount of domestic demand, less an 
import share of 1.532 million tons. This allotment quantity had to be 
reduced, if necessary, to avoid the cost of potential forfeitures of 
sugar loan collateral. Allotments were to be suspended if the import 
share exceeded the 1.532 million tons allotted to it. Suspending 
allotments was expected to increase the likelihood of CCC expenditures 
as forfeitures under the price support loan program were constrained by 
the program--forfeitures are marketings credited against a processor's 
allocation of the marketing allotment. Without an allotment program, 
processors could forfeit their entire sugar supply, if they so chose.
    The 2008 Farm Bill added another objective to the domestic 
allotment program, reinforcing USDA's function to use the sugar program 
to provide for a balanced domestic sugar market. USDA must now set the 
domestic allotment quantity, subject to specific constraints, to ensure 
that there is an adequate supply of raw and refined sugar for the 
domestic market. This new objective in the domestic program complements 
the existing authority in chapter 17 of the Harmonized Tariff Schedule 
maintained by the United States International Trade Commission 
permitting USDA to increase the sugar TRQs if supply is determined to 
be ``inadequate to meet domestic demand at reasonable prices.'' Thus, 
USDA must continue to use the sugar program authorities, to the extent 
possible, to keep supply limited enough to avoid forfeitures, but large 
enough to provide an adequate supply.
    The Sugar Marketing Allotment program divides the domestic sugar 
market between sugar importers and domestic sugar beet and sugarcane 
processors. Importers are always expected to fill their share because 
the U.S. price of sugar is usually considerably above the world sugar 
price. If the domestic processors' supply is inadequate to fill their 
allotment, then CCC must fill the deficit with its inventory; if it has 
no inventory, then CCC must reassign the unfilled market share to 
importers. The maximum market share reserved for imports under the 2002 
Farm Bill, 1.532 million tons, was also the allotment program 
suspension threshold and did not include imports needed to make up for 
deficit domestic production.
    Under the 2002 Farm Bill, all types of imported sugar were eligible 
for reassignment of the deficit, including, but not limited to, TRQ raw 
sugar, TRQ refined sugar, Mexican imports, Central America Free Trade 
Agreement (CAFTA) imports, and other high-tier imports. At times, a 
reassignment meant new access to the U.S. sugar market, for example an 
increase in the TRQ. At other times, a reassignment meant acknowledging 
an existing import category that resulted in no new access,

[[Page 15361]]

such as Mexican sugar. USDA reassigned the surplus allotment to an 
import source consistent with the objective of balancing the domestic 
market, avoiding forfeitures and providing adequate supply at 
reasonable prices. If USDA determined that the market was not 
adequately supplied, then USDA would increase access through a TRQ 
increase. If USDA determined that the market would be adequately 
supplied with the imports already expected, then USDA would reassign 
the surplus allotment to those imports. The following is a table of the 
sources of reassigned surplus allotment during administration of the 
Sugar Marketing Allotment program under the 2002 Farm Bill.

                                                                  Reassignment History
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              FY 2003         FY 2004         FY 2005         FY 2006         FY 2007         FY 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              (short tons, raw value)
                                                         -----------------------------------------------------------------------------------------------
OAQ.....................................................       8,663,000       8,250,000       8,680,000       9,350,000       8,750,000       8,950,000
    Beet Sugar..........................................       4,534,340       4,483,875       4,717,580       4,776,380       4,755,625       4,864,325
    Cane Sugar..........................................       3,954,660       3,766,125       3,670,208       2,981,620       3,540,375       3,626,533
Reassignments:
    Reassign Cane Shortfall to CCC......................         174,000               0          17,120               0               0               0
    Reassigned to Total Imports.........................               0               0         275,092       1,592,000         454,000         459,142
        Raw World Trade Organization (WTO) TRQ..........               0               0          84,447         745,000         250,000  ..............
        Refined WTO TRQ.................................               0               0          69,933         509,921          58,581          70,000
        Mexico TRQ......................................               0               0               0         276,000          86,419               0
        Mexico Non TRQ..................................               0               0         120,713               0               0         389,142
        Non Program Imports.............................               0               0               0          61,079          59,000               0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The 2008 Farm Bill changes the market sharing arrangements embodied 
in the Sugar Marketing Allotment program. The new objective that it 
must ensure adequate sugar supply means that when USDA sets the overall 
allotment quantity, it must be comfortable that the remaining share of 
domestic demand, up to 15 percent, will be satisfied. USDA cannot 
reassign surplus allotment to imports that would permit the non-
allotment market share (15 percent) to be unfulfilled. Thus, for the 
new allotment program, USDA cannot reassign surplus allotment to 
imports that would count against the 15-percent import market share. 
The 2008 Farm Bill also specifically requires that surplus allotment be 
reassigned to raw cane sugar imports only. Thus, the raw sugar TRQ, or 
raw sugar portion of CAFTA or Mexican imports, are now eligible as a 
source for reassignment. This still permits USDA significant 
flexibility in balancing the domestic market as these categories are 
expected to range between 1 to 2 million tons per year. Any imported 
refined sugar must be credited against the 15-percent import market 
share because it is not eligible for reassignment if domestic producers 
cannot fill their allotment.
    It should be noted that USDA's increases in access to the domestic 
market do not necessarily mean domestic supplies will increase and 
prices will fall. Sugar must be physically available to fill the 
access. Likewise, USDA's ability to restrict supply and raise prices is 
hampered by storage capacity. CCC sugar is stored in processor 
warehouses and storage capacity limits will cause the processors to 
reduce prices to avoid paying for expensive short term storage as the 
new crop is processed. CCC purchased sugar for considerably less than 
the forfeiture proceeds in 2000.
    The USDA budget baseline projects substantial costs to the sugar 
program because USDA's ability to limit supply was curtailed by NAFTA, 
which deregulates sweetener trade across the U.S.-Mexican border. The 
U.S. advantage in high fructose corn syrup (HFCS) production was 
expected to result in an increased flow of U.S. HFCS into Mexico, 
creating a Mexican surplus in sugar that would result in increased 
Mexican sugar imports into the United States. The increased Mexican 
imports were expected to result in prices below the federal support 
level and forfeiture of sugar price support loan collateral. The 2008 
Farm Bill addressed CCC's options to dispose of surplus sugar in the 
new Feedstock Flexibility Program, located in Title IX of the 2008 Farm 
Bill.
    Section 1435.300, ``Applicability,'' now provides that marketings 
of sugar made from in-process beet sugar will be counted against a 
processor's sugar marketing allocation. Before this change, which is 
required by the 2008 Farm Bill, CCC considered in-process beet sugar as 
a sugar and counted marketings of in-process beet sugar against a 
processor's allocation. This rule considers in-process beet sugar a 
feedstock from which sugar can be made, just as sugar beets or 
sugarcane are considered feedstocks for producing sugar. This change 
required minor edits for consistency to many sections in this subpart, 
as well as changes to the definitions section.
    Section 1435.302 is modified to reflect not only the 85 percent 
market share guarantee to domestic producers, but also CCC's policy of 
requiring a processor to use its marketing allotment to participate in 
USDA's sugar re-export, sugar containing products re-export, or 
polyhydric alcohol programs, and to sell sugar to CCC under the new 
Feedstock Flexibility Program.
    Section 1435.303, ``Overall Allotment Quantity,'' is removed from 
the regulations because it is now obsolete, and subsequent sections are 
renumbered accordingly.
    Section 1435.303, ``The Adjustment of the Overall Allotment 
Quantity,'' (formerly section 1435.304) has been modified to reflect 
the change in the 2008 Farm Bill which restricts CCC from reducing the 
OAQ below 85 percent of human consumption. The 2002 Farm Bill, as 
mentioned earlier, allowed CCC to reduce the domestic share in times of 
a demand decrease, without a lower limit.
    Sections 1435.306, ``Allocation of Marketing Allotments to 
Processors,'' and 1435.307, ``Transfer of Allocation,'' have been 
reorganized for clarification and to reflect changes from the 2008 Farm 
Bill. The provisions in these sections were formerly in Sec. Sec.  
1435.307 and 1435.308.
    The updated Sec.  1435.306, ``Allocation of Marketing Allotments to 
Processors,'' includes new provisions that exempt sugar made in FY 2009 
from in-process beet sugar purchased in FY 2008. The marketing of 
domestic in-process beet

[[Page 15362]]

sugar in FY 2008 was subject to a processor's FY 2008 allocation 
because, under the 2002 Farm Bill, in-process sugar was considered 
sugar subject to a processor's allotment. After September 30, 2008, the 
marketings of in-process beet sugar are no longer considered sugar 
subject to a processor's allotment due to a change made by the 2008 
Farm Bill. Section 359b(c)(1) of the Agricultural Adjustment Act of 
1938, as amended by the 2008 Farm Bill, includes the marketing of sugar 
processed from in-process beet sugar in the section describing the 
coverage of allotments. The new provision in Sec.  1435.306 is required 
so that companies that purchased in-process sugar, sold under a FY 2008 
allocation, are not caught in the transition to the new definition of 
sugar subject to allotment. Some of these companies may not have been 
beet processors with allotments. Without this new provision, these 
companies would be prevented from marketing the sugar processed from 
the in-process beet sugar. In the future, any company wishing to 
process in-process beet sugar into refined sugar must be a beet 
processor with an allocation of the beet sugar marketing allotment.
    The updated Sec.  1435.307, ``Transfer of allocation,'' provides 
that for proportionate share States, growers may now move allocation 
between facilities as they change their sugarcane deliveries. Under the 
previous regulation, growers needed permission from the processor they 
were leaving to move allocation commensurate with their cane 
deliveries. CCC is establishing the signup period for growers to 
request CCC to move allocation as the month of May for the following 
cane harvest season. During that signup month, CCC expects the grower 
to reach agreement with its original facility as to the amount of 
production history the grower is requesting and entitled to move. If 
the petitioning grower does not supply CCC during the month of May with 
its history for the crop years 1997 through 2003, certified by its 
original facility, CCC will refuse the grower's petition to transfer 
allocation. Since growers in proportionate share States do not need 
permission from the facility they are leaving to move allocation 
associated with their production, provisions for them are no longer 
included in the ``Transfer of Allocation'' section regarding facility 
closures.
    In light of proceedings in a court case, Amalgamated Sugar, LLC v. 
Vilsack, et al., the updated Sec.  1435.307 (formerly Sec.  1435.308) 
is being amended to permit CCC wider discretion to determine that a 
processor has permanently terminated operations. In a decision dated 
February 11, 2009, the U.S. Court of Appeals for the Ninth Circuit 
reversed a determination made by the Department transferring the sugar 
marketing allocation from one sugar processor to another sugar 
processor. The amendment permits CCC to make a determination that a 
sugar processor has permanently terminated operations, and transfer the 
allocation on the basis of a CCC determination, in addition to the 
other specified circumstances.
    This section also reflects an addition in the 2008 Farm Bill that 
allows the buyer and seller of a facility, rather than CCC, to choose 
the allocation amount to be transferred upon sale of the facility. 
Finally, Sec.  1435.307 is modified to add a provision that was 
effective in the 2002 Farm Bill, but not specified in the previous 
regulation, that a buyer of facilities may fill a production shortfall 
of its purchased facilities with beet sugar produced in other beet 
facilities it owns, if necessary.
    Section 1435.308, ``New Entrants,'' now specifies that in 
subsequent years after being assigned its initial allocation, the new 
entrant cane processor will be assigned an allocation that provides a 
fair, efficient, and equitable distribution of allocations from the 
allotment of the State within which the new entrant is located. In the 
case of cane processors in proportionate share States, the new 
entrant's allocation in subsequent years will include any allocation 
acquired through the voluntary allocation transfer provisions of Sec.  
1435.307, ``Transfer of Allocation.'' This ``New Entrants'' section 
also implements a change from the 2008 Farm Bill that requires CCC to 
assign to a new entrant constructing a new or reopening an existing 
facility that has no allocation an allocation that enables it to 
achieve a facility utilization rate similar to other sugar beet 
processors. The 2002 Farm Bill specified a formula to determine the new 
allocation that is removed in this rule. This section also now provides 
that a new entrant acquiring a facility with production history and the 
company holding its allocation must agree on the allocation to be 
transferred; otherwise CCC will deny the new entrant an allocation.
    Section 1435.309, ``Reassignment of Deficits,'' is changed in this 
rule to restrict reassignment of production shortfall, after it has 
been determined that CCC cannot fill the allocation, to imports of raw 
cane sugar only.
    Section 1435.313, ``Permanent Transfer of Acreage Base Histories 
Under Proportionate Shares,'' now incorporates a new process to restore 
sugarcane base acreage lost to nonagricultural uses before May 13, 2002 
in proportionate share States. USDA will notify affected landowners 
within 90 days of USDA becoming aware of the conversion that the 
landowner has 90 days to transfer the base. It is not USDA's 
responsibility to keep a vigilant watch for sugarcane base acreage 
converting to a nonagricultural use. If the landowner does not exercise 
his transfer rights, the grower of record will have 90 days after being 
notified by USDA to transfer the base. If the landowner or grower does 
not transfer the base, then the FSA county committee will take requests 
for the base and randomly assign to sugarcane farms in the county that 
are eligible and capable of accepting the acreage base. Any base 
remaining will go to the State FSA committee for dispersal.
    Section 1435.318, ``Penalties and Assessments,'' is also changed by 
this rule to include a provision for liquidated damages that was 
previously specified in section 1435.307.

Redesignation of Subpart E, ``Processor Sugar Payment-in-Kind (PIK) 
Program''

    The subpart on PIK is not changing with this rule. We will 
implement minor changes to PIK with the subsequent rule implementing 
Title IX to include provisions of the Feedstock Flexibility Program. 
This rule merely moves the PIK subpart from E to F, and reserves part E 
for a new subpart on ``General Disposition of CCC Inventory'' that will 
be added with the Title IX rule. It makes sense to have the General 
disposition subpart appear in the CFR before the PIK subpart, because 
PIK is a specific kind of disposition program. This rule also reserves 
subpart G for the Feedstock Flexibility program sections that will be 
added with the Title IX rule.

Notice and Comment

    These regulations are exempt from the notice and comment 
requirements of the Administrative Procedures Act (5 U.S.C. 553), as 
specified in section 1601(c) of the 2008 Farm Bill, which requires that 
the regulations be promulgated and administered without regard to the 
notice and comment provisions of section 553 of title 5 of the United 
States Code or the Statement of Policy of the Secretary of Agriculture 
effective July 24, 1971 (36 FR 13804) relating to notices of proposed 
rulemaking and public participation in rulemaking.

Executive Order 12866

    The Office of Management and Budget (OMB) designated this rule as 
economically significant under Executive Order 12866 and, therefore, 
OMB reviewed this final rule. A cost-

[[Page 15363]]

benefit assessment of this rule is summarized below and is available 
from the contact information above.

Summary of Economic Impacts

    This rule implements two major changes in the sugar program 
resulting from the 2008 Farm Bill: Higher loan rates and a guaranteed 
market share. These are expected to have zero impact on federal costs 
for FY 2009 and FY 2010. This is because baseline assumptions project 
FY 2011 to be the first year of surplus sugar in the marketplace. 
However, over the course of FY 2009 through FY 2018, federal net 
expenditures are expected to be $1.055 billion more than if the 2002 
Farm Bill provisions were still in place. This result is mostly driven 
by the increase in loan rates that increases the NAFTA floor price. 
While higher sugar prices in Mexico cause its manufacturers and 
consumers to substitute high fructose corn syrup for sugar, they also 
increase the grower incentive to plant more acreage to sugarcane. As a 
result, Mexican sugar exports to the U.S. are likely to increase over 
time, on average by 33 percent between 2009 and 2018. At the same time, 
U.S. production is likely to increase in response to high support 
levels. The loan rate increase is expected to increase sugar costs to 
consumers and sugar users by $1.4 billion from 2009 to 2018. This cost 
is the increase in the loan rate multiplied by sugar use; the demand 
for sugar is assumed to be perfectly inelastic.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act since 
CCC is not required to publish a notice of proposed rulemaking for this 
rule.

Environmental Review

    FSA has determined that these changes would not constitute a major 
Federal action that would significantly affect the quality of the human 
environment. Therefore, in accordance 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 FSA regulations for compliance with NEPA, specifically 7 CFR 
part 799.10(b)(2)(vii), no environmental assessment or environmental 
impact statement will be prepared.

Executive Order 12372

    This program is not subject to Executive Order 12372, 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. This rule 
is not retroactive and it does not preempt State or local laws, 
regulations, or policies unless they present an irreconcilable conflict 
with this rule. Before any judicial 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

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with the states is not required.

Unfunded Mandates

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local, and tribal government or the private sector. 
In addition, CCC was not required to publish a notice of proposed 
rulemaking for this rule. Therefore, this rule is not subject to the 
requirements of sections 202 and 205 of UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

    Section 1601(c)(3) of the 2008 Farm Bill requires that the 
Secretary use the authority in section 808 of title 5, United States 
Code, which allows an agency to forgo SBREFA's usual 60-day 
Congressional Review delay of the effective date of a major regulation 
if the agency finds that there is a good cause to do so. Accordingly, 
this rule is effective upon publication in the Federal Register.

Paperwork Reduction Act

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
section 1601(c)(2) of the 2008 Farm Bill, which provides that these 
regulations be promulgated and administered without regard to the 
Paperwork Reduction Act.

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.

0
For the reasons discussed above, this rule amends 7 CFR part 1435 as 
follows:

PART 1435--SUGAR PROGRAM

0
1. Revise the authority for part 1435 to read as follows:

    Authority:  7 U.S.C. 1359aa-1359jj and 7272; 15 U.S.C. 714b and 
714c.

Subpart A--General Provisions

0
2. Amend Sec.  1435.1 as follows:
0
a. Amend the introductory text by removing the years ``2002-2007'' and 
adding in their place the years ``2008 through 2012,'' and
0
b. Revise paragraph (d) to read as set forth below.


Sec.  1435.1  Applicability.

* * * * *
    (d) Administer an inventory disposition program to sell CCC 
inventory to bioenergy producers and exchange CCC inventory for 
processor reductions in production or certificates of quota entry.

0
3. Amend Sec.  1435.2 as follows:
0
a. Add new definitions, in alphabetical order, for ``CCC,'' 
``facility,'' ``human consumption,'' ``in-process beet sugar,'' ``in-
process cane sugar,'' and ``proportionate share State,'' to read as set 
forth below,
0
b. Remove the definition for ``in-process sugar,'' and
0
c. Revise the definitions of ``beet sugar,'' ``cane sugar refiner,'' 
``market or marketing,'' ``overall allotment quantity,'' ``sugar,'' and 
``sugar beet processor'' to read as set forth below.


Sec.  1435.2  Definitions.

* * * * *
    Beet sugar means sugar that is processed directly or indirectly 
from sugar beets, sugar beet molasses, or in-process beet sugar, 
whether produced domestically or imported.
* * * * *
    Cane sugar refiner means any person in the U.S. Customs Territory 
that refines raw cane sugar through affination or defecation, 
clarification, and further purification by absorption or 
crystallization.
* * * * *

[[Page 15364]]

    CCC means the Commodity Credit Corporation.
* * * * *
    Facility means a factory, mill, or plant.
* * * * *
    Human consumption means sugar for use in human food, beverages, or 
similar products.
* * * * *
    In-process beet sugar means the intermediate sugar-containing 
product, as CCC determines, produced from processing sugar beets. Like 
sugar beets, it is considered an input into the production of sugar 
regardless of whether it is produced domestically or imported.
    In-process cane sugar means the intermediate sugar-containing 
product, as CCC determines, produced from the processing of sugarcane. 
It is not raw sugar, nor is it suitable for direct human consumption.
    Market or marketing means the transfer of title associated with the 
sale or other disposition of sugar for human consumption in United 
States commerce. A marketing also includes a sale of sugar under the 
Feedstock Flexibility Program, the forfeiture of sugar loan collateral 
under the Sugar Loan Program, exportation of sugar from the United 
States Customs Territory eligible to receive credits under reexport 
programs for refined sugar or sugar-containing products administered by 
the Foreign Agricultural Service, or the sale of sugar eligible to 
receive credit for the production of polyhydric alcohol under the 
Polyhydric Alcohol program (see part 1530 of this title) administered 
by the Foreign Agricultural Service, and for any integrated processor 
and refiner, the movement of raw cane sugar into the refining process.
* * * * *
    Overall allotment quantity means, on a national basis, the total 
quantity of domestically produced sugar, raw value, processed from 
sugarcane, sugar beets or in-process beet sugar (whether the sugar 
beets or in-process beet sugar are produced domestically or imported), 
and the raw value equivalent of sugar in sugar products, that is 
permitted to be marketed by processors, during a crop year or other 
period in which marketing allotments are in effect.
* * * * *
    Proportionate share State means a State with an established 
allotment and more than 250 sugarcane producers in the State, other 
than Puerto Rico.
* * * * *
    Sugar means any grade or type of saccharine product derived, 
directly or indirectly, from sugarcane, sugar beets, sugarcane 
molasses, sugar beet molasses or in-process beet sugar whether 
domestically produced or imported and consisting of, or containing, 
sucrose or invert sugar, including raw sugar, refined crystalline 
sugar, edible molasses, edible cane syrup, liquid sugar, and in-process 
cane sugar.
    Sugar beet processor means a person who commercially produces 
sugar, directly or indirectly, from sugar beets, sugar beet molasses, 
or in-process beet sugar.
* * * * *


Sec.  1435.3  [Amended]

0
4. Amend Sec.  1435.3 as follows:
0
a. In the heading, remove the words ``and inspection,''
0
b. Remove paragraph (a),
0
c. Redesignate paragraph (b) as paragraph (a),
0
d. In newly redesignated paragraph (a) introductory text, remove the 
words ``the records shall'' and add the words ``records required by CCC 
to operate the sugar program must'' in their place, and
0
d. Reserve paragraph (b).

Subpart B--Sugar Loan Program

0
5. Revise the heading of Subpart B to read as set forth above.
0
6. Amend Sec.  1435.101 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1435.101  Loan rates.

    (a) The national average loan rate for raw cane sugar produced from 
domestically grown sugarcane is: 18 cents per pound for the 2008 crop 
year; 18.25 cents per pound for the 2009 crop year; 18.50 cents per 
pound for the 2010 crop year; 18.75 cents per pound for the 2011 crop 
year; and 18.75 cents per pound for the 2012 crop year.
    (b) The national average loan rate for refined beet sugar from 
domestically grown sugar beets is: 22.90 cents per pound for the 2008 
crop year; and a rate equal to 128.5 percent of the loan rate per pound 
of raw cane sugar for each of the crop years 2009 through 2012.
* * * * *


Sec.  1435.102  [Amended]

0
7. Amend Sec.  1435.102 in paragraph (c)(3) by adding the words ``in-
process sugars,'' immediately after the word ``beets,''.
0
8. Amend Sec.  1435.103 by revising paragraph (f) to read as follows:


Sec.  1435.103  Availability, disbursement, and maturity of loans.

* * * * *
    (f) Processors receiving loans in July, August, or September may 
repledge the sugar as collateral for a supplemental loan. Such 
supplemental loan must:
    (1) Be requested by the processor during the following October;
    (2) Be made at the loan rate in effect at the time the first loan 
was made; and
    (3) Mature in 9 months less the number of months that the first 
loan was in effect.


Sec.  1435.104  [Amended]

0
9. Amend Sec.  1435.104 as follows:
0
a. Remove paragraph (c)(2) and
0
b. Redesignate paragraphs (c)(3) and (c)(4) as paragraphs (c)(2) and 
(c)(3), respectively.
0
10. Amend Sec.  1435.105 as follows:
0
a. Revise paragraph (b) to read as set forth below,
0
b. In paragraph (c)(2), add the word ``before'' immediately before the 
words ``the processor,''
0
c. In paragraph (f), add the word ``next business'' before the word 
``day,'' and
0
d. Add paragraph (j) to read as set forth below.


Sec.  1435.105  Loan settlement and foreclosure.

* * * * *
    (b) Forfeiture of sugar loan collateral will be accepted as payment 
in full of the principal and interest due under a nonrecourse loan, 
subject to applicable premiums and discounts based on the difference 
between specifications reported on the sugar loan certification report 
and actual loadout characteristics.
* * * * *
    (j) The CCC rates for the storage of forfeited sugar to approved 
warehouses for each crop year of 2008 through 2011 will be at least:
    (1) For refined sugar, 15 cents per hundredweight of refined sugar 
per month; and
    (2) For raw cane sugar, 10 cents per hundredweight of raw cane 
sugar per month.
    (3) For 2012 and subsequent crop years, rates for the storage of 
forfeited sugar will revert to those used before June 18, 2008.
    (4) For sugar located in space not approved by CCC for storage, the 
payment rate will be zero until such time as the processor delivers 
such sugar to a CCC-approved warehouse.

Subpart C--Information Reporting and Recordkeeping Requirements

0
11. Amend Sec.  1435.200 as follows:
0
a. In paragraph (a), second sentence, remove the words ``made by'' and 
add, in their place, the word ``due,''
0
b. Revise paragraph (e) to read as set forth below,

[[Page 15365]]

0
c. Redesignate paragraphs (f), (g), and (h) as (h), (i), and (j), 
respectively,
0
d. Add paragraphs (f) and (g) to read as set forth below, and
0
e. Revise newly redesignated paragraph (i) to read as set forth below.


Sec.  1435.200  Information reporting.

* * * * *
    (e) Importers of sugars, syrups, or molasses to be used for 
domestic human consumption or to be used for the extraction of sugar 
for domestic human consumption must report such information as CCC 
requires, including the quantities of the products imported and the 
sugar content or equivalent of the products.
    (f) The Secretary will collect information on the production, 
consumption, stocks and trade of sugar in Mexico and publish the data 
in each edition of the World Agricultural Supply and Demand Estimates 
report.
    (g) The Secretary will collect publicly available information on 
the production, consumption, and trade of high fructose corn syrup in 
Mexico and publish the data in each edition of the World Agricultural 
Supply and Demand Estimates report.
* * * * *
    (i) By November 20 of each year, sugar beet processors, sugarcane 
processors, sugarcane refiners, and importers of sugars, syrups, and 
molasses, as selected by CCC, will submit to CCC a report, as specified 
by CCC, from an independent Certified Public Accountant that reviews 
its information submitted to CCC during the previous October 1 through 
September 30 period.
* * * * *


Sec.  1435.201  [Amended]

0
12. Amend Sec.  1435.201 in paragraph (a) by removing the reference 
``Sec.  1435.200'' and adding, in its place, the references ``Sec.  
1435.200(a) through (e).''

Subpart D--Flexible Marketing Allotments for Sugar

0
13. Amend Sec.  1435.300 as follows:
0
a. Revise paragraphs (a)(1) and (b) to read as set forth below and
0
b. In paragraph (a)(2), remove the words ``domestically produced.''


Sec.  1435.300  Applicability.

    (a) * * *
    (1) Processor marketings of sugar domestically processed from sugar 
beets or in-process beet sugar, whether such sugar beets or in-process 
beet sugar were produced domestically or imported,
* * * * *
    (b) This subpart does not apply to marketing imported raw or 
refined sugar.
* * * * *

0
14. Amend Sec.  1435.301 as follows:
0
a. Revise paragraphs (a)(1) and (a)(4) to read as set forth below and
0
b. Amend paragraph (a)(3) by removing the words ``available for 
consumption from'' and adding in their place the words ``used for human 
consumption in the United States from.''


Sec.  1435.301  Annual estimates and quarterly re-estimates.

    (a) * * *
    (1) Quantity of sugar that will be subject to human consumption in 
the United States during the crop year;
    * * *
    (4) Quantity of sugar that will be available from domestically 
processed sugarcane, sugar beets, and in-process beet sugar; and
* * * * *

0
15. Revise Sec.  1435.302 and its heading to read as follows:


Sec.  1435.302  Establishment of allotments.

    (a) By the beginning of the crop year, CCC will establish the 
overall allotment quantity, beet sugar and cane sugar allotments, State 
cane sugar allotments, and allocations for processors marketing sugar 
domestically processed from sugarcane, sugar beets, or in-process beet 
sugar, whether the sugar beets or in-process beet sugar is domestically 
produced or imported at a level:
    (1) That is sufficient to maintain raw and refined sugar prices 
above minimum prices to avoid forfeiture of loans to the CCC, but
    (2) Not less that 85 percent of estimated quantity of sugar for 
domestic human consumption for the crop year.
    (b) Determinations under this section to establish marketing 
allotments will be published in the Federal Register and accompanied by 
a statement of the reasons for the determination.

0
16. Remove Sec.  1435.303 and redesignate Sec. Sec.  1435.304 through 
1435.308 as Sec. Sec.  1435.303 though 1435.307, respectively.
0
17. Amend newly redesignated Sec.  1435.303 by revising paragraphs (a) 
and (b) to read as follows:


Sec.  1435.303  Adjustment of the Overall Allotment Quantity.

    (a) The overall allotment quantity may be adjusted, as CCC 
determines appropriate, but never to a quantity less than 85 percent of 
the estimated quantity of sugar for domestic human consumption for the 
crop year:
    (1) To avoid forfeiture of sugar loan collateral to CCC,
    (2) Ensure adequate supplies of raw and refined sugar in the 
domestic market, and,
    (3) To reflect changes in estimated sugar consumption, stocks, 
production, or imports based on re-estimates under Sec.  1435.301.
    (b) Determinations to adjust the overall allotment quantity will be 
published in the Federal Register and accompanied by a statement of the 
reasons for the determination.
* * * * *


Sec.  1435.305  [Amended]

0
18. Amend newly redesignated Sec.  1435.305, in paragraph (b), by 
removing the reference ``Sec.  1435.308(f)'' and adding, in its place, 
the reference ``Sec.  1435.308.''
0
19. Amend newly redesignated Sec.  1435.306 as follows:
0
a. In paragraph (a) introductory text, add the words ``, other than a 
new entrant's,'' before the words ``of the beet allotment,''
0
b. Revise paragraphs (b), (e) introductory text, (e)(1), and (e)(2) to 
read as set forth below,
0
c. Revise paragraph (g) to read as set forth below, and
0
d. Add paragraph (h) to read as set forth below.


Sec.  1435.306  Allocation of marketing allotments to processors.

* * * * *
    (b) Each sugarcane processor's, other than a new entrant's, 
allocation from a State cane sugar allotment will be calculated as the 
cane processor's share times the State cane sector allotment.
    (1) Each cane processor's share will be calculated as the 
processor's production base divided by the sum of the State's processor 
production bases.
    (2) A processor's production base is the sum of 0.50 times its 
ability to market plus 0.25 times its past processings plus 0.25 times 
its past marketings. These weights may be adjusted as CCC deems 
appropriate for the crop year.
* * * * *
    (e) Paragraph (d) of this section will not apply to:
    (1) Any sugar marketings to facilitate the export of sugar or 
sugar-containing products as long as such exports are not eligible to 
receive credits under reexport programs administered by the Foreign 
Agricultural Service for refined sugar or sugar-containing products;
    (2) Any sugar marketings for nonhuman consumption, except for the 
sale of sugar for the production of ethanol or other bioenergy under 
the

[[Page 15366]]

Feedstock Flexibility program or the sale of sugar for the production 
of polyhydric alcohol under the Polyhydric Alcohol program administered 
by the Foreign Agricultural Service; and
* * * * *
    (g) Paragraph (d) of this section also will not apply to the 
marketing of beet sugar processed from purchased in-process beet sugar 
if the processor purchased the in-process beet sugar before October 1, 
2008.
    (h) A sugar beet processor allocated a share of the beet sugar 
allotment may use only beet sugar to fill such allocation. A sugarcane 
processor allocated a share of the cane sugar allotment may only use 
cane sugar to fill such allocation.

0
20. Revise newly redesignated Sec.  1435.307 to read as follows:


Sec.  1435.307  Transfer of allocation.

    (a) If a sugarcane processing facility is sold or transferred to 
another owner or is closed as part of a corporate consolidation CCC 
will transfer the allotment allocation to the purchaser or successor.
    (b) In proportionate share States, allocations, based on the number 
of acres of sugarcane base being transferred and the pro rata amount 
reflecting the grower's contribution to allocation of the processor for 
the sugarcane base being transferred, will be transferred between 
facilities if the transfers are based on:
    (1) Written consent of the crop-share owners, or their 
representatives,
    (2) Written certification from the processor that will accept the 
additional sugarcane deliveries that its processing capacity will not 
be exceeded,
    (3) CCC will only consider requests for transfer of allocation 
submitted during the month of May. The request must include the 
grower's sugar production history for crop years 1997 through 2003. The 
facility with the grower's history will be required to certify the 
history when requested by the grower, and
    (4) Allocation transfers will be effective for the next fiscal year 
after the request is submitted to CCC, that is beginning October 1.
    (c) If a sugar beet processing facility or a sugarcane processing 
facility located in a non-proportionate share State is closed, and the 
growers that delivered their crops to the closed facility elect to 
deliver their crops to another processor, the growers may petition the 
Executive Vice President, CCC, to transfer their share of the 
allocation from the processor that closed the facility to their new 
processor. If CCC approves transfer of the allocations, it will 
distribute the closed facility's allocation based on the contribution 
of the growers' production history to the closed facility's allocation. 
CCC may grant the allocation transfer upon:
    (1) Written request by a grower to transfer allocation,
    (2) Written approval of the processor that will accept the 
additional deliveries,
    (3) Evidence satisfactory to CCC that the new processor has the 
capacity to accommodate the production of petitioning growers, and
    (4) Determinations by the CCC will be made within 60 days after the 
filing of the petition.
    (d) Subject to a transfer of allocation, if any, described in 
paragraph (c) of this section being completed, CCC will consider a 
processor to be permanently terminated and eliminate the processor's 
remaining allocation and distribute it to all other processors on a 
pro-rata basis when the processor:
    (1) Has been dissolved,
    (2) Has been liquidated in a bankruptcy proceeding,
    (3) Has not processed sugarcane or sugar beets for 2 consecutive 
crop years,
    (4) Has notified CCC that the processor has permanently terminated 
operations, or
    (5) Has been determined by CCC to have permanently terminated 
operations.
    (e) If a processor of beet sugar purchases all the assets of 
another processor, then CCC will immediately transfer allocation 
commensurate with the purchased facilities' production history, unless 
the allocation has already been transferred under paragraph (d) of this 
section.
    (f) If a processor of beet sugar purchases some, but not all, of 
the assets of another processor, then CCC will assign a pro rata 
portion of the allocation to the buyer to reflect the historical 
contribution of the sold facilities, unless the buyer and seller have 
agreed upon a different allocation amount.
    (1) The assignment of the allocation will apply to the crop year in 
which the sale occurs and for each subsequent year.
    (2) The buyer of the facilities as specified in paragraph (e) of 
this section may fill the assigned allocation with production from 
other facilities it owns if the purchased facilities lack the 
production to fill the assigned allocation.

0
21. Add Sec.  1435.308 to read as follows:


Sec.  1435.308  New entrants.

    (a) The Secretary may assign a new entrant sugarcane processor an 
allocation that provides a fair, efficient, and equitable distribution 
of allocations:
    (1) Applicants must demonstrate their ability to process, produce, 
and market sugar for the applicable crop year,
    (2) CCC will consider any adverse effects of the allocation upon 
existing processors and producers,
    (3) CCC will conduct a hearing on a new entrant application if an 
interested processor or grower requests a hearing,
    (4) A new entrant's allocation is limited to no more than 50,000 
short tons, raw value, for the first crop year, and
    (5) A new entrant will be provided, as determined by CCC:
    (i) A share of its State's cane allotment if the processor is 
located in Hawaii, Florida, Louisiana, or Texas or
    (ii) A share of the overall mainland cane allotment if the 
processor is located in any mainland State not listed in paragraph 
(a)(5)(i) of this section.
    (b) For proportionate share States, CCC will establish 
proportionate shares for the sugarcane required to fill the allocation.
    (c) If a new entrant beet processor constructs a new facility or 
reopens a facility that currently has no allocation, but last produced 
beet sugar from sugar beets and sugar beet molasses prior to the 1998 
crop year, CCC will:
    (1) Assign an allocation to the new entrant to enable it to achieve 
a facility utilization rate comparable to other similarly-situated 
sugar beet processors and
    (2) Reduce all other beet processor allocations by a like amount on 
a pro rata basis.
    (d) If a new entrant acquires an existing facility with production 
history that processed sugar beets for the 1998 or subsequent crop 
year, CCC will:
    (1) Assign the allocation to the buyer to reflect the historical 
contribution of the sold facilities, unless the buyer and seller have 
agreed upon a different allocation amount, or
    (2) If the new entrant and the processor holding the allocation of 
the existing facility cannot agree on an allocation amount, the new 
entrant will be denied a beet sugar allocation.


Sec.  1435.309  [Amended]

0
22. Amend Sec.  1435.309, paragraphs (c)(4) and (e)(3), by adding the 
words ``of raw cane sugar'' at the end of each paragraph.
0
23. Amend Sec.  1435.310 as follows:
0
a. In paragraph (b)(1)(i)(A), add the word ``or'' at the end,
0
b. In paragraph (b)(1)(i)(B), remove the word ``or'',

[[Page 15367]]

0
c. Remove paragraph (b)(1)(i)(C) and
0
d. Remove paragraph (b)(2) and redesignate paragraph (b)(3) as 
paragraph (b)(2).


Sec.  1435.312  [Amended]

0
24. Amend Sec.  1435.312, paragraph (a), first sentence, by adding the 
words ``(meaning only those varieties dedicated to the production of 
sugarcane to produce sugar for human consumption)'' immediately after 
the word ``seed.''
0
25. Amend Sec.  1435.313 as follows:
0
a. Redesignate paragraphs (b) and (c) as paragraphs (a)(1) and (a)(2), 
respectively, and
0
b. Add paragraph (b) to read as set forth below:


Sec.  1435.313  Permanent transfer of acreage base histories under 
proportionate shares.

* * * * *
    (b) Sugarcane acreage base that has been converted to 
nonagricultural use on or before May 13, 2002, may be transferred to 
other land suitable for the production of sugarcane under the following 
terms:
    (1) CCC must notify 1 or more affected landowners within 90 days of 
becoming aware of the conversion, of their rights to transfer the base 
to 1 or more farms owned by the landowner;
    (2) The landowner has 90 days from the date the landowner was 
notified to transfer the base;
    (3) If the landowner does not exercise this transfer right, the 
grower of record will have 90 days after being notified by CCC to 
transfer the base to 1 or more farms owned by the grower;
    (4) If the transfers as specified under paragraphs (b)(2) or (3) of 
this section are not accomplished during the specified periods, FSA 
county committee will place the base into a pool for possible 
reassignment to other farms;
    (5) After providing notice to farm owners, operators and growers of 
record in the county, the committee will accept requests from farm 
owners, operators, and growers in the county;
    (6) The county committee will assign the base to other sugarcane 
farms in the county that are eligible and capable of accepting the 
acreage base, based on a random drawing among requests received under 
paragraph (b)(5) of this section;
    (7) Any unassigned base will be made available to the State FSA 
committee and be allocated to remaining FSA county committees in the 
State representing counties with farms eligible for assignment of the 
base, based on a random drawing; and
    (8) After the acreage base has been reassigned, the acreage base 
will remain on the farm and subject to the transfer provisions of 
paragraph (a) of this section.

0
26. Amend Sec.  1435.318 as follows:
0
a. Revise paragraph (a) to read as set forth below,
0
b. Redesignate paragraphs (b) through (e) as paragraphs (c) through 
(f), respectively, and
0
c. Add paragraph (b) to read as set forth below.


Sec.  1435.318  Penalties and assessments.

    (a) Any sugar beet or sugarcane processor who knowingly markets 
sugar or sugar products in excess of the processor's allocation will be 
liable to CCC for a civil penalty in an amount equal to 3 times the 
U.S. market value, at the time the violation was committed, of that 
quantity of sugar involved in the violation.
    (b) CCC may assess liquidated damages, as specified in a surplus 
allocation survey and agreement, with respect to a surplus allocation 
still existing after the end of a crop year if the processor had a 
surplus allocation because the processor provided incomplete or 
erroneous information to CCC.

Subpart E--[Redesignated and Reserved]

0
27. Redesignate subpart E, consisting of Sec. Sec.  1435.400 through 
1435.405, as subpart F and reserve subpart E.

Subpart F--Processor Sugar Payment-In-Kind (PIK) Program


Sec. Sec.  1435.400 through 1435.405  [Amended]

0
28. In newly redesignated subpart F, redesignate Sec. Sec.  1435.400 
through 1435.405 as Sec. Sec.  1435.500 through 1435.505, respectively.

Subpart G--[Added and Reserved]

0
29. Reserve subpart G.

    Signed at Washington, DC, on March 31, 2009.
Dennis J. Taitano,
Acting Executive Vice President, Commodity Credit Corporation.
 [FR Doc. E9-7633 Filed 4-3-09; 8:45 am]
BILLING CODE 3410-05-P


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