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 Department of Agriculture Agricultural Marketing Service 7 CFR Part 1205
[Doc. #AMS-CN-09-0015; CN-09-002]
 AGENCY: Agricultural Marketing Service, USDA.
 ACTION: Final rule.
 SUMMARY: The Agricultural Marketing Service (AMS) is amending the Cotton Board Rules and Regulations by increasing the value assigned to imported cotton for calculating supplemental assessments collected for use by the Cotton Research and Promotion Program. An amendment is required to adjust the assessments collected on imported cotton and the cotton content of imported products to be the same as those paid on domestically produced cotton. In addition, AMS is adding and changing Harmonized Tariff Schedule (HTS) statistical reporting numbers that were amended since the last assessment adjustment.
 DATES: *Effective Date:*
                         August 7, 2009.
 FOR FURTHER INFORMATION CONTACT: Shethir M. Riva, Chief, Research and Promotion Staff, Cotton and Tobacco Programs, AMS, USDA, Stop 0224, 1400 Independence Ave., SW., Room 2639-S, Washington, DC 20250-0224, telephone (202) 720-6603, facsimile (202) 690-1718, or e-mail at 
                        *Shethir.Riva@usda.gov.*


SUPPLEMENTARY INFORMATION:  Executive Order 12866 The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action. Executive Order 12988 This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. This rule would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Cotton Research and Promotion Act (7 U.S.C. 2101-2118) (“Act”) provides that administrative proceedings must be exhausted before parties may file suit in court. Under Section 12 of the Act, any person subject to an order may file with the Secretary a petition stating that the order, any provision of the plan, or any obligation imposed in connection with the order is not in accordance with law and requesting a modification of the order or to be exempted therefrom. Such person is afforded the opportunity for a hearing on the petition. After the hearing, the Secretary would rule on the petition. The Act provides that the District Court of the United States in any district in which the person is an inhabitant, or has his principal place of business, has jurisdiction to review the Secretary's ruling, provided a complaint is filed within 20 days from the date of the entry of ruling. Background The Cotton Research and Promotion Act Amendments of 1990 enacted by Congress under Subtitle G of Title XIX of the Food, Agriculture, Conservation, and Trade Act of 1990 (Pub. L. 101-624) on November 28, 1990, contained two provisions that authorized changes in the funding procedures for the Cotton Research and Promotion Program. These provisions are: (1) The assessment of imported cotton and 
                    ( print page 32401)
                    cotton products; and (2) termination of the right of cotton producers to demand a refund of assessments. This rule increases the value assigned to imported cotton in the Cotton Board Rules and Regulations (7 CFR 1205.510(b)(2)). The total value is determined by a two-part assessment. The first part of the assessment is levied on the weight of cotton produced or imported at a rate of $1 per bale of cotton, which is equivalent to 500 pounds, or $1 per 226.8 kilograms of cotton. The second value is used to calculate the supplemental assessments on imported cotton and the cotton content of imported products. Supplemental assessments are levied at a rate of five-tenths of one percent of the value of domestically produced cotton, imported cotton, and the cotton content of imported products. The supplement assessment is combined with the per bale equivalent to determine the total value and assessment of the imported cotton or cotton-containing products. The Cotton Research and Promotion Rules and Regulations provide for assigning the calendar year weighted average price received by U.S. farmers for Upland cotton to represent the value of imported cotton. This is so that the assessment on domestically produced cotton and the assessment on imported cotton and the cotton content of imported products is the same. The source for the average price statistic is 
                    *Agricultural Prices,*
                     a publication of the National Agricultural Statistics Service (NASS) of the U.S. Department of Agriculture (USDA). Use of the weighted average price figure in the calculation of supplemental assessments on imported cotton and the cotton content of imported products will yield an assessment that is the same as assessments paid on domestically produced cotton. The current value of imported cotton as published in the 
                    **Federal Register**
                     (73 FR 69521) for the purpose of calculating assessments on imported cotton is $0.009874 per kilogram, which is equivalent to 0.9874 cents per kilogram. Using the Average Weighted Price received by U.S. farmers for Upland cotton for the calendar year 2008, the new value of imported cotton is $0.01088 per kilogram, which is equivalent to $1.0880 cents per kilogram, or $0.001006 per kilogram more than the previous value. An example of the complete assessment formula and how the figures are obtained is as follows: One bale is equal to 500 pounds. One kilogram equals 2.2046 pounds. One pound equals 0.453597 kilograms. One Dollar per Bale Assessment Converted to Kilograms A 500-pound bale equals 226.8 kg. (500 × .453597). $1 per bale assessment equals $0.002000 per pound (1/500) or $0.004409 per kg. (1/226.8). Supplemental Assessment of 
                    5/10
                     of One Percent of the Value of the Cotton Converted to Kilograms The 2008 calendar year weighted average price received by producers for Upland cotton is $0.587 per pound or $1.294 per kg. (0.587 × 2.2046). Five tenths of one percent of the average price in kg. equals $0.006471 per kg. (1.294 × .005). Total Assessment The total assessment per kilogram of raw cotton is obtained by adding the $1 per bale equivalent assessment of $0.004409 per kg. and the supplemental assessment $0.006471 per kg. which equals $0.01088 per kg. and is equivalent to $1.0880 cents per kilogram. The current assessment on imported cotton is $0.009874 per kilogram of imported cotton. The new assessment is $0.01088, which is equivalent to $1.0880 cents per kilogram, an increase of $0.001006 per kilogram. This increase reflects the increase in the Average Weighted Price of Upland Cotton Received by U.S. Farmers during the period January through December 2008. Since the value of cotton is the basis of the supplemental assessment calculation and the figures shown in the right hand column of the Import Assessment Table in section 1205.510(b)(3) are a result of such a calculation, the figures in this table have been revised. These figures indicate the total assessment per kilogram due for each HTS statistical reporting number subject to assessment. AMS also compared the current import assessment table with the U.S. International Trade Commission's (ITC) 2009 HTS and identified HTS statistical reporting numbers that have been changed or amended by ITC. The HTS statistical reporting number that currently appears in section 1205.510(b)(3) is listed below on the left side of the table with the new HTS statistical reporting number on the right side of the table. The new numbers corresponds with the same ITC category, but with the amended number as it appears in ITC's HTS. Current HTS
New HTS5205420020
52054200215205440020
5205440021
 In addition, AMS removed HTS statistical reporting numbers from section 1205.510(b)(3) that were no longer in the ITC official HTS on November 19, 2008 (73 FR 69521) and has worked with ITC to identify the new corresponding HTS statistical reporting numbers that ITC is using in the 2009 HTS. In many instances, the number is a replacement of a previous number and has no impact on the physical properties or cotton content of the product involved. In other instances, the HTS statistical reporting numbers were expanded and are now represented by two HTS statistical reporting numbers. Below on the left are the numbers removed on November 19, 2008 (73 FR 69521), and on the right are the new numbers that ITC currently is using and whose categories correspond to the previously removed HTS statistical reporting numbers from 1205.510(b)(3). Removed HTS No.
New HTS No.5208530000
52085910005210120000
52101910005211210025
52112021255211210035
52112021355211210050
52112021505211290090
52112029905604900000
56049090005702991010
57029905005702991090
57029915006109100005
61091000046109100009
610910000461091000116110202065
611020206761102020696110202075
611020207761102020796111206040
611120605061112060706111305040
611130505061113050706115198010
611510151061152980106115929000
611595900061151030006115936020
61159660206203424005
62034240066203424010
62034240116203424015
62034240166203424020
62034240216203424025
62034240266203424030
62034240316203424035
62034240366203424040
62034240416203424045
62034240466203424050
62034240516203424055
62034240566203424060
62034240616204624005
62046240066204624010
62046240116204624020
62046240216204624025
62046240266204624030
62046240316204624035
62046240366204624040
62046240416204624045
62046240466204624050
62046240516204624055
62046240566204624060
6204624061( print page 32402)6204624065
62046240666205202015
62052020166205202020
62052020216205202025
62052020266205202030
62052020316205202035
62052020366205202046
62052020476205202050
62052020516205202060
62052020616205202065
62052020666205202070
62052020716205202075
62052020766206303010
62063030116206303020
62063030216206303030
62063030316206303040
62063030416206303050
62063030516206303060
62063030616303110000
6303191100
 A proposed rule was published on April 10, 2009, with a comment period of April 10, 2009, through May 11, 2009 (74 FR 16331). AMS received one comment from a trade association representing American manufacturers, brands, distributors, retailers, and importers of textile and apparel products, and related service providers. The comment stated that the fee increase is inappropriately timed and current economic conditions argue against increasing the cotton fee. AMS disagrees. Section 1205.335(b)(2) of the Order provides that the rate of the supplemental assessment on imported cotton shall be the same as that paid on cotton produced in the United States. Further, the regulations at section 1205.510(b)(2) issued under the Order provide for assigning the calendar year weighted average price received by U.S. farmers for Upland cotton to represent the value of imported cotton. The source for the average price statistic is 
                    *Agricultural Prices,*
                     a publication of the National Agricultural Statistic Service (NASS) of the Department. Use of the weighted average price figure in the calculation of supplemental assessments on imported cotton and cotton content of imported products will yield an assessment that is the same as assessments paid on domestically produced cotton. The NASS numbers for Upland cotton for 2008 were used in this rulemaking, while the NASS numbers for 2007 were used in the final rule published in 2008 (73 FR 69521). One favorable comment was received from a cotton producer association in the 2008 rulemaking. The comment received in this rulemaking also stated that AMS is not obligated to make an adjustment now and cited past years in which no adjustments were made. The years 2004 through 2007 were noted. However, AMS issued a proposed rule for the 2004 amendments to the supplemental assessment in January 2005 (70 FR 2034). The proposal not only included the 2004 adjustment to the supplemental assessment in accordance with the regulations but also proposed that the total rate of assessment per kilogram for imported cotton be calculated by adding together the $1 per bale equivalent assessment and the supplemental assessment, and adjusting the sum to account for the estimated amount of U.S. cotton contained in imported textile products. The proposal was to address changes in the composition of U.S. cotton use and the anticipated ending of U.S. textile quotas. The proposal was made after an analysis of global cotton data and development of a comprehensive calculation to determine the percentage of U.S. cotton contained in total assessable cotton imports. The 2005 proposal generated one comment from the same trade association that commented in this action. In its 2005 comment, the commenter advised AMS to reconsider the then proposed formulation and do further work that would more accurately identify the amount of U.S. cotton contained in imported cotton products. As published in the November 20, 2006 
                    **Federal Register**
                    , AMS withdrew the proposed rule (71 FR 67072). That document noted that AMS was withdrawing the 2005 proposed rule to continue to evaluate the importer assessment issue and garner additional stakeholders' input and economic data. Adjustments to the supplemental assessment then resumed with the 2008 amendments based on NASS data for calendar year 2007. Finally, the commenter asserted that the proposed rule in this action would not have been put forward but for the change in the number of producer seats on the Cotton Board mandated by section 14202 of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246), more commonly known as the 2008 Farm Bill. AMS disagrees. Section 14202 of the 2008 Farm Bill amends the Cotton Research and Promotion Act by designating the States of Kansas, Virginia and Florida as cotton-producing States beginning with the 2008 crop. This amendment to the Act is the result of an act of Congress and changes the number of cotton-producing States only. Regulatory Flexibility Act and Paperwork Reduction Act In accordance with the Regulatory Flexibility Act (RFA) [5 U.S.C. 601-612], AMS examined the economic impact of this rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such action so that small businesses will not be unduly or disproportionately burdened. The Small Business Administration defines, in 13 CFR part 121, small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (importers) as having receipts of no more than $7,000,000. An estimated 13,000 importers are subject to the rules and regulations issued pursuant to the Cotton Research and Promotion Order. Most are considered small entities as defined by the Small Business Administration. This final rule would only affect importers of cotton and cotton-containing products and would raise the assessments paid by the importers under the Cotton Research and Promotion Order. The current assessment on imported cotton is $0.009874 per kilogram, which is equivalent to $0.9874 cents per kilogram, of imported cotton. The new assessment is $0.01088, which is equivalent to $1.0880 cents per kilogram and was calculated based on the 12-month average of monthly weighted average prices received by U.S. cotton farmers. Section 1205.510, “Levy of assessments”, provides “the rate of the supplemental assessment on imported cotton will be the same as that levied on cotton produced within the United States.” In addition, section 1205.510 provides that the 12-month average of monthly weighted average prices received by U.S. farmers will be used as the value of imported cotton for the purpose of levying the supplemental assessment on imported cotton. Under the Cotton Research and Promotion Program, assessments are used by the Cotton Board to finance research and promotion programs designed to increase consumer demand for Upland cotton in the United States and international markets. In 2008, producer assessments totaled $29.2 million and importer assessments totaled $25.9 million. According to the Cotton Board, should the volume of cotton products imported into the U.S. remain at the same level in 2009, one could expect the increased assessment to generate approximately $10.8 million. Importers with line-items appearing on U.S. Customs and Border Protection documentation with value of the cotton contained therein results of an assessment of two dollars ($2.00) or less will not be subject to assessments. In addition, imported cotton and products may be exempt from assessment if the cotton content of products is U.S. produced, cotton other than Upland, or 
                    ( print page 32403)
                    imported products that are eligible to be labeled as 100 percent organic under the National Organic Program (7 CFR part 205) and who is not a split operation. There are no Federal rules that duplicate, overlap, or conflict with this rule. In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which implement the Paperwork Reduction Act (PRA) (44 U.S.C. Chapter 35) the information collection requirements contained in the regulation to be amended have been previously approved by OMB and were assigned control number 0581-0093. This rule does not result in a change to the information collection and recordkeeping requirements previously approved. List of Subjects in 7 CFR Part 1205 Advertising
Agricultural research
Cotton
Marketing agreements
Reporting and recordkeeping requirements
 For the reasons set forth in the preamble 7 CFR Part 1205 is amended as follows: PART 1205—COTTON RESEARCH AND PROMOTION
 1.The authority citation for Part 1205 continues to read as follows: Authority:
                        7 U.S.C. 2101-2118 and 7 U.S.C. 7401. 2.In § 1205.510, paragraph (b)(2) and the table in paragraph (b)(3)(ii) are revised to read as follows: § 1205.510
  
 (b) * * * (2) The 12-month average of monthly weighted average prices received by U.S. farmers will be calculated annually. Such weighted average will be used as the value of imported cotton for the purpose of levying the supplemental assessment on imported cotton and will be expressed in kilograms. The value of imported cotton for the purpose of levying this supplemental assessment is $1.0880 cents per kilogram. (3) * * * (ii) * * * Import Assessment Table
[Raw cotton fiber]
HTS No.
Conv. fact.
Cents/pkg.5201000500
0
1.08805201001200
0
1.08805201001400
0
1.08805201001800
0
1.08805201002200
0
1.08805201002400
0
1.08805201002800
0
1.08805201003400
0
1.08805201003800
0
1.08805204110000
1.1111
1.20895204200000
1.1111
1.20895205111000
1.1111
1.20895205112000
1.1111
1.20895205121000
1.1111
1.20895205122000
1.1111
1.20895205131000
1.1111
1.20895205132000
1.1111
1.20895205141000
1.1111
1.20895205210020
1.1111
1.20895205210090
1.1111
1.20895205220020
1.1111
1.20895205220090
1.1111
1.20895205230020
1.1111
1.20895205230090
1.1111
1.20895205240020
1.1111
1.20895205240090
1.1111
1.20895205310000
1.1111
1.20895205320000
1.1111
1.20895205330000
1.1111
1.20895205340000
1.1111
1.20895205410020
1.1111
1.20895205410090
1.1111
1.20895205420021
1.1111
1.20895205420090
1.1111
1.20895205440021
1.1111
1.20895205440090
1.1111
1.20895206120000
0.5556
0.60455206130000
0.5556
0.60455206140000
0.5556
0.60455206220000
0.5556
0.60455206230000
0.5556
0.60455206240000
0.5556
0.60455206310000
0.5556
0.60455207100000
1.1111
1.20895207900000
0.5556
0.60455208112020
1.1455
1.24635208112040
1.1455
1.24635208112090
1.1455
1.24635208114020
1.1455
1.24635208114060
1.1455
1.24635208114090
1.1455
1.24635208118090
1.1455
1.24635208124020
1.1455
1.24635208124040
1.1455
1.24635208124090
1.1455
1.24635208126020
1.1455
1.24635208126040
1.1455
1.24635208126060
1.1455
1.24635208126090
1.1455
1.24635208128020
1.1455
1.24635208128090
1.1455
1.24635208130000
1.1455
1.24635208192020
1.1455
1.24635208192090
1.1455
1.24635208194020
1.1455
1.24635208194090
1.1455
1.24635208196020
1.1455
1.24635208196090
1.1455
1.24635208224040
1.1455
1.24635208224090
1.1455
1.24635208226020
1.1455
1.24635208226060
1.1455
1.24635208228020
1.1455
1.24635208230000
1.1455
1.24635208292020
1.1455
1.24635208292090
1.1455
1.24635208294090
1.1455
1.24635208296090
1.1455
1.24635208298020
1.1455
1.24635208312000
1.1455
1.24635208321000
1.1455
1.24635208323020
1.1455
1.24635208323040
1.1455
1.24635208323090
1.1455
1.24635208324020
1.1455
1.24635208324040
1.1455
1.24635208325020
1.1455
1.24635208330000
1.1455
1.24635208392020
1.1455
1.24635208392090
1.1455
1.24635208394090
1.1455
1.24635208396090
1.1455
1.24635208398020
1.1455
1.24635208412000
1.1455
1.24635208416000
1.1455
1.24635208418000
1.1455
1.24635208421000
1.1455
1.24635208423000
1.1455
1.24635208424000
1.1455
1.24635208425000
1.1455
1.24635208430000
1.1455
1.24635208492000
1.1455
1.24635208494020
1.1455
1.24635208494090
1.1455
1.24635208496010
1.1455
1.24635208496090
1.1455
1.24635208498090
1.1455
1.24635208512000
1.1455
1.24635208516060
1.1455
1.24635208518090
1.1455
1.24635208523020
1.1455
1.24635208523045
1.1455
1.24635208523090
1.1455
1.24635208524020
1.1455
1.24635208524045
1.1455
1.24635208524065
1.1455
1.24635208525020
1.1455
1.24635208591000
1.1455
1.24635208592025
1.1455
1.24635208592095
1.1455
1.24635208594090
1.1455
1.24635208596090
1.1455
1.24635209110020
1.1455
1.24635209110035
1.1455
1.24635209110090
1.1455
1.24635209120020
1.1455
1.24635209120040
1.1455
1.24635209190020
1.1455
1.24635209190040
1.1455
1.24635209190060
1.1455
1.24635209190090
1.1455
1.24635209210090
1.1455
1.24635209220020
1.1455
1.24635209220040
1.1455
1.24635209290040
1.1455
1.24635209290090
1.1455
1.24635209313000
1.1455
1.24635209316020
1.1455
1.24635209316035
1.1455
1.24635209316050
1.1455
1.24635209316090
1.1455
1.24635209320020
1.1455
1.24635209320040
1.1455
1.2463( print page 32404)5209390020
1.1455
1.24635209390040
1.1455
1.24635209390060
1.1455
1.24635209390080
1.1455
1.24635209390090
1.1455
1.24635209413000
1.1455
1.24635209416020
1.1455
1.24635209416040
1.1455
1.24635209420020
1.0309
1.12165209420040
1.0309
1.12165209430030
1.1455
1.24635209430050
1.1455
1.24635209490020
1.1455
1.24635209490090
1.1455
1.24635209516035
1.1455
1.24635209516050
1.1455
1.24635209520020
1.1455
1.24635209590025
1.1455
1.24635209590040
1.1455
1.24635209590090
1.1455
1.24635210114020
0.6873
0.74785210114040
0.6873
0.74785210116020
0.6873
0.74785210116040
0.6873
0.74785210116060
0.6873
0.74785210118020
0.6873
0.74785210191000
0.6873
0.74785210192090
0.6873
0.74785210214040
0.6873
0.74785210216020
0.6873
0.74785210216060
0.6873
0.74785210218020
0.6873
0.74785210314020
0.6873
0.74785210314040
0.6873
0.74785210316020
0.6873
0.74785210318020
0.6873
0.74785210414000
0.6873
0.74785210416000
0.6873
0.74785210418000
0.6873
0.74785210498090
0.6873
0.74785210514040
0.6873
0.74785210516020
0.6873
0.74785210516040
0.6873
0.74785210516060
0.6873
0.74785211110090
0.6873
0.74785211120020
0.6873
0.74785211190020
0.6873
0.74785211190060
0.6873
0.74785211202125
0.6873
0.74785211202135
0.4165
0.45325211202150
0.6873
0.74785211202990
0.6873
0.74785211320020
0.6873
0.74785211390040
0.6873
0.74785211390060
0.6873
0.74785211490020
0.6873
0.74785211490090
0.6873
0.74785211590025
0.6873
0.74785212146090
0.9164
0.99705212156020
0.9164
0.99705212216090
0.9164
0.99705509530030
0.5556
0.60455509530060
0.5556
0.60455513110020
0.4009
0.43625513110040
0.4009
0.43625513110060
0.4009
0.43625513110090
0.4009
0.43625513120000
0.4009
0.43625513130020
0.4009
0.43625513210020
0.4009
0.43625513310000
0.4009
0.43625514120020
0.4009
0.43625516420060
0.4009
0.43625516910060
0.4009
0.43625516930090
0.4009
0.43625601210010
1.1455
1.24635601210090
1.1455
1.24635601300000
1.1455
1.24635602109090
0.5727
0.62315602290000
1.1455
1.24635602906000
0.526
0.57235604909000
0.5556
0.60455607909000
0.8889
0.96715608901000
1.1111
1.20895608902300
1.1111
1.20895609001000
1.1111
1.20895609004000
0.5556
0.60455701104000
0.0556
0.06055701109000
0.1111
0.12095701901010
1.0444
1.13635702109020
1.1
1.19685702312000
0.0778
0.08465702411000
0.0722
0.07865702412000
0.0778
0.08465702421000
0.0778
0.08465702913000
0.0889
0.09675702990500
1.1111
1.20895702991500
1.1111
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0.6358
 Dated: June 30, 2009. David R. Shipman, Acting Administrator, Agricultural Marketing Service.


[FR Doc. E9-16031 Filed 7-7-09; 8:45 am] BILLING CODE 3410-02-P