80 FR 76873 - Cotton Board Rules and Regulations: Amending Importer Line-Item De Minimis

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

Federal Register Volume 80, Issue 238 (December 11, 2015)

The Agricultural Marketing Service (AMS) proposes to amend the Cotton Board Rules and Regulations to remove the cotton import de minimis provision. The Cotton Research and Promotion (R&P) Program assesses U.S. cotton producers and importers of cotton and cotton- containing products. Importers are exempt from paying the cotton import assessment (known commonly among importers as the ``cotton fee'') if a line item on U.S. Customs and Border Protection (CBP) documentation is $2.00 or less. The exemption was initially established to lessen the administrative burden of collecting an import assessment, which was originally estimated to be $2.00 per line item, in instances in which the transactions costs of the collection would exceed the actual value of the assessment. However, technological advances in the CBP documentation process significantly reduced the transactions costs associated with collecting import assessments, and CBP has since stopped charging USDA for the processing and collecting of assessments. Given that transactions costs no longer exceed assessment rates of $2.00 or less, AMS proposes to remove this de minimis provision from the regulations. In addition, the definition of cotton with respect to procedures for conducting the sign-up period would also be modified.

[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Proposed Rules]
[Pages 76873-76875]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-31116]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

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.

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Federal Register / Vol. 80, No. 238 / Friday, December 11, 2015 / 
Proposed Rules

[[Page 76873]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1205

[Doc. No. AMS-CN-14-0037]


Cotton Board Rules and Regulations: Amending Importer Line-Item 
De Minimis

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Agricultural Marketing Service (AMS) proposes to amend the 
Cotton Board Rules and Regulations to remove the cotton import de 
minimis provision. The Cotton Research and Promotion (R&P) Program 
assesses U.S. cotton producers and importers of cotton and cotton-
containing products. Importers are exempt from paying the cotton import 
assessment (known commonly among importers as the ``cotton fee'') if a 
line item on U.S. Customs and Border Protection (CBP) documentation is 
$2.00 or less. The exemption was initially established to lessen the 
administrative burden of collecting an import assessment, which was 
originally estimated to be $2.00 per line item, in instances in which 
the transactions costs of the collection would exceed the actual value 
of the assessment. However, technological advances in the CBP 
documentation process significantly reduced the transactions costs 
associated with collecting import assessments, and CBP has since 
stopped charging USDA for the processing and collecting of assessments. 
Given that transactions costs no longer exceed assessment rates of 
$2.00 or less, AMS proposes to remove this de minimis provision from 
the regulations. In addition, the definition of cotton with respect to 
procedures for conducting the sign-up period would also be modified.

DATES: Comments must be received on or before January 11, 2016.

ADDRESSES: Written comments may be submitted to the addresses specified 
below. All comments will be made available to the public. Please do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publically disclosed. All comments may be posted on the 
Internet and can be retrieved by most Internet search engines. Comments 
may be submitted anonymously.
    Comments, identified by AMS-CN-14-0037, may be submitted 
electronically through the Federal eRulemaking Portal at http://www.regulations.gov. Please follow the instructions for submitting 
comments. In addition, comments may be submitted by mail or hand 
delivery to Cotton Research and Promotion Staff, Cotton and Tobacco 
Program, AMS, USDA, 100 Riverside Parkway, Suite 101, Fredericksburg, 
Virginia, 22406. Written comments should be submitted in triplicate. 
All comments received will be made available for public inspection at 
Cotton and Tobacco Program, AMS, USDA, 100 Riverside Parkway, Suite 
101, Fredericksburg, Virginia, 22406. A copy of this notice may be 
found at: www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Shethir M. Riva, Chief, Research and 
Promotion Staff, Cotton and Tobacco Program, AMS, USDA, 100 Riverside 
Parkway, Suite 101, Fredericksburg, Virginia, 22406, telephone (540) 
361-2726, facsimile (540) 361-1199, or email at 
[email protected].

SUPPLEMENTARY INFORMATION:

A. Background

    Amendments to the Cotton Research and Promotion Act (7 U.S.C. 2101-
2118) (Act) were enacted by Congress under Subtitle G of Title XIX of 
the Food, Agriculture, Conservation, and Trade Act of 1990 (Pub. L. 
101-624, 104 stat. 3909, November 28, 1990). These amendments contained 
two provisions that authorize changes in the funding procedures for the 
Cotton Research and Promotion Program. These provisions provide for: 
(1) The assessment of imported cotton and cotton products; and (2) 
termination of refunds to cotton producers. (Prior to the 1990 
amendments to the Act, producers could request assessment refunds.)
    As amended, the Cotton Research and Promotion Order (7 CFR part 
1205) (Order) was approved by producers and importers voting in a 
referendum held July 17-26, 1991, and the amended Order was published 
in the Federal Register on December 10, 1991, (56 FR 64470). A proposed 
rule implementing the amended Order was published in the Federal 
Register on December 17, 1991, (56 FR 65450). Implementing rules were 
published on July 1 and 2, 1992, (57 FR 29181 and 57 FR 29431, 
respectively).
    The total value of assessment levied on cotton imports is the sum 
of two parts. The first part of the assessment is based on the weight 
of cotton imported--levied 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 part of the import assessment (referred to as the supplemental 
assessment) is based on the value of imported cotton lint or the cotton 
contained in imported cotton products--levied at a rate of five-tenths 
of one percent of the value of domestically produced cotton. The 
current assessment on imported cotton is $0.012013 per kilogram of 
imported cotton.
    The Cotton Research and Promotion Act provides that ``Any de 
minimis figure as established under this paragraph shall be such as to 
minimize the burden in administering the assessment provision but still 
provide for the maximum participation of imports of cotton in the 
assessment provisions of this chapter.'' 7 U.S.C. 2116(c)(2). The 
Import Assessment Table in paragraph (b)(3) of Sec.  1205.510 of the 
Cotton Research and Promotion Rules and Regulations indicates the total 
assessment rate ($ per kilogram) due for each Harmonized Tariff 
Schedule (HTS) number that is subject to assessment. Subparagraph (i) 
of this same paragraph provides for an exemption from assessment for 
any line item entry of cotton appearing on U.S. Customs and Border 
Protection (CBP) entry documentation whose calculated assessment is two 
dollars ($2.00) or less. This de minimis exemption was established to 
minimize the administrative burden of collecting import assessments, 
which was originally estimated to be $2.00 per line item, where 
administrative costs would

[[Page 76874]]

exceed the actual value of the assessment.
    The de minimis figure is an estimate of administrative burden, 
which is equivalent to the transactions costs of collecting the cotton 
fee. The de minimis provision was necessary to avoid instances where 
the transactions costs of collecting the cotton fee exceeded the cotton 
fee being collected.
    In January 2014, AMS became aware of CBP's automation processes in 
connection with documenting and collecting assessments. CBP indicated 
that the documentation and collection process is automated and costs 
have been significantly decreased. Taking into account technological 
advancements in the fee collection process, CBP no longer charges USDA 
for the collection of assessments on agricultural commodities. This has 
eliminated the administrative burden associated with the collection of 
assessments.
    AMS proposes to strike subparagraph (i) under paragraph Sec.  
1205.510(b)(3) of the Cotton Research and Promotion Rules and 
Regulations and append to the paragraph section the language currently 
in subparagraph (ii). This proposed action reflects the technological 
efficiencies of the CBP import documentation process by eliminating the 
de minimis provisions in the regulations, and, therefore, helps to 
ensure that the assessments collected on imported cotton and the cotton 
content of imported products would be the same as those paid on 
domestically produced cotton. In addition, AMS proposes to modify the 
definition of cotton in Sec.  1205.12 to include imported cotton that 
previously was exempted due to the de minimis exemption. With this 
action, importers who previously imported de minimis amounts of cotton 
may now be eligible to participate in the sign-up period for a 
continuance referendum that would determine whether a continuance 
referendum is favored.

B. Regulatory Impact Analysis

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to access all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This action has been designated as a ``non-significant regulatory 
action'' under section 3(f) of Executive Order 12866 and therefore has 
not been reviewed by the Office of Management and Budget.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
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 of Agriculture 
(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.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), AMS has 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. In 2013, an estimated 17,000 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 rule would only affect importers of cotton and cotton-
containing products whose calculated assessment for any line item entry 
of cotton appearing on a CBP entry document whose calculated assessment 
is two dollars ($2.00) or less. While data allowing for estimates of 
the number of importers that would be impacted does not exist, it is 
estimated that a very small portion of the estimated 17,000 importers 
would be affected by eliminating the de minimis exemption. The 
additional burden placed on those importers would be limited to two 
dollars ($2.00) per line item entry that would otherwise have qualified 
for the exemption. Importers are currently required to self-report on 
all line items being imported, therefore no additional transactions 
costs or administrative burden would be borne by these importers. Such 
importers may now be eligible to participate in a sign-up period to 
determine whether they and eligible producers favor the conduct of 
referendum on the continuance of the 1991 amendments to the Order.
    There are no Federal rules that duplicate, overlap, or conflict 
with this proposed 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, 
National Research, Promotion, and Consumer Information Programs. This 
proposed rule does not result in a change to the information collection 
and recordkeeping requirements previously approved.
    A 30-day comment period is provided to comment on the changes to 
the Cotton Board Rules and Regulations proposed herein. This period is 
deemed appropriate because this rule would help ensure that the 
assessments collected on imported cotton and the cotton content of 
imported products would be the same as those paid on domestically 
produced cotton. Accordingly, the change in this rulemaking, if 
adopted, should be implemented as soon as possible.

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, AMS proposes to amend 7 
CFR part 1205 as follows:

PART 1205--COTTON RESEARCH AND PROMOTION

0
1. The authority citation for part 1205 continues to read as follows:

    Authority:  7 U.S.C. 2101-2118.

0
2. Revise Sec.  1205.12 to read as follows:

[[Page 76875]]

Sec.  1205.12  Cotton.

    The term cotton means all Upland cotton harvested in the United 
States and all imports of Upland cotton, including the Upland cotton 
content of products derived thereof.
0
3. In Sec.  1205.510, revise paragraph (b)(3) introductory text and 
remove paragraphs (b)(3)(i) and (ii).
    The revision reads as follows:


Sec.  1205.510  Levy of assessments.

* * * * *
    (b) * * *
    (3) The following table contains Harmonized Tariff Schedule (HTS) 
classification numbers and corresponding conversion factors and 
assessments. The left column of the following table indicates the HTS 
classifications of imported cotton and cotton-containing products 
subject to assessment. The center column indicates the conversion 
factor for determining the raw fiber content for each kilogram of the 
HTS. HTS numbers for raw cotton have no conversion factor in the table. 
The right column indicates the total assessment per kilogram of the 
article assessed. In the event that any HTS number subject to 
assessment is changed and such change is merely a replacement of a 
previous number and has no impact on the physical properties, 
description, or cotton content of the product involved, assessments 
will continue to be collected based on the new number.
* * * * *

    Dated: December 7, 2015.
Rex A. Barnes,
Associate Administrator.
[FR Doc. 2015-31116 Filed 12-10-15; 8:45 am]
 BILLING CODE 3410-02-P