Rule2023-23727
Economic Adjustment Assistance for Textile Mills
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 31, 2023
Effective
October 31, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
The Agricultural Marketing Service (AMS) revises the regulation providing guidance for domestic manufacturers that consume Upland Cotton and voluntarily participate in the Economic Adjustment Assistance for Textile Mills Program. The revisions add definitions and codify certain participant responsibilities currently outlined in the existing user Agreement. The changes made by this rule are intended to strengthen management controls that have been added into the Agreement to prevent fraud, waste, and abuse. This action provides the necessary legal support for program administration.
Full Text
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<title>Federal Register, Volume 88 Issue 209 (Tuesday, October 31, 2023)</title>
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[Federal Register Volume 88, Number 209 (Tuesday, October 31, 2023)]
[Rules and Regulations]
[Pages 74330-74336]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23727]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 870
[Doc. No. AMS-FTPP-21-0055]
RIN 0581-AE26
Economic Adjustment Assistance for Textile Mills
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule with request for comments.
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SUMMARY: The Agricultural Marketing Service (AMS) revises the
regulation providing guidance for domestic manufacturers that consume
Upland Cotton and voluntarily participate in the Economic Adjustment
Assistance for Textile Mills Program. The revisions add definitions and
codify certain participant responsibilities currently outlined in the
existing user Agreement. The changes made by this rule are intended to
strengthen management controls that have been added into the Agreement
to prevent fraud, waste, and abuse. This action provides the necessary
legal support for program administration.
DATES:
Effective date: October 31, 2023.
Comment date: We will consider comments that we receive by the
close of business January 2, 2024. AMS may consider the comments
received and may conduct additional rulemaking based on the comments.
ADDRESSES: Interested persons are invited to submit written comments
concerning this final rule. All comments must be submitted through the
Federal e-rulemaking portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> and should
reference the document number and the date and page number of this
issue of the Federal Register. All comments submitted in response to
this final rule will be included in the record and will be made
available to the public. Please be advised that the identity of the
individuals or entities submitting comments will be made public on the
internet at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Dan Schofer, Cotton Program Manager,
Warehouse and Commodity Management Division, Fair Trade Practices
Program, AMS, USDA; Telephone: (202) 690-2434, or Email:
<a href="/cdn-cgi/l/email-protection#a5e1c4cb8bf6c6cdcac3c0d7e5d0d6c1c48bc2cad3"><span class="__cf_email__" data-cfemail="b7f3d6d999e4d4dfd8d1d2c5f7c2c4d3d699d0d8c1">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: Section 1207(c) of the Food, Conservation,
and Energy Act of 2008 (Pub. L. 110-234; May 22, 2008) directed the
Secretary of Agriculture (Secretary) to provide economic adjustment
assistance to domestic users of upland cotton under the Economic
Adjustment Assistance to Users of Upland Cotton program. Under the
program, domestic users of upland cotton may qualify for financial
assistance that can be used to acquire, construct, install, modernize,
develop, convert, or expand land, plant, buildings, equipment,
facilities, or machinery used in the manufacture of final cotton
products. Payments for such assistance are issued by the Commodity
Credit Corporation (CCC). Recipients must use these funds within a
certain timeframe and must maintain and provide, to program
administrators, records related to their use of upland cotton and
allowable capital expenditures under the program.
Section 1203(b) of the Agriculture Improvement Act of 2018 (Pub. L.
115-334; December 20, 2018) renamed the program ``Economic Adjustment
Assistance for Textile Mills'' (EAATM). In a memorandum dated July 1,
2019, the Secretary redelegated authority to administer EAATM from the
Farm Service Agency to AMS. A final rule published in the Federal
Register on October 15, 2020 (85 FR 65500), amended 7 CFR part 2 to
reflect the redelegation. The amended 7 CFR 2.79(a)(23) authorizes the
AMS Administrator to administer the EAATM program (7 U.S.C. 9037(c)). A
final rule published in the Federal Register on October 1, 2021 (86 FR
54339), removed the EAATM regulations from 7 CFR part 1427 and added
them in a new 7 CFR part 870--Economic Adjustment Assistance for
Textile Mills, in Sec. Sec. 870.1 to 870.9.
For participation in the EAATM program, domestic users must enter
into an Upland Cotton Domestic User Agreement (Form CCC-1045-DOM)
(Agreement) and submit upland cotton consumption documentation to AMS's
Warehouse and Commodity Management Division (WCMD) to receive financial
assistance.
AMS is now codifying the requirements specified in the Agreement as
regulations. This final rule amends 7 CFR part 870 by reorganizing and
revising existing sections and adding several new sections, supplying
definitions of certain program terms, and clarifying current program
practices to provide a better understanding of CCC requirements for
program participants.
Under this final rule, references in 7 CFR part 870 to the Upland
Cotton Domestic User Program are revised to reflect the current name of
the program, Economic Adjustment Assistance for Textile Mills. The
final rule adds a new Sec. 870.2--Definitions, to provide the meaning
of several terms used in program administration that have been subject
to differing interpretations in the past. For example, the term
domestic user is defined as a person regularly engaged in the business
of opening bales of eligible upland cotton for the purpose of spinning
such cotton into yarn, papermaking, or production of non-woven cotton
products. This definition clarifies and enhances the use of other terms
already defined in the current regulations. Eligible domestic users is
defined as domestic users who have entered into an Agreement with CCC
to participate in the program. Eligible upland cotton is defined to
mean baled lint; loose samples used for classification purposes that
have been re-baled; semi-processed motes that are suitable for
spinning, paper making, or production of non-woven fabric; or re-ginned
motes. Eligible upland cotton cannot be cotton for which previous EAATM
payments have been made, unprocessed derivatives of the lint cleaning
process, or textile mill wastes. Similarly, the term final cotton
product is defined to mean a domestically manufactured final product
that contains upland cotton to clarify those manufacturing purposes for
which program assistance funds are eligible. Each of these definitions
is intended to
[[Page 74331]]
clarify eligibility for program participation.
The term capital expenditures is defined to mean a business's
expenses related to the purchase or improvement of depreciable fixed
assets, such as physical property, facilities, and equipment used in
the manufacture of final products containing upland cotton. The terms
equipment and facility or plant is defined to identify those fixed
assets for which capital expenditures are recognized under the program.
Equipment is defined to mean any machine used directly in the
production of final cotton products in order to improve product
quality, handling, and/or production efficiency, and facility or plant
would mean the structures that house such equipment. Readily put into
service is defined to mean facilities, equipment, and/or plants put
into service within 24 months of purchase. The definition of operating
expenses includes examples of funds expended that are not eligible for
EAATM benefits, such as rent, salaries, supplies, utilities, insurance,
taxes, and maintenance. Each of these definitions are necessary to
clarify which expenses program participants can include in claims for
assistance under the program.
Terms including linters, pills, and raw motes are defined to
clarify types of processing byproducts that are not considered eligible
upland cotton for program purposes. Terms including agreement effective
date, date of consumption, fiscal year, and marketing year would be
defined to clarify various timeframes related to application and
reporting deadlines for program participation.
Terms used in the existing Agreement that are related to reporting
and recordkeeping requirements also are defined in the regulations. The
Upland Cotton Domestic User Agreement (Form CCC-1045 DOM) means the
agreement between CCC and an EAATM program participant, which outlines
general program provisions and responsibilities of the program
participant. This agreement is required of all program participants.
The Monthly Consumption Report refers to Form CCC-1045-UP-2--Monthly
Consumption/Application for Payment Report, or other form as prescribed
by CCC, that contains documentation of the baled cotton inventory
consumed, the eligible domestic user's calculation of program payments
for the month, and a signed certification regarding the documents
submitted. Participants are required to maintain a supplemental ledger,
which is defined as a line-item ledger of proposed capital expenditures
for audit purposes. Statement of eligible claim certification is the
document that identifies which domestic user in the manufacturing chain
is eligible to claim financial assistance under the EAATM program for
the use of specific semi-processed motes or re-ginned mote bales.
Terms used in filling out records and reports are also defined in
Sec. 870.2. Upland cotton means the widely cultivated American cotton
plant (Gossypium hirsutum) that has short-to-medium staple fibers.
Final cotton product is defined to mean domestically manufactured
products containing upland cotton. Net weight means the gross weight of
baled upland cotton consumed, less the weight of the bagging and ties.
Finally, Sec. 870.2 includes definitions for other terms necessary
for administration of the program as explained earlier, such as
Agricultural Marketing Service, Commodity Credit Corporation, Director
of AMS's Warehouse and Commodity Management Division, and the Economic
Adjustment Assistance for Textile Mills program.
Currently, Sec. Sec. 870.3 to 870.9 contain the definitions of
upland cotton and domestic users eligible for program participation and
provide instructions for filing applications for participation and
payments under the program. Under this final rule, those sections are
reorganized and revised to incorporate program provisions that are
currently only provided in the Agreement, and other sections are added
to ensure that all of the program's parameters are codified.
Under the final rule, Sec. 870.3--Upland Cotton Domestic User
Agreement, specifies how domestic users of upland cotton can enter into
Agreements with CCC to participate in the EAATM program. Applicants are
required to agree to use EAATM Program funds only in compliance with
the program and to identify all manufacturing facilities under their
operational control and for inclusion in the Agreement.
Section 870.5--Eligible upland cotton, describes upland cotton
eligible for payment under EAATM and specifies that only eligible
cotton consumed by the user in the United States on or after the
effective date of the Agreement is eligible for payment claims.
Further, EAATM Program funds cannot be used for expenses incurred by a
domestic user prior to signature by both parties to the Agreement.
Section 870.7--Monthly Consumption Report, requires program
participants to submit cotton consumption reports and supporting
documentation to AMS during each month of the Agreement term, including
those months in which no eligible upland cotton was consumed. Required
reports would constitute participants' claims for payments under the
program and include their calculations for such payments. Under the
final rule, delinquent Monthly Consumption Reports are ineligible for
payment for the applicable month. Section 870.7 further provides that
AMS will not process reports/claims that contain errors or omissions.
Finally, Sec. 870.7 requires that, in the event of a transfer of
eligible upland cotton bales, both program participants involved report
to AMS any transfers of eligible upland cotton bales between them and
that such transactions must be accompanied by a statement of eligible
claim certification. Submission of the Monthly Consumption Report
allows for validation of active participants, enumeration of domestic
consumption, and provides a baseline for verifying that duplicate
claims are not submitted for program payments.
Section 870.9--Payment, specifies that the current rate for payment
under the EAATM program is 3 cents per pound of eligible cotton
consumed, and that cotton is considered consumed on the date the
eligible cotton user removes the bale's bagging and ties immediately
prior to manufacturing it into final cotton products--without further
processing. Section 870.9 further provides that payments are based on
the bale's net weight and are made available upon the eligible cotton
user's submission of the required reports and documentation.
Section 870.11--Capital expenditures, specifies that eligible
domestic cotton users can only use payments under the EAATM program to
acquire or modernize land, buildings, or equipment in the United States
which are directly attributable to the purpose of manufacturing upland
cotton into final cotton products in the United States. Other uses,
such as for operating expenses or other purchases are not allowed.
Under Sec. 870.11, participants using EAATM program funds for
disallowed purposes are required to repay the money to CCC with
interest and are ineligible for program participation for one year
after the year of violation. Section Sec. 870.11 further specifies
that program participants must submit requests for pre-approval of
capital expenditures under the program that exceed an amount specified
in the Agreement and for any expenditures greater than $10 million on a
single, allowable, fixed asset. The regulation outlines the elements
required to be submitted in a pre-approval request.
[[Page 74332]]
The threshold value is specified in the latest Upland Cotton Domestic
User Agreement, rather than in the regulations to allow the Agency to
consider and respond to economic pressures.
Under the final rule, participants are required to make capital
expenditures equal to or greater than amounts received as EAATM program
payments within 18 months of the end of the marketing year for which
payments are made, unless participants apply for and are granted a
Funding Utilization Extension, but in no case more than an additional
36 months.
Fixed assets acquired and/or modernized with EAATM Program funds
must be in operation within 24 months after the date of delivery. If
unforeseen difficulties prevent utilization within the 24-month period,
written approval must be obtained from WCMD for an extension of time.
The timeframes and increased communication about expenditures between
the Agency and participants are expected to increase auditability and
transparency. Finally, Sec. 870.11 provides that program participants
cannot transfer--directly or indirectly--EAATM Program funds to another
entity. Participants are required to complete an asset transfer
certification in the event of a sale or transfer of assets to another
program participant. Except for extenuating circumstances approved by
AMS, fixed assets, purchased using EAATM Program funds, cannot be sold
until they have been in operation for at least 36 months and cannot be
purchased with EAATM Program funds again by another eligible domestic
user.
Section 870.13--Records and inspection, requires program
participants to maintain all records and reports relating to their
EAATM Agreement for a period of three years following termination of
the Agreement. Detailed record requirements are intended to provide
better guidance to the participants and expedite audits. These
requirements include identifying elements of the monthly consumption
listing, supporting documentation of purchased and consumed cotton,
supporting documentation of used but ineligible cotton, inventory
records, capital expenditures, and the supplemental ledger. Section
870.13 requires program participants to provide copies of records
supporting payment claims to AMS upon demand, and to make all records
related to their Agreements accessible to AMS, USDA, and/or any other
governmental unit needing access for audit or inspection purposes. The
reporting and recordkeeping requirements are needed for oversight to
safeguard program integrity.
Section 870.15--Compliance, enforcement, and appeals, provides that
AMS will notify appropriate investigating agencies--and that CCC may
terminate an Agreement and demand full repayment plus interest--if a
program participant is suspected of violating the Agreement, making any
fraudulent representation, or misrepresenting any fact affecting a
determination under the Agreement. Under the final rule, the
participant could be barred from further government program
participation as necessary to protect government interests. Further,
CCC retains the authority to terminate an Agreement at any time.
Section 870.15 also provides a process for appealing program
administration decisions.
Required Regulatory Analyses
Paperwork Reduction Act
The Economic Adjustment Assistance for Textile Mills Program is
exempt from the requirements of the Paperwork Reduction Act
(Agricultural Act of 2014 (Pub. L. 113-79, Title I, Subtitle F,
Administration Generally, Section 1601(c)(2)). Accordingly, the
information collection requirements of this final rule have not been
reviewed by the Office of Management and Budget.
Executive Order 13175
This final rule was reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which
requires agencies to consider whether their rulemaking actions have
Tribal implications. AMS has determined that this final rule is
unlikely to have substantial direct effects on one or more Indian
Tribes, on the relationship between the Federal Government and Indian
Tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian Tribes.
Executive Orders 12866 and 13563
Executive Order 12866--Regulatory Planning and Review, and
Executive Order 13563--Improving Regulation and Regulatory Review,
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasizes the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. The Office of
Management and Budget (OMB) designated this rule as not significant
under Executive Order 12866. Therefore, OMB has not reviewed this rule.
Regulatory Flexibility Analysis
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (5 U.S.C. 601-612), the Agricultural Marketing Service
(AMS) has considered the economic impact of the action on small
entities, and, accordingly, has prepared this Regulatory Flexibility
Analysis (RFA).
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions so that small businesses will not be
unduly or disproportionately burdened. AMS certifies that this rule
will not have a significant economic impact or burden on small Textile
Mill entities. In making this determination, AMS considered the current
and possible participant base of the Economic Adjustment Assistance for
Textile Mills (EAATM) Program and the nature of this action. The EAATM
Program is authorized by the Farm Bill, first in 2008 (Food,
Conservation, and Energy Act (Pub. L. 110-246)), reauthorized in 2014
(Agricultural Act of 2014 (Pub. L. 113-79)) and 2018 (Pub. L. 115-334),
and funded through Commodity Credit Corporation (CCC), with
administrative oversight delegated to AMS.
AMS used the Small Business Administration's (SBA) definition of
small business in reference to Textile Mills, found at 13 CFR 121.201.
The affected industry falls under the North American Industry
Classification System (NAICS) as Subsector 313, with most current
participants classified as code 313110--Textile Mills, Fiber, Yarn, and
Thread Mills. This classification includes firms that process raw
cotton into cotton products. SBA determines firm size for this industry
by number of employees, but on a per firm basis, with small firms
defined as having fewer than 1,500 employees. Current participants of
the EAATM Program are required to be registered with the System for
Awards Management; however, none of the current participants appear to
have the small business registration denoted on their entity profile.
EAATM participants do not disclose the number of employees in the
agreements or applications submitted to CCC but based on familiarity
with the industry and information from SBA's Dynamic Small Business
Search Database, AMS estimates that 25 out of the 34 current
[[Page 74333]]
participants can be considered small entities.
This action codifies existing requirements in the EAATM Domestic
User Agreement and does not impose any new requirements. In analyzing
the current economic impact on small entities, AMS could only deduce
positive impact. The EAATM program has fewer than 40 participants, and
AMS does not anticipate any surge in participation due to the action.
Small Textile Mill participants in the EAATM Program will not be unduly
or disproportionately burdened. Textile Mills of all sizes may benefit
proportionately from the program, as it provides a payment per pound of
cotton consumed to encourage domestic consumption of cotton.
The definition of an eligible participant in reference to the EAATM
Program is someone regularly engaged in opening bales of eligible
upland cotton for the purposes of spinning cotton into yarn, paper
making, or production of non-woven cotton products in the United
States, who has entered into an agreement with the CCC to participate
in the upland cotton user program. Participants may be public or
private nonprofit entities. All entities that adhere to the eligible
participant definition and submit a monthly application indicating
consumed bales of upland cotton, regardless of size, can voluntarily
participate and benefit from the EAATM Program. Program provisions are
administered without regard for business size. The paperwork required
to participate asks for information that is part of normal business
records. The information collection burden for eligible participants is
minimal as they must only compete the user application form with the
Textile Mill's monthly consumption. The voluntary nature of the program
allows any eligible participant to stop participating if they find
program participation causes an undue or disproportionate burden.
E-Government Act
USDA is committed to complying with the E-Government Act (44 U.S.C.
3601 et seq.) by promoting 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.
Executive Order 12988
This final rule was reviewed under Executive Order 12988--Civil
Justice Reform. This rule will not preempt State or local laws,
regulations, or policies unless they represent an irreconcilable
conflict with this rule. The final rule is not intended to have
retroactive effect. Before any judicial actions may be brought
regarding the provisions of this rule, administrative appeal provisions
of 7 CFR parts 11 and 780 must be exhausted.
Exemption From Notice and Comment
The EAATM program is authorized under Title I of the Agricultural
Act of 2014. As such, regulations for EAATM may be made without regard
to the notice and comment provisions of the Administrative Procedures
Act at 5 U.S.C. 553. (See 7 U.S.C. 9091(C)(2)(a)) Nevertheless, AMS is
interested in public feedback and invites comments on this final rule
from interested persons that may inform future rulemaking. Comments are
due January 2, 2024.
Further, AMS finds there is good cause for making this rule
effective immediately. Implementing the provisions of this final rule
without a 30-day delay provides program continuity and enumerates
participation requirements necessary for the industry to ensure access
to program benefits.
List of Subjects in 7 CFR Part 870
Cotton, EAATM, Payments, Reporting and recordkeeping, Textile
mills, Upland Cotton Domestic User Agreement.
0
For the reasons set forth in the preamble, the Agricultural Marketing
Service revises 7 CFR part 870 to read as follows:
PART 870--ECONOMIC ADJUSTMENT ASSISTANCE FOR TEXTILE MILLS
Sec.
870.1 Applicability.
870.2 Definitions.
870.3 Upland Cotton Domestic User Agreement.
870.5 Eligible upland cotton.
870.7 Monthly Consumption Report.
870.9 Payment.
870.11 Capital expenditures.
870.13 Records and inspection.
870.15 Compliance, enforcement, and appeals.
Authority: 7 U.S.C. 9037(c).
Sec. 870.1 Applicability.
(a) These regulations specify the terms and conditions under which
the Commodity Credit Corporation (CCC) will make payments to eligible
domestic users who have entered into an Upland Cotton Domestic User
Agreement with the Agricultural Marketing Service to participate in the
Economic Adjustment Assistance for Textile Mills Program.
(b) The Agricultural Marketing Service will specify the forms to be
used in administering the Economic Adjustment Assistance for Textile
Mills program.
Sec. 870.2 Definitions.
For the purposes of the regulations in this part:
Agreement effective date means the date on which the Upland Cotton
Domestic User Agreement takes effect or becomes operative and
enforceable.
Agricultural Marketing Service (AMS) means the Agricultural
Marketing Service of the United States Department of Agriculture, which
administers the Economic Adjustment Assistance for Textile Mills
Program.
Bale weight means the auditable weight of a bale of cotton as
determined on a scale certified as accurate by an independent party.
Baled lint means ginned or processed cotton lint, including but not
limited to lint classified by the Agricultural Marketing Service as
Below Grade, compressed into a standard-sized and weighed pack.
Capital expenditures means funds expended by a business for
modernization or acquisition of depreciable fixed assets such as
property, fixtures, or machinery that are directly attributable to the
improvement of productivity or efficiency of the domestic user in the
manufacturing of final products containing upland cotton. Capital
expenditures do not include debt service payments, even if such debt
service payments are for debt used to finance capital expenditures.
Commodity Credit Corporation (CCC) means the wholly owned
government corporation within the U.S. Department of Agriculture, whose
funds, facilities, and authorities are used to implement specific
activities as authorized by Congress.
Date of consumption means the date the bagging and ties are removed
from the bale, as determined by AMS.
Director means the Director of the Warehouse and Commodity
Management Division (WCMD) part of the Agricultural Marketing Service's
Fair Trade Practices Program.
Domestic user means a person who is regularly engaged in the
business of opening bales of eligible upland cotton in the United
States for the purpose of spinning such cotton into yarn, papermaking,
or production of non-woven cotton products also in the United States.
EAATM Program funds means funds provided by CCC as Economic
Adjustment Assistance for Textile Mills under the terms of the
Agreement.
Economic Adjustment Assistance for Textile Mills (EAATM) means the
[[Page 74334]]
program authorized by Congress under which eligible domestic users of
eligible upland cotton can apply for and receive financial assistance
to offset capital expenditures related to investments in the United
States for the manufacturing of products containing cotton, as provided
in this part.
Eligible domestic user means a domestic user in the United States,
who has entered into an agreement with CCC to participate in the
Economic Adjustment Assistance for Textile Mills program.
Eligible upland cotton means baled upland cotton, regardless of
origin, that is opened by an eligible domestic user and is baled lint,
re-baled loose samples, suitable semi-processed motes, or re-ginned
motes.
Equipment means any machine used directly in the production of
final cotton products in order to improve product quality, handling,
and/or production efficiency.
Facility or Plant means the structure(s) that houses the necessary
equipment for consuming and manufacturing eligible upland cotton into
the final cotton product.
Final cotton product means product manufactured domestically that
contains upland cotton.
Linters means lint produced from the cottonseed crushing process.
Marketing year means the one-year period starting on August 1 and
ending on the following July 31.
Monthly Consumption Report means Form CCC-1045-UP-2, the Monthly
Consumption/Application for Payment Report, or other form as prescribed
by AMS, submitted by the eligible domestic user for program payment
purposes that contains documentation of inventory consumed, payment
amounts, and a signed certification.
Net weight means the bale weight less the weight of the bagging and
ties.
Operating expenses means funds expended by a business in its normal
activities, including but not limited to rent, salaries, supplies,
utilities, insurance, taxes, and maintenance.
Operational control means the domestic user has plenary control
over the facility during the term of the Upland Cotton Domestic User
Agreement.
Person means any individual, partnership, corporation, association,
public or private organization or governmental entity, or combination
thereof.
Pills means waste from the mote cleaning process.
Raw motes means lint cleaner waste resulting from the ginning
process.
Readily put into service means facilities, equipment, and/or plants
put into service within 24 months of delivery.
Re-baled loose samples means loose samples of upland cotton that
have been removed from cotton bales for classification purposes and
subsequently re-baled.
Re-ginned mote bales means baled cotton fiber that has been removed
from small, broken, or immature cotton seeds by re-ginning.
Statement of eligible claim certification means an official
document identifying the entity eligible to claim EAATM financial
assistance for their use of suitable semi-processed motes or re-ginned
mote bales.
Suitable semi-processed motes means small, broken, or immature
cotton seeds with attached cotton fibers that are of a quality
suitable, without further processing, for spinning, papermaking, or
production of non-woven fabric.
Supplemental ledger means a line-item record detailing qualifying
capital expenditures that the eligible domestic user proposes to claim
for program purposes.
Upland cotton means a widely cultivated American cotton plant
(Gossypium hirsutum) having short-to-medium staple fibers.
Upland Cotton Domestic User Agreement (Form CCC-1045DOM or
Agreement) means an agreement between CCC and an eligible domestic user
regarding EAATM program participation.
Sec. 870.3 Upland Cotton Domestic User Agreement.
(a) To be eligible for payment under the Upland Cotton Economic
Adjustment Assistance for Textile Mills program, domestic users must
apply for program participation by submitting a signed original copy of
the version of the Upland Cotton Domestic User Agreement, then in
effect, for approval and execution by the Agricultural Marketing
Service on behalf of CCC. Upon approval, AMS will return an executed
copy to the domestic user.
(b) The domestic user must stipulate in writing that the intended
use of all funds received under the EAATM program will be for the sole
purpose of capital expenditures directly attributable to the purpose of
manufacturing upland cotton into final cotton products in the United
States.
(c) The domestic user must identify all plants and/or facilities to
be included as a part of the Upland Cotton Domestic User Agreement. The
domestic user must have operational control of these plants and/or
facilities.
(d) Payments will be made available to eligible domestic users who
have entered into the version of an Upland Cotton Domestic User
Agreement with CCC, then in effect, and who have complied with the
program requirements of this part.
(e) Upland Cotton Domestic User Agreement forms may be obtained
from the Warehouse and Commodity Management Division website.
Sec. 870.5 Eligible upland cotton.
(a) Upland cotton eligible for payment under this part must be
cotton that is consumed by the domestic user in the United States on or
after the effective date of a signed Upland Cotton Domestic User
Agreement, but not later than such date as may be set by the
Agricultural Marketing Service.
(b) The following are not eligible for payment under this part:
(1) Cotton for which a payment under the provisions of this part
has already been claimed or made available;
(2) Raw (unprocessed) motes, pills, linters, or other derivatives
of the lint cleaning process; or
(3) Textile mill wastes.
Sec. 870.7 Monthly Consumption Report.
(a) Eligible domestic users making applications for payment under
this part must submit a Monthly Consumption Report to AMS. The Monthly
Consumption Report must include the following:
(1) Documentation of eligible upland cotton inventory consumed by
the eligible domestic user;
(2) The eligible domestic user's calculation of financial
assistance claimed for payment under the program; and
(3) The eligible domestic user's signed certification as to the
accuracy of the Monthly Consumption Report.
(b) The eligible domestic user must report to AMS the activity
pursuant to paragraph (a)(1) of this section for each month beginning
on the effective date of the Agreement.
(1) If the eligible domestic user's facility is temporarily closed
for any reason, the eligible domestic user must notify AMS and submit a
Monthly Consumption Report prior to the end of the month following the
plant closure.
(2) Except as provided in paragraph (b)(1) of this section, the
domestic user must submit Monthly Consumption Reports every month, even
when no eligible upland cotton has been consumed.
(c) Monthly Consumption Reports not submitted by the last business
day of the following month will be considered late by AMS and are
ineligible for payment.
[[Page 74335]]
(d) AMS will not process for payment Monthly Consumption Reports or
any other required documents from an eligible domestic user that
contain errors or omissions.
(e) Any transaction between two eligible domestic users involving
the transfer of eligible upland cotton bales must be reported to AMS by
both eligible domestic users with a statement of eligible claim
certification as defined in Sec. 870.2.
Sec. 870.9 Payment.
(a) The payment rate for purposes of calculating payments as
specified in this part is 3 cents per pound.
(b) The payment rate is the rate in effect on the date of
consumption.
(1) Baled eligible upland cotton consumption must take place in a
building or collection of buildings where the cotton bale will be used
in the continuous process of manufacturing the cotton into final cotton
products in the United States, and as determined by AMS. Unbaled
eligible upland cotton will be considered consumed by the domestic user
on the date processed.
(2) The quantity of eligible upland cotton with respect to which a
payment is made available shall be determined based upon the net weight
of each bale of eligible upland cotton.
(c) Payments specified in this part will be determined by
multiplying the payment rate by one of the following:
(1) In the case of baled upland cotton, whether lint, loose
samples, or re-ginned motes, but not semi-processed motes, the net
weight of the cotton consumed;
(2) In the case of unbaled re-ginned motes consumed, without re-
baling, for an end use in a continuous manufacturing process, the
weight of the re-ginned motes after final cleaning; or
(3) In the case of suitable semi-processed motes, 25 percent of the
net weight of the semi-processed motes.
(d) In all cases, the payment will be determined based on the
amount of eligible upland cotton that an eligible domestic user
consumed during the immediately preceding calendar month.
(e) Payments specified in this part will be made available upon
application for payment and submission of supporting documentation, as
required by the provisions of this part.
Sec. 870.11 Capital expenditures.
(a) All payments to eligible domestic users of upland cotton under
this part shall be used only for capital expenditures that acquire,
construct, install, modernize, develop, convert, or expand land, plant,
buildings, equipment, or machinery in the United States. Capital
expenditures must be directly attributable to the purpose of
manufacturing upland cotton into final cotton products in the United
States and certified as such by the domestic user. Expenditures that
are not directly associated with manufacturing of upland cotton into
final cotton products in the United States are outside the purpose and
scope of the Economic Adjustment Assistance for Textile Mills Program
and are not eligible expenditures for funds under this part.
(b) Operating expenses are not eligible for purposes of this part.
(c) If AMS determines, after a review or audit of the eligible
domestic user's records, that economic adjustment assistance under this
part was not used for the purposes specified in paragraph (a) of this
section, the eligible domestic user shall be:
(1) Liable to repay the assistance to CCC, plus interest, as
determined by CCC; and
(2) Ineligible to receive assistance under EAATM for a period of
one year following AMS's determination.
(d) Any specific capital expenditure exceeding an amount, as
specified in the version of the Upland Cotton Domestic User Agreement,
then in effect, must be submitted for pre-approval. The request for
pre-approval must include:
(1) The description of the proposed expenditure specified for the
applicable marketing year;
(2) Itemized purchase order and/or invoice number, if applicable;
(3) Documentation of scheduled purchase date(s), installation date,
and location (which facility); and
(4) Any additional information required by AMS.
(e) The eligible domestic user must make capital expenditures equal
to, or greater than, any amounts received as EAATM Program funds,
within 18 months following the end of the applicable marketing year.
Equipment, facilities, and plants purchased with EAATM Program funds
must be readily put into service as defined in Sec. 870.2. The
eligible domestic user must:
(1) Make capital expenditures that exceed the amount paid to the
eligible domestic user for any marketing year. EAATM Program funds will
not carry over to the following marketing year without a written
Funding Utilization Extension from AMS.
(2) Request a Funding Utilization Extension for approval from AMS
to be considered for any capital expenditure exceeding a value of $10
million on a single, allowable, fixed asset.
(3) Request a Funding Utilization Extension at the time of a pre-
approval for a single item expenditure pursuant to paragraph (d) of
this section.
(4) Applications for a Funding Utilization Extension Request must
include, but are not limited to:
(i) Detailed plans for the expense;
(ii) Timeline of construction;
(iii) Schedule of payments;
(iv) Estimated date of when the capital expenditure will be
operational;
(v) Explanation of how the expense meets the criteria for allowable
purposes;
(vi) Justification for the extension request; and
(vii) Any other information or supporting documentation required by
AMS.
(5) WCMD will consider Funding Utilization Extension requests based
on allowable purposes. In any event, the maximum time extension for
EAATM Program funds to be used for capital expenditures will be 36
months beyond the existing timeframe of 30 months (Marketing Year + 18
months), for a total of 66 months.
(6) EAATM Program funds will be reconciled against the eligible
expense(s) specified in the Funding Utilization Extension until the
approved time extension has expired or funds are exhausted.
(f) Fixed assets acquired and/or modernized with EAATM Program
funds must be in operation within 24 months after the date of purchase.
If unforeseen difficulties prevent utilization within the 24-month
period, written approval must be obtained from WCMD for an extension of
time.
(g) Direct or indirect transfer of EAATM Program funds to another
entity is prohibited. In the event of a sale/transfer of an eligible
domestic user's business or its assets, the eligible domestic user must
sign a written verification certifying that no EAATM Program funds were
transferred, either in cash or as an asset purchased exclusively to be
transferred to the acquiring company.
(h) Each eligible domestic user involved in an acquisition/merger/
transfer must notify AMS and provide AMS with an itemized ledger
detailing specific equipment, building, facility, property, and/or
plants bought with EAATM Program funds included with any acquisition/
merger/transfer. In the event of an acquisition/merger/transfer and
without extenuating circumstances, equipment, facilities, and/or plants
purchased with EAATM Program funds by an eligible domestic user must be
operational for a minimum of 36 months prior to its sale and cannot be
purchased
[[Page 74336]]
with EAATM Program funds again by another eligible domestic user.
Sec. 870.13 Records and inspection.
(a) Required records. The eligible domestic user shall maintain all
records and reports relating to their Upland Cotton Domestic User
Agreement for a period of three years following termination of the
Agreement. At a minimum, records must include those listed in
paragraphs (a)(1) through (6) of this section.
(1) A monthly consumption record including a detailed list of bales
consumed, showing the bale numbers, net weights, date received, date
consumed, type of eligible upland cotton, and a facility identifier.
The consumption record must be accompanied by source documents such as
purchase orders and invoices to verify the information provided.
(2) Documentation supporting the receiving of cotton, including a
register of contracts, amendments, and cancellations. Records must show
the number of bales received each month by type of cotton, supported by
invoices or waybills and weight sheets documenting the net weight when
received at the user's facility.
(3) Documentation tracing the consumed bale weight back to source
documents showing the documented bale weight received at the user's
facility.
(4) Documentation supporting the acquisition, consumption, and
disposition of ineligible cotton and other textiles.
(5) A bale inventory record that summarizes, at least monthly, the
eligible domestic user's beginning inventory, receipts, adjustments,
consumption, and ending inventory.
(6) Documentation of capital expenditures that are equal to or
greater than payments received.
(i) The eligible domestic user must record information about
capital expenditures in a supplemental ledger as defined in Sec.
870.2, including, but not limited to, detailed descriptions of each
capital expenditure, acquisition date, date of payment, amount of
payment, and proof of payment, serial number(s), invoice number, and
location (applicable facility).
(ii) Capital expenditures must be grouped by Marketing Year.
(iii) Each line item must reflect only a single expense for an
identifiable single expenditure.
(b) Inspection of records. (1) Upon request from WCMD, the eligible
domestic user must forward to WCMD copies of any and all records which
support the domestic user's claims for payment.
(2) Eligible domestic users must make records available at all
reasonable times for an audit or inspection by authorized
representatives of AMS, the United States Department of Agriculture,
and/or any other governmental unit needing access for audit or
inspection purposes.
(3) Eligible domestic users shall permit, and assist without
impediment, any AMS-authorized individual to inspect or audit, on any
business day during the normal and customary hours of business, the
books, papers, records, accounts, and other applicable documents
relating to the Agreement. Failure to provide access or respond timely
to requests for information and records will result in denial of
benefits.
Sec. 870.15 Compliance, enforcement, and appeals.
(a) AMS will notify the appropriate investigating agencies of the
United States and CCC may terminate the Agreement and demand a full
refund of payments plus interest and suspend and debar the offending
company from further government participation as deemed necessary to
protect the interests of the government, if the eligible domestic user
is suspected by AMS to have knowingly:
(1) Adopted any scheme or device which violates the Agreement;
(2) Made any fraudulent representation; or
(3) Misrepresented any fact affecting a determination under the
Agreement.
(b) No Member or Delegate of Congress shall be admitted to any
share or part of the Agreement or to any benefit to arise therefrom,
except that this provision shall not be construed to extend to their
interest in any incorporated company, if the Agreement is for the
general benefit of such company, nor shall it be construed to extend to
any benefit which may accrue to such official in their capacity as a
party to an Agreement.
(c) Eligible domestic users who dispute a WCMD program
administration decision may request a review of the decision by the
Director.
(1) Requests for review must be in writing and contain the relevant
facts upon which the review will be heard. Requests must be received by
WCMD within 15 days from the date the eligible domestic user receives
the disputed decision.
(2) Requests must be directed to: Director, Warehouse and Commodity
Management Division, Agricultural Marketing Service, U.S. Department of
Agriculture, at <a href="/cdn-cgi/l/email-protection#3b7e7a7a6f76157e77687b4e485f5a155c544d"><span class="__cf_email__" data-cfemail="ffbabebeabb2d1bab3acbf8a8c9b9ed1989089">[email protected]</span></a>.
(d) 7 CFR 2.79(a)(23) authorizes the AMS Administrator to
administer the EAATM program (7 U.S.C. 9037(c)). In light of the
aforementioned redelegation, AMS is considered a successor ``Agency''
under 7 CFR 11.1, and decisions made under EAATM, if deemed adverse,
are subject to NAD jurisdiction. Accordingly, appeals under this
program shall be heard by the USDA National Appeals Division.
(e) Eligible domestic users who dispute a review decision by the
Director must appeal such decision to the USDA National Appeals
Division pursuant to 7 U.S.C. 6912(e) and 7 CFR 11. Such an appeal must
be made within 30 days of receipt of a WCMD decision.
(f) CCC may terminate the Upland Cotton Domestic User Agreement at
any time.
(g) When a new Agreement is executed for any reason, including but
not limited to programmatic requirements, expiration of authorizing
legislation, or exhaustion of funds, any previous Agreement between CCC
and the eligible domestic user shall be null and void/terminated.
(h) The Director may waive or modify deadlines and other program
requirements in cases where timeliness or failure to meet such other
requirements does not adversely affect the operation of the program.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-23727 Filed 10-30-23; 8:45 am]
BILLING CODE 3410-02-P
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</html>Indexed from Federal Register on October 31, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.