[Federal Register: April 9, 1998 (Volume 63, Number 68)]
[Rules and Regulations]               
[Page 17311-17315]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ap98-1]






Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

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[[Page 17311]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1425

RIN 0560-AF33

 
Cooperative Marketing Associations

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Interim rule and request for comments.

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SUMMARY: This rule amends the Commodity Credit Corporation's (CCC's) 
Cooperative Marketing Association (CMA) program to reduce workload and 
reporting burdens and focus CCC's monitoring efforts on the CMA's 
participation in the commodity loan and loan deficiency payment 
programs. Other CMA business functions will no longer be subject to 
review or approval.

DATES: This rule is effective April 9, 1998. Comments concerning this 
rule should be received on or before May 11, 1998 to be assured 
consideration.

ADDRESSES: Address all comments concerning this interim rule to James 
Goff, Agricultural Program Specialist, Price Support Division, USDA, 
FSA, STOP 0512, 1400 Independence Avenue, S.W., Washington, DC 20250-
0512, telephone (202) 720-5396: e-mail James__Goff@wdc.fsa.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    It has been determined that this rule does not have sufficient 
Federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this rule will not have a 
substantial direct effect on States or their political subdivisions, or 
on the distribution of power and responsibilities among various levels 
of government.

Executive Order 12866

    This interim rule is issued in conformance with Executive Order 
12866 and has been determined to be not significant and therefore has 
not been reviewed by the Office of Management and Budget.

Executive Order 12988

    The interim rule has been reviewed in accordance with Executive 
Order 12988. The provisions of this interim rule preempt State laws to 
the extent such laws are inconsistent with the provisions of this rule. 
The provisions of this rule are not retroactive. Before any judicial 
action may be brought concerning the provisions of this rule, the 
administrative remedies must be exhausted.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule because FSA and CCC are not required by 5 
U.S.C. 553 or any other provision of law to publish a notice of 
proposed rulemaking with respect to the subject matter of this rule.

Unfunded Mandates Reform Act of 1995

    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 governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of UMRA.

Federal Assistance Programs

    The titles and numbers of the Federal assistance programs, as found 
in the Catalog of Federal Domestic Assistance, to which this rule 
applies are:

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Environmental Evaluation

    It has been determined by an environmental evaluation that this 
action will have no significant impact on the quality of the human 
environment. Therefore, neither an environmental assessment nor an 
Environmental Impact Statement is needed.

Paperwork Reduction Act of 1995

    The Information Collections for the program are covered under OMB 
control number 0560-0040. A Notice with request for comments on the 
information collection was published in the Federal Register on April 
7, 1998, at 63 FR 16958. An information collection package will be sent 
to OMB for review at the end of the 60-day comment period.

Background

    CCC made loans and loan deficiency payments (LDP's) available to 
producers through agricultural marketing cooperatives for over 60 
years. USDA first extended commodity loans to cotton cooperatives in 
1934. Commodities now authorized for marketing assistance loans and 
LDP's through approved CMA's are: barley, canola, corn, cotton, 
flaxseed, mustard seed, oats, rapeseed, rice, safflower, sorghum, 
soybeans, sunflower seed, and wheat.

Explanation of Changes

    Existing regulations have not been substantially changed or updated 
in the last 15 years. Many of the old regulations dealt with monitoring 
changes in the CMA's by-laws, equity requirements, and conflict-of-
interest issues of board members and key employees. Cooperatives are 
voluntary organizations. Producers who join cooperatives have the right 
to review by-laws before joining the cooperative and approve by-law 
changes after becoming a member. CMA loans are non-recourse commodity 
loans for which CCC determines the loan value. CCC allows CMA's 
terminated for non-compliance to forfeit the collateral without 
additional financial penalty. CCC is not financially at risk for any 
program losses because, as stated in Sec. 1425.17(m), CMA's are 
responsible to CCC for all losses. In addition, CCC does not require 
individual producers receiving similar loans to meet any equity 
requirements. Conflict of interest concerns have become important to 
cooperatives, their insurance companies, and members. Therefore, CCC's 
concern with respect to by-law, equity, or conflict of interest issues 
is diminished and CCC believes it is in the best interest of the 
government to focus on marketing

[[Page 17312]]

assistance loans and LDP-related activity by the CMA's. CCC will now 
rely on the CMA's Articles of Incorporation and its marketing 
agreements with its members to establish that the CMA is operating as a 
cooperative and is allocating marketing assistance loan and LDP 
proceeds back to the applicable eligible producers.

Summary of Changes

    The entire part 1425 has been rewritten. In addition, specific 
changes are as follows:
    (a) Seed cotton has been removed from the definition of an 
authorized commodity in Sec. 1425.3. CMA's will no longer be authorized 
to obtain seed cotton loans.
    (b) Section 1425.4 is amended by replacing required audit 
submissions with balance sheet submissions;
    (c) All references to bylaw submissions and bylaw requirements are 
removed. This affected Sec. 1425.4, Sec. 1425.6, Sec. 1425.8, 
Sec. 1425.9, and Sec. 1425.19. Section 1425.11 was removed as a result 
and is now reserved;
    (d) Equity requirements in Sec. 1425.10(c) have been removed;
    (e) Conflict of interest statement submissions by cooperative Board 
members and key employees was removed from Sec. 1425.12. Section 
1425.12 is now reserved;
    (f) Provisions to allow discrepancies between CCC and CMA records 
related to the eligibility status for a producer under certain 
situations were added to Sec. 1425.17;
    (g) In Sec. 1425.14 the member volume requirement for a crop 
involved in loan or LDP activity has been reduced from 80 percent to 50 
percent;
    (h) The requirements in Sec. 1425.10 (d) to adjust a CMA's net 
worth for pledged assets and restricted accounts have been removed;
    (i) Section 1425.7(b) is amended so CCC may terminate a suspended 
CMA in less than 1 year;
    (j) In Sec. 1425.4(d) the requirements for CMA's to submit revised 
applications every 5 years is changed to require submissions when CCC 
questions whether the CMA is operating according to documents 
previously submitted; and
    (k) Definitions have been added to Sec. 1425.3 for cooperative, 
market gain, and loan pool.
    Submit comments as an:
    1. ASCII file avoiding the use of special characters and any form 
of encryption; or
    2. WordPerfect 5.1--7.0 file on diskette.
    Identify all comments and data in electronic form by RIN 0560-AF33.

List of Subjects in 7 CFR Part 1425

    Agricultural commodities Cooperatives, Marketing agreements.

    Accordingly, for the reasons stated in the preamble, 7 CFR part 
1425 is revised as set forth below:

PART 1425--COOPERATIVE MARKETING ASSOCIATIONS

Sec.
1425.1  Applicability.
1425.2  Administration.
1425.3  Definitions.
1425.4  Approval.
1425.5  Confidentiality.
1425.6  Approved CMA's.
1425.7  Suspension and termination of approval.
1425.8  Ownership and control.
1425.9  Open membership.
1425.10  Financial ratio requirement.
1425.11-1425.12  [Reserved]
1425.13  Uniform marketing agreement.
1425.14  Member business.
1425.15  Vested authority.
1425.16  Payment limitation.
1425.17  Eligible commodity and pooling.
1425.18  Distribution of proceeds.
1425.19  Member cooperatives.
1425.20  [Reserved]
1425.21  Records required.
1425.22  Inspection and investigation.
1425.23  Reports.
1425.24  OMB control number assigned pursuant to Paperwork Reduction 
Act.
1425.25  Appeals.

    Authority: 7 U.S.C. 1441 and 1421, 7 U.S.C. 7231-7237; and 15 
U.S.C. 714b, 714c, and 714j.


Sec. 1425.1  Applicability.

    This part sets forth the terms and conditions an approved 
Cooperative Marketing Association (CMA) must meet to obtain commodity 
marketing assistance loans (loans) and loan deficiency payments (LDP's) 
from CCC on behalf of its members. A CMA meeting these terms and 
conditions may obtain loans and LDP's for any eligible commodity for 
which a loan and LDP program is in effect.


Sec. 1425.2  Administration.

    On behalf of CCC, the Farm Service Agency will administer the 
provisions of this part under the general direction and supervision of 
the Deputy Administrator for Farm Programs. In the field, the 
provisions of this part will be administered by the State and county 
FSA committees.


Sec. 1425.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration. The terms defined in parts 718 
of this title and parts 1421 and 1427 of this chapter shall also be 
applicable, except where those definitions conflict with the 
definitions in this section.
    Active member is a member who has utilized the services offered by 
a CMA in one of the three preceding CMA fiscal years or such shorter 
period as may be provided in the CMA's articles of incorporation or 
bylaws.
    Approved cooperative marketing association (CMA) is a cooperative 
approved by CCC to participate in loan and LDP programs for any 
authorized commodity.
    Authorized commodity is a commodity for which a CMA is approved by 
CCC to obtain loans or LDP's. Commodities for which a CMA may be 
approved by CCC are barley, canola, corn, cotton, flaxseed, mustard 
seed, oats, rapeseed, rice, safflower, sorghum, soybeans, sunflower 
seed, and wheat.
    Cooperative is a business owned and controlled by the producers who 
use its services and operated under generally accepted cooperative 
principles.
    Eligible commodity is a commodity which meets the commodity's 
eligibility requirements set forth in chapter XIV of this title, and is 
produced and delivered to the CMA from a producer eligible for loan or 
LDP.
    Loan pool is any CMA pool containing commodities used by the CMA to 
obtain either loans or LDP's.
    Market gain is the sum of loan rate, minus the repayment rate on 
loans repaid with less than the loan rate, plus for LDP's, the same 
rate, times the quantity of commodity. Market gains cannot exceed the 
producer's applicable payment limitation as set out in part 1400 of 
this chapter.
    Member is a producer who:
    (a) Has fully paid for membership stock or earned equity credits in 
the CMA;
    (b) Has executed a uniform marketing agreement with the CMA; and
    (c) Is entitled to all CMA membership rights.


Sec. 1425.4  Approval.

    (a) For a cooperative to gain CMA status to participate in a 
marketing assistance loan or LDP program for the 1997 through 2002 crop 
years, a cooperative must submit an application for approval to CCC. An 
application must include:
    (1) A completed Form CCC-846 indicating commodities for which it 
seeks approval;
    (2) A balance sheet, dated within the last year, prepared for the 
cooperative and accompanied by a letter from an independent Certified 
Public Accountant, certifying that the balance sheet was prepared in 
accordance with

[[Page 17313]]

generally accepted accounting principles;
    (3) A copy of the articles of incorporation or articles of 
association and all marketing agreements for loan pools, together with 
a certification that this material is current;
    (4) Resolutions made by the cooperative's board of directors 
stating the cooperative will abide by provisions of this part, the 
nondiscrimination provisions thereof, and all other related CCC 
policies;
    (5) A detailed description of how proceeds from each loan pool will 
be distributed to members as provided for in Sec. 1425.18;
    (6) An executed form CCC-Cotton G, Cotton Cooperative Loan 
Agreement, by cooperatives applying for approval to participate in the 
cotton loan and LDP program; and
    (7) Other information as requested by CCC concerning the 
organizational, operational, financial or any other aspect of the 
cooperative requested by CCC related to the cooperative's proposed 
methods of conducting CCC loan and LDP business.
    (b) A CMA must submit, on an annual basis, the following 
information to CCC:
    (1) A completed Form CCC-846-1, which shall disclose:
    (i) The number of active and inactive CMA members;
    (ii) The CMA's allocated equity;
    (iii) The CMA's unallocated equity; and
    (iv) Quantity of each loan pool commodity delivered to the CMA for 
marketing and the portion of such commodities received from active 
members during the prior year.
    (2) The CMA's latest balance sheet. This balance sheet must be 
dated within the past year and be accompanied by a letter from an 
independent Certified Public Accountant certifying that the balance 
sheet was prepared in accordance with generally accepted accounting 
principles.
    (c) A CMA shall furnish information to CCC within thirty calendar 
days relating to any:
    (1) Change in its articles of incorporation and loan pool marketing 
agreements;
    (2) Resolution affecting loan or LDP operations;
    (3) Change to the CMA's name, address, phone number, or related 
data shown on the CCC-846-1;
    (4) Change in loan pool operations with an explanation and 
justification; and
    (5) Additional information CCC may request related to the CMA's 
continued approval by CCC.
    (d) CCC may require a CMA to submit a new initial application 
instead of a recertification application when it questions whether the 
CMA is operating according to documents previously submitted.


Sec. 1425.5  Confidentiality.

    Information submitted to CCC related to trade secrets, financial or 
commercial operations, or the financial condition of a CMA, whether for 
initial approval or continued approval, shall be kept confidential by 
the officers, agents, and employees of CCC and the Department of 
Agriculture except as required to be disclosed by law.


Sec. 1425.6  Approved CMA's.

    (a) CCC shall, in accordance with the provisions of this part, 
approve a CMA to obtain marketing assistance loans and LDP's.
    (b) CCC may approve a CMA to participate in a marketing assistance 
loan and LDP program for the 1997 through 2002 crop as:
    (1) Unconditionally approved; or
    (2) Conditionally approved.
    (c) If CCC determines a CMA is in substantial but not total 
compliance with the requirements of this part, CCC may make the 
approval conditional on CMA coming into full compliance within a 
reasonable period of time as specified in the notification of 
conditional approval.
    (d) A CMA is approved to participate in a marketing assistance loan 
and LDP program until the CMA's approval is suspended or terminated by 
CCC.


Sec. 1425.7  Suspension and termination of approval.

    (a) CCC may suspend a CMA from obtaining loans and LDP's when CCC 
determines the CMA has not:
    (1) Operated according to the CMA's application for approval or its 
last recertification submission;
    (2) Complied with applicable regulations;
    (3) Corrected deficiencies of the CMA's operation as noted by CCC; 
or
    (4) Violated any of its agreements with CCC.
    (b) A suspension may be lifted when CCC determines the CMA has 
complied with all requirements for approval. When suspensions are not 
lifted within 1 year, or a shorter time period if so indicated in CCC's 
suspension notification, the CMA's approval automatically terminates.
    (c) CCC may terminate a CMA's approval by giving the CMA written 
notice of the termination.
    (d) A CMA may, when it does not have any marketing assistance loans 
outstanding, through written notice to CCC, voluntarily terminate its 
participation in a loan and LDP program.
    (e) CCC may, on demand, call all outstanding CCC loans made to a 
suspended or terminated CMA. When loans are called, CCC will provide at 
least 10 calendar days written notice to the CMA. Commodities pledged 
as collateral for loans must be repaid by the date specified by CCC. If 
redemption is not made by the date specified, title to the commodity 
shall vest in CCC and CCC shall have no obligation to pay the 
commodity's market value above the principal amount of such loans.


Sec. 1425.8  Ownership and control.

    (a) CMA's must be owned and controlled by active members of the 
CMA.
    (b) The CMA must provide evidence that:
    (1) Active members own more than 50 percent of its allocated 
equity; and
    (2) A majority of directors are active members of the CMA or 
authorized representatives of active members.
    (c) An applicant cooperative or a CMA, not under the ownership or 
control, of its active members, may be approved by CCC if it is able to 
establish that, by retiring the equity of its inactive members or by 
obtaining new members, it can vest ownership and control in its active 
members, as required by this section, by a date specified by CCC.


Sec. 1425.9  Open membership.

    (a) The CMA shall provide CCC documented proof that the CMA admits 
every membership applicant who is eligible under the statute regulating 
the CMA.
    (b) Notwithstanding paragraph (a) of this section, a CMA may refuse 
membership to an applicant whose admission would prejudice, hinder, or 
otherwise obstruct the interests or purposes of the CMA.


Sec. 1425.10  Financial ratio requirement.

    To be financially able to make advances to their members and to 
market their commodities, CMA's shall have a current ratio of at least 
1 dollar of current assets for each 1 dollar of current liabilities 
(current ratio of 1:1 or better) on the balance sheet it submits to CCC 
with its initial application or annual recertification required in 
Sec. 1425.4.


Sec. 1425.11-Sec. 1425.12  [Reserved]


Sec. 1425.13  Uniform marketing agreement.

    (a) A CMA must enter into a uniform marketing agreement with each 
member who delivers a commodity to a loan pool.

[[Page 17314]]

    (b) The identification number used by the member to report acreage 
on applicable farms to FSA must appear on the marketing agreement.


Sec. 1425.14  Member business.

    (a) At least 50 percent of a crop of an authorized commodity 
acquired by, or delivered to, a CMA for marketing must be produced by 
its members for the CMA to obtain a loan or LDP for such crop. CCC may, 
for a period not to exceed 2 years, waive this requirement if:
    (1) The CMA can establish to CCC that such authorization is 
necessary for the efficient operation of the CMA; and
    (2) The CMA's plan, approved by CCC, will bring the CMA into 
compliance with the provisions of this section.
    (b) Commodities purchased or acquired from CCC and processed 
products acquired from other processors or merchandisers shall not be 
considered in determining the volume of member or nonmember business.


Sec. 1425.15  Vested authority.

    The marketing agreement between the CMA and its members shall give 
the CMA the authority to pledge the commodity as collateral for a loan, 
to place a lien on such commodity, and to market the commodity on 
behalf of its members even though the individual members retain the 
right, in effect, to determine the price at which the commodity can be 
marketed by the CMA.


Sec. 1425.16  Payment limitation.

    CMA's shall monitor market gains they receive from CCC on behalf of 
their members and not obtain market gains for a member above the 
member's payment limitation determined in accordance with part 1400 of 
this chapter.


Sec. 1425.17  Eligible commodity and pooling.

    (a) A CMA may establish separate loan pools as needed for 
quantities of a commodity.
    (b) Loans and, if applicable, LDP's will be available to CMA's for 
any eligible commodity in a loan pool as provided in paragraph (e) of 
this section and the beneficial interest provisions of parts 1421 and 
1427 of this chapter.
    (c) A pool shall be eligible for loans and LDP's if:
    (1) All of the commodity in the pool is eligible for loans or 
LDP's, except as provided in paragraphs (d) and (e) of this section;
    (2) The commodity was delivered by members to the CMA for their 
benefit;
    (3) The commodity was delivered and the members are eligible for 
loans and LDP's;
    (4) Members retain the right to share in marketing proceeds from 
the commodity in accordance with Sec. 1425.18; and
    (5) Members agreed to accept a payment of initial advances from the 
CMA in accordance with Sec. 1425.18(a).
    (d) Ineligible commodities may be included in eligible pools when:
    (1) The CMA inadvertently included ineligible quantities based on 
grade, quality, bale weight or repacking in the case of cotton, or 
other factors; or
    (2) There are eligibility discrepancies within FSA records, the 
producer has certified to the CMA that the commodity is eligible for 
loan, and there is no market gain or LDP involved in the loan pool for 
the crop year.
    (e) A CMA may, for a period of time as specified in Handbook 1-CMA, 
include a commodity that is ineligible based on FSA records when the 
producer has certified to the CMA the commodity is eligible. In these 
instances, CCC specifies a time period during which CMA's may obtain 
loan or LDP's on the applicable quantity while the eligibility status 
is resolved. If the final resolution is that the commodity was 
ineligible, the CMA must repay any loans outstanding with principal 
plus interest and any market gains obtained plus interest from the date 
of receiving the market gain through the repayment date.
    (f) The CMA must have in inventory a quantity of commodity 
delivered by members of each class and grade at least equal to the 
quantity each class and grade pledged as loan collateral.
    (g) Loans will be available to the CMA for the quantity of a farm-
stored commodity that is, pursuant to such CMA marketing agreement with 
a member, part of the CMA's loan pool.
    (h) A CMA shall have identity-preserved loan pool commodities 
stored in approved warehouses while the commodities are pledged as 
collateral for loan.
    (i) Loan eligibility for commingled commodities stored on a farm or 
in a warehouse may be transferred to an approved warehouse.
    (j) Commodities pledged as collateral for CCC loans shall be free 
and clear of all liens and encumbrances based on a CMA's financial 
agreements or the CMA shall obtain a completed form CCC-679, Lien 
Waiver. When liens are applicable based on CMA financial agreements, 
the CMA shall provide CCC the completed CCC-679. CMA's shall not take 
any action to cause a lien or encumbrance to be placed on a commodity 
after a loan is approved.
    (k) If a loan or LDP is obtained for any quantity in a loan pool, 
allocations of costs and expenses among separate pools for the 
commodity in the pool shall be made according to generally accepted 
accounting principles.
    (l) A CMA shall not apply marketing losses from a commodity not 
used to obtain a loan or LDP against the marketing proceeds of a 
commodity used to obtain a loan or LDP.
    (m) CMA's shall not carry forward losses from one loan pool and 
apply them against a subsequent loan pool without CCC's authorization. 
CCC may grant authorization when it determines that carrying forward 
the loss complies with CCC's loan and LDP program intent.
    (n) The CMA is responsible to CCC for any loss related to 
commodities the CMA pledged as collateral for loan or used to obtain 
LDP related to:
    (1) The CMA failing to comply with these regulations;
    (2) Changes in quantity or quality of either warehouse or farm 
stored commodities; or
    (3) Liens based on either the CMA's or its members' financial 
agreements.


Sec. 1425.18  Distribution of proceeds.

    (a)(1) If CCC makes loans or LDP's for any quantity in a loan pool, 
the related proceeds shall be distributed to members participating in 
the pool:
    (i) Based on the quantity and quality of the commodity delivered by 
each member;
    (ii) Less any authorized charges for services performed or paid by 
the CMA necessary to condition the commodity or otherwise make the 
commodity eligible for loans or LDP's; and
    (iii) Within 15 work days from the date the CMA receives loan or 
LDP proceeds from CCC, except when loans are redeemed within 15 work 
days of the date of the loan.
    (2) CMA's may credit advances to its members made before loans and 
LDP's are obtained against the distribution of loan and LDP proceeds 
requirement in paragraph (a)(1)(iii) of this section.
    (b)(1) Except as provided in paragraph (b)(2) of this section, loan 
pool proceeds shall not be combined with non-loan pool proceeds and the 
CMA shall distribute loan pool proceeds according to the information it 
provided CCC in accordance with Sec. 1425.4(b)(7).
    (2) Sales proceeds from a loan pool may be combined with sales 
proceeds from other pools if the proceeds from such pools are allocated 
among the pools according to the quantity and quality of the commodity 
included in the pools.

[[Page 17315]]

    (3) Loan and LDP proceeds shall only be issued to members involved 
in pools used for loans or LDP's.
    (4) When notified by CCC that loan and LDP distributions to a 
member must be reduced for a program year, farm, or crop, a CMA shall 
not make subsequent pool distributions and shall reimburse CCC for 
distributions previously issued, if applicable.


Sec. 1425.19  Member cooperatives.

    A CMA may obtain loans or LDP's on behalf of a member cooperative 
when the member cooperative is itself a CMA operating in accordance 
with this part. Loans and LDP's are restricted based on the CMA 
obtaining the loan or LDP.


Sec. 1425.20  [Reserved]


Sec. 1425.21  Records required.

    (a) A CMA shall maintain records for each loan or LDP commodity 
showing the quantity:
    (1) Received from each member and nonmember;
    (2) Eligible for loans and LDP's;
    (3) By quality factors specified in the applicable commodity 
regulations including class, grade, and quality, where applicable; and
    (4) Of unprocessed inventory broken down by items 1 through 3 
above.
    (b) Except as provided in paragraph (c) of this section, inventory 
shall be allocated in the following manner until all inventory in a 
loan pool is depleted:
    (1) For processed commodities, the pool's inventory shall be 
adjusted when the commodity is withdrawn from inventory for processing; 
and
    (2) For commodities that are not processed, the pool's inventory 
shall be allocated to the pool and the pool's inventories adjusted when 
the commodity is shipped.
    (c) Records of loan and non-loan pool dispositions do not have to 
be maintained separately when sales proceeds from pools are allocated 
according to the quantity and quality of commodity in the pools.


Sec. 1425.22  Inspection and investigation.

    (a) The books, documents, papers, and records of the CMA and 
subsidiaries shall be maintained for five years after the applicable 
crop year and shall be available to CCC for inspection and examination 
at all reasonable times.
    (b) At any time after an application is received, CCC shall have 
the right to examine all books, documents, papers, and determine 
whether the CMA is operating or has operated in accordance with the 
regulations in this part, its articles of incorporation or articles 
association, and agreements with producers, the representations made by 
the CMA in its application for approval, and, where applicable, its 
agreements with CCC.


Sec. 1425.23  Reports.

    (a) CMA's shall annually provide CCC a report of all commodity 
deliveries involved in loans and LDP's by FSA farm number for each 
member.
    (b) When requested by CCC, CMA's shall report market gains received 
on behalf of each member.


Sec. 1425.24  OMB control number assigned pursuant to Paperwork 
Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR 1425) have been approved by the Office of Management 
and Budget (OMB) under the provisions of 44 U.S.C. Chapter 35 and have 
been assigned OMB number 0560-0040.


Sec. 1425.25  Appeals.

    A CMA may obtain reconsideration and review of determinations made 
under this part in accordance with the appeal regulations set forth at 
part 780 of this title.

    Signed at Washington, D.C., on March 27, 1998.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 98-9017 Filed 4-8-98; 8:45 am]
BILLING CODE 3410-05-P