§1359dd Allocation of Marketing Allotments

Summary

The Secretary must divide each year’s sugar marketing allotment among the sugar processors covered by that allotment so that everyone has a fair chance to sell sugar. For cane sugar, allocations are made after a hearing if affected cane processors or growers ask for one. In States with more than one cane processor, the split is based on past marketings and the processors’ ability to market sugar, using production averages from 1996 through 2000 (the two highest years for marketings and the three highest years for processing). For States that follow proportionate shares, similar rules use the two highest years from 1997 through 2001 for some measures. Allotments tied to the Talisman facility before May 13, 2002, follow the March 25 and 26, 1999 agreements. Processors that start on or after May 13, 2002, can apply for an allocation after a hearing; a new processor’s first-year allotment cannot exceed 50,000 short tons (raw value), and later amounts are set by the Secretary using the same criteria. If a new processor causes a new mainland State allotment, that amount is taken pro rata from other mainland States. The Secretary must consider harm to existing mainland processors before giving new allocations and must require proof the applicant can process and market the sugar. Only one new-processor allocation is allowed per processing facility. If a cane processor is sold, transferred, or closed in a corporate consolidation, the allocation moves to the buyer, new owner, successor, or remaining affiliated processor as appropriate. For beet sugar, the Secretary divides allotments among beet processors using an adjusted weighted average of each processor’s beet sugar in the 1998 through 2000 crop years, with weights of 25 percent for 1998, 35 percent for 1999, and 40 percent for 2000. The Secretary must adjust these amounts if a processor opened or closed a factory, built a molasses desugarization facility, or had large quality losses during the listed years. Opening a factory increases a processor’s share by 1.25 percent of the total adjusted weighted average for all processors per factory; closing a factory decreases it by 1.25 percent per factory; building a molasses desugarization facility increases it by 0.25 percent per facility; and substantial stored-beet losses increase it by 1.25 percent. If a beet processor permanently stops operating, its allocation is canceled and divided among the others pro rata. If a processor or all its assets are sold, the allocation usually transfers to the buyer. If one or more factories are sold, a matching pro rata part of the seller’s allocation moves to the buyer based on the factories’ historical contribution, unless buyer and seller agree otherwise; that assignment applies for the rest of the crop year and later years, and the buyer may use other factories to fill any shortfall. A “new entrant” for beet sugar is an entity with no allocation and not affiliated with an allocation holder that will process beets under contract. If a new entrant builds or reopens a factory not used since before 1998, the Secretary gives it an allocation to reach a similar factory use rate and reduces other processors’ allocations pro rata. If a new entrant buys a factory that has processed since 1998, allocation transfer requires mutual agreement; without agreement the new entrant cannot get an allocation. Decisions under these rules can be appealed to the Secretary under the appeals process.