7 U.S.C. § 8740: Adjustments of loans

Summary

The Secretary may change loan rates for crop loans to account for differences like grade, type, quality, location, and other factors. For crops other than cotton, those changes should be made so the average loan level, based on how often those factors occur, equals the intended support level. The Secretary can set county-by-county loan rates so the lowest county rate is 95% of the national average, as long as doing so does not raise overall program spending or the national average loan rate. For cotton, the Secretary can adjust rates for quality differences. Within 180 days after the law was passed, the Secretary must update how upland cotton loans are run so they better match market values. Mandatory changes include removing warehouse location differences, using quality and staple-length differentials based on a 3-year weighted moving average of regional spot markets, fixing an artificial split between 32 and 33 staple due to micronaire, and capping any premium/discount so it is no larger than the change tied to a one-step better leaf grade. The Secretary must talk with U.S. cotton industry representatives before making changes, and the usual federal rulemaking process does not apply to those talks. The Secretary may later review and change these adjustments. For long and medium grain rice, rates may only vary for grade and milling yield differences.

Title 7, §8740

Agriculture, Source: USLM XML via OLRC

(a)Adjustment authority

Subject to subsection (e), the Secretary may make appropriate adjustments in the loan rates for any loan commodity (other than cotton) for differences in grade, type, quality, location, and other factors.

(b)Manner of adjustment

The adjustments under subsection (a) shall, to the maximum extent practicable, be made in such a manner that the average loan level for the commodity will, on the basis of the anticipated incidence of the factors, be equal to the level of support determined in accordance with this subtitle and subtitles B through E.

(c)Adjustment on county basis

(1)In general

The Secretary may establish loan rates for a crop for producers in individual counties in a manner that results in the lowest loan rate being 95 percent of the national average loan rate, if those loan rates do not result in an increase in outlays.

(2)Prohibition

Adjustments under this subsection shall not result in an increase in the national average loan rate for any year.

(d)Adjustment in loan rate for cotton

(1)In general

The Secretary may make appropriate adjustments in the loan rate for cotton for differences in quality factors.

(2)Revisions to quality adjustments for upland cotton

(A)In general

Not later than 180 days after the date of enactment of this Act, the Secretary shall implement revisions in the administration of the marketing assistance loan program for upland cotton to more accurately and efficiently reflect market values for upland cotton.

(B)Mandatory revisions

Revisions under subparagraph (A) shall include—

(i)the elimination of warehouse location differentials;

(ii)the establishment of differentials for the various quality factors and staple lengths of cotton based on a 3-year, weighted moving average of the weighted designated spot market regions, as determined by regional production;

(iii)the elimination of any artificial split in the premium or discount between upland cotton with a 32 or 33 staple length due to micronaire; and

(iv)a mechanism to ensure that no premium or discount is established that exceeds the premium or discount associated with a leaf grade that is 1 better than the applicable color grade.

(C)Discretionary revisions

Revisions under subparagraph (A) may include—

(i)the use of non-spot market price data, in addition to spot market price data, that would enhance the accuracy of the price information used in determining quality adjustments under this subsection;

(ii)adjustments in the premiums or discounts associated with upland cotton with a staple length of 33 or above due to micronaire with the goal of eliminating any unnecessary artificial splits in the calculations of the premiums or discounts; and

(iii)such other adjustments as the Secretary determines appropriate, after consultations conducted in accordance with paragraph (3).

(3)Consultation with private sector (4) Review of adjustments

(A)Prior to revision

In making adjustments to the loan rate for cotton (including any review of the adjustments) as provided in this subsection, the Secretary shall consult with representatives of the United States cotton industry.

(B)Inapplicability of chapter 10 of title 5

Chapter 10 of title 5 shall not apply to consultations under this subsection.

(e)Rice

The Secretary shall not make adjustments in the loan rates for long grain rice and medium grain rice, except for differences in grade and quality (including milling yields).

Notes & Related Subsidiaries

Editorial Notes

References in Text

This subtitle and subtitles B through E, referred to in subsec. (b), probably means subtitle B (§ 1201 et seq.) and subtitles C (§ 1301 et seq.), D (§ 1401 et seq.), and E (§ 1501 et seq.) of title I of Pub. L. 110–246,

June 18, 2008, 122 Stat. 1681. Subtitles B and C are classified generally to this subchapter and subchapter III (§ 8751 et seq.), respectively, of this chapter. Subtitle D enacted section 1359kk, 1359ll, and 7287 of this title, amended sections 1359aa to 1359gg, 1359ii, 7272, and 7971 of this title, repealed former section 1359kk of this title, and enacted provisions set out as notes under section 3602 and 7272 of this title. Subtitle E enacted subchapter IV (§ 8771 et seq.) of this chapter and amended section 608c, 1637b, 4502, 4504, 4531, and 4553 of this title and section 713a–14 of Title 15, Commerce and Trade. For complete classification of subtitles B to E to the Code, see Tables. The date of enactment of this Act, referred to in subsec. (d)(2)(A), is the date of enactment of Pub. L. 110–246, which was approved

June 18, 2008. Codification Pub. L. 110–234 and Pub. L. 110–246 enacted identical sections. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246.

Amendments

2022—Subsec. (d)(3)(B). Pub. L. 117–286 substituted “chapter 10 of title 5” for “Federal Advisory Committee Act” in heading and “Chapter 10 of title 5” for “The Federal Advisory Committee Act (5 U.S.C. App.)” in text.

Statutory Notes and Related Subsidiaries

Effective Date

Enactment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as a note under section 8701 of this title.

§8740 Adjustments of Loans