B-318838

October 28, 2009

The Honorable BlancheLincoln
Chairman
The Honorable Saxby Chambliss
Ranking Minority Member
Committee on Agriculture, Nutrition, and Forestry
United States Senate

The Honorable Collin C.Peterson
Chairman
The Honorable Frank D. Lucas
Ranking Minority Member
Committee on Agriculture
House of Representatives

Subject: Department of Agriculture, Commodity Credit Corporation: Farm StorageFacility Loan and Sugar Storage Facility Loan Programs

Pursuant to section801(a)(2)(A) of title 5, United States Code, this is our report on a major rulepromulgated by the Department of Agriculture, Commodity Credit Corporation(CCC), entitled "Farm Storage Facility Loan and Sugar Storage Facility LoanPrograms" (RIN: 0560-AH60). We receivedthe rule on October 15, 2009. It waspublished in the Federal Register as afinal rule on August 18, 2009. 74 Fed.Reg. 41,581.

The final rule amends the regulations governing the FarmStorage Facility Loan (FSFL) and Sugar Storage Facility Loan (SSFL)programs. The final rule implementschanges from the 2008 Farm Bill and adds hay and renewable biomass as eligibleFSFL commodities, extends the maximum loan term to 12 years, and increases themaximum loan amount to $500,000. Thefinal rule also adds fruits and vegetables (including nuts) as eligiblefacility loan commodities and adds cold storage facilities as eligiblefacilities. The final rule also clarifies requirements for loan security andallows for a partial loan disbursement during construction if certainconditions are met.

TheCongressional Review Act requires major rules to have a 60-day delay in theireffective date following their publication in the Federal Register orreceipt by Congress, whichever is later.5 U.S.C. sect. 801(a)(3)(A). However,notwithstanding the 60-day delay requirement, any rule that an agency for goodcause finds that notice and public procedures are impractical, unnecessary, orcontrary to the public interest is to take effect when the promulgating agencyso determines. 5 U.S.C.sect.808(2). Section 1601(c)(3) of the2008 Farm Bill directs CCC to make this finding. Accordingly, CCC found good cause to foregothe usual 60-day delay in effective date of a major rule and make the ruleeffective upon the date of filing for public inspection with the Federal Register, August 17, 2009, inorder to allow the large number of agricultural producers who are dependentupon these provisions for financing farm storage to know the details as soon aspossible, as it affects their planting, marketing, and building decisions.

Enclosed is our assessment of the CCC's compliance withthe procedural steps required by section 801(a)(1)(B)(i) through (iv) of title5 with respect to the rule. Our reviewof the procedural steps taken indicates that CCC complied with the applicablerequirements.

If you have any questions about this report or wish tocontact GAO officials responsible for the evaluation work relating to thesubject matter of the rule, please contact Shirley A. Jones, Assistant GeneralCounsel, at (202) 512-8156.

signed

Robert J. Cramer
Managing Associate General Counsel

Enclosure

cc: Deirdre Holder
Director, Regulatory Review Group
Department of Agriculture

ENCLOSURE

REPORT UNDER 5 U.S.C. sect.801(a)(2)(A) ON A MAJOR RULE
ISSUED BY THE
DEPARTMENT OF AGRICULTURE,
COMMODITY CREDIT CORPORATION
ENTITLED
"FARM STORAGE FACILITY LOAN AND
SUGAR STORAGE FACILITY LOAN PROGRAMS"
(RIN: 0560-AH60)

(i) Cost-benefit analysis

CCC prepared a cost-benefit analysis in conjunction withthe final rule. CCC determined that thechanges to the farm storage facility loans (FSFL) program will add costs of $6million in 2009, $28 million in 2010, $30 million in 2011, and $32 million in2012 over the cost of the existing program.If the full costs of the program are considered, rather than the changesmade by the final rule, the financial impact will be over $100 million peryear.

CCC determined that the final rule will have benefits toproducers of about $10 million per year in interest rate savings over what theywould have to pay to finance comparable loans from commercial lenders. Assuming that all those producers could havegotten a commercial loan and would have done so, commercial lenders have anequivalent $10 million loss in loan revenue per year. The benefits to producers may be larger, ifthe credit markets remain tight because the spread between FSFL rates andcommercial rates might be larger. CCC alsonoted that the final rule has a small potential for negative impact on commercialstorage facilities, such as grain elevators, by providing below-market rateloans for on-farm storage facilities.However, because FSFL has funded less than 4 percent of the on-farmstorage capacity in the United States, it is unlikely that the program ishaving a significant impact on commercial storage facilities at a nationallevel.

(ii) Agency actions relevant to the RegulatoryFlexibility Act, 5 U.S.C. sections603-605, 607, and 609

TheRegulatory Flexibility Act requires agencies to prepare an analysis inconjunction with any notice of proposed rulemaking or any final rule for whicha notice of proposed rulemaking was promulgated. 5 U.S.C. sect. 604. CCC did not issue a notice of proposedrulemaking in conjunction with this final rule; therefore, CCC was not requiredto prepare a Regulatory Flexibility Act analysis.

(iii) Agency actionsrelevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2U.S.C. sections1532-1535

TheUnfunded Mandates Reform Act of 1995 requires agencies to prepare an analysisbefore promulgating any notice of proposed rulemaking or any final rule forwhich a notice of proposed rulemaking was promulgated. 2 U.S.C. sect. 1532(a). CCC did not issue a notice of proposedrulemaking in conjunction with this final rule; therefore, CCC was not requiredto prepare an Unfunded Mandates Reform analysis.

(iv) Other relevant information or requirements underacts and executive orders

Administrative Procedure Act, 5 U.S.C. sections551 etseq.

The final rule was promulgated and administered withoutregard to the notice and comment provisions of the Administrative ProcedureAct, as required by section 1601(c) of the 2008 Farm Bill.

Paperwork Reduction Act, 44 U.S.C. sections3501-3520

The final rule is exempt from the requirements of thePaperwork Reduction Act, as specified in section 1601(c)(2) of the 2008 FarmBill.

Statutory authorization for the rule

The final rule is authorized by section 1614 of the 2008Farm Bill, Pub. L. No. 110-246, codified at 7 U.S.C. sect. 8789.

Executive Order No. 12,866 (Regulatory Planning andReview)

Thefinal rule was determined to be economically significant, was reviewed by theOffice of Management and Budget, and CCC prepared a cost-benefit analysis asrequired under the Order.

Executive Order No. 13,132 (Federalism)

CCCdetermined that this final rule does not have federalism implications, becauseit will not have substantial direct effects on the states, on the relationshipbetween the national government and the states, or on the distribution of powerand responsibilities among the various levels of government. In addition, CCC determined that this finalrule does not impose substantial direct compliance costs on state and localgovernments.