7 U.S. Code § 8740 - Adjustments of loans

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(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.[1]

(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 revisionsRevisions under subparagraph (A) shall include—
the elimination of warehouse location differentials;
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;
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
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 revisionsRevisions under subparagraph (A) may include—
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;
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
such other adjustments as the Secretary determines appropriate, after consultations conducted in accordance with paragraph (3).
(3) Consultation with private sector
(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 Federal Advisory Committee Act

The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to consultations under this subsection.

(4) Review of adjustmentsThe Secretary may review the operation of the upland cotton quality adjustments implemented pursuant to this subsection and may make further revisions to the administration of the loan program for upland cotton, by—
revoking or revising any actions taken under paragraph (2)(B); or
revoking or revising any actions taken or authorized to be taken under paragraph (2)(C).
(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).

(Pub. L. 110–234, title I, § 1210, May 22, 2008, 122 Stat. 965; Pub. L. 110–246, § 4(a), title I, § 1210, June 18, 2008, 122 Stat. 1664, 1693.)

[1]  See References in Text note below.
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 sections 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 sections 3602 and 7272 of this title. Subtitle E enacted subchapter IV (§ 8771 et seq.) of this chapter and amended sections 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.

The Federal Advisory Committee Act, referred to in subsec. (d)(3)(B), is Pub. L. 92–463, Oct. 6, 1972, 86 Stat. 770, which is set out in the Appendix to Title 5, Government Organization and Employees.


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.

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.