7 U.S.C. § 8740 — Adjustments of loans

(a) Adjustment authority. Subject to subsection (e), the Secretary may make appropriate adjustments to the loan rates for any loan commodity^* except cotton, to account for differences in grade, type, quality, location, and other factors.

(b) Manner of adjustment. These adjustments must, as much as practical, be made so that the average loan level for the commodity — given how often each factor is expected to come up — equals the level of support set elsewhere in this subtitle and subtitles B through E.

(c) Adjustment on county basis. (1) In general. The Secretary may set loan rates for a crop by county, as long as the lowest county rate stays at least 95 percent of the national average loan rate, and as long as this does not increase total spending. (2) Prohibition. These county adjustments cannot raise the national average loan rate for the commodity in any year.

(d) Adjustment in loan rate for cotton. (1) In general. The Secretary may make appropriate adjustments to cotton's loan rate for quality differences. (2) Revisions to quality adjustments for upland cotton. (A) In general. Within 180 days of enactment, the Secretary must put in place revisions to how the upland cotton marketing loan program is run, to more accurately and efficiently reflect cotton's market value. (B) Mandatory revisions. These required revisions must: (i) eliminate differences in payment based on warehouse location; (ii) set premium or discount differences for the various quality factors and staple lengths, using a three-year weighted moving average from the designated regional spot markets; (iii) remove any artificial split in the premium or discount between cotton with a 32 and a 33 staple length caused by micronaire (fiber fineness); and (iv) make sure no premium or discount is set higher than the one tied to a leaf grade that is one step better than the matching color grade. (C) Discretionary revisions. These optional revisions may include: (i) using price data beyond just the spot markets, to make quality-based pricing more accurate; (ii) adjusting the premiums or discounts for cotton with a 33-or-higher staple length, tied to micronaire, to remove unnecessary artificial splits; and (iii) any other adjustments the Secretary decides are appropriate, after consulting as described in paragraph (3). (3) Consultation with private sector. (A) Prior to revision. Before adjusting cotton's loan rate (or reviewing past adjustments) under this subsection, the Secretary must consult with representatives of the U.S. cotton industry. (B) Inapplicability of chapter 10 of title 5. The usual federal advisory-committee rules in chapter 10 of title 5 do not apply to these consultations. (4) Review of adjustments. The Secretary may review how the upland cotton quality adjustments are working, and may make further revisions by revoking or revising actions taken under paragraph (2)(B) or (2)(C).

(e) Rice. The Secretary cannot adjust the loan rates for long grain rice and medium grain rice^*, except for differences in grade and quality — including milling yield.