[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1276 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                S. 1276

   To permit agricultural producers to enter into market transition 
   contracts and receive loans, to require a pilot revenue insurance 
                    program, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

           September 27 (legislative day, September 25), 1995

 Mr. Grassley introduced the following bill; which was read twice and 
   referred to the Committee on Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL


 
   To permit agricultural producers to enter into market transition 
   contracts and receive loans, to require a pilot revenue insurance 
                    program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Farm Income Transition Act of 1995 
''.

SEC. 2. CERTAINTY AND FLEXIBILITY FOR AGRICULTURAL PROGRAMS.

    The Agricultural Act of 1949 (7 U.S.C. 1441 et seq.) is amended--
            (1) by transferring sections 106, 106A, and 106B to the end 
        of part I of subtitle B of title III of the Agricultural 
        Adjustment Act of 1938 (7 U.S.C. 1311 et seq.) and 
        redesignating the sections as sections 320D, 320E, and 320F, 
        respectively;
            (2) by moving sections 104, 111, 112, 114, and 202 to the 
        end of title IV and redesignating the sections as sections 428, 
        429, 430, 431, and 432 respectively;
            (3) by moving sections 108B, 204, and 206 to the end of 
        title IV (as amended by paragraph (2)) and redesignating the 
        sections as sections 433, 434, and 435, respectively; and
            (4) by striking titles I through III and inserting the 
        following:

``SEC. 2. DEFINITIONS.

    ``In this Act:
            ``(1) Considered planted.--The term `considered planted', 
        with respect to acreage on a farm, means acreage considered 
        planted to a covered commodity (as defined in section 201(a)) 
        in the conservation reserve, or under a program in effect under 
        this Act through the 1995 crop of a commodity or the 1996 crop 
        of winter wheat on--
                    ``(A) any reduced acreage on the farm;
                    ``(B) any acreage on the farm that producers were 
                prevented from planting to the commodity because of 
                drought, flood, or other natural disaster, or other 
                condition beyond the control of the producers;
                    ``(C) acreage in a quantity equal to the difference 
                between the permitted acreage for a commodity and the 
                acreage planted to the commodity, if the acreage 
                considered to be planted is devoted to conservation 
                uses or the production of crops permitted by the 
                Secretary under the programs established for any of the 
                1990 through 1994 crops of a commodity; or
                    ``(D) any acreage on the farm that the Secretary 
                determines is necessary to be included in establishing 
                a fair and equitable crop acreage base.
            ``(2) Crop acreage base.--The term `crop acreage base' 
        means the average of the quantity of acres planted and 
        considered planted to the commodity for the 1990 through 1994 
        crops, including the crop acreage base for extra long staple 
        cotton established under section 103(h)(5) (as in effect prior 
        to the date of enactment of the Farm Income Transition Act of 
        1995).
            ``(3) Double cropping.--The term `double cropping' means a 
        farming practice, as defined by the Secretary, that has been 
        carried out on a farm during at least 3 of the 5 crop years 
        immediately preceding the crop year for which the crop acreage 
        base for the farm is established.
            ``(4) Market transition payment.--The term `market 
        transition payment' means a payment made pursuant to a contract 
        entered into under section 201 with producers on a farm who--
                    ``(A) satisfy the eligibility requirements of 
                section 201(c); and
                    ``(B) in exchange for annual payments, are in 
                compliance with the conservation compliance plan for 
                the farm prepared in accordance with section 1212 of 
                the Food Security Act of 1985 (16 U.S.C. 3812) and 
                wetland protection requirements applicable to the farm 
                under subtitle C of title XII of the Act (16 U.S.C. 
                3821 et seq.).
            ``(5) Nonrecourse commodity loan.--The term `nonrecourse 
        commodity loan' means a nonrecourse loan paid to producers on a 
        farm under the terms provided in section 202.
            ``(6) Person.--The term `person' means an individual, 
        corporation, or other entity, as defined by the Secretary.
            ``(7) Producers.--The term `producers' means 1 or more 
        individual persons who, as determined by the Secretary--
                    ``(A) share in the risk of production of a 
                commodity; and
                    ``(B) is, or would have been, entitled to a share 
                of the proceeds from the marketing of the commodity.
            ``(8) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture.
            ``(9) United states.--The term `United States' means the 
        several States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Virgin Islands, Guam, American Samoa, and the 
        other territories and possessions of the United States.

     ``TITLE I--FUNDING FOR FEDERAL FARM PROGRAM COMMODITY PAYMENTS

``SEC. 101. EXPENDITURES FOR MARKET TRANSITION PAYMENTS FOR 1996 
              THROUGH 2002 CROP YEARS.

    ``(a) Total Expenditures.--The total amount of funds expended by 
the Commodity Credit Corporation under this title may not exceed 
$46,920,000,000 for--
            ``(1) payments made for the 1995 crop of a commodity after 
        September 30, 1995; and
            ``(2) market transition payments for a commodity for the 
        1996 through 2002 crops.
    ``(b) Total Expenditures Per Crop Year.--The Secretary shall, to 
the maximum extent practicable, expend not more than the following 
amounts on market transition payments:
            ``(1) For the 1996 crop, $8,260,000,000.
            ``(2) For the 1997 crop, $7,240,000,000.
            ``(3) For the 1998 crop, $7,080,000,000.
            ``(4) For the 1999 crop, $6,850,000,000.
            ``(5) For the 2000 crop, $6,590,000,000.
            ``(6) For the 2001 crop, $5,490,000,000.
            ``(7) For the 2002 crop, $5,380,000,000.
    ``(c) Commodity Credit Corporation.--
            ``(1) Salaries and expenses.--No funds of the Commodity 
        Credit Corporation may be used to pay any salary or expense of 
        an officer or employee of the Department of Agriculture in 
        connection with the administration of market transition 
        payments or nonrecourse commodity loans.
            ``(2) Agricultural production.--No funds of the Commodity 
        Credit Corporation in excess of the amounts authorized by 
        subsection (b) may be used to support--
                    ``(A) the price of a covered commodity (as defined 
                in section 201(a)) or any similar activity in relation 
                to the commodity; or
                    ``(B) the income of producers on a farm.

    ``TITLE II--MULTIYEAR PAYMENTS TO IMPROVE FARMING CERTAINTY AND 
                              FLEXIBILITY

``SEC. 201. MARKET TRANSITION PAYMENTS.

    ``(a) Definition of Covered Commodity.--In this section, the term 
`covered commodity' means wheat, corn, grain sorghums, barley, oats, 
upland cotton, extra long staple cotton, and rice.
    ``(b) Market Transition Contracts.--
            ``(1) Offer and consideration.--Beginning as soon as 
        practicable after the date of enactment of the Farm Income 
        Transition Act of 1995, but not later than February 1, 1996, 
        the Secretary shall offer to enter into a market transition 
        contract with producers on a farm who satisfy the requirements 
        of subsection (c). Participating producers shall agree, in 
        exchange for annual payments, to comply with the conservation 
        compliance plan for the farm established under section 1212 of 
        the Food Security Act of 1985 (16 U.S.C. 3812) and the wetland 
        protection requirements applicable to the farm under subtitle C 
        of title XII of the Act (16 U.S.C. 3821 et seq.).
            ``(2) Entry into contracts.--
                    ``(A) Deadline.--Except as provided in 
                subparagraphs (B) and (C), producers on a farm shall 
                elect whether to enter into a market transition 
                contract not later than April 15, 1996.
                    ``(B) Conservation reserve lands.--
                            ``(i) In general.--In the case of a 
                        conservation reserve contract applicable to 
                        cropland on a farm that expires after April 15, 
                        1996, producers on the farm shall have the 
option of including the cropland on the farm that has considered 
planting history (as determined by the Secretary) in a market 
transition contract of the producers. To be eligible, the cropland must 
include 1 or more crop acreage bases attributable to the cropland (as 
determined by the Secretary).
                            ``(ii) Whole farm enrolled in conservation 
                        reserve.--Producers on a farm who have enrolled 
                        the entire cropland on the farm, as determined 
                        by the Secretary, into the conservation reserve 
                        shall have the option, on expiration of the 
                        conservation reserve contract, to enter into a 
                        market transition contract.
                            ``(iii) Amount.--Market transition payments 
                        made for cropland under this subparagraph shall 
                        be made at the rate and amount applicable to 
                        the market transition payment level for that 
                        year.
                    ``(C) 1996 crop of winter wheat.--
                            ``(i) In general.--Producers on a farm who 
                        plant a 1996 crop of winter wheat in 1995 may 
                        elect to enter into a market transition 
                        contract, or obtain loans and payments for the 
                        1996 crop of winter wheat, under the same terms 
                        and conditions as were in effect for the 1995 
                        crop of winter wheat.
                            ``(ii) Timing of payments.--The Secretary 
                        shall, if the Secretary determines practicable, 
                        pay producers on a farm who plant a 1996 crop 
                        of winter wheat and elect to enter into a 
                        market transition contract for the crop--
                                    ``(I) an advance payment not later 
                                than June 1, 1996; and
                                    ``(II) a final payment not later 
                                than September 30, 1996.
                            ``(iii) Subsequent crops.--Producers on a 
                        farm who plant a 1996 crop of winter wheat 
                        shall elect whether to enter into a market 
                        transition contract for each of the 1997 
                        through 2002 crops not later than April 15, 
                        1996.
            ``(3) Duration of contract.--Except for the 1996 crop of 
        winter wheat, a market transition contract shall apply to the 
        1996 crop of a covered commodity and terminate on December 31, 
        2002.
    ``(c) Eligibility for Market Transition Payments.--
            ``(1) In general.--To be eligible for market transition 
        payments, producers on a farm must--
                    ``(A) own, rent, or crop share land that has a crop 
                acreage base that is attributable to the farm, as 
                determined by the Secretary; and
                    ``(B) satisfy the criteria under paragraph (2).
            ``(2) Payments based on production history.--Producers on a 
        farm shall be eligible for market transition payments if 
        deficiency payments and, if applicable, conservation reserve 
        payments were made for covered commodities that were planted, 
        or considered planted, on a crop acreage base established on 
        the farm for at least 2 of the 1990 through 1994 crops.
    ``(d) Amount of Market Transition Payments.--
            ``(1) Definition of payments.--In this subsection (except 
        as otherwise specifically provided), the term `payments' 
        means--
                    ``(A) deficiency payments; and
                    ``(B) if applicable, the lesser of--
                            ``(i) conservation reserve payments; or
                            ``(ii) the amount of deficiency payments 
                        that would have been made for the quantity of 
                        the covered commodity considered planted if the 
                        commodity had been planted, as determined by 
                        the Secretary.
            ``(2) 1990-1994 payments.--The Secretary shall determine 
        the total amount of payments--
                    ``(A) made to producers on a farm for all covered 
                commodities that were planted or considered planted on 
                the farm for the 1990 through 1994 crops; and
                    ``(B) made for all covered commodities that were 
                planted and considered planted throughout the United 
                States for the 1990 through 1994 crops.
            ``(3) Market transition payment for 1996-2002 crops.--The 
        annual market transition payment for each of the 1996 through 
        2002 crops shall equal the product of--
                    ``(A) the total amount of payments made to 
                producers on a farm determined under paragraph (2)(A) 
                divided by the total amount of payments made throughout 
                the United States determined under paragraph (2)(C); 
                and
                    ``(B) the annual funding available for the crop 
                under section 101(b).
            ``(4) Adjustment.--To maintain equity and fairness in 
        market transition payments, the Secretary shall, as determined 
        appropriate, adjust the payments to producers on a farm to 
        reflect the ratio of--
                    ``(A) the land on the farm on which there is 
                historical production and considered planting history 
                on 1 or more crop acreage bases; to
                    ``(B) the land on the farm for which the producers 
                on the farm are at risk in the year of the market 
                transition payment.
    ``(e) Receipt of Market Transition Payments.--
            ``(1) Annual payment estimate.--The Secretary shall 
        announce the estimated minimum payment to producers entering 
        into a market transition contract not later than March 15 of 
        each year of the term of the contract. The producers may 
        terminate the contract without penalty not later than 15 days 
        after the date of the announcement.
            ``(2) Timing of payments.--
                    ``(A) In general.--Payments shall be made not later 
                than September 30 of the year covered by the contract.
                    ``(B) Advance payment.--
                            ``(i) In general.--Subject to clause (ii), 
                        the Secretary may provide \1/2\ of the annual 
                        payment in advance to producers on a farm not 
                        later than March 15 of the same year, at the 
                        option of the producers.
                            ``(ii) 1996 crop.--If the Secretary elects 
                        to provide advance payments for the 1996 crop, 
                        the Secretary shall make the advance payments 
                        as soon as practicable after the date of 
                        enactment of the Farm Income Transition Act of 
                        1995, as determined by the Secretary.
            ``(3) Eligibility.--Producers on a farm who have entered 
        into a market transition contract shall be eligible to receive 
        market transition payments if the producers comply with the 
        conservation compliance plan for the farm and applicable 
        wetland protection requirements, as determined by the 
        Secretary.
    ``(f) Planting Flexibility.--Producers on a farm who possess 1 or 
more crop acreage bases shall plant any crop or conserving crop on the 
acreage base to receive a market transition payment. If a perennial 
conserving crop is planted, the producers shall not be required to 
replant the crop in the subsequent year.
    ``(g) Payment Limitation.--
            ``(1) Amount.--The total amount of payments made to a 
        person under a market transition contract for any year may not 
        exceed $50,000.
            ``(2) Attribution.--The Secretary shall attribute payments 
        to a natural person in proportion to the ownership interests of 
        the person in a corporation, limited partnership, or other 
        entity (as determined by the Secretary).
            ``(3) Scheme or device.--If the Secretary determines that a 
        person has knowingly adopted a material scheme or device to 
        obtain market transition payments to which the person is not 
        entitled, has evaded the requirements of this section, or has 
        acted with the purpose of evading the requirements of this 
        section, the person shall be ineligible to receive all payments 
        applicable to the crop year for which the scheme or device was 
        adopted and the succeeding crop year. The authority provided by 
        this paragraph shall be in addition to, and shall not supplant, 
        the authority provided by subsection (h).
            ``(4) Regulations.--The Secretary shall issue regulations--
                    ``(A) defining the term `person', as used in this 
                subsection, in a manner that conforms, to the maximum 
                extent practicable, to the regulations defining the 
                term `person' issued under section 1001 of the Food 
                Security Act of 1985 (7 U.S.C. 1308);
                    ``(B) prescribing such rules as the Secretary 
                determines are necessary to ensure a fair and 
                reasonable application of the limitation established 
                under this subsection; and
                    ``(C) providing for the tracking of payments made 
                or attributed to a person or entity (as determined by 
                the Secretary) on the basis of the social security 
                account number of the person or the employer 
                identification number of the entity.
    ``(h) Violation of Contract.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        the Secretary determines that producers on a farm are in 
        violation of, or have violated, the conservation compliance 
        plan for the farm or wetland protection requirements applicable 
        to the farm, the Secretary may terminate the market transition 
        contract with respect to the producers. On termination, the 
        producers shall forfeit all rights to receive future payments 
        under the contract and shall refund to the Secretary all 
        payments received by the producers during the period of the 
        violation with interest (as determined by the Secretary).
            ``(2) Refund or adjustment.--If the Secretary determines 
        that a violation does not warrant termination of the contract, 
        the Secretary shall require the producers to--
                    ``(A) refund to the Secretary a portion of the 
                payments received during the period of the violation, 
                together with interest, that is proportionate to the 
                severity of the violation (as determined by the 
                Secretary); or
                    ``(B) accept a reduction in the amount of future 
                payments that is proportionate to the severity of the 
                violation (as determined by the Secretary).
    ``(i) Transfer of Interest in Land Subject to Contract.--
            ``(1) Effect of transfer.--Except as provided in paragraph 
        (2), if producers on a farm who have entered into a market 
        transition contract transfer title of the land of the farm to 
        another person, or otherwise transfer the right to receive 
market transition payments, the transfer shall void the contract with 
the producers on the farm, effective as of the date of the transfer, 
unless--
                    ``(A) the transferee of the land or the right to 
                receive the remaining market transition payments agrees 
                to assume all or a portion of the obligations of the 
                contract in proportion to the transfer (as determined 
                by the Secretary); and
                    ``(B) the transferor agrees to transfer all or a 
                portion of the remaining transition payments in 
                proportion to the transfer (as determined by the 
                Secretary).
            ``(2) Exception.--If a producer who is eligible for 
        payments under a market transition contract dies, becomes 
        incompetent, or is otherwise unable to receive the payments, 
        the Secretary shall make the payments in accordance with 
        regulations prescribed by the Secretary.

``SEC. 202. NONRECOURSE AND MARKETING LOANS.

    ``(a) Definition of Covered Commodity.--In this section, the term 
`covered commodity' means corn, grain sorghums, barley, oats, rye, 
wheat, upland cotton, extra long staple cotton, rice, soybeans, 
sunflower seed, rapeseed, canola, safflower, flaxseed, and mustard 
seed.
    ``(b) Nonrecourse Loans.--For each of the 1996 through 2002 crops 
of a covered commodity, the Secretary shall make available to producers 
on a farm a nonrecourse commodity loan under terms and conditions 
prescribed by the Secretary. A nonrecourse commodity loan shall have a 
term of 9 months, beginning on the first day of the first month after 
the month in which the loan is made and may be extended at the 
discretion of the Secretary.
    ``(c) Loan Rate.--
            ``(1) In general.--The Secretary shall announce the loan 
        rate for each covered commodity not later than the first day of 
        the marketing year for which the loan rate is to be in effect.
            ``(2) Calculation.--The loan rate for a marketing 
        transition loan for a crop shall be equal to 80 percent of the 
        simple average price received by the producer for the covered 
        commodity during the immediately preceding 5 marketing years 
        for the commodity, excluding the year in which the average 
        price was lowest and the year in which the average price was 
        highest.
            ``(3) Simple average price.--For purposes of paragraph (2), 
        the Secretary shall determine the simple average price received 
        by producers of a covered commodity for the immediately 
        preceding marketing year.
    ``(d) Marketing Loans.--
            ``(1) In general.--The Secretary may permit producers on a 
        farm to repay a loan made under this section for a covered 
        commodity at a level that is the lesser of--
                    ``(A) the loan level; or
                    ``(B) the prevailing world market price for the 
                commodity (adjusted to United States quality and 
                location), as determined by the Secretary.
            ``(2) Prevailing world market price.--If the Secretary 
        permits producers on a farm to repay a loan in accordance with 
        paragraph (1), the Secretary shall prescribe by regulation--
                    ``(A) a formula to determine the prevailing world 
                market price for the crop of a covered commodity, 
                adjusted to United States quality and location; and
                    ``(B) a mechanism by which the Secretary shall 
                announce periodically the prevailing world market price 
                for the crop of the commodity.

                      ``TITLE III--ADMINISTRATION

``SEC. 301. REVENUE INSURANCE.

    ``(a) Pilot Program.--Not later than December 31, 1996, the 
Secretary shall carry out a pilot program in a limited number of States 
or groups of States, as determined by the Secretary, under which a 
producer of an agricultural commodity can elect to receive revenue 
insurance that will ensure that the producer receives an indemnity if 
the producer suffers a loss of revenue, as determined by the Secretary.
    ``(b) National Program.--Not later than December 31, 2000, the 
Secretary shall offer revenue insurance to agricultural producers at 1 
or more levels of coverage that is in addition to, or in place of, 
catastrophic and higher levels of crop insurance.
    ``(c) Administration.--Revenue insurance under this section shall--
            ``(1) be offered through reinsurance arrangements with 
        private insurance companies;
            ``(2) offer at least a minimum level of coverage that is an 
        alternative to catastrophic crop insurance;
            ``(3) be actuarily sound; and
            ``(4) require the payment of premiums and administrative 
        fees by participating producers.

``SEC. 302. ADMINISTRATION.

    ``(a) Equitable Relief.--
            ``(1) Loans and payments.--Notwithstanding section 201(h), 
        if the failure of producers on a farm to comply fully with the 
        terms and conditions of the program conducted under titles I 
        through III precludes the making of loans and payments, the 
        Secretary may, notwithstanding the failure, make the loans and 
        payments in such amounts as the Secretary determines are 
        equitable in relation to the seriousness of the failure. The 
        Secretary may consider whether the producers made a good faith 
        effort to comply fully with the terms and conditions of the 
        program in determining whether equitable relief is warranted 
        under this paragraph.
            ``(2) Deadlines and program requirements.--The Secretary 
        may authorize the county and State committees established under 
        section 8(b) of the Soil Conservation and Domestic Allotment 
        Act (16 U.S.C. 590h(b)) to waive or modify deadlines and other 
        program requirements in cases in which lateness or failure to 
        meet the other requirements does not affect adversely the 
        operation of the program.
    ``(b) Commodity Credit Corporation.--The Secretary shall carry out 
the programs authorized by title I through this title through the 
Commodity Credit Corporation.
    ``(c) Assignment of Payments.--Section 8(g) of the Soil 
Conservation and Domestic Allotment Act (16 U.S.C. 590h(g)) shall apply 
to payments or loans made under title I through this title.
    ``(d) Sharing of Payments.--The Secretary shall provide for the 
sharing of payments made under title I through this title for any farm 
among the producers on the farm on a fair and equitable basis.
    ``(e) Tenants and Sharecroppers.--In carrying out this Act, the 
Secretary shall provide adequate safeguards to protect the interests of 
tenants and sharecroppers.''.

SEC. 3. CONFORMING AMENDMENTS.

    Title X of the Food Security Act of 1985 is amended by striking 
sections 1001, 1001A, 1001B, and 1001D (7 U.S.C. 1308 et seq.).

SEC. 4. EFFECTIVE DATE.

    (a) Effective Date.--
            (1) In general.--Except as provided in this subsection and 
        as otherwise specifically provided in this Act, this Act and 
        the amendments made by this Act shall apply beginning with the 
        earlier of--
                    (A) the 1996 crop of an agricultural commodity; or
                    (B) December 1, 1995.
            (2) Market transition contract.--Title II of the 
        Agricultural Act of 1949 (as amended by section 2(4)) shall 
        apply as of the beginning of signup for market transition 
        payments under section 201 of the Act.
    (b) Prior Crops.--
            (1) In general.--Except as otherwise specifically provided 
        and notwithstanding any other provision of law, this Act and 
        the amendments made by this Act shall not affect the authority 
        of the Secretary of Agriculture to carry out a price support or 
        production adjustment program for any of the 1991 through 1995 
        crops of an agricultural commodity established under a 
        provision of law in effect immediately before the effective 
        date specified in subsection (a).
            (2) Liability.--A provision of this Act or an amendment 
        made by this Act shall not affect the liability of any person 
        under any provision of law as in effect before the application 
        of the provision in accordance with subsection (a).
                                 <all>
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