[Title 7 CFR XIV]
[Code of Federal Regulations (annual edition) - January 1, 1999 Edition]
[Title 7 - AGRICULTURE]
[Subtitle B - Regulations of the Department of Agriculture--(Continued)]
[Chapter Xiv - COMMODITY CREDIT CORPORATION,]
[From the U.S. Government Printing Office]
7AGRICULTURE101999-01-011999-01-01falseCOMMODITY CREDIT CORPORATION,XIVCHAPTER XIVAGRICULTURERegulations of the Department of Agriculture--(Continued)
CHAPTER XIV--COMMODITY CREDIT CORPORATION,
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Editorial Note: Nomenclature changes for Chapter XIV appear at 60 FR
1710, Jan. 5, 1995, and at 60 FR 64297, Dec. 15, 1995.
SUBCHAPTER A--GENERAL REGULATIONS AND POLICIES
Part Page
1400 Payment limitation and payment eligibility.. 251
1401 Commodity certificates, in kind payments,
and other forms of payment.............. 266
1402 Policy for certain commodities available for
sale.................................... 271
1403 Debt settlement policies and procedures..... 272
1404 Assignment of payments...................... 284
1405 Loans, purchases and other operations....... 285
1407 Suspension and debarment.................... 286
1409 Meetings of the Board of Directors of
Commodity Credit Corporation............ 287
SUBCHAPTER B--LOANS, PURCHASES, AND OTHER OPERATIONS
1410 Conservation Reserve Program................ 292
1412 Production flexibility contracts for wheat,
feed grains, and upland cotton.......... 310
1421 Grains and similarly handled commodities.... 320
1423 Processed agricultural commodities.......... 349
1425 Cooperative marketing associations.......... 353
1427 Cotton...................................... 358
1430 Dairy products.............................. 396
1435 Sugar program............................... 411
1437 Noninsured Crop Disaster Assistance Program
regulations for the 1997 and succeeding
crop years.............................. 420
1439 Emergency livestock assistance.............. 432
1446 Peanuts..................................... 463
1464 Tobacco..................................... 501
1466 Environmental Quality Incentives Program.... 517
1467 Wetlands Reserve Program.................... 531
[[Page 250]]
1468 Conservation Farm Option.................... 541
SUBCHAPTER C--EXPORT PROGRAMS
1485 Cooperative agreements for the development
of foreign markets for agricultural
commodities............................. 552
1487
[Reserved]
1488 Financing of sales of agricultural
commodities............................. 568
1491-1492
[Reserved]
1493 CCC Export Credit Guarantee Programs........ 579
1494 Export Bonus Programs....................... 624
1495
[Reserved]
1496 Procurement of processed agricultural
commodities for donation under Title II,
Pub. L. 480............................. 643
1499 Foreign Donation Programs................... 645
Cross Reference: For regulations relative to standards, inspections, and
marketing practices, see Chapter I of this title.
[[Page 251]]
SUBCHAPTER A--GENERAL REGULATIONS AND POLICIES
PART 1400--PAYMENT LIMITATION AND PAYMENT ELIGIBILITY--Table of Contents
Subpart A--General Provisions
Sec.
1400.1 Applicability.
1400.2 Administration.
1400.3 Definitions.
1400.4 Indian tribal ventures.
1400.5 Scheme or device.
1400.6 Commensurate contributions.
1400.7 Joint and several liability.
1400.8 Equitable adjustments.
1400.9 Appeals.
1400.10 Paperwork Reduction Act assigned number.
Subpart B--Person Determinations
1400.100 Timing for determining status of persons.
1400.101 Limited partnerships, limited liability partnerships, limited
liability companies, corporations and other similar entities.
1400.102 Joint operations.
1400.103 Trusts.
1400.104 Estates.
1400.105 Husband and wife.
1400.106 Minor children.
1400.107 States, political subdivisions, and agencies thereof.
1400.108 Charitable organizations.
1400.109 Changes in farming operations.
Subpart C--Actively Engaged in Farming Determinations
1400.201 General provisions for determining whether an individual or
entity is actively engaged in farming.
1400.202 Individuals.
1400.203 Joint operations.
1400.204 Limited partnerships, limited liability partnerships, limited
liability companies, corporations and other similar entities.
1400.205 Trusts.
1400.206 Estates.
1400.207 Landowners.
1400.208 Family members.
1400.209 Sharecroppers.
1400.210 Deceased and incapacitated individuals.
1400.211 Persons not considered to be actively engaged in farming.
1400.212 Hybrid seed producers.
Subpart D--Permitted Entities
1400.301 Limitation on the number of entities through which an
individual or entity may receive a payment and required
notification.
Subpart E--Cash Rent Tenants
1400.401 Eligibility.
Subpart F--Foreign Persons
1400.501 Eligibility.
1400.502 Notification.
Authority: 7 U.S.C. 1308, 1308-1, and 1308-2; 16 U.S.C. 3834.
Source: 61 FR 37566, July 18, 1996, unless otherwise noted.
Subpart A--General Provisions
Sec. 1400.1 Applicability.
(a) All of the provisions of this part are applicable to the
following programs and any other programs as may be provided for in
individual program regulations:
(1) The programs authorized by part 1412 of this chapter;
(2) Any program authorized by parts 1421 and 1427 of this chapter
under which a gain is realized by a producer from repaying a marketing
assistance loan for a commodity at a lower rate than the original loan
rate established for the commodity, and any program that authorizes the
making of a loan deficiency payment with respect to a commodity;
(3)(i) The program authorized by parts 704 and 1410 of this title
with respect to the Conservation Reserve Program (CRP) rental payments
made in accordance with a contract entered into on or after August 1,
1988. For contracts entered into before August 1, 1988, in accordance
with such contracts, the person may elect to have the provisions of this
part apply to such contract by notifying the county committee in writing
of such election. Such election shall be irrevocable.
(ii) The regulations set forth at part 795 of this title are
applicable to CRP contracts entered into before December 22, 1987, and
to CRP contracts entered into on or after such date and before August 1,
1988, if the person has not made the election specified in paragraph
(a)(3)(i) of this section.
[[Page 252]]
(iii) This part is not applicable to rental payments made in
accordance with a CRP contract if such payments are made to a State,
political subdivision, or agency thereof in connection with agreements
entered into under a special conservation reserve enhancement program
carried out by such State, political subdivision, or agency thereof that
has been approved by the Secretary, or a designee of the Secretary.
(iv) With respect to inherited land, this part is not applicable to
rental payments made in accordance with a CRP contract if such payments
are made to an individual heir who has succeeded to such contract. Such
land must have been subject to the CRP contract at the time it is
inherited by the individual.
(b) Only the provisions of subparts A and B are applicable to the
Agricultural Conservation Program (ACP) authorized under part 701 of
this title.
(c) This part shall be applied to the programs specified in
paragraph (a)(2) of this section on a crop year basis; and with respect
to the programs specified in paragraphs (a)(1) and (3) and (b) of this
section on a fiscal year basis.
(d) This part shall be used to determine whether individuals and
entities are to be treated as one person or as separate persons for the
purpose of applying the respective payment limitation provisions
applicable to the programs specified in this section and to such other
programs as may be provided in individual program regulations.
(e) In cases in which more than one provision of this part are
applicable, the provision which is most restrictive shall apply.
(f) Payments shall not be subject to the payment limitation
provisions if they are made to:
(1) Public schools with respect to land owned by a public school
district; or
(2) A State with respect to land owned by a State that is used to
maintain a public school.
(g) The following amounts are the limitations on payments per person
per applicable period for each payment.
------------------------------------------------------------------------
Limitation per
Payment type program year or
fiscal year
------------------------------------------------------------------------
Production Flexibility Contract...................... \1\ $40,000
Production Flexibility Contract...................... \2\ 50,000
Marketing Loan Gain.................................. \3\ 75,000
Loan deficiency...................................... .................
CRP.................................................. 50,000
ACP cost-share....................................... 3,500
Non-Insured Crop Disaster Assistance Program (NAP)... 100,000
------------------------------------------------------------------------
\1\ Annual payment amount.
\2\ Amounts made in accordance with section 113(c) of the Federal
Agriculture Improvement and Reform Act of 1996.
\3\ The total of marketing loan gains and loan deficiency payments
cannot exceed $75,000 per crop year.
Sec. 1400.2 Administration.
(a) The regulations in this part will be administered under the
general supervision and direction of the Executive Vice President,
Commodity Credit Corporation (CCC), and the Administrator, Farm Service
Agency (FSA). In the field, the regulations in this part will be
administered by the FSA State and county committees (herein referred to
as ``State and county committees,'' respectively).
(b) State executive directors, county executive directors and State
and county committees do not have authority to modify or waive any of
the provisions of this part.
(c) The State committee may take any action authorized or required
by this part to be taken by the county committee which has not been
taken by such committee. The State committee may also:
(1) Correct or require a county committee to correct any action
taken by such county committee that is not in accordance with this part;
or
(2) Require a county committee to withhold taking any action that is
not in accordance with this part.
(d) No delegation herein to a State or county committee shall
preclude the Executive Vice President, CCC, and the Administrator, FSA,
or a designee, from determining any question arising under this part or
from reversing or modifying any determination made by a State or county
committee.
(e) The initial ``actively engaged in farming'' and ``person''
determinations shall be made within 60 days after the producer files the
required forms and any other supporting documentation needed in making
such determinations.
[[Page 253]]
If the determination is not made within 60 days, the producer will
receive a determination for that program year that reflects the
determination sought by the producer unless the Deputy Administrator
determines that the producer did not follow the farm operating plan that
was presented to the county or State committee for such year.
(f) Initial determinations concerning the provisions of this part
shall not be made by a county FSA office with respect to any farm
operating plan that is for a joint operation with more than five
members.
Sec. 1400.3 Definitions.
(a) The terms defined in part 718 of this chapter shall be
applicable to this part and all documents issued in accordance with this
part, except as otherwise provided in this section.
(b) The following definitions shall also be applicable to this part:
Active personal labor. Active personal labor is personally providing
physical activities necessary in a farming operation, including
activities involved in land preparation, planting, cultivating,
harvesting, and marketing of agricultural commodities in the farming
operation. Other physical activities include those physical activities
required to establish and maintain conserving cover crops on conserving
use and CRP acreages and those physical activities necessary in
livestock operations.
Active personal management. Active personal management is personally
providing:
(1) The general supervision and direction of activities and labor
involved in the farming operation; or
(2) Services (whether performed on-site or off-site) reasonably
related and necessary to the farming operation, including:
(i) Supervision of activities necessary in the farming operation,
including activities involved in land preparation, planting,
cultivating, harvesting, and marketing of agricultural commodities, as
well as activities required to establish and maintain conserving cover
crops on conserving use and CRP acreage and activities required in
livestock operations;
(ii) Business-related actions, which include discretionary decision
making;
(iii) Evaluation of the financial condition and needs of the farming
operation;
(iv) Assistance in the structuring or preparation of financial
reports or analyses for the farming operation;
(v) Consultations in or structuring of business-related financing
arrangements for the farming operation;
(vi) Marketing and promotion of agricultural commodities produced by
the farming operation;
(vii) Acquiring technical information used in the farming operation;
and
(viii) Any other management function reasonably necessary to conduct
the farming operation and for which service the farming operation would
ordinarily be charged a fee.
Alien. Any person not a citizen or national of the United States.
Lawful Alien. Any person who is not a citizen or national of the
United States but who is admitted into the United States for permanent
residence under the Immigration and Nationality Act and possesses a
valid Alien Registration Receipt Card (Form I-551 or I-151).
(2) [Reserved]
Capital. Capital consists of the funding provided by an individual
or entity to the farming operation in order for such operation to
conduct farming activities. In determining whether an individual or
entity has contributed capital, in the form of funding, to the farming
operation, such capital must have been derived from a fund or account
separate and distinct from that of any other individual or entity
involved in such operation. Capital does not include the value of any
labor or management that is contributed to the farming operation or any
outlays for land or equipment. A capital contribution may be a direct
out-of-pocket input of a specified sum or an amount borrowed by the
individual or entity.
(1) With respect to a farming operation conducted by an individual,
a joint operation in which the capital is contributed by a member of the
joint operation or an entity, such capital contributed to meet the
requirements of:
(i) Section 1400.201(b) must be contributed directly by the
individual or entity and must not be acquired as a
[[Page 254]]
result of a loan made to, guaranteed, or secured by:
(A) Any other individual, joint operation, or entity that has an
interest in such farming operation;
(B) Such individual, joint operation, or entity by any other
individual, joint operation, or entity that has an interest in such
farming operation; or
(C) Any other individual, joint operation, or entity in whose
farming operation such individual, joint operation, or entity has an
interest; and
(ii) Sections 1400.6 and 1400.201(d) must be contributed directly by
the individual or entity and if acquired as a result of a loan made to,
guaranteed, or secured by the individuals, joint operations, or entities
listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the
loan must bear the prevailing interest rate; and
(2) With respect to a farming operation conducted by a joint
operation in which the capital is contributed by such joint operation,
such capital contributed to meet the requirements of:
(i) Section 1400.201(b) must be contributed directly by the joint
operation and must not be acquired as a result of a loan made to,
guaranteed, or secured by:
(A) Any individual, entity, or other joint operation that has an
interest in such farming operation, including either joint operation's
members;
(B) Such joint operation by any individual, entity, or other joint
operation that has an interest in such farming operation; or
(C) Any individual, entity, or other joint operation in whose
farming operation such joint operation has an interest.
(ii) Sections 1400.6 and 1400.201(d) must be contributed directly by
the joint operation and if acquired as a result of a loan made to,
guaranteed, or secured by the individuals, entities, or joint operations
listed in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, the
loan must bear the prevailing interest rate.
Entity. An entity is a corporation, joint stock company,
association, limited partnership, limited liability partnership, limited
liability company, irrevocable trust, revocable trust, estate,
charitable organization, or other similar organization, including any
such organization participating in the farming operation as a partner in
a general partnership, a participant in a joint venture, a grantor of a
revocable trust, or as a participant in a similar organization.
Equipment. Equipment is the machinery and implements needed by the
farming operation to conduct activities of the farming operation,
including machinery and implements involved in land preparation,
planting, cultivating, harvesting, or marketing of the crops involved.
Equipment also includes machinery and implements needed to establish and
maintain conserving cover crops on conserving use and CRP acreages and
those needed to conduct livestock operations.
(1) With respect to a farming operation conducted by an individual,
entity or joint operation in which the equipment is contributed by a
member of the joint operation, such equipment contributed to meet the
requirements of:
(i) Section 1400.201(b) must be contributed directly by the
individual or entity and must not be acquired as a result of a loan made
to, guaranteed, or secured by:
(A) Any other individual, joint operation, or entity that has an
interest in such farming operation.
(B) Such individual, joint operation, or entity by any other
individual, joint operation, or entity that has an interest in such
farming operation; or
(C) Any other individual, joint operation, or entity in whose
farming operation such individual, joint operation, or entity has an
interest.
(ii) Sections 1400.6 and 1400.201(d) must be contributed directly by
the individual or entity and if acquired as a result of a loan made to,
guaranteed, or secured by the individuals, joint operations, or entities
listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the
loan must bear the prevailing interest rate.
(2) With respect to a farming operation conducted by a joint
operation in which the equipment is contributed by such joint operation,
such equipment contributed to meet the requirements of:
[[Page 255]]
(i) Section 1400.201(b) must be contributed directly by the joint
operation and must not be acquired as a result of a loan made to,
guaranteed, or secured by:
(A) Any individual, entity, or other joint operation that has an
interest in such farming operation, including either joint operation's
members.
(B) Such joint operation by any individual, entity, or other joint
operation that has an interest in such farming operation; or
(C) Any individual, entity, or other joint operation in whose
farming operation such joint operation has an interest; and
(ii) Sections 1400.6 and 1400.201(d) must be contributed directly by
the joint operation and if listed as a result of a loan made to,
guaranteed, or secured by the individuals, entities, or joint operations
provided in paragraphs (2)(i)(A) through (2)(i)(C) of this definition,
the loan must bear the prevailing interest rate.
(3) Such equipment may be leased from any source. If such equipment
is leased from another individual or entity with an interest in the
farming operation, such equipment must be leased at a fair market value.
Family member. The term family member means an individual to whom
another member in the farming operation is related as lineal ancestor,
lineal descendant, or sibling, including spouses of those individuals
who do not make a significant contribution to the farming operation
themselves.
Farming operation. A farming operation is a business enterprise
engaged in the production of agricultural products that is operated by
an individual, entity, or joint operation and is eligible to receive
payments, directly or indirectly, under one or more of the programs
specified in Sec. 1400.1. An entity or individual may have more than one
farming operation if such individual or entity is a member of one or
more joint operations.
Interest in a Farming Operation. An individual, entity or joint
operation has an interest in a farming operation if the individual,
entity or joint operation:
(1) Owns or rents the land;
(2) Has an interest in the agricultural commodities produced; or
(3) Is a member of a joint operation that either owns or rents the
land or has an interest in the agricultural commodities produced.
Irrevocable trust. All trusts shall be considered to be revocable
trusts, except a trust may be considered to be an irrevocable trust if
it is a trust:
(1) That may not be modified or terminated by the grantor;
(2) In the corpus of which the grantor does not have any future,
contingent or remainder interest; and
(3) If established after January 1, 1987, that does not provide for
the transfer of the corpus of the trust to the remainder beneficiary in
less than 20 years from the date the trust is established except in
cases where the transfer is contingent upon either the remainder
beneficiary achieving at least the age of majority or the death of the
grantor or income beneficiary.
Joint operation. A joint operation is a general partnership, joint
venture, or other similar business organization.
Land. Land is farmland that meets the specific requirements of the
applicable program.
(1) With respect to a farming operation conducted by an individual,
a joint operation in which the land is contributed by a member of the
joint operation, or an entity, such land contributed to meet the
requirements of:
(i) Section 1400.201(b) must be contributed directly by the
individual or entity and must not be acquired as a result of a loan made
to, guaranteed, or secured by:
(A) Any other individual, joint operation, or entity that has an
interest in such farming operation;
(B) Such individual, joint operation, or entity by any other
individual, joint operation, or entity that has an interest in such
farming operation; or
(C) Any other individual, joint operation, or entity in whose
farming operation such individual, joint operation, or entity has an
interest; and
(ii) Sections 1400.6 and 1400.201(d) must be contributed directly by
the individual or entity and if acquired as a result of a loan made to,
guaranteed, or secured by the individuals, joint operations, or entities
listed in paragraphs
[[Page 256]]
(1)(i)(A) through (1)(i)(C) of this definition, the loan must bear the
prevailing interest rate; and
(2) With respect to a farming operation conducted by a joint
operation in which the land is contributed by such joint operation, such
land contributed to meet the requirements of:
(i) Section 1400.201(b) must be contributed directly by the joint
operation and must not be acquired as a result of a loan made to,
guaranteed, or secured by:
(A) Any individual, entity, or other joint operation that has an
interest in such farming operation, including either joint operation's
members;
(B) Such joint operation by any individual, entity, or other joint
operation that has an interest in such farming operation; or
(C) Any individual, entity, or other joint operation in whose
farming operation such joint operation has an interest; and
(ii) Sections 1400.6 and 1400.201(d) must be contributed directly by
the joint operation and if acquired as a result of a loan made to,
guaranteed, or secured by the individuals, entities, or joint operations
provided in paragraphs (2)(i)(A) through (2)(i)(C) of this definition,
the loan must bear the prevailing interest rate.
(3) Such land may be leased from any source. If such land is leased
from another individual or entity with an interest in the farming
operation, such land must be leased at a fair market value.
Payment. A payment includes:
(1) Payments made in accordance with part 1412 of this chapter;
(2) Loan gains and loan deficiency payments made in accordance with
parts 1421 and 1427 of this chapter;
(3) CRP annual rental payments made in accordance with parts 704 of
this title and 1410 of this chapter;
(4) ACP cost-share payments made in accordance with part 701 of this
title;
(5) Non-Insured Crop Disaster Assistance Program (NAP) payments; and
(6) With respect to other programs, any payments designated in
individual program regulations.
Payment, loan, or benefit. A payment, loan, or benefit made in
accordance with the 1996 Act, the CCC Charter Act, or Subtitle D of the
1985 Act, which results in a direct expenditure by the CCC or any other
agency of the Federal Government, including a payment made in accordance
with part 1401 of this title. Such term does not include the
establishment of contract acreages, farm program payment yields, acreage
allotments, marketing quotas, and similar program provisions.
Permitted entity. A permitted entity is an entity designated
annually by an individual that is to receive a payment, loan, or benefit
under a program specified in Sec. 1400.1(a).
Person. (1) A person is:
(i) An individual, including any individual participating in a
farming operation as a partner in a general partnership, a participant
in a joint venture, or a participant in a similar entity;
(ii) A corporation, joint stock company, association, limited
partnership, limited liability partnership, limited liability company,
irrevocable trust, revocable trust combined with the grantor of the
trust, estate, or charitable organization, including any such entity or
organization participating in the farming operation as a partner in a
general partnership, a participant in a joint venture, a grantor of a
revocable trust, or as a participant in a similar entity; and
(iii) A State, political subdivision, or agency thereof.
(2) In order for an individual or entity, other than an individual
or entity that is a member of a joint operation, to be considered a
separate person for the purposes of this part, in addition to other
provisions of this part, the individual or entity must:
(i) Have a separate and distinct interest in the land or the crop
involved;
(ii) Exercise separate responsibility for such interest; and
(iii) Maintain funds or accounts separate from that of any other
individual or entity for such interest.
(3) With respect to an individual or entity that is a member of a
joint operation, such individual or entity will have met the
requirements of paragraph (2) of this definition if the joint operation
meets the requirements of such paragraph.
(4) Any cooperative association of producers that markets
commodities
[[Page 257]]
for producers shall not be considered a person with respect to the
commodities so marketed for producers.
Public school. A public school is a primary, elementary, secondary
school, college, or university that is directly administered under the
authority of a governmental body or that receives a predominant amount
of its financing from public funds.
Sharecropper. An individual who performs work in connection with the
production of the crop under the supervision of the operator and who
receives a share of such crop in return for the provision of such labor.
Significant contribution. A significant contribution is the
provision of the following to a farming operation by an individual or
entity:
(1)(i) With respect to land, capital, or equipment contributed by an
individual or entity, a contribution that has a value at least equal to
50 percent of the individual's or entity's commensurate share of:
(A) The total value of the capital necessary to conduct the farming
operation;
(B) The total rental value of the land necessary to conduct the
farming operation;
(C) The total rental value of the equipment necessary to conduct the
farming operation; or
(ii) If the contribution by an individual or entity consists of any
combination of land, capital, and equipment, such combined contribution
must have a value at least equal to 30 percent of the individual's or
entity's commensurate share of the total value of the farming operation;
(2) With respect to active personal labor, an amount which is the
smaller of:
(i) 1,000 hours per calendar year; or
(ii) 50 percent of the total hours that would be necessary to
conduct a farming operation that is comparable in size to such
individual's or entity's commensurate share in the farming operation;
(3) With respect to active personal management, activities that are
critical to the profitability of the farming operation, taking into
consideration the individual's or entity's commensurate share in the
farming operation; and
(4) With respect to a combination of active personal labor and
active personal management, when neither contribution individually meets
the requirements of paragraphs (2) and (3) of this definition, a
combination of active personal labor and active personal management
that, when viewed together, results in a critical impact on the
profitability of the farming operation in an amount at least equal to
either the significant contribution of active personal labor or active
personal management as provided in paragraphs (2) and (3) of this
definition.
Substantial amount of active personal labor. Substantial amount of
active personal labor means the provision of active personal labor in an
amount that is the smaller of:
(1) 1,000 hours per calendar year; or
(2) 50 percent of the total hours that would be necessary to conduct
a farming operation that is comparable in size to such individual's or
entity's commensurate share in the farming operation.
Substantial beneficial interest. A substantial beneficial interest
in an entity is an interest of 10 percent or more. In determining
whether such an interest equals at least 10 percent, all interests in
the entity that are owned by an individual or entity directly or
indirectly through such means as ownership of a corporation that owns
the entity shall be taken into consideration. In order to ensure that
the provisions of this part are not circumvented by an individual or
entity, the Deputy Administrator may determine that an ownership
interest requirement of less than 10 percent shall be applied to such
individual or entity.
Total value of the farming operation. The total value of the farming
operation is the total of the costs, excluding the value of active
personal labor and active personal management contributed by a person
who is a member of the farming operation, needed to carry out the
farming operation for the year for which the determination is made.
[[Page 258]]
Sec. 1400.4 Indian tribal ventures.
An individual American Indian who receives payments through other
than an Indian tribal venture is required to certify that they will not
accrue total payments, including payments made to the Indian tribal
venture and to the individual American Indian, in excess of the
applicable payment limitation for programs specified in Sec. 1400.1.
Sec. 1400.5 Scheme or device.
(a) All or any part of the payment otherwise due a person on all
farms in which the person has an interest may be withheld or be required
to be refunded if the person adopts or participates in adopting a scheme
or device designed to evade this part or that has the effect of evading
this part. Such acts shall include, but are not limited to:
(1) Concealing information that affects the application of this
part;
(2) Submitting false or erroneous information; or
(3) Creating fictitious entities for the purpose of concealing the
interest of a person in a farming operation.
(b) If the Deputy Administrator determines that a person has adopted
a scheme or device to evade, or that has the purpose of evading, the
provisions of sections 1001, 1001A, or 1001C of the 1985 Act such person
shall be ineligible to receive payments under the programs specified in
Sec. 1400.1 with respect to the year for which such scheme or device was
adopted and the succeeding year.
Sec. 1400.6 Commensurate contributions.
In order to be considered eligible to receive payments under the
programs specified in Sec. 1400.1 an individual or entity specified in
Secs. 1400.202 through 1400.210 must have:
(a) A share of the profits or losses from the farming operation that
is commensurate with the individual's or entity's contribution to the
operation; and
(b) Contributions to the farming operation that are at risk.
Sec. 1400.7 Joint and several liability.
If two or more individuals or entities are considered to be one
person and the total payment received is in excess of the applicable
payment limitation provision, such individuals or entities shall be
jointly and severally liable for any liability that arises therefrom.
The provisions of this section shall be applicable in addition to any
liability that arises under a criminal or civil statute.
Sec. 1400.8 Equitable adjustments.
Actions taken by an individual or an entity in good faith on action
or advice of an authorized representative of the Deputy Administrator
may be accepted as meeting the requirements of this part to the extent
the Deputy Administrator deems necessary to provide fair and equitable
treatment to such individual or entity.
Sec. 1400.9 Appeals.
(a) Any person may obtain reconsideration and review of
determinations made under this part in accordance with the appeal
regulations set forth at part 780 of this title. With respect to such
appeals, the applicable reviewing authority shall:
(1) Schedule a hearing with respect to the appeal within 45 days
following receipt of the written appeal; and
(2) Issue a determination within 60 days following the hearing.
(b) The time limitations provided in paragraph (a) shall not apply
if:
(1) The appellant, or the appellant's representative, requests a
postponement of the scheduled hearing;
(2) The appellant, or the appellant's representative, requests
additional time following the hearing to present additional information
or a written closing statement;
(3) The appellant has not timely presented information to the
reviewing authority; or
(4) An investigation by the Office of Inspector General is ongoing
or a court proceeding is involved that affects the amount of payments a
person may receive.
(c) If the deadlines provided in paragraphs (a) and (b) of this
section are not met, the relief sought by the producer's appeal will be
granted for the applicable crop year unless the Deputy Administrator
determines that the producer did not follow the farm operating
[[Page 259]]
plan initially presented to the county committee for the year that is
the subject of the appeal.
(d) An appellant may waive the provisions of paragraphs (a) and (b)
of this section.
Sec. 1400.10 Paperwork Reduction Act assigned number.
The information collection requirements contained in this part have
been approved by the Office of Management and Budget (OMB) under the
provisions of 44 U.S.C. Chapter 35 and have been assigned OMB control
number 0560-0096.
Subpart B--Person Determinations
Sec. 1400.100 Timing for determining status of persons.
(a) Except as otherwise set forth in this part, for the 1996 program
or fiscal year, the status of an individual or entity on July 12, 1996,
shall be the basis on which determinations are made in accordance with
this part. Except as otherwise set forth in this part, for 1997 and
subsequent years, the status of an individual or entity on April 1 of
the applicable program or fiscal year, shall be the basis on which
determinations are made in accordance with this part.
(b) Actions taken by an individual or entity after the applicable
status date set forth in paragraph (a) of this section, but on or before
the final harvest date of the last contract commodity in the area, as
determined by the Deputy Administrator, shall not be used to determine
whether there has been an increase in the number of persons for the
applicable program or fiscal year. Actions taken by a person after the
status date set forth in paragraph (a) of this section, but on or before
the harvest of the last contract commodity in the area, shall be used to
determine whether there has been a decrease in the number of persons for
the applicable program or fiscal year.
Sec. 1400.101 Limited partnerships, limited liability partnerships, limited liability companies, corporations and other similar entities.
(a) A limited partnership, limited liability partnership, limited
liability company, corporation, or other similar entity shall be
considered to be a person separate from an individual partner,
stockholder, or member except that a limited partnership, limited
liability partnership, limited liability corporation, corporation, or
other similar entity in which more than 50 percent of the interest in
such limited partnership, limited liability partnership, limited
liability corporation, corporation, or other similar entity is owned by
an individual (including the interest owned by the individual's spouse,
minor children, and trusts for the benefit of such minor children) or by
an entity shall not be considered as a separate person from such
individual or entity.
(b) If the same two or more individuals or entities own more than 50
percent of the interest in each of two or more limited partnerships,
corporations, or other similar entities engaged in farming, all such
limited partnerships, limited liability partnership, limited liability
company, corporations, or other similar entities shall be considered to
be one person.
(c) The percentage share of the interest in a limited partnership,
limited liability partnership, limited liability company, corporation,
or other similar entity that is owned by an individual or other entity
shall be determined as of the status date set forth in paragraph (a) of
this section. If a partner, stockholder, or member acquires an interest
in the limited partnership, corporation, or other similar entity after
such date, and on or before the harvest of the last contract commodity
in the area as determined by the Deputy Administrator, the amount of any
such interest shall be included in determining the total ownership
interest of such partner, stockholder, or member.
(d) Where there is only one class of stock or other similar unit of
ownership, an individual's or entity's percentage share of the limited
partnership, limited liability partnership, limited liability company,
corporation, or other similar entity shall be based upon the outstanding
shares of stock or other similar unit of ownership held by the
individual or entity and compared to the total outstanding shares of
stock or other similar unit of ownership. If the limited partnership,
limited
[[Page 260]]
liability partnership, limited liability company, corporation, or other
similar entity has more than one class of stock or other unit of
ownership, the percentage share of the limited partnership, limited
liability partnership, limited liability company, corporation, or other
similar entity owned by an individual or entity shall be determined by
the Deputy Administrator on the basis of market quotations. If market
quotations are lacking or are too scarce to be recognized, such
percentage share shall be determined by the Deputy Administrator on the
basis of all relevant factors affecting the fair market value of such
stock or other unit of ownership, including the various rights and
privileges that are attributed to each such class.
Sec. 1400.102 Joint operations.
Members of joint operations may be separately treated as a person in
accordance with the requirements of this part. However, members of a
joint operation may request to be jointly treated as one person for the
purposes of this part.
Sec. 1400.103 Trusts.
(a) A trust shall be considered to be a person separate from the
individual income beneficiaries of the trust except that a trust that
has a sole income beneficiary shall not be considered to be a separate
person from such income beneficiary.
(b) Where two or more irrevocable trusts have common income
beneficiaries (including a spouse and minor children) with more than a
50 percent interest, all such trusts shall be considered to be one
person.
(c) A revocable trust and the grantor of such revocable trust shall
be considered to be one person.
Sec. 1400.104 Estates.
If the deceased individual had lived and would have been considered
to be one person with respect to an heir, the estate shall also be
considered to be one person with such heir.
Sec. 1400.105 Husband and wife.
(a) With respect to any married couple, the husband and wife shall
be considered to be one person except that a husband and wife, who:
(1) Prior to their marriage were separately engaged in unrelated
farming operations, will be determined to be separate persons with
respect to such farming operations so long as such operations remain
separate and distinct from any farming operation conducted by the other
spouse; or
(2) Except as provided in paragraph (b), do not hold, directly or
indirectly, a substantial beneficial interest in more than one entity
(including themselves) engaged in farm operations that also receive
payments as a separate person from either spouse, the spouses may be
considered as separate persons if each spouse otherwise meets the
requirements under this part to be considered a separate person and is
otherwise eligible to receive payment.
(b) With respect to any interest in an estate, for 2 program years
after the program year in which the individual died, a husband and wife
shall not be considered as having an interest in an entity to the extent
resulting from such interest in an estate for purposes of determining
persons.
Sec. 1400.106 Minor children.
(a) Except as provided in paragraph (b) of this section, a minor,
including a minor who is the beneficiary of a trust or who is an heir of
an estate, and the parent or any court-appointed person such as a
guardian or conservator who is responsible for the minor shall be
considered to be one person.
(b) A minor may be considered to be a separate person from the
minor's parent or any court appointed person such as a guardian or
conservator who is responsible for the minor, if the minor is a producer
on a farm and the minor's parent or any court appointed person such as
guardian or conservator who is responsible for the minor does not have
any interest in the farm on which the minor is a producer or in any
production from such farm. In addition the minor must:
(1) Have established and maintain a separate household from the
minor's parents or any court-appointed person such as a guardian or
conservator who is responsible for the minor and such
[[Page 261]]
minor personally carries out the farming activities with respect to the
minor's farming operation for which there is a separate accounting; or
(2) Not live in the same household as such minor's parent and:
(i) Be represented by a court-appointed guardian or conservator who
is responsible for the minor; and
(ii) Have ownership of the farm vested in the minor.
(c) A person shall be considered to be a minor until the age 18 is
reached. Court proceedings conferring majority on a person under 18
years of age will not change such person's status as a minor.
Sec. 1400.107 States, political subdivisions, and agencies thereof.
A State, political subdivision and agencies thereof shall be
considered to be one person.
Sec. 1400.108 Charitable organizations.
A charitable organization, including a club, society, fraternal or
religious organization, shall be considered to be a separate person to
the extent that such an entity is engaged in the production of crops as
a separate person, except where the land or the proceeds from the
farming operation may transfer to an entity that exercises control or
authority over such organization.
Sec. 1400.109 Changes in farming operations.
Any change in a farming operation that would increase the number of
persons to which the provisions of this part apply must be bona fide and
substantive. If bona fide, the following shall be considered to be
substantive changes in the farming operation:
(a) The addition of a family member to a farming operation in
accordance with Sec. 1400.208, except that such an addition will not
affect the status of any other individual or entity that is added to the
farming operation;
(b) With respect to a landowner only, a change from a cash rent to a
share rent;
(c) An increase through the acquisition of cropland not previously
involved in the farming operation of approximately 20 percent or more in
the total cropland involved in the farming operation, if such cropland
has planting history of an amount at least normal for the area;
(d) A change in ownership by sale or gift of a significant amount of
equipment from an individual or entity who previously has been engaged
in a farming operation to an individual or entity who has not been
involved in such operation. The sale or gift of equipment will be
considered to be bona fide and substantive only if the transferred
amount of such equipment is commensurate with the new individual's or
entity's share of the farming operation;
(e) A change in ownership by sale or gift of a significant amount of
land from an individual or entity who previously has been engaged in a
farming operation to an individual or entity who has not been involved
in such operation. The sale or gift of land will be considered to be
substantive only if the transferred amount of such land is commensurate
with the new individual's or entity's share of the farming operation.
Subpart C--Actively Engaged in Farming Determinations
Sec. 1400.201 General provisions for determining whether an individual or entity is actively engaged in farming.
(a) To be considered a person who is eligible to receive payments
with respect to a particular farming operation, a person must be an
individual or entity actively engaged in farming with respect to such
operation.
(b) Actively engaged in farming means, except as otherwise provided
in this part, that the individual or entity, independently makes a
significant contribution to a farming operation, of:
(1) Capital, equipment, or land, or a combination of capital,
equipment, or land; and
(2) Active personal labor or active personal management, or a
combination of active personal labor and active personal management.
(c) In determining if the individual or entity is actively
contributing a significant amount of active personal labor or active
personal management the following factors shall be taken into
consideration:
[[Page 262]]
(1) The types of crops and livestock produced by the farming
operation;
(2) The normal and customary farming practices of the area; and
(3) The total amount of labor and management necessary for such a
farming operation in the area.
(d) In order to be considered to be actively engaged in farming an
individual or entity specified in Secs. 1400.202 through 1400.210 must
have:
(1) A share of the profits or losses from the farming operation
commensurate with the individual's or entity's contribution to the
operation; and
(2) Contributions to the farming operation that are at risk.
Sec. 1400.202 Individuals.
An individual shall be considered to be actively engaged in farming
with respect to a farming operation if the individual makes a
significant contribution of:
(a) Capital, equipment, or land, or a combination of capital,
equipment, or land; and
(b) Active personal labor or active personal management, or a
combination of active personal labor and active personal management.
Sec. 1400.203 Joint operations.
(a) A member of a joint operation shall be considered to be actively
engaged in farming with respect to a farming operation if the member
makes a significant contribution of:
(1) Capital, equipment, or land or a combination of capital,
equipment, or land; and
(2) Active personal labor or active personal management or a
combination of active personal labor and active personal management.
(b) If a joint operation separately makes a significant contribution
of capital, equipment, or land, or a combination of capital, equipment,
or land, and the joint operation meets the provisions of
Sec. 1400.201(d), the members of the joint operation who make a
significant contribution of active personal management, or a combination
of active personal labor and active personal management to the farming
operation shall be considered to be actively engaged in farming with
respect to such farming operation.
Sec. 1400.204 Limited partnerships, limited liability partnerships, limited liability companies, corporations and other similar entities.
A limited partnership, limited liability partnership, limited
liability company, corporation, or other similar entity shall be
considered to be actively engaged in farming with respect to a farming
operation if:
(a) The entity separately makes a significant contribution to the
farming operation of capital, equipment, or land, or a combination of
capital, equipment, or land; and
(b) The partners, stockholders, or members collectively make a
significant contribution, whether compensated or not compensated, of
active personal labor, active personal management, or a combination of
active personal labor and active personal management to the farming
operation. The combined beneficial interest of all the partners,
stockholders, or members providing active personal labor or active
personal management, or a combination of active personal labor and
active personal management must be at least 50 percent.
Sec. 1400.205 Trusts.
A trust shall be considered to be actively engaged in farming with
respect to a farming operation if:
(a) The entity separately makes a significant contribution to the
farming operation of capital, equipment, or land, or a combination of
capital, equipment, or land;
(b) The income beneficiaries collectively make a significant
contribution of active personal labor or active personal management, or
a combination of active personal labor and active personal management to
the farming operation. The combined interest of all the income
beneficiaries providing active personal labor or active personal
management, or a combination of active personal labor and active
personal management must be at least 50 percent;
(c) The trust has provided a tax identification number of the trust
unless the trust is a revocable trust and the grantor is the sole income
beneficiary; and
[[Page 263]]
(d) The trust has provided a copy of the trust agreement to the
county committee unless the trust is a revocable trust.
Sec. 1400.206 Estates.
(a) For 2 program years after the program year in which an
individual dies the individual's estate shall be considered to be
actively engaged in farming if:
(1) The estate makes a significant contribution of either:
(i) Capital, equipment, or land; or
(ii) A combination of capital, equipment, or land; and
(2) The personal representative or heirs of the estate collectively
make a significant contribution of either:
(i) Active personal labor or active personal management; or
(ii) A combination of active personal labor and active personal
management.
(b) After the period set forth in paragraph (a) of this section, the
deceased individual's estate shall not be considered to be actively
engaged in farming unless, on a case by case basis, the Deputy
Administrator determines that the estate has not been settled primarily
for the purpose of obtaining program payments.
Sec. 1400.207 Landowners.
A person who is a landowner, including landowners with an undivided
interest in land, making a significant contribution of owned land to the
farming operation, shall be considered to be actively engaged in farming
with respect to such owned land, if the landowner receives rent or
income for such use of the land based on the land's production or the
operation's operating results. A landowner also includes a member of a
joint operation if the joint operation holds title to land in the name
of the joint operation and if the joint operation or its members submit
adequate documentation to determine that, upon dissolution of the joint
operation, the title to the land owned by the joint operation will
revert to such member of such joint operation.
Sec. 1400.208 Family members.
With respect to a farming operation conducted by persons, a majority
of whom are individuals who are family members, an adult family member
who makes a significant contribution of active personal management,
active personal labor, or a combination of active personal labor and
active personal management shall be considered to be actively engaged in
farming.
Sec. 1400.209 Sharecroppers.
A sharecropper who makes a significant contribution of active
personal labor to the farming operation shall be considered to be
actively engaged in farming.
Sec. 1400.210 Deceased and incapacitated individuals.
The determining authority shall take into consideration the
circumstances involving individuals who have died or become
incapacitated during the program year or fiscal year, as applicable. If
the individual dies or is incapacitated before a determination is made
that the individual is ``actively engaged in farming,'' the
representative of the deceased individual's estate or the incapacitated
individual, or other person if necessary, must provide the determining
authority information to verify that such individual did make a
conscious effort to and would have been determined to be actively
engaged in farming if not for the individual's death or incapacitation.
If the individual dies or is incapacitated after being determined to be
``actively engaged in farming,'' the determining authority shall allow
such determination to be in effect for that program year or fiscal year,
as applicable. However, the following year such individual or the
individual's estate must meet all necessary requirements in order to be
determined to be ``actively engaged in farming'' for that year.
Sec. 1400.211 Persons not considered to be actively engaged in farming.
An individual or entity who does not satisfy all of the provisions
of Secs. 1400.202 through 1400.210 and a landowner who rents land to a
farming operation for cash or a crop share guaranteed as to the amount
of the commodity shall not be considered to be actively engaged in
farming.
[[Page 264]]
Sec. 1400.212 Hybrid seed producers.
The existence of a hybrid seed contract for a producer shall not be
taken into account when making an actively engaged in farming
determination with respect to such producer. However, such producer must
satisfy all other applicable provisions of this part.
Subpart D--Permitted Entities
Sec. 1400.301 Limitation on the number of entities through which an individual or entity may receive a payment and required notification.
(a) An individual may receive a payment under a program specified in
Sec. 1400.1(a) either directly or indirectly from no more than three
permitted entities. An individual who receives such a payment shall
notify the county committee in the county in which such individual
maintains a farming operation whether or not the farming operation is to
be considered a permitted entity. An individual may only receive such
payments as a result of a farming operation conducted by:
(1) The individual and by no more than two entities in which the
individual holds a substantial beneficial interest; or
(2) No more than three entities in which the individual holds a
substantial beneficial interest.
(b) Except for entities specified in paragraph (c) of this section,
each entity entering into a contract or agreement under a program
specified in Sec. 1400.1(a) shall, by the date the contract or agreement
is submitted to the county committee, notify in writing:
(1) Each individual or other entity that acquires or holds an
interest in such entity of the requirements and limitations provided in
this part; and
(2) The county committee of the name and social security number of
each individual and the name and taxpayer identification number of each
entity that holds or acquires a substantial beneficial interest in such
entity.
(c) Entities shall not be subject to the provisions of paragraph (b)
of this section if, as determined by the Deputy Administrator:
(1) Because of the number of members of such entity no member is
likely to have a substantial beneficial interest in such entity; and
(2) Such provisions would cause undue financial hardship on such
entity.
(d)(1) An individual or entity that holds a substantial beneficial
interest in more than the number of permitted entities specified in
paragraph (a) of this section for which a contract or agreement has been
submitted to the county committee shall notify the county committee in
writing, in each county in which they conduct a farming operation, of
those entities that shall be considered as permitted entities by a date
as determined by the Deputy Administrator following the date the
contract or agreement was submitted to the county committee.
(2) The remaining entities in which the individual or entity holds a
substantial beneficial interest shall be notified that such entity is
subject to reductions in the payments earned by the remaining entity.
Such a reduction shall be made in an amount that bears the same
relationship to the full payment that the individual's interest in the
entity bears to all interests in the entity. The remaining entity's
members shall have the opportunity to adjust among themselves their
proportionate shares of the program benefits in the designated entity or
entities before such reductions are made.
(e) If an individual or entity fails to make such a notification as
specified in paragraph (d) of this section, all entities in which the
individual or entity holds a substantial beneficial interest shall be
subject to a reduction in payments in the manner specified in paragraph
(d)(2).
Subpart E--Cash Rent Tenants
Sec. 1400.401 Eligibility.
(a) Any tenant that is actively engaged in farming in accordance
with the provisions of subpart C and conducts a farming operation in
which the tenant rents the land for cash, for a crop share guaranteed as
to the amount of the commodity, or by any arrangement in which the
tenant does not compensate the landlord by cash or a crop share, and
receives benefits,
[[Page 265]]
with respect to such land under a program specified in Sec. 1400.1(a)
shall be ineligible to receive any payment with respect to such cash-
rented land unless the tenant makes a significant contribution to the
farming operation of:
(1) Active personal labor; or
(2) Active personal management and equipment. If such equipment is
leased by the tenant from:
(i) The landlord, the lease must reflect the fair market value of
the equipment leased; and
(ii) The same individual or entity that is providing hired labor to
the farming operation, the contracts for the lease of the equipment and
for the hired labor must be two separate contracts that reflect the fair
market value of the leased equipment and the hired labor and the tenant
must exercise complete control over the use of a significant amount of
the equipment during the current crop year.
(b) [Reserved]
Subpart F-- Foreign Persons
Sec. 1400.501 Eligibility.
(a) Any person who is not a citizen of the United States or a lawful
alien shall be ineligible to receive payments, loans and benefits, with
respect to any commodity produced, or land set aside from production, on
a farm that is owned or operated by such person unless such person is an
individual who is providing land, capital, and a substantial amount of
active personal labor on such farm.
(b)(1) A corporation or other entity shall be ineligible to receive
payments, loan, and benefits if more than 10 percent of the beneficial
ownership of the entity is held by persons who are not citizens of the
United States or lawful aliens unless each foreign individual who is a
stockholder or other type of member provides a substantial amount of
active personal labor in the production of crops on a farm owned or
operated by such an entity. However, upon the written request of the
entity, the Deputy Administrator may make payments in an amount
determined by the Deputy Administrator to be representative of the
percentage interest of the entity that is owned by citizens of the
United States and lawful aliens or foreign stockholders or other type of
member who provide a significant contribution of active personal labor
in the production of crops on a farm owned or operated by such entity.
(2) In determining whether more than 10 percent of the beneficial
ownership of an entity is held by persons who are not citizens of the
United States or by lawful aliens, the beneficial ownership interest
shall be the higher of the amount of such interest on:
(i) The date the applicable program contract or agreement is
executed by the entity; or
(ii) Any other date prior to the final harvest date that is
determined and announced by the Deputy Administrator to be normal in the
area for the applicable program crop.
(3) A corporation or other entity shall inform the county committee
of any increase in such ownership that occurs after the applicable
program contract or agreement is executed.
(4) In the event of an increase in such ownership after a payment,
loan, or benefit has been made, the entity shall refund such payment,
loan, or benefit.
(5) Where there is only one class of stock or other similar unit of
ownership, an individual's or entity's percentage share of the limited
partnership, corporation or other similar entity shall be based upon the
outstanding shares of stock or other similar unit of ownership held by
the individual or entity and compared to the total outstanding shares of
stock or other similar unit of ownership. If the limited partnership,
corporation or other similar entity has more than one class of stock or
other unit of ownership, the percentage share of the limited
partnership, corporation or other similar entity owned by an individual
or entity shall be determined by the Deputy Administrator on the basis
of market quotations. If market quotations are lacking or are too scarce
to be recognized, such percentage share shall be determined by the
Deputy Administrator on the basis of all relevant factors affecting the
fair market value of such stock or other unit of ownership, including
the various rights and privileges that are attributed to each such
class.
[[Page 266]]
(c) A citizen of the United States, lawful alien, or entity that is
not subject to this part who is in lawful possession, through a lease or
otherwise, of a farm owned by an individual or entity who is subject to
this part may receive a payment, loan, and benefit without regard to
this part.
Sec. 1400.502 Notification.
(a) Any entity, whether foreign or domestic, that executes a program
contract or agreement under which a payment, loan, or benefit may be
available must provide written notification to the county committee in
the county where the entity conducts its farming operation if:
(1) Any individual, group of individuals, entity, or group of
entities holds more than a 10 percent beneficial interest in such
entity; and
(2) Such individual, group of individuals, entity, or group of
entities, in accordance with Sec. 1400.501, are ineligible to receive a
payment, loan and benefit.
(b) Such written notification must, if known, include the name and
social security number or taxpayer identification number of such
individual or entity and of all individuals and entities that hold a
beneficial interest.
(c) The failure of the entity to provide this information will
result in the ineligibility of the entity to receive any payment, loan,
or benefit.
PART 1401--COMMODITY CERTIFICATES, IN KIND PAYMENTS, AND OTHER FORMS OF PAYMENT--Table of Contents
Sec.
1401.1 Applicability.
1401.2 Payments in lieu of cash payments.
1401.3 Payments to persons with outstanding CCC loans.
1401.4 Commodity certificates.
1401.5 In kind payments.
1401.6 Assignments.
1401.7 Miscellaneous provisions.
1401.8 Subsequent holders.
Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1445d.
Source: 51 FR 36921, Oct. 16, 1986, unless otherwise noted.
Redesignated at 53 FR 20290, June 3, 1988, and at 61 FR 37575, July 18,
1996.
Sec. 1401.1 Applicability.
This part shall be applicable to payments and loans made in
accordance with the programs administered by the Commodity Credit
Corporation (CCC) or the Farm Service Agency (FSA) as determined and
announced by the Secretary of Agriculture or a designee of the
Secretary. The definitions of the terms applicable to 7 CFR part 713 set
forth at Sec. 713.3 also shall be applicable to this part, except that
the term ``commodity'' shall mean any agricultural commodity.
Sec. 1401.2 Payments in lieu of cash payments.
(a) CCC will, in accordance with applicable program provisions, make
payments in a form other than in cash to persons who otherwise are
eligible to receive a cash payment from CCC. Further, subject only to
statutory prohibition and notwithstanding any provisions of the contract
to participate in a program administered by CCC or FSA, CCC may: at its
option, make payments in a form other than in cash.
(b) As determined by CCC, payments in a form other than in cash may
be made in the following manner:
(1) By delivery of a commodity to a person at a warehouse or other
similar facility;
(2) By transfer of negotiable warehouse receipts;
(3) By the issuance of certificates which CCC shall redeem in
accordance with this part;
(4) By the acquisition and use of commodities pledged as collateral
for CCC price support loans;
(5) By the use of commodities owned by CCC; and
(6) By such other methods as CCC determines appropriate, including
methods to enable the producer to receive payments in order to assure
that the producer receives the same total return as if the payments had
been made in cash.
(c) The value of the payments made in any manner set forth in
paragraph (b) shall be determined by CCC.
(d) Notwithstanding any other provision of this part, CCC may, with
respect to producers who are members of a cooperative marketing
association
[[Page 267]]
which has been determined in accordance with part 1425 of this title to
be eligible to receive price support on behalf of its producer-members,
enter into agreements with such producers and such cooperatives to
facilitate the making of payments to such producers. Such agreements may
include a provision which allows a producer to make available for the
use of the cooperative the value of the non-cash payment which would
otherwise be made to the producer.
Sec. 1401.3 Payments to persons with outstanding CCC loans.
(a) Persons with outstanding CCC loans who are eligible to receive
payments from CCC, including a person authorized to receive a payment on
behalf of another person, may be required to liquidate such loans in
accordance with this section in order to be eligible to receive a
payment authorized by Sec. 1470.2.
(b) A person with an outstanding CCC loan must, unless otherwise
agreed upon by the person and CCC, redeem and sell to CCC a quantity of
the commodity pledged as collateral for a CCC loan, as determined by
CCC, in an amount equal in value to the value of the payment which would
otherwise be made to such person. If the person has more than one
outstanding CCC loan, CCC may, by contract or otherwise, prescribe which
loan collateral the person shall be required to redeem in order to
receive payment. The purchase price shall be equal to the cost of
liquidating the loan or the portion of the loan for which the quantity
of the commodity sold to CCC is pledged as collateral, except that, in
the case of a special producer storage loan or a farmer-owned reserve
loan, the purchase price will not include the amount of any unearned
advance storage payments received with respect to the redeemed
collateral. After redemption and the subsequent sale to CCC of the
commodity pledged as collateral for such CCC loan, CCC shall make
available to the person a like quantity of the commodity.
Sec. 1401.4 Commodity certificates.
(a) General. CCC may issue commodity certificates as a form of
payment. Commodity certificates will bear a dollar denomination. Such
certificate may be transferred, exchanged for the inventory of CCC
(including the receipt in accordance with paragraph (e) of this section
of loan collateral by a person to whom a loan secured by such collateral
is made): or exchanged for cash, as provided for in this section.
Commodity certificates shall be subject to the provisions of this part,
and to any terms, conditions and restrictions provided on the
certificate, which are incorporated by reference herein.
(b) Liens, encumbrances, and State law. (1) The provisions of this
section or the commodity certificates shall take precedence over any
state statutory or regulatory provisions which are inconsistent with the
provisions of this section or with the provisions of the commodity
certificates.
(2) Commodity certificates shall not be subject to any lien,
encumbrance, or other claim or security interest, except that of an
agency of the United States Government arising specifically under
Federal statute.
(3) The provisions of this paragraph (b) shall apply without regard
to the identity of the holder of the certificate.
(c) Transferability. Any person may transfer a commodity certificate
to any other person. However, any such transfer must be in the full
amount of the certificate, and can be effected only by restrictive
endorsement on the back of the certificate, showing the name of the
transferee and the date of the transfer, and signed by the transferor.
CCC will not honor any certificate bearing any endorsement to ``bearer''
or any other nonrestrictive endorsement, or otherwise transferred in a
manner contrary to the regulations contained in this section. The person
who submits a commodity certificate to CCC shall endorse the certificate
to CCC.
(d) Exchange of commodity certificate for CCC-owned commodities--(1)
General. Except as otherwise provided in this paragraph and in
paragraphs (f) and (g) of this section, any holder of a commodity
certificate may exchange such certificate, by itself or together with
other commodity certificates, for such commodities as are made available
by
[[Page 268]]
CCC by endorsing and submitting the certificate to CCC. If a person
submits commodity certificates for exchange in order that the person
would be eligible to receive a quantity of a commodity which includes
less than an entire unit in which the commodity is stored (e.g., less
than an entire bale of cotton or an entire barrel of honey): (i) Such
person may forfeit the partial unit of the commodity to CCC, or (ii) CCC
may issue a check to such person for the partial unit of the commodity
or permit such person to purchase the remainder of such unit at a price
determined by CCC. A person may obtain information regarding commodities
available for exchange and the procedure for exchange from Kansas City
Commodity Office, FSA-USDA, Kansas City, MO 64141-0205.
(2) Minimum quantities. A holder of an amount of commodity
certificates sufficient to acquire a carload lot, or other quantity as
may be determined by CCC, may present such amount for exchange at any
time on or before the expiration date of such certificates. A holder who
is permitted to exchange the certificate for CCC-owned commodities but
who does not possess commodity certificates in the amount specified in
the preceding sentence may, not to exceed once during a calendar month,
submit such certificates to CCC. CCC will, at CCC's option, pay such
holder by check in the amount of the certificate or transfer to such
holder title to commodities owned by CCC.
(3) CCC-owned commodities stored by a person who submits commodity
certificates to CCC. CCC may require or permit holders of commodity
certificates to exchange such certificates for commodities owned by CCC
which are stored by such holder, without making such commodities or
kinds of commodities available to other holders of commodity
certificates.
(4) Valuation. Except as otherwise may be announced by CCC, CCC will
determine the value of CCC-owned commodities made available to holders
of commodity certificates.
(5) Transfer of title. Title to commodities owned by CCC which are
transferred to a person who submits commodity certificates to CCC shall
be transferred in store, except as may be determined and announced by
CCC. The person who submits certificates to CCC shall be responsible for
all costs incurred in transferring title to the commodity, except as
specifically provided by CCC. The transfer of title to such commodities
shall occur without regard to any State law or any claim of lien against
the commodity or proceeds thereof which may be asserted by any creditor
except agencies of the U.S. Government whose lien arises specifically
under Federal statute.
(6) Expiration date. CCC may, at its option, discount or refuse to
accept any commodity certificate presented for exchange after the
expiration date stated on the certificate.
(e) Use of commodity certificates to receive loan collateral--(1)
General. Except as otherwise provided in this paragraph and in
paragraphs (f) and (g) of this section, any holder of a commodity
certificate may use such certificate to receive commodities pledged as
collateral for CCC loans made to such person, at any time on or before
the expiration date stated on the certificate. A holder of a commodity
certificate who wishes to receive a quantity of a commodity pledged by
such person as collateral for a CCC loan in exchange for a certificate
shall redeem and sell to CCC a quantity of the commodity equal in value
to the dollar denomination of the certificate, as determined by CCC. The
purchase price shall be equal to the cost of liquidating the loan or the
portion of the loan for which the quantity of the commodity sold to CCC
is pledged as collateral, except that, in the case of a special producer
storage loan or a farmer-owned reserve loan, the purchase price will not
include the amount of any unearned advanced storage payments received
with respect to the redeemed loan collateral. Upon submission of the
certificate, which is endorsed to CCC, to the county FSA office which
issued the loan, the holder of a commodity certificate will receive the
quantity of the commodity which has been sold to CCC. Except as
otherwise determined by CCC, if the holder of such certificate does not
have commodities pledged as collateral for CCC
[[Page 269]]
loans equal in value to the dollar denomination of the certificate, as
determined by CCC, CCC will, at CCC's option and after the producer has
submitted the certificate, pay the difference to the person by check or
in the form of a new commodity certificate.
(2) Ineligible commodities. No person may use a commodity
certificate to receive a quantity of tobacco, peanuts, or extra long
staple cotton pledged as collateral for a CCC loan. No person may,
before August 1, 1986, use a commodity certificate to receive a quantity
of upland cotton pledged as collateral for a CCC loan.
(f) Cash redemption start date. (1) The person to whom a generic
certificate is issued which has a date entered in block D may submit
such certificate, endorsed to CCC, at the issuing county FSA office for
payment by check in the amount of the certificate on or after the date
entered in block D through the expiration date of the certificate. Such
person may not exchange the certificate for commodities owned by CCC,
except as otherwise agreed upon between such person and CCC.
(2) The person to whom a generic certificate is issued which has an
entry of ``S/H'' in block D may exchange such certificate for
commodities owned by CCC.
(3) The person to whom a commodity specific certificate is issued
which has a date entered in block D may submit such certificate,
endorsed to CCC, to the Kansas City Commodity Office for the specific
commodity entered in block C beginning on the date entered in block D
through the expiration date of the certificate. Such certificate may not
be exchanged for cash, except as otherwise agreed on by CCC.
(4) All other certificates may be transferred and exchanged as
determined and announced by CCC.
(g) ``Generic'' and commodity-specific commodity certificates--(1)
General. If a commodity certificate indicates that it is a ``generic''
certificate, such certificate may, subject to the provisions of
paragraphs (a) through (f) of this section, be exchanged for any
commodity made available by CCC or, as appropriate, used to receive a
quantity of any commodity which serves as collateral for a CCC loan. If
a certificate is not a ``generic certificate'', such certificate may be
exchanged for the commodity specified on the certificate, except as may
be determined and announced by CCC.
(2) Cotton program payments. Certificates issued as payments under
the 1991 through 1995 upland cotton program, including payments issued
in accordance with section 103B(a)(5)(B) of the Agricultural Act of
1949, may be exchanged for CCC-owned upland cotton only during such
times as determined and announced by CCC.
(3) Commodities not available in CCC inventory. Notwithstanding any
other provision of this section, if a person submits a commodity
specific certificate to CCC in exchange for a quantity of such commodity
and CCC determines it is not possible to make such commodity available,
CCC may: (i) Require such person to exchange the commodity specific
certificate for a generic certificate; or (ii) refuse to accept
submission of such certificate until CCC is able to make available a
quantity of the commodity specified on such certificate.
(h) CCC, at its option, may discount or refuse to accept any
certificate made, transferred, or submitted in violation of this
section.
(i) Interest. With respect to producers who receive commodity
certificates in accordance with the wheat, feed grains, upland cotton
and rice price support and production adjustment programs authorized by
parts 1413 and 1421 of this title, a producer to whom the certificate is
issued who exchanges such a certificate with CCC for cash in accordance
with subsection (f) of this section shall receive interest with respect
to such certificate for a 150 day period. Such interest shall be the
rate of interest determined in accordance with part 1405 of this Title
which is in effect on the date the certificate is issued.
[51 FR 36921, Oct. 16, 1986, as amended at 51 FR 43580, Dec. 3, 1986; 52
FR 45607, Dec. 1, 1987; 56 FR 361, Jan. 4, 1991]
Sec. 1401.5 In kind payments.
(a) Subject to the provisions of Secs. 1470.2 and 1470.3, CCC may
make payments in the form of commodities. Quantities of commodities made
available as payment shall be based upon
[[Page 270]]
the value of the commodity, as determined by CCC. Such quantity may be
adjusted by CCC to reflect the location, quality, and other similar
factors which CCC determines to affect the value of the commodity.
(b) The transfer of title to commodities made available in
accordance with paragraph (a) of this section shall be in store, except
as determined by CCC, and shall be made without regard to any State law
or any claim of lien against the commodity, or proceeds thereof, which
may be asserted by any creditor except agencies of the U.S. Government
whose lien arises specifically under Federal statute. The recipient of
such commodities shall be responsible for all costs incurred in
transferring title to the commodity, except as specifically provided by
CCC.
Sec. 1401.6 Assignments.
Notwithstanding any other provision of this chapter, a payment made
under this part may not be the subject of an assignment, except as
determined and announced by CCC.
Sec. 1401.7 Miscellaneous provisions.
Except as determined by CCC, the following provisions of this title
shall apply to this part:
(a) Part 13, Setoffs and Withholding.
(b) Part 707, Payments Due Persons Who Have Died, Disappeared, or
Been Declared Incompetent.
(c) Part 718, Determination of Acreage and Compliance.
(d) Part 780, Appeal Regulations.
(e) Part 790, Incomplete Performance Based Upon Actions or Advice of
an Authorized Representative of the Secretary.
(f) Part 791, Authority to Make Payments When There has been a
Failure to Comply Fully with the Program.
(g) Part 795, Payment Limitation.
(h) Part 796, Denial of Program Eligibility for Controlled Substance
Violations.
(i) Part 1403, Interest on Delinquent Debts.
(j) All other parts of the Code of Federal Regulations which are
made applicable to this part.
Sec. 1401.8 Subsequent holders.
(a) General. A person who acquires a commodity certificate from
another person shall be considered to be a ``subsequent holder'' of the
certificate. Subsequent holders of certificates who purchased a
commodity certificate on or before January 1, 1990 may, after the
expiration date specified on the certificate, submit the certificate to
CCC for a payment from CCC determined in accordance with paragraph (b)
of this section. All certificates must be submitted after January 2,
1991 and on or before May 28, 1991. Certificates submitted after May 28,
1991 shall not be accepted for payment. Certificates shall be considered
to be submitted as of the date of the postmark on the envelope
containing the certificate. All certificates submitted for payment must
be submitted with, and in accordance with, Form CCC-8. All certificates
submitted to CCC for payment shall be retained by CCC.
(b) Payment rates. (1) Certificates with an expiration date of April
30, 1989 or earlier shall not, in any instance, be eligible for payment
by CCC. Certificates which are submitted 18 months after the expiration
date specified on the certificate shall not be accepted for payment by
CCC.
(2) Persons who submit to CCC, in accordance with this section,
certificates with an expiration date of May 31, 1989 or later shall
receive a payment equal to 50 percent of the certificate's face value if
such certificate is submitted within the period which:
(i) Begins 6 months and one day after the expiration date specified
on the certificate and
(ii) Ends 18 months after such expiration date.
(3) Persons who submit to CCC in accordance with this section
certificates with an expiration date of May 31, 1989 or later shall
receive a payment equal to 85 percent of the certificate's face value if
such certificate is submitted within the period which:
(i) Begins the day after the expiration date specified on the
certificate and
(ii) Ends 6 months after such expiration date.
(c) Transitional rules. In order to provide full benefits under this
section to
[[Page 271]]
parties whose certificates may decline in value from the date of
enactment of section 1122 of the Food, Agriculture, Conservation, and
Trade Act of 1990 (November 28, 1990) until the implementation of the
provisions of such section, persons who, by January 31, 1991, submit to
CCC in accordance with this section certificates with expiration dates
of May 31, 1989, June 30, 1989, May 31, 1990, and June 30, 1990, shall
receive payments for such certificates as if they had been submitted on
November 30, 1990.
(d) Payment limit. (1) No person, as defined in Sec. 719.2(r) of
this title, shall receive a payment in excess of $1,000, except that any
wholly-owned or wholly controlled entity, such as a corporation, shall
be considered to be the same person as the person which owns or controls
such entity. Any person who adopts or participates in adopting a scheme
or device which is designed to evade this limitation or which has the
effect of evading this limitation shall be ineligible to receive a
payment under this section. Such acts include, but are not limited to:
(i) Concealing information which affects the application of this
section;
(ii) Submitting false or erroneous information;
(iii) Creating fictitious entities for the purpose of evading the
application of this section.
(2) No payment shall be paid to a person which is in excess of the
amount which the person paid for the certificate.
(e) Application. In order to receive a payment under this section, a
person must:
(1) Submit certificates with an expiration date of May 31, 1989, or
later with a completed Form CCC-8 to CCC postmarked by May 28, 1991;
(2) Submit no earlier than January 2, 1991 all certificates and
Forms CCC-8 to CCC by mail at the following address: CCC Expired
Certificate Exchange, Attn: Claims and Collections Division, P.O. Box
419205, Kansas City, Missouri, 64141-6205;
(3) Submit evidence to CCC which establishes to the satisfaction of
CCC:
(i) The date the subsequent holder purchased the certificates;
(ii) The price paid by the subsequent holder for the certificates;
and
(iii) If requested by CCC, the name and address of the person from
whom the subsequent holder purchased the certificates.
[56 FR 362, Jan. 4, 1991]
PART 1402--POLICY FOR CERTAIN COMMODITIES AVAILABLE FOR SALE--Table of Contents
Sec.
1402.1 General.
1402.2 Submission of offers, terms, and conditions.
1402.3 Information.
1402.4 Other sales.
Authority: 7 U.S.C. 7285; 15 U.S.C. 714b and 714c.
Source: 61 FR 37575, July 18, 1996, unless otherwise noted.
Sec. 1402.1 General.
To facilitate trade in private trade channels, the Commodity Credit
Corporation (CCC) will disseminate general sales offering information in
the CCC Sales List which is published in press release form. The CCC
Sales List will be revised and republished as necessary. CCC reserves
the right to make any amendments deleting or adding to the provisions of
the CCC Sales List or changing prices or methods of sale, including but
not limited to, changes in the minimum prices and carrying charges.
These lists are issued for the purpose of public information and do not
constitute an offer to sell by CCC or an invitation for offers to
purchase from CCC. The CCC Sales List will set forth either the prices
or the pricing basis at which commodity holdings of CCC are available
for sale for unrestricted or restricted use, and for export. Information
concerning barter and credit will also be included. To be placed on the
mailing list for the CCC Sales List press release, requests should be
made to the Director, Warehouse and Inventory Division, Stop 0553, 1400
Independence Avenue, SW, Washington, DC 20250-9860.
[[Page 272]]
Sec. 1402.2 Submission of offers, terms, and conditions.
CCC will entertain offers from prospective buyers for the purchase
of any commodities on the CCC Sales List. Offers accepted by CCC will be
subject to terms and conditions prescribed by CCC. These terms include,
among others, payment by cash or irrevocable letter of credit before
delivery of the commodity, removal of the commodity from CCC storage
within a reasonable period of time, and, in sales for export, proof of
exportation.
Sec. 1402.3 Information.
The terms and conditions of sale with respect to any commodity
appearing on the CCC Sales List will be furnished upon request addressed
to the Director, Warehouse and Inventory Division, Stop 0553, 1400
Independence Avenue, SW, Washington, DC 20250-9860.
Sec. 1402.4 Other sales.
The general policy of CCC of making sales on a competitive or
negotiated basis will continue to apply to all sales not covered by this
announcement. Inquiries with respect to such sales may be addressed to
the Director, Warehouse and Inventory Division, Stop 0553, 1400
Independence Avenue, SW, Washington, DC 20250-9860.
PART 1403--DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents
Sec.
1403.1 Applicability.
1403.2 Administration.
1403.3 Definitions.
1403.4 Demand for payment of debts.
1403.5 Collection by payment in full.
1403.6 Collection by installment payments.
1403.7 Collection by administrative offset.
1403.8 Withholding.
1403.9 Late payment interest and administrative charges.
1403.10 Waiver of late payment interest and administrative charges.
1403.11 Administrative appeal.
1403.12 Additional administrative collection action.
1403.13 Contact with debtor's employing agency.
1403.14 Prior provision of rights with respect to debt.
1403.15 Discharge of debts.
1403.16 Referral of delinquent debts to credit reporting agencies.
1403.17 Referral of debts to Department of Justice.
1403.18 Referral of delinquent debts to IRS for tax refund offset.
1403.19 Reporting of discharged debts to IRS.
1403.20 Referral of debts to private collection agencies.
1403.21 Collection of 1988 and 1989 advance deficiency overpayments.
Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1445b-2(b).
Source: 54 FR 52878, Dec. 22, 1989, unless otherwise noted.
Sec. 1403.1 Applicability.
Except as may otherwise be provided by statute, this part sets forth
the manner in which the Commodity Credit Corporation (CCC) will settle
and collect debts by and against CCC.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]
Sec. 1403.2 Administration.
The regulations in this part will be administered under the general
supervision and direction of the Executive Vice President, CCC and the
Administrator, Farm Service Agency (FSA).
Sec. 1403.3 Definitions.
The following definitions shall be applicable to this part:
Administrative charges means the additional costs of processing
delinquent debts against the debtor, to the extent such costs are
attributable to the delinquency. Such costs include, but are not limited
to, costs incurred in obtaining a credit report, costs of employing
commercial firms to locate debtor, costs of employing contractors for
collection services, costs of selling collateral or property to satisfy
the debt.
Administrative offset means deducting money payable or held by the
United States Government, or any agency thereof, to satisfy in whole or
in part a debt owed the Government, or any agency thereof.
FSA means the Farm Service Agency of the United States Department of
Agriculture (USDA).
Carrier means a person or other entity, including but not limited to
railroads, motor carriers, ocean carriers or piggyback enterprises,
which provide
[[Page 273]]
transportation or other transportation-related services for
compensation.
Certified financial statement means an account of the assets,
liabilities, income and expenses of a debtor, executed in accordance
with generally accepted accounting principles and attested to as
accurate by the preparer, under penalty of perjury.
CCC means the Commodity Credit Corporation.
Claim means an amount of money or property which has been determined
by CCC, after a notice of delinquency and a demand for the payment of
the debt has been made by CCC, to be owed to CCC by any person other
than a Federal agency.
Credit reporting agency means:
(1) A reporting agency as defined at 4 CFR 102.5(a), or
(2) Any entity which has entered into an agreement with USDA
concerning the referral of credit information.
Debt means any amount owed to CCC or owed by CCC which has not been
satisfied through payment or otherwise.
Debt record refers to the account, register, balance sheet, file,
ledger, data file, or similar record of debts owed to CCC, FSA, or any
other Government Agency with respect to which collection action is being
pursued, and which is maintained in an FSA office.
Delinquent debt means:
(1) Any debt owed to CCC that has not been paid by the date
specified in the applicable statute, regulation, contract, or agreement;
or
(2) any debt that has not been paid by the date of an initial
notification of indebtedness mailed or hand-delivered pursuant to
Sec. 1403.4.
Discharged debt means any debt, or part thereof, which CCC has
determined is uncollectible.
IRS means the Internal Revenue Service.
Late payment interest rate means the amount of interest charged on
delinquent debts and claims. The late payment interest rate shall be
determined as of the date a debt becomes delinquent and shall be equal
to the rate of interest assessed under the Prompt Payment Act.
Person means an individual, partnership, association, corporation,
estate or trust, or other business enterprise or other legal entity and,
whenever applicable, the Federal Government or a State government, or
any agency thereof.
Salary offset means the deduction of money from the current pay
account of a present or former Government employee payable by the United
States Government to, or held by the Government for, such person to
satisfy a debt that person owes the Government.
Settlement means any final disposition of a debt or claim.
Shipment means a carload, truckload, containerload, or other
conveyance load of freight shipped from one location by one shipper for
delivery. Such shipment must move in accordance with the terms of a
commercial or ocean bill or lading, or other similar agreement between
the carrier and CCC. In the case of export shipments, the agreement may
also be between the carrier and a private voluntary organization,
foreign government, or the Agency for International Development.
System of records means a group of any records under the control of
CCC or FSA from which information is retrieved by the name of the
individual, organization or other entity or by some identifying number,
symbol, or other identification assigned to the individual, organization
or other entity.
Withholding means the taking of action to temporarily prevent the
payment of some or all amounts to a debtor under one or more contracts
or programs.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]
Sec. 1403.4 Demand for payment of debts.
(a) When a debt is due CCC, an initial written demand for payment of
such amount shall be mailed or hand-delivered to the debtor. If the debt
is not paid in full by the date specified in the initial demand letter,
or if a repayment schedule acceptable to CCC has not been arranged with
the debtor, the initial demand may be followed by two subsequent written
demands at approximately 30-day intervals. The initial or subsequent
demand letters shall specify the following:
[[Page 274]]
(1) The basis for and the amount of the debt determined to be due
CCC, including the principal, applicable interest, costs and other
charges;
(2) CCC's intent to establish an account on a debt record 30 days
after the date of the letter, or other applicable period of time, if the
debt is not paid within that time;
(3) The applicable late payment interest rate.
(i) If a late payment interest rate is specified in the contract,
agreement or program regulation, the debtor shall be informed of that
rate and the date from which the late payment interest has been
accruing;
(ii) If a late payment interest rate is not specified in the
contract, agreement or program regulation, the debtor shall be informed
of the applicable late payment interest rate set out in Sec. 1403.9.
(4) CCC's intent, if applicable, to collect the debt 30 days from
the date of the initial demand letter, or other applicable period of
time, by administrative offset from any CCC or FSA payments due or to
become due to the debtor, and that the claim may be reported to other
agencies of the Federal government for offset from any amounts due or to
become due to the debtor;
(5) If not previously provided, the debtor's right to request
administrative review by an authorized CCC official, and the proper
procedure for making such request. If the request relates to the:
(i) Existence or amount of the debt, it must be made within 15 days
from the date of the letter, unless a different time period is specified
in the contract, agreement or program regulation;
(ii) Appropriateness of reporting to a credit reporting agency, it
must be made within 30 days from the date of the letter; or
(iii) Appropriateness of referral to IRS for tax refund offset, it
must be made within 60 days from the date of the letter.
(6) The debtor's right to a full explanation of the debt and to
dispute any information in the records of CCC concerning the debt;
(7) That CCC maintains the right to initiate legal action to collect
the amount of the debt;
(8) That if any portion of the debt remains unpaid or if a repayment
schedule satisfactory to CCC has not been arranged 90 days after the due
date, an additional interest rate shall be assessed on the unpaid
balance of the debt as prescribed in Sec. 1403.9(e);
(9) CCC's intent, if applicable, under Sec. 1403.16, to report any
delinquent debt to a credit reporting agency no sooner than 60 days from
the date of the letter;
(10) CCC's intent, if applicable, under Sec. 1403.18, to refer any
delinquent debt to the IRS, no sooner than 60 days from the date of the
letter, to be considered for offset against any tax refund due or to
become due the debtor.
(b) When CCC deems it necessary to protect the Government's
interest, written demand may be preceded by other appropriate actions.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991]
Sec. 1403.5 Collection by payment in full.
Except as CCC may provide in accordance with Sec. 1403.6, CCC shall
collect debts owed to the Government, including applicable interest,
penalties, and administrative costs, in full, whenever feasible whether
the debt is being collected by administrative offset or by another
method, including voluntary payment. If a debt is paid in one lump sum
after the due date, CCC will impose late payment interest, as provided
in Sec. 1403.9, unless such interest is waived as provided in
Sec. 1403.10.
Sec. 1403.6 Collection by installment payments.
(a) Payments in installments may be arranged, at CCC's discretion,
if a debtor furnishes satisfactory evidence of inability to pay a claim
in full by the specified date. The size and frequency of installment
payments shall:
(1) Bear a reasonable relation to the size of the debt and the
debtor's ability to pay; and
(2) Normally be of sufficient size and frequency to liquidate the
debt in not more than three years.
(b) Except as otherwise determined by CCC, no installment
arrangement
[[Page 275]]
will be considered unless the debtor submits a certified financial
statement which reflects the debtor's assets, liabilities, income, and
expenses. The financial statement shall not be required to be submitted
sooner than 15 business days following its request by CCC.
(c) All installment payment agreements shall be in writing and may
require the payment of interest at the late payment interest rate in
effect on the date such agreement is executed. The installment agreement
shall specify all the terms of the arrangement and include provision for
accelerating the debt in the event the debtor defaults. A confession of
judgment provision may be included in the agreement.
(d) CCC may deem a repayment plan to be abrogated if the debtor
fails to comply with its terms.
(e) If the debtor's financial statement or other information
discloses the ownership of assets which are not encumbered, the debtor
may be required to secure the payment of an installment note by
executing a security agreement and financing agreement which provides
CCC a security interest in the assets until the debt is paid in full.
(f) If the debtor owes more than one debt to CCC, CCC may allow the
debtor to designate the manner in which a voluntary installment payment
is to be applied. If the debtor does not designate the application of a
voluntary installment or partial payment, the payment will be applied to
such debts as determined by CCC.
Sec. 1403.7 Collection by administrative offset.
(a) The provisions of this section shall apply to all debts due CCC
except as otherwise provided in this part and part 1404 of this Chapter.
This section is not applicable to:
(1) CCC requests for administrative offset against money payable to
a debtor from the Civil Service Retirement and Disability Fund and CCC
requests for salary offset against a present or former employee of the
Federal Government which shall be made in accordance with regulations at
part 3 of this title;
(2) CCC requests for administrative offset against a Federal income
tax refund payable to a debtor which shall be made in accordance with
Sec. 1403.18;
(3) Cases in which CCC must adjust, by increasing or decreasing, a
payment which is to be paid under a contract in order to properly make
other payments due by CCC;
(4) Any case in which collection of the type of debt involved by
administrative offset is explicitly provided for or prohibited by
statute; and
(5) IRS Notices of Levy which shall be honored in accordance with
IRS statutes and regulations.
(b) Debts due CCC may be collected by administrative offset from
amounts payable by CCC when:
(1) The debtor has been provided written notification of the basis
and amount of the debt and has been given an opportunity to make
payment. Such written notification and opportunity includes notice of
the right to pursue an administrative appeal in accordance with part 780
of this Title or any other applicable appeal procedures, if not
previously provided;
(2) The debtor has been provided an opportunity to request to
inspect and copy the records of CCC related to the debt;
(3) The debtor has been notified in writing that the debt may be
collected by administrative offset if not paid; and
(4) The debt has not been delinquent for more than ten years or
legal action to enforce the debt has not been barred by an applicable
period of limitation, whichever is later.
(c) Administrative offset shall also be effected against amounts
payable by CCC:
(1) When requested or approved by the Department of Justice; or
(2) When a person is indebted under a judgment in favor of CCC.
(d) Debts due CCC from carriers for overcharges shall be offset
against amounts due such carriers under freight bills involving
shipments if:
(1) The carrier, without reasonable justification, has declined
payment of the debt or has failed to pay the debt after being given a
reasonable opportunity to make payment; and
(2) The period of limitation prescribed at 49 U.S.C. 11706(f) has
not expired.
[[Page 276]]
(e) Debts due CCC from carriers for loss or damage shall be offset
against amounts due such carriers under freight bills involving
shipments if:
(1) Timely demand for payment was made on the carrier;
(2) The carrier has declined payment of the debt without reasonable
justification or has ignored the claim; and
(3) The period of limitation prescribed at 49 U.S.C. 11707(e) has
not expired.
(f) Any overcharge or loss or damage debt due CCC on which the
applicable period of limitation has run may be offset against any
amounts owing by CCC to the carrier which are subject to a defense of
limitation.
(g) A payment due any person may be offset when there is a breach of
a contract or a violation of CCC program requirements, and offset is
considered necessary by CCC to protect the financial interests of the
Government.
(h) In the case of any procurement contract with CCC which provides
for invoicing at the time of shipment with delivery to be made at
designated destination points when:
(1) Payment is made to the contractor prior to receipt of evidence
of delivery, and
(2) CCC thereafter determines that the Contractor is indebted to CCC
because of losses sustained from shortage, damage to or deterioration of
the commodity while in transit and prior to delivery, CCC may offset
such indebtedness against amounts due and payable to the Contractor
under any other contract with CCC providing the Contractor has not
assigned the proceeds of such contract in accordance with part 1404 of
this chapter.
(i) CCC may effect administrative offset against a payment to be
made to a debtor prior to completion of the procedures required by
(b)(1-3) of this section if:
(1) Failure to take the offset would substantially prejudice CCC's
ability to collect the debt; and
(2) The time before the payment is to be made does not reasonably
permit the completion of those procedures.
(j)(1) Debts due any agency other than CCC shall be offset against
amounts payable by CCC to a debtor when an agency of the U.S. Government
has submitted a written request for offset which is mailed or hand-
delivered to the appropriate FSA State office, Kansas City Management
Office or Kansas City Commodity Office. Such written request must:
(i) Bear the signature of an authorized representative of the
requesting agency;
(ii) Include a certification that all requirements of the law and
the regulations for collection of the debt and for requesting offset
have been complied with;
(iii) State the name, address (including county), and, where legally
available, the social security number or employer ID number of the
debtor and a brief description of the basis of the debt, including
identification of the judgment, if any.
(iv) State the amount of the debt separately as to principal,
interest, penalties, and administrative costs. Interest, if any, shall
be computed on a daily basis to a date shown in the request. The amount
to be offset shall not exceed the principal sum owed by the debtor, plus
interest computed in accordance with the request, and any late payment
interest, penalties and administrative costs that have been assessed;
(v) Certify that the debtor has not filed for bankruptcy. If the
debtor has filed for bankruptcy, a copy of the order of the bankruptcy
court relieving the agency from the automatic stay must be included; and
(vi) State the name, address, and telephone number of a contact
person within the agency and the address to which payment should be
sent.
(2) Unless prohibited by law, the head of an agency, or a designee,
may defer or subordinate in whole or in part the right of the agency to
recover through offset all or part of any indebtedness to such agency,
or may withdraw a request for offset. Notice of such action must be sent
to the appropriate FSA office.
(k)(1) After CCC has complied with the provisions of this part, CCC
may request other agencies of the Government to offset amounts payable
by them to persons indebted to CCC.
[[Page 277]]
(2) In the case of a request to IRS for a tax refund offset, the
provisions at Sec. 1403.18 shall apply.
(l)(1) Debts shall be collected by offset in the following order of
priority without regard to the date of the request for such collection:
(i) Debts to CCC.
(ii) Debts to other agencies of USDA as determined by CCC.
(iii) Debts to other government agencies as determined by CCC.
(2) In the case of multiple debts involving the same debtor, CCC
may, at its discretion, deviate from the usual order of priority in
applying recovered amounts to debts owed other agencies when considered
to be in the Government's best interest. Such decision shall be made by
CCC based on the facts and circumstances of the particular case.
(m)(1) No amounts payable to a debtor by CCC shall be paid to an
assignee until there have been collected any amounts owed by the debtor
except as provided in this subsection.
(2) A payment which is assigned in accordance with part 1404 of this
Chapter by execution of Form CCC-36 shall be subject to offset for any
debt owed to CCC or FSA without regard to the date notice of assignment
was accepted by CCC or FSA.
(3) A payment which is assigned in accordance with part 1404 of this
Chapter by execution of Form CCC-252 shall be offset:
(i) Against any debt of the assignor entered on the debt record of
the applicable FSA office prior to the filing of such form with CCC or
FSA, or
(ii) At anytime, regardless of the date of filing of such form with
CCC or FSA, if the debt which is the basis for the offset arises under
the same contract under which the payment is earned by the assignor.
(4) With respect to all other Federal agencies, offset shall be made
of any amounts due any other Federal agency which are entered on the
debt record of the appropriate FSA office prior to the date the notice
of assignment was accepted by CCC or FSA.
(5) Any amount due and payable to the assignor which remains after
deduction of amounts paid to the assignee shall be available for offset.
(n) Amounts recovered by offset for CCC and FSA debts but later
found not to be owed to the Government shall be promptly refunded.
(o) The debtor shall be notified whenever any offset action has been
taken.
(p) Offsets made pursuant to this section shall not deprive a debtor
of any right he might otherwise have to contest the debt involved in the
offset action either by administrative appeal or by legal action.
(q) Any action authorized by the provisions of this section may be
taken:
(1) Against a debtor's pro rata share of payments due any entity
which the debtor participates in, either directly or indirectly, as
determined by CCC.
(2) When CCC determines that the debtor has established an entity,
or reorganized, transferred ownership of, or changed in some other
manner, their operation, for the purpose of avoiding the payment of the
claim or debt.
(r) The amount to be offset shall not exceed the actual or estimated
amount of the debt, including interest, administrative charges, and
penalties, unless the Department of Justice requests that a larger
specified amount be offset.
(s) Offset action will not be taken against payments when:
(1) The payment represents loan or purchase proceeds for a commodity
which is subject to the rights of the holder of a prior valid
enforceable lien. However, any amount that exceeds the amount of the
prior lien shall be available for offset.
(2) A debt has been discharged as provided in Sec. 1403.15.
(3) The amount payable to the debtor is used to satisfy a prior lien
on property pledged as collateral for a CCC loan or sold to CCC.
However, any amount exceeding the amount of the prior lien shall be
available for offset.
(4) CCC determines such action will unduly interfere with the
administration of a CCC or FSA program.
(5) The debt has been delinquent for more than ten years or legal
action to enforce the debt due CCC is barred by an applicable period of
limitation, whichever is later.
(t)(1) Notwithstanding the provisions of paragraph (b) of this
section and Sec. 1403.4, with respect to debts which are
[[Page 278]]
based upon an unsettled CCC loan, offset action may be taken when the
debtor has been:
(i) Provided written notification of the maturity date of the loan
and the debtor has not repaid the loan by the maturity date or, in the
case of a nonrecourse price support loan, has not repaid the loan or
forfeited the loan collateral to CCC by the date specified by CCC;
(ii) Notified of CCC's intent to establish an account on a debt
record 30 days after the maturity date, or other applicable period of
time, if the loan is not settled in accordance with the loan agreement;
(iii) Notified of the right to pursue an administrative appeal in
accordance with part 780 of this title if such an opportunity has not
been previously provided;
(iv) Provided an opportunity to inspect and copy CCC records related
to the debt; and
(v) Notified in writing that the debt may be collected by
administrative offset if the loan is not repaid or, with respect to
nonrecourse loans only, settled through forfeiture of the loan
collateral.
(2) After a claim has been established by CCC with respect to a loan
which has not been settled by the date specified in the loan agreement:
(i) In the event CCC takes possession of the collateral which is
security for a nonrecourse of recourse loan made in accordance with
parts 1421, 1427, 1434, or 1435 of this chapter, the value of such loan
collateral shall be determined by CCC in accordance with the provisions
of such parts which are used to determine the settlement value of the
collateral. The value of such collateral shall be applied to the claim.
Any amount remaining due on the claim must be paid by the debtor.
(ii) In the event CCC takes possession of the collateral which is
the security for any other loan, the value of such collateral, as
determined by CCC, less any costs incurred by CCC in taking possession
and disposing of the collateral, shall be applied to the claim. Any
amount remaining due on the claim must be paid by the debtor.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991;
60 FR 43706, Aug. 23, 1995]
Sec. 1403.8 Withholding.
(a) Withholding of a payment prior to the completion of an
applicable offset procedure may be made from amounts payable to a debtor
by CCC to ensure that the interests of CCC and the United States will be
protected as provided in this section.
(b) A payment may be withheld to protect the interests of CCC or the
United States only if CCC determines that:
(1) There has been a serious breach of contract or violation of
program requirements and the withholding action is considered necessary
to protect the financial interests of CCC;
(2) There is substantial evidence of violations of criminal or civil
frauds statutes and criminal prosecution or civil frauds action is of
primary importance to program operations of CCC;
(3) Prior experience with the debtor indicates that collection will
be difficult if amounts payable to the debtor are not withheld;
(4) There is doubt that the debtor will be financially able to pay a
judgment on the claim of CCC;
(5) The facts available to CCC are insufficient to determine the
amount to be offset or the proper payee;
(6) A judgment on a claim of CCC has been obtained; or
(7) Such action has been requested by the Department of Justice.
(c) Except for debts due CCC or FSA, withholding action by CCC on
amounts payable to debtors of other Government agencies may not be made
unless requested by the Department of Justice.
[54 FR 52878, Dec. 22, 1989]
Sec. 1403.9 Late payment interest and administrative charges.
(a)(1) The provisions of this section are applicable to all persons
whose debt to CCC becomes delinquent after January 1, 1990, unless the
debtor and CCC agree otherwise.
[[Page 279]]
(2) Late payment interest provisions of this section shall not
apply:
(i) To debts owed by Federal agencies and State and local
governments. Interest on debts owed by such entities shall be charged in
accordance with applicable statutes or, if none are applicable, at the
rate of interest charged by the U.S. Treasury for funds borrowed by CCC
on the day the debt became delinquent;
(ii) If an applicable statute, regulation, agreement or contract
either prohibits the charging of such interest or specifies the interest
or charges applicable to the debt involved;
(iii) If the late payment interest is waived by CCC.
(b) CCC will assess late payment interest on the full amount of
delinquent debts. For purposes of this section, the term ``full amount
of the delinquent debt'' means the sum of the principal, accrued regular
loan interest or accrued program interest, and any other charges which
are otherwise due and owing to CCC on the delinquent debt at the time
the late payment interest is assessed, except as provided in paragraphs
(a)(2) and (d)(3) of this section.
(c) The late payment interest shall be expressed as an annual rate
of interest which CCC charges on delinquent debts. The late payment
interest rate shall be equal to the higher of the Treasury Department's
current value of funds rate or the rate of interest assessed under the
Prompt Payment Act, determined as of the date specified in paragraphs
(d)(1) and (d)(2) of this section.
(d)(1) When a debt results from a statute, regulation, contract or
other agreement with specific provisions for late payment interest and
payment due date, late payment interest shall accrue on the amount of
the debt from the first day the debt became delinquent, unless otherwise
provided by statute.
(2) With respect to debts not resulting from a statute, regulation,
contract or agreement containing specific provisions for late payment
interest and payment due date, late payment interest shall begin to
accrue from the date on which notice of the debt is first mailed or
hand-delivered to the debtor, except that, with respect to debts
resulting from price support loans, late payment interest shall begin to
accrue from the date on which a claim is established.
(3) The rate of late payment interest initially assessed will be
fixed for the duration of the indebtedness, except when a debtor has
defaulted on a repayment agreement and seeks to enter into a new
agreement. CCC may then set a new rate of interest which reflects the
late payment interest rate in effect at the time the new agreement is
executed. All charges which accrued, but which were not collected under
the defaulted agreement, shall be added to the principal to be paid
under a new repayment agreement.
(4) The late payment interest on delinquent debts will accrue on a
daily basis.
(e)(1) Except as specified in paragraphs (a)(2) and (e)(2) of this
section, an additional interest rate of three (3) percent per annum will
be assessed on any portion of a debt which remains unpaid 90 days after
the date described in paragraph (d)(1) or (d)(2) of this section, if no
repayment schedule satisfactory to CCC has been agreed upon. Such rate
will be assessed retroactively from the date late payment interest began
to accrue and apply on a daily basis. Such rate shall continue to accrue
until the delinquent debt has been paid.
(2) With respect to debts resulting from price support loans, an
additional interest rate of three (3) percent per annum will be assessed
on a portion of a debt which remains unpaid 60 days after the date on
which a claim was established. Such rate will be assessed retroactively
from the date of claim establishment and apply on a daily basis. Such
rate shall continue to accrue until the delinquent debt has been paid.
(f) CCC shall assess as administrative charges the additional costs
of processing delinquent debts against the debtor, to the extent such
costs are attributable to the delinquency. Such costs include, but are
not limited to, costs incurred in obtaining a credit report, costs of
employing commercial firms to locate debtor, costs of employing
contractors for collection services,
[[Page 280]]
costs of selling collateral or property to satisfy the debt.
(g) When a debt is paid in partial or installment payments, payments
will be applied first to administrative charges, second to additional
interest assessed in accordance with paragraph (e) of this section and
late payment interest, and third to outstanding principal.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66955, Dec. 27, 1991;
60 FR 43706, Aug. 23, 1995]
Sec. 1403.10 Waiver of late payment interest, additional interest and administrative charges.
(a) Except for debts resulting from price support loans, CCC shall
waive the collection of late payment interest and administrative charges
on a debt or any portion of a debt which is paid within 30 days after
the date on which late payment interest began to accrue.
(b) CCC may waive the assessment and collection of all or a portion
of the additional interest on debts which are appealed in accordance
with 7 CFR part 780, or other applicable appeal procedures, from either
the date of the appeal or the date of delinquency, as determined by CCC,
until the date a final administrative determination is issued. However,
with respect to CCC programs administered by the Foreign Agricultural
Service, CCC shall waive the assessment and collection of additional
interest on debts which are appealed in accordance with 7 CFR part 780,
or other applicable appeal procedures, from the date of delinquency
until 30 days after the date of the letter informing the appellant of
the final administrative determination. The waiver provisions of the
paragraph shall not apply during any period of delay due to:
(1) The appellant's request for a postponement of the scheduled
hearing;
(2) The appellant's request for an additional time following the
hearing to present additional information or a written closing
statement; or
(3) The appellant's failure to timely present information to the
reviewing authority.
(c) Assessment and collection of late payment interest, additional
interest and administrative charges under this part may be waived by CCC
in full, or in part, if it is determined that such action is in the best
interest of CCC.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66956, Dec. 27, 1991]
Sec. 1403.11 Administrative appeal.
If the opportunity to appeal the determination has not previously
been provided under part 24 or 780 of this title or any other appeal
procedure, a debtor may obtain an administrative review under part 780
of this title, or other applicable appeal procedures, of CCC's
determination concerning the existence or amount of a debt, if a request
is filed with the authority who made the determination within 15 days of
the date of CCC's initial demand letter, unless a longer period is
specified in the initial demand letter.
[56 FR 66956, Dec. 27, 1991]
Sec. 1403.12 Additional administrative collection action.
Nothing contained in this part shall preclude the use of any other
administrative or contractual remedy which may be available to CCC to
collect debts owed to the Government.
[56 FR 66956, Dec. 27, 1991]
Sec. 1403.13 Contact with debtor's employing agency.
When a debtor is employed by the Federal Government or is a member
of the military establishment or the Coast Guard, and collection by
offset cannot be accomplished in accordance with 5 U.S.C. 5514, CCC may
contact the employing agency to arrange for payment of the debt by
allotment or otherwise, in accordance with section 206 of Executive
Order No. 11222, May 8, 1965, 30 FR 6469.
Sec. 1403.14 Prior provision of rights with respect to debt.
CCC will not provide an administrative appeal with respect to issues
which were subject to administrative review at the debtor's request as
provided under another statute or regulation before:
(a) Effecting administrative offset;
(b) Referring the debt to private collection or credit reporting
agencies;
[[Page 281]]
(c) Referring the debt to the Office of Personnel Management (OPM)
for salary offset against the current pay of a present or former
Government employee; or
(d) Referring the debt to IRS for tax refund offset.
Sec. 1403.15 Discharge of debts.
(a) Except as required by other applicable regulation or statute, a
debt or part thereof owed CCC shall be discharged and the records and
accounts on that debt closed in the following situations:
(1) When an obligation or part thereof is discharged in bankruptcy;
(2) When an obligation or part thereof is the subject of a final
judgment entered by a court of competent jurisdiction which is adverse
to CCC;
(3) When a debt or part thereof is compromised and paid, the amount
of such compromise;
(4) When collection of a debt by administrative offset is barred in
accordance with Sec. 1403.7(s)(5).
(b) A debt or part thereof owed CCC may be discharged and the
records and accounts on that debt closed when the Controller, CCC, has
determined that such action is in the best interest of CCC.
(c) A claims official or claims officer may discharge a delinquent
debt if such debt arises under the terms of the authority delegated to
such official or officer in the following circumstances:
(1) The delinquent debt is owed by an entity which has been
liquidated or dissolved and no legal remedy is feasible.
(2) The delinquent debt is owed by an individual who:
(i) Is declared legally insane or incompetent;
(ii) Possessed of no assets or other means of payment; and
(iii) Possessed of no reasonable prospects of being able to pay the
debt in the future.
(3) The delinquent debt was incurred by an individual who is
deceased, and from whose estate recovery cannot be made.
(d) Debts discharged in accordance with this section may be reported
to the Internal Revenue Service pursuant to Sec. 1403.19.
Sec. 1403.16 Referral of delinquent debts to credit reporting agencies.
(a) This section specifies the procedures that will be followed by
CCC and the rights that will be afforded to farm producers when CCC
reports delinquent debts to credit reporting agencies.
(b) Before disclosing information to a credit reporting agency in
accordance with this part, CCC shall review the claim and determine that
it is valid and delinquent.
(c) Before a debt may be referred to a credit reporting agency, the
debtor must be notified, pursuant to Sec. 1403.4, of CCC's intent to
make such a report. Such notification shall include:
(1) CCC's intent to disclose to a credit reporting agency that the
debtor is responsible for the debt, and that such disclosure will be
made not less than 60 days after notification to such debtor.
(2) The information intended to be disclosed to the credit reporting
agency under paragraph (g)(1) of this section.
(3) The debtor's right to enter a repayment agreement on the debt,
including, at the discretion of CCC, installment payments, and that if
such an agreement is reached, the debt will not be referred to a credit
reporting agency.
(4) The debtor's right to review of this action in accordance with
paragraph (i) of this section.
(d) The debtor shall be notified, in writing at the debtor's last
known address, when CCC has reported any delinquent debt to a credit
reporting agency.
(e)(1) CCC shall notify each credit reporting agency to which an
original disclosure of delinquent debt information was made of any
substantial change in the condition or amount of the claim.
(2) CCC shall promptly verify or correct, as appropriate,
information about the debt on request of a credit reporting agency. The
records of the debtor shall reflect any correction resulting from such
request.
(f) Information reported to a credit reporting agency on delinquent
debts shall be derived from the system of records maintained by CCC.
[[Page 282]]
(g) CCC shall limit delinquent debt information disclosed to credit
reporting agencies to:
(1) The name, address, taxpayer identification number, and other
information necessary to establish the identity of the debtor;
(2) The amount, status, and history of the claim; and
(3) The program under which the claim arose.
(h) Reasonable action shall be taken to locate a debtor for whom CCC
does not have a current address before reporting delinquent debt
information to a credit reporting agency.
(i)(1) Before disclosing delinquent debt information to a credit
reporting agency, CCC shall, upon request of the debtor, provide for a
review of the debt in accordance with Sec. 1403.11. This review shall
only consider defenses or arguments which were not available or could
not have been available at any previous appeal proceeding permitted
under Sec. 1403.11.
(2) Upon receipt of a request for review within 30 days from the
date of notice to the debtor of intent to refer delinquent debt
information to a credit reporting agency, CCC shall suspend its schedule
for disclosure to a credit reporting agency until a final decision
regarding the appropriateness of disclosure to a credit reporting agency
is made.
(3) Upon completion of the review, the reviewing official shall
transmit to the debtor a written notification of the decision. If
appropriate, the debtor shall be notified of the scheduled date on or
after which the debt will be referred to the credit reporting agency.
The debtor will also be notified of any changes from the initial
notification in the information to be disclosed.
(j)(1) In accordance with guidelines established by the Executive
Vice President, CCC, the responsible claims official shall report to
credit reporting agencies delinquent debt information specified in
paragraph (g) of this section.
(2) The agreements entered into by USDA and credit reporting
agencies shall provide the necessary assurances to CCC that the credit
reporting agencies to which information will be provided are in
compliance with the provisions of all the laws and regulations of the
United States relating to providing credit information.
(3) CCC shall not report delinquent debt information to credit
reporting agencies when:
(i) The debtor has entered a repayment agreement covering the debt
with CCC, and such agreement is still valid; or
(ii) CCC has suspended its schedule for disclosure of delinquent
debt information pursuant to paragraph (i)(2) of this section.
(k) Disclosures made under this section shall be in accordance with
the requirements of the Privacy Act, as amended (5 U.S.C. 552a).
(l) Notwithstanding the provisions of paragraphs (a) through (k) of
this section, all commercial debts owed by debtors other than farm
producers may be reported to credit reporting agencies.
[54 FR 52878, Dec. 22, 1989, as amended at 56 FR 66956, Dec. 27, 1991]
Sec. 1403.17 Referral of debts to Department of Justice.
Debts which cannot be collected in accordance with these regulations
may be referred to the Department of Justice for collection action.
Sec. 1403.18 Referral of delinquent debts to IRS or tax refund offset.
CCC may refer legally enforceable delinquent debts to IRS to be
offset against tax refunds due to debtors under 26 U.S.C. 6402, in
accordance with the provisions of 31 U.S.C. 3720A and Treasury
Department regulations.
Sec. 1403.19 Reporting discharged debts to IRS.
(a) In accordance with IRS regulations, CCC may report to IRS as
discharged debts on IRS Form 1099-G only the amounts specified in
paragraph (b) of this section.
(b) The following discharged debts may be reported to IRS:
(1) The amount of a debt discharged under a compromise agreement
between CCC and the debtor, except for compromises made due to doubt
about the Government's ability to prove its case in court for the full
amount of the debt.
[[Page 283]]
(2) The amount of a debt discharged by the running of the statutory
period of limitation for collecting the debt by administrative offset
specified in 31 U.S.C. 3716.
(3) The amount of a debt discharged by CCC in accordance with
Sec. 1403.15(b).
Sec. 1403.20 Referral of debts to private collection agencies.
If CCC's collection efforts have been unsuccessful after 90 days and
the delinquent debt remains unpaid, CCC may refer the debt to a private
collection agency for collection.
Sec. 1403.21 Collection of 1988 and 1989 advance deficiency overpayments.
(a) The provisions of this section set forth the policies and
procedures for collection of 1988 and 1989 advance deficiency
overpayments (``overpayments'').
(b) The following definition shall be applicable to this section:
Financial hardship means that condition of a producer in which
payment of the debt by lump sum would jeopardize the producer's ability
to provide food, shelter, and medical care to his immediate family, or
to continue the producer's farming operation, as determined by CCC.
(c) This section applies to collection of overpayments from those
producers who are suffering financial hardship, as determined by CCC,
and who also meet the following conditions, as determined by CCC:
(1) Who received an advance deficiency payment for the 1988 or 1989
crop of a commodity under part 1413 of this chapter;
(2) Who are required to provide a refund of at least $1,500 of such
payment, as a result of the increase in market prices of the commodity;
(3) Who reside in a county, or in a county that is contiguous to a
county where CCC has determined that farming, ranching, or aquaculture
operations have been substantially affected as evidenced by a reduction
in normal production for the county of at least 30 percent during two of
the three crop years 1988, 1989, and 1990 by:
(i) A natural disaster designated by the Secretary of Agriculture;
(ii) A major disaster or emergency designated by the President under
the Robert T. Stafford Disaster and Emergency Assistance Act (42 U.S.C.
5121 et seq.);
(4) Where the total quantity of the 1988 or 1989 crop of the
commodity that the producers were able to harvest is less than the
result of multiplying 65 percent of the farm payment yield established
CCC for the crop by the sum of the acreage planted for the harvest and
the acreage prevented from being planted (because of the disaster or
emergency referred to in paragraph (c)(3) of this section) for the crop;
and
(5) Who have applied to the County Farm Service Agency Office which
issued the advance deficiency payment, no later than May 31, 1991, for a
determination of eligibility for the repayment provisions of this
section.
(d) CCC shall assess interest on delinquent debts for 1988 or 1989
overpayments as follows:
(1) CCC shall establish a regional annual interest rate for each of
12 geographic regions, corresponding to the extent practicable, as
determined by CCC, with the 12 geographic districts of the Farm Credit
System.
(2) Each regional annual interest rate shall not exceed the average
of the interest rates charged by Farm Credit System institutions within
the region to high-risk borrowers on 1-year operating loans, as
determined by CCC based upon information provided to CCC by the Farm
Credit System.
(3) Interest shall accrue at the established regional annual
interest rate for the region in which the debt arose, beginning November
28, 1990.
(e) CCC shall not offset, in each of the crop years 1990, 1991, and
1992, more than \1/3\ of the farm program payments otherwise due a
producer, as a result of the producer's delinquency in repaying the
overpayment.
(f) CCC shall permit producers to repay the overpayment in three
equal installments during each of the crop years 1990, 1991, and 1992,
if the producers document to CCC that they have entered into agreements
to obtain multiperil crop insurance policies for the 1991 and 1992 crop
years.
[56 FR 32319, July 16, 1991]
[[Page 284]]
PART 1404--ASSIGNMENT OF PAYMENTS--Table of Contents
Sec.
1404.1 General statement.
1404.2 Definitions.
1404.3 Payments which may be assigned.
1404.4 Execution of assignment form.
1404.5 [Reserved]
1404.6 Payment to the assignee.
1404.7 Misrepresentations.
1404.8 Liability of the Secretary or disbursing agents.
Sec. 1404.9 OMB Control Numbers assigned pursuant to the Paperwork
Reduction Act.
Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 590h(g).
Source: 54 FR 52883, Dec. 22, 1989, unless otherwise noted.
Sec. 1404.2 Definitions.
(a)(1) Assignee means any person, including any agency of the
Federal Government, to whom an assignment of an FSA or CCC payment is
made in accordance with this part.
(2) Assignor means any person who is the recipient of a payment from
FSA or CCC who assigns the payment to another person in accordance with
this part.
(3) Payment means a cash payment and excludes
(i) Any payment made in accordance with part 1470 of this title;
(i) Price support loan or purchase agreement proceeds; and
(iii) Any payments made in accordance with parts 1487, 1488, 1491,
1492, and 1493 of this title.
(b) The terms defined in parts 719, 1413, 1421 and 1427 shall also
be applicable to this part.
Sec. 1404.3 Payments which may be assigned.
Except as otherwise provided in this part or in individual program
regulations, contracts and agreements entered into by FSA or CCC, any
payment due a person from FSA or CCC may be assigned.
[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]
Sec. 1404.4 Execution of assignment form.
(a)(1) The assignment of any FSA or CCC payment must be made by the
execution of Form CCC-36 or Forms CCC-251 and CCC-252. Form CCC-36 is
applicable to payments made under programs administered in accordance
with 7 CFR parts 701, 704, 1413, 1430, 1468, 1472 and 1475. Such form is
also applicable to any other program which is administered by a county
ASC committee. Forms CCC-251 and 252 are applicable to all other CCC or
FSA programs and contracts.
(2)(i) To be recognized by FSA or CCC, Form CCC-36 must be filed in
the county FSA office prior to the time the county committee approves
the making of the payment covered by the assignment. To be recognized by
FSA or CCC, Forms CCC-251 and 252 must be filed with the FSA or CCC
office from which the payment will be made prior to the making of the
payment.
(ii) Form CCC-36 or Forms CCC-251 and 252 must be signed by both the
assignor and the assignee.
(3) The assignor and the assignee shall promptly notify the
appropriate FSA or CCC office of any change affecting the assignment.
(b) [Reserved]
[54 FR 52883, Dec. 22, 1989, as amended at 56 FR 361, Jan. 4, 1991]
Sec. 1404.6 Payment to the assignee.
(a) The assignee shall be paid the smaller of the amount specified
on Form CCC-36 or CCC-251 or the amount of the payment earned under the
program or contract covered by the assignment. Any indebtedness owed by
the assignor to CCC, FSA, or any other agency of the United States shall
be subject to offset.
(b) Any indebtedness owed by the assignor to CCC or FSA shall be
offset from any payment which is owed by CCC or FSA without regard to
the date of filing of a Form CCC-36 with the applicable FSA or CCC
office. Except as
[[Page 285]]
provided in paragraph (d) of this section, any indebtedness owed by the
assignor to CCC or FSA shall be offset from any payment which is owed by
CCC or FSA if such indebtedness was entered on the debt record of the
applicable FSA or CCC office prior to the date of the filing of Forms
CCC-251 and 252 with the applicable FSA or CCC office.
(c) Any indebtedness owed by the assignor to any agency of the
United States other than CCC or FSA which was entered on the debt record
of the applicable FSA or CCC office prior to the date of filing of the
Form CCC-36 or Forms CCC-251 and 252 with such office shall be offset
prior to the making of any payment to the assignee.
(d) Any indebtedness arising under a contract between the assignor
and FSA or CCC which is the subject of the assignment shall be offset
from the payment prior to the making of any payment to the assignee
under such contract without regard to the date of the filing of Form
CCC-36 or Forms CCC-251 and 252 with the appropriate FSA or CCC office.
Sec. 1404.7 Misrepresentations.
If FSA or CCC has reason to believe that any material
misrepresentation was made by the assignor or the assignee in executing
Forms CCC-36, CCC-251 or CCC-252, FSA or CCC shall give notice thereof
to the assignor and the assignee. If, after investigation and
opportunity for the assignor and assignee to be heard, FSA or CCC finds
that any material misrepresentation was in fact made, FSA or CCC shall
notify the assignor and the assignee of such finding, and void such
assignment, and insofar as concerns FSA, CCC or any other agency of the
United States, the assignment shall be of no effect.
Sec. 1404.8 Liability of the Secretary or disbursing agents.
Neither the United States, the CCC, the Secretary nor any disbursing
agent shall be liable in any suit if payment is made to the assignor
without regard to the existence of any assignment, and nothing contained
herein shall be construed to authorize any suit against the United
States, the CCC, the Secretary or any disbursing agent if payment is not
made to the assignee, or if payment is made to only one of several
assignees.
Sec. 1404.9 OMB Control Numbers assigned pursuant to the Paperwork Reduction Act.
The information collection requirements contained in this part have
been approved by the Office of Management and Budget under the
provisions of 44 U.S.C. 35 and have been assigned OMB control number
0560-0004.
PART 1405--LOANS, PURCHASES, AND OTHER OPERATIONS--Table of Contents
Sec.
1405.1 Interest.
1405.2 Basic rule of fractions.
1405.3 Effect of changes in regulations.
1405.4 Delegations of authority.
1405.5 Notice and comment.
1405.6 Crop insurance requirement.
Authority: 15 U.S.C. 714b and 714c.
Source: 61 FR 37575, July 18, 1996, unless otherwise noted.
Sec. 1405.1 Interest.
(a) Except as may otherwise be determined by CCC as provided in
individual program regulations, program contracts or such other means as
deemed appropriate by CCC the rate of interest that is applicable to CCC
loans shall be equal to the rate of interest charged by the U.S.
Treasury for funds borrowed by CCC on the date the loan is disbursed by
CCC, plus 1 percent. This rate of interest shall be in effect until the
earlier of the maturity of the loan or the next January 1.
(b) The rate of interest applicable to all CCC loans that are
outstanding as of January 1 of any year shall be adjusted as of such
date to equal the rate of interest charged by the U.S. Treasury for
funds borrowed by CCC on such date, plus 1 percent. This rate shall be
in effect until the earlier of the maturity of the loan or the next
January 1. The rate of interest applicable to CCC loans as of January 1
of any year shall be announced by CCC by press release or other means.
[[Page 286]]
Sec. 1405.2 Basic rule of fractions.
Fractions shall be rounded in accordance with the provisions of 7
CFR part 718.
Sec. 1405.3 Effect of changes in regulations.
Unless otherwise indicated, the regulations in effect in this
chapter as of April 4, 1996, shall continue to apply to the 1991 through
1995 crops of agricultural commodities, to milk produced on or before
May 1, 1996, and to contracts entered into prior to any amendments to
this chapter after that date.
Sec. 1405.4 Delegations of authority.
The delegations of authority relating to the CCC programs and
activities are set forth in the by-laws of CCC and in dockets approved
by the CCC Board of Directors. Copies of the By-laws and the dockets may
be obtained from the Secretary of CCC.
Sec. 1405.5 Notice and comment.
The level of loans, purchases and payments made in accordance with
the programs set forth in this chapter shall be determined without
regard to the notice and comment provisions of 5 U.S.C. 553.
Sec. 1405.6 Crop insurance requirement.
(a) To be eligible for any benefits or payments under 7 CFR parts
1410, 1412, 1421, 1427, 1435, 1443, 1446, or 1464, the producer must
obtain at least the catastrophic level of insurance for each crop of
economic significance in which the producer has an interest or provide a
written waiver to the Secretary that waives any eligibility for
emergency crop loss assistance in connection with the crop, if insurance
is available in the county for the crop. In meeting this requirement,
the producer may:
(1) Obtain at least the catastrophic level of crop insurance in all
counties for each crop of economic significance in which the producer
has an interest;
(2) Obtain at least the catastrophic level of crop insurance for
some, but not all, crops of economic significance for which the producer
has an interest, and sign a waiver; or
(3) Sign a waiver that waives any eligibility for crop loss
assistance in connection with the producer's crop.
(b) Crop of economic significance. The term ``crop of economic
significance'' means a crop that has contributed in the previous year,
or is expected to contribute in the current crop year, 10 percent or
more of the total expected value of all crops grown by the producer.
However, notwithstanding the preceding sentence, if the total expected
liability under the catastrophic risk protection endorsement is equal to
or less than the administrative fee required for the crop, such crop
will not be considered a crop of economic significance.
PART 1407--SUSPENSION AND DEBARMENT--Table of Contents
Sec.
1407.1 Purpose.
1407.2 Suspension and debarment.
1407.3 Scope.
Authority: Sec. 4, 62 Stat. 1070, as amended (15 U.S.C. 714b).
Source: 50 FR 12767, Apr. 1, 1985, unless otherwise noted.
Sec. 1407.1 Purpose.
This part prescribes the terms and conditions under which persons
(i.e., an individual or any form of business entity, such as a
proprietorship, partnership, corporation, association, or cooperative)
may be suspended and debarred from contracting with the Commodity Credit
Corporation (CCC) and from otherwise participating in programs
administered or financed by CCC.
Sec. 1407.2 Suspension and debarment.
The provisions of 48 CFR 409.403 et seq. shall be applicable to all
CCC suspension and debarment proceedings, except that the authority to
suspend or debar is reserved to the Executive Vice President, CCC, or
his designee.
Sec. 1407.3 Scope.
CCC suspension and debarment proceedings shall not be applicable to
contracts entered into by CCC under its price support operations and
other CCC
[[Page 287]]
programs with persons in their capacity as producers.
PART 1409--MEETINGS OF THE BOARD OF DIRECTORS OF COMMODITY CREDIT CORPORATION--Table of Contents
Sec.
1409.1 General statement.
1409.2 Definitions.
1409.3 Open meetings.
1409.4 Exemptions.
1409.5 Closure of meetings.
1409.6 Notices to the public.
1409.7 Records retention.
1409.8 Public inspection and copying of records; applicable fees.
1409.9 Report to Congress.
Authority: Sec. 3(a), 90 Stat. 1244 (5 U.S.C. 552b), and sec. 4, 62
Stat. 1070, as amended (15 U.S.C. 714b).
Source: 42 FR 14673, Mar. 16, 1977, unless otherwise noted.
Sec. 1409.1 General statement.
(a) It is the policy of Commodity Credit Corporation, under the
provisions of the ``Government in the Sunshine Act'' (5 U.S.C. 552b) to
make available to the public, to the fullest extent practicable,
information regarding the decision process of the Board of Directors of
Commodity Credit Corporation.
(b) This part sets forth the procedural requirements designed to
provide the public with such information while continuing to protect the
rights of individuals and to maintain the capabilities of Commodity
Credit Corporation in carrying out its responsibilities under the
statutes administered by Commodity Credit Corporation.
Sec. 1409.2 Definitions.
(a) The term Board means the Board of Directors of Commodity Credit
Corporation.
(b) The term Director means an individual who is a member of the
Board of Directors of Commodity Credit Corporation and includes the
Secretary of Agriculture, who is by statute an ex-officio director and
Chairman of the Board.
(c) The term General Counsel means the General Counsel or the
Assistant General Counsel of Commodity Credit Corporation.
(d) The term meeting means the deliberations of at least five
(quorum) Directors of the Board of Directors of Commodity Credit
Corporation where such deliberations determine or result in the joint
conduct or disposition of official Board business but shall not include
deliberations for:
(1) Closing a portion or portions of a meeting or series of meetings
as provided in Sec. 1409.5 (a) and (b) of this part, or
(2) Calling a meeting at a date earlier than announced as provided
in paragraph 1409.6(a)(2) of this part; or
(3) Changing the subject matter of a publicly announced meeting as
provided in Sec. 1409.6(b) of this part; or
(4) Determining whether or not to withhold from disclosure
information pertaining to a meeting or portions of a meeting or series
of meetings as provided in Sec. 1409.5(b) of this part.
(e) The term public observation means the right of any member of the
public to attend and observe, but not participate or interfere in any
way in an open meeting of the Board, within the limits of reasonable and
comfortable accommodations made available for such purpose by Commodity
Credit Corporation.
Sec. 1409.3 Open meetings.
Every portion of every meeting of the Board of Directors will be
open to public observation except as provided in Secs. 1409.4 and 1409.5
of this part.
Sec. 1409.4 Exemptions.
(a) A portion or portions of a Board meeting may be closed to the
public and any information pertaining to such meeting otherwise required
by Sec. 1409.3 of this part to be disclosed to the public may be
withheld, where the Board determines that public disclosure of
information to be discussed at such meetings is likely to--
(1) Disclose matters that are:
(i) Specifically authorized under criteria established by an
Executive order to be kept secret in the interests of national defense
or foreign policy and
(ii) In fact properly classified pursuant to such Executive order;
(2) Relate solely to the internal personnel rules and practice of
Commodity Credit Corporation;
[[Page 288]]
(3) Disclose matters specifically exempted from disclosure by
statute (other than the Freedom of Information Act, 5 U.S.C. 552),
provided that such statute:
(i) Requires that the matters be withheld from the public in such a
manner as to leave no discretion on the issue, or
(ii) Establishes particular criteria for withholding or refers to
particular types of matters to be withheld;
(4) Disclose trade secrets and commercial or financial information
obtained from a person and privileged or confidential;
(5) Involve accusing any person of a crime, or formally censuring
any person;
(6) Disclose information of a personal nature where disclosure would
constitute a clearly unwarranted invasion of personal privacy;
(7) Disclose investigatory records compiled for law enforcement
purposes, or information which if written would be contained in such
records, but only to the extent that the production of such records or
information would:
(i) Interfere with enforcement proceedings,
(ii) Deprive a person of a right to a fair trial or to an impartial
adjudication,
(iii) Constitute an unwarranted invasion of personal privacy, or
(iv) Disclose the identity of a confidential source, and, in the
case of a record compiled by a criminal enforcement authority in the
course of a criminal investigation, or by an agency conducting a lawful
national security intelligence investigation, confidential information
furnished only by the confidential source,
(v) Disclose investigative techniques and procedures, or
(vi) Endanger the life or physical safety of law enforcement
personnel;
(8) Disclose information contained in or related to examination,
operating, or condition reports prepared by, on behalf of, or for the
use of an agency responsible for the regulation or supervision of
financial institutions;
(9) Disclose information the premature disclosure of which would be
likely to: (i) Lead to significant financial speculation in agricultural
commodities or significantly endanger the stability of any financial
institution; or
(ii) Significantly frustrate implementation of a proposed Board
action except where the Board has already disclosed to the public the
content or nature of its proposed action or where Commodity Credit
Corporation is required by law to make such disclosure on its own
initiative prior to taking final action on such proposal; or
(10) Specifically concern Commodity Credit Corporation's
participation in a civil action or proceedings.
(b) Any Board meeting or portion thereof, which may be closed, or
any information which may be withheld under paragraph (a) of this
section, will not be closed or withheld, respectively, in any case where
the Board finds the public interest requires otherwise.
Sec. 1409.5 Closure of meetings.
(a) Procedure for closing a majority of the meetings. (1) A majority
of the meetings of the Board will be closed to the public pursuant to
exemptions 4, 8, (9)(i) and 10 of Sec. 1409.4(a) of this part. These
meetings will include deliberations such as those relating to the levels
of price support for various agricultural commodities, the allocation of
quantities of commodities for export programs, and the interest rates
for commodity loans and farm storage facility loans. Board meetings will
be closed pursuant to exemptions 4, 8, (9)(i) and 10 when at least five
Directors vote at the beginning of such meeting, or portion thereof, to
close the exempt portion or portions of the meeting. A copy of the vote,
reflecting the vote of each Director on the question, will be made
available to the public. The Board will, except to the extent that such
information is exempt from disclosure under the exemptions in
Sec. 1409.4(a) of this part, provide the public with public announcement
of the time, place, and subject matter of the meeting and of each
portion thereof, at the earliest practicable time.
(2) The provisions of paragraph (b) of this section and Sec. 1409.6,
except Sec. 1409.6(e), of this part will not apply to any meeting or
portion thereof to which paragraph (a) of this section applies.
[[Page 289]]
(b) Procedure for closing other meetings. (1) A separate vote of the
entire membership of the Board will be taken with respect to each Board
meeting a portion or portions of which are proposed to be closed to the
public or any information which is proposed to be withheld from the
public on the basis of one or more of the exemptions in Sec. 1409.4(a)
of this part. The vote of each Director will be recorded and no proxy
shall be allowed.
(2) A portion or portions of a meeting may be closed on the basis of
one or more of the exemptions in Sec. 1409.4(a) of this part only when
at least five Directors vote to take such action.
(3) A single vote of the entire membership of the Board may be taken
with respect to a series of meetings, a portion or portions of which are
proposed to be closed to the public or with respect to the withholding
of any information concerning such series of meetings, on the basis of
one or more of the exemptions in Sec. 1409.4(a) of this part. Each
meeting in such series must involve the same particular matters and must
be scheduled to be held no more than thirty days after the initial
meeting in such series. The vote of each Director participating in such
vote will be recorded and no proxy vote shall be allowed.
(4) Whenever any person whose interests may be directly affected by
a portion of a Board's meeting requests that the Board close such
portion to the public on the basis of exemptions (5), (6), or (7) of
Sec. 1409.4(a) of this part, the Board, upon the request of any one of
its members, will vote whether or not to close such portion of the
meeting. The vote of each Director participating in such vote will be
recorded and no proxy shall be allowed.
(c) General counsel's certification. Before every Board meeting
closed on the basis of one or more of the exemptions in Sec. 1409.4(a)
of this part, the General Counsel will publicly certify that, in his
opinion, the meeting may be closed to the public and shall state each
relevant exemption.
Sec. 1409.6 Notices to the public.
(a)(1) The Secretary of the Board will make a public announcement at
least one week before each Board meeting of (i) the time and place of
the meeting, (ii) subject matter of the meeting, except to the extent
that such information is exempt from disclosure under Sec. 1409.4(a) of
this part, (iii) whether the meeting is to be open or closed to the
public and (iv) the name and business telephone number of the Secretary
of the Board.
(2) Notwithstanding paragraph (a)(1) of this section, less than one
week advance public notice for a meeting may be given when at least five
Directors determine by recorded vote that the Board business requires
that a meeting be called at an earlier date, but in such case,
announcement of the meeting will be made at the earliest practicable
time.
(b)(1) When the Board votes on whether to close a portion or
portions of a meeting or a series of meetings, or with respect to
withholding any information concerning such meeting or series of
meetings, in accordance with Sec. 1409.5(b) of this part, the Secretary
of the Board will make available to the public a written copy of such
vote reflecting the vote of each member on the question within one
business day of such vote.
(2) If the Board votes to close a portion or portions of a meeting
or a series of meetings in accordance with Sec. 1409.5(b) of this part,
the Secretary of the Board will make available to the public within one
business day of such vote, (i) a list of the names and affiliations of
persons expected to be present at such closed portion or portions of the
meeting or series of meetings and (ii) a full written explanation of the
Board's action in closing the portion of portions of the meeting or
series of meetings, unless such disclosure would reveal the information
that the meeting itself was closed to protect.
(c) The time or place of a board meeting may be changed following
the public announcement as required by paragraph (a)(1) of this section
only if the Board publicly announces such change or changes at the
earliest practicable time.
(d) The subject matter of a Board meeting or the determination of
the Board to open or close a meeting or portions thereof to the public,
may be
[[Page 290]]
changed following the public announcement as required by paragraph
(a)(1) of this section only if (i) five Directors determine by recorded
vote that Board business so requires and that no earlier announcement of
the change was possible and (ii) the Board publicly announces such
change and the vote of each Director upon such change at the earliest
practicable time.
(e) The Secretary of the Board shall use all reasonable means to
keep the public promptly and fully informed of public announcements
including the use of a bulletin board outside the office of the
Secretary of the Board at the address indicated in Sec. 1409.8(b) of
this part. Requests for information concerning Board meetings should be
addressed to the Secretary of the Board.
(f) Immediately following each public announcement required by this
section, the information provided in such public announcement will be
submitted for publication in the Federal Register.
(g) The Board usually meets in room 200-A, Administration Building,
United States Department of Agriculture, 14th Street and Independence
Avenue, SW., Washington, DC. Each person interested in attending an open
meeting of the Board should notify the Secretary of the Board at least
one business day prior to the open meeting of their intention to attend
the meeting. Any person who fails to do so may not be accommodated if
there is insufficient space in the meeting room.
Sec. 1409.7 Records retention.
(a) The Secretary of the Board will maintain the following records
for each Board meeting, or portion thereof which is closed to the public
pursuant to a vote under Sec. 1409.5 of this part:
(1) A copy of the General Counsel's certification required by
Sec. 1409.5(c) of this part;
(2) A copy of a statement from the presiding officer which sets
forth the time and place of the closed meeting or portion thereof and
list of persons present; and
(3) A complete verbatim transcript or electronic recording adequate
to record fully the proceedings of each Board meeting or portion of a
meeting, except that in the case of a meeting or portion of a meeting
closed to the public on the basis of exemptions (8), (9)(i) or (10) of
Sec. 1409.4(a) of this part, the Secretary of the Board will maintain
either a transcript, electronic recording, or a complete set of minutes.
Such minutes shall fully and clearly describe all matters discussed and
shall provide a full and accurate summary of actions taken and the
reasons therefor, including a description of each of the views expressed
on any item and the record of any roll-call vote reflecting the vote of
each member on the question. All documents considered in connection with
any action will be identified in such minutes.
(b) The retention period for the records required by paragraph (a)
of this section will be for a period of at least two years after the
particular Board meeting, or until one year after the conclusion of any
Board proceeding with respect to which the meeting or portion thereof
was held, whichever occurs later.
Sec. 1409.8 Public inspection and copying of records; applicable fees.
(a) The Secretary of the Board will make promptly available to the
public the transcript, electronic recording, transcription of the
recording, or minutes of the discussion of any item on the agenda of a
Board meeting, or any item of the testimony of any witness received at
the meeting except for such item or items of such discussion or
testimony as the Secretary of the Board determines to contain
information which may be withheld on the basis of one or more of the
exemptions in Sec. 1409.4(a) of this part.
(b) Requests for public inspection of electronic recording,
transcripts or minutes of Board meetings shall be made to the Secretary
of the Board of Directors of Commodity Credit Corporation, Room 218-W,
Administration Building, United States Department of Agriculture, 14th
Street and Independence Avenue, SW., Washington, DC 20250.
(c) The transcripts, minutes, or transcriptions of electronic
recordings of a Board meeting will disclose the identity of each
speaker, and will be furnished to any person at the actual cost of
transcription or duplication.
[[Page 291]]
Sec. 1409.9 Report to Congress.
The Secretary of Agriculture will annually report to the Congress
regarding the Board's compliance with the Government in the Sunshine
Act, including a tabulation of the total number of open meetings, the
total number of closed meetings, the reasons for closing such meetings
and a description of any litigation brought against the Board pursuant
to the Government in the Sunshine Act, including any costs assessed
against Commodity Credit Corporation in such litigation.
[[Page 292]]
SUBCHAPTER B--LOANS, PURCHASES, AND OTHER OPERATIONS
PART 1410--CONSERVATION RESERVE PROGRAM--Table of Contents
Sec.
1410.1 Administration.
1410.2 Definitions.
1410.3 General description.
1410.4 Maximum county acreage.
1410.5 Eligible persons.
1410.6 Eligible land.
1410.7 Duration of contracts.
1410.8 Conservation priority areas.
1410.9 Alley-cropping.
1410.10 Conversion to trees.
1410.11 Restoration of wetlands.
1410.12-1410.19 [Reserved]
1410.20 Obligations of participant.
1410.21 Obligations of the Commodity Credit Corporation.
1410.22 Conservation plan.
1410.23 Eligible practices.
1410.24--1410.29 [Reserved]
1410.30 Signup.
1410.31 Acceptability of offers.
1410.32 CRP contract.
1410.33 Contract modifications.
1410.34 Extended program protection.
1410.35--1410.39 [Reserved]
1410.40 Cost-share payments.
1410.41 Levels and rates for cost-share payments.
1410.42 Annual rental payments.
1410.43 Method of payment.
1410.44--1410.49 [Reserved]
1410.50 State enhancement program.
1410.51 Transfer of land.
1410.52 Violations.
1410.53 Executed CRP contract not in conformity with regulations.
1410.54 Performance based upon advice or action of the Department.
1410.55 Access to land under contract.
1410.56 Division of program payments and provisions relating to tenants
and sharecroppers.
1410.57 Payments not subject to claims.
1410.58 Assignments.
1410.59 Appeals.
1410.60 Scheme or device.
1410.61 Filing of false claims.
1410.62 Miscellaneous.
1410.63 Permissive uses.
1410.64 Paperwork Reduction Act assigned numbers.
Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3801-3847.
Source: 62 FR 7625, Feb. 19, 1997, unless otherwise noted.
Sec. 1410.1 Administration.
(a) The regulations in this part will be administered under the
general supervision and direction of the Executive Vice President,
Commodity Credit Corporation (CCC), and the Administrator, Farm Service
Agency (FSA), through the Deputy Administrator. In the field, the
regulations in this part will be administered by the State and county
FSA committees (``State committees'' and ``county committees,''
respectively).
(b) State executive directors, county executive directors, and State
and county committees do not have the authority to modify or waive any
of the provisions in this part unless specifically authorized by the
Deputy Administrator.
(c) The State committee may take any action authorized or required
by this part to be taken by the county committee which has not been
taken by such committee, such as:
(1) Correct or require a county committee to correct any action
taken by such county committee which is not in accordance with this
part; or
(2) Require a county committee to withhold taking any action which
is not in accordance with this part.
(d) No delegation herein to a State or county committee shall
preclude the Executive Vice President, CCC, the Administrator, FSA, or a
designee, or the Deputy Administrator from determining any question
arising under this part or from reversing or modifying any determination
made by a State or county committee.
(e) Data furnished by the applicants will be used to determine
eligibility for program benefits. Furnishing the data is voluntary;
however, the failure to
[[Page 293]]
provide data could result in program benefits being withheld or denied.
(f) Notwithstanding other provisions of the preceding paragraphs of
this section, the EI, suitability of land for permanent vegetative or
water cover, factors for determining the likelihood of improved water
quality and adequacy of the planned practice to achieve desired
objectives shall be determined by the Natural Resource Conservation
Service (NRCS) or any other non-USDA source approved by NRCS, in
accordance with the Field Office Technical Guide of NRCS or other
guidelines deemed appropriate by the NRCS, except that no such
determination by NRCS shall compel CCC to execute a contract which CCC
does not believe will serve the purposes of the program established by
this part.
(g) State committees, with NRCS, may develop a State evaluation
process to rank acreage based on State-specific goals and objectives
where such an evaluation process would further the goals of CRP. Such
State committees may choose between developing a State ranking system or
using the national ranking system. States' ranking processes shall be
developed based on recommendations from State Technical Committees,
follow national guidelines, and be approved by the Deputy Administrator.
(h) CCC may consult with the Forest Service (FS), a State forestry
agency, or other organization for such assistance as is determined by
CCC to be necessary for developing and implementing conservation plans
which include tree planting as the appropriate practice or as a
component of a practice.
(i) CCC may consult with the Cooperative State Research, Education,
and Extension Service to coordinate a related information and education
program as deemed appropriate to implement the Conservation Reserve
Program (CRP).
(j) CCC may consult with the U.S. Fish and Wildlife Service (FWS) or
State wildlife agencies for such assistance as is determined necessary
by CCC to implement the CRP.
(k) The regulations governing the CRP as of February 11, 1997, shall
continue to be applicable to contracts in effect as of that date. The
regulations set forth in this part as of February 12, 1997, shall be
applicable to contracts executed on or after that date.
Sec. 1410.2 Definitions.
The following definitions shall be applicable to this part:
Agricultural commodity means any crop planted and produced by annual
tilling of the soil or on an annual basis by one-trip planters or sugar
cane planted or produced in a State or alfalfa and other multi year
grasses and legumes in rotation as approved by the Secretary. For
purposes of determining crop history, as relevant to eligibility to
enroll land in the program, land shall be considered planted to an
agricultural commodity during a crop year if, as determined by CCC, an
action of the Secretary prevented land from being planted to the
commodity during the crop year.
Alley-cropping means the practice of planting rows of trees
surrounded by a strip of vegetative cover, alternated with wider strips
of agricultural commodities planted in accordance with a conservation
plan approved by the local conservation district and CCC.
Allotment means an acreage for a commodity allocated to a farm in
accordance with the Agricultural Adjustment Act of 1938, as amended.
Alternative perennials means woody species of plants grown on
certain CRP acres, including, but not limited to shrubs, bushes, and
vines.
Annual rental payment means, unless the context indicates otherwise,
the annual payment specified in the CRP contract which, subject to the
availability of funds, is made to a participant to compensate such
participant for placing eligible land in the CRP.
Applicant means a person who submits an offer to CCC to enter into a
CRP contract.
Arid area means acreage located west of the 100th meridian that
receives less than 25 inches of average annual precipitation.
Bid or offer means,unless the context indicates otherwise, if
required by CCC, the per-acre rental payment requested by the owner or
operator in such owner's or operator's request to participate in the
CRP.
[[Page 294]]
Conservation district means a political subdivision of a State,
Native American Tribe, or territory, organized pursuant to the State or
territorial soil conservation district law, or Tribal law. The
subdivision may be a conservation district, soil conservation district,
soil and water conservation district, resource conservation district,
natural resource district, land conservation committee, or similar
legally constituted body.
Conservation plan means a record of the participant's decisions, and
supporting information, for treatment of a unit of land or water, and
includes a schedule of operations, activities, and estimated
expenditures needed to solve identified natural resource problems by
devoting eligible land to permanent vegetative cover, trees, water, or
other comparable measures.
Conservation priority area means areas so designated by the Deputy
Administrator with actual and adverse water quality or habitat impacts
related to agricultural production activities or to assist agricultural
producers to comply with Federal and State environmental laws and to
meet other conservation needs, such as for air quality, as determined by
the Deputy Administrator.
Contour grass strip means a vegetation area that follows the contour
of the land, the width of which is determined using the appropriate FOTG
and which is so designated by a conservation plan developed under this
part.
Contract period means the term of the contract which shall be not
less than 10, nor more than 15, years.
Cost-share payment means the payment made by CCC to assist program
participants in establishing the practices required in a contract.
Cropland means land defined as cropland in accordance with the
provisions of part 718 of this title, except for land in terraces that
are no longer capable of being cropped.
Cropped wetlands means farmed wetlands and wetlands farmed under
natural conditions.
Deputy Administrator means the Deputy Administrator for Farm
Programs, FSA, or a designee.
Environmental Quality Incentives Program (EQIP) means the program
authorized by the Food Security Act of 1985, as amended, in which
eligible persons enter into contracts with CCC to address threats to
soil, water, and related natural resources and for other purposes.
Erodibility index (EI) means the factor, as calculated by NRCS, used
to determine the inherent erodibility of a soil by dividing the
potential average annual rate of erosion without management for each
soil by the predetermined T value for the soil.
Farmed wetlands means land defined as farmed wetlands in accordance
with the provisions of part 12 of this title.
Federally owned land means land owned by the Federal Government or
any department, instrumentality, bureau, or agency thereof, or any
corporation whose stock is wholly owned by the Federal Government.
Field means a part of a farm which is separated from the balance of
the farm by permanent boundaries such as fences, roads, permanent
waterways, woodlands, other similar features, or croplines, as
determined by CCC.
Field Office Technical Guide (FOTG) means the official NRCS
guidelines, criteria, and standards for planning and applying
conservation treatments and conservation management systems. It contains
detailed information on the conservation of soil, water, air, plant, and
animal resources applicable to the local area for which it is prepared.
Field windbreak, shelterbelt, and living snowfence mean a vegetative
barrier with a linear configuration composed of trees, shrubs, or other
vegetation, as determined by CCC, which are designated as such practices
in a conservation plan and which are planted for the purpose of reducing
wind erosion, snow control, wildlife habitat, and energy conservation.
Filter strip means a strip or area of vegetation the purpose of
which is to remove nutrients, sediment, organic matter, pesticides, and
other pollutants from surface runoff and subsurface flow by deposition,
absorption, plant uptake, and other processes, thereby reducing
pollution and protecting surface water and subsurface water quality and
of a width determined appropriate for the purpose by the applicable
FOTG.
[[Page 295]]
Highly erodible land (HEL) means that land determined to be HEL in
accordance with the provisions of part 12 of this title.
Landlord means a person who rents or leases acreage to another
person.
Local FSA office means the FSA office serving the area in which the
FSA records are located for the farm or ranch.
Operator means a person who is in general control of the farming
operation on the farm, as determined by CCC.
Owner means a person or entity who is determined by FSA to have
sufficient legal ownership of the land, including a person who is buying
the acreage under a purchase agreement; each spouse in a community
property State; each spouse when spouses own property jointly and a
person who has life-estate in a property.
Participant means an owner or operator or tenant who has entered
into a contract.
Payment period means the 10- to 15-year contract period for which
the participant receives an annual rental payment.
Permanent vegetative cover means perennial stands of approved
combinations of certain grasses, legumes, forbs, and shrubs with a life
span of 10 or more years, or trees.
Permanent wildlife habitat means a permanent vegetative cover with
the specific purpose of providing habitat, food, or cover for wildlife
and protecting other environmental concerns.
Practice means a conservation, wildlife habitat, or water quality
measure with appropriate operations and management as agreed to in the
conservation plan to accomplish the desired program objectives according
to CRP and NRCS standards and specifications as a part of a conservation
management system.
Predominantly highly erodible field means that land defined has a
predominantly highly field in accordance with the provisions of part 12
of this title.
Quota means the pounds of tobacco or peanuts or other commodity
allocated to a farm for commodity support purposes or control pursuant
to the terms of the Agricultural Adjustment Act of 1938, as amended.
Riparian buffer means a strip or area of vegetation of a width
determined appropriate by the applicable FOTG the purpose of which is to
remove nutrients, sediment, organic matter, pesticides, and other
pollutants from surface runoff and subsurface flow by deposition,
absorption, plant uptake, and other processes, thereby reducing
pollution and protecting surface water and subsurface water quality
which are also intended to provide shade to reduce water temperature for
improved habitat for aquatic organisms and supply large woody debris for
aquatic organisms and habitat for wildlife.
Soil loss tolerance (T) means the maximum average annual erosion
rate specified in the FOTG that will not adversely impact the long term
productivity of the soil.
State Technical Committee means that committee established pursuant
to 16 U.S.C. 3861 to provide information, analysis, and recommendations
to the U.S. Department of Agriculture.
State water quality priority areas means any area so designated by
the State committee and NRCS, in consultation with the State Technical
Committee where agricultural nonpoint source pollutants or agricultural
point source pollutants contribute or create the potential for failure
to meet applicable water quality standards or the goals and requirements
of Federal or State water quality laws. These areas may include areas
designated under section 319 of the Federal Water Pollution Control Act
(33 U.S.C. 1329) as water quality protection areas, sole source aquifers
or other designated areas that result from agricultural nonpoint sources
of pollution. Acreage in these areas may be determined eligible as
conservation priority areas.
Technical assistance means the assistance provided in connection
with the CRP to owners or operators by NRCS, FS, or another source as
approved by the NRCS or FS, as appropriate, in classifying cropland,
developing conservation plans, determining the eligibility of land, and
implementing and certifying practices, and forestry issues.
Water bank program (WBP) means the program authorized by the Water
Bank
[[Page 296]]
Act of 1970, as amended, in which eligible persons enter into 10-year
agreements to preserve, restore, and improve wetlands.
Water cover means flooding of land by water either to develop or
restore shallow water areas for wildlife or wetlands, or as a result of
a natural disaster.
Wellhead protection area means the area designated by the
appropriate State agency with an Environmental Protection Agency
approved Wellhead Protection Program for water being drawn for public
use, as defined for public use by the Safe Drinking Water Act, as
amended.
Wetland means land defined as wetland in accordance with provisions
of part 12 of this title.
Wetlands farmed under natural conditions means land defined as
wetlands farmed under natural conditions in accordance with provisions
of part 12 of this title.
Wetlands Reserve Program (WRP) means the program authorized by the
Food Security Act of 1985, as amended, in which eligible persons enter
into long-term agreements to restore and protect wetlands.
Sec. 1410.3 General description.
(a) Under the CRP, CCC will enter into contracts with eligible
participants to convert eligible land to a conserving use for a period
of time of not less than 10 nor more than 15 years in return for
financial and technical assistance.
(b) A conservation plan for eligible acreage must be obtained by a
participant which must be approved by the conservation district in which
the lands are located unless the conservation district declines to
review the plan in which case NRCS may take such further action as is
needed to account for lack of such review.
(c) The objectives of the CRP are to cost-effectively reduce water
and wind erosion, protect the Nation's long-term capability to produce
food and fiber, reduce sedimentation, improve water quality, create and
enhance wildlife habitat, and other objectives including encouraging
more permanent conservation practices and tree planting.
(d) Except as otherwise provided, a participant may, in addition to
any payment under this part, receive cost-share assistance, rental or
easement payments, or tax benefits from a State, subdivision of such
State, or a private organization in return for enrolling lands in CRP.
However, a participant may not receive or retain CRP cost-share
assistance if other Federal cost-share assistance is provided for such
acreage under any other provision of law, as determined by the Deputy
Administrator. Further, under no circumstances may the cost-share
payments received under this part, or otherwise, exceed the cost of the
practice, as determined by CCC.
Sec. 1410.4 Maximum county acreage.
The maximum acreage which may be placed in the CRP and the WRP may
not exceed 25 percent of the total cropland in the county of which no
more than 10 percent of the cropland in the county may be subject, in
the aggregate, to a CRP or WRP easement, unless CCC determines that such
action would not adversely affect the local economy of the county. This
restriction on participation shall be in addition to any other
restriction imposed by law.
Sec. 1410.5 Eligible persons.
(a) In order to be eligible to enter into a CRP contract in
accordance with this part, a person must be an owner, operator, or
tenant of eligible land and:
(1) If an operator of eligible land, seeking to participate without
the owner, must have operated such land for at least 12 months prior to
the close of the applicable signup period and must provide satisfactory
evidence that such operator will be in control of such eligible land for
the full term of the CRP contract period;
(2) If an owner of eligible land, must have owned such land for at
least 12 months prior to the close of the applicable signup period,
unless:
(i) The new owner acquired such land by will or succession as a
result of the death of the previous owner;
(ii) The only ownership change in the 12 month period occurred due
to foreclosure on the land and the owner of
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the land, immediately before the foreclosure, exercises a timely right
of redemption from the mortgage holder in accordance with State law;
(iii) As determined by the Deputy Administrator, the circumstances
of the acquisition are such that present adequate assurance that the new
owner of such eligible land did not acquire such land for the purpose of
placing it in the CRP; or
(3) If a tenant, the tenant is a participant with an eligible owner
or operator.
(b) Notwithstanding paragraph (a) of this section, under continuous
signup provisions authorized by Sec. 1410.30, an otherwise eligible
person must have owned or operated, as appropriate, the eligible land
for at least 12 months prior to submission of an offer.
Sec. 1410.6 Eligible land.
(a) In order to be eligible to be placed in the CRP, land:
(1) Must be cropland that:
(i) Has been annually planted or considered planted to an
agricultural commodity in 2 of the 5 most recent crop years, as
determined by the Deputy Administrator, provided further that field
margins which are incidental to the planting of crops may also be
considered qualifying cropland to the extent determined appropriate by
the Deputy Administrator; and
(ii) Is physically and legally capable of being planted in a normal
manner to an agricultural commodity, as determined by the Deputy
Administrator.
(2) Must be marginal pasture land, as determined by the Deputy
Administrator, that:
(i) Is enrolled or has recently been enrolled in the WBP provided:
(A) The acreage is in the final year of the WBP agreement or, if not
in the final year of the WBP agreement and only for enrollments in the
CRP for FY 1997, is acreage for which the WBP agreement expired on
December 31, 1996, where the land would be considered in compliance if
such agreement was still in effect, as determined by the Deputy
Administrator;
(B) The acreage is not classified as naturally occurring type 3
through 7 wetlands, as determined by the Deputy Administrator regardless
of whether the acreage is or is not protected by a Federal agency
easement or mortgage restriction (types 3 through 7 wetlands that are
normally artificially flooded shall not be precluded from eligibility),
and;
(C) Enrollment in CRP would enhance the environmental benefits of
the site, as determined by Deputy Administrator; or
(ii) Is determined to be suitable for use as a riparian buffer. A
field or portion of a field of marginal pasture land may be considered
to be suitable for use as a riparian buffer only if, as determined by
NRCS, it:
(A) Is located adjacent to permanent stream corridors excluding
corridors that are considered gullies or sod waterways; and
(B) Is capable, when permanent grass, forbs, shrubs or trees are
grown, of substantially reducing sediment that otherwise would be
delivered to the adjacent stream or waterbody; or
(3) Must be acreage currently enrolled in the CRP provided the
scheduled expiration date of the current CRP contract is to occur before
the available effective date of a new CRP contract, as determined by the
Deputy Administrator, provided the acreage is otherwise eligible
according to this part, as determined by the Deputy Administrator.
(b) Any land qualifying under the provisions of paragraph (a)(1)
must also, to be eligible for a contract:
(1) Be a field or portion of a field determined to be suitable for
use as a permanent wildlife habitat, filter strip, riparian buffer,
contour grass strip, grass waterway, field windbreak, shelterbelt,
living snowfence, other uses as may be determined by the Deputy
Administrator, vegetation on salinity producing areas, including any
applicable recharge area, or any area determined eligible for CRP based
on wetland or wellhead protection area criteria to be eligible to be
placed in the CRP. A field or portion of a field may be considered to be
suitable for use as a filter strip or riparian buffer only if it, as
determined by NRCS:
(i) Is located adjacent to a stream, other waterbody of a permanent
nature (such as a lake, pond, or sinkhole), or
[[Page 298]]
wetland excluding such areas as gullies or sod waterways; and
(ii) Is capable, when permanent grass, forbs, shrubs or trees are
grown, of substantially reducing sediment that otherwise would be
delivered to the adjacent stream or waterbody; or
(2)(i) Be a field which has evidence of scour erosion caused by out-
of-bank flows of water, as determined by NRCS. In addition such land
must:
(A) Be expected to flood a minimum of once every 10 years; and
(B) Have evidence of scour erosion as a result of such flooding.
(ii) To the extent practicable, be the actual affected cropland
areas of a field; however, the entire cropland area of an eligible field
may be enrolled if:
(A) The size of the field is 9 acres or less; or
(B) More than one third of the cropland in the field is land which
lies between the water source and the inland limit of the scour erosion.
(iii) If the full field is not eligible for enrollment under this
paragraph (b)(2), be that portion of the cropland between the waterbody
and the inland limit of the scour erosion together with, as determined
by the Deputy Administrator, additional areas which would otherwise be
unmanageable and would be isolated by the eligible areas.
(iv) Be planted to an appropriate tree species according to the
FOTG, unless tree planting is determined to be inappropriate by NRCS, in
consultation with Forest Service, in which case the eligible cropland
shall be devoted to another acceptable permanent vegetative cover in
accordance with the FOTG; or
(3) Be contributing to the degradation of water quality or posing an
on-site or off-site environmental threat to water quality if such land
remains in production so long as water quality objectives, with respect
to such land, cannot be obtained under other Federal programs, including
but not limited to EQIP authorized under part 1466 of this chapter; or
(4) Be devoted to certain covers, as determined by the Deputy
Administrator, which are established and maintained according to the
FOTG provided such acreage is not required to be maintained as such
under any life-span obligations, as determined by the Deputy
Administrator; or
(5) Be non-irrigated or irrigated cropland which produces or serves
as the recharge area, as determined by the Deputy Administrator, for
saline seeps, or acreage which is functionally related to such saline
seeps, or where a rising water table contributes to increased levels of
salinity at or near the ground surface; or
(6) Be considered HEL according to conservation compliance
provisions under part 12 of this chapter; or
(7) For redefined fields, have an EI of greater than or equal to 8,
calculated by using the weighted average of the EI's of soil map units
within the field; or
(8) Be within a public wellhead protection area or in an approved
Hydrologic Unit Area; or
(9) Be within a designated conservation priority area; or
(10) Be designated as a cropped wetland and appropriate associated
acreage, as determined by the Deputy Administrator; or
(11) Be cropland which, as determined by the Deputy Administrator,
is associated with noncropped wetlands and would provide significant
environmental benefits; or
(c) Notwithstanding paragraphs (a) and (b) of this section, land
shall be ineligible for enrollment if, as determined by the Deputy
Administrator, land is:
(1) Federally owned land unless the applicant has a lease for the
contract period;
(2) Land on which the use of the land is restricted through deed or
other restriction prior to enrollment in CRP prohibiting the production
of agricultural commodities except for eligible land under paragraph
(a)(2) of this section; or
(3) Land already enrolled in the CRP unless the scheduled expiration
date of the current contract is to occur before the available effective
date of a new CRP contract, as determined by the Deputy Administrator.
Sec. 1410.7 Duration of contracts.
(a) Except as provided in paragraph (b) of this section, contracts
under this part shall be for a term of 10 years.
[[Page 299]]
(b) In the case of land devoted to riparian buffers, filter strips,
restoration of wetlands, hardwood trees, shelterbelts, windbreaks,
wildlife corridors, or other practices deemed appropriate by CCC under
the original terms of a contract subject to this part or for land
devoted to eligible practices under a contract modified under
Sec. 1410.10, the participant may specify the duration of the contract
provided that such contracts must be at least 10 years and no more than
a total of 15 years in length.
(c) All contracts shall expire on September 30 of the appropriate
year.
Sec. 1410.8 Conservation priority areas.
(a) CCC may designate National conservation priority areas according
to paragraph (c) of this section.
(b) State FSA committees, in consultation with NRCS and State
Technical Committees, may submit a recommendation to the Deputy
Administrator within guidelines established by the Deputy Administrator
for designation of conservation priority areas. Such recommendations
should contain clearly defined conservation and environmental objectives
and analysis of how CRP can cost-effectively address such objectives.
The purpose of the conservation priority area designation is to enhance
the CRP by better addressing conservation and environmental issues in a
planned and coordinated manner within a State. Generally, the total
acreage of conservation priority areas, in aggregate, shall not total
more than 10 percent of the cropland in a State unless there are
identified and documented extraordinary environmental needs, as
determined by Deputy Administrator.
(c) A region shall be eligible for designation as a priority area
only if the region has actual significant adverse water quality or
wildlife habitat impacts related to activities of agricultural
production or if the designation helps agricultural producers to comply
with Federal and State environmental laws.
(d) Conservation priority area designations shall expire after 5
years unless redesignated, except they may be withdrawn:
(1) Upon application by the appropriate State water quality agency;
or
(2) By the Deputy Administrator.
(e) In those areas designated as conservation priority areas, under
this section, special emphasis will be placed on identified
environmental concerns. These concerns may include water quality, such
as assisting agricultural producers to comply with nonpoint source
pollution requirements, air quality, or wildlife habitat (especially for
currently listed threatened and endangered species or to prevent other
species from becoming threatened and endangered), as determined by the
Deputy Administrator.
Sec. 1410.9 Alley-cropping.
(a) Alley-cropping on CRP land may be permitted by CCC if:
(1) The land is planted to, or converted to, hardwood trees in
accordance with Sec. 1410.10;
(2) Agricultural commodities are planted in accordance with a prior,
site-specific and NRCS approved conservation plan in close proximity to
such hardwood trees; and
(3) The owner and operator of such land agree to implement
appropriate conservation measures on such land.
(b) CCC may solicit bids for alley-cropping permission for CRP land.
Annual rental payments for the term of any contract modified under this
section shall be reduced by at least 50 percent of the original amount
of the total rental payment in the original contract and, in the case of
any contract modified to change from another cover crop, the total
annual rental payments over the term of any such contract may not exceed
the total annual rental payments specified in the original contract.
(c) The actual reduction in rental payment will be determined by
CCC, based upon criteria, such as percentage of the total acreage that
will be available for cropping and projected returns to the producer
from such cropping.
(d) The area available for cropping will be chosen according to the
FOTG and will be farmed in accordance with an approved conservation plan
so as to minimize erosion and degradation of water quality during those
years when
[[Page 300]]
the areas are devoted to an agricultural commodity.
Sec. 1410.10 Conversion to trees.
An owner or operator who has entered into a contract prior to
November 28, 1990, may elect to convert areas of highly erodible
cropland, subject to such contract, which is devoted to permanent
vegetative cover, from such cover to hardwood trees (including alley
cropping and riparian buffers limited to hardwood trees where permitted
by CCC), windbreaks, shelterbelts, or wildlife corridors.
(a) With respect to any contract modified under this section, the
participant may elect to extend such contract in accordance with the
provisions of Sec. 1410.7(b).
(b) With respect to any contract modified under this section in
which such areas are converted to windbreaks, shelterbelts, or wildlife
corridors, the owner of such land must agree to maintain such plantings
for a time period established by the Deputy Administrator.
(c) CCC shall, as it determines appropriate, pay up to 50 percent of
the eligible cost of establishing new conservation measures authorized
under this section, except that the total cost-share paid with respect
to such contract, including cost-share assistance paid when the original
cover was established, may not exceed the amount by which CCC would have
paid had such land been originally devoted to such new conservation
measures.
(d) With respect to any contract modified under this section, the
participant must participate in the Forest Stewardship Program (16
U.S.C. 2103a).
Sec. 1410.11 Restoration of wetlands.
(a) An owner or operator who entered into a CRP contract on land
that is suitable for restoration to wetlands or that was restored to
wetlands while under such contract, may, if approved by CCC, subject to
any restrictions as may be imposed by law, apply to transfer such
eligible acres subject to such contract that are devoted to an approved
cover from the CRP to the WRP. Transferred acreage shall be terminated
from the CRP effective the day a WRP easement is filed. Participants
will receive a prorated CRP annual payment for that part of the year the
acreage was enrolled in the CRP according to Sec. 1410.42. Refunds of
cost-share payments or any applicable incentive payments need not be
required unless specified by the Deputy Administrator.
(b) An owner or operator who has enrolled acreage in the CRP may, as
determined and approved by CCC, restore suitable acres to wetlands with
cost-share assistance provided that Federal cost-share assistance has
not been previously provided specifically for wetland restoration on the
proposed restoration site. In addition to the cost-share limitation in
Sec. 1410.41 of this part, an additional one time financial incentive
may be provided to encourage restoration of the hydrology of the site.
Sec. 1410.12--Sec. 1410.19 [Reserved]
Sec. 1410.20 Obligations of participant.
(a) All participants subject to a CRP contract must agree to:
(1) Carry out the terms and conditions of such CRP contract;
(2) Implement the conservation plan, which is part of such contract,
in accordance with the schedule of dates included in such conservation
plan unless the Deputy Administrator determines that the participant
cannot fully implement the conservation plan for reasons beyond the
participant's control and CCC agrees to a modified plan;
(3) Establish temporary vegetative cover when required by the
conservation plan or, as determined by the Deputy Administrator, if the
permanent vegetative cover cannot be timely established;
(4)(i) A reduction in the aggregate total quotas and acreage
allotments for the contract period for each farm which contains land
subject to such CRP contract by an amount based upon the ratio between
the acres in the CRP contract and the total cropland acreage on such
farm. Quotas and acreage allotments reduced during the contract period
shall be returned at the end of the contract period in the same amounts
as would apply had the land not been enrolled in the CRP unless CCC
approves, in accordance with the
[[Page 301]]
provisions of Sec. 1410.34, an extension of such protection; and
(ii) reduce production flexibility contract acres enrolled under
part 1412 of this chapter or CRP acres enrolled under this part so that
the total of such acres does not exceed the total cropland on the farm;
(5) Not produce an agricultural commodity on highly erodible land,
in a county which has not met or exceeded the acreage limitation under
Sec. 1410.4, which was acquired on or after November 28, 1990, unless
such land, as determined by CCC, has a history in the most recent five-
year period of producing an agricultural commodity other than forage
crops;
(6) Comply with all requirements of part 12 of this title;
(7) Not allow grazing, harvesting, or other commercial use of any
crop from the cropland subject to such contract except for those periods
of time approved in accordance with instructions issued by the Deputy
Administrator;
(8) Establish and maintain the required vegetative or water cover
and the required practices on the land subject to such contract and take
other actions that may be required by CCC to achieve the desired
environmental benefits and to maintain the productive capability of the
soil throughout the CRP contract period;
(9) Comply with noxious weed laws of the applicable State or local
jurisdiction on such land;
(10) Control on land subject to such contract all weeds, insects,
pests and other undesirable species to the extent necessary to ensure
that the establishment and maintenance of the approved cover is
adequately protected and to provide such maintenance as necessary, or
may be specified in the CRP conservation plan, to avoid an adverse
impact on surrounding land, taking into consideration water quality,
wildlife, and other needs, as determined by the Deputy Administrator;
and
(11) Be jointly and severally responsible, if the participant has a
share of the payment greater than zero, with the other contract
participants for compliance with such contract and the provisions of
this part and for any refunds or payment adjustments which may be
required for violations of any of the terms and conditions of the CRP
contract and provisions of this part.
Sec. 1410.21 Obligations of the Commodity Credit Corporation.
CCC shall, subject to the availability of funds:
(a) Share the cost with participants of establishing eligible
practices specified in the conservation plan at the levels and rates of
cost-sharing determined in accordance with the provisions of this part;
(b) Pay to the participant for a period of years not in excess of
the contract period an annual rental payment in such amounts as may be
specified in the CRP contract;
(c) Provide such technical assistance as may be necessary to assist
the participant in carrying out the CRP contract; and
(d) Permit grazing on CRP land to the extent determined appropriate
by the Deputy Administrator where the grazing is incidental to the
gleaning of crop residues on fields where the contracted land is
located. Such incidental gleaning shall be limited to the 7-month period
in which grazing of conservation use acreage was previously allowed, as
determined by CCC, in a State under the provisions of the Agricultural
Act of 1949, as amended, or after the producer harvests the grain crop
of the surrounding field. Further, CCC may provide approval of the
incidental grazing of the CRP, but only in exchange for an applicable
reduction in the annual rental payment, as determined appropriate by the
Deputy Administrator.
(e) Provide approval of normal forestry maintenance such as pruning,
thinning, and timber stand improvement on lands converted to forestry
use only in accordance with a conservation plan in exchange for an
applicable reduction in the annual rental payment as determined
appropriate by the Deputy Administrator.
Sec. 1410.22 Conservation plan.
(a) The applicant shall develop and submit a conservation plan which
is acceptable to NRCS and is approved by the conservation district for
the land to be entered in the CRP. If the conservation district declines
to review
[[Page 302]]
the conservation plan, such approval by the conservation district may be
waived.
(b) The practices included in the conservation plan and agreed to by
the participant must cost-effectively reduce erosion necessary to
maintain the productive capability of the soil, improve water quality,
protect wildlife or wetlands, protect a public well head, or achieve
other environmental benefits as applicable.
(c) If applicable, a tree planting plan shall be developed and
included in the conservation plan. Such tree planting plan may allow up
to 3 years to complete plantings if 10 or more acres of hardwood trees
are to be established.
(d) If applicable, the conservation plan shall address the goals
included in the conservation priority designation authorized under
Sec. 1410.8 of this part.
(e) All conservation plans and revisions of such plans shall be
subject to the approval of CCC and NRCS.
Sec. 1410.23 Eligible practices.
(a) Eligible practices are those practices specified in the
conservation plan that meet all standards needed to cost-effectively:
(1) Establish permanent vegetative or water cover, including
introduced or native species of grasses and legumes, forest trees, and
permanent wildlife habitat;
(2) Meet other environmental benefits, as applicable, for the
contract period; and
(3) Accomplish other purposes of the program.
(b) Water cover is eligible cover for purposes of paragraph (a) of
this section only if approved by the Deputy Administrator for purposes
such as the enhancement of wildlife or the improvement of water quality.
Such water cover shall not include ponds for the purpose of watering
livestock, irrigating crops, or raising for commercial purposes.
Secs. 1410.24-1410.29 [Reserved]
Sec. 1410.30 Signup.
Offers for contracts shall be submitted only during signup periods
as announced periodically by the Deputy Administrator, except that CCC
may hold a continuous signup for land to be devoted to particular uses,
as CCC deems desirable.
Sec. 1410.31 Acceptability of offers.
(a) Except as provided in paragraph (c) of this section, producers
may submit bids for the amounts they are willing to accept as rental
payments to enroll their acreage in the CRP. The bids shall, to the
extent practicable, be evaluated on a competitive basis in which the
bids selected will be those where the greatest environmental benefits
relative to cost are generated, provided the bid is not in excess of the
maximum acceptable payment rate established for the for the area offered
by or for the Deputy Administrator.
(b) In evaluating contract offers, different factors, as determined
by CCC, may be considered from time to time for priority purposes to
accomplish the goals of the program. Such factors may include, but are
not limited to:
(1) Soil erosion;
(2) Water quality (both surface and ground water);
(3) Wildlife benefits;
(4) Conservation priority area designations;
(5) Soil productivity;
(6) Conservation compliance considerations;
(7) Likelihood that enrolled land will remain in conserving uses
beyond the contract period, which may be indicated by, for example, tree
planting, permanent wildlife habitat, or commitments by a participant to
a State or other entity to extend the conservation plan;
(8) Air quality; and
(9) Cost of enrolling acreage in the program.
(c) Acreage determined eligible for continuous signup, as provided
in Sec. 1410.30, shall be automatically accepted in the program if the:
(1) Land is eligible in accordance with the applicable provisions of
Sec. 1410.6, as determined by the Deputy Administrator;
(2) Applicant is eligible in accordance with the provisions of
Sec. 1410.5; and
(3) Applicant accepts either the maximum payment rate CCC is willing
to offer to enroll the acreage in the program or a lesser rate.
[[Page 303]]
Sec. 1410.32 CRP contract.
(a) In order to enroll land in the CRP, the participant must enter
into a contract with CCC.
(b) The CRP contract will be comprised of:
(1) The terms and conditions for participation in the CRP;
(2) The conservation plan; and
(3) Any other materials or agreements determined necessary by CCC.
(c)(1) In order to enter into a CRP contract, the applicant must
submit an offer to participate as provided in Sec. 1410.30;
(2) An offer to enroll land in the CRP shall be irrevocable for such
period as is determined and announced by CCC. The applicant shall be
liable to CCC for liquidated damages if the applicant revokes an offer
during the period in which the offer is irrevocable as determined by the
Deputy Administrator. CCC may waive payment of such liquidated damages
if CCC determines that the assessment of such damages, in a particular
case, is not in the best interest of CCC and the program.
(d) The CRP contract must, within the dates established by CCC, be
signed by:
(1) The applicant; and
(2) The owners of the cropland to be placed in the CRP, if
applicable.
(e) The Deputy Administrator is authorized to approve CRP contracts
on behalf of CCC.
(f) CRP contracts may be terminated by CCC before the full term of
the contract has expired if:
(1) The owner loses control of or transfers all or part of the
acreage under contract and the new owner does not wish to continue the
contract;
(2) The participant voluntarily requests in writing to terminate the
contract and obtains the approval of CCC according to terms and
conditions as determined by CCC;
(3) The participant is not in compliance with the terms and
conditions of the contract;
(4) Acreage is enrolled in another State, Federal or local
conservation program;
(5) The CRP practice fails after a certain time period, as
determined by the Deputy Administrator, and the county committee
determines the cost of restoring the practice outweighs the benefits
received from the restoration;
(6) The CRP contract was approved based on erroneous eligibility
determinations; or
(7) It is determined by CCC that such a release is needed in the
public interest.
(g)(1) Contracts for land enrolled in CRP before January 1, 1995,
which have been in effect for at least 5 years may be unilaterally
terminated by all CRP participants on a contract except for contract
acreage:
(i) Located within a width determined appropriate by the applicable
FOTG of a perennial stream or other permanent waterbody to reduce
pollution and to protect surface and subsurface water quality;
(ii) On which a CRP easement is filed;
(iii) That is considered to be a wetland by NRCS;
(iv) Located within a wellhead protection area;
(v) That is subject to frequent flooding, as determined by the
Deputy Administrator;
(vi) That may be required to serve as a wetland buffer according to
the FOTG to protect the functions and values of a wetland; or
(vii) On which there exist one or more of the following practices,
installed or developed as a result of participation in the CRP or as
otherwise required by the conservation plan:
(A) Grass waterways;
(B) Filter strips;
(C) Shallow water areas for wildlife;
(D) Bottom land timber established on wetlands;
(E) Field windbreaks; and
(F) Shelterbelts.
(2) With respect to terminations under this paragraph:
(i) Any land for which an early termination is sought must have an
EI of 15 or less;
(ii) The termination shall become effective 60 days from the date
the participant submits notification to CCC of the participant's desire
to terminate the contract;
(iii) Acreage terminated under this provision is eligible to be re-
offered for CRP during future signup periods, provided that the acreage
otherwise meets the current eligibility criteria; and
[[Page 304]]
(iv) Participants shall be required to meet conservation compliance
requirements of part 12 of this title to the extent applicable to other
land.
(h) Except as allowed and approved by CCC where the new owner of
land enrolled in CRP is a Federal agency that agrees to abide by the
terms and conditions of the terminated contract, the participant in a
contract that has been terminated must refund all or part of the
payments made with respect to the contract plus interest thereon, as
determined by CCC, and shall pay liquidated damages as provided for in
the contract. CCC, in its discretion, may permit the amount to be repaid
to be reduced to the extent that such a reduction will not impair the
purposes of the program. Further, a refund of an annual rental and cost-
share payment need not be required from a participant who is otherwise
in full compliance with the CRP contract when the land is purchased by
or for the United States, as determined by CCC.
Sec. 1410.33 Contract modifications.
(a) By mutual agreement between CCC and the participant, a CRP
contract may be modified in order to:
(1) Decrease acreage in the CRP;
(2) Permit the production of an agricultural commodity under
extraordinary circumstances during a crop year on all or part of the
land subject to the CRP contract as determined by the Deputy
Administrator;
(3) Facilitate the practical administration of the CRP; or
(4) Accomplish the goals and objectives of the CRP, as determined by
the Deputy Administrator.
(b) CCC may modify CRP contracts to add, delete, or substitute
practices when:
(1) The installed practice failed to adequately provide for the
desired environmental benefit through no fault of the participant; or
(2) The installed measure deteriorated because of conditions beyond
the control of the participant; and
(3) Another practice will achieve at least the same level of
environmental benefit.
(c) Offers to extend contracts may be made available to the extent
otherwise allowed by law.
(d) CCC may terminate a CRP contract if the participant agrees to
such termination and CCC determines such termination to be in the public
interest.
Sec. 1410.34 Extended program protection.
(a) In the final year of the contract, participants may, subject to
the terms and conditions announced by CCC request to extend the
preservation of quota and acreage allotment history for 5 years (and, if
announced by CCC, in successive 5-year increments). Such approval may be
given by CCC only if the participant agrees to continue for that period,
but without payment, to abide by the terms and conditions which applied
to the relevant contract relating to the conservation of the property
for the term in which payments were to be made.
(b) Where such an extension is approved, no additional cost-share,
annual rental, or other payment shall be made.
(c) Haying and grazing of the acreage subject to such an extension
may be permitted during the extension period, except during any
consecutive 5-month period between April 1 and October 31 of any year as
established by the State committee. In the event of a natural disaster,
CCC may permit unlimited haying and grazing of such acreage.
(d) In the event of a violation of any CRP contract extended under
this section, CCC may reduce or terminate, retroactively, prospectively,
or both, the amount of quota, and acreage allotment history otherwise
preserved under the extended contract.
Secs. 1410.35-1410.39 [Reserved]
Sec. 1410.40 Cost-share payments.
(a) Cost-share payments shall be made available upon a determination
by CCC that an eligible practice, or an identifiable unit thereof, has
been established in compliance with the appropriate standards and
specifications.
(b) Except as otherwise provided for in this part, cost-share
payments may be made under the CRP only for the
[[Page 305]]
cost-effective establishment or installation of an eligible practice.
(c) Except as provided in paragraph (d) of this section, cost-share
payments shall not be made to the same owner or operator on the same
acreage for any eligible practices which have been previously
established, or for which such owner or operator has received cost-share
assistance from any Federal agency.
(d) Except as provided for under Sec. 1410.10(c), cost-share
payments may be authorized for the replacement or restoration of
practices for which cost-share assistance has been previously allowed
under the CRP, only if:
(1) Replacement or restoration of the practice is needed to achieve
adequate erosion control, enhanced water quality, wildlife habitat, or
increased protection of public wellheads; and
(2) The failure of the original practice was due to reasons beyond
the control of the participant.
(e) The cost-share payment made to a participant shall not exceed
the participant's actual contribution to the cost of establishing the
practice and the amount of the cost-share may not be an amount which,
when added to assistance from other sources, exceeds the cost of the
practices.
(f) CCC shall not make cost-share payments with respect to a CRP
contract if any other Federal cost-share assistance has been, or is
being, made with respect to the establishment of the cover crop on land
subject to such contract.
Sec. 1410.41 Levels and rates for cost-share payments.
(a) As determined by the Deputy Administrator, CCC shall not pay
more than 50 percent of the actual or average cost of establishing
eligible practices specified in the conservation plan, except that CCC
may allow cost-share payments for maintenance costs to the extent
required by Sec. 1410.40 and CCC may determine the period and amount of
such cost-share payments.
(b) The average cost of performing a practice may be determined by
CCC based on recommendations from the State Technical Committee. Such
cost may be the average cost in a State, a county, or a part of a State
or county, as determined by the Deputy Administrator.
(c) A one-time financial incentive, may be offered to participants
who restore the hydrology of eligible wetlands in accordance with the
provisions of Sec. 1410.11(b) or other lands as determined by the Deputy
Administrator; such incentives will not be greater than 25 percent of
the cost of restoring such wetlands or other lands, as determined by
CCC.
(d) Except as otherwise provided, a participant may, in addition to
any payment under this part, receive cost-share assistance, rental
payments, or tax benefits from a State, subdivision of such State, or a
private organization in return for enrolling lands in CRP. However, as
provided under Sec. 1410.40(f) of this part, a participant may not
receive or retain CRP cost-share assistance if other Federal cost-share
assistance is provided for such acreage, as determined by the Deputy
Administrator. Further, under no circumstances may the cost-share
payments received under this part, or otherwise, exceed the cost of the
practice, as determined by CCC.
Sec. 1410.42 Annual rental payments.
(a) Subject to the availability of funds, annual rental payments
shall be made in such amount and in accordance with such time schedule
as may be agreed upon and specified in the CRP contract.
(b) The annual rental payment shall be divided among the
participants on a single contract in the manner agreed upon in such
contract.
(c) The maximum amount of rental payments which a person may receive
under the CRP for any fiscal year shall not exceed $50,000. The
regulations set forth at part 1400 of this chapter shall be applicable
in making eligibility and ``person'' determinations as they apply to
payment limitations under this part.
(d) In the case of a contract succession, annual rental payments
shall be divided between the predecessor and the successor participants
as agreed to among the participants and approved by CCC. If there is no
agreement among the participants, annual rental
[[Page 306]]
payments shall be divided in such manner deemed appropriate by the
Deputy Administrator and such distribution may be based on the actual
days of ownership of the property.
(e) CCC shall, when appropriate, prepare a schedule for each county
that shows the maximum soil rental rate CCC may pay which may be
supplemented to reflect special contract requirements. As determined by
the Deputy Administrator, such schedule will be calculated based on the
relative productivity of soils within the county using NRCS data and
local FSA average cash rental estimates. The schedule will be posted in
the local FSA office. As determined by the Deputy Administrator, the
schedule shall indicate, when appropriate, that:
(1) Contracts offered by producers who request rental payments
greater than the schedule for their soil(s) will be rejected;
(2) Offers of contracts that are expected to provide especially high
environmental benefits, as determined by the Deputy Administrator, may
be accepted without further evaluation when the requested rental rate is
less than or equal to the corresponding soil schedule; and
(3) Otherwise qualifying offers shall be ranked competitively based
on factors established under Sec. 1410.31 of this part in order to
provide the most cost-effective environmental benefits, as determined by
the Deputy Administrator.
(f) Additional financial incentives may be provided to producers
offering contracts expected to provide especially high environmental
benefits through an increased annual rental payment or incentive payment
as determined by the Deputy Administrator.
Sec. 1410.43 Method of payment.
Except as provided in Sec. 1410.50, payments made by CCC under this
part may be made in cash or other methods of payment in accordance with
part 1401 of this chapter, unless otherwise specified by CCC.
Secs. 1410.44-1410.49 [Reserved]
Sec. 1410.50 State enhancement program.
(a) For contracts to which a State, political subdivision, or agency
thereof has succeeded in connection with an approved conservation
reserve enhancement program, payments shall be made in the form of cash
only. The provisions that limit the amount of payments per year that a
person may receive under this part shall not be applicable to payments
received by such State, political subdivision, or agency thereof in
connection with agreements entered into under such enhancement programs
carried out by such State, political subdivision, or agency thereof
which has been approved for that purpose by CCC.
(b) CCC may enter into other agreements in accordance with terms
deemed appropriate by CCC, with States to use the CRP to cost-
effectively further specific conservation and environmental objectives
of that State and the nation.
Sec. 1410.51 Transfer of land.
(a)(1) If a new owner or operator purchases or obtains the right and
interest in, or right to occupancy of, the land subject to a CRP
contract, as determined by the Deputy Administrator, such new owner or
operator, upon the approval of CCC, may become a participant to a new
CRP contract with CCC with respect to such transferred land.
(2) With respect to the transferred land, if the new owner or
operator becomes a successor to the existing CRP contract, the new owner
or operator shall assume all obligations under the CRP contract of the
previous participant.
(3) If the new owner or operator becomes a successor to a CRP
contract with CCC, then, except as otherwise determined appropriate by
the Deputy Administrator:
(i) Cost-share payments shall be made to the participant, past or
present, who established the practice; and
(ii) Annual rental payments to be paid during the fiscal year when
the land was transferred shall be divided between the new participant
and the previous participant in the manner specified in Sec. 1410.42.
(b) If a participant transfers all or part of the right and interest
in, or right to occupancy of, land subject to a
[[Page 307]]
CRP contract and the new owner or operator does not become a successor
to such contract within 60 days of such transfer, such contract shall be
terminated with respect to the affected portion of such land and the
original participant:
(1) Must forfeit all rights to any future payments with respect to
such acreage;
(2) Shall comply with the provisions of Sec. 1410.32(h); and
(3) Refund all previous payments received under the contract by the
participant or prior participants, plus interest, except as otherwise
specified by the Deputy Administrator.
(c) Federal agencies acquiring property, by foreclosure or
otherwise, that contains CRP contract acreage cannot be a party to the
contract by succession. However, through an addendum to the CRP
contract, if the current operator of the property is one of the
participants on such contract, such operator may, as permitted by CCC,
continue to receive payments provided for in such contract so long as:
(1) The property is maintained in accordance with the terms of the
contract;
(2) Such operator continues to be the operator of the property; and
(3) Ownership of the property remains with such federal agency.
Sec. 1410.52 Violations.
(a)(1) If a participant fails to carry out the terms and conditions
of a CRP contract, CCC may terminate the CRP contract.
(2) If the CRP contract is terminated by CCC in accordance with this
paragraph:
(i) The participant shall forfeit all rights to further payments
under such contract and refund all payments previously received together
with interest; and
(ii) Pay liquidated damages to CCC in such amount as specified in
such contract.
(b) If the Deputy Administrator determines such failure does not
warrant termination of such contract, the Deputy Administrator may
authorize relief as the Deputy Administrator deems appropriate.
(c) CCC may reduce a demand for a refund under this section to the
extent CCC determines that such relief would be appropriate and will not
deter the accomplishment of the goals of the program.
Sec. 1410.53 Executed CRP contract not in conformity with regulations.
If, after a CRP contract is approved by CCC, it is discovered that
such CRP contract is not in conformity with the provisions of this part,
the provisions of the regulations shall prevail.
Sec. 1410.54 Performance based upon advice or action of the Department.
The provisions of Sec. 718.8 of this title relating to performance
based upon the action or advice of a representative of the Department
shall be applicable to this part.
Sec. 1410.55 Access to land under contract.
(a) Any representative of the Department, or designee thereof, shall
be provided by the applicant or participant as the case may be, with
access to land which is:
(1) The subject of an application for a contract under this part; or
(2) Under contract or otherwise subject to this part.
(b) With respect to such land identified in paragraph (a) of this
section, the participant or applicant shall provide such representatives
with access to examine records with respect to such land for the purpose
of determining land classification and erosion rates and for the purpose
of determining whether there is compliance with the terms and conditions
of the CRP contract.
Sec. 1410.56 Division of program payments and provisions relating to tenants and sharecroppers.
(a) Payments received under this part shall be divided in the manner
specified in the applicable contract or agreement and CCC shall ensure
that producers who would have an interest in acreage being offered
receive treatment which CCC deems to be equitable, as determined by the
Deputy Administrator. CCC may refuse to enter into a contract when there
is a disagreement
[[Page 308]]
among persons seeking enrollment as to a person's eligibility to
participate in the contract as a tenant and there is insufficient
evidence to indicate whether the person seeking participation as a
tenant does or does not have an interest in the acreage offered for
enrollment in the CRP.
(b) CCC may remove an operator or tenant from a CRP contract when
the operator or tenant:
(1) Requests, in writing to be removed from the CRP contract;
(2) Files for bankruptcy and the trustee or debtor in possession
fails to affirm the contract, to the extent permitted by the provisions
of applicable bankruptcy laws;
(3) Dies during the contract period and the Administrator of the
estate fails to succeed to the contract within a period of time
determined by the Deputy Administrator; or
(4) Is the subject of an order of a court of competent jurisdiction
requiring the removal from the CRP contract of the operator or tenant
and such order is received by FSA, as determined by the Deputy
Administrator.
(c) In addition to the provisions in paragraph (b) of this section,
tenants shall maintain their tenancy throughout the contract period in
order to remain on a contract. Tenants who fail to maintain tenancy on
the acreage under contract, including failure to comply with provisions
under applicable State law, may be removed from a contract by CCC. CCC
shall assume the tenancy is being maintained unless notified otherwise
by a CRP participant specified in the applicable contract.
Sec. 1410.57 Payments not subject to claims.
Subject to part 1403 of this chapter, any cost-share or annual
payment or portion thereof due any person under this part shall be
allowed without regard to questions of title under State law, and
without regard to any claim or lien in favor of any creditor, except
agencies of the United States Government.
Sec. 1410.58 Assignments.
Any participant who may be entitled to any cash payment under this
program may assign the right to receive such cash payments, in whole or
in part, as provided in part 1404 of this chapter.
Sec. 1410.59 Appeals.
(a) Except as provided in paragraph (b) of this section, a
participant or person seeking participation may appeal or request
reconsideration of an adverse determination rendered with regard to such
participation in accordance with the administrative appeal regulations
at parts 11 and 780 of this title.
(b) Determinations by NRCS concerning land classification, erosion
rates, water quality ratings or other technical determinations may be
appealed in accordance with procedures established under part 614 of
this title or otherwise established by NRCS.
Sec. 1410.60 Scheme or device.
(a) If it is determined by CCC that a person has employed a scheme
or device to defeat the purposes of this part, any part of any program
payment otherwise due or paid such person during the applicable period
may be required to be refunded with interest thereon as determined
appropriate by CCC.
(b) A scheme or device includes, but is not limited to, coercion,
fraud, misrepresentation, depriving any other person of cost-share
assistance or annual rental payments, or obtaining a payment that
otherwise would not be payable.
(c) A new owner or operator or tenant of land subject to this part
who succeeds to the responsibilities under this part shall report in
writing to CCC any interest of any kind in the land subject to this part
that is retained by a previous participant. Such interest shall include
a present, future, or conditional interest, reversionary interest, or
any option, future or present, with respect to such land, and any
interest of any lender in such land where the lender has, will, or can
obtain, a right of occupancy to such land or an interest in the equity
in such land other than an interest in the appreciation in the value of
such land occurring after the loan was made. Failure to fully disclose
such interest shall be considered a scheme or device under this section.
[[Page 309]]
Sec. 1410.61 Filing of false claims.
If it is determined by CCC that any participant has knowingly
supplied false information or has knowingly filed a false claim, such
participant shall be ineligible for payments under this part with
respect to the program year in which the false information or claim was
filed and the contract may be terminated in which case a full refund of
all prior payments may be demanded. False information or false claims
include, but are not limited to, claims for payment for practices which
do not meet the specifications of the applicable conservation plan. Any
amounts paid under these circumstances shall be refunded, together with
interest as determined by CCC, and any amounts otherwise due such
participant shall be withheld. The remedies provided for in this section
shall be in addition to any and all other remedies, criminal and/or
civil that may apply.
Sec. 1410.62 Miscellaneous.
(a) Except as otherwise provided in this part, in the case of death,
incompetency, or disappearance of any participant, any payment due under
this part shall be paid to the participant's successor in accordance
with the provisions of part 707 of this title.
(b) Unless otherwise specified in this part, payments under this
part shall be subject to the requirements of part 12 of this title
concerning highly-erodible land and wetland conservation and payments
that otherwise could be made under this part may be withheld to the
extent provided for in part 12 of this title.
(c) Any remedies permitted CCC under this part shall be in addition
to any other remedy, including, but not limited to criminal remedies, or
actions for damages in favor of CCC, or the United States, as may be
permitted by law; provided further the Deputy Administrator may add to
the contract such additional terms as needed to enforce these
regulations which shall be binding on the parties and may be enforced to
the same degree as provisions of these regulations.
(d) Absent a scheme or device to defeat the purpose of the program,
when an owner loses control of CRP acreage due to foreclosure and the
new owner chooses not to continue the contract in accordance with
Sec. 1410.51, refunds shall not be required from any participant on the
contract to the extent that the Deputy Administrator determines that
forgiving such repayment is appropriate in order to provide fair and
equitable treatment.
(e) Crop insurance purchase requirements in part 1405 of this
chapter apply to contracts executed in accordance with this part.
(f) Land enrolled in CRP shall be classified as cropland for the
time period enrolled in CRP and, after the time period of enrollment,
may be removed from such classification upon a determination by the
county committee that such land no longer meets the conditions
identified in part 718 of this title.
(g) Research projects may be submitted by the State committee and
authorized by the Deputy Administrator to further the purposes of CRP.
The research projects must include objectives that are consistent with
this part, provide economic and environmental information not adversely
affect local agricultural markets, and be conducted and monitored by a
bona fide research entity.
(h) CCC may enter into other agreements, as approved by the Deputy
Administrator, to use the CRP to meet authorized wetland mitigation
banking pilot projects.
Sec. 1410.63 Permissive uses.
Unless otherwise specified by the Deputy Administrator, no crops of
any kind may be planted or harvested from designated CRP acreage during
the contract period.
Sec. 1410.64 Paperwork Reduction Act assigned numbers.
The Office of Management and Budget has approved the information
collection requirements contained in these regulations under provisions
44 U.S.C. Chapter 35 and OMB number 0560-0125 has been assigned.
[[Page 310]]
PART 1412--PRODUCTION FLEXIBILITY CONTRACTS FOR WHEAT, FEED GRAINS, RICE, AND UPLAND COTTON--Table of Contents
Subpart A--General Provisions
Sec.
1412.101 Applicability.
1412.102 Administration.
1412.103 Definitions.
1412.104 Performance based upon advice or action of county or State
committee.
1412.105 Appeals.
Subpart B--Production Flexibility Contract Terms and Enrollment
Provisions
1412.201 Production flexibility contract.
1412.202 Eligible producers.
1412.203 Notification of eligible contract acreage.
1412.204 Reconstitutions.
1412.205 Reducing contract acreage.
1412.206 Planting flexibility.
1412.207 Succession-in-interest to a production flexibility contract.
Subpart C--Financial Considerations Including Sharing Production
Flexibility Payments
1412.301 Limitation of production flexibility contract payments.
1412.302 Contract payment provisions.
1412.303 Sharing of contract payments.
1412.304 Provisions relating to tenants and sharecroppers.
Subpart D--Contract Violations and Diminution of Payments
1412.401 Contract violations.
1412.402 Violations of highly erodible land and wetland conservation
provisions.
1412.403 Violations regarding controlled substances.
1412.404 Contract liability.
1412.405 Misrepresentation and scheme or device.
1412.406 Offsets and assignments.
1412.407 Certification.
Subpart E--Production Flexibility and Conservation Reserve Programs
1412.501 Timing for enrollment and termination of production
flexibility of contracts.
Authority: 7 U.S.C. 7201 et seq.; and 15 U.S.C. 714b and 714c.
Source: 61 FR 37575, July 18, 1996, unless otherwise noted.
Subpart A--General Provisions
Sec. 1412.101 Applicability.
The Federal Agriculture Improvement and Reform Act of 1996 (1996
Act) provides producers on farms with 1996 wheat, corn, barley, grain
sorghum, oats, upland cotton and rice crop acreage bases the opportunity
to enter into Production Flexibility Contracts with the Commodity Credit
Corporation (CCC) for the years 1996 through 2002. Producers who
participate in the program must fully comply with the terms of the
production flexibility contracts and this part, and in return will
receive production flexibility payments.
Sec. 1412.102 Administration.
(a) The program is administered under the general supervision of the
Executive Vice-President, CCC, and shall be carried out by State and
county Farm Service Agency (FSA) committees (herein called State and
county committees).
(b) State and county committees, and representatives and their
employees, do not have authority to modify or waive any of the
provisions of the regulations of this part.
(c) The State committee shall take any action required by the
regulations of this part that the county committee has not taken. The
State committee shall also:
(1) Correct, or require a county committee to correct any action
taken by such county committee that is not in accordance with the
regulations of this part; or
(2) Require a county committee to withhold taking any action that is
not in accordance with this part.
(d) No provision or delegation to a State or county committee shall
preclude the Executive Vice President (Administrator, FSA), or a
designee, from determining any question arising under the program or
from reversing or modifying any determination made by a State or county
committee.
(e) The Deputy Administrator may authorize State and county
committees to waive or modify deadlines, except statutory deadlines, and
other program requirements in cases where lateness or failure to meet
such other
[[Page 311]]
requirements does not adversely affect operation of the program.
(f) A representative of CCC may execute a form CCC-478, ``1996
through 2002 Production Flexibility Contract'' only under the terms and
conditions determined and announced by the Executive Vice President,
CCC. Any contract that is not executed in accordance with such terms and
conditions, including any purported execution prior to the date
authorized by the Executive Vice President, CCC, is null and void.
Sec. 1412.103 Definitions.
The definitions set forth in this section shall be applicable for
all purposes of administering the Production Flexibility Program. The
terms defined in parts 718 of this title and 1400 of this chapter shall
also be applicable, except where those definitions conflict with the
definitions set forth in this section.
Annual payment amount is the amount to be paid under a contract in
effect for each fiscal year with respect to a contract commodity and
equals the product of:
(1) 85 percent of the enrolled contract acreage multiplied by
(2) The payment yield multiplied by
(3) The payment rate except that the total of such payments shall
not exceed $40,000 per person in accordance with part 1400 of this
chapter.
Contract means forms CCC-478 and CCC-478 Appendix.
Contract acreage means a quantity of acres enrolled in a contract.
Contract commodity means wheat, corn, grain sorghum, barley, oats,
upland cotton, and rice.
Contract payment means a payment made under this part pursuant to a
production flexibility contract.
Corn means field corn or sterile high-sugar corn. Popcorn, corn
nuts, blue corn, sweet corn, and corn varieties grown for decoration
uses are not corn.
Dry peas means Austrian, wrinkled seed, green, yellow, and Umatilla.
Eligible acreage means the crop acreage base that would have been
established for a contract commodity in accordance with regulations in
effect on January 1, 1996, at part 1413 of this chapter. If a crop has a
designated crop-rotation crop acreage base for 1995, the 1996 crop
acreage base established for such crop is determined by averaging
planted and considered planted acreages determined in accordance with
part 1413 of this chapter as it was in effect on January 1, 1996, taking
into consideration the number of years in the most recent rotation
cycle. The sum of the crop acreage bases for a farm cannot exceed the
cropland for the farm, less cropland enrolled in the Conservation
Reserve Program in accordance with parts 704 and 1410 of this title,
except to the extent that such excess is due to an established practice
of double cropping on the farm in accordance with regulations in effect
as of January 1, 1996, at part 1413 of this chapter.
Grain sorghum means grain sorghum of a feed grain or dual purpose
variety (including any cross that, at all stages of growth, has most of
the characteristics of a feed grain or dual purpose variety). Sweet
sorghum is not considered a grain sorghum.
Oilseeds means acreages of soybeans, sunflower seed, rapeseed,
canola, safflower, flaxseed, mustard seed, or, if designated by CCC,
other oilseeds, planted for harvest as seed, or volunteer acreages of
such crops from which the seed is harvested.
Owner means an owner as defined in part 718 of this title and, only
for purposes of enrolling a farm in the program authorized by this part
or taking any subsequent action to maintain the eligibility of the farm,
any agency of the Federal Government; however, such agency shall not be
eligible to receive any payment made pursuant to such contract.
Payment rate means the annual payment rate determined and announced
by CCC.
Payment yield means the payment yield established for the crop of a
contract commodity for the farm in accordance with the regulations in
effect on January 1, 1996, at part 1413 of this chapter. CCC shall
adjust the payment yield to reflect the additional payments made in
accordance with Sec. 1413.15 of such regulations.
Rice means rice excluding sweet, glutinous, or candy rice such as
Mochi Gomi.
Upland cotton means planted and stub cotton that is produced from
other
[[Page 312]]
than pure strain varieties of the Barbadense species, any hybrid
thereof, or any other variety of cotton in which one or more of these
varieties predominate. For program purposes, brown lint cotton is
considered upland cotton.
Sec. 1412.104 Performance based upon advice or action of county or State committee.
The provisions of Sec. 718.8 of this title are applicable to this
part.
Sec. 1412.105 Appeals.
A producer may obtain reconsideration and review of any adverse
determination made under this part in accordance with the appeal
regulations found at parts 11 and 780 of this title.
Subpart B--Production Flexibility Contract Terms and Enrollment
Provisions
Sec. 1412.201 Production flexibility contract.
(a) CCC shall offer to enter into a 7-year contract with an eligible
producer on a farm having eligible acreage.
(b) A transfer (or change) in the interest of an owner or producer
subject to a contract in the contract acreage covered by the contract
shall result in the termination of the contract with respect to the
acreage, unless the transferee or owner of the acreage agrees to assume
all obligations under the contract. The termination shall be effective
on the date of the transfer or change.
(c) All producers sharing in the contract payments on a farm whose
payment shares have not been designated for a fiscal year must sign the
contract designating payment shares and provide supporting documentation
as specified in parts 12, 1400, and 1405 of this title no later than
August 1 of the fiscal year to be eligible to earn a contract payment in
that fiscal year. If all producers have not signed the contract by this
deadline, no producers on the contract will be eligible for a payment
for that farm for that fiscal year.
[61 FR 37575, July 18, 1996, as amended at 62 FR 55152, Oct. 23, 1997;
63 FR 31103, June 8, 1998]
Sec. 1412.202 Eligible producers.
Producers eligible to enter into a contract are:
(a) An owner of a farm who assumes all or a part of the risk of
producing a crop;
(b) A producer (other than an owner) on a farm with a share-rent
lease for such farm, regardless of the length of the lease, if the owner
enters into the same contract;
(c) A producer (other than an owner) on an eligible farm who rents
such farm under a lease expiring on or after September 30, 2002, in
which case the owner is not required to enter into the contract;
(d) A producer (other than an owner) on an eligible farm who cash
rents such farm under a lease expiring before September 30, 2002. The
owner of such farm may also enter into the same contract. If the
producer elects to enroll less than 100 percent of the crop acreage
bases in the contract, the consent of the owner is required;
(e) An owner of an eligible farm who cash rents such farm and the
lease term expires before September 30, 2002, if the tenant declines to
enter into a contract. In the case of an owner covered by this
paragraph, contract payments shall not begin under a contract until the
lease held by the tenant ends; and
(f) An owner or producer described in paragraphs (a) through (e)
regardless of whether the owner or producer purchased catastrophic risk
protection in accordance with part 1405 of this chapter.
Sec. 1412.203 Notification of eligible contract acreage.
The owner, and operator and all producers on a farm shall be
notified in writing of the number of acres eligible for enrollment in a
contract.
Sec. 1412.204 Reconstitutions.
Farms shall be reconstituted in accordance with part 718 of this
title.
Sec. 1412.205 Reducing contract acreage.
(a) A permanent reduction of all or a portion of a farm's contract
acreage or eligible contract acreage shall be allowed at the written
request of the
[[Page 313]]
owner to the county committee on Form CCC-505.
(b) If the producers convert contract acreage to a non-agricultural
commercial or industrial use, the contract acreage shall be reduced
accordingly.
Sec. 1412.206 Planting flexibility.
(a) For the 1996 through 2002 crop years, any crop may be planted on
contract acreage on a farm, except as limited elsewhere in this section.
For fiscal year 1998, for each acre a producer plants wild rice on
contract acreage, 1 acre will not be used in determining the contract
payment. Any crop may be planted on cropland in excess of the contract
acreage.
(b) Contract acreage may be hayed or grazed at any time.
(c) Planting fruits and vegetables (except lentils, mung beans, and
dry peas), is prohibited on contract acreage, except:
(1) A producer may double crop fruits or vegetables with a contract
commodity in any region described in paragraph (d) of this section, in
which case contract payments will not be reduced. Double cropping for
purposes of this section means planting for harvest fruits or vegetables
in cycle on the same acres with a contract commodity planted for grain
or lint in a 12 month period under weather conditions normal for the
region and being able to repeat the same cycle in the following 12 month
period;
(2) On a farm that the county committee determines has a history of
planting fruits or vegetables, in which case contract payments shall be
reduced in accordance with paragraph (e) of this section;
(3) By a producer that the county committee determines a history of
fruit or vegetables as the simple average of the sum of a specific fruit
or vegetable planted for harvest by the producer during the years 1991
through 1995, excluding any year in which a fruit or vegetable was not
planted, in which case contract payments shall be reduced in accordance
with paragraph (e); or
(4) On a farm with a 1995 rotation designation crop acreage base
established in accordance with part 1413 of this title as in effect on
January 1, 1996, and the producers on the farm planted fruits or
vegetables as a part of the rotation, in which case there will be no
reduction in contract payments if the acreage of fruits and vegetables
continue to be planted in the same rotation cycle with contract
commodities, the acreage of fruits and vegetables is not increased, and
an annual acreage report is filed for the farm.
(d) For purposes of this part, the following counties have been
determined to be regions having a history of doublecropping contract
commodities with fruits or vegetables. State committees have established
the following counties as regions within their respective States:
Alabama
Baldwin, Barbour, Butler, Chambers, Chilton, Clarke, Covington,
Cullman, Geneva, Greene, Jackson, Jefferson, Lee, Madison, Mobile,
Montgomery, Randolph, Sumter, Talladega, Walker, and Washington.
Alaska
None.
Arkansas
Ashley, Benton, Clay, Conway, Crawford, Cross, Drew, Franklin,
Independence, Jackson, Lawrence, Lee, Lincoln, Little River, Logan,
Miller, Perry, Poinsett, Pope, Prairie, Pulaski, Sebastian, and
Woodruff.
Arizona
Cochise, Graham, Greenlee, LaPaz, Maricopa, Pima, Pinal, and Yuma.
California
Alameda, Amador, Butte, Colusa, Contra Costa, Fresno, Glenn,
Imperial, Kern, Kings, Madera, Merced, Riverside, Sacramento, San
Benito, San Joaquin, Santa Clara, Siskiyou, Solano, Stanislaus, Sutter,
Tehama, Tulare, Yolo, and Yuba.
Caribbean Office
None.
Connecticut
None.
Colorado
None.
Delaware
Kent, New Castle, and Sussex.
Florida
All counties.
[[Page 314]]
Georgia
Appling, Atkinson, Bacon, Baker, Baldwin, Banks, Ben Hill, Berrien,
Bleckley, Brooks, Bryan, Bulloch, Burke, Calhoun, Candler, Catoosa,
Chatham, Clay, Clinch, Coffee, Colquitt, Columbia, Cook, Crisp, Decatur,
Dodge, Dooly, Dougherty, Early, Echols, Effingham, Emanuel, Evans,
Floyd, Forsyth, Franklin, Glascock, Grady, Hart, Houston, Irwin, Jeff
Davis, Jefferson, Jenkins, Johnson, Jones, Lamar, Lanier, Lauren, Lee,
Liberty, Long, Lowndes, McDuffie, Macon, Miller, Mitchell, Monroe,
Montgomery, Morgan, Peach, Pierce, Pike, Pulaski, Putnam, Randolph,
Richmond, Schley, Screven, Seminole, Stephens, Sumter, Tattnall,
Telfair, Terrell, Thomas, Tift, Toombs, Treutlen, Turner, Twiggs, Upson,
Ware, Warren, Washington, Wayne, Webster, Wheeler, Wilcox, Wilkinson,
and Worth.
Hawaii
None (no CAB's).
Idaho
None.
Illinois
Calhoun, Clark, Crawford, Edgar, Effingham, Gallatin, Iroquois,
Kankakee, Lawrence, Madison, Marion, Mason, Monroe, St. Clair, Union,
Vermilion and White.
Indiana
Allen, Bartholemew, Gibson, Hamilton, Knox, LaGrange, Lake, Madison,
Miami, Posey, Sullivan, Vandenberg, and Warrick.
Iowa
Louisa.
Kansas
None.
Kentucky
Clinton and Wayne.
Louisiana
Avoyelles, Franklin, Grant, Rapides, and Morehouse.
Maine
None.
Maryland
Baltimore, Caroline, Carroll, Dorchester, Kent, Queen Annes,
Somerset, Talbot, Wicomico, and Worcester.
Massachusetts
None.
Michigan
None.
Minnesota
None.
Mississippi
Calhoun, Carroll, Covington, Jefferson Davis, Lowndes, Marshall,
Monroe, Montgomery, and Prentiss.
Missouri
Barton, Butler, Cape Girardeau, Dade, Dunklin, Jasper, Lawrence,
Mississippi, New Madrid, Newton, Ripley, Scott, and Stoddard.
Montana
None.
Nebraska
None.
Nevada
Clark.
New Jersey
Burlington, Cumberland, Gloucester, Mercer, Middlesex, Monmouth,
Salem.
New Hampshire
None.
New Mexico
Curry, Dona Ana, Eddy, Hidalgo, Lea, Luna, Quay, Roosevelt, San
Juan, and Sierra.
New York
Orange and Suffolk.
North Carolina
Beaufort, Bladen, Brunswick, Cabarrus, Camden, Carteret, Chowan,
Cleveland, Columbus, Craven, Cumberland, Currituck, Davidson, Davie,
Duplin, Edgecombe, Franklin, Granville, Greene, Harnett, Hertford, Hoke,
Hyde, Johnston, Jones, Lee, Lenoir, Lincoln, Martin, Mecklenburg, Moore,
Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Pender,
Perquimans, Pitt, Richmond, Robeson, Rockingham, Rutherford, Sampson,
Scotland, Stanly, Stokes, Tyrell, Union, Warren, Washington, Watauga,
Wayne, Wilkes, Wilson, and Yadkin.
North Dakota
None.
Ohio
Auglaize, Brown, Henry, Logan, Morgan, Muskingham, and Wood.
[[Page 315]]
Oklahoma
Adair, Alfalfa, Beckham, Blaine, Bryan, Caddo, Canadian, Carter,
Cherokee, Cotton, Custer, Delaware, Dewey, Ellis, Garfield, Garvin,
Grady, Grant, Greer, Harmon, Haskell, Hughes, Jackson, Jefferson, Kay,
Kingfisher, Kiowa, LeFlore, Logan, McClain, McIntosh, Major, Marshall,
Mayes, Muskogee, Noble, Nowata, Okmulgee, Osage, Pawnee, Payne,
Pittsburg, Pottawatomie, Roger Mills, Rogers, Sequoyah, Stephens,
Tillman, Tulsa, Wagoner, Washita, Woods, and Woodward.
Oregon
Benton, Linn, Morrow, and Umatilla.
Pennsylvania
Adams, Allegheny, Beaver, Bucks, Centre, Chester, Columbia,
Cumberland, Delaware, Franklin, Lancaster, Luzerne, Mifflin, Montgomery,
Montour, Northumberland, Schuylkill, Snyder, Union, Wyoming, and York.
Rhode Island
None.
South Carolina
All counties.
South Dakota
None.
Tennessee
Bledsoe, Cannon, Carroll, Claiborne, Coffee, Crockett, Dyer, Greene,
Hardeman, Haywood, Jefferson, Knox, Lake, Lauderdale, Lincoln, Madison,
Meigs, McMinn, Pickett, Rhea, Robertson, and Union.
Texas
Anderson, Armstrong, Atascosa, Bailey, Baylor, Briscoe, Brooks,
Cameron, Castro, Cherokee, Cochran, Collingsworth, Cottle, Crosby,
Dallam, Dawson, Deaf Smith, Dimmit, Duval, Floyd, Foard, Frio, Gaines,
Hale, Hall, Hartley, Haskell, Hidalgo, Jim Hogg, Jim Wells, Kinney,
Kleberg, Knox, Lamb, Lubbock, Lynn, Maverick, Medina, Moore, Motley,
Nacogdoches, Oldham, Panola, Parmer, Pecos, Randall, Rusk, San Patricio,
Starr, Swisher, Terry, Uvalde, Webb, Wilbarger, Willacy, Yoakum, Zapata,
and Zavala.
Utah
Davis and Weber.
Vermont
None.
Virginia
Accomack, Augusta, Botetourt, Brunswick, Campbell, Charlotte,
Chesapeake, Cumberland, Dinwiddie, Halifax, Hanover, Isle of Wight, King
and Queen, King William, Lunenburg, Mecklenburg, Middlesex, Nelson, New
Kent, Northampton, Nottoway, Page, Pittsylvania, Powhatan, Prince
George, Richmond, Rockbridge, Rockingham, Shenandoah, Southampton,
Stafford, Suffolk, Sussex, Virginia Beach, and Westmoreland.
Washington
Adams, Benton, Clark, Cowlitz, Franklin, Grant, Klickitat, Lewis,
Skagit, and Yakima.
West Virginia
Mason and Putnam.
Wisconsin
Brown, Calumet, Chippewa, Columbia, Dane, Dodge, Dunn, Eau Claire,
Fond du Lac, Grant, Green, Green Lake, Iowa, Jefferson, Kenosha,
Marquette, Racine, Richland, Rock, St. Croix, Sauk, Walworth, Waushara,
and Winnebago.
Wyoming
None.
(e) For each acre a producer plants to fruits or vegetables on
contract acreage under paragraphs (c)(2) or (3) of this section, 1 acre
will not be used in determining the contract payment. The calculation
for this reduction is based on the contract crop with the lowest payment
amount per acre. Reductions will be prorated among all producers based
on each producer's share of the total payment for the farm. Such
producers may adjust the reduction in payments as they agree upon.
(f) Fruits and vegetables include but are not limited to all nuts
except peanuts, certain fruit-bearing trees and: acerola (barbados
cherry), antidesma, apples, apricots, aragula, artichokes, asparagus,
atemoya, (custard apple), avocados, babaco papayas, bananas, beans
(except soybeans, mung, adzuki, faba, and lupin), beets--other than
sugar, blackberries, blackeye peas, blueberries, bok choy,
boysenberries, breadfruit, broccoflower, broccolo-cavalo, broccoli,
brussel sprouts, cabbage, cai lang, caimito, calabaza, carambola (star
fruit), calaboose, carob, carrots, cascadeberries, cauliflower,
celeriac, celery, chayote, cherimoyas (sugar apples), canary melon,
cantaloupes, cardoon, casaba melon, cassava, cherries, chickpeas/
[[Page 316]]
garbanzo beans, chinese bitter melon, chicory, chinese cabbage, chinese
mustard, chinese water chestnuts, chufes, citron, citron melon, coffee,
collards, cowpeas, crabapples, cranberries, cressie greens, crenshaw
melons, cucumbers, currants, cushaw, daikon, dasheen, dates, dry edible
beans, dunga, eggplant, elderberries elut, endive, escarole, etou,
feijoas, figs, gai lien, gailon, galanga, genip, gooseberries,
grapefruit, grapes, guambana, guavas, guy choy, chinese mustard,
honeydew melon, huckleberries, jackfruit, jerusalem artichokes, jicama,
jojoba, kale, kenya, kiwifruit, kohlrabi, kumquats, leeks, lemons,
lettuce, limequats, limes, lobok, loganberries, longon, loquats, lotus
root, lychee (litchi), mandarins, mangos, marionberries, mongosteen, mar
bub, melongene, mesple, mizuna, moqua, mulberries, murcotts, mushrooms,
mustard greens, nectarines, ny Yu, okra, olallieberries, olives, onions,
opo, oranges, papaya, paprika, parsnip, passion fruits, peaches, pears,
peas, all peppers, persimmon, persian melon, pimentos, pineapple,
pistachios, plantain, plumcots, plums, pomegranates, potatoes, prunes,
pummelo, pumpkins, quinces, radiochio, radishes, raisins, raisins
(distilling), rambutan, rape greens, rapini, raspberries, recao,
rhubarb, rutabaga, santa claus melon, salsify, saodilla, sapote, savory,
scallions, shallots, shiso, spinach, squash, strawberries, suk gat,
swiss chard, sweet corn, sweet potatoes, tangelos, tangerines, tangos,
tangors, taniers, taro root, tau chai, teff, tindora, tomatillos,
tomatoes, turnips, turnip greens, watercress, watermelons, white sapote,
and yam.
(g) Fruits or vegetables planted on contract acreage for green
manure, haying, or grazing are not considered as planted to fruits or
vegetables, but producers planting fruits and vegetables for such
purposes shall pay a fee to cover the cost of a farm visit, in
accordance with part 718 of this title, to verify that the crop has not
been harvested.
[61 FR 37575, July 18, 1996; 61 FR 49049, 49050, Sept. 18, 1996, as
amended at 63 FR 31103, June 8, 1998]
Sec. 1412.207 Succession-in-interest to a production flexibility contract.
(a) A person may succeed to the contract if there has been a change
in the operation of a farm, such as:
(1) A sale of land;
(2) A change of operator or producer, including a change in a
partnership that increases or decreases the number of partners; or
(3) A foreclosure, bankruptcy, or involuntary loss of the farm after
enrollment in a production flexibility contract.
(b) A succession in interest to the contract is not permitted if CCC
determines that the change results in a violation of the landlord-tenant
provisions set forth at Sec. 1412.304, or otherwise defeats the purpose
of the program.
(c) If a producer who is entitled to a contract payment dies,
becomes incompetent, or is otherwise unable to receive the contract
payment, the CCC will make the payment in accordance with part 707 of
this title.
(d) A producer or owner must inform the county committee of changes
in interest not later than:
(1) August 1 of the fiscal year in which the change occurs if
producers on the contract acreage remain the same, but payment shares
change; or
(2) August 1 of the fiscal year in which the change occurs, if a new
producer is being added to the contract.
(e) In any case in which payment has previously been made to a
predecessor, such payment shall not be paid to the successor. If the
predecessor refunds an advance contract payment, such producer shall not
be assessed interest in accordance with part 1403 of this chapter.
[61 FR 37575, July 18, 1996; 61 FR 49050, Sept. 18, 1996, as amended at
62 FR 55152, Oct. 23, 1997; 63 FR 31103, June 8, 1998]
Subpart C--Financial Considerations Including Sharing Production
Flexibility Payments
Sec. 1412.301 Limitation of production flexibility contract payments.
The sum total of annual contract payment amounts shall not exceed
the amounts specified in part 1400 of this chapter.
[[Page 317]]
Sec. 1412.302 Contract payment provisions.
(a) A producer may request 50 percent of each fiscal year's contract
payment as an advance payment.
(b) At the option of the producer, for fiscal year 1997 and each
subsequent fiscal year, 50 percent of the annual contract payment shall
be paid on December 15 or January 15, as requested by the producer. To
receive the advance payment the producers on the farm must be in
compliance with all requirements of the contract at the time of the
advance payment. For fiscal year 1998 and each subsequent fiscal year,
all producers sharing in the contract payment on the farm must no later
than 15 days prior to the final date to issue the advance payment, sign
the contract designating payment shares and provide supporting
documentation as specified in parts 12, 1400, and 1405 of this title, if
applicable; and request the advance payment. If all producers on the
farm have not signed the contract designating payment shares according
to this paragraph, then no producers will be eligible for a payment for
that farm for that fiscal year.
(c) A final contract payment shall be made not later than September
30 of each of the fiscal years 1996 through 2002.
(d) If a producer declines to accept, or is determined to be
ineligible for all or any part of the producer's share of the production
flexibility payment computed for the farm in accordance with the
provisions of this section:
(1) The payment or portions thereof shall not become available for
any other producer; and
(2) The producer shall refund to CCC any amounts representing
payments that exceed the payments determined by CCC to have been earned
under the program authorized by this part. Part 1403 of this chapter
shall be applicable to all unearned payments.
[61 FR 37575, July 18, 1996, as amended at 62 FR 55152, Oct. 23, 1997;
63 FR 31104, June 8, 1998]
Sec. 1412.303 Sharing of contract payments.
(a) Each eligible producer on a farm shall be given the opportunity
to enroll in a contract and receive contract payments determined fair
and equitable as agreed to by the producers on the farm and approved by
the county committee.
(1) Producers must provide a copy of their written lease to the
county committee, and, in the absence of a written lease, must provide
to the county committee a complete written description of the terms and
conditions of any oral agreement or lease.
(2) A lease will be considered a cash lease if the lease provides
for only a guaranteed sum certain cash payment, or a fixed quantity of
the crop (for example, cash, pounds, or bushels per acre).
(3) If a lease contains provisions that require the payment of rent
on the basis of the amount of crop produced or the proceeds derived from
the crop, or the interest such producer would have had if the crop had
been produced, or combination thereof, such agreement shall be
considered to be a share lease.
(4) Beginning on October 1, 1998, for years in which payment shares
had not been designated prior to October 23, 1997, a producer's lease,
including a lease which provides for the greater of a guaranteed amount
or share of the crop or crop proceeds, shall be considered a share lease
if the lease provides for both:
(i) A guaranteed amount such as a fixed dollar amount or quantity;
and
(ii) A share of the crop proceeds.
(5) If the lease is a cash lease, the landlord is not eligible for a
contract payment.
(6) A lease that the county committee determined to be a cash lease
under Sec. 1412.303 as contained in the 7 CFR, parts 1200 to 1499,
edition revised as of January 1, 1997, will be considered a cash lease
for the years in which payment shares were designated if, prior to
October 23, 1997:
(i) The designation of shares was executed; and
(ii) The county committee was provided a copy of the lease
applicable for the designated years.
(b) When contract acreage is leased on a share basis, neither the
landlord nor the tenant shall receive 100 percent of the contract
payment for the farm.
[[Page 318]]
(1) A landowner may receive up to 100 percent of the contract
payment if no lease exists with respect to the contract acreage. The
leasing of grazing or haying privileges is not considered cash leasing.
(2) [Reserved]
(c) The county committee shall approve a contract for enrollment and
approve the division of payment when all of the following apply:
(1) The landowners, tenants and sharecroppers sign the contract and
agree to the payment shares shown on the contract;
(2) The county committee determines that the interests of tenants
and sharecroppers are being protected; and
(3) That the division of payments is not done in a manner to
circumvent the provisions of part 1400 of this chapter.
[61 FR 37575, July 18, 1996, as amended at 62 FR 55152, Oct. 23, 1997;
63 FR 31104, June 8, 1998]
Sec. 1412.304 Provisions relating to tenants and sharecropper.
(a) Contract payments shall not be made by CCC if:
(1) The landlord or operator has adopted a scheme or device for the
purpose of depriving any tenant or sharecropper of the payments to which
such person would otherwise be entitled under the program. If any of
such conditions occur or are discovered after payments have been made,
all or any such part of the payments as the State committee may
determine shall be refunded to CCC; or
(2) The landlord terminated a lease in violation of state law as
determined by a state court.
(b) Notwithstanding the provisions set forth at Sec. 1412.302(c), if
the landowners, tenants and sharecroppers on a farm fail to reach an
agreement regarding the division of contract payments for a fiscal year,
the county committee shall make the payment at a later date if all
persons eligible to receive a share of the contract payment have
executed a contract not later than August 1 of the applicable fiscal
year and subsequently agree to the division of contract payment.
[61 FR 37575, July 18, 1996, as amended at 62 FR 55152, Oct. 23, 1997;
63 FR 31104, June 8, 1998]
Subpart D--Contract Violations and Diminution in Payments
Sec. 1412.401 Contract violations.
(a) Except as provided in paragraph (b) of this section, if a
producer subject to a contract violates a requirement of the contract
specified in Secs. 1412.206(c), 1412.402, 1412.403, and 1412.405, the
Deputy Administrator shall terminate the contract with respect to the
producer on each farm in which the producer has an interest. Upon such
termination, the producer shall forfeit all rights to receive future
contract payments on each farm in which the producer has an interest and
shall refund all contract payments received by the producer during the
period of the violation, plus interest with respect to the contract
payments as determined in accordance with part 1403 of this chapter.
(b) If the county committee determines that a violation is not
serious enough to warrant termination of the contract under paragraph
(a) of this section, the county committee may require the producer
subject to the contract either, or both of the following:
(1) Refund to CCC that part of the contract payments received by the
producer during the period of the violation, plus interest determined in
accordance with part 1403 of this chapter; and
(2) If there is a violation of Sec. 1412.206, accept a reduction in
the amount of current and future contract payments that is equal to the
sum proportionate to the severity of:
(i) Market value of the fruit and vegetables planted on each
contract acreage; and
(ii) The contract payment for each such acre.
(c) Producers who do not plant a crop on contract acreage must
protect any such land from weeds and erosion, including providing
sufficient cover if determined necessary by the county committee. The
first violation of this provision by a producer will result in a
reduction in the producer's payment for
[[Page 319]]
the farm by an amount equal to 3 times the cost of maintenance of the
acreage, but not to exceed 50 percent of the payment for the farm for
that fiscal year. The second violation of this provision will result in
a reduction in the payment for the farm by an amount equal to 3 times
the cost of maintenance of the acreage, not to exceed the payment for
the farm for that fiscal year.
[61 FR 37575, July 18, 1996; 61 FR 49050, Sept. 18, 1996]
Sec. 1412.402 Violations of highly erodible land and wetland conservation provisions.
The provisions of part 12 of this title, apply to this part.
Sec. 1412.403 Violations regarding controlled substances.
The provisions of Sec. 718.11 of this title apply to this part.
[61 FR 37575, July 18, 1996; 61 FR 49050, Sept. 18, 1996]
Sec. 1412.404 Contract liability.
All producers receiving a share of the contract payment are jointly
and severally liable for contract violations and resulting repayments.
Sec. 1412.405 Misrepresentation and scheme or device.
(a) A producer who is determined to have erroneously represented any
fact affecting a program determination made in accordance with this part
shall not be entitled to contract payments and must refund all payments,
plus interest determined in accordance with part 1403 of this chapter.
(b) A producer who is determined to have knowingly:
(1) Adopted any scheme or device that tends to defeat the purpose of
the program;
(2) Made any fraudulent representation; or
(3) Misrepresented any fact affecting a program determination shall
refund to CCC all payments, plus interest determined in accordance with
part 1403 of this chapter received by such producer with respect to all
contracts. The producer's interest in all contracts shall be terminated.
Sec. 1412.406 Offsets and assignments.
(a) Except as provided in paragraph (b) of this section, any payment
or portion thereof to any person shall be made without regard to
questions of title under State law and without regard to any claim or
lien against the crop, or proceeds thereof, in favor of the owner or any
other creditor except agencies of the U.S. Government. The regulations
governing offsets and withholdings found at part 1403 of this chapter
shall be applicable to contract payments.
(b) Any producer entitled to any payment may assign any payments in
accordance with regulations governing assignment of payment found at
part 1404 of this chapter.
Sec. 1412.407 Certification.
As a condition of eligibility for contract payments, the operator or
owner must timely submit a report of fruit and vegetable acreage in
accordance with part 718 of this title. If such operator or owner does
not report all of the fruits and vegetables planted on contract acreage,
the contract shall be terminated with respect to such farm unless the
provisions of Sec. 1412.401(b)(1) and (2) are applicable.
[61 FR 37575, July 18, 1996; 61 FR 49050, Sept. 18, 1996]
Subpart E--Production Flexibility and Conservation Reserve Programs
Sec. 1412.501 Timing for enrollment and termination of production flexibility contracts.
(a) At the beginning of each fiscal year, the Secretary shall allow
an eligible producer on a farm with acreage enrolled in a Conservation
Reserve Program contract in accordance with parts 704 or 1410 of this
title that terminates after August 1, 1996, to enter into or modify an
existing production flexibility contract if such land otherwise would
have been eligible for enrollment under this part as of August 1, 1996.
[[Page 320]]
(b) A production flexibility contract shall begin with the 1996 crop
of a contract commodity or in the case of acreage that was enrolled in
the Conservation Reserve Program, the date the production flexibility
contract was entered into or modified to include the acreage previously
subject to the Conservation Reserve Program contract.
(c) All contracts shall terminate on September 30, 2002, unless
terminated at an earlier date by mutual consent of all parties.
(d) A contract for farms whose Conservation Reserve Program contract
terminates after August 1, 1996, shall be signed by a producer no later
than November 30 of the fiscal year following the fiscal year the
Conservation Reserve Program contract is terminated.
(e) A Conservation Reserve Program contract that is terminated:
(1) In fiscal year 1996, if the effective date of the Conservation
Reserve Program contract termination is earlier than August 1, 1996, and
the land that was subject to the Conservation Reserve Program contract
is enrolled in a production flexibility contract, the owner or producer
is eligible to receive both the 1996 production flexibility contract
payment and a prorated Conservation Reserve Program payment.
(2) In fiscal years 1997 through 2002, if a conservation reserve
contract is terminated, and the land that was subject to the
conservation reserve contract is enrolled in a production flexibility
contract, the owner or producer may elect to receive either the
production flexibility contract payments or a prorated Conservation
Reserve Program payment, but not both.
PART 1421--GRAINS AND SIMILARLY HANDLED COMMODITIES--Table of Contents
Subpart--Loan and Loan Deficiency Payment Regulations for the 1996
Through 2002 Crops of Wheat, Feed Grains, Rice, Oilseeds (Canola,
Flaxseed, Mustard Seed, Rapeseed, Safflower, Soybeans, and Sunflower
Seed), and Farm-Stored Peanuts
Sec.
1421.1 Applicability.
1421.2 Administration.
1421.3 Definitions.
1421.4 Eligible producers.
1421.5 General eligibility requirements.
1421.6 Maturity dates.
1421.7 Adjustment of basic loan rates.
1421.8 Approved storage.
1421.9 Warehouse receipts.
1421.10 Warehouse charges.
1421.11 Liens.
1421.12 Fees, charges, and interest.
1421.13-1421.14 [Reserved]
1421.15 Loss or damage to the commodity.
1421.16 Personal liability of the producers.
1421.17 Farm-stored commodities.
1421.18 Warehouse-stored loans.
1421.19 Liquidation of loans.
1421.20 Release of the commodity pledged as collateral for a loan.
1421.21 [Reserved]
1421.22 Settlement.
1421.23 Foreclosure.
1421.24 Protein determinations.
1421.25 Loan repayments.
1421.26 Transfer of farm-stored loan to warehouse-stored association
loan.
1421.27 Producer-handler purchases of additional peanuts pledged as
collateral for a loan.
1421.28 Required producer-handler records and supervision of farm-
stored additional peanuts pledged as collateral for a loan or
purchased by a producer-handler from loan.
1421.29 Loan deficiency payments.
1421.30 Death, incompetency, or disappearance.
1421.31 Recourse loans.
1421.32 Handling payments and collections not exceeding $9.99.
Subpart--Regulations Governing the Wheat and Feed Grain Farmer-Owned
Reserve Program for 1990 through 1995 Crops
1421.200 Administration.
Subpart--Standards for Approval of Warehouses for Grain, Rice, Dry
Edible Beans, and Seed
1421.5551 General statement and administration.
1421.5552 Basic standards.
1421.5553 Bonding requirements for net worth.
1421.5554 Examination of warehouses.
1421.5555 Exceptions.
1421.5556 Approval of warehouses, requests for reconsideration.
1421.5557 Exemption from requirements.
1421.5558 Contract and application and inspection fees.
1421.5559 OMB control numbers assigned pursuant to Paperwork Reduction
Act.
Authority: 7 U.S.C. 7231-7235, 7237; and 15 U.S.C. 714b and 714c.
[[Page 321]]
Subpart--Loan and Loan Deficiency Payment Regulations for the 1996
through 2002 Crops of Wheat, Feed Grains, Rice, Oilseeds (Canola,
Flaxseed, Mustard Seed, Rapeseed, Safflower, Soybeans, and Sunflower
Seed), and Farm-Stored Peanuts
Source: 61 FR 37581, July 18, 1996, unless otherwise noted.
Sec. 1421.1 Applicability.
(a) The regulations of this subpart are applicable to the 1996
through 2002 crops of barley, corn, grain sorghum, oats, peanuts, rice,
wheat, and oilseeds as set forth in Sec. 1421.3. These regulations set
forth the terms and conditions under which loans shall be entered into
and loan deficiency payments made by the Commodity Credit Corporation
(CCC). Additional terms and conditions are set forth in the note and
security agreement and the loan deficiency payment application that must
be executed by a producer to receive loans and loan deficiency payments.
All loans made under this subpart are nonrecourse unless as noted in
Sec. 1421.31. With respect to warehouse-stored loans for peanuts, loans
shall be made in accordance with part 1446 of this chapter.
(b) Basic county loan rates, the schedule of premiums and discounts,
and forms that are used in administering loans and loan deficiency
payments for a crop of a commodity are available in State and county FSA
offices (State and county offices, respectively). The forms for use in
connection with the programs in this section shall be prescribed by CCC.
(c)(1) Loans and loan deficiency payments shall be available as
provided in this part with regard to barley, corn, grain sorghum, oats,
oilseeds, and wheat produced in the United States.
(2) Loans and loan deficiency payments shall be available only with
respect to rice produced in the continental United States.
(3) Farm-stored loans shall be available only with respect to farmer
stock peanuts, as defined in part 1446 of this chapter, that are
produced in the United States and that are also of a type specified in
part 729 of this title.
(d) Loans and loan deficiency payments shall not be available with
respect to any commodity produced on land owned or otherwise in the
possession of the United States if such land is occupied without the
consent of the United States.
Sec. 1421.2 Administration.
(a) The loan and loan deficiency payment program that is applicable
to a crop of a commodity shall be administered under the general
supervision of the Executive Vice President, CCC (Administrator, FSA)
and shall be carried out in the field by State and county FSA committees
(State and county committees, respectively).
(b) State and county committees, and representatives and employees
thereof, do not have the authority to modify or waive any of the
provisions of the regulations of this part.
(c) The State committee shall take any action required by these
regulations that has not been taken by the county committee. The State
committee shall also:
(1) Correct, or require a county committee to correct, an action
taken by such county committee that is not in accordance with the
regulations of this part; or
(2) Require a county committee to withhold taking any action that is
not in accordance with the regulations of this part.
(d) No provision or delegation herein to a State or county committee
shall preclude the Executive Vice President, CCC, or a designee or the
Administrator, FSA, or a designee, from determining any question arising
under the program or from reversing or modifying any determination made
by a State or county committee.
(e) The Deputy Administrator for Farm Programs, FSA, may authorize
State and county committees to waive or modify deadlines and other
program requirements in cases where lateness or failure to meet such
other requirements does not affect adversely the operation of the loan
and loan deficiency payment program.
(f) A representative of CCC may execute loans and loan deficiency
payment
[[Page 322]]
applications and related documents only under the terms and conditions
determined and announced by CCC. Any such document that is not executed
in accordance with such terms and conditions, including any purported
execution before the date authorized by CCC, shall be null and void.
Sec. 1421.3 Definitions.
The definitions set forth in this section shall be applicable for
all purposes of program administration. The terms defined in part 718 of
this title and parts 1412, 1425, and 1427 of this chapter shall also be
applicable, except where those definitions conflict with the definitions
set forth in this section.
Basic loan rate means the loan rate established by CCC for a
commodity before any adjustment for premiums and discounts.
Charges means all fees, costs, and expenses incurred in insuring,
carrying, handling, storing, conditioning, and marketing the commodity
tendered to CCC for loan. Charges also include any other expenses
incurred by CCC in protecting CCC's or the producer's interest in such
commodity.
High moisture commodities means corn and grain sorghum normally
harvested and intended to be stored or marketed in a high moisture
condition.
Loan deficiency quantity means the eligible quantity that was
certified by the producer as eligible to be pledged as collateral for a
loan, for which the producer elected to forgo obtaining the loan.
Loan quantity means the quantity on which the loan was disbursed
shown on the note and security agreement.
Oilseeds means any crop of soybeans, sunflower seed, canola,
rapeseed, safflower, flaxseed, mustard seed, and other oilseeds as
determined and announced by CCC.
Sec. 1421.4 Eligible producers.
(a) An eligible producer of a crop of a commodity shall be a person
(i.e., an individual, partnership, association, corporation, estate,
trust, State or political subdivision or agency thereof, or other legal
entity) that:
(1) Produces such a crop as a landowner, landlord, tenant, or
sharecropper, or in the case of rice, furnishes land, labor, water, or
equipment for a share of the rice crop;
(2) Meets the requirements of this part; and
(3) Meets the requirements of parts 12, 718, 1405, 1412, and 1446 of
this title.
(b) A receiver or trustee of an insolvent or bankrupt debtor's
estate, an executor or an administrator of a deceased person's estate, a
guardian of an estate of a ward or an incompetent person, and trustees
of a trust shall be considered to represent the insolvent or bankrupt
debtor, the deceased person, the ward or incompetent, and the
beneficiaries of a trust, respectively, and the production of the
receiver, executor, administrator, guardian, or trustee shall be
considered to be the production of the person or estate represented by
the receiver, executor, administrator, guardian, or trustee. Loan or
loan deficiency payment documents executed by any such person will be
accepted by CCC only if they are legally valid and such person has the
authority to sign the applicable documents.
(c) A minor who is otherwise an eligible producer shall be eligible
to receive loans or loan deficiency payments only if the minor meets one
of the following requirements:
(1) The right of majority has been conferred on the minor by court
proceedings or by statute;
(2) A guardian has been appointed to manage the minor's property and
the applicable loan or loan deficiency payment documents are signed by
the guardian;
(3) Any note signed by the minor is cosigned by a person determined
by the county committee to be financially responsible; or
(4) A bond is furnished under which a surety guarantees to protect
CCC from any loss incurred for which the minor would be liable had the
minor been an adult.
(d)(1) Two or more producers may obtain a single joint loan with
respect to commodities that are stored in the same farm storage
facility. Two or more producers may obtain individual loans with respect
to their share of the commodity that is stored commingled in a farm
storage facility with commodities owned by other producers if such other
producers execute Form
[[Page 323]]
CCC-665 that provides that such producers shall obtain the permission of
a representative of the county committee before removal of any quantity
of the commodity from the storage facility. All producers who store a
commodity in a farm storage facility in which commodities that have been
pledged as collateral for a loan shall be liable for any damage incurred
by CCC with respect to the deterioration or unauthorized removal or
disposition of such commodities in accordance with Sec. 1421.17.
(2) Two or more producers may obtain a single joint loan with
respect to commodities that are stored in an approved warehouse if the
warehouse receipt that is pledged as collateral for the loan is issued
jointly to such producers.
(3) If more than one producer executes a note and security agreement
with CCC, each such producer shall be jointly and severally liable for
the violation of the terms and conditions of the note and the
regulations set forth in this part. Each such producer shall also remain
liable for repayment of the entire loan amount until the loan is fully
repaid without regard to such producer's claimed share in the commodity
pledged as collateral for the loan. In addition, such producer may not
amend the note and security agreement with respect to the producer's
claimed share in such commodities, or loan proceeds, after execution of
the note and security agreement by CCC.
(e)(1) The county committee may deny a producer a loan on farm-
stored commodities if the producer has:
(i) Been convicted of a criminal act;
(ii) Has made a misrepresentation, with respect to acquiring a farm-
stored loan or in the maintenance of the commodity pledged as security
for a farm-stored loan; or
(iii) Failed to protect adequately the interests of CCC in the
commodity pledged as security for a farm-stored loan.
(2) In such cases, the producer shall be ineligible for subsequent
farm-stored loans unless the county committee determines that the
producer will adequately protect CCC's interest in the commodity that
would be pledged as collateral for such a loan. A producer who is denied
a farm-stored loan will be eligible to pledge a commodity as collateral
for a warehouse-stored loan.
(f) Warehouse-stored loans may be made to a warehouse operator who,
acting on behalf and with the authorization of a producer, tenders to
CCC warehouse receipts issued by such warehouse operator for a commodity
produced by such warehouse operator only in those States where the
issuance and pledge of such warehouse receipts is valid under State law.
(g) An approved cooperative marketing association (CMA) may obtain a
loan on the eligible production of such commodity or loan deficiency
payment with respect to such commodity on behalf of the members of the
CMA who are eligible to receive loans and loan deficiency payments with
respect to a crop of a commodity. For purposes of this subpart and in
applicable loan and loan deficiency payment forms, the term producer
includes an approved CMA.
(h) With respect to peanuts tendered to CCC for loan, a producer
must also meet the provisions of part 1446 of this title. Before
obtaining a farm-stored loan with respect to additional peanuts, a
producer must register as a handler with the State FSA office of the
State in which the producer's farm is located.
(i)(1) Two or more producers may obtain a single joint loan
deficiency payment with respect to commodities that are stored in the
same farm storage facility. Two or more producers may obtain individual
loan deficiency payments with respect to their share of the commodity
that is stored commingled in a farm storage facility with commodities
owned by other producers. All producers who store a commodity in a farm
storage facility in which commodities for which a loan deficiency
payment has been requested shall be liable for any damage incurred by
CCC with respect to incorrect certification of such commodities in
accordance with Sec. 1421.16.
(2) Two or more producers may obtain a single joint loan deficiency
payment with respect to commodities that are stored in an approved or
unapproved warehouse if the acceptable
[[Page 324]]
documentation representing an eligible commodity for which a loan
deficiency payment is requested is completed jointly for such producers.
(3) Each producer who is a party to a joint loan deficiency payment
will be jointly and severally responsible and liable for the breach of
the obligations set forth in the loan deficiency payment documents and
in the applicable regulations in this subpart.
Sec. 1421.5 General eligibility requirements.
(a) A producer must, unless otherwise authorized by CCC, request
loans and loan deficiency payments at the county office that, in
accordance with part 718 of this title, is responsible for administering
programs for the farm on which the commodity was produced. An approved
CMA must, unless otherwise authorized by CCC, request loans and loan
deficiency payments at the location designated by CCC. An eligible
producer who produces a crop of barley, corn, grain sorghum, oats, rice,
or wheat on a farm covered by a production flexibility contract shall be
eligible for a loan on any production of that commodity. In the case of
oilseeds, any production produced by an eligible producer shall be
eligible for a loan. To receive loans or loan deficiency payments for a
crop of a commodity, a producer must execute a note and security
agreement or loan deficiency payment application on or before:
(1) January 31 of the year following the year in which the crop of
peanuts is normally harvested for additional peanuts pledged as
collateral for a farm-stored loan;
(2) March 31 of the year following the year in which the following
crops are normally harvested: quota peanuts pledged as collateral for a
farm-stored loan, barley, canola, flaxseed, oats, rapeseed, and wheat;
(3) April 30 of the year following the year in which the crop of
peanuts is harvested for quota peanuts tendered for purchase; or
(4) May 31 of the year following the year in which the following
crops are normally harvested: corn, grain sorghum, mustard seed, rice,
safflower, soybeans, and sunflower seed.
(b)(1) To be eligible to receive loans or loan deficiency payments,
commodities must be tendered to CCC by an eligible producer and must be
eligible and in existence when approved by CCC. To be eligible to
receive loans, commodities must also be stored in approved storage at
the time of disbursement of loan proceeds. The commodity must not have
been sold, nor any sales option on such commodity granted, to a buyer
under a contract that provides that the buyer may direct the producer to
pledge the commodity to CCC as collateral for a loan or to obtain a loan
deficiency payment. Such commodities must also be merchantable for food,
feed, or other uses determined by CCC and must not contain mercurial
compounds, toxin producing molds, or other substances poisonous to
humans or animals. Notwithstanding any other provision of this part,
such commodities that contain vomitoxin levels of 5 or less parts per
million or contain levels of more than 5 parts per million, may be
eligible for a nonrecourse or recourse loan, respectively. Corn
containing aflatoxin levels not exceeding 20 parts per billion may be
eligible for a nonrecourse loan.
(2) The determination of class, grade, grading factors, milling
yields, and other quality factors, including the determination of type,
quality and quantity for peanuts:
(i) With respect to barley, canola, corn, flaxseed, grain sorghum,
oats, rice, soybeans, sunflower seed for extraction of oil, and wheat,
shall be based upon the Official United States Standards for Grain and
the Official United States Standards for Rice as applied to rough rice
whether or not such determinations are made on the basis of an official
inspection. The costs of an official grade determination may be paid by
CCC. The grade and grading requirements that are used in administering
loans and loan deficiency payments for the commodities in this paragraph
are available in State and county offices.
(ii) With respect to a crop of mustard seed, rapeseed, safflower
seed, and sunflower seed used for a purpose other than to extract oil,
shall be based on quality requirements established and announced by CCC,
whether or not such
[[Page 325]]
determinations are made on the basis of an official inspection. The
costs of an official quality determination may be paid by CCC. The
quality requirements that are used in administering loans and loan
deficiency payments for the oilseeds in this paragraph are available in
State and county offices.
(iii) With respect to peanuts, shall be determined at the time of
delivery to CCC by a Federal-State Inspector authorized or licensed by
the Secretary.
(3) Corn pledged as collateral for a farm-stored loan may be ear or
shelled corn, but may not be ground ear corn. If the collateral is ear
corn, the producer must:
(i) Before delivery to CCC, shell such corn without cost to CCC; and
(ii) Before removal of the commodity for shelling, have the approval
of CCC in accordance with Sec. 1421.20. Corn pledged as collateral for a
warehouse-stored loan must be shelled corn.
(4) When a quantity of a commodity is determined by weight, the
following shall apply:
(i) A bushel of barley shall be 48 pounds of barley free of dockage;
(ii) A bushel of corn shall be 56 pounds of shelled corn;
(iii) A bushel of oats shall be 32 pounds of oats;
(iv) Quantities of peanuts shall be determined in tons and
hundredths of a ton;
(v) Quantities of farm-stored rice shall be in whole units of 100
pounds of rice;
(vi) A bushel of soybeans shall be 60 pounds of soybeans with no
more than 1 percent foreign material;
(vii) A bushel of grain sorghum shall be 56 pounds of grain sorghum
free of dockage;
(viii) A bushel of wheat shall be 60 pounds of wheat free of
dockage;
(ix) Quantities of farm-stored canola, flaxseed, mustard seed,
rapeseed, safflower seed, and sunflower seed shall be determined in
whole units of 100 pounds of the respective commodity;
(x) A bushel of canola shall be 50 pounds of canola free of dockage;
(xi) A bushel of flaxseed shall be 56 pounds of flaxseed free of
dockage;
(xii) A bushel of mustard seed shall be 54 pounds of mustard seed
free of dockage;
(xii) A bushel of rapeseed shall be 50 pounds of rapeseed free of
dockage;
(xiv) A bushel of safflower seed shall be 40 pounds of safflower
seed free of dockage; and
(xv) A bushel of sunflower seed shall be 28 pounds of sunflower seed
free of foreign material.
(5) With respect to farm-stored loans and loan deficiency payments,
all determinations of weight and quality, except as otherwise agreed to
by CCC, shall be determined at the time of delivery of the commodity to
CCC or at the time the loan deficiency payment application is filed.
(c)(1) To be eligible to receive loans or loan deficiency payments,
a producer must have the beneficial interest in the commodity that is
tendered to CCC for a loan or loan deficiency payment. The producer must
always have had the beneficial interest in the commodity unless, before
the commodity was harvested, the producer and a former producer whom the
producer tendering the commodity to CCC has succeeded had such an
interest in the commodity. Commodities obtained by gift or purchase
shall not be eligible to be tendered to CCC for loans or loan deficiency
payments. Heirs who succeed to the beneficial interest of a deceased
producer or who assume the decedent's obligations under an existing loan
or loan deficiency payment shall be eligible to receive loans and loan
deficiency payments whether succession to the commodity occurs before or
after harvest so long as the heir otherwise complies with the provisions
of this part.
(2) A producer shall not be considered to have divested the
beneficial interest in the commodity if the producer retains control,
title, and risk of loss in the commodity, including the right to make
all decisions regarding the tender of such commodity to CCC for loans or
loan deficiency payments, and the producer:
(i) Executes an option to purchase, whether or not a payment is made
by the potential buyer for such option to purchase, with respect to such
commodity if all other eligibility requirements are met and the option
to purchase contains the following provision:
Notwithstanding any other provision of this option to purchase,
title, risk of loss,
[[Page 326]]
and beneficial interest in the commodity, as specified in 7 CFR part
1421, shall remain with the producer until the buyer exercises this
option to purchase the commodity. This option to purchase shall expire,
notwithstanding any action or inaction by either the producer or the
buyer, at the earlier of: (1) The maturity of any CCC loan which is
secured by such commodity; (2) the date the CCC claims title to such
commodity; or (3) such other date as provided in this option
or
(ii) Enters into a contract to sell the commodity if the producer
retains title, risk of loss, and beneficial interest in the commodity
and the purchaser does not pay to the producer any advance payment
amount or any incentive payment amount to enter into such contract
except as provided in part 1425 of this chapter.
(3) If loans and loan deficiency payments are made available to
producers through an approved CMA in accordance with part 1425 of this
chapter, the beneficial interest in the commodity must always have been
in the producer-member who delivered the commodity to the CMA or its
member CMA's, except as otherwise provided in this section. Commodities
delivered to such a CMA shall not be eligible to receive loans or loan
deficiency payments if the producer-member who delivered the commodity
does not retain the right to share in the proceeds from the marketing of
the commodity as provided in part 1425 of this chapter.
(d)(1) A producer may, before the final date for obtaining a loan
for a commodity, re-offer as collateral for such a loan any commodity
that had been previously pledged as collateral for a loan, except with
respect to:
(i) Commodities that have been acquired in accordance with part 1401
of this chapter;
(ii) Commodities that have been redeemed at a rate that is less than
the loan rate as determined in accordance with Sec. 1421.25; and
(iii) Commodities for which a payment has been made in accordance
with Sec. 1421.29.
(2) The commodity re-offered as security for the subsequent loan
shall have the same maturity date as the original loan.
(e) Producers who redeem loan collateral at the lower loan repayment
rate in accordance with Sec. 1421.25 or, in lieu of receiving a loan
receive a loan deficiency payment in accordance with Sec. 1421.29, shall
provide CCC with:
(1) Evidence of production of the collateral such as sales receipts
or other written documentation acceptable to CCC; or
(2) The storage location of the collateral that has not been
otherwise disposed of and allow CCC access to such collateral; and
(3) Permission to inspect, examine, and make copies of the records
and other written data as deemed necessary to verify the eligibility of
the producer and commodity.
(f) Producers who redeem loan collateral or receive a loan
deficiency payment for a commodity in accordance with paragraph (e) of
this section must provide evidence of production acceptable to CCC
before the final loan availability date of the crop year for such
commodity following the crop year for which the loan or loan deficiency
payment was made. Production evidence includes but is not limited to:
(1) Evidence of sales;
(2) Load summary or assembly sheets;
(3) Warehouse receipts issued by a warehouse that is approved
according to Sec. 1421.8(b) or by a warehouse that is not approved; and
(4) Quantities determined by measurement at CCC's discretion.
(g) If the producer fails to provide acceptable evidence of
production as required in paragraph (e)(1) of this section, such
producer shall be required to repay the market gain or loan deficiency
payment and charges, plus interest.
(h) The loan documents shall not be presented for disbursement
unless the commodity subject to the note and security agreement is an
eligible commodity, in existence, and is in approved storage. If the
commodity was not either an eligible commodity, in existence, or in
approved storage at the time of disbursement, the total amount disbursed
under the loan and charges plus interest shall be refunded promptly by
the producer.
(i) CCC shall limit the total loan quantity for a loan disbursement
or
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loan deficiency quantity for a loan deficiency payment based on a
subsequent increase in the quantity of eligible commodity by the final
loan availability date to 100 percent of the outstanding quantity of
such loan or loan deficiency payment application. A producer may obtain
a separate loan or loan deficiency payment before the final loan
availability date for the commodity for quantities in excess of 100
percent of such quantity if such quantities are an otherwise eligible
commodity.
Sec. 1421.6 Maturity dates.
(a)(1) All loans shall mature on demand by CCC and with respect to:
(i) All commodities, except peanuts and loan collateral transferred
in accordance with Sec. 1421.17(c) and (d), no later than the last day
of the 9th calendar month following the month in which the note and
security agreement is filed in accordance with Sec. 1421.5(a) and
approved; and
(ii) Peanuts, April 30 of the year following the year the commodity
is normally harvested.
(2) CCC may at any time accelerate the loan maturity date by
providing the producer notice of such acceleration at least 30 days in
advance of the accelerated maturity date.
(3) The request for a loan shall not be approved until all producers
having an interest in the collateral sign the note and security
agreement and CCC approves such note and security agreement.
(b) If a producer fails to settle the loan in accordance with
paragraph (a) of this section within 30 days from the maturity date of
such loan, or other reasonable time period as established by CCC, a
claim for the loan amount and charges plus interest shall be
established. CCC shall:
(1) Inform the producer before the maturity date of the loan of the
date by which the loan must be settled or a claim will be established in
accordance with part 1403 of this title; and
(2) If the producer delivers the loan collateral in accordance with
Sec. 1421.22 after a claim is established:
(i) Determine the value of the settlement for such collateral in
accordance with Sec. 1421.22;
(ii) Waive interest on the loan amount that accrued before the
establishment of the claim with respect to the settlement value of the
quantity delivered from the date such loan proceeds were disbursed
through the loan maturity date. Interest that accrues after the
establishment of the claim shall not be waived; and
(iii) Reduce the outstanding claim amount arising from the loan by
the amount of the settlement value of the quantity delivered plus the
amount of interest that was waived.
Sec. 1421.7 Adjustment of basic loan rates.
(a) Basic loan rates for a commodity may be established on a State,
regional, or county basis and may be adjusted by CCC to reflect quality
and location applicable to the commodity and as otherwise provided in
this section.
(b) The basic loan rates for the wheat, corn, barley, oats, grain
sorghum, rice, peanuts, soybean, canola, flaxseed, mustard seed,
rapeseed, safflower, and sunflower seed crops will be determined by CCC
and made available at State and county offices.
(c)(1) With respect to all commodities except peanuts and rice,
warehouse-stored loans shall be disbursed at levels based on the basic
county loan rate for the county where the commodity is stored, adjusted
for the schedule of premiums and discounts established for the commodity
on the basis of quality factors set forth on warehouse receipts or
supplemental certificates and for other quality factors, as determined
and announced by CCC.
(2) With respect to rice, warehouse-stored loans shall be disbursed
at levels based on the milling yields times the whole and broken kernel
loan rates, adjusted for the schedule of discounts on the basis of
quality factors set forth on warehouse receipts or supplemental
certificates and for other quality factors, as determined and announced
by CCC.
(3) With respect to commodities moved from one warehouse to another
in accordance with the terms and conditions prescribed by CCC on Form
CCC-699, Reconcentration Agreement and Trust Receipt, the loan rate will
be
[[Page 328]]
adjusted to reflect the new storage location.
Sec. 1421.8 Approved storage.
(a) Approved farm storage shall consist of a storage structure
located on or off the farm (excluding public warehouses) that is
determined by CCC to be under the control of the producer and to afford
safe storage of the commodity pledged as collateral for a loan. As may
be determined and announced by the Executive Vice President, CCC,
approved farm storage may also include on-ground storage, temporary
storage structures, or other storage arrangements.
(b) Approved warehouse storage shall consist of:
(1) A public warehouse for which a CCC storage agreement for the
commodity is in effect and that is approved by CCC for price support
purposes. Such a warehouse is referred to in this subpart as an approved
warehouse. The names of approved warehouses may be obtained from the
Kansas City Commodity Office, P.O. Box 419205, Kansas City, Missouri
64141-6205, or from State and county offices.
(2) A warehouse operated by an approved CMA as defined in part 1425
of this chapter.
(c) The approved storage requirements provided in this section may
be waived by CCC if the producer requests a loan deficiency payment
pursuant to the loan deficiency payment provisions contained in
Sec. 1421.29.
Sec. 1421.9 Warehouse receipts.
(a) Warehouse receipts tendered to CCC with respect to a loan or
loan deficiency payment must meet the provisions of this section and all
other provisions of this part, and CCC program documents.
(b) Warehouse receipts must be issued in the name of the eligible
producer or CCC. If issued in the name of the eligible producer, the
receipts must be properly endorsed in blank in order to vest title in
the holder. Receipts must be issued by an approved warehouse and must
represent a commodity that is deemed to be stored commingled. The
receipts must be negotiable and must represent a commodity that is the
same quantity and quality as the eligible commodity actually in storage
in the warehouse of the original deposit. However, warehouse receipts
may be issued by another warehouse if the eligible commodity was
reconcentrated in accordance with the provisions of Sec. 1421.20(c).
(c) If the receipt is issued for a commodity that is owned by the
warehouse operator either solely, jointly, or in common with others, the
fact of such ownership shall be stated on the receipt. In States where
the pledge of warehouse receipts issued by a warehouse operator on the
warehouse operator's commodity is invalid, the warehouse operator may
offer the commodity to CCC for loan if such warehouse is licensed and
operating under the U.S. Warehouse Act.
(d) Each warehouse receipt or accompanying supplemental certificate
representing a commodity stored in an approved warehouse that has a
storage agreement with CCC shall indicate that the commodity is insured
in accordance with such agreement. The cost of such insurance shall not
be for the account of CCC.
(e) A separate warehouse receipt must be submitted for each grade
and class of any commodity tendered to CCC and, with respect to rice,
such receipt must also state the milling yield of the rice.
(f)(1) Each warehouse receipt, or a supplemental certificate (in
duplicate) that properly identifies the warehouse receipt, must be
issued in accordance with the Uniform Grain and Rice Storage Agreement
or the U.S. Warehouse Act, as applicable, and must indicate:
(i) The name and location of the storing warehouse;
(ii) The warehouse code assigned by CCC;
(iii) The warehouse receipt number;
(iv) The date the receipt was issued;
(v) The type of commodity;
(vi) The date the commodity was deposited or received;
(vii) The date to which storage has been paid or the storage start
date;
(viii) Whether the commodity was received by rail, truck or barge;
(ix) The amount per bushel, pound, or hundredweight of prepaid in or
out charges;
[[Page 329]]
(x) The signature of the warehouse operator or the authorized agent;
and
(xi) For warehouses operating under a merged warehouse code
agreement (KC-385), the location and county to which the producer
delivered the commodity.
(2) In addition to the information specified in paragraph (f)(1) of
this section, additional commodity specific requirements shall be
determined by CCC and are available at State and county offices and the
Kansas City Commodity Office.
(g) If a warehouse receipt indicates that the commodity tendered for
loan grades ``infested'' or ``contains excess moisture'', or both, the
receipt must be accompanied by a supplemental certificate as provided in
Sec. 1421.18 in order for the commodity to be eligible for a loan. The
grade, grading factors, and quantity to be delivered must be shown on
the certificate as follows:
(1) When the warehouse receipt shows ``infested'' and the commodity
has been conditioned to correct the infested condition, the supplemental
certificate must show the same grade without the ``infested''
designation and the same grading factors and quantity as shown on the
warehouse receipt.
(2)(i) When the warehouse receipt shows that the commodity contained
excess moisture and the commodity has been dried or blended, the
supplemental certificate must show the grade, grading factors, and
quantity after drying or blending of the commodity. Such entries shall
reflect a drying or blending shrinkage as provided in paragraph
(g)(2)(iv) of this section.
(ii) When a supplemental certificate is issued in accordance with
paragraphs (g)(1) and (g)(2)(i) of this section, the grade, grading
factors and the quantity shown on such certificate shall supersede the
entries for such items on the warehouse receipt.
(iii) If the commodity has been dried or blended to reduce the
moisture content, the quantity specified on the warehouse receipt or the
supplemental certificate shall represent the quantity after drying or
blending.
(iv) For commodities dried or blended in accordance with paragraph
(g)(2)(iii) of this section, such quantity shall reflect a minimum
shrinkage in the receiving weight excluding dockage:
(A) For the following commodities, 1.3 times the percentage
difference between the moisture content of the commodity received and
the following percentages for the specified commodity:
(1) Barley: 14.5 percent;
(2) Corn: 15.5 percent;
(3) Grain sorghum: 14.0 percent;
(4) Oats; 14.0 percent;
(5) Rice: 14.0 percent;
(6) Soybeans; 14.0 percent; and
(7) Wheat: 13.5 percent.
(B) For the following commodities, 1.1 times the percentage
difference between the moisture content of the commodity received and
the following percentages for the specified commodity:
(1) Canola: 10.0 percent;
(2) Flaxseed: 9.0 percent;
(3) Mustard Seed: 10.0 percent;
(4) Rapeseed: 10.0 percent;
(5) Safflower Seed: 10.0 percent; and
(6) Sunflower Seed: 10.0 percent.
(h)(1) If, in accordance with paragraph (g) of this section, a
supplemental certificate is issued in connection with a warehouse
receipt, such certificate must state that no lien for processing will be
asserted by the warehouse operator against CCC or any subsequent holder
of such receipt.
(2) Warehouse receipts and the commodities represented by such
receipts that are stored in an approved warehouse that is operating in
accordance with a Uniform Grain and Rice Storage Agreement (UGRSA) may
be subject to a lien for warehouse charges only to the extent provided
in Sec. 1421.10. In no event shall a warehouse operator be entitled to
satisfy such a lien by sale of the commodities when CCC is the holder of
such receipt.
(i) Warehouse receipts representing commodities that have been
shipped by rail or by barge, must be accompanied by supplemental
certificates completed in accordance with paragraph (f) of this section.
Sec. 1421.10 Warehouse charges.
(a) CCC-approved handling and storage rates that may be deducted
from loan proceeds are available in State and county offices. Such
deductions shall be based upon the entries on the
[[Page 330]]
warehouse receipt or supplemental certificate, but in no case shall be
higher than the CCC approved rate. No storage deduction shall be made if
written evidence acceptable to CCC is submitted indicating that:
(1) Storage charges through the maturity date have been prepaid; or
(2) The producer has arranged with the warehouse operator for the
payment of storage charges through the maturity date and the warehouse
operator enters an endorsement in substantially the following form on
the warehouse receipt:
Storage arrangements have been made by the depositor of the grain
covered by this receipt through (date through which storage has been
provided). No lien will be asserted by the warehouse operator against
CCC or any subsequent holder of the warehouse receipt for the storage
charges that accrued before the specified date.
(b) The beginning date to be used for computing storage deductions
on the commodity stored in an approved warehouse shall be the later of
the following:
(1) The date the commodity was received or deposited in the
warehouse;
(2) The date the storage charges start; or
(3) The day following the date through which storage charges have
been paid.
(c) For commodities delivered to CCC in settlement for a loan, CCC
shall pay to the producer the warehouse charges for receiving the
commodity, or in-charges. If the warehouse receipt delivered to CCC in
settlement for a loan shows that such charges have been paid, CCC shall
issue such payment to the producer. If the receipt shows that such
charges have not been paid, the producer will assign such payment to the
warehouse and CCC shall issue such payment to the warehouse for the
producer's account.
Sec. 1421.11 Liens.
(a) The county office shall file or record, as required by State
law, all security agreements that are issued with respect to commodities
pledged as collateral for loans. The cost of filing and recording shall
be paid for by CCC.
(b) If there are any liens or encumbrances on the commodity, waivers
that fully protect the interest of CCC must be obtained even though the
liens or encumbrances are satisfied from the loan proceeds. No
additional liens or encumbrances shall be placed on the commodity after
the loan is approved.
Sec. 1421.12 Fees, charges, and interest.
(a) A producer shall pay a nonrefundable loan service fee to CCC at
a rate determined by CCC. The amount of such fees are available in State
and county offices and are shown on the note and security agreement.
(b) Interest that accrues with respect to a loan shall be determined
in accordance with part 1405 of this chapter. All or a portion of such
interest may be waived with respect to a quantity of commodity that has
been redeemed in accordance with Sec. 1421.25 at a rate that is less
than the principal amount of the loan plus charges and interest.
(c) For each crop of soybeans, the producer, as defined in the
Soybean Promotion, Research, and Consumer Information Act (7 U.S.C.
Chapter 6301), shall remit to CCC an assessment that shall be determined
at the time CCC acquires the commodity, and shall be at a rate equal to
one-half of 1 percent of the amount determined in accordance with
Sec. 1421.19.
(d) Additional fees representing amounts voted on by producers for
marketing or promotional fees may be deducted from loan proceeds by CCC
as requested and agreed to by the governing body of such marketing or
promotional fee and CCC. Deduction of such fees from amounts due
producers and the payment of such fees to such governing body shall be
made by CCC in a manner and at such time as determined by CCC.
Secs. 1421.13-1421.14 [Reserved]
Sec. 1421.15 Loss or damage to the commodity.
The producer is responsible for any loss in quantity or quality of
the commodity pledged as collateral for a farm-stored loan. CCC shall
not assume any loss in quantity or quality of the loan collateral for
farm-stored loans.
[[Page 331]]
Sec. 1421.16 Personal liability of the producers.
(a) When a producer obtains a commodity loan or requests a loan
deficiency payment, the producer agrees:
(1) When signing Form CCC-666, Farm Stored Loan Quantity
Certification, when applicable, Form CCC-677, Farm Storage Note and
Security Agreement, and Form CCC-678, Warehouse Storage Note and
Security Agreement, that the producer will not:
(i) Provide an incorrect certification of the quantity or make any
fraudulent representation for the loan; or
(ii) Remove or dispose of a quantity of commodity that is collateral
for a CCC farm-stored loan without prior written approval from CCC in
accordance with Sec. 1421.20;
(2) When signing Form CCC-666 LDP, Loan Deficiency Payment
Application and Certification, or CCC-709, Direct Loan Deficiency
Payment Agreement, as applicable, that the producer will not provide an
incorrect certification of the quantity or make any fraudulent
representation for loan deficiency payment purposes; and
(3) That violation of the terms and conditions of the Form CCC-677,
Form CCC-678, Form CCC-666 LDP, or Form CCC-709, as applicable, will
cause harm or damage to CCC in that funds may be disbursed to the
producer for a quantity of a commodity that is not actually in existence
or for a quantity on which the producer is not eligible.
(b) The violations referred to in paragraph (a) of this section are
defined as follows:
(1) Incorrect certification is the certifying of a quantity of a
commodity for the purpose of obtaining a commodity loan or a loan
deficiency payment in excess of the quantity eligible for such loan or
loan deficiency payment or the making of any fraudulent representation
with respect to obtaining loans or loan deficiency payments;
(2) Unauthorized removal is the movement of any farm-stored loan
quantity from the storage structure in which the commodity was stored or
structures that were designated when the loan was approved to any other
storage structure whether or not such structure is located on the
producer's farm without prior written authorization from the county
committee in accordance with Sec. 1421.20, if the movement of loan
collateral prevents CCC from obtaining the first lien on such
collateral; and
(3) Unauthorized disposition is the conversion of any loan quantity
pledged as collateral for a farm-stored loan without prior written
authorization from the county committee in accordance with Sec. 1421.20.
(c) The producer and CCC agree that it will be difficult, if not
impossible, to prove the amount of damages to CCC for the violations in
accordance with paragraph (b) of this section. Accordingly, if the
county committee determines that the producer has violated the terms and
conditions of Form CCC-677, Form CCC-678, Form CCC-666 LDP, or Form CCC-
709, as applicable, liquidated damages shall be assessed on the quantity
of the commodity that is involved in the violation. If CCC determines
the producer:
(1) Acted in good faith when the violation occurred, liquidated
damages will be assessed by multiplying the quantity involved in the
violation by:
(i) 10 percent of the loan rate applicable to the loan note or the
loan deficiency payment rate for the first offense; or
(ii) 25 percent of the loan rate applicable to the loan note or the
loan deficiency payment rate for the second offense; or
(2) Did not act in good faith with regard to the violation, or for
cases other than the first or second offense, liquidated damages will be
assessed by multiplying the quantity involved in the violation by 25
percent of the loan rate applicable to the loan note or the loan
deficiency payment rate.
(d) For liquidated damages assessed in accordance with paragraph
(c)(1) of this section, the county committee shall:
(1) Require repayment of the loan principal applicable to the loan
quantity incorrectly certified or the loan quantity removed or disposed
of for loan deficiency payment, the loan deficiency payment rate
applicable to the loan deficiency quantity incorrectly certified, and
charges, plus interest applicable to the amount repaid; and
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(2) If the producer fails to pay such amount within 30 days from the
date of notification, call the applicable loan involved in the
violation, or for loan deficiency payments, require repayment of the
entire loan deficiency payment and charges plus interest.
(e) For liquidated damages assessed in accordance with paragraph
(c)(2) of this section, the county committee shall call the loan
involved in the violation, or for loan deficiency payments, require
repayment of the entire loan deficiency payment and charges plus
interest.
(f) The county committee:
(1) May waive the administrative actions taken in accordance with
paragraphs (c)(1) and (d) if the county committee determines that:
(i) The violation occurred inadvertently, accidentally, or
unintentionally; or
(ii) The producer acted to prevent spoilage of the commodity.
(2) Shall not consider the following acts as inadvertent,
accidental, or unintentional:
(i) Movement of loan collateral off the farm;
(ii) Movement of loan collateral from one storage structure to
another on the farm, except as provided for in Sec. 1421.17(b)(1); and
(iii) Feeding the loan collateral.
(3) Shall furnish a copy of its determination to the State
committee, and the Administrator. If the determination of the county
committee is not disapproved by either the State committee or the
Administrator, FSA, or a designee, within 60 calendar days from the date
the determination is received, such determination shall be considered to
have been approved.
(g) If, for any violation in accordance with paragraph (b) of this
section, the county committee determines that CCC's interest is not or
will not be protected, the county committee shall call any or all of the
producer's farm-stored loans, and deny future farm-stored loans and loan
deficiency payments without production evidence for 24 months after the
date the violation is discovered. Depending on the severity of the
violation, the county committee may deny future farm-stored loans and
loan deficiency payments without production evidence for an additional
12 month period.
(h) If the county committee determines that the producer has
committed a violation in accordance with paragraph (b), the county
committee shall notify the producer in writing that:
(1) The producer has 30 calendar days to provide evidence and
information regarding the circumstances that caused the violation, to
the county committee; and
(2) Administrative actions will be taken in accordance with
paragraphs (d) or (e) of this section.
(i) If the loan is called in accordance with this section, the
producer may not repay the loan at the lower of the loan repayment rate
in accordance with Sec. 1421.25 and may not utilize the provisions of
part 1401 of this chapter with respect to such loan.
(j) Producers who have been refused a farm-stored loan under
provisions of this section may apply for a warehouse-stored loan.
(k)(1) If a producer:
(i) Makes any fraudulent representation in obtaining a loan or loan
deficiency payment, maintaining, or settling a loan; or
(ii) Disposes or moves the loan collateral without the approval of
CCC, such loan shall be payable upon demand by CCC. The producer shall
be liable for:
(A) The amount of the loan or loan deficiency payment;
(B) Any additional amounts paid by CCC with respect to the loan or
loan deficiency payment;
(C) All other costs that CCC would not have incurred but for the
fraudulent representation, the unauthorized disposition or movement of
the loan collateral;
(D) Interest on such amounts; and
(E) Liquidated damages assessed under paragraph (c) of this section.
(2) With regard to amounts due for a loan, the payment of such
amounts may not be satisfied by:
(i) The forfeiture of loan collateral to CCC of commodities with a
settlement value that is less than the total of such amounts; or
(ii) By repayment of such loan at the lower loan repayment rate as
prescribed in Sec. 1421.25 and may not utilize
[[Page 333]]
the provisions of part 1401 of this chapter with respect to such loans.
(3) Notwithstanding any provisions of the note and security
agreement, if a producer has made any such fraudulent representation or
if the producer has disposed of, or moved, the loan collateral without
prior written approval from CCC in accordance with Sec. 1421.20, the
value of the settlement for such collateral delivered to or removed by
CCC shall be determined by CCC in accordance with Sec. 1421.22.
(l) A producer shall be personally liable for any damages resulting
from a commodity delivered to or removed by CCC containing mercurial
compounds, toxin producing molds, or other substances poisonous to
humans or animals.
(m) If the amount disbursed under a loan or in settlement thereof,
or loan deficiency payment exceeds the amount authorized by this part,
the producer shall be liable for repayment of such excess and charges,
plus interest.
(n) If the amount collected from the producer in satisfaction of the
loan is less than the amount required in accordance with this part, the
producer shall be personally liable for repayment of the amount of such
deficiency and charges, plus interest.
(o) In the case of joint loans or loan deficiency payments, the
personal liability for the amounts specified in this section shall be
joint and several on the part of each producer signing the note or loan
deficiency payment application.
(p) Any or all of the liquidated damages assessed in accordance with
the provisions of paragraph (c) may be waived as determined by CCC.
Sec. 1421.17 Farm-stored commodities.
(a) The quantity of a commodity that shall be used to determine the
amount of a farm-stored loan shall not exceed a percentage (the loan
percentage), as established by the State committee that shall not exceed
a percentage established by CCC, of the certified or measured quantity
of the eligible commodity stored in approved farm storage and covered by
the note and security agreement. The quantity of a commodity pledged as
security for a farm-storage loan shall be measured or certified in
accordance with paragraph (e). Farm-stored loans may be made on less
than the maximum quantity eligible for loan at the producer's request.
If the loan quantity is reduced by the State committee, the county
committee, or by request of the producer, such reduced quantity shall be
the mortgaged quantity on the note and security agreement for the
commodity in a bin, crib, or lot on which the loan is made.
(1) With respect to additional peanuts, loans shall be made on 100
percent of the estimated quantity pledged as collateral for a farm-
stored loan.
(2) With respect to all other commodities, the State committee may
establish a loan percentage that does not exceed a percentage
established by CCC or may apply quality discounts to the loan rate, each
year for each commodity on a Statewide basis or for specified areas
within the State. Before approving a county committee request to
establish a different loan percentage, or to apply quality discounts,
the State committee shall consider conditions in the State or areas
within a State to determine if the loan percentage should be reduced
below the maximum loan percentage or the quality discounts should be
applied to the basic county loan rate to provide CCC with adequate
protection. Loans disbursed based upon loan percentages previously
lowered and loan rates adjusted for quality shall not be altered if
conditions within the State or areas within the State change to
substantiate removing such reductions; percentages established or loan
rates adjusted for quality in accordance with this section shall apply
only to new loans and not to outstanding loans. The factors to be
considered by the State committee in determining loan percentages or the
necessity to apply quality discounts shall include but are not limited
to:
(i) General crop conditions;
(ii) Factors affecting quality peculiar to an area within the State;
and
(iii) Climatic conditions affecting storability.
(3) The loan percentages established by the State committee may be
reduced by the county committee when authorized on an individual farm,
area, or producer basis when determined to
[[Page 334]]
be necessary in order to provide CCC with adequate protection. The
factors to be considered by the county committee in reducing the loan
percentages shall include but not be limited to:
(i) The condition or suitability of the storage structure;
(ii) The condition of the commodity;
(iii) The hazardous location of the storage structure, such as a
location that exposes the structure to danger of flood, fire, and theft
by a person not entrusted with possession of the commodity;
(iv) Any disagreement with respect to the quantity of the commodity
to be pledged as collateral for a loan; and
(v) Such other factors that relate to the preservation or safety of
the loan collateral.
(b) If an eligible quantity of a commodity except peanuts, has been
commingled with an ineligible quantity of the commodity, the commingled
commodity is not eligible to be pledged as collateral for a loan unless:
(1) The producer, when requesting a loan shall designate all
structures that may be used for storage of the loan collateral. In such
cases, the producer is not required to obtain prior written approval
from the county committee before moving loan collateral from one
designated structure to another designated structure. In all other
instances, if the producer intends to move loan collateral from a
designated structure to another undesignated structure, the producer
must request prior approval from the county committee. Such approval
shall be evidenced on Form CCC-687-1 and the eligible or ineligible
commodity must be measured by a representative of the county office, at
the producer's expense, before commingling; or
(2) The producer has made a certification with respect to the
acreage planted to the commodity that is to be commingled for all farms
in which the producer has an interest. When certifying to the acreage on
all farms in which interest is held, the producer must provide
acceptable evidence of the production and purchase of the commodity from
which the county committee may determine whether the eligible production
claimed by the producer is reasonable in relation to the production
practices on such farm or similar farms in the same county; or have
either the eligible or ineligible commodity measured by a representative
of the county office at the producer's expense, before commingling.
Peanuts pledged as collateral for a loan must be stored separately from
peanuts produced on any other farm and handled in such a manner that
only the actual peanuts produced on the farm and on no other farm will
be delivered to CCC.
(c) Upon request by the producer before transfer, the county
committee may approve the transfer of a quantity of a commodity that is
pledged as collateral for a farm-stored loan to a warehouse-stored loan
at any time during the loan period.
(1) Liquidation of the farm-stored loan or part thereof shall be
made through the pledge of warehouse receipts for the commodity placed
under warehouse-stored loan and the immediate payment by the producer of
the amount by which the warehouse-stored loan is less than the farm-
stored loan or part thereof and charges plus interest. The loan quantity
for the warehouse-stored loan cannot exceed 110 percent of the loan
quantity transferred from the farm-stored loan.
(2) Any amounts due the producer shall be disbursed by the county
office. The maturity date of the warehouse-stored loan shall be the
maturity date applicable to the farm-stored loan that was transferred.
(d) Upon request by the producer before the transfer, the county
committee may approve the transfer of a warehouse-stored loan or part
thereof to a farm-stored loan at any time during the loan period.
Quantities pledged as collateral for a farm-stored loan shall be based
on a measurement by a representative of the county office before
approving the farm-stored loan. The producer must immediately repay the
amount by which the farm-stored loan is less than the warehouse-stored
loan and charges plus interest on the shortage. The maturity date of the
farm-stored loan shall be the maturity date applicable to the warehouse-
stored loan that was transferred.
[[Page 335]]
(e) The quantity of a commodity pledged as security for a farm-
stored loan or for which a loan deficiency payment is requested may be
determined on the basis of the quantity of the commodity that an
eligible producer certifies in writing on Form CCC-666 for a loan and
Form CCC-666 LDP or CCC-709, as applicable, for a loan deficiency
payment, is eligible to be pledged as collateral and is otherwise
available for loan or loan deficiency payment purposes.
(f) If the county committee determines, by measurement or otherwise,
that the actual quantity serving as collateral for a loan is less than
the loan quantity, the county committee shall take the actions specified
in Sec. 1421.16.
Sec. 1421.18 Warehouse-stored loans.
(a) The quantity of a commodity that may be pledged as collateral
for a loan shall be the quantity of any eligible commodity delivered to
CCC for storage at an approved warehouse. Such quantity shall be the net
weight specified on the warehouse receipt or supplemental certificate.
(b) To be eligible to be pledged as collateral for a loan, the
commodity must not be Sample Grade and must meet the requirements of
Sec. 1421.5 and the commodity eligibility requirements, as determined by
CCC. These requirements are available at State and county offices.
Sec. 1421.19 Liquidation of loans.
(a) If a producer does not pay to CCC the total amount due in
accordance with a loan, CCC shall have the right to acquire title to the
loan collateral and to sell or otherwise take possession of such
collateral without any further action by the producer. With respect to
farm-stored loans, the producer may, as CCC determines, deliver the
collateral for such loan in accordance with instructions issued by CCC.
CCC will not accept delivery of any quantity of a commodity in excess of
110 percent of the outstanding farm-stored loan quantity. If a quantity
in excess of 110 percent of the outstanding farm-stored loan quantity is
shown on the warehouse receipt or other documents, the producer shall
provide replacement warehouse receipts and delivery documents. If the
warehouse receipt and such other documents applicable to the settlement
are not replaced showing only the quantity eligible for delivery, CCC
shall provide for such corrected documents and apply charges for such
service, if any, to the producer's account as charges for settlement on
the loan.
(b) If the producer desires to deliver eligible commodities to CCC
in satisfaction of the loan, the producer must notify CCC of such
intention before the loan maturity date by giving written notice to the
county office that disbursed the proceeds for such loan. If the producer
fails to deliver such commodities to CCC by the date specified on Form
CCC-691, Commodity Delivery Notice, and the producer subsequently
redeems the commodity pledged as collateral for the loan before delivery
is completed, interest shall continue to be assessed on such amount in
accordance with part 1405 of this chapter.
(c) If, either before or after maturity, the commodity is going out
of condition or is in danger of going out of condition, the producer
shall so notify the county office and confirm such notice in writing. If
the county committee determines that the commodity is going out of
condition or is in danger of going out of condition and the commodity
cannot be satisfactorily conditioned by the producer and delivery cannot
be accepted within a reasonable length of time, the county committee
shall arrange for an inspection and grade and quality determination.
When delivery is completed, settlement shall be made on the basis of
such grade and quality determination or on the basis of the grade and
quality determination made at the time of delivery, whichever is higher,
for the quantity actually delivered.
(d) If the producer loses control of the storage structure, or if
there is insect infestation that cannot be controlled, danger of flood,
or damage to the storage structure making it unsafe to continue storage
of the commodity on the farm, the commodity may be delivered before the
maturity date of the loan upon prior approval of the county committee in
accordance with paragraph (a). Settlement will be made
[[Page 336]]
with the producer as provided in Sec. 1421.22.
Sec. 1421.20 Release of the commodity pledged as collateral for a loan.
(a) A producer, when requesting a loan shall designate specific
storage structures on Form CCC-677, in accordance with
Sec. 1421.17(b)(1). The producer is not required to request prior
approval before moving loan collateral between such designated
structures. Movement of loan collateral to any other structures not
designated on CCC-677, or the disposal of such loan collateral without
prior written approval of the county committee, shall subject the
producer to the administrative actions specified in Sec. 1421.16. A
producer may at any time obtain the release, in accordance with this
section, of all or any part of the commodity remaining as loan
collateral by paying to CCC, with respect to the quantity of the
commodity released:
(1) The principal amount of the loan that is outstanding and charges
plus interest; or
(2) If CCC so announces, an amount less than the principal amount of
the loan and charges plus interest under the terms and conditions
specified by CCC at the time the producer redeems the commodity pledged
as collateral for such loan in accordance with Sec. 1421.25. The
producer may request and CCC may approve removal of a quantity of the
commodity from storage, without the payment to CCC of the loan amount,
if the principal amount outstanding on such loan before such removal
does not exceed the maximum loan value of the quantity of the commodity
remaining in storage after such removal. When the proceeds of the sale
of the commodity are needed to repay all or a part of a farm-stored
loan, the producer must request and obtain prior written approval of the
county office on a form prescribed by CCC in order to remove a specified
quantity of the commodity from storage. Any such approval shall be
subject to the terms and conditions set forth in the applicable form,
copies of which may be obtained by producers at the county office. Any
such approval shall not constitute a release of CCC's security interest
in the commodity or release the producer from liability for any amounts
due and owing to CCC with respect to the loan indebtedness if full
payment of such amounts is not received by the county office. If a
producer fails to repay a loan within the time period prescribed by CCC
for a farm-storage loan and commodity pledged as loan collateral has
been delivered to a buyer in accordance with Form CCC-681-1,
Authorization for Delivery of Loan Collateral for Sale, such producer
may not repay the loan at the rate that is less than the loan rate
determined in accordance with Sec. 1421.25(a)(1)(ii) or (b)(2).
(b) CCC may allow a producer to establish a loan repayment rate
determined in accordance with Sec. 1421.25 (a)(1)(ii) or (b)(2) on Form
CCC-681-1, Authorization for Delivery of Loan Collateral for Sale,
provided the producer complies with all terms and conditions set forth
on Form CCC-681-1. If a producer fails to repay a loan within the time
period prescribed by CCC in accordance with the terms and conditions of
Form CCC-681-1 and the commodity pledged as collateral for such loan has
been delivered to a buyer in accordance with Form CCC-681-1, such
producer may not repay the loan at the rate that is less than the loan
rate determined in accordance with Sec. 1421.25 (a)(1)(ii) or (b)(2).
(c)(1) The producer may arrange with the county office for the
release of all or part of the commodity that is pledged as collateral
for a warehouse-stored loan at or before the maturity of such loan by,
with respect to the quantity of the commodity to be released, paying to
CCC:
(i) The principal amount of the loan and charges plus interest; or
(ii) If CCC so announces, an amount less than the principal amount
of the loan and charges plus interest under the terms and conditions
specified by CCC at the time the producer redeems the commodity pledged
as collateral for such loan in accordance with Sec. 1421.25. Each
partial release of the loan collateral must cover all of the commodity
represented by one warehouse receipt. Warehouse receipts redeemed by
repayment of the loan shall be released only to the producer. However,
such receipts may be released to
[[Page 337]]
persons designated in a written authorization that is filed with the
county office by the producer within 15 days before the date of
repayment.
(2) Upon the filing of Form CCC-699, Reconcentration Agreement and
Trust Receipt, by the producer and warehouse operator, CCC may, during
the loan period, approve the reconcentration in another CCC-approved
warehouse of all or part of a commodity that is pledged as collateral
for a warehouse-stored loan. Any such approval shall be subject to the
terms and conditions set forth in Form CCC-699, Reconcentration
Agreement and Trust Receipt.
(3) A producer may, before the new warehouse receipt is delivered to
CCC, pay to CCC:
(i) The principal amount of the loan and charges plus interest and
applicable charges; or
(ii) If CCC so announces, an amount less than the principal amount
of the loan and charges plus interest under the terms and conditions
specified by CCC at the time the producer redeems the commodity pledged
as collateral for such loan in accordance with Sec. 1421.25.
(d) The note and security agreement shall not be released until the
loan has been satisfied in full.
(e) If the commodity is moved on a non-workday from storage without
obtaining prior approval to move such commodity, such removal shall
constitute unauthorized removal or disposition, as applicable, of such
commodity unless the producer notifies the county office the next
workday that such commodity has been moved and such movement is approved
by CCC.
Sec. 1421.21 [Reserved]
Sec. 1421.22 Settlement.
(a) The value of the settlement of loans shall be made by CCC on the
following basis:
(1) With respect to nonrecourse loans, the schedule of premiums and
discounts for the commodity:
(i) If the value of the collateral at settlement is less than the
amount due, the producer shall pay to CCC the amount of such deficiency
and charges, plus interest on such deficiency; or
(ii) If the value of the collateral at settlement is greater than
the amount due, such excess shall be retained by CCC and CCC shall have
no obligation to pay such amount to any party.
(2) With respect to recourse loans, the proceeds from the sale of
the commodity:
(i) If the value of the collateral at settlement is less than the
amount due, the producer shall pay to CCC the amount of such deficiency
and charges, plus interest on such deficiency; or
(ii) If the proceeds received from the sale of the commodity are
greater than the sum of the amount due plus any cost incurred by CCC in
conducting the sale of the commodity, the amount of such excess shall be
paid to the producer or, if applicable, to any secured creditor of the
producer.
(3) If CCC sells the commodity described in paragraph (a)(1) or
(a)(2) in settlement of the loan, the sales proceeds shall be applied to
the amount owed CCC by the producer. The producer shall be responsible
for any costs incurred by CCC in completing the sale. CCC may deduct
such amount from the sales proceeds.
(b) Settlements made by CCC with respect to eligible commodities
that are acquired by CCC and that are stored in an approved warehouse
shall be made on the basis of the entries set forth in the applicable
warehouse receipt, supplemental certificate, and other accompanying
documents.
(c)(1) All eligible commodities that are stored in other than
approved warehouses shall be delivered to CCC in accordance with
instructions issued by CCC. Settlement for such commodities shall be
made on the basis of entries set forth in the applicable warehouse
receipt, supplemental certificate, and other accompanying documents.
(2) With respect to all commodities, except peanuts, that are
delivered from other than an approved warehouse, settlement shall be
made by CCC on the basis of the basic loan rate that is in effect for
the commodity at the producer's customary delivery point, as determined
by CCC.
(3)(i) With respect to peanuts, settlement values for quota and
additional peanuts shall be determined and announced annually by CCC.
Settlement
[[Page 338]]
shall be made by CCC on the amount computed on the basis of net weight
and quality of such peanuts with an allowance of 4 percent for Virginia
type peanuts and an allowance of 3.5 percent for other types of peanuts
in order to compensate producers for shrinkage during storage on peanuts
delivered on or after January 31 of the year following the year in which
the crop was produced less discounts of:
(A) $2 per ton, net weight, for each full 1 percent of foreign
material in excess of 15 percent; and
(B) $10 per ton, net weight, for peanuts containing more than 10
percent moisture.
(ii) No allowance for shrinkage shall be made for storage with
respect to peanuts delivered before February 1 of the year following the
year in which the crop was produced.
(iii) If a producer delivers peanuts from a farm to CCC in a
quantity that would exceed the farm poundage quota when added to the
peanuts marketed, and considered marketed from the farm as quota
peanuts, the additional peanut loan rate shall be used with respect to
such peanuts if CCC determines that the producer made an inadvertent
error in determining the quantity of peanuts pledged as collateral as
quota peanuts. If CCC determines that such error was not inadvertent, a
loan shall not be made available with respect to such quantity and
marketing quota penalties shall be assessed in accordance with part 729
of this title.
(iv) The loan rate for additional peanuts shall be used for all
peanuts that do not grade Segregation 1 at the time of delivery to CCC
if the producer does not elect to settle such additional peanuts as
quota peanuts. If the producer elects to settle such peanuts as quota
peanuts, the quantity shall not exceed the lesser of:
(A) The difference between the production of Segregation 1 peanuts
on the farm and the farm poundage quota; or
(B) The amount of the under-marketings of quota peanuts as shown on
the farm marketing card.
(4) With respect to rice acquired by CCC at a location other than an
approved warehouse, settlement shall be made on the basis of the class,
grade, and quality entries set forth in the Federal-State inspection
certificate and on the basis of the quantity set forth in the weight
certificates.
(d) A producer may be required to retain and store the commodity
that is pledged as collateral for a loan for a period of 60 days after
the maturity date of a loan without any cost to CCC if CCC is unable to
take delivery of the commodity. If CCC is unable to take delivery of the
commodity within the 60-day period after the loan maturity date, the
producer shall be paid a storage payment upon delivery of the commodity
to CCC. The storage payment shall be computed at the storage rate stated
in the applicable CCC storage agreement for the commodity in effect at
the delivery point where the producer delivers the commodity. The period
for earning such storage payment shall begin the day following the
expiration of the 60-day period after such maturity date and extend
through the earlier of:
(1) The final date of actual delivery; or
(2) The final date for delivery as specified in the delivery
instructions issued to the producer by the county office.
(e) When a producer is directed by the county office to haul the
commodity for delivery, except aromatic rice, a greater distance than
would have been necessary to make delivery to the producer's customary
delivery point, as determined by CCC, the producer will be allowed
compensation, as determined by the State committee at a rate not to
exceed the common carrier truck rate or the rate available from local
truckers, for hauling the eligible commodity the additional distance. In
determining the rate of payment for excess hauling, the State committee
may establish reasonable mileage minimums below which producers will not
receive compensation for hauling.
(f)(1) Producers may request trackloading for loan collateral where
approved warehouse space is not available locally or where KCCO
determines that it would be to the benefit of CCC. Where local weighing
facilities are not available or when requested by producers, destination
weights may be used for settlement purposes. All producers loading in
the same car must sign an
[[Page 339]]
agreement stating the percentage share of the total quantity to be
credited to each. When requested by producers before delivery of the
commodity, settlement may be made on the basis of destination grades.
Such destination grade determination for a car shall be applied to the
entire quantity of a commodity loaded into the same car, regardless of
the grade or quality of a commodity loaded into the car by any producer.
(2) A trackloading payment of 19 cents per bushel (or 31.66 cents
per hundredweight in the case of sorghum, oilseeds, and rice, excluding
aromatic rice) shall be made to the producer on an eligible commodity
delivered to CCC under this subsection.
(g) If a farm-stored commodity is delivered in advance of the
applicable loan maturity date as provided in Sec. 1421.19, a deduction
for storage charges shall be made. The deduction shall be made for the
period from the date of delivery to the applicable maturity date for the
commodity. Such deduction shall be at the rate charged by the warehouse
to which the commodity was delivered. No deduction for storage charges
shall be made for early delivery of a farm-stored commodity if the loan
maturity date is accelerated by CCC under a general acceleration of the
maturity date in a particular area.
(h) A refund of warehouse storage charges will be made by CCC to the
producer if the maturity date of a warehouse storage loan is accelerated
by CCC for reasons other than any wrongful act or omission on the part
of the producer, and the commodity is not redeemed. The amount of the
storage charges to be refunded shall be computed at the lesser of the
UGRSA rate or the rate prepaid by the producer for the period of
unearned storage.
(i) If a warehouse charges the producer for either the receiving
charges or the receiving and loading out charges on an eligible
commodity in an approved warehouse, the producer shall, upon delivery to
CCC of warehouse receipts representing the commodity stored in such
warehouse, be reimbursed or given credit by the county office for such
prepaid charges at the lesser of the UGRSA rate or the rate prepaid by
the producer. The producer must furnish to the county office, written
evidence signed by the warehouse operator that such charges have been
paid.
Sec. 1421.23 Foreclosure.
(a) Upon maturity and nonpayment of a warehouse-stored loan, title
to the unredeemed collateral securing the loan shall immediately vest in
CCC. Upon maturity and nonpayment of farm-stored loan, title to the
unredeemed collateral securing the loan shall vest in CCC upon demand.
When CCC acquires title to the unredeemed collateral, CCC shall have no
obligation to pay for any market value that such collateral may have in
excess of the loan indebtedness, (the unpaid amount of the note and
charges plus interest).
(b) If the total amount due on a farm-stored loan (the unpaid amount
of the note and charges, plus interest) is not satisfied upon maturity,
CCC may remove the commodity from storage, and assign, transfer, and
deliver the commodity or documents evidencing title thereto at such
time, in such manner, and upon such terms as CCC may determine, at
public or private sale. Any such disposition may also be effected
without removing the commodity from storage. The commodity may be
processed before sale and CCC may become the purchaser of the whole or
any part of the commodity at either a public or private sale.
(c) If a farm-stored commodity removed by CCC from storage is sold,
the value of the settlement for the commodity shall be determined
according to Sec. 1421.22. If a deficiency exists, the amount of the
deficiency may be setoff from any payment that would otherwise be due
the producer from CCC or any other agency of the United States.
Sec. 1421.24 Protein determinations.
(a) With respect to Hard Red Winter and Hard Red Spring wheat
tendered to CCC that is stored in an approved warehouse, producers must
obtain official protein content determinations or, if determined
acceptable by CCC, protein content determinations arrived at by mutual
agreement between the producer and the warehouse operator.
[[Page 340]]
Costs of such determinations shall not be paid by CCC.
(b) With respect to farm-stored wheat, the basic loan rate shall not
be adjusted to reflect the protein content.
Sec. 1421.25 Loan repayments.
(a) Rice market repayments.
(1) A producer may repay a nonrecourse loan for a 1996 through 2002
crop of rice at a rate that is the lesser of:
(i) The loan rate and charges, plus interest determined for a crop;
or
(ii) The prevailing world market price, as determined by CCC.
(2) The prevailing world market price for a class of rice shall be
determined by the CCC based upon a review of prices at which rice is
being sold in world markets and a weighting of such prices through the
use of information such as changes in supply and demand of rice, tender
offers, credit concessions, barter sales, government-to-government
sales, special processing costs for coatings or premixes, and other
relevant price indicators, and shall be expressed in U.S. equivalent
values f.o.b. vessel, U.S. port of export, per hundredweight as follows:
(i) U.S. grade No. 2, 4 percent broken kernels, long grain milled
rice;
(ii) U.S. grade No. 2, 4 percent broken kernels, medium grain milled
rice; and
(iii) U.S. grade No. 2, 4 percent broken kernels, short grain milled
rice.
(3) Export transactions involving rice and all other related market
information will be monitored on a continuous basis for the purposes of
paragraph (2). Relevant information may be obtained for this purpose
from U.S. Department of Agriculture field reports, international
organizations, public or private research entities, international rice
brokers, and any other source of reliable information.
(4) The prevailing world market price for a class of rice adjusted
to U.S. quality and location (the adjusted world price (AWP)), that is
determined in accordance with paragraph (5), shall be applicable to the
provisions in this section.
(5) The AWP for each class of rice shall equal the prevailing world
market price for a class of rice (U.S. equivalent value) as determined
in accordance with paragraphs (a) (2) and (3) and adjusted to U.S.
quality and location as follows:
(i) The prevailing world market price for a class of rice shall be
adjusted to reflect an f.o.b. mill position by deducting from such
calculated price an amount that is equal to the estimated national
average costs associated with:
(A) The use of bags for the export of U.S. rice, and
(B) The transfer of such rice from a mill location to f.o.b. vessel
at the U.S. port of export with such costs including, but not limited
to, freight, unloading, wharfage, insurance, inspection, fumigation,
stevedoring, interest, banking changes, storage, and administrative
costs.
(ii) The price determined in accordance with paragraph (a)(5)(i)
shall be adjusted to reflect the market value of the total quantity of
whole kernels contained in such milled rice by deducting the world value
of broken kernels contained therein, with such value of the broken
kernels to be determined by multiplying the quantity of such broken
kernels (4% per hundredweight) by the world market value of such broken
kernels. The world market value of broken kernels shall be based upon
the relationship of whole and broken kernel world prices as estimated
from observations of prices at which rice is being sold in world
markets.
(iii) The price determined in accordance with (a)(5)(ii) shall be
adjusted to reflect the per pound market value of whole kernels by
dividing the price by the quantity of whole milled kernels contained in
the milled rice (96% per hundredweight).
(iv) The price determined in accordance with paragraph (a)(5)(iii)
shall be adjusted to reflect the market value of whole kernels contained
in 100 pounds of rough rice by multiplying such price by the estimated
national average quantity of whole kernel rice by class obtained from
milling 100 pounds of rough rice.
(v) The price determined in accordance with paragraph (a)(5)(iv)
shall be adjusted to reflect the total market value of rough rice by:
(A) Adding to such price:
(1) The market value of bran contained in the rough rice, computed
by
[[Page 341]]
multiplying the domestic unit market value of bran by the estimated
national average quantity of bran produced in milling 100 pounds of
rice; and
(2) The market value of broken kernels contained in the rough rice,
computed by multiplying the estimated world market value of broken
kernels by the estimated national average quantity of broken kernels
produced in milling 100 pounds of rice;
(B) Deducting from such price:
(1) An estimated cost of milling rough rice; and
(2) An estimated cost of transporting rough rice from farm to mill
locations.
(vi) The price determined in accordance with paragraph (a)(5)(v) may
be adjusted to a whole kernel loan rate basis by deducting the estimated
world market value of the total quantity of broken kernels contained in
such rice and dividing the resulting value by the estimated national
average quantity of milled whole kernels produced in milling 100 pounds
of rice.
(6)(i) The adjusted world price for each class for rice, loan rate
basis, shall be determined by CCC and shall be announced, to the extent
practicable, on or after 3 p.m. eastern time each Tuesday, but may be
announced more frequently, as determined by CCC, continuing through the
later of:
(A) The last Tuesday of July 2003; or
(B) The last Tuesday of the latest month the 2002-crop rice loans
mature.
(ii) In the event that Tuesday is a non-workday, the determination
will be made on the next workday, on or after 3 p.m. eastern time.
(iii) The announced prices will be effective upon announcement and
will remain in effect for a period as announced by the CCC.
(7) Notwithstanding any other provision of this section, on the day
of the announcement of the adjusted world price, between 2 p.m. eastern
time and the time of the world price announcement, CCC will not accept
repayments of rice loans at a world market price level not previously
locked-in, and applications for lock-in of a rice loan repayment rate.
(b) For 1996 through 2002 crops of barley, corn, grain sorghum,
oats, wheat, and oilseeds, a producer may repay a nonrecourse loan at a
rate that is the lesser of:
(1) The loan rate and charges, plus interest determined for such
crop; or
(2) The alternative repayment rate for barley, corn, grain sorghum,
oats, wheat, and oilseeds.
(c) To the extent practicable, CCC shall determine and announce the
alternative repayment rate, based upon the previous day's market prices
at appropriate U.S. terminal markets as determined by CCC, adjusted to
reflect quality and location for each crop of a commodity as follows:
(1) On a weekly basis in each county for oilseeds, except soybeans;
and
(2) On a daily basis in each county for barley, corn, grain sorghum,
oats, soybeans, and wheat.
Sec. 1421.26 Transfer of farm-stored loan to warehouse-stored association loan.
Producers may deliver peanuts under a farm-stored loan to the
association and obtain loan advances on such peanuts with the prior
approval of the county office anytime on or before January 31 following
the calendar year in which the crop was grown. Association advances
shall be payable jointly to the producer and the CCC and shall be used
to settle the farm-stored loan.
Sec. 1421.27 Producer-handler purchases of additional peanuts pledged as collateral for a loan.
(a) Producer-handlers may, at any time before loan maturity, forfeit
their additional peanuts to CCC and immediately repurchase such peanuts
from CCC by paying the amount necessary under the following sales
policies:
(1) For unrestricted use, at a price determined by CCC but, for the
applicable type, not less than 105 percent of the quota loan rate, if
purchased before December 31 of the calendar year in which the crop was
grown, and at not less than 107 percent of the quota loan rate, if
purchased after December 31 of the calendar year in which the crop was
grown;
(2) For edible export, at a price determined by CCC but not less
than any minimum sales price determined and announced by CCC; and
[[Page 342]]
(3) For crushing (either domestic or export), at a price determined
by CCC but not less than the additional loan rate for the applicable
type.
(b) For purchases on or before January 31 following the calendar
year in which the crop was grown, the county committee shall determine
the sale price under the appropriate sales policy specified in paragraph
(a). Loans will be settled at the county office, and amounts collected
in excess of that necessary to settle loans will be remitted to the
association for the respective area. The association will credit such
amounts to the appropriate loan pool. The producer should be listed as a
participant in the loan pool for the purpose of determining and
distributing net gains from the loan pool.
(c) For purchases after January 31 following the calendar year in
which the crop was grown, the county committee shall determine the sale
price under the appropriate sales policy specified in paragraph (a). Any
amount collected in excess of the loan indebtedness shall accrue to CCC.
[61 FR 37581, July 18, 1996, as amended at 62 FR 62692, Nov. 25, 1997]
Sec. 1421.28 Required producer-handler records and supervision of farm-stored additional peanuts pledged as collateral for a loan or purchased by a producer-
handler from loan.
(a)(1) Each producer-handler shall maintain records as required in
part 1446 of this chapter for all additional peanuts that are purchased
and sold for which an ASCS-1007, Inspection Certificate and Sales
Memorandum, is issued.
(2) The following records shall be maintained for all peanuts
purchased from CCC that are not inspected. Each producer-handler shall
maintain records that show all sales and other disposals of peanuts.
Such records shall show date of sale, quantity, type, and to whom sold.
Records shall be maintained in such a manner that will enable the county
office to readily reconcile quantities sold with all peanuts produced by
the producer. All records shall be maintained for a period of three
years following the end of the marketing year in which the peanuts were
produced.
(b)(1) The county office shall inspect and account for all
additional peanuts pledged as collateral for a loan as determined
necessary by the county committee.
(2) The county office shall supervise the disposition of all
additional peanuts purchased for use as seed and not inspected. The
identical peanuts pledged as collateral for a loan must be disposed of
and the producer must account for all peanuts that were under additional
loan. The producer-handler shall request a county office representative
to supervise the disposition of the peanuts and shall give the county
office at least 3 working days notice of the date of such disposition.
The county office shall determine the extent to which supervision is
needed.
(3) With respect to additional peanuts on which ASCS-1007 is issued,
the producer-handler shall be subject to all provisions in part 1446 of
this chapter relating to the disposition of additional peanuts.
(c) The producer-handler shall pay all costs of supervision, as
determined by the county committee for county office supervision when
county office supervision is completed, and or determined by the
association for peanuts supervised by association representatives when
association supervision is completed.
(d) The producer-handler is subject to penalties as provided in part
1446 of this chapter with respect to any peanuts purchased in accordance
with Sec. 1421.27.
Sec. 1421.29 Loan deficiency payments.
(a) CCC will announce whether loan deficiency payments will be made
available to producers on a farm for a specific crop for a crop year.
(b) In order to be eligible to receive loan deficiency payments if
such payments are made available for a crop, the producer of such
commodity must:
(1) Comply with all of the program requirements to be eligible to
obtain loans in accordance with this part;
(2) Agree to forego obtaining such loans;
[[Page 343]]
(3) File and request payment on Form CCC-666 LDP, unless the
producer enters into an agreement according to paragraph (h), for a
quantity of an eligible commodity; and
(4) Otherwise comply with all program requirements.
(c) The loan deficiency payment rate for a crop shall be the amount
by which the loan rate for the crop exceeds the rate at which CCC has
announced that producers may repay their loans in accordance with
Sec. 1421.25. Such rate shall be the amount determined on the day the
producer submits a completed request for a loan deficiency payment to
the county office. When such request is for rice and the request
provides that the loan deficiency payment rate shall be based on the
date of delivery, and the documentation of delivery indicates the rice
was delivered after 3 p.m. eastern time, the loan deficiency payment
rate in effect after 3 p.m. eastern time of the delivery date shall be
used. In all other cases for rice where the loan deficiency payment rate
is based on the delivery date, the payment rate in effect at 12:00:01
a.m. eastern time of the delivery date shall be used.
(d) The loan deficiency payment applicable to such crop shall be
computed by multiplying the loan deficiency payment rate, as determined
in accordance with paragraph (c), by the quantity of the crop the
producer is eligible to pledge as collateral for a nonrecourse loan for
which the loan deficiency payment is requested.
(e) The total amount of loan deficiency payment a producer may
receive is limited in accordance with the regulations at part 1400 of
this chapter.
(f) CCC will make the loan deficiency payment in accordance with
paragraph (d). Notwithstanding any provisions in this part, a loan
deficiency payment may be based on 100 percent of the net eligible
quantity specified on acceptable evidence of production of the commodity
certified as eligible for loan deficiency payment if such production
evidence is provided for such commodity. If such production evidence is
provided, CCC shall limit such increase in loan deficiency payment
quantity to 110 percent of the quantity certified as eligible for such
payment.
(g) Notwithstanding any other provision of this section, on the day
of the announcement of the adjusted world price, applications for loan
deficiency payments for rice that specify the payment rate will not be
accepted between 2 p.m. eastern time and the time of the world price
announcement.
(h) If the producer enters into an agreement with CCC on or before
the date of harvesting a quantity of an eligible commodity and the
producer has the beneficial interest in such quantity as specified in
accordance with Sec. 1421.5(c) on the date the commodity was harvested,
the loan deficiency payment rate applicable to such commodity would be
the loan deficiency payment rate based on the date the commodity was
delivered to the processor, buyer, warehouse, or CMA. In such cases, the
producer must meet all the other requirements in paragraph (b) on or
before the final date to apply for a loan deficiency payment in
accordance with Sec. 1421.5.
Sec. 1421.30 Death, incompetency, or disappearance.
In case of the death, incompetency, or disappearance of any producer
who is entitled to the payment of any sum in settlement of a loan or
loan deficiency payment, payment shall, upon proper application to the
county office that made the loan or loan deficiency payment, be made to
the persons who would be entitled to such producer's payment under the
regulations contained in part 707 of this title.
Sec. 1421.31 Recourse loans.
(a) CCC shall make recourse loans available to eligible producers of
high moisture corn and high moisture grain sorghum. Repayment of such
recourse loans shall be in accordance with the terms and conditions set
forth by CCC.
(b) CCC may make recourse loans available to eligible producers with
respect to commodities not specified in paragraph (a). Repayment of such
recourse loans shall be in accordance with the terms and conditions set
forth by CCC when the availability of such recourse loans is announced.
(c) The value of the collateral for settlements described in
paragraphs (a)
[[Page 344]]
and (b) shall be determined by CCC according to Sec. 1421.22.
Sec. 1421.32 Handling payments and collections not exceeding $9.99.
In order to avoid administrative costs of making small payments and
handling small accounts, amounts of $9.99 or less that are due the
producer will be paid only upon the producer's request. Deficiencies of
$9.99 or less, including interest, may be disregarded unless demand for
payment is made by CCC.
Subpart--Regulations Governing the Wheat and Feed Grain Farmer-Owned
Reserve Program for 1990 through 1995 Crops
Sec. 1421.200 Administration.
The Wheat and Feed Grain Farmer Owned Reserve (FOR) Program was not
reauthorized by Congress for the 1996 crop. Effective for the 1990
through 1995 crops, the regulations setting forth the applicable terms
and conditions for the Wheat and Feed Grain Farmer Owned Reserve (FOR)
Program can be found in the regulations published in 7 CFR Part 1421 as
of January 1, 1996, shall be applicable for any outstanding FOR loans on
or after April 4, 1996.
[61 FR 37595, July 18, 1996]
Subpart--Standards for Approval of Warehouses for Grain, Rice, Dry
Edible Beans, and Seed
Source: 44 FR 67078, Nov. 23, 1979, unless otherwise noted.
Sec. 1421.5551 General statement and administration.
(a) This subpart prescribes the requirements which must be met and
the procedures which must be followed by a warehouseman in the United
States or Puerto Rico who desires the initial or continuing approval by
the Commodity Credit Corporation (hereinafter referred to as ``CCC'') of
warehouse(s) for the storage and handling of:
(1) Wheat, oats, corn, rye, barley, sorghums, flaxseed, soybeans,
sunflower seed, canola, rapeseed, safflower, mustard, and such other
oilseeds as the Secretary may determine under a Uniform Grain Storage
Agreement (which commodities are hereinafter referred to as ``grain''),
(2) Rough rice under a Uniform Rice Storage Agreement,
(3) Milled rice under a Milled Rice Storage Agreement,
(4) Dry Edible Beans under a Bean Storage Agreement, and
(5) Seed under a Seed Storage Agreement, which are owned by CCC or
held by CCC as security for price support loans.
This subpart is not applicable to grain, rough and milled rice, dry
edible beans, and seed purchased in store for prompt shipment or to
handling operations of a temporary nature.
(b) Copies of the CCC storage agreement and forms required for
obtaining approval under this subpart may be obtained from the Kansas
City Commodity Office, U.S. Department of Agriculture, P.O. Box 205,
Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO'').
(c) A warehouse must be approved by KCCO and a storage contract or
agreement must be in effect between CCC and the warehouseman before CCC
will use such warehouse. The approval of a warehouse or the entering
into of a storage contract or agreement does not constitute a commitment
that CCC will use the warehouse, and no official or employee of the U.S.
Department of Agriculture is authorized to make any such commitment.
(d) A warehouseman, when applying for approval under this subpart,
shall submit to CCC at KCCO:
(1) A completed Form CCC-24, ``Application for Approval of Warehouse
for Grain, Rice, Dry Edible Beans, and Seed'', and a completed Form CCC-
24-1, ``Supplement to Application for Approval of Warehouse for Grain,
Rice, Dry Edible Beans, and Seed'',
(2) A current financial statement prepared in accordance with
generally accepted accounting principles meeting the following
requirements:
(i) Each financial statement shall include, but not be limited to
the following:
(A) A balance sheet;
[[Page 345]]
(B) A statement of income (profit and loss);
(C) Statement of retained earnings; and
(D) A statement of changes in the financial position.
(ii) Each financial statement shall be accompanied by one of the
following:
(A) A report of audit or review conducted by an independent CPA or
an independent public accountant in accordance with standards
established by the American Institute of Certified Public Accountants.
The accountant's report of audit or review shall include the
accountant's certifications, assurances, opinions, comments, and notes
with respect to such financial statement, or
(B) A compilation report of the financial statement which is
prepared by a grain commission firm or a management firm if such firm
has been authorized by the Deputy Vice President, CCC (Deputy
Administrator, Commodity Operations, FSA) to provide a compilation
report of financial statements of warehousemen.
(iii) All financial statements shall be accompanied by a
certification by the chief executive officer of the warehouseman, under
penalty of perjury, that the financial statement(s) accurately reflects
the financial condition of the warehouseman for the period specified in
such statement.
(iv) A current financial statement on Form WA-51-2, ``Financial
Statement'', supported by such supplemental schedules as CCC may
request. Financial statements may be submitted on forms other than Form
WA-51-2 with approval of the Director, KCCO, or the Director's designee.
(v) Only one financial statement is required for a chain of
warehouses owned or operated by a single business entity. If approved by
the Director, KCCO, or the Director's designee, the financial statement
of a parent company, which includes the financial position of a wholly-
owned subsidiary, may be used to meet the CCC standards for approval for
the wholly-owned subsidiary.
(3) Evidence that the warehouseman is licensed by the appropriate
licensing authority as required under Sec. 1421.5552(a)(2) and such
other documents or information as CCC may require.
(e) The provisions of paragraph (d)(2) of this section shall also be
applicable to warehousemen who have an existing storage contract with
CCC. Such warehousemen with existing storage contracts shall submit
their financial statements to CCC in the manner prescribed reflecting
their financial condition as of the close of the warehouseman's fiscal
or calendar year's operation, whichever is applicable. Thereafter, the
financial statements and the audit, review or compilation reports shall
be furnished annually to reflect the warehouseman's fiscal or calendar
year's operation, whichever is applicable, and at such other times as
may be required by the AMS or CCC.
[44 FR 67078, Nov. 23, 1979, as amended at 47 FR 22502, May 25, 1982;
Amdt. 4, 50 FR 29640, July 22, 1985; 56 FR 46371, Sept. 12, 1991]
Sec. 1421.5552 Basic standards.
Unless otherwise provided in this subpart, each warehouseman and
each of the warehouses owned or operated by such warehouseman for which
CCC approval is sought for the storage or handling of CCC owned or loan
commodities shall meet the following standards:
(a) The warehouseman shall:
(1) Be an individual, partnership, corporation, association, or
other legal entity engaged in the business of storing or handling for
hire, or both, the applicable commodity. The warehouseman, if a
corporation, shall be authorized by its charter to engage in such
business,
(2) Have a current and valid license for the kind of storage
operation for which the warehouseman seeks approval if such a license is
required by State or local laws or regulations,
(3) Have a net worth which is the greater of $50,000 or an amount
which is computed by multiplying the maximum storage capacity of the
warehouse (the total quantity of the commodity which the warehouseman
desires to store and which the warehouse can accommodate when stored in
the customary manner) under the approved contract with CCC times twenty-
five (25) cents per bushel in the case of
[[Page 346]]
grain, fifty (50) cents per hundredweight in the case of rough rice,
eighty-five (85) cents per hundredweight in the case of milled rice, and
sixty (60) cents per hundredweight in the case of dry edible beans. In
the case of seed, the net worth of the warehouseman shall be at least
equal to an amount which is computed by multiplying the estimated number
of pounds of seed to be stored times seven (7) cents per pound. If this
calculated net worth requirement exceeds $50,000, the warehouseman may
satisfy any deficiency in net worth between the $50,000 minimum
requirement and such calculated net worth requirement by furnishing
bonds, irrevocable letters of credit, or other acceptable substitute
security meeting the requirements of Sec. 1421.5553.
(4) Have available sufficient funds to meet ordinary operating
expenses,
(5) Have satisfactorily corrected upon request by CCC, any
deficiencies in the performance of any storage contract or agreement
with CCC,
(6) Maintain accurate and complete inventory and operating records,
(7) Use only prenumbered warehouse receipts and scale tickets,
(8) Have available at the warehouse adequate and operable
firefighting equipment for the type of warehouse and applicable stored
commodity, and
(9) Have a work force and equipment available to complete load out
within sixty (60) working days of that quantity of grain, rice, beans,
or seed for which the warehouse is or may be approved under the Uniform
Grain Storage Agreement, Uniform Rice Storage Agreement, Milled Rice
Storage Agreement, Bean Storage Agreement, or Seed Storage Agreement.
Notwithstanding the provisions of this paragraph, the load out capacity
of any warehouse at a single location need not exceed the equivalent of
200 railroad cars per day.
(b) The warehouseman, officials, or supervisory employees of the
warehouseman in charge of the warehouse operations shall have the
necessary experience, organization, technical qualifications, and skills
in the warehousing business regarding the applicable commodities to
enable them to provide proper storage and handling services.
(c) Warehouseman, officials, and each of the supervisory employees
of the warehouseman in charge of the warehouse operations shall:
(1) Have a satisfactory record of integrity, judgment, and
performance, and
(2) Be neither suspended nor debarred under applicable CCC
suspension and debarment regulations.
(d) The warehouse shall:
(1) Be of sound construction, in good state of repair, and
adequately equipped to receive, handle, store, preserve, and deliver the
applicable commodity,
(2) Be under the control of the contracting warehouseman at all
times, and
(3) Not be subject to greater than normal risk of fire, flood, or
other hazards.
[44 FR 67078, Nov. 23, 1979, as amended by Amdt. 4, 50 FR 29640, July
22, 1985; 51 FR 32627, Sept. 15, 1986; 55 FR 11572, Mar. 29, 1990]
Sec. 1421.5553 Bonding requirements for net worth.
A bond furnished by a warehouseman under this subpart must meet the
following requirements:
(a) Such bond shall be executed by a surety which:
(1) Has been approved by the U.S. Treasury Department, and
(2) Maintains an officer or representative authorized to accept
service of legal process in the State where the warehouse is located.
(b) Such bond shall be on Form CCC-33, ``Warehouseman's Bond'',
except that a bond furnished under State law (statutory bond) or under
operational rules of nongovernmental supervisory agencies may be
accepted in an equivalent amount as a substitute for a bond running
directly to CCC if:
(1) CCC determines that such bond provides adequate protection to
CCC,
(2) It has been executed by a surety specified in paragraph (a) of
this section or has a blanket rider and endorsement executed by such a
surety with the liability of the surety under such rider or endorsement
being the same as that of the surety under the original bond, and
(3) It is noncancellable for not less than ninety (90) days or
includes a
[[Page 347]]
rider providing for not less than ninety (90) days' notice to CCC before
cancellation. Excess coverage on a substitute bond for one warehouse
will not be accepted or applied by CCC against insufficient bond
coverage on other warehouses.
(c) Cash and negotiable securities offered by a warehouseman may be
accepted by CCC in lieu of the equivalent amount of required bond
coverage. Any such cash or negotiable securities accepted by CCC will be
returned to the warehouseman when the period for which coverage was
required has ended and there appears to CCC to be no liability under the
storage contract or agreement.
(d) A legal liability insurance policy may be accepted by CCC in
lieu of the required amount of bond coverage provided such policy
contains a clause or rider making the policy payable to CCC, CCC
determines that it affords protection equivalent to a bond, and the
Office of the General Counsel, U.S. Department of Agriculture, approves
it for legal sufficiency.
(e) An irrevocable letter of credit may be accepted by CCC in lieu
of the required amount of bond coverage provided that the issuing bank
is a commercial bank insured by the Federal Deposit Insurance
Corporation. Such standby letter of credit shall be on Form CCC-33A,
``Irrevocable Letter of Credit'', or on such other form as may be
specifically approved by the Director, KCCO, or the Director's designee.
[44 FR 67078, Nov. 23, 1979, as amended by Amdt. 4, 50 FR 29640, July
22, 1985]
Sec. 1421.5554 Examination of warehouses.
Except as otherwise provided in this subpart, a warehouse must be
examined by a person designated by CCC before it may be approved by CCC
for the storage or handling of commodities and periodically thereafter
to determine its compliance with CCC's standards and requirements.
Sec. 1421.5555 Exceptions.
Notwithstanding any other provisions of this subpart:
(a) The financial, bond, and original and periodic warehouse
examination provisions of this subpart do not apply to any warehouseman
approved or applying for approval for the storage and handling of
commodities under CCC programs if the warehouse is licensed under the
U.S. Warehouse Act for such commodities but a special examination shall
be made of such warehouse whenever CCC determines such action is
necessary.
(b) A warehouseman who has a net worth of at least $50,000 but who
fails or whose warehouse fails to meet one or more of the other
standards of this subpart may be approved if:
(1) CCC determines that the warehouse services are needed and the
warehouse storage and handling conditions provide satisfactory
protection for the commodity, and
(2) The warehouseman furnishes such additional bond coverage (or
cash or acceptable negotiable securities or legal liability insurance
policy) as may be prescribed by CCC.
[44 FR 67078, Nov, 23, 1979, as amended at 51 FR 32627, Sept. 15, 1986]
Sec. 1421.5556 Approval of warehouses, requests for reconsideration.
(a) CCC will approve a warehouse if it determines that the warehouse
meets the standards set forth in this subpart. CCC will send a notice of
approval to the warehouseman. Approval under this subpart, however, does
not relieve the warehouseman of the responsibility for performing the
warehouseman's obligations under any agreement with CCC or any other
agency of the United States.
(b) Except as otherwise provided in this subpart:
(1) CCC will not approve the warehouse if CCC determines that the
warehouse does not meet the standards set forth in this subpart, and
(2) CCC will send any notice of rejection of approval to the
warehouseman. The notice will state the cause(s) for such action. Unless
the warehouseman or any officials or supervisory employees of the
warehouseman are suspended or debarred, CCC will approve the warehouse
if the warehouseman establishes that the causes for CCC's rejection of
approval have been remedied.
(c) If rejection of approval by CCC is due to the warehouseman's
failure to meet the standards set forth:
[[Page 348]]
(1) In Sec. 1421.5552, other than the standard set forth in
paragraph (c)(2) thereof, the warehouseman may, at any time after
receiving notice of such action, request reconsideration of the action
and present to the Director, KCCO, in writing, information in support of
such request. The Director shall consider such information in making a
determination and notify the warehouseman in writing of such
determination. The warehouseman may, if dissatisfied with the Director's
determination, obtain a review of the determination and an informal
hearing thereon by filing an appeal with the Deputy Administrator,
Commodity Operations, Farm Service Agency (hereinafter referred to as
``FSA''). The time of filing appeals, forms for requesting an appeal,
nature of the informal hearing, determination and reopening of the
hearing shall be as prescribed in the FSA regulations governing appeals,
7 CFR part 780. When appealing under such regulations, the warehouseman
shall be considered as a ``participant''; and
(2) In Sec. 1421.5552(c)(2), the warehouseman's administrative
appeal rights with respect to suspension and debarment shall be in
accordance with applicable CCC regulations. After expiration of a period
of suspension or debarment, a warehouseman may, at any time, apply for
approval under this subpart.
[Amdt. 4, 50 FR 29640, July 22, 1985]
Sec. 1421.5557 Exemption from requirements.
If warehousing services in any area cannot be secured under the
provisions of the subpart and no reasonable and economic alternative is
available for securing such services for commodities under CCC programs,
the President or Executive Vice President, CCC, may temporarily exempt,
in writing, applicants for storage agreements and warehousemen who are
currently under contract with CCC in such area from one or more of the
standards of this subpart and may establish such other standards as are
considered necessary to satisfactorily safeguard the interests of CCC.
[53 FR 8746, Mar. 17, 1988]
Sec. 1421.5558 Contract and application and inspection fees.
(a) Each warehouseman who has a non-federally licensed grain or rice
warehouse in States that do not have a Cooperative Agreement with CCC
for warehouse examinations must pay an annual contract fee to CCC for
each such warehouse which is approved by CCC or for which CCC approval
is sought as follows:
(1) A warehouseman who has an existing agreement with CCC for the
storage or handling of CCC-owned commodities or commodities pledged to
CCC as loan collateral must pay an annual contract fee for each
warehouse approved under that agreement in advance of the renewal date
of such agreement.
(2) All grain and rice warehousemen who do not have an existing
agreement with CCC for the storage and handling of CCC-owned commodities
or commodities pledged to CCC as loan collateral but who desire such an
agreement must pay an application and inspection fee for each warehouse
for which CCC approval is sought prior to CCC conducting the original
warehouse examination. The annual contract fee must be paid by the
warehouseman to CCC prior to the time that the agreement is entered
into.
(3) The contract fee will be prorated based upon the total number of
months for which the contract is to be effective.
(4) CCC may, upon the request of a warehouseman, conduct an
examination of a warehouse for the sole benefit of the warehouseman and
such warehouseman shall pay to CCC a fee equal to 1\1/2\ times the
amount of the warehouseman's annual contract fee for such examination.
(b) Any subsequent changes in the contract and application fees
shall be announced in the Federal Register.
[Amdt. 4, 50 FR 29641, July 22, 1985, as amended at 51 FR 32627, Sept.
15, 1986; 53 FR 10062, Mar. 29, 1988]
Sec. 1421.5559 OMB control numbers assigned pursuant to Paperwork Reduction Act.
The information collection requirements contained in this regulation
(7 CFR part 1421) have been approved by
[[Page 349]]
the Office of Management and Budget under provisions of 44 U.S.C.
Chapter 35 and have been assigned OMB Numbers 0560-0009 and 0560-0036.
[Amdt. 4, 50 FR 29641, July 22, 1985]
PART 1423--PROCESSED AGRICULTURAL COMMODITIES--Table of Contents
Subpart--Standards for Approval of Dry and Cold Storage Warehouses for
Processed Agricultural Commodities, Extracted Honey, and Bulk Oils
Sec.
1423.1 General statement and administration.
1423.2 Basic standards.
1423.3 Bonding requirements for net worth.
1423.4 Examination of warehouses.
1423.5 Exceptions.
1423.6 Approval of warehouse, requests for reconsideration.
1423.7 Exemption from requirements.
1423.8 OMB control numbers assigned pursuant to Paperwork Reduction
Act.
Authority: Secs. 4 and 5, 62 Stat. 1070, as amended, (15 U.S.C. 714b
and c).
Subpart--Standards for Approval of Dry and Cold Storage Warehouses for
Processed Agricultural Commodities, Extracted Honey, and Bulk Oils
Source: 44 FR 67081, Nov. 23, 1979, unless otherwise noted.
Sec. 1423.1 General statement and administration.
(a) This subpart prescribes the requirements which must be met and
the procedures which must be followed by a warehouseman in the United
States or Puerto Rico who desires the approval by the Commodity Credit
Corporation (hereinafter referred to as ``CCC'') of warehouse(s) for the
storage and handling of:
(1) Dry or refrigerated processed agricultural commodities under a
Processed Commodities Storage Agreement (hereinafter referred to as
``processed commodities''),
(2) Bulk oils, under a Contract or Agreement for Tank Storage, which
are owned by CCC or held by CCC as collateral for price support loans,
and
(3) Extracted Honey (hereinafter referred to as ``honey'') under a
Honey Storage Agreement, either in bulk or in containers meeting
specifications in the applicable honey price support regulations, which
is owned by CCC or held by CCC as security for price support loans. This
subpart shall not apply to processed commodities, extracted honey, and
bulk oils purchased in store by CCC for prompt shipment or to handling
of commodities.
(b) Copies of the CCC storage agreement and forms required for
obtaining approval under this subpart may be obtained from the Kansas
City Commodity Office, U.S. Department of Agriculture, P.O. Box 205,
Kansas City, Missouri 64141 (hereinafter referred to as the ``KCCO'').
(c) A warehouse must be approved by KCCO and a storage contract or
agreement must be in effect between CCC and the warehouseman before CCC
will use such warehouse. The approval of a warehouse or the entering
into of a storage contract or agreement does not constitute a commitment
that CCC will use the warehouse, and no official or employee of the U.S.
Department of Agriculture is authorized to make any such commitment.
(d) A warehouseman when applying for approval under this subpart,
shall submit to CCC at KCCO:
(1) A completed Form CCC-560, ``Application for Approval of
Warehouse (Processed Commodities)'', or Form CCC-513, ``Application for
Approval of Tank Farm'', or Form CCC-55, ``Application for Approval of
Warehouse for Honey Storage Contract'', whichever is applicable,
(2) A current financial statement on Form WA-51, ``Financial
Statement'', supported by such supplemental schedules as CCC may
request. Financial statements may be submitted on forms other than Form
WA-51 with approval of the Director, KCCO, or the Director's designee.
Financial statements shall show the financial condition of the
warehouseman as of a date no earlier than ninety (90) days prior to the
date of the warehouseman's application, or such other date as CCC may
prescribe. Additional financial statements shall be furnished annually
and
[[Page 350]]
at such other times as CCC may require. CCC also may require that
financial statements prepared by the warehouseman or by a public
accountant be examined by an independent certified public accountant in
accordance with generally accepted auditing standards. Only one
financial statement is required for a chain of warehouses owned or
operated by a single business entity. If approved by the Director, KCCO,
or the Director's designee, the financial statement of a parent company,
which includes the financial position of a wholly-owned subsidiary, may
be used to meet the CCC standards for approval for the wholly-owned
subsidiary.
(3) Copies of the warehouseman's tariff and any changes thereto, and
(4) Evidence that the warehouseman is licensed by the appropriate
licensing authority as required under Sec. 1423.2(a)(2) and such other
documents or information as CCC may require.
[44 FR 67081, Nov. 23, 1979, as amended at 45 FR 84009. Dec. 22, 1980;
Amdt. 3, 50 FR 42512, Oct. 21, 1985]
Sec. 1423.2 Basic standards.
Unless otherwise provided in this subpart, each warehouseman and
each of the warehouses owned or operated by such warehouseman for which
CCC approval is sought for the storage or handling of CCC-owned or loan
commodities shall meet the following standards:
(a) The warehouseman shall:
(1) Be an individual, partnership, corporation, association, or
other legal entity engaged in the business of storing or handling for
hire, or both, the applicable commodity. The warehouseman, if a
corporation, shall be authorized by its charter to engage in such
business.
(2) Have a current and valid license for the kind of storage
operation for which the warehouseman seeks approval if such a license is
required by State or local laws or regulations.
(3) Have a net worth which is the greater of $25,000 or (i) for
dairy and other processed commodities (other than those shown in
paragraph (a)(3)(ii) of this section, the amount which results from
multiplying five (5) percent of the current purchase price, times the
quantity of the commodity to be stored; (ii) for honey, sugar and bulk
oils, the amount which results from multiplying the storage capacity of
the flat warehouse space available to CCC or the maximum capacity of the
bulk tank(s), whichever is applicable, times five (5) percent of the
current loan value for honey and sugar and five (5) percent of the
current market value for bulk oils. The net worth need not exceed
$250,000. If the calculated net worth exceeds $25,000, the warehouseman
may satisfy any deficiency in net worth between the $25,000 minimum
requirement and such calculated net worth by furnishing bonds (or
acceptable substitute security) meeting the requirements of Sec. 1423.3,
(4) Have available sufficient funds to meet ordinary operating
expenses,
(5) Have satisfactory corrected, upon request by CCC, any
deficiencies in the performance of any storage contract or agreement
with CCC,
(6) Use only warehouse receipts or such other documents as CCC may
prescribe,
(7) Maintain accurate and complete inventory and operating records,
(8) Have available at the warehouse adequate and operable
firefighting equipment for the type of warehouse and applicable stored
commodity, and
(9) Have a work force and equipment available to complete loadout as
stated below or as CCC may prescribe:
(i) Forty-five (45) working days of the total quantity of all honey
and processed commodities stored for CCC.
(ii) Seventy-five (75) working days of that quantity of bulk oils
for which the warehouse is or may be approved under a contract with CCC.
(b) The warehouseman, officials, or supervisory employees of the
warehouseman in charge of the warehouse operations shall have the
necessary experience, organization technical qualifications, and skills
in the warehousing business regarding the applicable commodity to enable
them to provide proper storage and handling services.
(c) Warehouseman, officials, and each of the supervisory employees
of the warehouseman in charge of the warehouse operations shall:
(1) Have a satisfactory record of integrity, judgment, and
performance, and
[[Page 351]]
(2) Be neither suspended nor debarred under applicable CCC
suspension and debarment regulations.
(d) The warehouse shall:
(1) Be of sound construction, in good state of repair, and
adequately equipped to receive, handle, store, preserve, and deliver the
applicable commodity,
(2) Be under the control of the contracting warehouseman at all
times. If a warehouse is leased by the warehouseman, a copy of the
written lease agreement must be furnished to CCC at the time the
warehouseman applies for approval under this subpart. The lease
agreement must be renewable and must provide that the lessor cannot
cancel the agreement without giving at least 120 days notice to the
warehouseman. All leases are subject to approval by the CCC Contracting
Officer, and
(3) Not be subject to greater than normal risk of fire, flood or
other hazards.
[44 FR 67081, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 42512, Oct.
21, 1985]
Sec. 1423.3 Bonding requirements for net worth.
A bond furnished by a warehouseman under this subpart must meet the
following requirements:
(a) Such bond shall be executed by a surety which:
(1) Has been approved by the U.S. Treasury Department, and
(2) Maintains an officer or representative authorized to accept
service of legal process in the State where the warehouse is located.
(b) Such bond shall be on Form CCC-33, ``Warehouseman's Bond'',
except that a bond furnished under State law (statutory bond) or under
operational rules of nongovernmental supervisory agencies may be
accepted in an equivalent amount as a substitute for a bond running
directly to CCC if:
(1) CCC determines that such bond provides adequate protection to
CCC.
(2) It has been executed by a surety specified in paragraph (a) of
this section or has a blanket rider and endorsement executed by such a
surety with the liability of the surety under such rider or endorsement
being the same as that of the surety under the original bond, and
(3) It is noncancellable for not less than one hundred twenty (120)
days or includes a rider providing for not less than one hundred twenty
(120) days' notice to CCC before cancellation. Excess coverage on a
substitute bond for one warehouse will not be accepted or applied by CCC
against insufficient bond coverage on other warehouses.
(c) Cash and negotiable securities offered by a warehouseman may be
accepted by CCC in lieu of the equivalent amount of required bond
coverage. Any such cash or negotiable securities accepted by CCC will be
returned to the warehouseman when the period for which coverage was
required has ended and there appears to CCC to be no liability under the
storage contract or agreement.
(d) A legal liability insurance policy may be accepted by CCC in
lieu of the required amount of bond coverage provided such policy
contains a clause or rider making the policy payable to CCC, CCC
determines that it affords protection equivalent to a bond, and the
Office of the General Counsel, U.S. Department of Agriculture, approves
it for legal sufficiency.
(e) An irrevocable letter of credit may be accepted by CCC in lieu
of the required amount of bond coverage provided that the issuing bank
is a commercial bank insured by the Federal Deposit Insurance
Corporation. Such standby letter of credit shall be on Form CCC-33A,
``Irrevocable Letter of Credit'', or on such other form as may be
specifically approved by the Director, KCCO, or the Director's designee.
(Pub. L. 80-89, 62 Stat. 1070, as amended (15 U.S.C. 714b))
[44 FR 67081, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 42513, Oct.
21, 1985]
Sec. 1423.4 Examination of warehouses.
Except as otherwise provided in this subpart a warehouse must be
examined by a person designated by CCC before it may be approved by CCC
for the storage or handling of commodities and periodically thereafter
to determine its compliance with CCC's standards and requirements.
[[Page 352]]
Sec. 1423.5 Exceptions.
Notwithstanding any other provisions of this subpart:
(a) The financial, bond, and original and periodic warehouse
examination provisions of this subpart do not apply to any warehouseman
approved or applying for approval for the storage and handling of
commodities under CCC programs if the warehouse is licensed under the
U.S. Warehouse Act for such commodities, but a special examination shall
be made of such warehouse whenever CCC determines such action is
necessary.
(b) A warehouseman who has a net worth of at least $25,000 but who
fails, or whose warehouse fails, to meet one or more of the other
standards of this subpart may be approved if:
(1) CCC determines that the warehouse services are needed and the
warehouse storage and handling conditions provide satisfactory
protection for the commodity, and
(2) The warehouseman furnishes such additional bond coverage (or
cash or acceptable negotiable securities or legal liability insurance
policy) as may be prescribed by CCC.
[44 FR 67081, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 42513, Oct.
21, 1985]
Sec. 1423.6 Approval of warehouse, requests for reconsideration.
(a) CCC will approve a warehouse if it determines that the warehouse
meets the standards set forth in this subpart. CCC will send a notice of
approval to the warehouseman. Approval under this subpart, however, does
not relieve the warehouseman of the responsibility for performing the
warehouseman's obligations under any agreement with CCC or any other
agency of the United States.
(b) Except as otherwise provided in this subpart:
(1) CCC will not approve the warehouse if CCC determines that the
warehouse does not meet the standards set forth in this subpart; and
(2) CCC will send any notice of rejection of approval to the
warehouseman. The notice will state the cause(s) for such action. Unless
the warehouseman or any officials or supervisory employees of the
warehouseman are suspended or debarred, CCC will approve the warehouse
if the warehouseman establishes that the causes for CCC's rejection of
approval have been remedied.
(c) If rejection of approval by CCC is due to the warehouseman's
failure to meet the standards set forth:
(1) In Sec. 1423.2, other than the standard set forth in paragraph
(c)(2) thereof, the warehouseman may, at any time after receiving notice
of such action, request reconsideration of the action and present to the
Director, KCCO, in writing, information in support of such request. The
Director shall consider such information in making a determination and
notify the warehouseman in writing of such determination. The
warehouseman may, if dissatisfied with the Director's determination,
obtain a review of the determination and an informal hearing thereon by
filing an appeal with the Deputy Administrator, Commodity Operations,
Farm Service Agency (hereinafter referred to as ``FSA''). The time of
filing appeals, forms for requesting an appeal, nature of the informal
hearing, determination and reopening of the hearing shall be as
prescribed in the FSA regulations governing appeals, 7 CFR part 780.
When appealing under such regulations, the warehouseman shall be
considered as a ``participant'''; and
(2) In Sec. 1423.2(c)(2), the warehouseman's administrative appeal
rights with respect to suspension and debarment shall be in accordance
with applicable CCC regulations. After expiration of a period of
suspension or debarment, a warehouseman may, at any time, apply for
approval under this subpart.
[Amdt. 3, 50 FR 42513, Oct. 21, 1985]
Sec. 1423.7 Exemption from requirements.
(a) If warehousing services in any area cannot be secured under the
provisions of this subpart, and no reasonable and economical alternative
is available for securing such services, the President or Executive Vice
President, CCC, may exempt, in writing, applicants in such area from one
or more of the standards of this subpart and may establish such other
standards as are considered necessary to safeguard satisfactorily the
interests of CCC.
[[Page 353]]
(b) Warehousemen who are currently under contract with CCC will be
required to meet the terms and conditions of these regulations at the
time of renewal of their contract.