[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1999 Edition]
[From the U.S. Government Printing Office]


          7



          Agriculture



[[Page i]]

          PARTS 1200 TO 1599

                         Revised as of January 1, 1999

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF JANUARY 1, 1999
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1999



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 7:
    Subtitle B--Regulations of the Department of Agriculture 
      (Continued):
          Chapter XI--Agricultural Marketing Service 
          (Marketing Agreements and Orders; Miscellaneous 
          Commodities), Department of Agriculture                    5
          Chapter XIII--Northeast Dairy Compact Commission         219
          Chapter XIV--Commodity Credit Corporation, 
          Department of Agriculture                                249
          Chapter XV--Foreign Agricultural Service, Department 
          of Agriculture                                           663
  Finding Aids:
      Material Approved for Incorporation by Reference........     703
      Table of CFR Titles and Chapters........................     705
      Alphabetical List of Agencies Appearing in the CFR......     723
      List of CFR Sections Affected...........................     733



[[Page iv]]


      


                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  7 CFR 1200.1 refers 
                       to title 7, part 1200, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 1999), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 523-4534.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I), and Acts Requiring Publication 
in the Federal Register (Table II). A list of CFR titles, chapters, and 
parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.

[[Page vii]]

    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408.

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call 202-512-1800, 
M-F, 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2233, 24 hours 
a day. For payment by check, write to the Superintendent of Documents, 
Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO 
Customer Service call 202-512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Weekly Compilation of Presidential Documents and 
the Privacy Act Compilation are available in electronic format at 
www.access.gpo.gov/nara (``GPO Access''). For more information, contact 
Electronic Information Dissemination Services, U.S. Government Printing 
Office. Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
[email protected].
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.nara.gov/fedreg. The NARA 
site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 1999.



[[Page ix]]



                               THIS TITLE

    Title 7--Agriculture is composed of fifteen volumes. The parts in 
these volumes are arranged in the following order: parts 1-26, 27-52, 
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-
1599, 1600-1899, 1900-1939, 1940-1949, 1950-1999, and part 2000 to end. 
The contents of these volumes represent all current regulations codified 
under this title of the CFR as of January 1, 1999.

    The Food and Nutrition Service current regulations in the volume 
containing parts 210-299, include the Child Nutrition Programs and the 
Food Stamp Program. The regulations of the Federal Crop Insurance 
Corporation are found in the volume containing parts 400-699.

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199. Part 900--General Regulations is carried as a note in the 
volume containing parts 1000-1199, as a convenience to the user.

    Redesignation tables appear in the Finding Aids section of the 
volumes containing parts 210-299 and parts 1600-1899.

    For this volume, Cheryl E. Sirofchuck was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1200 to 1599)

  --------------------------------------------------------------------

 SUBTITLE B--Regulations of the Department of Agriculture--(Continued):

                                                                    Part

chapter xi--Agricultural Marketing Service (Marketing 
  Agreements and Orders; Miscellaneous Commodities), 
  Department of Agriculture.................................        1200


chapter xiii--Northeast Dairy Compact Commission............        1300


chapter xiv--Commodity Credit Corporation, Department of 
  Agriculture...............................................        1402


chapter xv--Foreign Agricultural Service, Department of 
  Agriculture...............................................        1520

[[Page 3]]

  Subtitle B--Regulations of the Department of Agriculture--(Continued)

[[Page 5]]



CHAPTER XI--AGRICULTURAL MARKETING SERVICE (MARKETING AGREEMENTS AND ORDERS; MISCELLANEOUS COMMODITIES), DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1200            Rules of practice and procedure governing 
                    proceedings under research, promotion, 
                    and education programs..................           7
1205            Cotton research and promotion...............          16
1207            Potato research and promotion plan..........          45
1208            Fresh cut flowers and fresh cut greens 
                    promotion and information...............          59
1209            Mushroom promotion, research, and consumer 
                    information order.......................          77
1210            Watermelon research and promotion plan......          97
1214            Kiwifruit research, promotion, and consumer 
                    information order.......................         117
1215            Popcorn promotion, research, and consumer 
                    information.............................         119
1220            Soybean promotion, research, and consumer 
                    information.............................         130
1230            Pork promotion, research, and consumer 
                    information.............................         148
1240            Honey research, promotion, and consumer 
                    information order.......................         162
1250            Egg research and promotion..................         182
1260            Beef promotion and research.................         198
1270

Wool and mohair advertising and promotion [Reserved]

[[Page 7]]



PART 1200--RULES OF PRACTICE AND PROCEDURE GOVERNING PROCEEDINGS UNDER RESEARCH, PROMOTION, AND EDUCATION PROGRAMS--Table of Contents




   Subpart--Rules of Practice and Procedure Governing Proceedings To 
                      Formulate and Amend an Order

Sec.
1200.1  Words in the singular form.
1200.2  Definitions.
1200.3  Proposals.
1200.4  Reimbursement of Secretary's expenses.
1200.5  Institution of proceedings.
1200.6  Docket number.
1200.7  Judge.
1200.8  Motions and requests.
1200.9  Conduct of the hearing.
1200.10  Oral and written arguments.
1200.11  Certification of the transcript.
1200.12  Copies of the transcript.
1200.13  Administrator's recommended decision.
1200.14  Submission to Secretary.
1200.15  Decision by the Secretary.
1200.16  Execution of the order.
1200.17  Filing, extension of time, effective date of filing, and 
          computation of time.
1200.18  Ex parte communications.
1200.19  Additional documents to be filed with hearing clerk.
1200.20  Hearing before Secretary.

Subpart--Rules of Practice Governing Proceedings on Petitions To Modify 
   or To Be Exempted From Research, Promotion, and Education Programs

1200.50  Words in the singular form.
1200.51  Definitions.
1200.52  Institution of proceeding.

    Authority: 7 U.S.C. 2111; 2620; 2713; 3409; 4313; 4509; 4609; 4814; 
4909; 6008; 6106; 6206; 6306; 6410; 6807; and 7106.



   Subpart--Rules of Practice and Procedure Governing Proceedings To 
                      Formulate and Amend an Order

    Source: 47 FR 44684, Oct. 8, 1982, unless otherwise noted.



Sec. 1200.1  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.



Sec. 1200.2  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means the Cotton Research and Promotion Act, as 
amended, Pub. L. 89-502, 89th Cong., approved July 13, 1966, 7 U.S.C. 
2101-2119; the Egg Research and Consumer Information Act, as amended, 
Pub. L. 93-428, 93rd Cong., approved October 1, 1974, 7 U.S.C. 2701-
2718; the Floral Research and Consumer Information Act, Pub. L. 97-98, 
97th Cong., approved December 22, 1981, 7 U.S.C. 4301-4319; the Potato 
Research and Promotion Act, as amended, Pub. L. 91-670, 91st Cong., 
approved January 11, 1971, 7 U.S.C. 2611-2627; the Wheat and Wheat Foods 
Research and Nutrition Education Act, Pub. L. 95-113, 95th Cong., 
approved September 29, 1977, 7 U.S.C. 3401-3417; the Honey Research, 
Promotion, and Consumer Information Act, Pub. L. 98-590, 98th Cong., 
approved October 30, 1984, 7 U.S.C. 4601-4612; the Watermelon Research 
and Promotion Act, Pub. L. 99-198; 99th Cong., approved December 23, 
1985, 7 U.S.C. 4901-4916; and any subsequent research, consumer 
information, promotion, and nutrition education acts established as 
Public Law by Congress.
    (b) The term Department means the United States Department of 
Agriculture.
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in the Secretary's stead.
    (d) The term judge or administrative law judge means any 
administrative law judge appointed pursuant to 5 U.S.C. 3105 and 
assigned to conduct the hearing.
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in the Administrator's stead.
    (f) The term Federal Register means the publication provided for by 
the

[[Page 8]]

Federal Register Act, approved July 26, 1935 (44 U.S.C. 1501-1511), and 
acts supplementing and amending it.
    (g) The term hearing means that part of the proceeding which 
involves the submission of evidence.
    (h) The term order means any order or plan or any amendment to it 
which may be issued pursuant to the Act.
    (i) The term proceeding means a proceeding forming the basis on 
which an order may be issued.
    (j) The term hearing clerk means the hearing clerk, U.S. Department 
of Agriculture, Washington, DC.
    (k) The term board means the board or council established by the 
order to administer the program.

[47 FR 44684, Oct. 8, 1982, as amended at 52 FR 12899, Apr. 20, 1987]



Sec. 1200.3  Proposals.

    (a) An order may be proposed by any organization certified pursuant 
to the Act or any interested person affected by the Act, including the 
Secretary. Any person or organization other than the Secretary proposing 
an order shall file with the Administrator a written application, 
together with a copy of the proposal, requesting the Secretary to hold a 
hearing upon the proposal. Upon receipt of such proposal, the 
Administrator shall cause such investigation to be made and such 
consideration to be given as, in the Administrator's opinion, are 
warranted. If the investigation and consideration lead the Administrator 
to conclude that the proposed order will not tend to effectuate the 
declared policy of the Act, or that for other proper reasons a hearing 
should not be held on the proposal, the Administrator shall deny the 
application, and promptly notify the applicant of such denial, which 
notice shall be accompanied by a brief statement of the grounds for the 
denial.
    (b) If the investigation and consideration lead the Administrator to 
conclude that the proposed order will tend to effectuate the declared 
policy of the Act, or if the Secretary desires to propose an order, the 
Administrator shall sign and cause to be served a notice of hearing, as 
provided herein.



Sec. 1200.4  Reimbursement of Secretary's expenses.

    If provided for in the Act or any amendment thereto, expenses 
incurred by the Secretary in preparing or amending the order, 
administering the order, and conducting the referendum shall be 
reimbursed.



Sec. 1200.5  Institution of proceedings.

    (a) Filing and contents of the notice of hearing. The proceeding 
shall be instituted by filing the notice of hearing with the hearing 
clerk. The notice of hearing shall contain a reference to the authority 
under which the order is proposed; shall define the scope of the hearing 
as specifically as may be practicable; shall contain either the terms or 
substance of the proposed order or a description of the subjects and 
issues involved; and shall state the time and place of such hearing, and 
the place where copies of such proposed order may be obtained or 
examined. The time of the hearing shall not be less than 15 days after 
the date of publication of the notice in the Federal Register, as 
provided herein, unless the Administrator shall determine that an 
emergency exists which requires a shorter period of notice, in which 
case the period of notice shall be that which the Administrator may 
determine to be reasonable in the circumstances: Except that in the case 
of hearings on amendments to an order, the time of the hearing may be 
less than 15 days but shall not be less than three days after the date 
of publication in the Federal Register.
    (b) Giving notice of hearing and supplemental publicity. (1) The 
Administrator shall give or cause to be given notice of hearing in the 
following manner:
    (i) By publication of the notice of hearing in the Federal Register;
    (ii) By mailing a copy of the notice of hearing to each organization 
known by the Administrator to be interested therein;
    (iii) By issuing a press release containing the complete text or a 
summary of the contents of the notice of hearing and making the same 
available to such newspapers as, in the Administrator's discretion, are 
best calculated to bring the notice to the attention of the persons 
interested therein; and

[[Page 9]]

    (iv) By forwarding copies of the notice of hearing addressed to 
those Governors of the States and executive heads of territories and 
possessions of the United States and the mayor of the District of 
Columbia that are directly affected by such order.
    (2) Legal notice of the hearing shall be deemed to be given if 
notice is given in the manner provided by paragraph (b)(1)(i) of this 
section; failure to give notice in the manner provided in paragraphs 
(b)(2) (ii), (iii), and (iv) of this section shall not affect the 
legality of the notice.
    (c) Record of notice and supplemental publicity. There shall be 
filed with the hearing clerk or submitted to the judge at the hearing an 
affidavit or certificate of the person giving the notice provided in 
paragraphs (b)(1) (iii) and (iv) of this section. In regard to the 
provisions relating to mailing in paragraph (b)(1)(ii) of this section, 
determination by the Administrator that such provisions have been 
complied with shall be filed with the hearing clerk or submitted to the 
judge at the hearing. In the alternative, if notice is not given in the 
manner provided in paragraphs (b)(1) (ii), (iii), and (iv) of this 
section there shall be filed with the hearing clerk or submitted to the 
judge at the hearing a determination by the Administrator that such 
notice is impracticable, unnecessary, or contrary to the public interest 
with a brief statement of the reasons for such determination. 
Determinations by the Administrator as herein provided shall be final.



Sec. 1200.6  Docket number.

    Each proceeding, immediately following its institution, shall be 
assigned a docket number by the hearing clerk and thereafter the 
proceeding may be referred to by such number.



Sec. 1200.7  Judge.

    (a) Assignment. No judge who has any pecuniary interest in the 
outcome of a proceeding shall serve as judge in such proceeding.
    (b) Power of judge. Subject to review by the Secretary, as provided 
elsewhere in this subpart, the judge in any proceeding shall have power 
to:
    (1) Rule upon motions and requests;
    (2) Change the time and place of hearings, and adjourn the hearing 
from time to time or from place to place;
    (3) Administer oaths and affirmations and take affidavits;
    (4) Examine and cross-examine witnesses and receive evidence;
    (5) Admit or exclude evidence;
    (6) Hear oral argument on facts or law; and
    (7) Do all acts and take all measures necessary for the maintenance 
of order at the hearings and the efficient conduct of the proceeding.
    (c) Who may act in absence of judge. In case of the absence of the 
judge or the judge's inability to act, the powers and duties to be 
performed by the judge under this part in connection with a proceeding 
may, without abatement of the proceeding unless otherwise ordered by the 
Secretary, be assigned to any other judge.
    (d) Disqualification of judge. The judge may at any time withdraw as 
judge in a proceeding if such judge deems himself or herself to be 
disqualified. Upon the filing by an interested person in good faith of a 
timely and sufficient affidavit of personal bias or disqualification of 
a judge, the Secretary shall determine the matter as a part of the 
record and decision in the proceeding, after making such investigation 
or holding such hearings, or both, as the Secretary may deem appropriate 
in the circumstances.



Sec. 1200.8  Motions and requests.

    (a) General. (1) All motions and requests shall be filed with the 
hearing clerk, except that those made during the course of the hearing 
may be filed with the judge or may be stated orally and made a part of 
the transcript.
    (2) Except as provided in Sec. 1200.17(b) such motions and requests 
shall be addressed to, and ruled on by, the judge if made prior to 
certification of the transcript pursuant to Sec. 1200.11 or by the 
Secretary if made thereafter.
    (b) Certification to Secretary. The judge may, in his or her 
discretion, submit or certify to the Secretary for decision any motion, 
request, objection, or other question addressed to the judge.

[[Page 10]]



Sec. 1200.9  Conduct of the hearing.

    (a) Time and place. The hearing shall be held at the time and place 
fixed in the notice of hearing, unless the judge shall have changed the 
time or place, in which event the judge shall file with the hearing 
clerk a notice of such change, which notice shall be given in the same 
manner as provided in Sec. 1200.5 (relating to the giving of notice of 
the hearing): Except that if the change in time or place of hearing is 
made less than five days prior to the date previously fixed for the 
hearing, the judge either in addition to or in lieu of causing the 
notice of the change to be given, shall announce, or cause to be 
announced, the change at the time and place previously fixed for the 
hearing.
    (b) Appearances--(1) Right to appear. At the hearing, any interested 
person shall be given an opportunity to appear, either in person or 
through authorized counsel or representative, and to be heard with 
respect to matters relevant and material to the proceeding. Any 
interested person who desires to be heard in person at any hearing under 
these rules shall, before proceeding to testify, state his or her name, 
address, and occupation. If any such person is appearing through a 
counsel or representative, such person or such counsel or representative 
shall, before proceeding to testify or otherwise to participate in the 
hearing, state for the record the authority to act as such counsel or 
representative, and the names, addresses, and occupations of such person 
and such counsel or representative. Any such person or such counsel or 
representative shall give such other information respecting such 
appearance as the judge may request.
    (2) Debarment of counsel or representative. (i) Whenever, while a 
proceeding is pending before the judge, such judge finds that a person, 
acting as counsel or representative for any person participating in the 
proceeding, is guilty of unethical or unprofessional conduct, the judge 
may order that such person be precluded from further acting as counsel 
or representative in such proceeding. An appeal to the Secretary may be 
taken from any such order, but the proceeding shall not be delayed or 
suspended pending disposition of the appeal: Except that the judge may 
suspend the proceeding for a reasonable time for the purpose of enabling 
the client to obtain other counsel or representative.
    (ii) In case the judge has ordered that a person be precluded from 
further action as counsel or representative in the proceeding, the judge 
within a reasonable time thereafter shall submit to the Secretary a 
report of the facts and circumstances surrounding such order and shall 
recommend what action the Secretary should take respecting the 
appearance of such person as counsel or representative in other 
proceedings before the Secretary. Thereafter the Secretary may, after 
notice and an opportunity for hearing, issue such order respecting the 
appearance of such person as counsel or representative in proceedings 
before the Secretary as the Secretary finds to be appropriate.
    (3) Failure to appear. If any interested person fails to appear at 
the hearing, that person shall be deemed to have waived the right to be 
heard in the proceeding.
    (c) Order of procedure. (1) The judge shall, at the opening of the 
hearing prior to the taking of testimony, have noted as part of the 
record the notice of hearing as filed with the Office of the Federal 
Register and the affidavit or certificate of the giving of notice or the 
determination provided for in Sec. 1200.5(c).
    (2) Evidence shall then be received with respect to the matters 
specified in the notice of the hearing in such order as the judge shall 
announce.
    (d) Evidence--(1) General. The hearing shall be publicly conducted, 
and the testimony given at the hearing shall be reported verbatim.
    (i) Every witness shall, before proceeding to testify, be sworn or 
make affirmation. Cross-examination shall be permitted to the extent 
required for a full and true disclosure of the facts.
    (ii) When necessary, in order to prevent undue prolongation of the 
hearing, the judge may limit the number of times any witness may testify 
to the same matter or the amount of corroborative or cumulative 
evidence.
    (iii) The judge shall, insofar as practicable, exclude evidence 
which is immaterial, irrelevant, or unduly repetitious, or which is not 
of the sort upon

[[Page 11]]

which responsible persons are accustomed to rely.
    (2) Objections. If a party objects to the admission or rejection of 
any evidence or to any other ruling of the judge during the hearing, 
such party shall state briefly the grounds of such objection, whereupon 
an automatic exception will follow if the objection is overruled by the 
judge. The transcript shall not include argument or debate thereon 
except as ordered by the judge. The ruling of the judge on any objection 
shall be a part of the transcript. Only objections made before the judge 
may subsequently be relied upon in the proceeding.
    (3) Proof and authentication of official records or documents. An 
official record or document, when admissible for any purpose, shall be 
admissible as evidence without the presence of the person who made or 
prepared the same. The judge shall exercise discretion in determining 
whether an official publication of such record or document shall be 
necessary, or whether a copy would be permissible. If permissible such a 
copy should be attested to by the person having legal custody of it, and 
accompanied by a certificate that such person has the custody.
    (4) Exhibits. All written statements, charts, tabulations, or 
similar data offered in evidence at the hearing shall, after 
identification by the proponent and upon satisfactory showing of 
authenticity, relevancy, and materiality, be numbered as exhibits and 
received in evidence and made a part of the record. Such exhibits shall 
be submitted in quadruplicate and in documentary form. In case the 
required number of copies is not made available, the judge shall 
exercise discretion as to whether said exhibits shall, when practicable, 
be read in evidence or whether additional copies shall be required to be 
submitted within a time to be specified by the judge. If the testimony 
of a witness refers to a statute, or to a report or document (including 
the record of any previous hearing), the judge, after inquiry relating 
to the identification of such statute, report, or document, shall 
determine whether the same shall be produced at the hearing and 
physically be made a part of the evidence as an exhibit, or whether it 
shall be incorporated into the evidence by reference. If relevant and 
material matter offered in evidence is embraced in a report or document 
(including the record of any previous hearing) containing immaterial or 
irrelevant matter, such immaterial or irrelevant matter shall be 
excluded and shall be segregated insofar as practicable, subject to the 
direction of the judge.
    (5) Official notice. Official notice at the hearing may be taken of 
such matters as are judicially noticed by the courts of the United 
States and of any other matter of technical, scientific, or commercial 
fact of established character: Except that interested persons shall be 
given an adequate period of time, at the hearing or subsequent to it, of 
matters so noticed and shall be given adequate opportunity to show that 
such facts are inaccurate or are erroneously noticed.
    (6) Offer of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the transcript. The offer of proof shall consist of a 
brief statement describing the evidence to be offered. If the evidence 
consists of a brief oral statement or of an exhibit, it shall be 
inserted into the transcript in toto. In such event, it shall be 
considered a part of the transcript if the Secretary decides that the 
judge's ruling in excluding the evidence was erroneous. The judge shall 
not allow the insertion of such evidence in toto if the taking of such 
evidence will consume a considerable length of time at the hearing. In 
the latter event, if the Secretary decides that the judge erred in 
excluding the evidence, and that such error was substantial, the hearing 
shall be reopened to permit the taking of such evidence.



Sec. 1200.10  Oral and written arguments.

    (a) Oral argument before the judge. Oral argument before the judge 
shall be in the discretion of the judge. Such argument, when permitted, 
may be limited by the judge to any extent that the judge finds necessary 
for the expeditious disposition of the proceeding and shall be reduced 
to writing and made part of the transcript.

[[Page 12]]

    (b) Briefs, proposed findings, and conclusions. The judge shall 
announce at the hearing a reasonable period of time within which 
interested persons may file with the hearing clerk proposed findings and 
conclusions, and written arguments or briefs, based upon the evidence 
received at the hearing, citing, where practicable, the page or pages of 
the transcript of the testimony where such evidence appears. Factual 
material other than that adduced at the hearing or subject to official 
notice shall not be alluded to therein, and, in any case, shall not be 
considered in the formulation of the order. If the person filing a brief 
desires the Secretary to consider any objection made by such person to a 
ruling of the judge, as provided in Sec. 1200.9(d), that person shall 
include in the brief a concise statement concerning each such objection, 
referring, where practicable, to the pertinent pages of the transcript.



Sec. 1200.11  Certification of the transcript.

    The judge shall notify the hearing clerk of the close of a hearing 
as soon as possible thereafter and of the time for filing written 
arguments, briefs, proposed findings, and proposed conclusions and shall 
furnish the hearing clerk with such other information as may be 
necessary. As soon as possible after the hearing, the judge shall 
transmit to the hearing clerk an original and three copies of the 
transcript of the testimony and the original and all copies of the 
exhibits not already on file in the office of the hearing clerk. The 
judge shall attach to the original transcript of the testimony a 
certificate stating that, to the best of the judge's knowledge and 
belief, the transcript is a true transcript of the testimony given at 
the hearing, except in such particulars as the judge shall specify, and 
that the exhibits transmitted are all the exhibits as introduced at the 
hearing with such exceptions as the judge shall specify. A copy of such 
certificate shall be attached to each of the copies of the transcript of 
testimony. In accordance with such certificate the hearing clerk shall 
note upon the official record copy, and cause to be noted on other 
copies of the transcript, each correction detailed therein by adding or 
crossing out (but without obscuring the text as originally transcribed) 
at the appropriate place any words necessary to make the same conform to 
the correct meaning, as certified by the judge. The hearing clerk shall 
obtain and file certifications to the effect that such corrections have 
been effectuated in copies other than the official record copy.



Sec. 1200.12  Copies of the transcript.

    (a) During the period in which the proceeding has an active status 
in the Department, a copy of the transcript and exhibits shall be kept 
on file in the office of the hearing clerk where it shall be available 
for examination during official hours of business. Thereafter said 
transcript and exhibits shall be made available by the hearing clerk for 
examination during official hours of business after prior request and 
reasonable notice to the hearing clerk.
    (b) If a personal copy of the transcript is desired, such copy may 
be obtained upon written application filed with the reporter and upon 
payment of fees at a rate that may be agreed upon with the reporter.



Sec. 1200.13  Administrator's recommended decision.

    (a) Preparation. As soon as practicable following the termination of 
the period allowed for the filing of written arguments or briefs and 
proposed findings and conclusions the Administrator shall file with the 
hearing clerk a recommended decision.
    (b) Contents. The Administrator's recommended decision shall 
include: (1) a preliminary statement containing a description of the 
history of the proceedings, a brief explanation of the material issues 
of fact, law, or discretion presented on the record, and proposed 
findings and conclusions about such issues, including the reasons or 
basis for such proposed findings; (2) a ruling upon each proposed 
finding or conclusion submitted by interested persons; and (3) an 
appropriate proposed order effectuating the Administrator's 
recommendations.
    (c) Exceptions to recommended decision. Immediately following the 
filing of the

[[Page 13]]

recommended decision, the Administrator shall give notice thereof and 
opportunity to file exceptions thereto by publication in the Federal 
Register. Within a period of time specified in such notice any 
interested person may file with the hearing clerk exceptions to the 
Administrator's proposed order and a brief in support of such 
exceptions. Such exceptions shall be in writing, shall refer, where 
practicable, to the related pages of the transcript, and may suggest 
appropriate changes in the proposed order.
    (d) Omission of recommended decision. The procedure provided in this 
section may be omitted only if the Secretary finds on the basis of the 
record that due and timely execution of the Secretary's functions 
imperatively and unavoidably requires such omission.



Sec. 1200.14  Submission to Secretary.

    Upon the expiration of the period allowed for filing exceptions or 
upon request of the Secretary, the hearing clerk shall transmit to the 
Secretary the record of the proceeding. Such record shall include: All 
motions and requests filed with the hearing clerk and rulings thereon; 
the certified transcript; any proposed findings or conclusions or 
written arguments or briefs that may have been filed; the 
Administrator's recommended decision, if any; and such exceptions as may 
have been filed.



Sec. 1200.15  Decision by the Secretary.

    After due consideration of the record, the Secretary shall render a 
decision. Such decision shall become a part of the record and shall 
include: (a) a statement of findings and conclusions, including the 
reasons or basis for such findings, upon all the material issues of 
fact, law, or discretion presented on the record, (b) a ruling upon each 
proposed finding and proposed conclusion not previously ruled upon in 
the record, (c) a ruling upon each exception filed by interested 
persons, and (d) either (1) denial of the proposal to issue an order, or 
(2) if the findings upon the record so warrant, an order, the provisions 
of which shall be set forth and such order shall be complete except for 
its effective date and any determinations to be made under Sec. 1200.16: 
Except that such order shall not be executed, issued, or made effective 
until and unless the Secretary determines that the requirements of 
Sec. 1200.16 have been met.



Sec. 1200.16  Execution of the order.

    (a) Issuance of the order. The Secretary shall, if the Secretary 
finds that it will tend to effectuate the purposes of the Act, issue and 
make effective the order which was filed as part of the Secretary's 
decision pursuant to Sec. 1200.15: Except that the issuance of such 
order shall have been approved or favored by eligible voters as required 
by the applicable Act.
    (b) Effective date of order. No order shall become effective in less 
than 30 days after its publication in the Federal Register, unless the 
Secretary, upon good cause found and published with the order, fixes an 
earlier effective date.
    (c) Notice of issuance. After issuance of the order, such order 
shall be filed with the hearing clerk, and notice thereof, together with 
notice of the effective date, shall be given by publication in the 
Federal Register.



Sec. 1200.17  Filing, extension of time, effective date of filing, and computation of time.

    (a) Number of copies. Except as provided otherwise herein, all 
documents or papers required or authorized by the foregoing provisions 
hereof to be filed with the hearing clerk shall be filed in 
quadruplicate. Any documents or papers so required or authorized to be 
filed with the hearing clerk shall be filed with the judge during the 
course of an oral hearing.
    (b) Extension of time. The time for filing of any document or paper 
required or authorized by the foregoing provisions to be filed may be 
extended by the judge (before the record is so certified by the judge) 
or by the Administrator (after the record is so certified by the judge 
but before it is transmitted to the secretary), or by the Secretary 
(after the record is transmitted to the secretary) upon request filed, 
and if, in the judgment of the judge, Administrator, or the Secretary, 
as the case may be, there is good reason for

[[Page 14]]

the extension. All rulings made pursuant to this paragraph shall be 
filed with the hearing clerk.
    (c) Effective date of filing. Any document or paper required or 
authorized by the foregoing provisions to be filed shall be deemed to be 
filed when it is postmarked or, if otherwise delivered, when it is 
received by the hearing clerk.
    (d) Computation of time. Sundays and Federal holidays shall be 
included in computing the time allowed for the filing of any document or 
paper: Except that when such time expires on a Sunday, or a Federal 
holiday, such period shall be extended to include the next following 
business day.



Sec. 1200.18  Ex parte communications.

    (a) At no stage of the proceeding following the issuance of a notice 
of hearing and prior to the issuance of the Secretary's decision thereon 
shall an employee of the Department who is or may reasonably be expected 
to be involved in the decision process of the proceeding discuss ex 
parte the merits of the proceeding with any person having an interest in 
the proceeding or with any representative of such person: Except that 
procedural matters and status reports shall not be included within the 
limitation: And except further that an employee of the Department who is 
or may reasonably be expected to be involved in the decisional process 
of the proceeding may discuss the merits of the proceeding with such a 
person if all parties known to be interested in the proceeding have been 
given notice and an opportunity to participate. A memorandum of any such 
discussion shall be included in the record of the proceeding.
    (b) No person interested in the proceeding shall make or knowingly 
cause to be made to an employee of the Department who is or may 
reasonably be expected to be involved in the decisional process of the 
proceeding an ex parte communication relevant to the merits of the 
proceeding except as provided in paragraph (a) of this section.
    (c) If an employee of the Department who is or may reasonably be 
expected to be involved in the decisional process of the proceeding 
receives or makes a communication prohibited by this section, the 
Department shall place on the public record of the proceeding:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral communications; 
and
    (3) All written responses, and memoranda, stating the substance of 
all oral responses thereto.
    (d) Upon receipt of a communication knowingly made or knowingly 
caused to be made by a party in violation of this section, the 
Department may, to the extent consistent with the interest of justice 
and the policy of the underlying statute, take whatever steps are deemed 
necessary to nullify the effect of such communication.
    (e) For the purposes of this section, ex parte communication means 
any oral or written communication not on the public record with respect 
to which reasonable prior notice to all interested parties is not given, 
but which shall not include requests for status reports (including 
requests on procedural matters) on a proceeding.



Sec. 1200.19  Additional documents to be filed with hearing clerk.

    In addition to the documents or papers required or authorized by the 
foregoing provisions of this subpart to be filed with the hearing clerk, 
the hearing clerk shall receive for filing and shall have custody of all 
papers, reports, records, orders, and other documents which relate to 
the administration of any order and which the Secretary is required to 
issue or to approve.



Sec. 1200.20  Hearing before Secretary.

    The Secretary may act in the place and stead of a judge in any 
proceeding herein. When the Secretary so acts, the hearing clerk shall 
transmit the record to the Secretary at the expiration of the period 
provided for the filing of proposed findings of fact, conclusions, and 
orders, and the Secretary shall then, after due consideration of the 
record, issue the final decision in the proceeding: Except the Secretary 
may issue a tentative decision in which event the parties shall be 
afforded an opportunity to file exceptions before the issuance of the 
final decision.

[[Page 15]]



Subpart--Rules of Practice Governing Proceedings on Petitions To Modify 
    or To Be Exempted From Research, Promotion and Education Programs

    Source: 60 FR 37326, July 20, 1995, unless otherwise noted.



Sec. 1200.50  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.



Sec. 1200.51  Definitions.

    As used in this subpart, the terms as defined in the acts shall 
apply with equal force and effect. In addition, unless the context 
otherwise requires:
    (a) The term Act means Floral Research and Consumer Information Act 
[7 U.S.C. 4301-4319]; the Fresh Cut Flowers and Fresh Cut Greens 
Promotion and Consumer Information Act [7 U.S.C. 6801-6814]; the Honey 
Research, Promotion, and Consumer Information Act, as amended [7 U.S.C. 
4601-4612]; the Lime Research, Promotion, and Consumer Information Act, 
as amended [7 U.S.C. 6201-6212]; the Mushroom Promotion, Research, and 
Consumer Information Act of 1990 [7 U.S.C. 6101-6112]; the Pecan 
Promotion and Research Act of 1990 [7 U.S.C. 6001-6013]; the Potato 
Research and Promotion Act, as amended [7 U.S.C. 2611-2627]; the 
Watermelon Research and Promotion Act, as amended [7 U.S.C. 4901-4916], 
the Egg Research and Consumer Information Act [7 U.S.C. 2701-2718], the 
Cotton Research and Promotion Act [7 U.S.C. 2101-2118], the Pork 
Promotion, Research, and Consumer Information Act [7 U.S.C. 4801-4819], 
the Soybean Promotion, Research, and Consumer Information Act [7 U.S.C. 
6301-6311], the Sheep Promotion, Research, and Information Act of 1994 
[7 U.S.C. 7101-7111], the Dairy Production Stabilization Act of 1983 [7 
U.S.C. 4501-4513], the Fluid Milk Promotion Act of 1990 [7 U.S.C. 6401-
6417], and the Wheat and Wheat Foods Research and Nutrition Education 
Act [7 U.S.C. 3401-3417].
    (b) Department means the U.S. Department of Agriculture.
    (c) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    (d) Judge means any administrative law judge, appointed pursuant to 
5 U.S.C. 3105, and assigned to the proceeding involved.
    (e) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated, or may hereafter 
be delegated, to act in the Administrator's stead.
    (f) Order means any order or any amendment thereto which may be 
issued pursuant to the Act. The term order shall include plans issued 
under the Acts listed in paragraph (a) of this section.
    (g) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity subject 
to an order or to whom an order is sought to be made applicable, or on 
whom an obligation has been imposed or is sought to be imposed under an 
order.
    (h) Proceeding means a proceeding before the Secretary arising under 
section 1957 of the Act.
    (i) Hearing means that part of the proceedings which involves the 
submission of evidence.
    (j) Party includes the U.S. Department of Agriculture.
    (k) Hearing clerk means the Hearing Clerk, U.S. Department of 
Agriculture, Washington, D.C.
    (l) Decision means the judge's initial decision and includes the 
judge's:
    (1) Findings of fact and conclusions with respect to all material 
issues of fact, law or discretion, as well as the reasons or basis 
thereof;
    (2) Order; and
    (3) Rulings on findings, conclusions and orders submitted by the 
parties; and
    (m) Petition includes an amended petition.

[[Page 16]]



Sec. 1200.52  Institution of proceeding.

    (a) Filing and service of petitions. Any person subject to an order 
desiring to complain that such order or any provision of such order or 
any obligation imposed in connection with an order is not in accordance 
with law, shall file with the hearing clerk, in quintuplicate, a 
petition in writing addressed to the Secretary. Promptly upon receipt of 
the petition in writing the hearing clerk shall transmit a true copy 
thereof to the Administrator and the General Counsel, respectively.
    (b) Contents of petitions. A petition shall contain:
    (1) The correct name, address, and principal place of business of 
the petitioner. If the petitioner is a corporation, such fact shall be 
stated, together with the name of the State of incorporation, the date 
of incorporation, and the names, addresses, and respective positions 
held by its officers and directors; if an unincorporated association, 
the names and addresses of its officers, and the respective positions 
held by them; if a partnership, the name and address of each partner;
    (2) Reference to the specific terms or provisions of the order, or 
the interpretation or application of such terms or provisions, which are 
complained of;
    (3) A full statement of the facts, avoiding a mere repetition of 
detailed evidence, upon which the petition is based, and which it is 
desired that the Secretary consider, setting forth clearly and concisely 
the nature of the petitioner's business and the manner in which 
petitioner claims to be affected by the terms or provisions of the order 
or the interpretation or application thereof, which are complained of;
    (4) A statement of the grounds on which the terms or provisions of 
the order, or the interpretation or application thereof, which are 
complained of, are challenged as not in accordance with law;
    (5) Requests for the specific relief which the petitioner desires 
the Secretary to grant; and
    (6) An affidavit by the petitioner, or, if the petitioner is not an 
individual, by an officer of the petitioner having knowledge of the 
facts stated in the petition, verifying the petition and stating that it 
is filed in good faith and not for purposes of delay.
    (c) A motion to dismiss a petition: filing, contents, and responses 
to a petition. If the Administrator is of the opinion that the petition, 
or any portion thereof, does not substantially comply, in form or 
content, with the Act or with requirements of paragraph (b) of this 
section, the Administrator may, within 30 days after the filing of the 
petition, file with the hearing clerk a motion to dismiss the petition, 
or any portion of the petition, on one or more of the grounds stated in 
this paragraph. Such motion shall specify the grounds for objection to 
the petition and if based, in whole or in part, on allegations of fact 
not appearing on the face of the petition, shall be accompanied by 
appropriate affidavits or documentary evidence substantiating such 
allegations of fact. The motion may be accompanied by a memorandum of 
law. Upon receipt of such motion, the hearing clerk shall cause a copy 
thereof to be served upon the petitioner, together with a notice stating 
that all papers to be submitted in opposition to such motion, including 
any memorandum of law, must be filed by the petitioner with the hearing 
clerk not later than 20 days after the service of such notice upon the 
petitioner. Upon the expiration of the time specified in such notice, or 
upon receipt of such papers from the petitioner, the hearing clerk shall 
transmit all papers which have been filed in connection with the motion 
to the judge for the judge's consideration.
    (d) Further proceedings. Further proceedings on petitions to modify 
or to be exempted from the Order shall be governed by Secs. 900.52(c)(2) 
through 900.71 of the Rules of Practice Governing Proceedings on 
Petitions To Modify or To Be Exempted From Marketing Orders. However, 
each reference to marketing order in the title shall mean order.



PART 1205--COTTON RESEARCH AND PROMOTION--Table of Contents




            Subpart--Procedures for Conduct of Sign-up Period

                               Definitions

Sec.

[[Page 17]]

1205.10  Act.
1205.11  Administrator.
1205.12  Cotton.
1205.13  Upland cotton.
1205.14  Department.
1205.15  Farm Service Agency.
1205.16  Order.
1205.17  Person.
1205.18  Producer.
1205.19  Importer.
1205.20  Representative period.
1205.21  Secretary.
1205.22  State.
1205.23  United States.

                               Procedures

1205.24  General.
1205.25  Supervision of sign-up period.
1205.26  Eligibility.
1205.27  Participation in the sign-up period.
1205.28  Counting.
1205.29  Reporting results.
1205.30  Instructions and forms.

              Subpart--Cotton Research and Promotion Order

                               Definitions

1205.301  Secretary.
1205.302  Act.
1205.303  Person.
1205.304  Cotton.
1205.305  Upland cotton.
1205.306  Bale.
1205.307  Fiscal period.
1205.308  Cotton Board.
1205.309  Producer.
1205.310  Importer.
1205.311  Handler.
1205.312  Handle.
1205.313  United States.
1205.314  Cotton-producing State.
1205.315  Marketing.
1205.316  Cotton-Producer organization.
1205.317  Cotton-Importer organization.
1205.318  Contracting organization or association.
1205.319  Cotton-producing region.
1205.320  Marketing year.
1205.321  Part and subpart.

                              Cotton Board

1205.322  Establishment and membership.
1205.323  Term of office.
1205.324  Nominations.
1205.325  Selection.
1205.326  Acceptance.
1205.327  Vacancies.
1205.328  Alternate members.
1205.329  Procedure.
1205.330  Compensation and reimbursement.
1205.331  Powers.
1205.332  Duties.

                         Research and Promotion

1205.333  Research and promotion.

                        Expenses and Assessments

1205.334  Expenses.
1205.335  Assessments.
1205.336  ``Importer Reimbursements''.
1205.337  Influencing governmental action.

                       Reports, Books, and Records

1205.338  Reports.
1205.339  Books and records.
1205.340  Confidential treatment.

              Certification of Cotton Producer Organization

1205.341  Certification of cotton producer organization.
1205.342  Certification of cotton importer organizations.

                              Miscellaneous

1205.343  Suspension and termination.
1205.345  Proceedings after termination.
1205.346  Effect of termination or amendment.
1205.347  Personal liability.
1205.348  Separability.

                    Subpart--Members of Cotton Board

1205.401  Definitions.
1205.402  Determination of Cotton Board membership.
1205.403  Nomination procedure.

               Subpart--Cotton Board Rules and Regulations

                               Definitions

1205.500  Terms defined.

                                 General

1205.505  Communication.

                               Assessments

1205.510  Levy of assessments.
1205.511  Payment and collection.
1205.512  Collecting handlers and time of collection of $1 per bale 
          assessment.
1205.513  Collecting handlers and time of collection of the supplemental 
          assessment.
1205.514  Customs Service and the Collection of the $1 per bale 
          assessment.
1205.515  Customs Service and the collection of the supplemental 
          assessment.
1205.516  Reports and remittance to the Cotton Board.
1205.517  Failure to report and remit.
1205.518  Receipts for payment of assessments.

                             Reimbursements

1205.520  Procedure for obtaining reimbursement.

                           Warehouse Receipts

1205.525  Entry of gin code number.

[[Page 18]]

                           Reports and Records

1205.530  Gin reports and reporting schedule.
1205.531  Records.
1205.532  Retention period for reports and records.
1205.533  Availability of reports and records.

                        Confidential Information

1205.540  Confidential books, records, and reports.
1205.541  OMB control numbers.

                    Subpart--Fiscal Period [Reserved]

    Authority: 7 U.S.C. 2101-2118.



            Subpart--Procedures for Conduct of Sign-up Period

    Source: 62 FR 1660, Jan. 13, 1997, unless otherwise noted.

                               Definitions



Sec. 1205.10  Act.

    The term Act means the Cotton Research and Promotion Act, as amended 
[7 U.S.C 2101-2118; Public Law 89-502, 80 Stat 279, as amended].



Sec. 1205.11  Administrator.

    The term Administrator means the Administrator of the Agricultural 
Marketing Service, or any officer or employee of USDA to whom authority 
has been delegated to act in the Administrator's stead.



Sec. 1205.12  Cotton.

    The term cotton means all Upland cotton harvested in the United 
States and all imports of Upland cotton, including the Upland cotton 
content of products derived thereof. The term cotton does not include 
imported cotton for which the assessment is less than the de minimis 
assessment established by regulations.



Sec. 1205.13  Upland cotton.

    The term Upland cotton means all cultivated varieties of the species 
Gossypium hirsutum L.



Sec. 1205.14  Department.

    The term Department means the U.S. Department of Agriculture.



Sec. 1205.15  Farm Service Agency.

    The term Farm Service Agency--formerly Agricultural Stabilization 
and Conservation Service (ASCS)--also referred to as ``FSA,'' means the 
Farm Service Agency of the Department.



Sec. 1205.16  Order.

    The term Order means the Cotton Research and Promotion Order.



Sec. 1205.17  Person.

    The term person means any individual 18 years of age or older, or 
any partnership, corporation, association, or any other entity.



Sec. 1205.18  Producer.

    The term producer means any person who shares in a cotton crop, or 
in the proceeds thereof, as an owner of the farm, cash tenant, landlord 
of a share tenant, share tenant, or sharecropper.



Sec. 1205.19  Importer.

    The term importer means any person who enters, or withdraws from 
warehouse, cotton for consumption in the customs territory of the United 
States, and the term import means any such entry.



Sec. 1205.20  Representative period.

    The term representative period means the 1995 calendar year.



Sec. 1205.21  Secretary.

    The term Secretary means the Secretary of Agriculture of the United 
States, or any other officer or employee of the Department to whom 
authority has been delegated to act in the Secretary's stead.



Sec. 1205.22  State.

    The term State means each of the 50 states.



Sec. 1205.23  United States.

    The term United States means the 50 states of the United States of 
America.

                               Procedures



Sec. 1205.24  General.

    A sign-up period will be conducted to determine whether eligible 
producers and importers favor the conduct of a

[[Page 19]]

referendum on the continuance of the 1991 amendments to the Order.
    (a) If the Secretary determines, based on the results of the sign-up 
period, that at least 10 percent (4,622) or more of the number of cotton 
producers and importers who voted in the 1991 referendum request the 
conduct of a continuance referendum on the 1991 Order amendments, a 
referendum will be held within 12 months after the end of the sign-up 
period. Not more than 20 percent of the total requests counted toward 
the 10 percent figure may be from producers from any one state or from 
importers of cotton.
    (b) If the Secretary determines that fewer than 10 percent (4,622) 
of the number of producers and importers who voted in the 1991 
referendum do not favor a continuance referendum, no referendum will be 
held.



Sec. 1205.25  Supervision of sign-up period.

    The Administrator shall be responsible for conducting the sign-up 
period in accordance with this subpart.



Sec. 1205.26  Eligibility.

    Only persons who meet the eligibility requirements in this subpart 
may participate in the sign-up period. No person is entitled to sign up 
more than once.
    (a) Except as set forth in paragraphs (b) and (c) of this section, 
the following persons are eligible to request the conduct of a 
continuance referendum:
    (1) any person who was engaged in the production of Upland cotton 
during calendar year 1995; and
    (2) any person who was an importer of Upland cotton and imported 
Upland cotton in excess of the de minimis assessment value of $2.00 per 
line item entry during calendar year 1995.
    (b) A general partnership is not eligible to request a continuance 
referendum, however, the individual partners of an eligible general 
partnership are each entitled to submit a request.
    (c) Where a group of individuals is engaged in the production of 
Upland cotton under the same lease or cropping agreement, only the 
individual or individuals who signed or entered into the lease or 
cropping agreement are eligible to participate in the sign-up period. 
Individuals who are engaged in the production of Upland cotton as joint 
tenants, tenants in common, or owners of community property, are each 
entitled to submit a request if they share in the proceeds of the 
required crop as owners, cash tenants, share tenants, sharecroppers or 
landlords of a fixed rent, standing rent or share tenant.
    (d) An officer or authorized representative of a qualified 
corporation or association may submit a request on behalf of that 
corporation or association.
    (e) A guardian, administrator, executor, or trustee of any qualified 
estate or trust may submit a request on behalf of that estate or trust.
    (f) An individual may not submit a request on behalf of another 
individual.



Sec. 1205.27  Participation in the sign-up period.

    The sign-up period will be from January 15, 1997, through April 14, 
1997. Those persons who favor the conduct of a continuance referendum 
and who wish to request that USDA conduct such a referendum may do so by 
submitting such request in accordance with this section. All requests 
must be received by the appropriate USDA office by April 14, 1997.
    (a) Before the sign-up period begins, FSA shall establish a list of 
known, eligible, Upland cotton producers at each county office serving 
counties where cotton is produced, and shall also establish a list of 
known, eligible Upland cotton importers.
    (b) Before the start of the sign-up period, USDA shall mail a 
request form to each known, eligible, cotton importer. Importers who 
wish to request a referendum and who do not receive a request form in 
the mail by February 1, 1997, may participate in the sign-up period by 
submitting a signed, written, request for a continuance referendum, 
along with a copy of a U.S. Customs form 7501 showing payment of a 
cotton assessment for calendar year 1995. Importers must submit their 
requests and supporting documents to USDA, FSA, DAPDFO, STOP 0539, 
Attention: William A. Brown, P.O. Box 2415, Room 3096-s, 1400 
Independence Ave. SW., Washington, D.C., 20250-0539. All requests and 
supporting documents must

[[Page 20]]

be received by the appropriate FSA office by April 14, 1997.
    (c) Producers must request a continuance referendum by signing up in 
person at the county FSA office that serves the county where the 
producer's farm is located. A producer who wishes to request a 
referendum and whose name does not appear on the cotton producer list at 
the appropriate county FSA office may participate in the sign-up period 
by submitting a signed, written, request for a continuance referendum, 
along with a copy of a sales receipt for cotton produced during 1995. 
All requests and supporting documentation must be received by the 
appropriate FSA office by April 14, 1997.



Sec. 1205.28  Counting.

    County FSA offices and FSA, Deputy Administrator for Program 
Delivery and Field Operations (DAPDFO), shall begin counting requests no 
later than April 15, 1997. FSA shall determine the number of eligible 
persons who favor the conduct of a continuance referendum.



Sec. 1205.29  Reporting results.

    (a) Each county FSA office shall prepare and transmit to the state 
FSA office, by April 23, 1997, a written report of the number of 
eligible producers who requested the conduct of a referendum, and the 
number of ineligible persons who made requests.
    (b) DAPDFO shall prepare, by April 23, 1997, a written report of the 
number of eligible importers who requested the conduct of a referendum, 
and the number of ineligible persons who made requests.
    (c) Each state FSA office shall, by April 30, 1997, forward all 
county reports, and DAPDFO shall, by April 30, 1997, forward its report 
of importer requests, to the Director, Cotton Division, AMS, STOP 0224, 
1400 Independence Avenue, SW., Washington, D.C., 20250-0224.
    (d) The Chief of the Research and Promotion Staff, Cotton Division, 
shall prepare a report of the requests received, including the number of 
eligible persons who requested the conduct of a referendum, and the 
number of ineligible persons who made requests, to the Director of the 
Cotton Division, and shall maintain one copy of the report where it will 
be available for public inspection for a period of 5 years following the 
end of the sign-up period.
    (e) The Director of the Cotton Division shall prepare and submit to 
the Secretary a report of the results of the sign-up period. The 
Secretary will conduct a referendum if requested by 10 percent or more 
of the number of cotton producers and importers voting in the most 
recent (July 1991) referendum, but not more than 20 percent of the total 
requests counted toward the 10 percent figure may be from producers in 
any one state or from importers of cotton. The Secretary shall announce 
the results of the sign-up period in a separate notice in the Federal 
Register.



Sec. 1205.30  Instructions and forms.

    The Administrator is hereby authorized to prescribe additional 
instructions and forms consistent with the provisions of this subpart to 
govern conduct of the sign-up period.



              Subpart--Cotton Research and Promotion Order

    Source: 31 FR 16758, Dec. 31, 1966, unless otherwise noted.

                               Definitions



Sec. 1205.301  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the U.S. Department of Agriculture to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.



Sec. 1205.302  Act.

    Act means the Cotton Research and Promotion Act, as amended (7 
U.S.C. 2101-2118; Public Law 89-502, 80 Stat 279, as amended).

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.303  Person.

    Person means any individual, partnership, corporation, association, 
or any other entity.

[[Page 21]]



Sec. 1205.304  Cotton.

    Cotton means:
    (a) All Upland cotton harvested in the United States, and, except as 
used in Secs. 1205.311 and 1205.335, includes cottonseed of such cotton 
and the products derived from such cotton and its seed, and
    (b) Imports of Upland cotton, including the Upland cotton content of 
the products derived thereof. The term ``cotton'' shall not, however, 
include:
    (1) Any entry of imported cotton by an importer which has a value or 
weight less than a de minimis amount established in regulations issued 
by the Secretary and
    (2) Industrial products as that term is defined by regulation.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.305  Upland cotton.

    Upland cotton means all cultivated varieties of the species 
Gossypium hirsutum L.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.306  Bale.

    Except as used in Sec. 1205.322, Bale means the package of lint 
cotton produced at a cotton gin or the amount of processed cotton in a 
manufactured product that is equivalent to a 500 pound bale of lint 
cotton.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.307  Fiscal period.

    Fiscal period is the 12-month budgetary period and means the 
calendar year unless the Cotton Board, with the approval of the 
Secretary, selects some other 12-months budgetary period.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.308  Cotton Board.

    Cotton Board means the administrative body established pursuant to 
Sec. 1205.318.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.309  Producer.

    Producer means any person who shares in a cotton crop actually 
harvested on a farm, or in the proceeds thereof, as an owner of the 
farm, cash tenant, landlord of a share tenant, share tenant, or 
sharecropper.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.310  Importer.

    Importer means many person who enters, or withdraws from warehouse, 
cotton for consumption in the customs territory of the United States, 
and the term import means any such entry.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.311  Handler.

    Handler means any person who handles cotton, including the Commodity 
Credit Corporation.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.312  Handle.

    Handle means to harvest, gin, warehouse, compress, purchase, market, 
transport, or otherwise acquire ownership or control of cotton.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.313  United States.

    United States means the 50 States of the United States of America.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.314  Cotton-producing State

    Cotton-producing State means each of the following States and 
combinations of States:
    Alabama-Florida; Arizona; Arkansas; California-Nevada; Georgia; 
Louisiana; Mississippi; Missouri-Illinois; New Mexico; North Carolina-
Virginia; Oklahoma; South Carolina; Tennessee-Kentucky; Texas.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.315  Marketing.

    Marketing includes the sale of cotton or the pledging of cotton to 
the Commodity Credit Corporation as collateral for a price support loan.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]

[[Page 22]]



Sec. 1205.316  Cotton-Producer organization.

    Cotton-Producer organization means any organization which has been 
certified by the Secretary pursuant to Sec. 1205.341.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.317  Cotton-Importer organization.

    Cotton-Importer organization means any organization which has been 
certified by the Secretary pursuant to Sec. 1205.342.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.318  Contracting organization or association.

    Contracting organization or association means the organization or 
association with which the Cotton Board has entered into a contract or 
agreement pursuant to Sec. 1205.328(c).

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.319  Cotton-producing region.

    Cotton-producing region means each of the following groups of 
cotton-producing States:
    (a) Southeast Region: Alabama-Florida, Georgia, North Carolina-
Virginia, and South Carolina;
    (b) Midsouth Region: Arkansas, Louisiana, Mississippi, Missouri-
Illinois, and Tennessee-Kentucky;
    (c) Southwest Region: Oklahoma and Texas;
    (d) Western Region: Arizona, California-Nevada, and New Mexico.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.320  Marketing year.

    Marketing year means a consecutive 12-month period ending on July 
31.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.321  Part and subpart.

    Part means the cotton research and promotion order and all rules, 
regulations and supplemental orders issued pursuant to the act and the 
order, and the aforesaid order shall be a ``subpart'' of such part.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]

                              Cotton Board



Sec. 1205.322  Establishment and membership.

    (a) There is hereby established a Cotton Board composed of:
    (1) Representatives of cotton producers, each of whom shall have an 
alternate, selected by the Secretary from nominations submitted by 
eligible producer organizations within a cotton-producing state, as 
certified pursuant to Sec. 1205.341, or, if the Secretary determines 
that a substantial number of producers are not members of or their 
interests are not represented by any such eligible organizations, from 
nominations made by producers in a manner authorized by the Secretary, 
and
    (2) Representatives of cotton importers, each of whom shall have an 
alternate, selected by the Secretary from nominations submitted by 
eligible importer organizations, as certified pursuant to Sec. 1205.342, 
or, if the Secretary determines that a substantial number of importers 
are not members of or their interests are not represented by any such 
eligible organization, from nominations made by importers in a manner 
authorized by the Secretary.
    (b) Representation on the Cotton Board shall be as follows:
    (1) Each cotton-producing state shall have at least one member and 
an additional member for each 1 million bales or major fraction (more 
than half) thereof of cotton produced in the state and marketed above 
one million bales during the period specified in the regulations for 
determining Board membership; and
    (2) Cotton importers shall be represented by an appropriate number 
of representatives, as determined by the Secretary, of importers of 
cotton subject to assessment during the period specified in the 
regulations for determining Board membership. That number shall not be 
less than two members. The initial importer representation on the Board 
shall consist of four representatives. The Secretary may, after

[[Page 23]]

consultation with organizations representing importers, reduce or 
increase the number of importer representatives, in the manner 
prescribed by the Secretary.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.323  Term of office.

    All members of the Board and their alternatives shall serve for 
terms of three years. Each member and alternate shall continue to serve 
until a successor is selected and has qualified.

[56 FR 64472, Dec. 10, 1991]



Sec. 1205.324  Nominations.

    All nominations authorized under Sec. 1205.322 shall be made within 
such a period of time and in such a manner as the Secretary shall 
prescribe. The eligible producer organizations within each cotton-
producing state, as certified pursuant to Sec. 1205.341, shall caucus 
for the purpose of jointly nominating two qualified persons for each 
member and each alternate member to be selected to represent the cotton 
producers of such cotton-producing state. The eligible importer 
organizations, as certified pursuant to Sec. 1205.342, shall caucus for 
the purpose of jointly nominating two qualified persons for each member 
and alternate member to be selected to represent cotton importers. If 
joint agreement is not reached with respect to the nominees for any such 
position, each such organization may nominate two qualified persons for 
any position on which there is no agreement.

[56 FR 64472, Dec. 10, 1991; 56 FR 66670, Dec. 24, 1991]



Sec. 1205.325  Selection.

    From the nominations made pursuant to Secs. 1205.322 and 1205.324, 
the Secretary shall select the members of the Board and an alternate for 
each member on the basis of representation provided for in 
Secs. 1205.322 and 1205.323.

[56 FR 64473, Dec. 10, 1991]



Sec. 1205.326  Acceptance.

    Any person selected by the Secretary as a member or as an alternate 
member of the Board shall qualify by filing a written acceptance with 
the Secretary promptly after being notified of such selection.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.327  Vacancies.

    To fill any vacancy occasioned by the failure of any person selected 
as a member or as an alternate member of the Board to qualify, or in the 
event of death, removal, resignation or disqualification of any member 
or alternate member of the Board, a successor for the unexpired term of 
such member or alternate member of the Board shall be nominated and 
selected in the manner specified in Secs. 1205.322, 1205.324 and 
1205.325.

[56 FR 64473, Dec. 10, 1991]



Sec. 1205.328  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom the person is the alternate, shall act in the place and stead 
of such member and perform such other duties as assigned. In the event 
of death, removal, resignation or disqualification of a member, the 
alternate for the member shall act for the member until a successor for 
such member is selected and qualified. In the event that both a producer 
member of the Board and the member's alternate are unable to attend a 
meeting, the Board may designate any other alternate member from the 
same cotton-producing state or region to serve in such member's place 
and stead of such meeting. In the event that both an importer member and 
the member's alternate are unable to attend a meeting, the Board may 
designate any other importer alternate member to serve in such member's 
place and stead at such meeting.

[56 FR 64473, Dec. 10, 1991]



Sec. 1205.329  Procedure.

    A majority of the members of the Board, or alternates acting for 
members, shall constitute a quorum and any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. At assembled meetings all votes shall be cast in person. For 
routine and noncontroversial matters which do not require deliberation 
and the exchange of

[[Page 24]]

views, and in matters of an emergency nature when there is not enough 
time to call an assembled meeting of the Board, the Board may also take 
action upon the concurring votes of a majority of its members by mail, 
telegraph or telephone, but any such action by telephone shall be 
confirmed promptly in writing.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.330  Compensation and reimbursement.

    The members of the Board, and alternates when acting as members, 
shall serve without compensation but shall be reimbursed for necessary 
expenses, as approved by the Board, incurred by them in the performance 
of their duties under this subpart.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.331  Powers.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) Subject to the approval of the Secretary, to make rules and 
regulations to effectuate the terms and provisions of this subpart 
including the designation of the handler, importer, or other person 
responsible for collecting the assessments authorized by Sec. 1205.335, 
which designation may be of different handlers, importers, or other 
persons, or classes of handlers, importers, or other persons, to 
recognize differences in marketing practices or procedures in any state 
or area;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (d) To recommend to the Secretary amendments to this subpart.

[31 FR 16758, Dec. 31, 1966, as amended at 42 FR 4813, Jan. 26, 1977. 
Redesignated and amended at 56 FR 64472, 64473, Dec. 10, 1991]



Sec. 1205.332  Duties.

    The Board shall have the following duties:
    (a) To select from among its members a chairman and such other 
officers as may be necessary for the conduct of its business, and to 
define their duties;
    (b) To appoint or employ such persons as it may deem necessary and 
to determine the compensation and to define the duties of each;
    (c) With the approval of the Secretary, to enter into contracts or 
agreements for the development and submission to it of research and 
promotion plans or projects authorized by Sec. 1205.333, and for the 
carrying out of such plans or projects when approved by the Secretary, 
and for the payment of costs thereof with funds collected pursuant to 
Sec. 1205.335, with an organization or association whose governing body 
consists of cotton producers selected by the cotton-producer 
organizations certified by the Secretary under Sec. 1205.341, in such 
manner that the producers of each cotton-producing state will, to the 
extent practicable, have representation on the governing body of such 
organization in the proportion that the cotton marketed by the producers 
of such state bears to the total marketed by the producers of all 
cotton-producing states. Any such contract or agreement shall provide 
that such contracting organization or association shall develop and 
submit annually to the Cotton Board, for the purpose of review and 
making recommendations to the Secretary, a program of research, 
advertising, and sales promotion projects, together with a budget, or 
budgets, which shall show the estimated cost to be incurred for such 
projects, and that any such projects shall become effective upon 
approval by the Secretary. Any such contract or agreement shall also 
provide that the contracting organization shall keep accurate records of 
all its transactions, which shall be available to the Secretary and 
Board on demand, and make an annual report to the Cotton Board of 
activities carried out and an accounting for funds received and 
expended, and such other reports as the Secretary may require;
    (d) To review and submit to the Secretary any research and promotion 
plans or projects which have been developed and submitted to it by the 
contracting organization or association, together with its 
recommendations

[[Page 25]]

with respect to the approval thereof by the Secretary;
    (e) To submit to the Secretary for his approval budgets on a fiscal 
period basis of its anticipated expenses and disbursements in the 
administration of this subpart, including probable costs of advertising 
and promotion and research and development projects as estimated in the 
budget or budgets submitted to it by the contracting organization or 
association, with the Board's recommendations with respect thereto;
    (f) To maintain such books and records and prepare and submit such 
reports from time to time to the Secretary as he may prescribe, and to 
make appropriate accounting with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g) To cause its books to be audited by a competent public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and to submit a copy of each such audit to 
the Secretary;
    (h) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that his representative may attend such 
meetings;
    (i) To act as intermediary between the Secretary and any producer, 
importer, or handler.
    (j) To submit to the Secretary such information as he may request.

[31 FR 16758, Dec. 31, 1966. Redesignated and amended at 56 FR 64472, 
64473, Dec. 10, 1991]

                         Research and Promotion



Sec. 1205.333  Research and promotion.

    The Cotton Board shall in the manner prescribed in Sec. 1205.332(c) 
establish or provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate plans or projects for the advertising and sales promotion of 
cotton and its products, which plans or projects shall be directed 
toward increasing the general demand for cotton or its products in 
accordance with section 6(a) of the act;
    (b) The establishment and carrying on of research and development 
projects and studies with respect to the production, ginning, 
processing, distribution, or utilization of cotton and its products in 
accordance with section 6(b) of the act, to the end that the marketing 
and utilization of cotton may be encouraged, expanded, improved, or made 
more efficient.

[31 FR 16758, Dec. 31, 1966. Redesignated and amended at 56 FR 64472, 
64473, Dec. 10, 1991]

                        Expenses and Assessments



Sec. 1205.334  Expenses.

    (a) The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart.
    (b) The Board shall reimburse the Secretary for:
    (1) Expenses up to $300,000 incurred by the Secretary in connection 
with any referendum conducted under the Act and
    (2) Expenses incurred by the Department of Agriculture for 
administrative and supervisory costs up to five employee years annually.
    (c) The Board shall reimburse any agency of the United States 
Government that assists in administering the import provisions of the 
order for a reasonable amount of the expenses incurred by that agency in 
connection therewith.
    (d) The funds to cover such expenses incurred under paragraphs (a), 
(b) and (c) of this section shall be paid from assessments received 
pursuant to Sec. 1205.335.

[42 FR 4813, Jan. 26, 1977. Redesignated and amended at 56 FR 64472, 
64473, Dec. 10, 1991]



Sec. 1205.335  Assessments.

    (a) Each cotton producer or other person for whom cotton is being 
handled shall pay to the handler thereof designated by the Cotton Board 
pursuant to regulations issued by the Secretary and such handler shall 
collect from the producer or other person for whom the cotton, including 
cotton owned by the handler, is being handled, and shall pay to the 
Cotton Board, at such times and in such manner as prescribed by 
regulations issued by the Secretary, assessments as prescribed in 
paragraphs (a) (1) and (2) of this section:

[[Page 26]]

    (1) An assessment at the rate of $1 per bale of cotton handled;
    (2) A supplemental assessment on cotton handled which shall not 
exceed one percent of the value of such cotton as determined by the 
Cotton Board and approved by the Secretary and published in the Cotton 
Board rules and regulations. The rate of the supplemental assessment may 
be increased or decreased by the Cotton Board with the approval of the 
Secretary. The Secretary shall prescribe by regulation whether the 
assessment rate shall be levied on:
    (i) The current value of the cotton, or
    (ii) An average value determined from current and/or historical 
cotton prices and converted to a fixed amount for each bale.
    (b) Each importer of cotton shall pay to the Cotton Board through 
the U.S. Customs Service, or in such other manner and at such times as 
prescribed by regulations issued by the Secretary, assessments as 
prescribed in paragraphs (b)(1) and (2) of this section:
    (1) An assessment of $1 per bale of cotton imported or the bale 
equivalent thereof for cotton products.
    (2) A supplemental assessment on each bale of cotton imported, or 
the bale equivalent thereof for cotton products, which shall not exceed 
one percent of the value of such cotton as determined by the Cotton 
Board and approved by the Secretary and published in the Cotton Board 
rules and regulations. The rate of the supplemental assessment on 
imported cotton shall be the same as that paid on cotton produced in the 
United States. The rate of the supplemental assessment may be increased 
or decreased by the Cotton Board with the approval of the Secretary. The 
Secretary shall prescribe by regulation the value of imported cotton 
based on an average of current and/or historical cotton prices.
    (c) The Secretary may designate by regulation exemptions to 
assessments provided for in this section for the following:
    (1) Entries of products designated by specific Harmonized Tariff 
Schedule numbers which the Secretary determines are composed of U.S. 
cotton or other than Upland cotton, and for;
    (2) Cotton contained in entries of imported cotton and cotton 
products that is U.S. produced cotton or is other than Upland cotton.
    (d) Assessments collected under this section are to be used for such 
expenses and expenditures, including provision for a reasonable reserve, 
as the Secretary finds reasonable and likely to be incurred by the 
Cotton Board and the Secretary under this subpart.

[56 FR 64473, Dec. 10, 1991]



Sec. 1205.336  ``Importer Reimbursements''.

    Any cotton importer against whose imports any assessment is made and 
collected under the authority of the Act who has reason to believe that 
such assessment or any portion of such assessment was made on U.S. 
produced cotton or cotton other than Upland cotton shall have the right 
to demand and receive from the Cotton Board a reimbursement of the 
assessment or portion of the assessment upon submission of proof 
satisfactory to the Board that the importer paid the assessment and that 
the cotton was produced in the U.S. or is other than Upland cotton. Any 
such demand shall be made by the importer in accordance with regulations 
and on a form and within a time period prescribed by the Board and 
approved by the Secretary. Such time periods shall provide the importer 
at least 90 days from the date of collection to submit the reimbursement 
form to the Board. Any such reimbursement shall be made within 60 days 
after demand therefor.

[56 FR 64474, Dec. 10, 1991]



Sec. 1205.337  Influencing governmental action.

    No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action except in recommending to the Secretary amendments to this 
subpart.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]

[[Page 27]]

                       Reports, Books, and Records



Sec. 1205.338  Reports.

    Each handler and importer subject to this subpart and importers of 
de minimis amounts of cotton may be required to report to the Cotton 
Board periodically such information as is required by regulations, which 
may include but not be limited to the following:
    (a) Number of bales handled or imported;
    (b) Number of bales on which an assessment was collected;
    (c) Name and address of person from whom the handler has collected 
the assessments on each bale handled or imported;
    (d) Date collection was made on each bale handled or imported.

[56 FR 64474, Dec. 10, 1991]



Sec. 1205.339  Books and records.

    Each handler and importer subject to this subpart and importers of 
de minimis amounts of cotton shall maintain and make available for 
inspection by the Secretary such books and records as are necessary to 
carry out the provisions of this subpart and the regulations issued 
thereunder, including such records as are necessary to verify any 
reports required. Such records shall be retained for at least two years 
beyond the marketing year of their applicability.

[56 FR 64474, Dec. 10, 1991]



Sec. 1205.340  Confidential treatment.

    All information obtained from such books, records or reports shall 
be kept confidential by all officers and employees of the Department of 
Agriculture and of the Cotton Board, and only such information so 
furnished or acquired as the Secretary deems relevant shall be disclosed 
by them, and then only in a suit or administrative hearing brought at 
the direction, or upon the request, of the Secretary of Agriculture, or 
to which the Secretary or any officer of the United States is a party, 
and involving this subpart. Nothing in this Sec. 1205.340 shall be 
deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of handlers or importers subject to this subpart or importers of 
de minimis amounts of cotton, which statements do not identify the 
information furnished by any person, or
    (b) The publication by the direction of the Secretary, of the name 
of any person violating this subpart, together with a statement of the 
particular provisions of this subpart violated by such person.

[56 FR 64474, Dec. 10, 1991]

              Certification of Cotton Producer Organization



Sec. 1205.341  Certification of cotton producer organization.

    Any cotton producer organization within a cotton-producing State may 
request the Secretary for certification of eligibility to participate in 
nominating members and alternate members to represent such State on the 
Cotton Board. Such eligibility shall be based in addition to other 
available information upon a factual report submitted by the 
organization which shall contain information deemed relevant and 
specified by the Secretary for the making of such determination, 
including the following:
    (a) Geographic territory within the State covered by the 
organization's active membership;
    (b) Nature and size of the organization's active membership in the 
State, proportion of total of such active membership accounted for by 
farmers, a map showing the cotton-producing counties in such State in 
which the organization has members, the volume of cotton produced in 
each such county, the number of cotton producers in each such county, 
and the size of the organization's active cotton producer membership in 
each such county;
    (c) The extent to which the cotton producer membership of such 
organization is represented in setting the organization's policies;
    (d) Evidence of stability and permanency of the organization;
    (e) Sources from which the organization's operating funds are 
derived;
    (f) Functions of the organization; and
    (g) The organization's ability and willingness to further the aims 
and objectives of the act.

[[Page 28]]


The primary consideration in determining the eligibility of an 
organization shall be whether its cotton producer membership consists of 
a sufficiently large number of cotton producers who produce a relatively 
significant volume of cotton to reasonably warrant its participation in 
the nomination of members for the Cotton Board. Any cotton producer 
organization found eligible by the Secretary under this Sec. 1205.341 
will be certified by the Secretary, and the Secretary's determination as 
to eligibility is final.

[31 FR 16758, Dec. 31, 1966. Redesignated and amended at 56 FR 64472, 
64474, Dec. 10, 1991]



Sec. 1205.342  Certification of cotton importer organizations.

    Any importer organization may request the Secretary for 
certification of eligibility to participate in nominating members and 
alternate members to represent cotton importers on the Cotton Board. 
Such eligibility shall be based, in addition to other available 
information, upon a factual report submitted by the organization which 
shall contain information deemed relevant and specified by the Secretary 
for the making of such determination, including the following:
    (a) Nature and size of organization's active membership, proportion 
of total active membership accounted for by cotton importers and the 
total amount of cotton imported by the organization's cotton importer 
members;
    (b) The extent to which the cotton importer membership of such 
organization is represented in setting the organization's policies;
    (c) Evidence of stability and permanency of the organization;
    (d) Sources from which the organization's operating funds are 
derived;
    (e) Functions of the organization; and
    (f) The organization's ability and willingness to further the aims 
and objectives of the Act.
    The primary consideration in determining the eligibility of an 
organization shall be whether its membership consist of a sufficient 
large number of cotton importers who import a relatively significant 
volume of cotton to reasonably warrant its participation in the 
nomination of members for the Cotton Board. Any importer organization 
found eligible by the Secretary under this Sec. 1205.342 will be 
certified by the Secretary, and the Secretary's determination as to 
eligibility is final.

[56 FR 64475, Dec. 10, 1991]

                              Miscellaneous



Sec. 1205.343  Suspension and termination.

    (a) The Secretary will, whenever the Secretary finds that this 
subpart or any provision thereof obstructs or does not tend to 
effectuate the declared policy of the Act, terminate or suspend the 
operation of this subpart or such provision.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of 10 percent or more of the number of 
cotton producers and importers (if subject to the Order) voting in the 
most recent referendum, to determine whether cotton producers and 
importers subject to the Order favor the suspension or termination of 
this subpart, except that in counting such request for a referendum, not 
more than 20 percent of such request may be from producers from any one 
state or importers of cotton (if subject to the Order). The Secretary 
shall suspend or terminate such subpart at the end of the marketing year 
whenever the Secretary determines that its suspension or termination is 
approved or favored by a majority of producers and importers subject to 
the Order voting in such referendum who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of cotton, and who produced and imported more than 50 
percent of the volume of cotton produced and imported by those voting in 
the referendum.

[56 FR 64474, Dec. 10, 1991]



Sec. 1205.345  Proceedings after termination.

    (a) Upon the termination of this subpart the Cotton Board shall 
recommend not more than five of its members to the Secretary to serve as 
trustees, for the purpose of liquidating the affairs of the Cotton 
Board. Such persons, upon designation by the Secretary, shall become 
trustees of all of

[[Page 29]]

the funds and property then in the possession or under control of the 
Board, including claims for any funds unpaid or property not delivered 
or any other claim existing at the time of such termination.
    (b) The said trustees shall--
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Cotton Board under any 
contracts or agreements entered into by it pursuant to Sec. 1205.332 
(c);
    (3) From time-to-time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and the trustees, to such person or persons as the Secretary may 
direct; and
    (4) Upon request of the Secretary execute such assignments or other 
instruments necessary or appropriate to vest in such persons full title 
and right to all funds, property and claims vested in the Board or the 
trustees pursuant to this Sec. 1205.345.
    (c) Any person to whom funds, property or claims have been 
transferred or delivered pursuant to this Sec. 1205.345 shall be subject 
to the same obligation imposed upon the Cotton Board and upon the 
trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practicable, in the interest of continuing one or more of 
the cotton research or promotion programs hitherto authorized.

[31 FR 16758, Dec. 31, 1966. Redesignated and amended at 56 FR 64472, 
64475, Dec. 10, 1991]



Sec. 1205.346  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not 
(a) affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder, or (b) 
release or extinguish any violation of this subpart or any regulation 
issued thereunder, or (c) affect or impair any rights or remedies of the 
United States, or of the Secretary, or of any other person, with respect 
to any such violation.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.347  Personal liability.

    No member or alternate member of the Cotton Board shall be held 
personally responsible, either individually or jointly with others, in 
any way whatsoever, to any person for errors in judgment, mistakes, or 
other acts, either of commission or omission, as such member or 
alternate, except for acts of dishonesty or willful misconduct.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



Sec. 1205.348  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.

[31 FR 16758, Dec. 31, 1966. Redesignated at 56 FR 64472, Dec. 10, 1991]



                    Subpart--Members of Cotton Board



Sec. 1205.401  Definitions.

    (a) Cotton Division. Cotton Division means the Cotton Division of 
the Agricultural Marketing Service of the U.S. Department of 
Agriculture.
    (b) Director. Director means the Director of the Cotton Division.

[32 FR 1084, Jan. 31, 1967, as amended at 41 FR 37092, Sept. 2, 1976]



Sec. 1205.402  Determination of Cotton Board membership.

    (a) In determining whether any cotton-producing state is entitled to 
be represented by more than one member of the Cotton Board as provided 
in Sec. 1205.322, average annual production of Upland cotton in terms of 
480-pound net weight bales for the five most recent marketing years will 
be used as the criteria for determination of such additional members.

[[Page 30]]

    (b) In determining whether importers of cotton and cotton-containing 
products are entitled to be represented by more than a minimum of two 
members on the Cotton Board as provided in Sec. 1205.322, the average 
annual volume of imported cotton and the cotton content of imported 
products on which assessments have been collected will be used as the 
criteria for determination of such additional members. This volume of 
cotton will be expressed in terms of 480-pound net weight bales for the 
five most recent calendar years. The initial importer representation on 
the Board shall consist of four importer representatives.
    (c) All members appointed from a state will be entitled to serve a 
full three-year term even though it is determined in a subsequent year 
that a state should have fewer additional members by using the average 
production of the five most recent marketing years as specified in 
paragraph (a) of this section.
    (d) All members appointed to represent importers will be entitled to 
serve a full three-year term even though it is determined in a 
subsequent year that importers should be represented by fewer additional 
members by using the average volume of imports of cotton and the cotton 
content of products on which assessments have been collected as 
specified in paragraph (b) of this section.
    (e) Each year the Director shall:
    (1) Based on the average annual production of Upland cotton in terms 
of 480-pound net weight bales for the five most recent marketing years, 
notify all certified cotton producer organizations in each cotton-
producing state of the number of vacancies to be filled by cotton 
producers on the Cotton Board; and
    (2) Based on the average annual volume of imports of cotton and the 
cotton content of cotton-containing products on which assessments as 
provided for in Sec. 1205.335 have been collected in terms of 480-pound 
net weight bales for the five most recent calendar years, notify all 
certified cotton importer organizations of the number of vacancies to be 
filled by cotton importers on the Cotton Board.

[56 FR 65980, Dec. 20, 1991]



Sec. 1205.403  Nomination procedure.

    (a) The Director shall notify all certified producer organizations 
within each cotton-producing state and all certified importer 
organizations of the location, date, and time of the caucus for 
nominating producer and importer representatives for the Cotton Board as 
specified in Sec. 1205.324. The Director will designate a representative 
from the Cotton Division to attend the caucus meeting of cotton producer 
organizations in each state, and of cotton importer organizations. Each 
eligible cotton producer organization within each cotton-producing state 
and each importer organization will be entitled to only one 
representative at the caucus for the purpose of nominating two qualified 
persons for each member and for each alternate member to be selected. 
The representative of a cotton producer organization shall be a cotton 
producer and resident of such state, an officer or member of the Board 
of Directors of such organization, and duly and unqualifiedly authorized 
in writing by such organization to make nominations on its behalf. The 
representative of an importer organization shall be an importer of 
cotton and/or products containing cotton, an officer or member of the 
Board of Directors of such organization, and duly and unqualifiedly 
authorized in writing by such organization to make nominations on its 
behalf. The representative of the Director designated to attend the 
caucus meeting of cotton producer organizations in each state and of 
cotton importer organizations will ascertain the qualifications and 
eligibility of each representative of a cotton producer organization or 
cotton importer organization to participate in said meeting and to make 
nominations.
    (b) Each caucus will be conducted as follows:
    (1) The representative from the Cotton Division will act as 
temporary chairperson and will explain the procedure for nominations and 
the duties of the Cotton Board;
    (2) The representatives in attendance from the certified 
organizations will then select a chairperson and secretary;
    (3) At each caucus there will be presented for nomination and there 
will be

[[Page 31]]

nominated not less than the number of nominees required under the 
provisions of Secs. 1205.322, 1205.324, and 1205.402.

[56 FR 65981, Dec. 20, 1991]



               Subpart--Cotton Board Rules and Regulations

    Source: 42 FR 35974, July 13, 1977, unless otherwise noted.

                               Definitions



Sec. 1205.500  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, the following terms shall mean:
    (a) ASCS means the Agricultural Stabilization and Conservation 
Service of the U.S. Department of Agriculture.
    (b) Cotton Board means the administrative body established pursuant 
to the Cotton Research and Promotion Order.
    (c) CCC means the Commodity Credit Corporation.
    (d) Current value of Cotton means the gross price per pound of lint 
cotton received by the producer for cotton as shown on the producers' 
settlement document before deductions are made for weight penalties, 
buyer's commission or brokerage fees, marketing fees, the $1 per bale 
cotton research and promotion assessment, picking charges, ginning 
charges, warehouse receiving charges, warehouse storage charges, 
transportation charges or any other charges, plus any amount received by 
a producer in the form of a loan deficiency payment with respect to such 
cotton.
    (e) Form A means Cotton Producer's Note, Form CCC Cotton A.
    (f) Gin code number means the identification number assigned to each 
cotton gin by the Cotton Division, Agricultural Marketing Service, U.S. 
Department of Agriculture.
    (g) Handle means to harvest, gin, warehouse, compress, purchase, 
market, transport, or otherwise acquire ownership or control of cotton.
    (h) Handler means any person who handles cotton, including CCC.
    (i) Marketing means any sale of cotton, or the pledging of cotton to 
CCC as collateral for a price support loan.
    (j) Marketing year means a consecutive 12-month period ending on 
July 31.
    (k) Person means any individual, partnership, corporation, 
association, or any other entity, whether governmental or private.
    (l) Producer means any person who owns or shares in a cotton crop 
(or in the proceeds thereof) as landowner, landlord, tenant, or 
sharecropper.
    (m) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the U.S. Department of Agriculture 
to whom authority has heretofore been delegated, or to whom authority 
may hereafter be delegated, to act in the Secretary's stead.
    (n) Loan deficiency payment means any payment on Upland cotton made 
by the Commodity Credit Corporation to a producer in accordance with 7 
CFR 713.55.
    (o) Importer means any person who enters, or withdraws from 
warehouse, cotton for consumption in the customs territory of the United 
States and import means any such entry.
    (p) Customs Service means the United States Customs Service of the 
United States Department of Treasury.
    (q) Cotton means:
    (1) All Upland cotton harvested in the United States, and, except as 
used in section 7(e) of the Act, includes cottonseed of such cotton and 
the products derived from such cotton and its seed, and
    (2) Imports of Upland cotton, including the Upland cotton content of 
the products derived thereof. The term cotton shall not, however, 
include:
    (i) Any entry of imported cotton by an importer which has a value or 
weight less than a de minimis amount established in regulations issued 
by the Secretary and
    (ii) Industrial products as that term is defined by regulation.
    (r) Industrial products means cotton-containing products which are 
classified in the Harmonized Tariff Schedule of the United States under 
classifications other than textile classifications. Certain cotton-
containing textile products under textile classifications shall also be 
considered to be industrial products, and are therefore not included in 
the table appearing in these

[[Page 32]]

regulations as products subject to assessment. Such products include, 
but are not limited to textile fabrics coated, impregnated, covered, or 
laminated, with other materials, textile piping and tubing, and belting 
materials.

[42 FR 35974, July 13, 1977, as amended at 50 FR 10932, Mar. 19, 1985; 
51 FR 6098, Feb. 20, 1986; 51 FR 37705, Oct. 24, 1986; 57 FR 29185, July 
1, 1992]

                                 General



Sec. 1205.505  Communication.

    All reports, requests, applications for reimbursements, and 
communications in connection with the Cotton Research and Promotion 
Order shall be addressed as follows: Cotton Board, Post Office Box 2121, 
Memphis, Tennessee, 38101-2121.

[57 FR 29186, July 1, 1992]

                               Assessments



Sec. 1205.510  Levy of assessments.

    (a) Producer assessments. An assessment of $1 per bale for cotton 
research and promotion is hereby levied on each bale of Upland cotton 
that is produced from cotton harvested and ginned except cotton consumed 
by any governmental agency from its own production. Such assessment 
shall be payable and collected only once on each bale.
    (1) A supplemental assessment for cotton research and promotion in 
addition to the $1 per bale assessment provided for in paragraph (a) of 
this section, is hereby levied on each bale of Upland cotton harvested 
and ginned except cotton consumed by any governmental agency from its 
own production. The supplemental assessment rate shall be levied at the 
rate of five-tenths of one percent of:
    (i) The current value of the cotton multiplied by the number of 
pounds of lint cotton or;
    (ii) The current value of the cotton converted to a fixed amount per 
bale as reflected in the following assessment chart:

                          Assessment Chart \1\
------------------------------------------------------------------------
                                                            Supplemental
                                                             Assessment,
              Current value (cents per pound)                dollars per
                                                                bale
------------------------------------------------------------------------
.00 to 9.99...............................................          0.15
10.00 to 19.99............................................           .40
20.00 to 29.99............................................           .65
30.00 to 39.99............................................           .90
40.00 to 49.99............................................          1.15
50.00 to 59.99............................................          1.40
60.00 to 69.99............................................          1.65
70.00 to 79.99............................................          1.90
80.00 to 89.99............................................          2.15
90.00 to 99.99............................................          2.40
100.00 to 109.99..........................................          2.65
110.00 to 119.99..........................................         2.90
------------------------------------------------------------------------
\1\ Assessment is calculated on \5/10\ of 1 percent of the midpoint of
  each 10 cents increment, based on a 500 lb. bale and converted to a
  fixed amount per bale.

    (2) Each marketing year the collecting handler must select one of 
the two options for collecting the supplemental assessment as provided 
in paragraph (a)(1) of this section. The handler shall notify the Cotton 
Board as to the method selected at the time the handler files the first 
handler report each marketing year.
    (b) Importer assessment. An assessment for cotton research and 
promotion of $1 per bale is hereby levied on each bale of cotton, or the 
bale equivalent thereof for cotton in cotton-containing products 
identified in the HTS conversion factor table in paragraph (b)(3) of 
this section and imported into the United States on or after July 31, 
1992. The $1 per bale assessment shall be converted to a fixed amount 
per kilogram to facilitate the U.S. Customs Service in collecting this 
assessment.
    (1) A supplemental assessment for cotton research and promotion in 
addition to the $1 per bale assessment provided for in paragraph (b) of 
this section is hereby levied on each bale of cotton or bale equivalent 
of cotton in cotton-containing products, identified in this subpart, 
imported into the United States on or after July 31, 1992. The 
supplemental assessment shall be levied at the rate of five-tenths of 
one percent of the historical value of cotton as determined by the 
Secretary and expressed in paragraph (b)(2) of this section. The rate of 
the supplemental assessment on imported cotton will be

[[Page 33]]

the same as that levied on cotton produced within the United States. The 
supplemental assessment will be calculated as a fixed amount per 
kilogram and added to the $1 per bale or bale equivalent assessment to 
facilitate the Customs Service in collecting assessments.
    (2) The 12-month average of monthly average prices received by U.S. 
farmers will be calculated annually. Such average will be used as the 
value of imported cotton for the purpose of levying the supplemental 
assessment on imported cotton and will be expressed in kilograms. The 
value of imported cotton for the purpose of levying this supplemental 
assessment is $1.4881 per kilogram.
    (3) The following table contains Harmonized Tariff Schedule (HTS) 
classification numbers and corresponding conversion factors and 
assessments. The left column of the following table indicates the HTS 
classifications of imported cotton and cotton-containing products 
subject to assessment. The center column indicates the conversion factor 
for determining the raw fiber content for each kilogram of the HTS. HTS 
numbers for raw cotton have no conversion factor in the table. The right 
column indicates the total assessment per kilogram of the article 
assessed.
    (i) Any line item entry of cotton appearing on Customs entry 
documentation in which the value of the cotton contained therein results 
in the calculation of an assessment of two dollars ($2.00) or less will 
not be subject to assessments as described in this section.
    (ii) In the event that any HTS number subject to assessment is 
changed and such change is merely a replacement of a previous number and 
has no impact on the physical properties, description, or cotton content 
of the product involved, assessments will continue to be collected based 
on the new number.

                         Import Assessment Table
                           [Raw cotton fiber]
------------------------------------------------------------------------
                                                         Conv.    Cents/
                        HTS No.                          fact.     kg.
------------------------------------------------------------------------
5201000500............................................   0        1.185
5201001200............................................   0        1.185
5201001400............................................   0        1.185
5201001800............................................   0        1.185
5201002200............................................   0        1.185
5201002400............................................   0        1.185
5201002800............................................   0        1.185
5201003400............................................   0        1.185
5201003800............................................   0        1.185
5204110000............................................   1.1111   1.3167
5204200000............................................   1.1111   1.3167
5205111000............................................   1.1111   1.3167
5205112000............................................   1.1111   1.3167
5205121000............................................   1.1111   1.3167
5205122000............................................   1.1111   1.3167
5205131000............................................   1.1111   1.3167
5205132000............................................   1.1111   1.3167
5205141000............................................   1.1111   1.3167
5205210020............................................   1.1111   1.3167
5205210090............................................   1.1111   1.3167
5205220020............................................   1.1111   1.3167
5205220090............................................   1.1111   1.3167
5205230020............................................   1.1111   1.3167
5205230090............................................   1.1111   1.3167
5205240020............................................   1.1111   1.3167
5205240090............................................   1.1111   1.3167
5205310000............................................   1.1111   1.3167
5205320000............................................   1.1111   1.3167
5205330000............................................   1.1111   1.3167
5205340000............................................   1.1111   1.3167
5205410020............................................   1.1111   1.3167
5205410090............................................   1.1111   1.3167
5205420020............................................   1.1111   1.3167
5205420090............................................   1.1111   1.3167
5205440020............................................   1.1111   1.3167
5205440090............................................   1.1111   1.3167
5206120000............................................   0.5556   0.6584
5206130000............................................   0.5556   0.6584
5206140000............................................   0.5556   0.6584
5206220000............................................   0.5556   0.6584
5206230000............................................   0.5556   0.6584
5206240000............................................   0.5556   0.6584
5206310000............................................   0.5556   0.6584
5207100000............................................   1.1111   1.3167
5207900000............................................   0.5556   0.6584
5208112020............................................   1.1455   1.3574
5208112040............................................   1.1455   1.3574
5208112090............................................   1.1455   1.3574
5208114020............................................   1.1455   1.3574
5208114060............................................   1.1455   1.3574
5208114090............................................   1.1455   1.3574
5208118090............................................   1.1455   1.3574
5208124020............................................   1.1455   1.3574
5208124040............................................   1.1455   1.3574
5208124090............................................   1.1455   1.3574
5208126020............................................   1.1455   1.3574
5208126040............................................   1.1455   1.3574
5208126060............................................   1.1455   1.3574
5208126090............................................   1.1455   1.3574
5208128020............................................   1.1455   1.3574
5208128090............................................   1.1455   1.3574
5208130000............................................   1.1455   1.3574
5208192020............................................   1.1455   1.3574
5208192090............................................   1.1455   1.3574
5208194020............................................   1.1455   1.3574
5208194090............................................   1.1455   1.3574
5208196020............................................   1.1455   1.3574
5208196090............................................   1.1455   1.3574
5208224040............................................   1.1455   1.3574
5208224090............................................   1.1455   1.3574
5208226020............................................   1.1455   1.3574
5208226060............................................   1.1455   1.3574

[[Page 34]]

 
5208228020............................................   1.1455   1.3574
5208230000............................................   1.1455   1.3574
5208292020............................................   1.1455   1.3574
5208292090............................................   1.1455   1.3574
5208294090............................................   1.1455   1.3574
5208296090............................................   1.1455   1.3574
5208298020............................................   1.1455   1.3574
5208312000............................................   1.1455   1.3574
5208321000............................................   1.1455   1.3574
5208323020............................................   1.1455   1.3574
5208323040............................................   1.1455   1.3574
5208323090............................................   1.1455   1.3574
5208324020............................................   1.1455   1.3574
5208324040............................................   1.1455   1.3574
5208325020............................................   1.1455   1.3574
5208330000............................................   1.1455   1.3574
5208392020............................................   1.1455   1.3574
5208392090............................................   1.1455   1.3574
5208394090............................................   1.1455   1.3574
5208396090............................................   1.1455   1.3574
5208398020............................................   1.1455   1.3574
5208412000............................................   1.1455   1.3574
5208416000............................................   1.1455   1.3574
5208418000............................................   1.1455   1.3574
5208421000............................................   1.1455   1.3574
5208423000............................................   1.1455   1.3574
5208424000............................................   1.1455   1.3574
5208425000............................................   1.1455   1.3574
5208430000............................................   1.1455   1.3574
5208492000............................................   1.1455   1.3574
5208494020............................................   1.1455   1.3574
5208494090............................................   1.1455   1.3574
5208496010............................................   1.1455   1.3574
5208496090............................................   1.1455   1.3574
5208498090............................................   1.1455   1.3574
5208512000............................................   1.1455   1.3574
5208516060............................................   1.1455   1.3574
5208518090............................................   1.1455   1.3574
5208523020............................................   1.1455   1.3574
5208523045............................................   1.1455   1.3574
5208523090............................................   1.1455   1.3574
5208524020............................................   1.1455   1.3574
5208524045............................................   1.1455   1.3574
5208524065............................................   1.1455   1.3574
5208525020............................................   1.1455   1.3574
5208530000............................................   1.1455   1.3574
5208592025............................................   1.1455   1.3574
5208592095............................................   1.1455   1.3574
5208594090............................................   1.1455   1.3574
5208596090............................................   1.1455   1.3574
5209110020............................................   1.1455   1.3574
5209110035............................................   1.1455   1.3574
5209110090............................................   1.1455   1.3574
5209120020............................................   1.1455   1.3574
5209120040............................................   1.1455   1.3574
5209190020............................................   1.1455   1.3574
5209190040............................................   1.1455   1.3574
5209190060............................................   1.1455   1.3574
5209190090............................................   1.1455   1.3574
5209210090............................................   1.1455   1.3574
5209220020............................................   1.1455   1.3574
5209220040............................................   1.1455   1.3574
5209290040............................................   1.1455   1.3574
5209290090............................................   1.1455   1.3574
5209313000............................................   1.1455   1.3574
5209316020............................................   1.1455   1.3574
5209316035............................................   1.1455   1.3574
5209316050............................................   1.1455   1.3574
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[[Page 37]]

 
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6209205035............................................   0.9749   1.1553
6209205040............................................   1.2186   1.444
6209205045............................................   0.9749   1.1553
6209205050............................................   0.9749   1.1553
6209303020............................................   0.2463   0.2919
6209303040............................................   0.2463   0.2919
6210109010............................................   0.2291   0.2715
6210403000............................................   0.0391   0.0463
6210405020............................................   0.4556   0.5399
6211111010............................................   0.1273   0.1509
6211111020............................................   0.1273   0.1509
6211118010............................................   1.1455   1.3574
6211118020............................................   1.1455   1.3574
6211320007............................................   0.8461   1.0026
6211320010............................................   1.0413   1.2339
6211320015............................................   1.0413   1.2339
6211320030............................................   0.9763   1.1569
6211320060............................................   0.9763   1.1569
6211320070............................................   0.9763   1.1569
6211330010............................................   0.3254   0.3856
6211330030............................................   0.3905   0.4627
6211330035............................................   0.3905   0.4627
6211330040............................................   0.3905   0.4627
6211420010............................................   1.0413   1.2339
6211420020............................................   1.0413   1.2339
6211420025............................................   1.1715   1.3882
6211420060............................................   1.0413   1.2339
6211420070............................................   1.1715   1.3882
6211430010............................................   0.2603   0.3085
6211430030............................................   0.2603   0.3085
6211430040............................................   0.2603   0.3085
6211430050............................................   0.2603   0.3085
6211430060............................................   0.2603   0.3085
6211430066............................................   0.2603   0.3085
6212105020............................................   0.2412   0.2858
6212109010............................................   0.9646   1.1431
6212109020............................................   0.2412   0.2858
6212200020............................................   0.3014   0.3572
6212900030............................................   0.1929   0.2286
6213201000............................................   1.1809   1.3994
6213202000............................................   1.0628   1.2594
6213901000............................................   0.4724   0.5598
6214900010............................................   0.9043   1.0716
6216000800............................................   0.2351   0.2786
6216001720............................................   0.6752   0.8001
6216003800............................................   1.2058   1.4289
6216004100............................................   1.2058   1.4289
6217109510............................................   1.0182   1.2066
6217109530............................................   0.2546   0.3017
6301300010............................................   0.8766   1.0388
6301300020............................................   0.8766   1.0388
6302100010............................................   1.1689   1.3851
6302215010............................................   0.8182   0.9696
6302215020............................................   0.8182   0.9696
6302217010............................................   1.1689   1.3851
6302217020............................................   1.1689   1.3851
6302217050............................................   1.1689   1.3851
6302219010............................................   0.8182   0.9696
6302219020............................................   0.8182   0.9696
6302219050............................................   0.8182   0.9696
6302222010............................................   0.4091   0.4848
6302222020............................................   0.4091   0.4848
6302313010............................................   0.8182   0.9696
6302313050............................................   1.1689   1.3851
6302315050............................................   0.8182   0.9696

[[Page 38]]

 
6302317010............................................   1.1689   1.3851
6302317020............................................   1.1689   1.3851
6302317040............................................   1.1689   1.3851
6302317050............................................   1.1689   1.3851
6302319010............................................   0.8182   0.9696
6302319040............................................   0.8182   0.9696
6302319050............................................   0.8182   0.9696
6302322020............................................   0.4091   0.4848
6302322040............................................   0.4091   0.4848
6302402010............................................   0.9935   1.1773
6302511000............................................   0.5844   0.6925
6302512000............................................   0.8766   1.0388
6302513000............................................   0.5844   0.6925
6302514000............................................   0.8182   0.9696
6302600010............................................   1.1689   1.3851
6302600020............................................   1.052    1.2466
6302600030............................................   1.052    1.2466
6302910005............................................   1.052    1.2466
6302910015............................................   1.1689   1.3851
6302910025............................................   1.052    1.2466
6302910035............................................   1.052    1.2466
6302910045............................................   1.052    1.2466
6302910050............................................   1.052    1.2466
6302910060............................................   1.052    1.2466
6303110000............................................   0.9448   1.1196
6303910000............................................   0.6429   0.7618
6304111000............................................   1.0629   1.2595
6304190500............................................   1.052    1.2466
6304191000............................................   1.1689   1.3851
6304191500............................................   0.4091   0.4848
6304192000............................................   0.4091   0.4848
6304910020............................................   0.9351   1.1081
6304920000............................................   0.9351   1.1081
6505901540............................................   1.181    1.3995
6505902060............................................   0.9935   1.1773
6505902545............................................   0.5844   0.6925
------------------------------------------------------------------------

    (4) Any entry of cotton that qualifies for informal entry according 
to regulations issued by the Customs Service will not be subject to the 
assessment.
    (5) Imported textile and apparel articles assembled of components 
formed from cotton produced in the United States and identified by HTS 
numbers 9802.00.8015 or 9802.00.9000 shall be exempt from assessments 
under this subpart.
    (6) Imported cotton and products may be exempted by the Cotton Board 
from assessment under this paragraph. Such imported cotton and products 
may include, but are not limited to cotton and the cotton content of 
products which is U.S. produced cotton, or cotton other than Upland 
cotton.
    (i) A request for such exemption must be submitted to the Cotton 
Board by the importer, prior to the importation of the cotton product. 
The Cotton Board will then issue, if deemed appropriate, a numbered 
exemption certificate valid for 1 year from the date of issue. The 
exemption number should be entered by the importer on the Customs entry 
documentation in the appropriate location as determined by the U.S. 
Customs Service.
    (ii) The request for exemption should include:
    (A) the name, address, and importer identification number for the 
importer;
    (B) the HTS classification of the imported product;
    (C) weight of the product for which the exemption is sought;
    (D) estimated date of entry;
    (E) commercial invoices of other such documentation indicating the 
origin or production or type of the cotton fiber used to produce the 
imported product;
    (F) manufacture's description of the imported product.
    (7) The exemption number ``999999999'' shall be entered on the 
Customs entry summary document, in the appropriate location as 
determined by the U.S. Customs Service, by the importer when, based on 
the importer's own determination, the imported product is identified by 
a Harmonized Tariff Schedule classification number which is subject to 
assessment but the particular article contains no cotton.
    (8) Articles imported into the United States temporarily and under 
bond which are classified by the Harmonized Tariff Schedule heading 
which begins with ``9813'' shall not be subject to assessment.
    (9) Articles imported into the U.S. after being exported from the 
U.S. for alterations and which are classified by the Harmonized Tariff 
Schedule subheadings 9802.00.40 and 9802.00.50 shall not be subject to 
assessment.

[57 FR 29432, July 2, 1992, as amended at 58 FR 52216, Oct. 7, 1993; 59 
FR 59111, Nov. 16, 1994; 60 FR 36034, July 13, 1995; 61 FR 31819, 31822, 
June 21, 1996; 62 FR 22878, Apr. 28, 1997; 62 FR 46414, Sept. 2, 1997; 
62 FR 50244, Sept. 25, 1997; 63 FR 27819, May 21, 1998]



Sec. 1205.511  Payment and collection.

    (a) The $1 per bale assessment shall be paid by:
    (1) The producer of the cotton to the collecting handler designated 
in Sec. 1205.512, and
    (2) The importer of cotton to the Customs Service as provided in 
Sec. 1205.514.

[[Page 39]]

    (b) The supplemental assessment shall be paid by:
    (1) The producer of the cotton to the collecting handler designated 
in Sec. 1205.513, and
    (2) The importer of cotton to the Customs Service as described in 
Sec. 1205.515.
    (c) If more than one person subject to assessment shares in the 
proceeds received from a bale or bale equivalent, each such person is 
obligated to pay that portion of the assessment that is equivalent to 
that person's proportionate share of the proceeds.
    (d) Failure of the handler to collect the assessments on each bale 
shall not relieve the handler of the handler's obligation to remit the 
assessments to the Cotton Board as required in Secs. 1205.512, 1205.513 
and 1205.516.

[57 FR 29190, July 1, 1992]



Sec. 1205.512  Collecting handlers and time of collection of $1 per bale assessment.

    Collecting handlers and the time of collecting the $1 per bale 
assessment shall be as follows:
    (a) Except as provided in paragraph (b) of this section, any person 
who purchases a bale of cotton from the producer of the cotton shall be 
the collecting handler for such cotton. The handler shall collect the 
assessment at the time the handler first makes any payment or any credit 
to the producer's account for the cotton. The handler shall give the 
producer a receipt indicating payment of the assessment.
    (b) Any cooperative marketing association or other person that 
accepts a bale of cotton from the producer of the cotton under an oral 
or written contract or agreement providing for the marketing of the 
cotton shall be the collecting handler for such cotton. Such association 
or person shall collect the assessment regardless of whether the cotton 
is marketed or tendered to CCC for price support loan. The handler shall 
collect the assessment at the time the handler first makes any cash 
advance, any payment, or any credit to the producer's account for the 
cotton. The handler shall give the producer a receipt indicating payment 
of the assessment.
    (c) For bales of cotton tendered to CCC for Form A loan, except 
bales tendered pursuant to paragraph (b) of this section:
    (1) The ASCS County Office shall be the collecting handler except as 
provided in paragraph (c)(2) of this section. The ASCS County Office 
shall collect the assessment when it makes disbursement based on the 
Form A loan documents. The producer's copy of the Cotton Producer's Note 
(Form CCC Cotton A) shall show payment of the assessment and shall 
constitute the producer's receipt for payment of the assessment.
    (2) Any person (other than an ASCS County Office) who advances to 
the producer the loan value of the cotton as shown on a Cotton 
Producer's Note (Form CCC Cotton A) shall be the collecting handler for 
such cotton. The handler shall collect the $1 per bale assessment at the 
time the handler makes any advance to the producer on the loan value of 
the cotton. The handler shall give the producer a receipt indicating 
payment of the assessment.
    (d) Any person who purchases cotton in the cotton field where 
produced or who purchases seed cotton or unbaled lint cotton from the 
producer of the cotton shall be the collecting handler. The handler 
shall collect the assessment at the time such cotton is ginned and shall 
give the producer a receipt indicating payment of the assessment. When a 
bale is ginned that contains any such cotton purchased from more than 
one producer, the handler shall collect each producer's proportionate 
share of the assessment and shall give each producer a receipt 
indicating the producer's proportionate share of the assessment payment.
    (e) Any person who purchases cotton from a producer whereby the 
producer agrees to deliver a certain quantity of cotton but retains the 
right to establish the price at some future date shall be the collecting 
handler for such cotton. The handler shall collect the $1 per bale 
assessment at the time final settlement is made on the cotton. The 
handler shall give the producer a receipt indicating payment of the $1 
per bale assessment.
    (f) Any person who consumes domestically or exports cotton of that 
person's own production shall be the collecting handler for such cotton. 
Such

[[Page 40]]

handler shall pay the assessment to the Cotton Board at the time the 
cotton is consumed or exported.
    (g) Any person who obtains ownership of a bale of cotton from the 
producer of the cotton by transfer of any kind or by any means, under 
conditions other than those described in paragraph (a), (b), (c), (d) or 
(e) of this section shall be the collecting handler for such cotton. 
Such handler shall collect the assessment at the time such handler takes 
ownership of the cotton. The handler shall give the producer a receipt 
indicating payment of the assessment.
    (h) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of such producer, or the 
producer's estate, or the person acting on behalf of creditors, shall be 
considered the producer for the purposes of this section.

[42 FR 35974, July 31, 1977, as amended at 50 FR 10932, Mar. 19, 1985; 
57 FR 29190, July 1, 1992]



Sec. 1205.513  Collecting handlers and time of collection of the supplemental assessment.

    Collecting handlers and the time of collecting the supplemental 
assessment shall be as follows:
    (a) Except as provided in paragraph (b) of this section, any person 
who purchases a bale of cotton from the producer of the cotton shall be 
the collecting handler for such cotton. The handler shall collect the 
supplemental assessment at the time the handler first makes any payment 
or any credit to the producer's account for the cotton. The handler 
shall give the producer a receipt indicating payment of the supplemental 
assessment.
    (b) Any cooperative marketing association or other person that 
accepts a bale of cotton from the producer of the cotton under an oral 
or written contract or agreement providing for the marketing of the 
cotton shall be the collecting handler for such cotton. Such association 
or person shall collect the supplemental assessment regardless of 
whether the cotton is marketed or tendered to CCC for price support 
loan. The handler shall collect the supplemental assessment at the time 
the handler first makes any cash advance, any payment, or any credit to 
the producer's account for the cotton. Supplemental assessments due on 
any subsequent cash advances, payments, or credits to the producer's 
account shall be collected by the handler at the time final settlement 
is made on the cotton. The handler shall give the producer a receipt 
each time a supplemental assessment is collected.
    (c) For bales of cotton tendered to CCC for Form A loan, except 
bales tendered pursuant to paragraph (b) of this section:
    (1) The ASCS County Office shall be the collecting handler except as 
provided in paragraph (c)(2) of this section. The ASCS County Office 
shall collect the supplemental assessment when it makes disbursement 
based on the Form A loan value of cotton. The producer's copy of the 
Cotton Producer's Note (Form CCC Cotton A) shall show payment of the 
supplemental assessment and shall constitute the producer's receipt for 
payment of the supplemental assessment.
    (2) Any person (other than an ASCS County Office) who advances to 
the producer the loan value of the cotton as shown on a Cotton 
Producer's Note (Form CCC Cotton A) shall be the collecting handler for 
such cotton. The handler shall collect the supplemental assessment at 
the time the handler makes any advance to the producer on the loan value 
of the cotton. The handler shall give the producer a receipt indicating 
payment of the supplemental assessment.
    (d) With respect to any Upland cotton on which the producer or a 
cooperative marketing association acting on behalf of a producer 
receives a loan deficiency payment, the ASCS County Office or the 
cooperative marketing association shall be the collecting handler of the 
supplemental assessment on the value of the cotton represented by the 
loan deficiency payment at the time such payment is made to the producer 
or the cooperative marketing association. A copy of a document 
reflecting this transaction issued by the ASCS County Office or 
cooperative marketing association shall show the amount

[[Page 41]]

collected as the supplemental assessment and shall constitute the 
producer's receipt for payment of the supplemental assessment.
    (e) Any person who (1) purchases a producer's equity in cotton 
tendered to CCC for Form A loan or (2) purchases cotton that a producer 
has redeemed from the Form A loan, shall be the collecting handler for 
the portion of the total supplemental assessment not collected under 
paragraph (c) of this section. The handler shall give the producer a 
receipt indicating payment of that portion of the supplemental 
assessment.
    (f) Any person who purchases cotton in the cotton field where 
produced or who purchases seed cotton or unbaled lint cotton from the 
producer of the cotton shall be the collecting handler. The handler 
shall collect the supplemental assessment at the time such cotton is 
ginned and shall give the producer a receipt indicating payment of the 
supplemental assessment. When a bale is ginned and baled that contains 
any such cotton purchased from more than one producer, the handler shall 
collect each producer's proportionate share of the supplemental 
assessment and shall give each producer a receipt indicating the 
producer's proportionate share of the supplemental assessment payment.
    (g) Any person who purchases cotton from a producer whereby the 
producer agrees to deliver a certain quantity of cotton but retains the 
right to establish the price at some future date shall be the collecting 
handler for such cotton. The handler shall collect the supplemental 
assessment at the time final settlement is made on the cotton. The 
handler shall give the producer a receipt indicating payment of the 
supplemental assessment.
    (h) Any person who consumes domestically cotton of that person's own 
production shall be the collecting handler for such cotton. The handler 
shall pay the supplemental assessment at the time of consumption on the 
basis of a market value determined in consultation with the Cotton 
Board.
    (i) Any person who exports cotton of that person's own production 
shall be the collecting handler for such cotton. Such handler shall pay 
the supplemental assessment on the basis of the current value of cotton 
as reflected on the export settlement document.
    (j) Any person who obtains ownership of a bale of cotton from the 
producer of the cotton by transfer of any kind or by any means, under 
conditions other than those described in paragraph (a), (b), (c), (d), 
(e), or (f) of this section shall be the collecting handler for such 
cotton. Such handler shall collect the supplemental assessment at the 
time the handler takes ownership of the cotton. The handler shall give 
the producer a receipt indicating payment of the supplemental 
assessment.
    (k) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of such producer or the producer's 
estate, or the person acting on behalf of creditors, shall be considered 
the producer for the purposes of this section.

[42 FR 35974, July 31, 1977, as amended at 50 FR 10932, Mar. 19, 1985; 
51 FR 37705, Oct. 24, 1986; 57 FR 29190, July 1, 1992]



Sec. 1205.514  Customs Service and the Collection of the $1 per bale assessment.

    The Collection of the $1 per bale assessment by the Customs Service 
shall be as follows:
    (a) The Customs Service will collect the assessment from the 
importer or from any person acting as principal, agent, broker or 
consignee for cotton or cotton-containing products produced outside the 
United States and imported into the United States. The Customs Service 
will collect the assessment on cotton and cotton-containing products 
identified by Harmonized Tariff Schedule heading numbers in 
Sec. 1205.510(b)(2) at the time of importation and forward such 
assessment as per the agreement between the United States Customs 
Service and the U.S. Department of Agriculture.
    (b) In the event of an importer's death, bankruptcy, receivership, 
or incapacity to act, the representative of such importer, or the 
importer's estate, or the person acting on behalf of creditors, shall be 
considered the importer for the purposes of this section.

[57 FR 29191, July 1, 1992]

[[Page 42]]



Sec. 1205.515  Customs Service and the collection of the supplemental assessment.

    The collection of the supplemental assessment by the Customs Service 
shall be as follows:
    (a) The Customs Service will collect the supplemental assessment 
from any person acting as principal, agent, broker or consignee for 
cotton or cotton-containing products produced outside the United States 
and imported into the United States. Customs Service will collect the 
assessment on all cotton and cotton-containing products identified by 
Harmonized Tariff Schedule heading numbers in Sec. 1205.510(b)(2) at the 
time of importation and forward such assessment as per the agreement 
between the United States Customs Service and the U.S. Department of 
Agriculture.
    (b) In the event of an importer's death, bankruptcy, receivership, 
or incapacity to act, the representative of such importer, or the 
importer's estate, or the person acting on behalf of creditors, shall be 
considered the importer for the purposes of this section.

[57 FR 29191, July 1, 1992]



Sec. 1205.516  Reports and remittance to the Cotton Board.

    (a) Handler reports and remittances. Each collecting handler shall 
transmit assessments to the Cotton Board as follows:
    (1) Reporting periods. Each calendar month shall be a reporting 
period and the period shall end on the close of business on the last day 
of the month.
    (2) Reports. Each collecting handler shall make reports on forms 
made available or approved by the Cotton Board. Each report shall be 
mailed to the Cotton Board and postmarked within ten days after the 
close of the reporting period.
    (i) Collecting handler report. Each collecting handler shall prepare 
a separate report form each reporting period for each gin from which 
such handler handles cotton on which the handler is required to collect 
the assessments during the reporting period. Each report shall be mailed 
in duplicate to the Cotton Board and shall contain the following 
information:
    (A) Date of report;
    (B) Reporting period covered by report;
    (C) Gin code number;
    (D) Name and address of handler;
    (E) Listing of all producers from whom the handler was required to 
collect the assessments, their addresses, total number of bales, and 
total assessment collected and remitted for each producer;
    (F) Date of last report remitting assessments to the Cotton Board.
    (ii) No cotton purchased report. Each collecting handler shall 
submit a no cotton purchased report form for each reporting period in 
which no cotton was handled for which the handler is required to collect 
assessments during the reporting period. A collecting handler who 
handles cotton only during certain months shall file a final no cotton 
purchased report at the conclusion of such handlers marketing season. If 
a collecting handler handles cotton during any month following 
submission of the final report for the handlers marketing season, such 
handler shall send a collecting handler report and remittance to the 
Cotton Board by the 10th day of the month following the month in which 
cotton was handled. The no cotton purchased report shall be signed and 
dated by the handler of the handler's agent.
    (3) Remittances. The collecting handler shall remit all assessments 
to the Cotton Board with the report required in paragraph (a)(2) of this 
section. All remittances sent to the Cotton Board by collecting handlers 
shall be made by check, draft, or money order payable to the order of 
the ``Cotton Board''. All remittances shall be received subject to 
collection and payment at par.
    (4) Interest and late payment charges. (i) There shall be an 
interest charge, at rates prescribed by the Cotton Board with the 
approval of the Secretary, on any handler who is sent a second certified 
mail notice of past-due assessments from the Cotton Board in any one 
marketing year (August 1-July 31).
    (ii) In addition to the interest charge specified in paragraph 
(a)(4)(i) of this section, there shall be a late payment charge on any 
handler whose remittance is not received by the Cotton Board within 10 
days after the close of the reporting period in which interest

[[Page 43]]

charges were first accrued. The late payment charge shall be 5 percent 
of the unpaid balance before interest charges have accrued.
    (iii) The interest and late payment charges on the unremitted 
assessments for a particular reporting period will be applied from the 
first working day on or following the 20th day of the month in which the 
assessments were due.
    (b) Importer reports and remittance. The United States Customs 
Service will transmit reports and assessments collected on imported 
cotton to the Agricultural Marketing Service according to the agreement 
between the Customs Service and the Agricultural Marketing Service. Upon 
the request of the Cotton Board, an importer shall file with the Board a 
report, for a period of time specified in the request, that includes the 
following information:
    (1) The importer's name and address;
    (2) The quantity of cotton and cotton products imported;
    (3) The amount of the assessment paid on imported cotton and cotton 
products;
    (4) The amount of imported cotton and cotton products on which the 
assessment was not paid to the Customs Service.

[57 FR 29190, July 1, 1992]



Sec. 1205.517  Failure to report and remit.

    (a) Any collecting handler who fails to submit reports and 
remittances according to reporting periods and time schedules required 
in Sec. 1205.516 shall be subject to appropriate action by the Cotton 
Board which may include one or more of the following actions:
    (1) Audits of the collecting handler's books and records to 
determine the amount owed the Cotton Board;
    (2) Requirement that an escrow account for the deposit of 
assessments collected be established. Frequency and schedule of deposits 
and withdrawals from the escrow account shall be determined by the 
Cotton Board with the Approval of the Secretary;
    (3) Referral to the Secretary for appropriate enforcement action;
    (4) Publication of a collecting handler's name in accordance with 
the following provisions:
    (i) The name of any collecting handler will be subject to 
publication if the collecting handler:
    (A) is sent two certified mail notices of past due assessments and/
or collecting handler reports from the Cotton Board in any one marketing 
year (August 1-July 31), or
    (B) is required by the Cotton Board to establish an escrow account 
for depositing assessments, in accordance with paragraph (a)(2) of this 
section, and does not comply with the deposit procedures established by 
the Cotton Board with approval of the Secretary.
    (ii) The name of any collecting handler who is subject to 
publication will be published by the Cotton Board with the approval of 
the Secretary in a monthly listing during the primary cotton marketing 
season (September through March) and a bi-monthly listing during the 
remainder of the year. The published listing will be distributed by the 
Cotton Board.
    (iii) The Cotton Board, with approval of the Secretary, may notify 
individual producers that the assessments collected by such producer's 
collecting handler, whose name is subject to publication in accordance 
with the provisions of paragraph (a)(4)(i) of this section, have not 
been remitted to the Cotton Board as required.
    (b) Any importer who fails to submit reports to the Cotton Board 
pursuant to request made according to Sec. 1205.516 or assessments to 
the Customs Service, shall be subject to one or more of the following 
actions:
    (1) Audits of the importer's books and records to determine the 
amount owed the Cotton Board.
    (2) A deduction for the amount of any unpaid assessment by the 
Customs Service from the importers surety bond.
    (3) Referral to the Secretary for appropriate enforcement action.

[57 FR 29191, July 1, 1992]



Sec. 1205.518  Receipts for payment of assessments.

    Each collecting handler who is required by Sec. 1205.512 and 
Sec. 1205.513 to give the producer a receipt showing payment of cotton 
research and promotion assessments shall provide the producer with an 
invoice or settlement sheet for

[[Page 44]]

the cotton. Such document shall serve as a receipt shall contain the 
following information:
    (a) Name and address of collecting handler.
    (b) Gin code number of gin at which cotton was ginned.
    (c) Name and address of producer who paid assessment.
    (d) Number of bales on which assessment was paid.
    (e) Gross price per pound received by the producer.
    (f) Total assessments paid by the producer.
    (g) Date on which assessment was paid by producer.

(Approved by the Office of Management and Budget under control number 
0581-0115)

[42 FR 35974, July 13, 1977, as amended at 49 FR 8420, Mar. 7, 1984. 
Redesignated and amended at 51 FR 6099, Feb. 20, 1986. Further 
redesignated at 57 FR 29190, July 1, 1992]

                             Reimbursements



Sec. 1205.520  Procedure for obtaining reimbursement.

    Each importer against whose imports of cotton or cotton-containing 
products any assessments are made and collected may obtain a 
reimbursement on that portion of the assessment that was collected on 
cotton produced in the United States or cotton other than Upland cotton 
by following the procedures prescribed in this section.
    (a) Application form. An importer shall obtain a reimbursement 
application form from the Cotton Board. Such form may be obtained by 
written request to the Cotton Board and the request shall bear the 
importer's signature or the importer's properly-witnessed mark.
    (b) Submission of reimbursement application to Cotton Board. Any 
importer requesting a reimbursement shall mail the application on the 
prescribed form to the Cotton Board. The application shall be postmarked 
within 180 days from the date the assessments were paid on the cotton by 
such importer. The reimbursement application shall show:
    (1) The importer's name, address, phone number and Customs Service 
identification number;
    (2) Weight of the cotton in each HTS category for which the 
reimbursement is requested;
    (3) Subtotal amounts to be reimbursed for each HTS number and grand 
total to be reimbursed;
    (4) Date or inclusive dates on which the assessments were paid;
    (5) The name of the port of entry; and
    (6) Certification by the importer that the cotton was grown in the 
U.S. or is other than Upland cotton.
    (c) Where more than one importer shared in the assessment payment on 
cotton, joint or separate reimbursement application forms may be filed. 
In any such case, the reimbursement application shall show the names, 
addresses and proportionate shares of assessments paid by all importers. 
The reimbursement application shall bear the signature of each importer 
seeking reimbursement.
    (d) Proof of payment of the assessment on U.S. produced or other 
than Upland cotton. A copy of the Customs entry form and the commercial 
invoice filed with the Customs Service shall accompany the importer's 
reimbursement application. Within 60 days from the date the properly 
executed application for reimbursement is received by the Cotton Board, 
the Cotton Board shall make reimbursement to the importer. For joint 
applications, the reimbursement shall be made payable to all eligible 
importers signing the reimbursement application. Documentation submitted 
with reimbursement applications shall not be returned to the importer.

[57 FR 29192, July 1, 1992, as amended at 62 FR 22879, Apr. 28, 1997]

                           Warehouse Receipts



Sec. 1205.525  Entry of gin code number.

    The warehouse that first receives a bale for storage after ginning 
shall enter the gin code number of the gin at which the bale was ginned 
on the warehouse receipt issued for the bale.

[57 FR 29192, July 1, 1992]

[[Page 45]]

                           Reports and Records



Sec. 1205.530  Gin reports and reporting schedule.

    (a) Gin reports. Each year each cotton gin in the United States 
shall submit reports to the Cotton Board on forms or certificates made 
available or approved by the Cotton Board as follows:
    (1) End-of-season report. Except as provided in paragraph (a)(2) of 
this section, each gin shall report to the Cotton Board an alphabetical 
listing of producer names, their addresses, and the number of bales 
ginned for each such producer during its ginning season.
    (2) Certificate in Lieu of End-of-Season Report. If a gin is the 
collecting handler on every bale ginned at such gin and collecting 
handler reports and remittances of assessments have been made in 
accordance with Sec. 1205.516, a certification to that effect may be 
made to the Cotton Board in lieu of an end-of-season report.
    (b) Reporting schedule. The schedule for submitting gin reports is 
as follows:
    (1) Each gin that completes ginning operations prior to January 16 
shall make a report to the Cotton Board within 10 days after completion 
of ginning.
    (2) Each gin that operates on or after January 16 will make a report 
to the Cotton Board not later than January 25 covering bales ginned 
through January 15.
    (3) Each gin that operates after January 15 shall make a 
supplemental report to the Cotton Board within 10 days after the close 
of ginning operations covering bales ginned after January 15.

[42 FR 35974, July 13, 1977, as amended at 57 FR 29192, July 1, 1992]



Sec. 1205.531  Records.

    Each handler or importer required to make reports pursuant to this 
subpart shall maintain such books and records as are necessary to verify 
the reports.

[57 FR 29192, July 1, 1992]



Sec. 1205.532  Retention period for reports and records.

    Each handler and importer required to make reports pursuant to this 
subpart shall retain for at least 2 years beyond the marketing year of 
their applicability:
    (a) One copy of the report made to the Cotton Board; and
    (b) Such books and records as are necessary to verify such reports.

[57 FR 29192, July 1, 1992]



Sec. 1205.533  Availability of reports and records.

    Each handler and importer required to make reports pursuant to this 
subpart shall make available for inspection by the Cotton Board, 
including its designated employees, and the Secretary any reports, 
books, or records required under this subpart.

[57 FR 29192, July 1, 1992]

                        Confidential Information



Sec. 1205.540  Confidential books, records, and reports.

    All information obtained from the books, records, and reports of 
handlers and importers shall be kept confidential in the manner and to 
the extent provided for in Sec. 1205.340.

[57 FR 29192, July 1, 1992]



Sec. 1205.541  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1980, Public Law 96-511, is OMB number 0581-
0093, except Board member nominee information sheets are assigned OMB 
number 0505-0001.

[57 FR 29192, July 1, 1992]



                    Subpart--Fiscal Period [Reserved]



PART 1207--POTATO RESEARCH AND PROMOTION PLAN--Table of Contents




               Subpart--Potato Research and Promotion Plan

                               Definitions

Sec.
1207.301  Secretary.
1207.302  Act.
1207.303  Plan.
1207.304  Person.
1207.305  Producer.
1207.306  Potatoes.
1207.307  Handle.

[[Page 46]]

1207.308  Handler.
1207.309  Board.
1207.310  Fiscal period and marketing year.
1207.311  Programs and projects.
1207.312  Importer.
1207.313  Customs Service.

                     National Potato Promotion Board

1207.320  Establishment and membership.
1207.321  Term of office.
1207.322  Nominations and appointment.
1207.323  Acceptance.
1207.324  Vacancies.
1207.325  Procedure.
1207.326  Compensation and reimbursement.
1207.327  Powers.
1207.328  Duties.

                         Research and Promotion

1207.335  Research and promotion.

                        Expenses and Assessments

1207.341  Budget and expenses.
1207.342  Assessments.
1207.343  [Reserved]
1207.344  Operating reserve.

                       Reports, Books, and Records

1207.350  Reports.
1207.351  Books and records.
1207.352  Confidential treatment.

                              Miscellaneous

1207.360  Influencing governmental action.
1207.361  Right of the Secretary.
1207.362  Suspension or termination.
1207.363  Proceedings after termination.
1207.364  Effect of termination or amendment.
1207.365  Personal liability.
1207.366  Separability.

                     Subpart--Rules and Regulations

                               Definitions

1207.500  Definitions.

                                 General

1207.501  Communications.
1207.502  Determination of membership.
1207.503  Nominations.
1207.504  Term of office.
1207.505  Procedure.
1207.506  Policy.
1207.507  Administrative Committee.
1207.508  USDA costs.

                               Assessments

1207.510  Levy of assessments.
1207.511  Determination of assessable quantity.
1207.512  Designated handler.
1207.513  Payment of assessments.
1207.514  [Reserved]
1207.515  Safeguards.

                                 Records

1207.532  Retention period for records.
1207.533  Availability of records.
1207.534  OMB control number assigned pursuant to the Paperwork 
          Reduction Act.

                        Confidential Information

1207.540  Confidential books, records, and reports.
1207.545  Right of the Secretary.
1207.546  Personal liability.

    Authority: 7 U.S.C. 2611-2627.



               Subpart--Potato Research and Promotion Plan

    Source: 37 FR 5008, Mar. 9, 1972, unless otherwise noted.

                               Definitions



Sec. 1207.301  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in his stead.



Sec. 1207.302  Act.

    Act means the Potato Research and Promotion Act, Title III of Public 
Law 91-670, 91st Congress, approved January 11, 1971, 84 Stat. 2041, as 
amended.

[56 FR 40229, Aug. 14, 1991]



Sec. 1207.303  Plan.

    Plan means this potato research and promotion plan issued by the 
Secretary pursuant to the act.



Sec. 1207.304  Person.

    Person means any individual, partnership, corporation, association, 
or other entity.



Sec. 1207.305  Producer.

    Producer means any person engaged in the growing of 5 or more acres 
of potatoes who owns or shares the ownership and risk of loss of such 
potato crop.



Sec. 1207.306  Potatoes.

    Potatoes means any or all varieties of Irish potatoes grown by 
producers in the 50 states of the United States and

[[Page 47]]

grown in foreign countries and imported into the United States.

[56 FR 40229, Aug. 14, 1991]



Sec. 1207.307  Handle.

    Handle means to grade, pack, process, sell, transport, purchase, or 
in any other way to place potatoes or cause potatoes to be placed in the 
current of commerce. Such term shall not include the transportation or 
delivery of field-run potatoes by the producer thereof to a handler for 
grading, storage, or processing.



Sec. 1207.308  Handler.

    Handler means any person (except a common or contract carrier of 
potatoes owned by another person) who handles potatoes, including a 
producer who handles potatoes of his own production.



Sec. 1207.309  Board.

    Board means the National Potato Promotion Board, hereinafter 
established pursuant to Sec. 1207.320.



Sec. 1207.310  Fiscal period and marketing year.

    Fiscal period and marketing year mean the 12-month period from July 
1 through June 30 of the following year or such other period which may 
be approved by the Secretary.



Sec. 1207.311  Programs and projects.

    Programs and projects mean those research, development, advertising 
or promotion programs or projects developed by the Board pursuant to 
Sec. 1207.335.



Sec. 1207.312  Importer.

    Importer means any person who imports tablestock, frozen or 
processed potatoes for ultimate consumption by humans, or seed potatoes 
into the United States.

[56 FR 40229, Aug. 14, 1991]



Sec. 1207.313  Customs Service.

    Customs Service means the United States Customs Service of the 
United States Department of the Treasury.

[56 FR 40229, Aug. 14, 1991]

                     National Potato Promotion Board



Sec. 1207.320  Establishment and membership.

    (a) There is hereby established a National Potato Promotion Board, 
hereinafter called the ``Board'', composed of producers, importers, and 
a public member appointed by the Secretary. Producer members shall be 
appointed from nominations submitted by producers in the various States 
or groups of States pursuant to Sec. 1207.322. Importer members shall be 
appointed from nominations submitted by importers pursuant to 
Sec. 1207.322. The public member shall be nominated by Board members in 
such manner as recommended by the Board and approved by the Secretary, 
and shall be appointed by the Secretary.
    (b) Producer membership upon the Board shall be determined on the 
basis of the potato production reported in the latest Crop Production 
Annual Summary Report issued by the Crop Reporting Board, U.S. 
Department of Agriculture. Unless the Secretary, upon recommendation of 
the Board, determines an alternate basis, for each five million 
hundredweight of such production, or major fraction thereof, produced 
within each State, such State shall be entitled to one member. However, 
each State shall initially be entitled to at least one member.
    (c) The number of importer member positions on the Board shall be 
based on the hundredweights of potatoes, potato products equivalent to 
fresh potatoes, and seed potatoes imported into the United States but 
shall not exceed five importer members. Unless the Secretary, upon 
recommendation of the Board, determines an alternate basis, there shall 
be one importer member position for each 5 million hundredweight, or 
major fraction thereof, of potatoes, potato product equivalents, and 
seed potatoes imported into the United States.
    (d) Any State in which the potato producers fail to respond to an 
officially called nomination meeting may be combined with an adjacent 
State for the purpose of representation on the Board, in which case the 
Board's producer member selected by the Secretary will represent both 
States, but

[[Page 48]]

such member's voting power under Sec. 1207.325 shall not be increased.
    (e) The Secretary, upon recommendation of the Board, may establish, 
through rule making procedure, districts or groups of States in order to 
change the representation requirements for membership on the Board. In 
such event the voting power of members under Sec. 1207.325 would be 
based upon the total production within the new district or group of 
States.
    (f) Should the Board fail to nominate a public member, the Secretary 
may appoint such member.

[37 FR 5008, Mar. 9, 1972, as amended at 49 FR 20806, May 17, 1984; 49 
FR 31390, Aug. 7, 1984; 56 FR 40229, Aug. 14, 1991]



Sec. 1207.321  Term of office.

    (a) The term of office of Board members shall be 3 years, beginning 
July 1, or such other beginning date as may be approved pursuant to 
regulations.
    (b) The terms of office of the Board's producer members shall be so 
determined that approximately one-third of the terms will expire each 
year. Importer and public member terms shall run concurrently. All 
members serving on the Board on the effective date of this amendment to 
the Plan shall continue serving the term to which they were appointed.
    (c) Board members shall serve during the term of office for which 
they are selected and have qualified, and until their successors are 
selected and have qualified.
    (d) No member shall serve for more than two full successive terms of 
office.

[37 FR 5008, Mar. 9, 1972, as amended at 56 FR 40229, Aug. 14, 1991]



Sec. 1207.322  Nominations and appointment.

    The Secretary shall select the producer, importer, and public 
members of the Board from nominations which may be made in the following 
manner.
    (a) A meeting or meetings of producers shall be held in each State 
to nominate producer members for the Board. For nominations to the 
initial Board the meetings shall be announced by the U.S. Department of 
Agriculture. The Department may call upon other organizations to assist 
in conducting the meetings such as State and national organizations of 
potato producers. Such nomination meetings shall be held not later than 
60 days after the issuance of this subpart. Any organization designated 
to hold such nomination meetings shall give adequate notice of such 
meetings to the potato producers affected; also to the Secretary so that 
a representative of the Secretary, if available, may conduct such 
meetings or act as secretary of such nomination meetings.
    (b) After the establishment of the initial Board, the nominations 
for subsequent Board producer members shall be made by producers at 
meetings in the producing sections or States. The Board shall hold such 
meetings, or cause them to be held, in accordance with rules established 
pursuant to recommendation of the Board.
    (c) Only producers may participate in designating producer nominees. 
Each producer is entitled to one vote only on behalf of himself, his 
partners, agents, subsidiaries, affiliates, and representatives for each 
position for which nominations are being held. If a producer is engaged 
in producing potatoes in more than one State, he shall elect the State 
in which he shall vote. In no event shall he vote in nominations in more 
than one meeting.
    (d) The importer members shall be nominated by importers of 
potatoes, potato products and/or seed potatoes. The number of importer 
members on the Board shall be announced by the Secretary and shall not 
exceed five members. The Board may call upon organizations of potato, 
potato products and/or seed potato importers to assist in nominating 
importers for membership on the Board. If such organizations fail to 
submit nominees or are determined by the Board to not adequately 
represent importers, then the Board may conduct meetings of importers to 
nominate eligible importers for Board member positions. In determining 
if importer organizations adequately represent importers, the Board 
shall consider:
    (1) How many importers belong to the association;
    (2) What percentage of the total number of importers is represented 
by the association;

[[Page 49]]

    (3) Is the association representative of the potato, potato product, 
and seed potato import industry;
    (4) Does the association speak for potato, potato product, and seed 
potato importers; and
    (5) Other relevant information as may be warranted.
    (e) The public member shall be nominated by the producer and 
importer members of the Board. The public member shall have no direct 
financial interest in the commercial production or marketing of potatoes 
except as a consumer and shall not be a director, stockholder, officer 
or employee of any firm so engaged. The Board shall prescribe such 
additional qualifications, administrative rules and procedures for 
selection and voting for each candidate as it deems necessary and the 
Secretary approves.

[37 FR 5008, Mar. 9, 1972, as amended at 49 FR 20806, May 17, 1984; 56 
FR 40229, Aug. 14, 1991]

    Effective Date Note: At 62 FR 46179, Sept. 2, 1997, in 
Sec. 1207.322, paragraphs (a) and (d)(1) through (d)(5); in paragraph 
(b), the words ``at meetings'' in the first sentence and the entire last 
sentence; in paragraph (c), the last sentence; and in paragraph (d), the 
last two sentences of the introductory text are suspended, effective 
Sept. 3, 1997.



Sec. 1207.323  Acceptance.

    Each person selected by the Secretary as a member of the Board shall 
qualify by filing a written acceptance with the Secretary promptly after 
being notified of such selection.



Sec. 1207.324  Vacancies.

    To fill any vacancy caused by the failure of any person selected as 
a member of the Board to qualify, or in the event of the death, removal, 
resignation, or disqualification of any member, a successor shall be 
nominated and selected in the manner specified in Sec. 1207.322. In the 
event of failure to provide nominees for such vacancies, the Secretary 
may select other eligible persons.



Sec. 1207.325  Procedure.

    (a) Each State (or district or group of States established pursuant 
to Sec. 1207.320) which has a member on the Board shall be entitled to 
not less than one vote for any production up to 1 million hundredweight, 
plus one additional vote for each additional 1 million hundredweight of 
production, or major fraction thereof, as determined by the latest crop 
production annual summary report issued by the Crop Reporting Board, 
U.S. Department of Agriculture. The casting of the votes for each State 
shall be determined by the members of the Board from that State.
    (b) A majority of the Board members shall constitute a quorum and 
any action of the Board shall require a majority of concurring votes of 
those present and voting. At assembled meetings all votes shall be cast 
in person or by duly authorized proxy.
    (c) For routine and noncontroversial matters which do not require 
deliberation and the exchange of views, and for matters of an emergency 
nature when there is not enough time to call an assembled meeting, the 
Board may act upon a majority of concurring votes of its members cast by 
mail, telegraph, or telephone. Any vote cast by telephone shall be 
confirmed promptly in writing.

[37 FR 5008, Mar. 9, 1972, as amended at 57 FR 40083, Sept. 2, 1992]



Sec. 1207.326  Compensation and reimbursement.

    Members of the Board shall serve without compensation but shall be 
reimbursed for reasonable expenses incurred by them in the performance 
of their duties as members of the Board.



Sec. 1207.327  Powers.

    The Board shall have the following powers subject to Sec. 1207.361:
    (a) To administer the provisions of this plan in accordance with its 
terms and conditions;
    (b) To make rules and regulations to effectuate the terms and 
conditions of this plan;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of this plan; and
    (d) To recommend to the Secretary amendments to this plan.



Sec. 1207.328  Duties.

    The Board shall, among other things, have the following duties:
    (a) To meet and organize and to select from among its members a 
president and such other officers as may be

[[Page 50]]

necessary; to select committees and subcommittees of Board members to 
nominate the public member; to adopt such rules for the conduct of its 
business as it may deem advisable; and it may establish advisory 
committees of persons other than Board members;
    (b) To employ such persons as it may deem necessary and to determine 
the compensation and define the duties of each; and to protect the 
handling of Board funds through fidelity bonds;
    (c) At the beginning of each fiscal period, to prepare and submit to 
the Secretary for his approval a budget on a fiscal period basis of the 
anticipated expenses in the administration of this plan including the 
probable costs of all programs or projects and to recommend a rate of 
assessment with respect thereto;
    (d) To develop programs and projects and to enter into contracts or 
agreements for the development and carrying out of programs or projects 
of research, development, advertising or promotion, and the payment of 
the costs thereof with funds collected pursuant to this plan;
    (e) To keep minutes, books, and records which clearly reflect all of 
the acts and transactions of the Board. Minutes of each Board meeting 
shall be promptly reported to the Secretary;
    (f) To cause the books of the Board to be audited by a certified 
public accountant at least once each fiscal period, and at such other 
time as the Board may deem necessary. The report of such audit shall 
show the receipt and expenditure of funds collected pursuant to this 
part. Two copies of each such report shall be furnished to the Secretary 
and a copy of each such report shall be made available at the principal 
office of the Board for inspection by producers, handlers, and 
importers;
    (g) To give the Secretary the same notice of meetings of the Board 
and its subcommittees as is given to its members;
    (h) To act as intermediary between the Secretary and any producer, 
handler, or importer;
    (i) To furnish the Secretary such information as he may request.
    (j) To prepare and submit to the Secretary such reports from time to 
time as may be prescribed by the Secretary for appropriate accounting 
with respect to the receipt and disbursement of funds entrusted to the 
Board; and

[37 FR 5008, Mar. 9, 1972, as amended at 49 FR 20806, May 17, 1984; 56 
FR 40230, Aug. 14, 1991; 57 FR 40083, Sept. 2, 1992]

                         Research and Promotion



Sec. 1207.335  Research and promotion.

    The Board shall develop and submit to the Secretary for approval any 
programs or projects authorized in this section. Such programs or 
projects shall provide for:
    (a) The establishment, issuance, effectuation and administration of 
appropriate programs or projects for the advertising and promotion of 
potatoes and potato products: Provided, however, That any such program 
or project shall be directed toward increasing the general demand for 
potatoes and potato products;
    (b) Establishing and carrying on research and development projects 
and studies to the end that the marketing and utilization of potatoes 
may be encouraged, expanded, improved, or made more efficient: Provided, 
That quality control, grade standards and supply management programs 
shall not be conducted under, or as a part of, this plan; and
    (c) The development and expansion of potato and potato product sales 
in foreign markets.
    (d) No advertising or promotion program shall make any reference to 
private brand names or use false or unwarranted claims in behalf of 
potatoes or their products or false or unwarranted statements with 
respect to the attributes or use of any competing products.

                        Expenses and Assessments



Sec. 1207.341  Budget and expenses.

    (a) At the beginning of each fiscal period, or as may be necessary 
thereafter, the Board shall prepare and recommend a budget on a fiscal 
period basis of its anticipated expenses and disbursements in the 
administration of this plan, including probable costs of research, 
development, advertising, and promotion. The Board shall also

[[Page 51]]

recommend a rate of assessment calculated to provide adequate funds to 
defray its proposed expenditures and to provide for a reserve as set 
forth in Sec. 1207.344.
    (b) The Board is authorized to incur such expenses for research, 
development, advertising, or promotion of potatoes and potato products, 
such other expenses for the administration, maintenance, and functioning 
of the Board, and any referendum and administrative costs incurred by 
the Department of Agriculture as are approved pursuant to Sec. 1207.361.

[37 FR 5008, Mar. 9, 1972, as amended at 49 FR 20806, May 17, 1984]



Sec. 1207.342  Assessments.

    (a) The funds to cover the Board's expenses shall be acquired by the 
levying of assessments upon handlers and importers as designated in 
regulations recommended by the Board and issued by the Secretary. Such 
assessments shall be levied at a rate fixed by the Secretary which shall 
not exceed one-half of one per centum of the immediate past ten calendar 
years United States average price received for potatoes by growers as 
reported by the Department of Agriculture and not more than one such 
assessment may be collected on any potatoes.
    (b) Each designated handler, as specified in regulations, shall pay 
assessments to the Board on all potatoes handled by him, including 
potatoes he produced. Assessments shall be paid to the Board at such 
time and in such manner as the Board shall direct pursuant to 
regulations issued hereunder. The designated handler may collect the 
assessments from the producer, or deduct such assessments from the 
proceeds paid to the producer on whose potatoes the assessments are 
made, provided he furnishes the producer with evidence of such payment.
    (c) The importer of imported potatoes, potato products, or seed 
potatoes shall pay the assessment to the Board at the time of entry, or 
withdrawal, for consumption of such potatoes and potato products into 
the United States.
    (d) The assessment on imported tablestock potatoes and frozen or 
processed potato products for ultimate consumption by humans and on seed 
potatoes shall be established by the Board so that the effective 
assessment shall be equal to that on domestic production.
    (e) The Board may authorize other organizations to collect 
assessments in its behalf.
    (f) The Board may exempt potatoes used for nonfood purposes, other 
than seed, from the provisions of this plan and shall establish adequate 
safeguards against improper use of such exemptions.

[37 FR 5008, Mar. 9, 1972, as amended at 49 FR 20806, May 17, 1984; 56 
FR 40230, Aug. 14, 1991]



Sec. 1207.343  [Reserved]



Sec. 1207.344  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal periods excess funds in a reserve so 
established: Provided, That funds in the reserve shall not exceed 
approximately two fiscal periods' expenses. Such reserve funds may be 
used to defray any expenses authorized under this part.

                       Reports, Books, and Records



Sec. 1207.350  Reports.

    (a) Each designated handler shall maintain a record with respect to 
each producer for whom he handled potatoes and for potatoes handled 
which he himself produced. He shall report to the Board at such times 
and in such manner as it may prescribe by regulations such information 
as may be necessary for the Board to perform its duties under this part. 
Such reports may include, but shall not be limited to, the following:
    (1) Total quantity of potatoes handled for each producer and for 
himself, including those which are exempt under the plan;
    (2) Total quantity of potatoes handled for each producer and for 
himself subject to the plan and assessments, and
    (3) Name and address of each person from whom he collected an 
assessment, the amount collected from each person, and the date such 
collection was made.

[[Page 52]]

    (b) Each importer shall report to the Board at such times and in 
such manner as it may prescribe such information as may be necessary for 
the Board to perform its duties under this part.

[37 FR 5008, Mar. 9, 1972, as amended at 56 FR 40230, Aug. 14, 1991]



Sec. 1207.351  Books and records.

    Each handler or importer subject to this part shall maintain and 
make available for inspection by authorized employees of the Board and 
the Secretary such books and records as are appropriate and necessary to 
carry out the provisions of this Plan and the regulations issued 
thereunder, including such records as are necessary to verify any 
reports required. Such records shall be maintained for at least 2 years 
beyond the marketing year of their applicability.

[37 FR 5008, Mar. 9, 1972, as amended at 56 FR 40230, Aug. 14, 1991]



Sec. 1207.352  Confidential treatment.

    All information obtained from books, records, or reports required 
pursuant to this part shall be kept confidential by all employees of the 
Department of Agriculture and of the Board, and by all contractors and 
agents retained by the Board, and only such information so furnished or 
acquired as the Secretary deems relevant shall be disclosed by them, and 
then only in a suit or administrative hearing brought at the direction, 
or upon the request, of the Secretary, or to which the Secretary or any 
officer of the United States is a party, and involving this Plan. 
Nothing in this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of handlers or importers subject to this Plan, which statements 
do not identify the information furnished by any person; or
    (b) The publication by direction of the Secretary of the name of any 
person violating this Plan, together with a statement of the particular 
provisions of this Plan violated by such person.

[56 FR 40230, Aug. 14, 1991]

                              Miscellaneous



Sec. 1207.360  Influencing governmental action.

    No funds collected by the Board under this plan shall in any matter 
be used for the purpose of influencing governmental policy or action 
except in recommending to the Secretary amendments to this subpart.



Sec. 1207.361  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive action proposed and prepared by the Board 
shall be submitted to the Secretary for his approval.



Sec. 1207.362  Suspension or termination.

    (a) The Secretary shall, whenever he finds that this plan or any 
provision thereof obstructs or does not tend to effectuate the declared 
policy of the act, terminate or suspend the operation of this plan or 
such provision thereof.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of the Board or of 10 percent or more of 
the potato producers and importers to determine whether potato producers 
and importers favor termination or suspension of this plan. The 
Secretary shall suspend or terminate such plan at the end of the 
marketing year whenever the Secretary determines that its suspension or 
termination is favored by a majority of the potato producers and 
importers voting in such referendum who, during a representative period 
determined by the Secretary, have been engaged in the production or 
importation of potatoes or potato products, and who produced or imported 
more than 50 percent of the volume of the potatoes or potato products 
produced or imported by the producers and importers voting in the 
referendum.

[37 FR 5008, Mar. 9, 1972, as amended at 56 FR 40230, Aug. 14, 1991]



Sec. 1207.363  Proceedings after termination.

    (a) Upon the termination of this plan, the Board shall recommend not 
more than five of its members to the Secretary to serve as trustees for 
the purpose of liquidating the affairs of the

[[Page 53]]

Board. Such persons, upon designation by the Secretary, shall become 
trustees of all funds and property then in the possession or under 
control of the Board including claims for any funds unpaid or property 
not delivered or any other claim existing at the time of such 
termination.
    (b) The said trustees shall (1) continue in such capacity until 
discharged by the Secretary; (2) carry out the obligations of the Board 
under any contracts or agreements entered into by it pursuant to this 
plan; (3) account for all receipts and disbursements and deliver all 
property on hand, together with all books and records of the Board and 
of the trustees, to such person or persons as the Secretary may direct; 
and (4) upon the request of the Secretary execute such assignments or 
other instruments necessary or appropriate to vest in such person or 
persons full title and right to all of the funds, property, and claims 
vested in the Board of the trustees pursuant to this section.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this section shall be subject to 
the same obligation imposed upon the Board and upon the trustee.
    (d) A reasonable effort shall be made by the Board or its trustees 
to return to producers and importers any residual funds not required to 
defray the necessary expenses of liquidation. If it is found impractical 
to return such remaining funds to producers and importers, such funds 
shall be disposed of in such manner as the Secretary may determine to be 
appropriate.

[37 FR 5008, Mar. 9, 1972, as amended at 56 FR 40231, Aug. 14, 1991]



Sec. 1207.364  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this plan or of any regulation issued pursuant thereto, 
or the issuance of any amendment to either thereof, shall not (a) affect 
or waive any right, duty, obligation, or liability which shall have 
arisen or which may thereafter arise in connection with any provision of 
this plan or any regulation issued thereunder, or (b) release or 
extinguish any violation of this plan or any regulation issued 
thereunder, or (c) affect or impair any rights or remedies of the United 
States, or of the Secretary, or of any other person, with respect to any 
such violation.



Sec. 1207.365  Personal liability.

    No member of the Board shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever to any person 
for errors in judgments, mistakes, or other acts, either of commission 
or omission, as such member except for acts of willful misconduct, gross 
negligence, or those which are criminal in nature.



Sec. 1207.366  Separability.

    If any provision of this plan is declared invalid or the 
applicability thereof to any person or circumstance is held invalid, the 
validity of the remainder of this plan or applicability thereof to other 
persons or circumstances shall not be affected thereby.



                     Subpart--Rules and Regulations

    Source: 37 FR 17379, Aug. 26, 1972, unless otherwise noted.

                               Definitions



Sec. 1207.500  Definitions.

    (a) Unless otherwise defined in this subpart, definitions of terms 
used in this subpart shall have the same meaning as the definitions of 
such terms which appear in Subpart--Potato Research and Promotion Plan.
    (b) Processor. Processor means any person who commercially processes 
potatoes into potato products, including, but not restricted to, frozen, 
dehydrated, or canned potato products, potato chips and shoestrings, and 
flour.
    (c) Imported frozen or processed potatoes for ultimate consumption 
by humans. Imported frozen or processed potatoes for ultimate 
consumption by humans means products which are imported into the United 
States which the Secretary determines contain a substantial amount of 
potato.

[37 FR 17379, Aug. 26, 1972, as amended at 56 FR 40231, Aug. 14, 1991; 
57 FR 40083, Sept. 2, 1992]

[[Page 54]]

                                 General



Sec. 1207.501  Communications.

    All communications in connection with the Potato Research and 
Promotion Plan shall be addressed to: National Potato Promotion Board, 
7555 East Hampden Avenue, Suite 412, Denver, Colorado 80231.

[59 FR 44036, Aug. 26, 1994]



Sec. 1207.502  Determination of membership.

    (a) Pursuant to Sec. 1207.320 and the recommendation of the Board, 
annual producer memberships on the Board shall be determined on the 
basis of the average potato production of the 3 preceding years in each 
State as set forth in the Crop Production Annual Summary Reports issued 
by the Crop Reporting Board of the U.S. Department of Agriculture.
    (b) Pursuant to Sec. 1207.320 and the recommendation of the Board, 
annual importer memberships on the Board shall be determined on the 
basis of the average potato, potato product, and seed potato importation 
of the 3 preceding years as determined by the Board's records.

[56 FR 40231, Aug. 14, 1991]



Sec. 1207.503  Nominations.

    (a) Pursuant to Sec. 1207.322 of the plan, the Board shall assist 
producers in producing sections or States each year to nominate producer 
members for the Board. Such nominations may be conducted at meetings or 
by mail ballots. One individual shall be nominated for each position to 
become vacant. A list of nominees shall be submitted to the Secretary 
for consideration by November 1 of each year.
    (b) Pursuant to Sec. 1207.322 of the plan, the Board shall assist 
importers each year to nominate importer members for the Board. Such 
nominations may be conducted at meetings or by mail ballots.
    (c) Nomination meetings or mail balloting shall be well publicized 
with notice given to producers, importers, and the Secretary at least 10 
days prior to each meeting or mailing of ballots.
    (d) The public member shall be nominated by the producer and 
importer members of the Board.

[37 FR 17379, Aug. 26, 1972, as amended at 49 FR 2093, Jan. 18, 1984; 56 
FR 40231, Aug. 14, 1991; 62 FR 46179, Sept. 2, 1997]



Sec. 1207.504  Term of office.

    (a) The term of office of Board members shall be for three years and 
shall begin March 1 and end on the last day of February.
    (b) Board members shall serve during the term of office for which 
they are selected and have qualified and until their successors are 
selected and have qualified.

[38 FR 7123, Mar. 16, 1973, as amended at 49 FR 2093, Jan. 18, 1984]



Sec. 1207.505  Procedure.

    (a) The procedure for conducting the Board's meetings shall be in 
accordance with the bylaws adopted by the Board on June 7, 1972, and 
approved by the Secretary and any subsequent amendments adopted by the 
Board and approved by the Secretary.
    (b) Each importer member shall be entitled to not less than one 
vote. Importer members shall also be entitled to one additional vote for 
each 1 million hundredweight, or major fraction thereof, on a fresh-
weight basis, of imported tablestock potatoes, potato products, or seed 
potatoes, as determined by data on imports provided by the U.S. 
Department of Agriculture. The casting of such votes shall be determined 
by the importer members.

[62 FR 46179, Sept. 2, 1997]



Sec. 1207.506  Policy.

    (a) It shall be the policy of the Board to carry out an effective 
and continuous coordinated program of marketing research, development, 
advertising, and promotion in order to help maintain and expand existing 
domestic and foreign markets for potatoes and to develop new or improved 
markets.
    (b) It shall be the objective of the Board to carry out programs and 
projects which will provide maximum benefit to the potato industry and 
no undue preference shall be given to any of the various industry 
segments.

[[Page 55]]



Sec. 1207.507  Administrative Committee.

    (a) The Board shall annually select from among its members an 
Administrative Committee composed of producer members as provided for in 
the Board's bylaws, one or more importer members, and the public member. 
Selection shall be made in such manner as the Board may prescribe: 
Except that such committee shall include the Chairperson and six Vice-
Chairpersons, one of whom shall also serve as the Secretary and 
Treasurer of the Board.
    (b) The Administrative Committee shall act for the Board in 
implementing such marketing research, development, advertising, and/or 
promotion activities as directed by the Board, and shall, subject to 
such direction, be charged with developing and submitting to the 
Secretary for his approval specific programs or projects in the name of 
the Board. The Administrative Committee shall further act for the Board 
in authorizing contracts or agreements for the development and carrying 
out of such programs or projects and the payment of the costs thereof 
with funds collected pursuant to Sec. 1207.342 of the plan.
    (1) The Administrative Committee also shall act for the Board in 
contracting with cooperating agencies for the collection of assessments 
pursuant to Sec. 1207.513(d).
    (2) [Reserved]
    (c) The Board may assign such other administrative powers and duties 
to the Administrative Committee as it shall determine, and the 
Administrative Committee shall act on behalf of and in the name of the 
Board in all administrative matters.

[37 FR 17379, Aug. 26, 1972, as amended by Amdt. 6, 42 FR 55879, Oct. 
20, 1977; 44 FR 25621, May 2, 1979; 50 FR 25199, June 18, 1985; 56 FR 
40231, Aug. 14, 1991; 59 FR 44036, Aug. 26, 1994]



Sec. 1207.508  USDA costs.

    Pursuant to Sec. 1207.341 of the Plan the Board shall pay those 
administrative costs incurred by the U.S. Department of Agriculture for 
the conduct of its duties under the Plan as are determined periodically 
by the Secretary. Payment shall be due promptly after billing for such 
costs.

[49 FR 26202, June 27, 1984]

                               Assessments



Sec. 1207.510  Levy of assessments.

    (a) Domestic assessments. (1) An assessment rate of 2 cents per 
hundredweight shall be levied on all potatoes produced within the 50 
States of the United States.
    (2) No assessment shall be levied on potatoes grown in the 50 States 
of the United States by producers of less than 5 acres of potatoes.
    (b) Assessments on imports. (1) An assessment rate of 2 cents per 
hundredweight shall be levied on all tablestock potatoes imported into 
the United States for ultimate consumption by humans and all seed 
potatoes imported into the United States. An assessment rate of 2 cents 
per hundredweight shall be levied on the fresh weight equivalents of 
imported frozen or processed potatoes for ultimate consumption by 
humans. The importer of imported tablestock potatoes, potato products, 
or seed potatoes shall pay the assessment to the Board through the U.S. 
Customs Service at the time of entry or withdrawal for consumption of 
such potatoes and potato products into the United States.
    (2) The following conversion factors shall be used to determine the 
fresh weight equivalents of frozen and processed potato products:

Frozen potato products..........................................   .50
Canned potatoes.................................................   .636
Potato chips and shoestring potatoes............................   .245
Dehydrated potato products......................................   .14
Potato starch...................................................   .1111
 

    (3) The Harmonized Tariff Schedule (HTS) categories and assessment 
rates on imported tablestock potatoes and frozen or processed potatoes 
for ultimate consumption by humans and on imported seed potatoes are as 
follows:

------------------------------------------------------------------------
                                                         Assessment
  Tablestock potatoes, processed potato products,  ---------------------
                 and seed potatoes                  Cents/cwt   Cents/kg
------------------------------------------------------------------------
0701.10.0020......................................       2.00     0.0441
0701.10.0040......................................       2.00     0.0441
0701.90.1000......................................       2.00     0.0441
0701.90.5010......................................       2.00     0.0441
0701.90.5020......................................       2.00     0.0441
0701.90.5030......................................       2.00     0.0441
0701.90.5040......................................       2.00     0.0441

[[Page 56]]

 
0710.10.0000......................................       4.00     0.0882
2004.10.4000......................................       4.00     0.0882
2004.10.8020......................................       4.00     0.0882
2004.10.8040......................................       4.00     0.0882
2005.20.6060......................................     3.1446     0.0693
0712.10.0000......................................    14.2857     0.3149
1105.10.0000......................................    14.2857     0.3149
1105.20.0000......................................    14.2857     0.3149
2005.20.6040......................................    14.2857     0.3149
2005.20.2000......................................     8.1633     0.1800
1108.13.0010......................................    18.0018     0.3969
------------------------------------------------------------------------

    (4) No assessments shall be levied on otherwise assessable potatoes 
which are contained in imported products wherein potatoes are not a 
principal ingredient.
    (c) Potatoes and potato products used for nonhuman food purposes, 
other than seed, are exempt from assessment but are subject to the 
disposition of exempted potatoes provisions of Sec. 1207.515 of this 
subpart.
    (d) No more than one such assessment shall be made on any potatoes 
or potato products.

[57 FR 40083, Sept. 2, 1992, as amended at 58 FR 3359, Jan. 8, 1993; 59 
FR 44036, Aug. 26, 1994]



Sec. 1207.511  Determination of assessable quantity.

    The assessable quantity of potatoes in any lot shall be determined 
on the basis of utilization. Assessments shall be due on the entire lot 
handled for human consumption, seed, or unspecified purposes if there is 
no accounting made on the basis of the utilization of such lot. However, 
if the accounting identifies all or portions of such lot on the basis of 
utilization, assessments shall be due only on that portion utilized for 
human consumption and seed.



Sec. 1207.512  Designated handler.

    The assessment on each lot of potatoes produced in the 50 States of 
the United States and handled shall be paid by the designated handler as 
hereafter set forth.
    (a) Unless otherwise provided in paragraphs (a)(8), (b), and (c) of 
this section, the designated handler shall be the first handler of such 
potatoes. The first handler is the person who initially performs a 
handler function as heretofore defined. Such person may be a fresh 
shipper, processor, or other person who first places the potatoes in the 
channels of commerce. A producer who grades, packs, or otherwise 
performs handler functions thereby becomes a handler and as such assumes 
first handler responsibilities under this part. The following examples 
are provided to aid in identification of first handlers who are 
designated handlers:
    (1) Producer delivers field-run potatoes of his own production to a 
handler for preparation for market. The handler in this instance is the 
designated handler, regardless of whether he subsequently handles such 
potatoes for his own account or for the account of the producer.
    (2) Producer delivers field-run potatoes of his own production to a 
handler who takes title to such potatoes and places them in storage for 
subsequent handling. The handler who purchases such potatoes from the 
producer is the designated handler.
    (3) Producer delivers field-run potatoes to a commercial storage 
facility for the purpose of holding such potatoes under his own account 
for later sale. There is no designated handler in this instance since 
such potatoes have not been handled as heretofore defined and no 
assessment is due. The designated handler of such potatoes would be 
identified on the basis of subsequent handling of such potatoes.
    (4) Fresh shipper purchases a lot of potatoes from a producer, packs 
a portion of such potatoes for fresh market, and delivers the balance to 
a processor. The fresh shipper is the designated handler for all 
potatoes in the lot.
    (5) Handler purchases potatoes from a producer's field or storage 
for the purpose of preparing such potatoes for market or for 
transporting such potatoes to storage for subsequent handling. The 
handler who purchases such potatoes from the producer is the designated 
handler.
    (6) Producer packs and sells potatoes of his own production from the 
field, roadside stand, or storage to a consumer, itinerant trucker, or 
other buyer. In performing such handler functions the producer assumes 
the responsibility of designated handler.
    (7) Processor utilizes potatoes of his own production in the 
manufacture of

[[Page 57]]

potato chips, frozen, dehydrated, or canned products for human 
consumption. In so handling potatoes, the processor assumes the 
responsibility of designated handler.
    (8) Producer utilizes potatoes of his own production for seed in 
planting his subsequent crop. Such seed potatoes do not enter the 
current of commerce; there is no designated handler in this instance 
since the potatoes have not been handled as heretofore defined and no 
assessment is due. However, seed potatoes sold or shipped to other 
producers for planting or to other persons for subsequent disposition 
enter the current of commerce and are subject to assessment. The 
producer of seed potatoes shall be the designated handler of such 
potatoes shipped to other producers for planting and the assessment is 
due when he first sells or otherwise handles such potatoes. The first 
person who acquires seed potatoes from the producer thereof for 
subsequent disposition other than planting by said person shall be the 
designated handler of such potatoes. However, the seed producer will be 
the designated handler responsible for filing reports and making 
payments, unless he can show that the first person who obtained the 
potatoes from him disposed of them other than by planting. To show this 
the seed producer must submit to the Potato Board the name and address 
of the first person who obtained the potatoes from him and an invoice of 
sale or settlement sheet on which it is indicated that such person will 
be the designated handler and therefore will be responsible for the 
payment of the assessments. Only by showing this is the seed producer no 
longer considered the designated handler and therefore not liable for 
the assessments.
    (b) Any person who handles potatoes for a producer thereof under 
oral or written contract or agreement providing for the sale thereof 
shall be the designated handler for such potatoes, notwithstanding the 
fact that the producer may have graded, packed, or otherwise handled 
such potatoes and thereby became the first handler of such potatoes.
    Examples.  A cooperative marketing association, or other person, who 
makes an accounting to the producer, or pay the proceeds of the sale to 
the producer would be the designated handler responsible for the 
assessment.
    (c) Any processor who purchases potatoes from the producer thereof 
shall be the designated handler even though the producer may have 
graded, packed, or otherwise handled such potatoes and thereby became 
the first handler of such potatoes.

[37 FR 17379, Aug. 26, 1972, as amended by Amdt. 4, 40 FR 7893, Feb. 24, 
1975; Amdt. 7, 43 FR 9133, Mar. 6, 1978; Amdt. 8, 43 FR 51001, Nov. 2, 
1978; 56 FR 40231, Aug. 14, 1991]



Sec. 1207.513  Payment of assessments.

    (a) Time of payment. The assessment on domestically produced 
potatoes shall become due at the time a determination of assessable 
potatoes is made in the normal handling process, pursuant to 
Sec. 1207.511. If no determination is made of the utilization of a lot, 
assessments shall be due on the entire lot when it enters the current of 
commerce. The assessment on imported potatoes, potato products, and seed 
potatoes shall become due at the time of entry, or withdrawal, for 
consumption into the United States.
    (b) Responsibility for payment. (1) The designated handler is 
responsible for payment of the assessment on domestically produced 
potatoes. He may pay with no reimbursement from the producer. In the 
alternative, he may collect the assessment from the producer, or deduct 
such assessment from the proceeds paid to the producer on whose potatoes 
the assessment is made, provided he furnishes the producer with evidence 
of such payment. Any such collection or deduction of assessment shall be 
made not later than the time when the assessment becomes payable by the 
handler to the Board. Failure of the handler to collect or deduct such 
assessment does not relieve the handler of his obligation to remit the 
assessment to the Board.
    (2) The Customs Service shall collect payment of assessment on 
imported potatoes, potato products, and seed potatoes from importers and 
forward such assessment per agreement between the Customs Service and 
the U.S. Department of Agriculture. Importers shall be responsible for 
payment of assessment

[[Page 58]]

directly to the Board of any assessment due but not collected by the 
Customs Service at the time of entry, or withdrawal, for consumption 
into the United States. An importer may apply to the Board for 
reimbursement of assessments paid on exempted products.
    (c) Payment directly to the Board. (1) Except as provided in 
paragraphs (b) and (d) of this section, each designated handler or 
importer shall remit assessments directly to the Board by check, draft, 
or money order payable to the National Potato Promotion Board, or NPPB, 
not later than 10 days after the end of the month such assessment is due 
together with a report (preferably on Board forms) thereon.
    (2) All designated handlers, including a designated handler whose 
own production is handled and assessments to the Board paid by another 
designated handler, shall report to the Board:
    (i) Date of report (which is also date of payment to the Board).
    (ii) The name and address of the designated handler;
    (iii) The period potatoes were handled;
    (iv) The total quantity of potatoes determined to be assessable 
during the period potatoes were handled, pursuant to Sec. 1207.511.
    (3) Designated handlers who collect assessments from producers or 
withhold assessments from their accounts or pay the assessment 
themselves shall also include a list of all such producers whose 
potatoes were handled during the period, their addresses and the total 
assessable quantities handled for each such producer.
    (i) In lieu of such a list, the designated handler may substitute 
authentic copies of settlement sheets given to each producer provided 
such settlement sheets contain all the information listed above.
    (ii) The words ``final report'' shall be shown on the last report at 
the close of his marketing season or at the end of each fiscal period if 
such handler markets potatoes on a year-round basis.
    (4) Prepayment of assessment: (i) In lieu of the monthly assessment 
and reporting requirements of paragraph (b) of this section, the Board 
may permit designated handlers to make advance payments of their total 
estimated assessments for the season to the Board prior to their actual 
determination of assessable potatoes. Such procedure may be permitted 
when it is considered by the designated handler to be the more practical 
method of payment.
    (ii) Persons using such procedure shall provide a final annual 
accounting of actual handling and assessments.
    (iii) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board upon request.
    (d) Payment through cooperating agency. The Board may authorize 
other organizations to collect assessments in its behalf. In any State 
or area in which the Board has negotiated an agreement to collect 
assessments with an agency such as a State Potato Commission or a Potato 
Association approved by the Secretary, the designated handler shall pay 
the assessment to such agency in the time and manner, and with such 
identifying information as specified in such agreement. Such an 
agreement shall not provide any cooperating agency with authority to 
collect confidential information from handlers; to qualify, the 
cooperating agency must on its own accord have access to all information 
required by the Board for collection purposes. If the Board requires 
further evidence of payment than provided, it may acquire such evidence 
from individual designated handlers.
    (1) All such agreements are subject to the requirement of 
Sec. 1207.352 Confidential treatment, of the plan, the provisions of 
section 310(c) of the Act, and all applicable rules and regulations and 
financial safeguards in effect under the Act and the plan; and all 
affected persons shall agree to, and conduct their operations and 
activities in accordance with, such requirements.
    (2) [Reserved]

[37 FR 17379, Aug. 26, 1972, as amended by Amdt. 6, 42 FR 55879, Oct. 
20, 1977; 56 FR 40231, Aug. 14, 1991; 62 FR 46179, Sept. 2, 1997]



Sec. 1207.514  [Reserved]



Sec. 1207.515  Safeguards.

    The Board may require reports by designated handlers and importers 
on

[[Page 59]]

the handling, importation, and disposition of exempted potatoes. Also, 
authorized employees of the Board or the Secretary, may inspect such 
books and records as are appropriate and necessary to verify the reports 
on such disposition.

[37 FR 17379, Aug. 26, 1972, as amended at 56 FR 40232, Aug. 14, 1991]

                                 Records



Sec. 1207.532  Retention period for records.

    Each handler and importer required to make reports pursuant to this 
subpart shall maintain and retain such records for at least 2 years 
beyond the end of the marketing year of their applicability:
    (a) One copy of each report made to the Board; and
    (b) Such records as are necessary to verify such reports.

[37 FR 17379, Aug. 26, 1972, as amended at 56 FR 40232, Aug. 14, 1991]



Sec. 1207.533  Availability of records.

    (a) Each handler and importer required to make reports pursuant to 
this subpart shall make available for inspection by authorized employees 
of the Board or the Secretary during regular business hours, such 
records as are appropriate and necessary to verify reports required 
under this subpart.
    (b) Importers shall also maintain for 2 years records on the total 
quantities of potatoes imported and on the total quantities of potato 
products imported, and a record of each importation of potatoes, potato 
products, and seed potatoes including quantity, date, and port of entry, 
and shall make such records available for inspection by authorized 
employees of the Board or the Secretary during regular business hours.

[56 FR 40232, Aug. 14, 1991]



Sec. 1207.534  OMB control number 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 (OMB) under the 
provisions of 44 U.S.C. Chapter 35 and have been assigned OMB Control 
number 0581-0093.

[49 FR 23826, June 8, 1984]

                        Confidential Information



Sec. 1207.540  Confidential books, records, and reports.

    All information obtained from the books, records, and reports of 
handler and importers and all information with respect to refunds of 
assessments made to individual producers and importers shall be kept 
confidential in the manner and to the extent provided for in 
Sec. 1207.352 of the Plan.

[56 FR 40232, Aug. 14, 1991]



Sec. 1207.545  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive action proposed and prepared by the Board 
shall be submitted to the Secretary for his approval.



Sec. 1207.546  Personal liability.

    No member of the Board shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever to any person 
for errors in judgment, mistakes, or other acts, either of commission or 
omission, as such member, except for acts of willful misconduct, gross 
negligence, or those which are criminal in nature.



PART 1208--FRESH CUT FLOWERS AND FRESH CUT GREENS PROMOTION AND INFORMATION--Table of Contents




    Subpart A--Fresh Cut Flowers and Fresh Cut Greens Promotion and 
                            Information Order

                               Definitions

Sec.
1208.1  Act.
1208.2  Consumer information.
1208.3  Council.
1208.4  Cut flowers.
1208.5  Cut greens.
1208.6  Cut flowers and greens.
1208.7  Department.
1208.8  Exempt handler.
1208.9  Fiscal year.
1208.10  Gross sales price.
1208.11  Order.
1208.12  Part and subpart.
1208.13  Person.
1208.14  Promotion.

[[Page 60]]

1208.15  Producer that is a qualified handler.
1208.16  Qualified handler.
1208.17  Research.
1208.18  Retailer.
1208.19  Secretary.
1208.20  Substantial portion.
1208.21  State.
1208.22  Traditional retailer.
1208.23  Traditional retail florist organization.
1208.24  United States.

                      Establishment of the Council

1208.30  Establishment and membership of the Council.
1208.31  Election and appointment of members and alternates other than 
          retailers.
1208.32  Designation and appointment of retailer members and alternates.
1208.33  Failure to nominate.
1208.34  Terms of office and compensation.
1208.35  Vacancies.
1208.36  Procedure.
1208.37  Executive committee.

                        Activities of the Council

1208.40  Duties of the Council.
1208.41  Budgets and expenses.
1208.42  Plans, projects, budgets, and contracts.
1208.43  Other contracts and agreements.

                               Assessments

1208.50  Assessments.
1208.51  Influencing governmental action.
1208.52  Charges for late payments.
1208.53  Adjustment of accounts.
1208.54  Refunds of assessments and escrow account.
1208.55  Postponement of collections.
1208.56  Determinations.

                        Suspension or Termination

1208.60  Suspension and termination.
1208.61  Proceedings after termination.
1208.62  Effect of termination or amendment.

                       Reports, Books, and Records

1208.70  Books, records, reports, cost control, and audits of the 
          Council.
1208.71  Reports, books, and records of persons subject to this subpart.
1208.72  Confidential treatment.

                              Miscellaneous

1208.80  Right of the Secretary.
1208.81  Personal liability.
1208.82  Patents, copyrights, inventions, publications, and product 
          formulations.
1208.83  Amendments.
1208.84  Separability.
1208.85  OMB control numbers.

                    Subpart B--Rules and Regulations

                               Definitions

1208.100  Terms defined.

                               Assessments

1208.150  Procedures for postponement of collections.

    Authority: The Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Act of 1993, 7 U.S.C. 6801 et seq.

    Source: 59 FR 67143, Dec. 29, 1994, unless otherwise noted.



    Subpart A--Fresh Cut Flowers and Fresh Cut Greens Promotion and 
                            Information Order

                               Definitions



Sec. 1208.1  Act.

    Act means the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Act of 1993, Pub. L. 103-190, 7 U.S.C. Secs. 6801 et seq., 
and any amendments thereto.



Sec. 1208.2  Consumer information.

    Consumer information means any action or program that provides 
information to consumers and other persons on appropriate uses for cut 
flowers and greens under varied circumstances, or on the care and 
handling of cut flowers and greens.



Sec. 1208.3  Council.

    Council means the Fresh Cut Flowers and Fresh Cut Greens Promotion 
Council established pursuant to Sec. 1208.30 of this subpart and which 
shall be referred to as the National PromoFlor Council.



Sec. 1208.4  Cut flowers.

    Cut flowers include all flowers cut from growing plants that are 
used as fresh-cut flowers and that are produced under cover or in field 
operations, but not including foliage plants, floral supplies, or 
flowering plants.



Sec. 1208.5  Cut greens.

    Cut greens include all cultivated or noncultivated decorative 
foliage cut from growing plants that are used as fresh-cut decorative 
foliage (except Christmas trees) and that are produced

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under cover or in field operations, but not including foliage plants, 
floral supplies, or flowering plants.



Sec. 1208.6  Cut flowers and greens.

    The term cut flowers and greens means either cut flowers or cut 
greens, even though the cut flowers or cut greens are sold as separate 
commodities by a person in the floral marketing system, or cut flowers 
and cut greens collectively when both commodities are sold by a person 
in the floral marketing system.



Sec. 1208.7  Department.

    Department means the United States Department of Agriculture.



Sec. 1208.8  Exempt handler.

    Exempt handler means a person who would otherwise be considered to 
be a qualified handler except that the person's annual sales of cut 
flowers and greens to retailers and other exempt handlers is less than 
$750,000.



Sec. 1208.9  Fiscal year.

    Fiscal year means a 12-month period recommended by the Council and 
approved by the Secretary.



Sec. 1208.10  Gross sales price.

    Gross sales price means the total amount of the transaction in a 
sale of cut flowers and greens from a handler to a retailer or exempt 
handler including but not limited to charges such as containers, pre-
cooling, packing, sleeving, delivery, freight, shipping, or other 
charges necessary to the protection and preservation of the cut flowers 
and greens.



Sec. 1208.11  Order.

    Order means this subpart.



Sec. 1208.12  Part and subpart.

    Part means the Fresh Cut Flowers and Fresh Cut Greens Promotion and 
Information Order and all rules and regulations issued pursuant to the 
Act. The order itself shall be a subpart of such part.



Sec. 1208.13  Person.

    Person means any individual, group of individuals, firm, 
partnership, corporation, joint stock company, association, society, 
cooperative, or other legal entity.



Sec. 1208.14  Promotion.

    Promotion means any action determined by the Secretary to advance 
the image, desirability, or marketability of cut flowers and greens, 
including paid advertising.



Sec. 1208.15  Producer that is a qualified handler.

    Producer that is a qualified handler means an entity that is 
engaged: In the domestic production, for sale in commerce, of cut 
flowers and greens and that owns or shares in the ownership and risk of 
loss of the cut flowers and greens; or as a first processor of 
noncultivated greens, in receiving the greens from a person who gathers 
the greens for handling; and is subject to assessments as a qualified 
handler under the order.



Sec. 1208.16  Qualified handler.

    Qualified handler means a person operating in the cut flowers and 
greens marketing system that sells domestic or imported cut flowers and 
greens to retailers and exempt handlers and whose annual sales of cut 
flowers and greens to retailers and exempt handlers are $750,000 or 
more. The term does not include a person who only physically transports 
or delivers cut flowers and greens. However, the term does include, but 
is not limited to, the following entities when they have the requisite 
volume of sales of cut flowers and greens as provided in Secs. 1208.50 
and 1208.57:
    (a) A qualified wholesale handler--a person in business as a floral 
wholesale jobber (i.e., a person who conducts a commission or other 
wholesale business in buying and selling cut flowers and greens) or as a 
floral supplier (i.e., a person engaged in acquiring cut flowers and 
greens to be manufactured into floral articles or otherwise processed 
for resale) if the annual value of the qualified wholesale handlers sale 
of cut flowers and greens to retailers and exempt handlers is $750,000 
or more;
    (b) A manufacturer of bouquets for sale to retailers if the cut 
flowers and

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greens used in such articles are a substantial portion of the value of 
the manufactured floral articles;
    (c) A manufacturer of floral articles (other than bouquets) for sale 
to retailers if the cut flowers and greens used in such articles are a 
substantial portion of the value of the manufactured floral articles;
    (d) An auction house that clears the sale of cut flowers and greens 
to retailers and exempt handlers through a central clearinghouse;
    (e) A distribution center that is owned or controlled by a retailer 
if the predominant retail business activity of the retailer is floral 
sales. In addition to sales, non-sale transfers of cut flowers and 
greens by the distribution center to retail outlets, shall be counted 
for the purpose of applying the $750,000 minimum volume rule to the 
center and the value of such transfers shall be determined as provided 
in Secs. 1208.50 and 1208.57;
    (f) An importer that is a qualified handler--a person whose 
principal activity is the importation of cut flowers and greens into the 
United States (either directly or as an agent, broker, or consignee of 
any person or nation that produces or handles cut flowers and greens 
outside of the United States for sale in the United States) and who 
sells such cut flowers and greens to retailers and exempt handlers or 
directly to consumers, if the annual combined value of such sales 
determined as provided in Secs. 1208.50 and 1208.57 totals $750,000 or 
more;
    (g) A producer that is a qualified handler, e.g., a person who 
produces cut flowers and greens and who sells such cut flowers and 
greens directly to retailers or consumers if the annual combined value 
of such sales determined as provided in Secs. 1208.50 and 1208.57 totals 
$750,000 or more.



Sec. 1208.17  Research.

    Research means market research and studies limited to the support of 
advertising, market development, and other promotion efforts and 
consumer information efforts relating to cut flowers and greens, 
including educational activities.



Sec. 1208.18  Retailer.

    Retailer means a person who sells cut flowers and greens to 
consumers. The term includes:
    (a) All retail outlets that sell cut flowers and greens to consumers 
including retail florists, supermarkets, and other mass market retail 
outlets that sell such cut flowers or greens, except distribution 
centers defined in Sec. 1208.16(e) (i.e., centers that are owned or 
controlled by a retailer if the predominant retail business activity of 
the retailer is floral sales and whose sales and non-sale transfers of 
cut flowers and greens to retail outlets total $750,000 or more, 
determined as provided in this subpart) even though such centers may 
also make direct sales to consumers.
    (b) Distribution centers owned or controlled by a retailer (or 
distribution centers owned or controlled cooperatively by a group of 
such retailers) when the predominant business activity of the retailer 
or retailers is not the sale of cut flowers and greens to consumers; and
    (c) Distribution centers independently owned but operated primarily 
to provide food products to retail stores.



Sec. 1208.19  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec. 1208.20  Substantial portion.

    Substantial portion means that portion of the total value of 
manufactured floral articles that represents the value of the cut 
flowers and greens in such articles (expressed as a percentage factor) 
which the Council, with the approval of the Secretary, finds to be great 
enough to cause such articles to be classed as cut flowers and greens 
under this subpart.



Sec. 1208.21  State.

    State means each of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of

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the Northern Mariana Islands, the United States Virgin Islands, Guam, 
American Samoa, the Republic of the Marshall Islands, the Federated 
States of Micronesia, and the Republic of Palau (until such time as the 
Compact of Free Association is ratified).



Sec. 1208.22  Traditional retailer.

    Traditional retailer means any retailer, as defined in Sec. 1208.18, 
whose primary business is the sale of floral products, including fresh 
cut flowers and cut greens, or who has a specific department dedicated 
to the sale of floral products, including fresh cut flowers and cut 
greens.



Sec. 1208.23  Traditional retail florist organization.

    Traditional florist organization means membership organizations of 
traditional retailers with activities and membership which are 
nationwide in scope.



Sec. 1208.24  United States.

    United States means the States collectively.

                      Establishment of the Council



Sec. 1208.30  Establishment and membership of the Council.

    (a) A Fresh Cut Flowers and Fresh Cut Greens Promotion Council which 
shall be named the National PromoFlor Council is hereby established to 
administer the terms and provisions of this subpart. The Council shall 
consist of 25 members nominated by the floral industry and appointed by 
the Secretary, as provided in this subpart, each of whom shall have an 
alternate nominated and appointed in the same manner as members of the 
Council are nominated and appointed.
    (b) The membership of the Council shall be divided as follows:
    (1) 14 members and their alternates shall represent qualified 
wholesale handlers of domestic or imported cut flowers and greens;
    (2) Three members and their alternates shall represent producers 
that are qualified handlers of cut flowers and greens;
    (3) Three members and their alternates shall represent importers 
that are qualified handlers of cut flowers and greens;
    (4) Three members and their alternates shall represent traditional 
retailers of cut flowers and greens;
    (5) One member and alternate shall represent persons who produce cut 
flowers and greens in locations east of the Mississippi River; and
    (6) One member and alternate shall represent persons who produce cut 
flowers and greens in locations west of the Mississippi River.



Sec. 1208.31  Election and appointment of members and alternates other than retailers.

    (a) PromoFlor Organizing Group, Inc., an industry organizing 
committee, is designated as an election committee for the purpose of 
receiving the names of individuals who are engaged in the industry and 
who are prepared to serve as members (other than retailer members) of 
the Council or as alternates if elected as nominees and if selected by 
the Secretary for such positions.
    (b) The election committee shall, within five (5) days of the 
issuance of this subpart and with the assistance of the Secretary, 
request the submission of names of candidates for nominees from those 
segments of the industry for which nominees must be selected by an 
election process. These segments are: qualified wholesale handlers; 
importers who are qualified handlers; producers of cut flowers and 
greens who are qualified handlers; and producers of cut flowers and 
greens without regard to whether they are qualified handlers. 
Notification of the industry of the selection process by the election 
committee shall be by a news release to industry publications and where 
appropriate, newspapers of general circulation. In order to be assured 
of a place on the slate of candidates, the names of candidates must be 
received by the election committee not later than fifteen (15) days 
after the date of the first such news release.
    (c) Names of candidates shall be sought for the following seats on 
the Council:
    (1) 14 members and their respective alternates to represent 
qualified wholesale handlers of domestic or imported

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cut flowers and greens. Two such members and their respective alternates 
to represent the United States at large and two such members and their 
respective alternates to represent each of the following regions:
Region 1 (Pacific): Alaska, California, Hawaii, Oregon, Washington, the 
Commonwealth of the Northern Mariana Islands, Guam, the Federated States 
of Micronesia, American Samoa, the Republic of the Marshall Islands, and 
the Republic of Palau.
Region 2 (Inter-Mountain): Arizona, Arkansas, Colorado, Idaho, Kansas, 
Louisiana, Montana, Nebraska, Nevada, New Mexico, North Dakota, 
Oklahoma, South Dakota, Texas, Utah, and Wyoming.
Region 3 (North Central): Illinois, Indiana, Iowa, Michigan, Minnesota, 
Missouri, and Wisconsin.
Region 4 (Northeast): Connecticut, Maine, Massachusetts, New Hampshire, 
New Jersey, New York, Rhode Island, and Vermont.
Region 5 (Mid-Atlantic): Delaware, District of Columbia, Kentucky, 
Maryland, Ohio, Pennsylvania, Virginia, and West Virginia.
Region 6 (Southeast): Alabama, Florida, Georgia, Mississippi, North 
Carolina, Puerto Rico, South Carolina, Tennessee, and the United States 
Virgin Islands.
    (2) Three at-large members and their alternates to represent 
importers that are qualified handlers of cut flowers and greens.
    (3) Three members and their alternates to represent producers of cut 
flowers and greens that are qualified handlers of cut flowers and 
greens. There shall be one such member and alternate from each of the 
following production areas:

Production Area 1: California.
Production Area 2: Alaska, Arizona, Arkansas, Colorado, Hawaii, Idaho, 
Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, 
Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, 
Oregon, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming.
Production Area 3: Alabama, Connecticut, Delaware, Florida, Georgia, 
Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, 
New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, 
South Carolina, Tennessee, Vermont, Virginia, and West Virginia.

    (4) Two members and their respective alternates to represent persons 
who produce cut flowers and greens in locations east and west of the 
Mississippi River, respectively. There shall be one such member and 
alternate from the east, and one such member and alternate from the 
west.
    (d) Names of candidates for nominees may be submitted by state, 
regional (either regions within a state or regions that include more 
than one state as appropriate), or national industry organizations, 
provided that the organization has members engaged in the appropriate 
segment of the industry and from the region or production area if 
applicable, or by petition. The names of candidates submitted by an 
industry organization shall be accompanied by statements showing the 
role of the organization in the industry and general information about 
the membership it represents. No industry organization may submit more 
than two names of candidates for each seat on the Council. The names of 
candidates submitted by petition shall be accompanied by petitions in 
support of such candidate, signed by not less than ten (10) persons 
engaged in the appropriate segment of the industry and from the region 
or production area, if applicable, that the candidate will represent if 
ultimately selected by the Secretary. Submission of names of all 
candidates, whether by organizations or by petition, must include a 
certification by the candidate that the candidate is within the segment 
of the industry and the region or production area for which the 
candidate is nominated and, if elected as a nominee and if subsequently 
appointed by the Secretary, the candidate is willing to serve as a 
member or alternate member on the Council.
    (e) The names of candidates so submitted shall be reviewed and 
organized by the election committee for the preparation of slates of 
candidates. Separate slates for each segment and region of the industry 
shall be prepared as appropriate. There must be at least four candidates 
for each position on the Council for which nominees must be selected by 
election. No candidate may seek nomination for more than one seat on the 
Council. In a case where a candidate is nominated more than once, the 
election committee will decide which place on the ballot the candidate's 
name will appear. If insufficient candidates have been proposed for any 
seat, the election committee shall

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select additional candidates as required. The slates shall be prepared 
not later than 5 days after the date for receiving names of candidates 
by the election committee.
    (f) After all candidates have been listed on the slates of 
candidates, the slates shall be supplied to an independent certified 
public accounting (CPA) firm contracted by the election committee. The 
ballots shall be printed and distributed by the CPA firm by U.S. mail, 
or other means selected by the election committee, not later than 15 
days after the slates of candidates are received from the election 
committee. To the maximum extent practicable, ballots will be 
distributed to all persons who are eligible to vote for candidates under 
this subpart in the segment of the industry, the region, or in the 
United States as a whole, as applicable, to which the ballot pertains. 
Ballots that are not returned to the CPA firm within 20 days shall be 
declared invalid. The votes for each candidate on the ballots shall be 
tallied by the CPA firm at the end of the voting period and the results 
furnished to the election committee. The election committee shall issue 
a news release setting forth the names of the candidates and the number 
of votes received by each candidate within 5 days after the voting 
period has ended. Those candidates on each of the ballots who rank 
first, second, third, and fourth in the number of votes received for 
each seat on the Council shall be declared the nominees for each such 
seat.
    (g) The names of those declared the nominees for each of the seats 
on the Council representing the various segments of the industry and the 
designated regions or production areas, where applicable, shall be 
submitted to the Secretary in order of rank with the number of votes 
received by each such nominee shown after the nominee's name and with 
the recommendation that the nominee with the most votes for each of such 
seats be declared the member of the Council and the nominee with the 
next greatest number of votes for each of such seats be declared the 
alternate member. The Secretary shall then appoint from the nominees so 
provided the members and their alternates for each of such seats on the 
Council.
    (h) Subsequent elections of nominees and appointment of members and 
alternates as terms expire shall be conducted by the Council or the 
Council staff in the manner similar to that described above except that 
the Council shall act as the election committee for which provision is 
made in this section. The nomination and election process shall be 
completed at least 90 days before the beginning of each nominee's term 
of office.
    (i) The Council shall periodically review the cut flower and greens 
market in the United States for changes in the geographic distribution 
of importing, producing, and marketing facilities and shall, if 
appropriate, recommend changes in the regions and production areas 
described in this section to the Secretary for approval.



Sec. 1208.32  Designation and appointment of retailer members and alternates.

    (a) Four nominations for one of the traditional retailer members of 
the Council and that member's alternate shall be received from the 
American Floral Marketing Council (AFMC) or a successor entity.
    (b) Four nominations for each of two members of the Council and 
their alternates shall be received from national traditional retail 
florist organizations other than the AFMC. In order to be eligible to 
submit nominations for members and alternates to serve on the Council, 
such organizations must certify that their activities and membership are 
nationwide in scope. No more than four nominations for each seat may be 
submitted by each organization.
    (c) The Secretary shall choose from among the names submitted by the 
AFMC the names of the member and alternate who shall fill the seat on 
the Council representing the AFMC. The Secretary shall choose from among 
the names submitted by national traditional retail florist organizations 
other than the AFMC the two members and their alternates who shall fill 
the other two seats on the Council representing traditional retailers.

[[Page 66]]



Sec. 1208.33  Failure to nominate.

    If any group of qualified wholesale handlers, producers that are 
qualified handlers, importers that are qualified handlers, persons who 
produce cut flowers and greens, or traditional retailers fails to 
nominate individuals for appointments as members or alternates of the 
Council, the Secretary may appoint individual(s) from the appropriate 
segment(s), region(s), or area(s) of the industry to fill the vacancy or 
vacancies. The failure of any nominee to promptly indicate the nominee's 
willingness to serve in such manner as may be prescribed by the 
Secretary shall be treated as a failure to nominate.



Sec. 1208.34  Term of office and compensation.

    (a) The term of office for each member or alternate member of the 
Council shall be three years. As provided in the Act, the initial 
appointments on the Council shall be as follows: nine of the member 
appointments shall be for two-year terms, eight of the appointments 
shall be for three-year terms, and eight of the appointments shall be 
for four-year terms. Alternate members shall have the same terms of 
office as their respective members. The term of office on the initial 
Council shall be apportioned as follows:
    (1) One of the two qualified wholesale handler members representing 
each of Regions 1, 2, 4, and 5 shall serve two-year terms of office; one 
of the two qualified wholesale handler members representing each of 
Regions 3, 4, and 6 shall serve three-year terms of office; and one of 
the two qualified wholesale handler members representing each of Regions 
1, 2, 3, 5, and 6 shall serve four-year terms of office.
    (2) The two qualified wholesale handler members representing the 
United States at large shall serve terms of office of two years and 
three years respectively.
    (3) The members representing producers that are qualified handlers 
from Production Areas 1 and 2 shall serve three-year terms of office, 
and the member representing producers that are qualified handlers from 
Production Area 3 shall serve a four-year term of office.
    (4) The three members representing importers that are qualified 
handlers shall serve terms of office of two, three, and four years 
respectively.
    (5) The members representing producers that produce cut flowers and 
greens east and west of the Mississippi River shall each serve two-year 
terms of office.
    (6) The member representing retailers nominated by the AFMC shall 
serve a two-year term of office. The two members representing retailers 
not nominated by the AFMC shall serve three-year and four-year terms of 
office respectively.
    (b) No member of the Council may serve more than two consecutive 
terms of three years, except that any member serving an initial term of 
four years or two years may serve an additional term of three years.
    (c) The term of office for the initial Council shall begin 
immediately following appointment by the Secretary. Should the term of 
office of the initial Council begin before January 1, 1995, the time 
between appointment and January 1, 1995, shall not count towards the 
initial term of office. Should the term of office of the initial Council 
begin later than January 1, 1995, all time until the following January 
will count as a full year toward the terms of office set out in this 
section. In subsequent years, the term of office shall begin on January 
1 or such other period which may be recommended by the Council and 
approved by the Secretary.
    (d) Members of the Council shall serve without compensation, but 
each member or alternate member acting in place of a member shall be 
reimbursed for the expenses incurred in performing duties as a member of 
the Council.



Sec. 1208.35  Vacancies.

    (a) Should any Council member position become vacant, the alternate 
of that member shall automatically assume the position of said member. 
Candidates for the vacant alternate member position which resulted from 
the alternate filling the vacant member position shall be nominated in 
the manner specified in Secs. 1208.31 and 1208.32. Provided, That a 
vacancy will not be required to be filled if the unexpired term is less 
than six months.

[[Page 67]]

    (b) Should the positions of both a member and such member's 
alternate become vacant, Candidates to serve the unexpired terms of 
office for such member and alternate shall be nominated in the manner 
specified in Secs. 1208.31 and 1208.32. Provided, That a vacancy will 
not be required to be filled if the unexpired term is less than six 
months.
    (c) If a member of the Council consistently refuses to perform the 
duties of a member of the Council, if a member of the Council fails to 
submit reports and remit assessments required under this part, or if a 
member of the Council is known to be engaged in acts of dishonesty or 
willful misconduct, the Council may recommend to the Secretary that the 
member be removed from office. If the Secretary finds that the 
recommendation of the Council shows adequate cause, the Secretary shall 
remove such member from office. Further, without recommendation of the 
Council, a member may be removed by the Secretary upon a showing of 
adequate cause, if the Secretary determines that the person's continued 
service would be detrimental to the achievement of the purposes of the 
Act.



Sec. 1208.36  Procedure.

    (a) Thirteen (13) Council members, including alternates acting in 
place of members of the Council, shall constitute a quorum: Provided, 
That such alternates shall serve only when the member is absent from a 
meeting or is disqualified. Any action of the Council shall require the 
concurring votes of a majority of those present and voting. At assembled 
meetings, all votes shall be cast in person.
    (b) In lieu of voting at an assembled meeting, and, when in the 
opinion of the chairperson of the Council such action is considered 
necessary, or for matters of an emergency nature when there is not 
enough time to call an assembled meeting, the Council may act upon a 
majority of concurring votes of its members cast by mail, telegraph, 
telephone, facsimile, or by other means of communication: Provided, That 
each member or alternate acting for a member receives an accurate, full, 
and substantially identical explanation of each proposition. Telephone 
votes shall be promptly confirmed in writing. All votes shall be 
recorded in the Council minutes.



Sec. 1208.37  Executive committee.

    (a) The Council is authorized to appoint an executive committee of 
not more than nine persons from among its members. Initially, the 
executive committee shall be composed of the following:
    (1) Four members representing qualified wholesale handlers;
    (2) Two members representing producers that are qualified handlers;
    (3) Two members representing importers that are qualified handlers; 
and
    (4) One member representing traditional retailers.
    (b) After the initial appointments, each appointment to the 
executive committee shall be made so as to ensure that the committee 
reflects, to the maximum extent practicable, the membership composition 
of the Council as a whole.
    (c) Each initial appointment to the executive committee shall be for 
a term of two years. After the initial appointments, each appointment to 
the executive committee shall be for a term of one year.
    (d) The Council may delegate to the executive committee the 
authority of the Council under this subpart to hire and manage staff and 
conduct the routine business of the Council consistent with such 
policies as are determined by the Council.

                        Activities of the Council



Sec. 1208.40  Duties of the Council.

    The Council shall have the following duties, in addition to the 
duties specified in other sections of this subpart:
    (a) Administer this subpart in accordance with the terms and 
provisions of this subpart;
    (b) Make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) Appoint members of the Council to serve on the executive 
committee, as provided in Sec. 1208.37;
    (d) Employ such persons as the Council determines are necessary, and 
set the compensation and define the duties of the persons;

[[Page 68]]

    (e) Develop budgets for the implementation of this subpart and 
submit the budgets to the Secretary for approval, and propose and 
develop (or receive and evaluate), approve, and submit to the Secretary 
for approval plans and projects for cut flowers and greens promotion, 
consumer information, or related research;
    (f) Implement plans and projects for cut flowers and greens 
promotion, consumer information, or related research, or contract or 
enter into agreements with appropriate persons to implement the plans 
and projects and pay the costs of the implementation of contracts and 
agreements with funds received under this subpart;
    (g) Keep minutes, books, and records which clearly reflect all of 
the acts and transactions of the Council. Minutes of all meetings shall 
be promptly provided to the Secretary;
    (h) Evaluate ongoing and completed plans and projects for cut 
flowers and greens promotion, consumer information, or related research;
    (i) Receive, investigate, and report to the Secretary complaints of 
violations of this subpart and direct that the staff of the Council 
periodically review the list of importers of cut flowers and greens 
provided by the Customs Service to determine whether persons on the list 
are subject to this subpart;
    (j) Recommend to the Secretary amendments to this subpart;
    (k) Invest, pending disbursement under a plan or project, funds 
collected through assessments only in: Obligations of the United States 
or any agency of the United States, general obligations of any State or 
any political subdivision of a State, any interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal Reserve 
System, or obligations fully guaranteed as to principal and interest by 
the United States. Income from any such invested funds may be used only 
for a purpose for which the invested funds may be used.
    (l) Prepare and submit to the Secretary such reports as may be 
prescribed for appropriate accounting with respect to the receipt and 
disbursement of funds entrusted to the Council monthly, or at such times 
as prescribed by the Secretary. Monthly financial statements shall be 
submitted to the Department and shall include at least:
    (1) A balance sheet, and
    (2) An expense budget comparison showing expenditures during the 
month, year-to-date expenditures, and an unexpended budget. Upon 
request, a summary of checks issued by the Council is to be made 
available. Reports shall be submitted within 30 days after the end of 
each month.
    (m) To cause the books of the Council to be audited by an 
independent certified public accountant at the end of each fiscal 
period, and at such other times as the Council or the Secretary may deem 
necessary. The report of each audit shall show the receipt and 
expenditure of funds collected pursuant to this part, and shall be 
submitted to the Secretary.
    (n) To give the Secretary the same notification, written or oral, as 
provided to Council members concerning all conference calls and 
meetings, including executive, advisory, subcommittee, and other 
meetings related to Council matters, and to grant the Secretary access 
to all such calls and meetings;
    (o) To follow the Department's equal opportunity/civil rights 
policies; and
    (p) Provide the Secretary such information as the Secretary may 
require.



Sec. 1208.41  Budgets and expenses

    (a) The Council shall promptly adopt and forward to the Secretary 
for approval its determination of the beginning and ending dates of an 
annual fiscal period to be used by the Council for budgeting and 
accounting purposes.
    (b) The Council shall submit annual budgets of its anticipated 
expenses and disbursement in the administration of this subpart, 
including the projected costs for the promotion of cut flowers and 
greens, consumer information, and related research plans and projects to 
the Secretary for approval. The first budget, which shall be submitted 
promptly after the effective date of this subpart, shall cover such 
period as may remain before the beginning of the next fiscal year. If 
such fiscal period is 90 days or less, the first budget shall cover such 
period, as well as the next fiscal year. Thereafter, the Council

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shall submit budgets for each succeeding fiscal year not less than 30 
days before the beginning of such fiscal year.
    (c) The Council is authorized to incur such expenses (including 
provision for a reasonable reserve for operating contingencies) as the 
Secretary finds are reasonable and likely to be incurred by the Council 
for its maintenance and functioning and to enable it to exercise its 
powers and perform its duties in accordance with this subpart. Expenses 
authorized in this paragraph shall be paid from assessments collected 
pursuant to Sec. 1208.50, or other funds available to the Council.
    (d) The Council shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1208.50, or from other funds available to the 
Council, for administrative costs incurred by the Department to carry 
out its responsibilities pursuant to this subpart after December 29, 
1994.
    (e) The Council shall establish an interest-bearing escrow account 
with a bank that is a member of the Federal Reserve System and shall 
deposit in such account an amount equal to the percentage determined by 
the Council to be held in reserve for the payment of refunds pursuant to 
Sec. 1208.54.
    (f) The Council may, with the approval of the Secretary, borrow 
money for the payment of administrative expenses, subject to the same 
fiscal, budget, and audit controls as other funds of the Council.



Sec. 1208.42  Plans, projects, budgets, and contracts.

    The Council shall develop and implement plans and projects for the 
promotion of, and the dissemination of information about, cut flowers 
and greens, as well as for research related to cut flowers and greens in 
accordance with the following:
    (a) The Council shall develop, or contract for the development of, 
plans and projects for advertising, sales promotion, other promotion, 
and for dissemination of consumer information, with respect to cut 
flowers and greens, and may disburse such funds as necessary for these 
purposes after such plans or projects have been submitted to, and 
approved by, the Secretary. Any such plan or project shall be directed 
toward increasing the general demand for cut flowers and greens and 
shall not make reference to a private brand or trade name, point of 
origin, or source of supply, except that the Council may offer such 
plans and projects of the Council for use by commercial parties such as 
local, regional, State, or national floral industry organizations, and 
then only under terms and conditions prescribed by the Council and 
approved by the Secretary. No plan or project may make use of unfair or 
deceptive acts or practices with respect to quality or value.
    (b) The Council shall develop, or contract for the development of, 
plans and projects for research on the development of both established 
and new markets for cut flowers and greens and for research with respect 
to postharvest physiology, distribution, sale, marketing, use, and 
promotion of cut flowers and greens, as well as the dissemination of 
consumer information concerning cut flowers and greens. The Council is 
authorized to develop, or contract for the development of, such plans 
and projects for other research with respect to the marketing, 
promotion, and dissemination of information about cut flowers and greens 
as it finds appropriate. The Council may disburse such funds as 
necessary for these purposes after such plans or projects have been 
submitted to, and approved by, the Secretary.
    (c) The Council shall submit to the Secretary, for approval before 
implementation, any contracts for development of plans and projects, as 
well as such plans and projects as may be developed by or approved by 
the Council for advertising, promotion, dissemination of information, 
and research. All such submissions to the Secretary shall be accompanied 
by a proposed budget showing the estimated expense to be incurred and 
the availability of revenue from which such expense may be paid. On 
approval of any such submission, the Council may proceed with the 
contract, plan or project and incur the expenses necessary to carry it 
out. Contracts or agreements to be submitted to the Secretary and 
entered into if approved by the Secretary shall, among such other 
matters as may be required, provide that:

[[Page 70]]

    (1) The contracting or agreeing party shall develop and submit to 
the Council a plan or project, together with a budget that includes the 
estimated costs to be incurred for the plan or project;
    (2) The plan or project shall become effective on the approval of 
the Secretary; and
    (3) The contracting or agreeing party shall:
    (i) Keep accurate records of all of the transactions of the party;
    (ii) Account for funds received and expenses;
    (iii) Make periodic reports to the Council of activities conducted; 
and
    (iv) Make such other reports as the Council or the Secretary may 
require.
    (d) The Council, from time to time, may seek advice from and consult 
with experts from the production, import, wholesale, and retail segments 
of the cut flowers and greens industry to assist in the development of 
promotion, consumer information, and related research plans and 
projects. For these purposes, the Council may appoint special committees 
composed of persons other than Council members. A committee so appointed 
may not provide advice or recommendations to a representative of an 
agency, or an officer, of the Federal Government, and shall consult 
directly with the Council.



Sec. 1208.43  Other contracts and agreements.

    The Council may enter into contracts or agreements for 
administrative services, including contracts of employment, as may be 
required to conduct its business in accordance with such fiscal period 
budgets as may have been approved by the Secretary. To the extent 
appropriate to the contract involved, contracts entered into by the 
Council under the authority of this section shall contain provisions 
comparable to those described in Sec. 1208.42(c).

                               Assessments



Sec. 1208.50  Assessments.

    (a) Each qualified handler, as defined in Sec. 1208.16, shall pay to 
the Council an assessment in an amount determined in accordance with 
this subpart, on each sale of cut flowers and greens to a retailer or an 
exempt handler (as defined in Sec. 1208.8) and on each non-sale transfer 
of cut flowers and greens to a retailer by a qualified handler that is a 
distribution center; as well as each direct sale of cut flowers and 
greens to a consumer by a producer that is a qualified handler, or by an 
importer that is a qualified handler. Such assessments shall be remitted 
by each qualified handler to the Council or its agent within 60 days 
after the end of the month in which the sale or non-sale transfer 
subject to assessment under this subpart took place. Such assessments 
shall be paid at the following rates:
    (1) During the first three years after December 29, 1994.
    (i) Except as provided in paragraph (a)(1)(ii) of this section, the 
rate shall be one-half of 1 (0.5) percent of the gross sales price of 
the cut flowers and greens sold;
    (ii) In the case of non-sale transfers to a retailer by a qualified 
handler that is a distribution center and in the case of direct sales by 
importers or producers, the rate shall be one-half of 1 (0.5) percent of 
the amount of each transaction's valuation for assessment as provided in 
paragraph (b);
    (2) After the first three years from December 29, 1994, the uniform 
assessment rate may be increased or decreased annually by not more than 
one-quarter of 1 (0.25) percent of the gross sales price of a product 
sold; or in the case of other transactions the amount of such 
transactions, except that the assessment rate may not exceed 1 percent 
of the gross sales price or the transaction amount. Changes in the rate 
of assessment may only be made if such changes are adopted by a two-
thirds majority vote of the Council and approved by the Secretary (after 
public notice and opportunity for comment as provided in the Act) as 
being necessary to carry out the objectives of the Act. Any such change 
so approved by the Secretary may be put into effect without a referendum 
but shall be announced not less than 30 days prior to the beginning of a 
fiscal year.
    (b) Each non-sale transfer of cut flowers and greens to a retailer 
from a qualified handler that is a distribution center shall be treated 
as a sale of cut

[[Page 71]]

flowers and greens to a retailer and shall be assessable. Each direct 
sale of cut flowers and greens to a consumer by a producer who is a 
qualified handler or an importer who is a qualified handler shall be 
assessable. These transactions shall be determined to have the following 
valuations for assessment purposes:
    (1) In the case of a non-sale transfer of cut flowers and greens 
from a distribution center that is a qualified handler and each direct 
sale of cut flowers and greens to a consumer by an importer that is a 
qualified handler, the amount of the valuation of the cut flowers and 
greens for assessment purposes shall be the price paid by the 
distribution center or importer to acquire the cut flowers and greens, 
and determined by multiplying the acquisition price by a uniform factor 
of 1.43 to represent the markup of a wholesale handler on a sale to a 
retailer.
    (2) In the case of a direct sale to a consumer by a producer who is 
a qualified handler, the valuation of the cut flowers and greens for 
assessment purposes shall be equal to an amount determined by 
multiplying the price paid by the consumer by a uniform factor of 0.50 
to represent the cost of producing the article and the markup of a 
wholesale handler on a sale to a retailer.
    (3) The Council may consider and adopt changes in the uniform 
factors specified in paragraphs (b) (1) and (2) of this section. Any 
such change shall not become effective until it has been adopted by a 
majority vote of the Council and approved by the Secretary after public 
notice and opportunity to comment on such change as provided in the Act. 
Changes so adopted and approved shall become effective at the beginning 
of the next fiscal year.
    (c) The collection of assessments shall commence on or after a date 
established by the Secretary, and shall continue until terminated by the 
Secretary. If the Council is not constituted on the date the first 
assessments are to be remitted, the Secretary shall have the authority 
to receive assessments on behalf of the Council and may hold such 
assessments in an interest bearing account until the Council is 
constituted, and the funds may be transferred to the Council.
    (d) Assessments shall be determined on the basis of the gross sales 
price. The Council, with the approval of the Secretary, may make uniform 
adjustments in determining the gross sales price when such adjustments 
reflect changes in trade practices or ensure equitable treatment of all 
qualified handlers paying assessments.
    (e) No assessments may be levied on any sale of cut flowers and 
greens for export from the United States. The Council is authorized to 
establish procedures for the verification of exports.
    (f) In general, assessment funds (less refunds, if any) shall be 
used:
    (1) For payment of costs incurred in implementing and administering 
this subpart;
    (2) To provide for a reasonable reserve to be maintained from 
assessments to be available for contingencies; and
    (3) To cover the administrative costs incurred by the Secretary in 
implementing and administering this Act.

    Note to Sec. 1208.50: The requirement to pay assessments is 
terminated as of July 29, 1997.


[59 FR 67143, Dec. 29, 1994, as amended at 62 FR 40257, July 28, 1997]



Sec. 1208.51  Influencing governmental action.

    No funds collected by the Council shall in any manner be used for 
the purpose of influencing legislation or government action or policy, 
except to develop and recommend to the Secretary amendments to this 
subpart.



Sec. 1208.52  Charges for late payments.

    Any assessment due the Council pursuant to Sec. 1208.50 that is not 
paid on time shall be increased 1.5 percent each month it remains unpaid 
beginning with the day following the date such assessment was due. If 
not paid in full, any remaining amount due, which shall include any 
unpaid charges previously made pursuant to this section, shall be 
increased at the same rate on the corresponding day of each month 
thereafter until paid. For the purpose of this section, any assessment 
that was determined at a date later than prescribed by this subpart 
because of a failure to submit a report when due

[[Page 72]]

shall be considered to have been payable by the date it would have been 
due if the report had been filed when due. The timeliness of a payment 
to the Council shall be based on the applicable postmark date or the 
date actually received by the Council, whichever is earlier.



Sec. 1208.53  Adjustment of accounts.

    Whenever the Council or the Secretary determines through an audit of 
a person's reports, records, books, or accounts or through some other 
means that additional money is due the Council or that money is due such 
person from the Council, such person shall be notified of the amount 
due. The person shall then remit any amount due the Council by the next 
date for remitting assessments. Overpayments shall be credited to the 
account of the person remitting the overpayment and shall be applied 
against amounts due in succeeding months.



Sec. 1208.54  Refunds of assessments and escrow account.

    (a) Any qualified handler may demand and receive from the escrow 
account, subject to the limitation on such payments provided in 
paragraph (c), a one-time refund of any assessments paid by or on behalf 
of the handler if the handler requests the refund before the initial 
referendum on this subpart is held and this subpart is rejected by the 
voters when it is submitted to the referendum. Such a refund will be 
paid only if all of the following conditions are met:
    (1) The handler has paid the assessments sought to be refunded and 
has submitted proof of such payment;
    (2) The handler does not support the program established under this 
subpart and so states in the handler's demand for a refund;
    (3) The handler's demand for a refund is made on a form specified by 
the Council and filed not less than 10 days prior to the date when the 
initial referendum, conducted pursuant to Sec. 1208.60(a) to ascertain 
whether this subpart shall remain in effect, is scheduled to begin; and
    (4) This subpart is not approved by a simple majority of the votes 
cast by qualified handlers in the initial referendum.
    (b) The Council shall establish an escrow account to be used for 
assessment refunds, as needed, and shall place into the account an 
amount equal to 10 percent of the total amount of assessments collected 
during the period beginning on December 29, 1994 and ending on the date 
the results of the initial referendum are issued and the initial 
referendum is completed.
    (c) If the amount in the escrow account is not sufficient to refund 
the total amount of assessments demanded by all qualified handlers 
determined eligible for refunds and this subpart is not approved in the 
referendum, the Council shall prorate the amount of all such refunds 
among all eligible qualified handlers that demand the refund. If there 
is any amount in excess of the amount needed to pay refunds and 
expenses, it shall be returned pro rata to those who paid assessments. 
If this subpart is approved in the referendum, there shall be no refunds 
made, and all funds in the escrow account shall be returned to the 
Council for use by the Council in accordance with the other provisions 
of this subpart.



Sec. 1208.55  Postponement of collections.

    (a) The Council may grant a postponement of the payment of an 
assessment under this subpart for any qualified handler that establishes 
that it is financially unable to make the payment. In order that a 
qualified handler that is financially unable to pay an assessment may 
have the opportunity to petition the Council to postpone payment of such 
an assessment, as provided in the Act, the Council shall develop forms 
and procedures for this purpose as expeditiously as possible and submit 
them to the Secretary for approval and issuance after notice and an 
opportunity for public comment thereon. Such procedures shall, among 
other things, require that the handler demonstrate the handler's 
inability to pay through the submission of an opinion prepared by an 
independent certified public accountant (at the handler's expense) and 
any other documentation specified therein to the effect that the handler 
is insolvent or will be unable to continue to operate if

[[Page 73]]

the handler is required to pay the assessment when due.
    (b) The procedures for obtaining a postponement of payment to be 
developed by the Council for submission to the Secretary shall also 
include provisions with respect to the period of postponement, the 
conditions of payment that may be imposed and the basis, if any, on 
which further extensions of the time for payment will be granted so as 
to appropriately reflect the demonstrated needs of the qualified 
handler.



Sec. 1208.56  Determinations.

    (a) The Council is authorized to make the determinations required by 
this subpart as to the status of persons as qualified handlers and 
exempt handlers including determinations of the status of persons as 
qualified wholesale handlers, distribution centers that are qualified 
handlers, producers that are qualified handlers, importers that are 
qualified handlers, as well as such other determinations of status and 
facts as may be required for the effective administration of this 
subpart. Based on such determinations, the Council from time to time 
shall publish lists of exempt handlers who are not required to pay 
assessments, and lists of qualified handlers who are required to pay 
assessments under this subpart.
    (b) For the purpose of applying the $750,000 annual sales limitation 
to a specific person in order to determine the status of the person as a 
qualified handler or an exempt handler or to a specific facility in 
order to determine the status of the facility as an eligible separate 
facility for the purpose of referenda, the Council is authorized to 
determine the annual sales volume of a person or facility.
    (c) Any such determination shall be based on the sales of cut 
flowers and greens by the person or facility during the most recently-
completed calendar year, except that in the case of a new business or 
other operation for which complete data on sales during all or part of 
the most recently-completed calendar year are not available to the 
Council, the determination may be made using an alternative time period 
or other alternative procedures as the Council may find appropriate. In 
making such determinations, the Council is authorized to make 
attributions in accordance with paragraphs (c) (1) through (4) of this 
section and for the purpose of determining the annual sales volume of a 
person or a separate facility of a person, sales attributable to a 
person shall include:
    (1) In the case of an individual, sales attributable to the spouse, 
children, grandchildren, parents, and grandparents of the person;
    (2) In the case of a partnership or member of a partnership, sales 
attributable to the partnership and other partners of the partnership;
    (3) In the case of an individual or a partnership, sales 
attributable to any corporation or other entity in which the individual 
or partnership owns more than 50 percent of the stock or (if the entity 
is not a corporation) that the individual or partnership controls; and
    (4) In the case of a corporation, sales attributable to any 
corporate subsidiary or other corporation or entity in which the 
corporation owns more than 50 percent of the stock or (if the entity is 
not a corporation) that the corporation controls.
    (d) The Council is also authorized to attribute any stock ownership 
interest as may be required to carry out this subpart. In doing so a 
stock ownership interest in the entity that is owned by the spouse, 
children, grandchildren, parents, grandparents, or partners of an 
individual, or by a partnership in which a person is a partner, or by a 
corporation more than 50 percent of the stock of which is owned by a 
person, shall be treated as owned by the individual or person.
    (e) For the purpose of this subpart, the Council, with the approval 
of the Secretary, may require a person who sells cut flowers and greens 
to retailers to submit reports to the Council on annual sales by the 
person and on stock ownership.

                        Suspension or Termination



Sec. 1208.60  Suspension and termination.

    If the Secretary finds that this subpart, or any provision of this 
subpart, obstructs or does not tend to effectuate

[[Page 74]]

the policy of the Act, the Secretary shall terminate or suspend the 
operation of this subpart or the provision of this subpart under such 
terms as the Secretary determines are appropriate. Such termination or 
suspension shall not be considered an order within the meaning of such 
term in the Act.



Sec. 1208.61  Proceedings after termination.

    (a) Upon the termination of this subpart, the Council shall 
recommend not more than five of its members to the Secretary to serve as 
trustees for the purpose of liquidating the assets of the Council. Such 
persons, upon designation by the Secretary, shall become trustees of all 
the funds and property owned, in the possession of, or under the control 
of the Council, including any claims unpaid or property not delivered, 
or any other claim existing at the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Council under any contract or 
agreement entered into by it under this subpart;
    (3) Make refunds from the escrow account to those persons who 
applied for refunds of assessments paid and who are eligible to receive 
such refunds. Such refunds shall be made within 30 days after the 
referendum results are issued.
    (4) From time to time account for all receipts and disbursements, 
and deliver all property on hand, together with all books and records of 
the Council and of the trustees, to such persons as the Secretary may 
direct; and
    (5) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Council or the trustees under this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered under this subpart shall be subject to the same 
obligations imposed upon the Council and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information 
programs, plans, or projects authorized under this subpart.



Sec. 1208.62  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation or rule issued under 
this subpart, or the issuance of any amendment to such provisions, shall 
not:
    (a) Affect or waive any right, duty, obligation, or liability that 
shall have arisen or may hereafter arise in connection with any 
provision of this subpart or any such regulation or rule;
    (b) Release or extinguish any violation of this subpart or any such 
regulation or rule; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.

                       Reports, Books, and Records



Sec. 1208.70  Books, records, reports, cost control, and audits of the Council.

    (a) The Council shall maintain the books and records that the 
Secretary may require to account for the receipt and disbursement of all 
funds entrusted to the Council in accordance with the provisions of this 
subpart, and shall prepare and submit to the Secretary, from time to 
time as prescribed by the Secretary, all reports that the Secretary may 
require.
    (b) The Council shall, as soon as practicable after December 29, 
1994 and after consultation with the Secretary and other appropriate 
persons, implement a system of cost controls based on normally accepted 
business practices that will ensure that the annual budgets of the 
Council include only amounts for administrative expenses that cover the 
minimum administrative activities and personnel needed to properly 
administer and enforce this subpart, and conduct, supervise, and 
evaluate plans and projects under this subpart.

[[Page 75]]

    (c) The Council shall cause the books and records of the Council to 
be audited by an independent certified public accountant at the end of 
each fiscal year. All audits must be performed in accordance with either 
standards issued by the American Institute of Certified Public 
Accountants or by the General Accounting Office. A report of each audit 
shall be submitted to the Secretary.



Sec. 1208.71  Reports, books, and records of persons subject to this subpart.

    (a) Each qualified handler shall prepare and file reports containing 
such information as may be required by the Council with the approval of 
the Secretary. Such information shall include:
    (1) Data showing the volume of sales and non-sale transfers of cut 
flowers and greens made during the reporting period;
    (2) The amount of the assessment on such sales or non-sale 
transfers; and
    (3) Any other data that may be required by the Council with the 
approval of the Secretary.
    (b) Each person subject to this subpart shall maintain and make 
available for inspection by agents of the Council and the Secretary such 
books and records as are determined by the Council with the approval of 
the Secretary, as necessary to carry out the provisions of this subpart 
and the regulations issued hereunder, including such records as are 
necessary to verify any reports required. Such records shall be retained 
for at least two years beyond the fiscal period of their applicability.



Sec. 1208.72  Confidential treatment.

    (a) Information obtained from books, records, or reports required to 
be maintained or filed under the Act and this subpart shall be kept 
confidential by all persons, including agents and former agents of the 
Council, all officers and employees and all former officers and 
employees of the Department, and by all officers and employees and all 
former officers and employees of contracting agencies having access to 
such information, and shall not be available to Council members. Only 
those persons having a specific need for such information to effectively 
administer the provisions of this subpart shall have access to such 
information. In addition, only such information so furnished or acquired 
as the Secretary deems relevant shall be disclosed by them, and then 
only in a suit or administrative hearing brought at the discretion, or 
upon the request, of the Secretary, or to which the Secretary or any 
officer of the United States is a party, and involving this subpart. 
Nothing in this paragraph shall be deemed to prohibit:
    (1) The issuance of general statements, based upon the reports, of 
the number of persons subject to this subpart or statistical data 
collected from such reports, which statements do not identify the 
information furnished by any such persons, and
    (2) The publication, by direction of the Secretary, of the name of 
any individual, group of individuals, partnership, corporation, 
association, cooperative, or other entity that has been adjudged to have 
violated this subpart, together with a statement of the particular 
provisions of the subpart so violated.
    (b) No information on how a person voted in a referendum conducted 
under the Act shall be made public.

                              Miscellaneous



Sec. 1208.80  Right of the Secretary.

    All fiscal matters, programs or projects, by-laws, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Council shall be submitted to the Secretary for approval.



Sec. 1208.81  Personal liability.

    No member or employee of the Council shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgement, mistakes, or other acts of either 
commission or omission of such member or employee under this subpart, 
except for acts of dishonesty or willful misconduct.



Sec. 1208.82  Patents, copyrights, inventions, publications, and product formulations.

    Any patents, copyrights, inventions, publications, or product 
formulations

[[Page 76]]

developed through the use of funds received by the Council under this 
subpart shall be the property of the United States Government as 
represented by the Council and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, 
publications, or product formulations, inure to the benefit of the 
Council. Upon termination of this subpart, Sec. 1208.61 shall apply to 
determine disposition of all such property.



Sec. 1208.83  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Council or by any interested person affected by the provisions of 
the Act, including the Secretary.



Sec. 1208.84  Separability.

    If any provision of this subpart is declared invalid, or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec. 1208.85  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1980, Public Law 96-511, is OMB number 0581-
0096, except Council member nominee information sheets are assigned OMB 
number 0505-0001.



                    Subpart B--Rules and Regulations

    Source:  61 FR 30501, June 17, 1996, unless otherwise noted.

                               Definitions



Sec. 1208.100  Terms defined.

    Unless otherwise defined in this subpart, definitions or terms used 
in this subpart shall have the same meaning as the definitions of such 
terms which appear in Subpart A--Fresh Cut Flowers and Fresh Cut Greens 
Promotion and Information Order of this part.

                               Assessments



Sec. 1208.150  Procedures for postponement of collections.

    (a) For a request for postponement of the payment of assessments to 
be granted, the qualified handler requesting such postponement must: 
Submit a written opinion from a Certified Public Accountant stating that 
the handler making the request is insolvent or will be unable to 
continue to operate if the handler is required to pay the assessments 
when due; and submit copies of the handler's last three (3) years' 
federal tax returns. The request must be in writing no later than 30 
days after the assessment for the first month of the requested 
postponement period is due. Applications postmarked after the 30-day due 
date will not be considered by the Council. The qualified handler must 
file handler reports with the Council for each month during the 
postponement period. The postponement period may not exceed six (6) 
months unless an extension is requested and granted by the Council. Only 
one extension of up to six (6) months may be granted. Within the 
postponement period, the qualified handler will be exempt from paying 
assessments beginning with the first month for which the request for 
postponement is filed with the Council and for no more than six (6) 
months unless an extension is granted. The same procedures used for the 
initial request will be used to grant any extension. The written request 
must specify:
    (1) A reason for the request;
    (2) Detailed information concerning the qualified handler's name, 
address, and telephone and fax numbers;
    (3) The month(s) for which the request is made;
    (4) Assessments due per month or gross sales per month;
    (5) Total assessments due;
    (6) The percent or amount of the outstanding assessment to be paid 
each month after the postponement of payment is granted; and
    (7) The starting and ending date for the payment of assessments due.
    (b) At the end of the postponement period, the qualified handler 
must pay the percent or amount outstanding of assessments agreed upon 
each month

[[Page 77]]

as well as any other assessments which are due. An extension of time for 
payment of postponed assessments, if granted, will be for the same 
months previously requested and granted. The extension must not exceed 
six (6) months. If a qualified handler requests that another period be 
postponed, that handler must file another application for the 
postponement of the assessment for the second period using the same 
procedure which was followed in requesting the first postponement. A 
qualified handler may request the postponement of the payment of 
assessments for a maximum of two periods of up to six (6) months each. 
The payment applicable to the second postponement period, if granted, 
may not be extended, and the payment period must not exceed the length 
of the postponement period. Payment of the total assessments due, when 
an extension and a second period are granted, must begin within one (1) 
year after the first postponed month's assessments were originally due. 
No additional postponements would be considered by the Council until the 
assessments owed for the first two periods have been paid. The Council 
may conduct an audit of the qualified handler's records at any time to 
determine whether the qualified handler will be unable to continue to 
operate if the handler is required to pay the assessments due. In the 
event that postponed assessments are not paid when due, the Council can 
demand that all such assessments due be paid in their entirety.
    (c) Charges for late payment of assessments as described in 
Sec. 1208.52 will not be imposed on assessments for which postponement 
of payment has been granted.



PART 1209--MUSHROOM PROMOTION, RESEARCH, AND CONSUMER INFORMATION ORDER--Table of Contents




 Subpart A--Mushroom Promotion, Research, and Consumer Information Order

                               Definitions

Sec.
1209.1  Act.
1209.2  Commerce.
1209.3  Consumer information.
1209.4  Council.
1209.5  Department.
1209.6  First handler.
1209.7  Fiscal year.
1209.8  Importer.
1209.9  Industry information.
1209.10  Marketing.
1209.11  Mushrooms.
1209.12  On average.
1209.13  Part and subpart.
1209.14  Person.
1209.15  Producer.
1209.16  Programs, plans, and projects.
1209.17  Promotion.
1209.18  Region.
1209.19  Research.
1209.20  Secretary.
1209.21  State and United States.

                            Mushroom Council

1209.30  Establishment and membership.
1209.31  Nominations.
1209.32  Acceptance.
1209.33  Appointment.
1209.34  Term of office.
1209.35  Vacancies.
1209.36  Procedure.
1209.37  Compensation and reimbursement.
1209.38  Powers.
1209.39  Duties.

   Promotion, Research, Consumer Information, and Industry Information

1209.40  Programs, plans, and projects.

                        Expenses and Assessments

1209.50  Budget and expenses.
1209.51  Assessments.
1209.52  Exemption from assessment.
1209.53  Influencing governmental action.

                       Reports, Books, and Records

1209.60  Reports.
1209.61  Books and records.
1209.62  Confidential treatment.

                              Miscellaneous

1209.70  Right of the Secretary.
1209.71  Suspension or termination.
1209.72  Proceedings after termination.
1209.73  Effect of termination or amendment.
1209.74  Personal liability.
1209.75  Patents, copyrights, inventions, publications, and product 
          formulations.
1209.76  Amendments.
1209.77  Separability.

                    Subpart B--Rules and Regulations

                               Definitions

1209.200  Terms defined.

                          Nomination Procedures

1209.231  Nominations.
1209.233  Regional caucus chairpersons.

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1209.235  Mail balloting.
1209.237  Appointment.

                                 General

1209.239  Financial statements.

                               Assessments

1209.251  Payment of assessments.
1209.252  Exemption procedures.

                                 Reports

1209.260  Reports.

                              Miscellaneous

1209.280  OMB control numbers.

Subpart C--Procedure for the Conduct of Referenda in Connection With the 
      Mushroom Promotion, Research, and Consumer Information Order

1209.300  General.
1209.301  Definitions.
1209.302  Voting.
1209.303  Instructions.
1209.304  Subagents.
1209.305  Ballots.
1209.306  Referendum report.
1209.307  Confidential information.

    Authority: 7 U.S.C. 6101-6112.

    Source: 57 FR 31951, July 20, 1992, unless otherwise noted.



 Subpart A--Mushroom Promotion, Research, and Consumer Information Order

    Source: 58 FR 3449, Jan. 8, 1993, unless otherwise noted.

                               Definitions



Sec. 1209.1  Act.

    Act means the Mushroom Promotion, Research, and Consumer Information 
Act of 1990, subtitle B of title XIX of the Food, Agriculture, 
Conservation, and Trade Act of 1990, Pub. L. 101-624, 7 U.S.C. 6101-
6112, and any amendments thereto.



Sec. 1209.2  Commerce.

    Commerce means interstate, foreign, or intrastate commerce.



Sec. 1209.3  Consumer information.

    Consumer information means information and programs that will assist 
consumers and other persons in making evaluations and decisions 
regarding the purchase, preparation, and use of mushrooms.



Sec. 1209.4  Council.

    Council means the administrative body referred to as the Mushroom 
Council established under Sec. 1209.30 of this subpart.



Sec. 1209.5  Department.

    Department means the United States Department of Agriculture.



Sec. 1209.6  First handler.

    First handler means any person who receives or otherwise acquires 
mushrooms from a producer and prepares for marketing or markets such 
mushrooms, or who prepares for marketing or markets mushrooms of that 
person's own production.



Sec. 1209.7  Fiscal year.

    Fiscal year means the 12-month period from January 1 to December 31 
each year, or such other period as recommended by the Council and 
approved by the Secretary.



Sec. 1209.8  Importer.

    Importer means any person who imports, on average, over 500,000 
pounds of mushrooms annually from outside the United States.



Sec. 1209.9  Industry information.

    Industry information means information and programs that will lead 
to the development of new markets and marketing strategies, increased 
efficiency, and activities to enhance the image of the mushroom 
industry.



Sec. 1209.10  Marketing.

    (a) Marketing means the sale or other disposition of mushrooms in 
any channel of commerce.
    (b) To market means to sell or otherwise dispose of mushrooms in any 
channel of commerce.



Sec. 1209.11  Mushrooms.

    Mushrooms means all varieties of cultivated mushrooms grown within 
the United States and marketed for the fresh market, or imported into 
the United States and marketed for the fresh market, except such term 
shall

[[Page 79]]

not include mushrooms that are commercially marinated, canned, frozen, 
cooked, blanched, dried, packaged in brine, or otherwise processed in 
such manner as the Council, with the approval of the Secretary, may 
determine.



Sec. 1209.12  On average.

    On average means a rolling average of production or imports during 
the last two fiscal years, or such other period as may be determined by 
the Secretary.



Sec. 1209.13  Part and subpart.

    Part means this mushroom promotion and research order and all rules 
and regulations and supplemental orders issued thereunder, and the term 
subpart means the mushroom promotion and research order.



Sec. 1209.14  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec. 1209.15  Producer.

    Producer means any person engaged in the production of mushrooms who 
owns or shares the ownership and risk of loss of such mushrooms and who 
produces, on average, over 500,000 pounds of mushrooms per year.



Sec. 1209.16  Programs, plans, and projects.

    Programs, plans, and projects means promotion, research, consumer 
information, and industry information plans, studies, projects, or 
programs conducted pursuant to this part.



Sec. 1209.17  Promotion.

    Promotion means any action determined by the Secretary to enhance 
the image or desirability of mushrooms, including paid advertising.



Sec. 1209.18  Region.

    Region means one of the described geographic subdivisions of the 
production areas described in Sec. 1209.30 (b) or as later realigned or 
reapportioned pursuant thereto, or the import region described in 
Sec. 1209.30(c).



Sec. 1209.19  Research.

    Research means any type of study to advance the image, desirability, 
safety, marketability, production, product development, quality, or 
nutritional value of mushrooms.



Sec. 1209.20  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec. 1209.21  State and United States.

    (a) State means any of the several States, the District of Columbia, 
and the Commonwealth of Puerto Rico.
    (b) United States means collectively the several States of the 
United States of America, the District of Columbia, and the Commonwealth 
of Puerto Rico.

                            Mushroom Council



Sec. 1209.30  Establishment and membership.

    (a) There is hereby established a Mushroom Council of not less than 
four or more than nine members. The Council shall be composed of 
producers appointed by the Secretary under Sec. 1209.33, except that, as 
provided in paragraph (c), importers shall be appointed by the Secretary 
to the Council under Sec. 1209.33 once imports, on average, reach at 
least 35,000,000 pounds of mushrooms annually.
    (b) For purposes of nominating and appointing producers to the 
Council, the United States shall be divided into four geographic regions 
and the number of Council members from each region shall be as follows:
    (1) Region 1: including Maine, Vermont, New Hampshire, 
Massachusetts, Rhode Island, Connecticut, New York, Ohio, Kentucky, 
Indiana, Michigan, Wisconsin, Illinois, Missouri, Iowa, Nebraska, 
Kansas, Minnesota, North Dakota, South Dakota, Montana, Colorado, and 
Wyoming--2 Members.
    (2) Region 2: including Pennsylvania, Delaware, New Jersey, the 
District of Columbia, West Virginia, Virginia, and Maryland--3 Members.

[[Page 80]]

    (3) Region 3: including Washington, Oregon, Idaho, Utah, Arizona, 
California, Nevada, Alaska, and Hawaii--3 Members.
    (4) Region 4: including New Mexico, Texas, Oklahoma, Arkansas, 
Louisiana, Alabama, Mississippi, Georgia, Tennessee, North Carolina, 
South Carolina, Florida, and the Commonwealth of Puerto Rico--1 Member.
    (c) Importers shall be represented by a single, separate region, 
referred to as Region 5, consisting of the United States as defined in 
Sec. 1209.21(b) when imports, on average, equal or exceed 35,000,000 
pounds of mushrooms annually.
    (d) At least every five years, and not more than every three years, 
the Council shall review changes in the geographic distribution of 
mushroom production volume throughout the United States and import 
volume, using the average annual mushroom production and imports over 
the preceding four years, and, based on such review, shall recommend to 
the Secretary reapportionment of the regions established in paragraph 
(b), or modification of the number of members from such regions, as 
determined under the rules established in paragraph (e), or both, as 
necessary to best reflect the geographic distribution of mushroom 
production volume in the United States and representation of imports, if 
applicable.
    (e) Subject to the nine-member maximum limitation, the following 
procedure will be used to determine the number of members for each 
region to serve on the Council under paragraph (d):
    (1) Each region that produces, on average, at least 35,000,000 
pounds of mushrooms annually shall be entitled to one representative on 
the Council.
    (2) As provided in paragraph (c), importers shall be represented by 
a single, separate region, which shall be entitled to one 
representative, if such region imports, on average, at least 35,000,000 
pounds of mushrooms annually.
    (3) Each region shall be entitled to representation by an additional 
Council member for each 50,000,000 pounds of annual production or 
imports, on average, in excess of the initial 35,000,000 pounds required 
to qualify the region for representation.
    (4) Should, in the aggregate, regions be entitled to levels of 
representation under paragraphs (e) (1), (2) and (3) that would exceed 
the nine-member limit on the Council under the Act, the regions shall be 
entitled to representation on the Council as follows:
    (i) Each region first shall be assigned one representative on the 
Council pursuant to paragraphs (e) (1) and (2).
    (ii) Then, each region with 50,000,000 pounds of annual production 
or imports, on average, in excess of the initial 35,000,000 pounds 
required to qualify the region for representation shall be assigned one 
additional representative on the Council, except that if under such 
assignments all five regions, counting importers as a region, if 
applicable, would be entitled to additional representatives, that region 
with the smallest on-average volume, in terms of production or imports, 
will not be assigned an additional representative.
    (iii) After members are assigned to regions under paragraphs (e)(4) 
(i) and (ii), if less than the entire nine seats on the Council have 
been assigned to regions, the remaining seats on the Council shall be 
assigned to each region for each 50,000,000 pound increment of annual 
production or import volume, on average, in excess of 85,000,000 pounds 
until all the seats are filled. It for any such 50,000,000 pound 
increment, more regions are eligible for seats than there are seats 
available, the seat or seats assigned for such increment shall be 
assigned to that region or those regions with greater on-average 
production or import volume than the other regions otherwise eligible at 
that increment level.
    (f) In determining the volume of mushrooms produced in the United 
States or imported into the United States for purposes of this section, 
the Council and the Secretary shall:
    (1) Only consider mushrooms produced or imported by producers and 
importers, respectively, as those terms are defined in Secs.  1209.8 and 
1209.15; and
    (2) Use the information received by the Council under Sec. 1209.60, 
and data published by the Department.

[[Page 81]]

    (g) For purposes of the provisions of this section relating to the 
appointment of producers and importers to serve on the Council, the term 
producer or importer refers to any individual who is a producer or 
importer, respectively, or if the producer or importer is an entity 
other than an individual, an individual who is an officer or employee of 
such producer or importer.



Sec. 1209.31  Nominations.

    All nominations for appointments to the Council under Sec. 1209.33 
shall be made as follows:
    (a) As soon as practicable after this subpart becomes effective, 
nominations for appointment to the initial Council shall be obtained 
from producers by the Secretary. In any subsequent year in which an 
appointment to the Council is to be made, nominations for positions 
whose terms will expire at the end of that year shall be obtained from 
producers, and as appropriate, importers, and certified by the Council 
and submitted to the Secretary by August 1 of such year, or such other 
date as approved by the Secretary.
    (b) Nominations shall be made at regional caucuses of producers or 
importers, or by mail ballot as provided in paragraph (e), in accordance 
with procedures prescribed in this section.
    (c) Except for initial Council members, whose nomination process 
will be initiated by the Secretary, the Council shall issue a call for 
nominations by February 1 of each year in which nominations for an 
appointment to the Council is to be made. The call shall include, at a 
minimum, the following information:
    (1) A list by region of the vacancies for which nominees may be 
submitted and qualifications as to producers and importers.
    (2) The date by which the names of nominees shall be submitted to 
the Secretary for consideration to be in compliance with paragraph (a) 
of this section.
    (3) A list of those States, by region, entitled to participate in 
the nomination process.
    (4) The date, time, and location of any next scheduled meeting of 
the Council, and national and State producer or importer associations, 
if known, and of the regional caucuses, if any.
    (d)(1) Except as provided in paragraph (e), nominations for each 
position shall be made by regional caucus in the region entitled to 
nominate for such position. Notice of such caucus shall be publicized to 
all producers or importers within the region, and to the Secretary, at 
least 30 days prior to the caucus. The notice shall have attached to it 
the call for nominations from the Council and the Department's equal 
opportunity policy. Except with respect to nominations for the initial 
appointments to the Council, the responsibility for convening and 
publicizing the regional caucus shall be that of the Council.
    (2) All producers or importers within the region may participate in 
the caucus. However, if a producer is engaged in the production of 
mushrooms in more than one region or is also an importer, such person's 
participation within a region shall be limited to one vote and shall 
only reflect the volume of such person's production or imports within 
the applicable region.
    (3) The regional caucus shall conduct the selection process for the 
nominees in accordance with procedures to be adopted at the caucus 
subject to the following requirements:
    (i) There shall be two individuals nominated for each open position.
    (ii) Each nominee shall meet the qualifications set forth in the 
call.
    (iii) If a producer nominee is engaged in the production of 
mushrooms in more than one region or is also an importer, such 
individual shall participate within the region that such individual so 
elects in writing to the Council and such election shall remain 
controlling until revoked in writing to the Council.
    (e) After the regional caucuses for the initial Council, the Council 
may conduct the selection of nominees by mail ballot in lieu of a 
regional caucus.
    (f) When producers or importers are voting for nominees to the 
Council, whether through a regional caucus or a mail ballot, the 
following conditions shall apply:
    (1) Voting for any open position shall be on the basis of:
    (i) One vote per eligible voter; and

[[Page 82]]

    (ii) Volume of on-average production or imports of the eligible 
voter within that region.
    (2) Whenever the producers or importers in a region are choosing 
nominees for one open position on the Council, the proposed nominee with 
the highest number of votes cast and the proposed nominee with the 
highest volume of production or importers voted shall be the nominees 
submitted to the Secretary. If a proposed nominee receives both the 
highest number of votes cast and the highest volume of production or 
imports voted, then the proposed nominee with the second highest number 
of votes cast shall be a nominee submitted to the Secretary along with 
such proposed nominee receiving both the highest number of votes cast 
and the highest volume of production or imports voted.
    (3) Whenever the producers or importers in a region are choosing 
nominees for more than one open position on the Council at the same 
time, the number of the nominations submitted to the Secretary shall 
equal twice the number of such open positions, and for each open 
position shall consist of the proposed nominee with the highest number 
of votes cast and the proposed nominee with the highest volume of 
production or imports voted with respect to that position, subject to 
the rule set out in paragraph (f)(2). An individual shall only be 
nominated for one such open position.
    (4) Voters shall certify on their ballots as to their on-average 
production or import volume within the region involved. Such 
certification may be subject to verification.
    (g)(1) The Secretary may reject any nominee submitted. If there are 
insufficient nominees from which to appoint members to the Council as a 
result of the Secretary's rejecting such nominees, additional nominees 
shall be submitted to the Secretary under the procedures set out in this 
section.
    (2) Whenever producers or importers in a region cannot agree on 
nominees for an open position on the Council under the preceding 
provisions of this section, or whenever they fail to nominate 
individuals for appointment to the Council, the Secretary may appoint 
members in such manner as the Secretary, by regulation, determines 
appropriate.



Sec. 1209.32  Acceptance.

    Each individual nominated for membership on the Council shall 
qualify by filing a written acceptance with the Secretary at the time of 
nomination.



Sec. 1209.33  Appointment.

    From the nominations made pursuant to Sec. 1209.31, the Secretary 
shall appoint the members of the Council on the basis of representation 
provided for in Sec. 1209.30, except that no more than one member may be 
appointed to the Council from nominations submitted by any one producer 
or importer.



Sec. 1209.34  Term of office.

    (a) The members of the Council shall serve for terms of three years, 
except that the members appointed to the initial Council shall serve, 
proportionately, for terms of one, two, and three years.
    (b) Members of the initial Council shall be designated for, and 
shall serve, terms as follows: One producer member each from regions 1, 
2 and 3 shall be appointed for an initial term of one year; one producer 
member each from regions 1, 2, and 3 shall be appointed for an initial 
term of two years; and one producer member each from regions 2, 3, and 4 
shall be appointed for an initial term of three years. Because current 
imports of fresh mushrooms are less than 35,000,000 pounds, the minimum 
established for representation on the Council, importers will not 
initially have a member appointed to the Council.
    (c)(1) Except with respect to terms of office of the initial 
Council, the term of office for each member of the Council shall begin 
on January 1 or such other date that may be approved by the Secretary.
    (2) The term of office for the initial Council shall begin 
immediately following appointment by the Secretary, except that time in 
the interim period from appointment until the following January 1, or 
such other date that is the generally applicable beginning date for 
terms under paragraph (c)(1) approved by the Secretary, shall not count 
toward the initial term of office.

[[Page 83]]

    (d) Council members shall serve during the term of office for which 
they are appointed and have qualified, and until their successors are 
appointed and have qualified.
    (e)(1) No member shall serve more than two successive three-year 
terms, except as provided in paragraph (e)(2)(ii).
    (2)(i) Those members serving initial terms of two or three years may 
serve one successive three-year term.
    (ii) Those members serving initial terms of one year may serve two 
successive three-year terms.



Sec. 1209.35  Vacancies.

    (a) To fill any vacancy occasioned by the death, removal, 
resignation, or disqualification of any member of the Council, the 
Secretary may appoint a successor from the most recent nominations 
submitted for open positions on the Council assigned to the region that 
the vacant position represents, or the Secretary may obtain nominees to 
fill such vacancy in such manner as the Secretary, by regulation, deems 
appropriate. Each such successor appointment shall be for the remainder 
of the term vacated. A vacancy will not be required to be filled if the 
unexpired term is less than six months.
    (b)(1) No successor appointed to a vacated term of office shall 
serve more than two successive three-year terms on the Council, except 
as provided in paragraph (b)(2)(ii).
    (2)(i) Any successor serving longer than one year may serve one 
successive three-year term.
    (ii) Any successor serving one year or less may serve two successive 
three-year terms.
    (c) If a member of the Council consistently refuses to perform the 
duties of a member of the Council, or if a member of the Council is 
known to be engaged in acts of dishonesty or willful misconduct, the 
Council may recommend to the Secretary that the member be removed from 
office. If the Secretary finds the recommendation of the Council shows 
adequate cause, the Secretary shall remove such member from office. 
Further, without recommendation of the Council, a member may be removed 
by the Secretary upon showing of adequate cause, including the failure 
by a member to submit reports or remit assessments required under this 
part, if the Secretary determines that such member's continued service 
would be detrimental to the achievement of the purposes of the Act.



Sec. 1209.36  Procedure.

    (a) At a properly convened meeting of the Council, a majority of the 
members shall constitute a quorum.
    (b) Each member of the Council will be entitled to one vote on any 
matter put to the Council, and the motion will carry if supported by a 
simple majority of those voting. At assembled meetings of the Council, 
all votes will be cast in person.
    (c) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Council such action is considered 
necessary, the Council may take action upon the concurring votes of a 
majority of its members by mail, telephone, telegraph, or any other 
means of communication, but any such action shall be confirmed promptly 
in writing. In that event, all members must be notified and provided the 
opportunity to vote. Any action so taken shall have the same force and 
effect as though such action had been taken at a properly convened 
meeting of the Council. All votes shall be recorded in Council minutes.
    (d) Meetings of the Council may be conducted by electronic 
communications, provided that each member is given prior notice of the 
meeting and has an opportunity to be present either physically or by 
electronic connection.
    (e) The organization of the Council and the procedures for 
conducting meetings of the Council shall be in accordance with its 
bylaws,which shall be established by the Council and approved by the 
Secretary.



Sec. 1209.37  Compensation and reimbursement.

    The members of the Council shall serve without compensation but 
shall be reimbursed for necessary and reasonable expenses, including a 
reasonable per diem allowance, as approved by the Council and the 
Secretary, incurred by such members in the performance of their 
responsibilities under this subpart.

[[Page 84]]



Sec. 1209.38  Powers.

    The Council shall have the following powers:
    (a) To receive and evaluate or, on its own initiative, develop and 
budget for proposed programs, plans, or projects to promote the use of 
mushrooms, as well as proposed programs, plans, or projects for 
research, consumer information, or industry information, and to make 
recommendations to the Secretary regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To appoint or employ such individuals as it may deem necessary, 
define the duties, and determine the compensation of such individuals;
    (d) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (e) To receive, investigate, and report to the Secretary for action 
complaints of violations of the provisions of this subpart;
    (f) To disseminate information to producers, importers, first 
handlers, or industry organizations through programs or by direct 
contact using the public postal system or other systems;
    (g) To select committees and subcommittees of Council members, 
including an executive committee whose powers and membership shall be 
determined by the Council, subject to the approval of the Secretary, and 
to adopt such bylaws and other rules for the conduct of its business as 
it may deem advisable;
    (h) To establish committees which may include individuals other than 
Council members, and pay the necessary and reasonable expenses and fees 
for the members of such committees;
    (i) To recommend to the Secretary amendments to this subpart;
    (j) With the approval of the Secretary, to enter into contracts or 
agreements with national, regional, or State mushroom producer 
organizations, or other organizations or entities, for the development 
and conduct of programs, plans, or projects authorized under 
Sec. 1209.40 and with such producer organizations for other services 
necessary for the implementation of this subpart, and for the payment of 
the cost thereof with funds collected and received pursuant to this 
subpart. The Council shall not contract with any producer or importer 
for the purpose of mushroom promotion or research. The Council may lease 
physical facilities from a producer or importer for such promotion or 
research, if such an arrangement is determined to be cost effective by 
the Council and approved by the Secretary. Any contract or agreement 
shall provide that:
    (1) The contractor or agreeing party shall develop and submit to the 
Council a program, plan, or project together with a budget or budgets 
that shall show the estimated cost to be incurred for such program, 
plan, or project;
    (2) Any such program, plan, or project shall become effective upon 
approval of the Secretary;
    (3) The contracting or agreeing party shall keep accurate records of 
all of its transactions and make periodic reports to the Council of 
activities conducted, submit accountings for funds received and 
expended, and make such other reports as the Secretary or the Council 
may require; and the Secretary may audit the records of the contracting 
or agreeing party periodically; and
    (4) Any subcontractor who enters into a contract with a Council 
contractor and who receives or otherwise uses funds allocated by the 
Council shall be subject to the same provisions as the contractor;
    (k) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a program, plan, or project, funds collected 
through assessments provided for in Sec. 1209.51, and any other funds 
received by the Council in, and only in, obligations of the United 
States or any agency thereof, in general obligations of any State or any 
political subdivision thereof, in any interest-bearing account or 
certificate of deposit of a bank that is a member of the Federal Reserve 
System, or in obligations fully guaranteed as to principal and interest 
by the United States;
    (l) Such other powers as may be approved by the Secretary; and
    (m) To develop and propose to the Secretary voluntary quality and 
grade standards for mushrooms, if the Council determines that such 
quality and

[[Page 85]]

grade standards would benefit the promotion of mushrooms.



Sec. 1209.39  Duties.

    The Council shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson and such other officers as may be 
necessary;
    (b) To evaluate or develop, and submit to the Secretary for 
approval, promotion, research, consumer information, and industry 
information programs, plans, or projects;
    (c) To prepare for each fiscal year, and submit to the Secretary for 
approval at least 60 days prior to the beginning of each fiscal year, a 
budget of its anticipated expenses and disbursements in the 
administration of this subpart, as provided in Sec. 2109.50.
    (d) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (e) To prepare and make public, at least annually, a report of its 
activities carried out, and an accounting for funds received and 
expended;
    (f) To cause its financial statements to be prepared in conformity 
with generally accepted accounting principles and to be audited by an 
independent certified public accountant in accordance with generally 
accepted auditing standards at least once each fiscal year and at such 
other times as the Secretary may request, and submit a copy of each such 
audit to the Secretary;
    (g) To give the Secretary the same notice of meetings of the Council 
as is given to members in order that the Secretary, or a representative 
of the Secretary, may attend such meetings;
    (h) To submit to the Secretary such information as may be requested 
pursuant to this subpart;
    (i) To keep minutes, books, and records that clearly reflect all the 
acts and transactions of the Council. Minutes of each Council meeting 
shall be promptly reported to the Secretary;
    (j) To act as intermediary between the Secretary and any producer or 
importer;
    (k) To follow the Department's equal opportunity/civil rights 
policies; and
    (l) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the mushroom industry's position in 
the marketplace, maintain and expand existing markets and uses for 
mushrooms, develop new markets and uses for mushrooms, and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the mushroom industry.

   Promotion, Research, Consumer Information, and Industry Information



Sec. 1209.40  Programs, plans, and projects.

    (a) The Council shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan, or 
project authorized under this subpart. Such programs, plans, or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, consumer information, and 
industry information with respect to mushrooms; and
    (2) The establishment and conduct of research with respect to the 
sale, distribution, marketing, and use of mushrooms and mushroom 
products, and the creation of new products thereof, to the end that 
marketing and use of mushrooms may be encouraged, expanded, improved or 
made more acceptable. However, as prescribed by the Act, nothing in this 
subpart may be construed to authorize mandatory requirements for quality 
control, grade standards, supply management programs, or other programs 
that would control production or otherwise limit the right of individual 
producers to produce mushrooms.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the

[[Page 86]]

Council shall take appropriate steps to implement it.
    (c) Each programs, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Council to ensure 
that it contributes to an effective program of promotion, research, 
consumer information, or industry information. If it is found by the 
Council that any such program, plan, or project does not contribute to 
an effective program of promotion, research, consumer information, or 
industry information, then the Council shall terminate such program, 
plan, or project.
    (d) In carrying out any program, plan, or project, no reference to a 
brand name, trade name, or State or regional identification of any 
mushrooms or mushroom product shall be made. In addition, no program, 
plan, or project shall make use of unfair or deceptive acts or practices 
with respect to the quality, value, or use of any competing product.

                        Expenses and Assessments



Sec. 1209.50  Budget and expenses.

    (a)(1) At least 60 days prior to the beginning of each fiscal year, 
and as may be necessary thereafter, the Council shall prepare and submit 
to the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart. Each such 
budget shall include:
    (i) A statement of objectives and strategy for each program, plan, 
or project;
    (ii) A summary of anticipated revenue, with comparative data for at 
least one preceding year;
    (iii) A summary of proposed expenditures for each program, plan, or 
project; and
    (iv) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year.

Each budget shall include a rate of assessment for such fiscal year 
calculated, subject to Sec. 1209.51(b), to provide adequate funds to 
defray its proposed expenditures and to provide for a reserve as set 
forth in paragraph (f). The Council may change such rate at any time, as 
provided in Sec. 1209.51(b)(5).
    (2)(i) Subject to paragraph (a)(2)(ii), any amendment or addition to 
an approved budget must be approved by the Secretary, including shifting 
of funds from one program, plan, or project to another.
    (ii) Shifts of funds which do not cause an increase in the Council's 
approved budget and which are consistent with governing bylaws need not 
have prior approval by the Secretary.
    (b) The Council is authorized to incur such expenses, including 
provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Council for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Council.
    (c) The Council shall not use funds collected or received under this 
subpart to reimburse, defray, or make payment of expenditures incurred 
in developing, drafting, studying, lobbying on or promoting the 
legislation authorizing this subpart. Such prohibition includes 
reimbursement, defrayment, or payment to mushroom industry associations 
or organizations, producers or importers, lawyers, law firms, or 
consultants.
    (d) The Council may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects. Such contributions shall be free from any encumbrance by 
the donor and the Council shall retain complete control of their use. 
The donor may recommend that the whole or a portion of the contribution 
be applied to an ongoing program, plan, or project.
    (e) The Council shall reimburse the Secretary, from funds received 
by the Council, for administrative costs incurred by the Secretary in 
implementing and administering this subpart, except for the salaries of 
Department employees incurred in conducting referenda.
    (f) The Council may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established, except that the funds in the reserve shall not exceed 
approximately

[[Page 87]]

one fiscal year's expenses. Such reserve funds may be used to defray any 
expenses authorized under this subpart.
    (g) With the approval of the Secretary, the Council may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Council.



Sec. 1209.51  Assessments.

    (a) Any first handler initially purchasing, or otherwise placing 
into the current of commerce, mushrooms produced in the United States 
shall, in the manner as prescribed by the Council and approved by the 
Secretary, collect an assessment based upon the number of pounds of 
mushrooms marketed in the United States for the account of the producer, 
and remit the assessment to the Council.
    (b) The rate of assessment effective during any fiscal year shall be 
the rate specified in the budget for such fiscal year approved by the 
Secretary, except that:
    (1) The rate of assessment during the first year this subpart is in 
effect shall be one-quarter of one cent per pound of mushrooms marketed, 
or the equivalent thereof.
    (2) The rate of assessment during the second year this subpart is in 
effect shall not exceed one-third of one cent per pound of mushrooms 
marketed, or the equivalent thereof.
    (3) The rate of assessment during the third year this subpart is in 
effect shall not exceed one-half of one cent per pound of mushrooms 
marketed, or the equivalent thereof.
    (4) The rate of assessment during each of the fourth and following 
years this subpart is in effect shall not exceed one cent per pound of 
mushrooms marketed, or the equivalent thereof.
    (5) The Council may change the rate of assessment for a fiscal year 
at any time with the approval of the Secretary as necessary to reflect 
changed circumstances, except that any such changed rate may not exceed 
the level of assessment specified in paragraphs (b)(1), (2), (3), or 
(4), whichever is applicable.
    (c) Any person marketing mushrooms of that person's own production 
to consumers in the United States, either directly or through retail or 
wholesale outlets, shall be considered a first handler and shall remit 
to the Council an assessment on such mushrooms at the rate per-pound 
then in effect, and in such form and manner prescribed by the Council.
    (d) Only one assessment shall be paid on each unit of mushrooms 
marketed.
    (e)(1) Each importer of mushrooms shall pay an assessment to the 
Council on mushrooms imported for marketing in the United States, 
through the U.S. Customs Service or in such other manner as may be 
established by rules and regulations approved by the Secretary.
    (2) The per-pound assessment rate for imported mushrooms shall be 
the same as the rate provided for mushrooms produced in the United 
States.
    (3) The import assessment shall be uniformly applied to imported 
mushrooms that are identified by the number, 0709.51.0000, in the 
Harmonized Tariff Schedule of the United States or any other number used 
to identify fresh mushrooms.
    (4) The assessments due on imported mushrooms shall be paid when the 
mushrooms are entered or withdrawn for consumption in the United States, 
or at such other time as may be established by rules and regulations 
prescribed by the Council and approved by the Secretary and under such 
procedures as are provided in such rules and regulations.
    (5) Only one assessment shall be paid on each unit of mushrooms 
imported.
    (f) The collection of assessments under this section shall commence 
on all mushrooms marketed in or imported into the United States on or 
after the date established by the Secretary, and shall continue until 
terminated by the Secretary. If the Council is not constituted on the 
date the first assessments are to be collected, the Secretary shall have 
the authority to receive assessments on behalf of the Council and may 
hold such assessments until the Council is constituted, then remit such 
assessments to the Council.
    (g)(1) Each person responsible for remitting assessments under 
paragraphs (a), (c), or (e) shall remit the amounts due from assessments 
to the Council on a monthly basis no later than the fifteenth day of the 
month following the

[[Page 88]]

month in which the mushrooms were marketed, in such manner as prescribed 
by the Council.
    (2)(i) A late payment charge shall be imposed on any person that 
fails to remit to the Council the total amount for which the person is 
liable on or before the payment due date established under this section. 
The amount of the late payment charge shall be prescribed in rules and 
regulations as approved by the Secretary.
    (ii) An additional charge shall be imposed on any person subject to 
a late payment charge, in the form of interest on the outstanding 
portion of any amount for which the person is liable. The rate of 
interest shall be prescribed in rules and regulations as approved by the 
Secretary.
    (3) Any assessment that is determined to be owing at a date later 
than the payment due established under this section, due to a person's 
failure to submit a report to the Council by the payment due date, shall 
be considered to have been payable on the payment due date. Under such a 
situation, paragraphs (g)(2)(i) and (g)(2)(ii) of this section shall be 
applicable.
    (h) The Council, with the approval of the Secretary, may enter into 
agreements authorizing other organizations to collect assessments in its 
behalf. Any such organization shall be required to maintain the 
confidentiality of such information as is required by the Council for 
collection purposes. Any reimbursement by the Council for such services 
shall be based on reasonable charges for services rendered.
    (i) The Council is hereby authorized to accept advance payment of 
assessments for the fiscal year by any person, that shall be credited 
toward any amount for which such person may become liable. The Council 
shall not be obligated to pay interest on any advance payment.



Sec. 1209.52  Exemption from assessment.

    (a) Persons that produce or import, on average, 500,000 pounds or 
less of mushrooms annually shall be exempted from assessment.
    (b) To claim such exemption, such persons shall apply to the 
Council, in the form and manner prescribed in the rules and regulations.
    (c) Mushrooms produced in the United States that are exported are 
exempt from assessment and are subject to such safeguards as prescribed 
in rules and regulations to prevent improper use of this exemption.
    (d) Domestic and imported mushrooms used for processing are exempt 
from assessment and are subject to such safeguards as prescribed in 
rules and regulations to prevent improper use of this exemption.



Sec. 1209.53  Influencing governmental action.

    No funds received by the Council under this subpart shall in any 
manner be used for the purpose of influencing legislation or 
governmental policy or action, except to develop and recommend to the 
Secretary amendments to this subpart, and to submit to the Secretary 
proposed voluntary grade and quality standards for mushrooms.

                       Reports, Books and Records



Sec. 1209.60  Reports.

    (a) Each producer marketing mushrooms of that person's own 
production directly to consumers, and each first handler responsible for 
the collection of assessments under Sec. 1209.51(a) shall be required to 
report monthly to the Council, on a form provided by the Council, such 
information as may be required under this subpart or any rules and 
regulations issued thereunder. Such information shall include, but not 
be limited to, the following:
    (1) The first handler's name, address, and telephone number;
    (2) Date of report, which is also the date of payment to the 
Council;
    (3) Period covered by the report;
    (4) The number of pounds of mushrooms purchased, initially 
transferred, or that in any other manner are subject to the collection 
of assessments, and a copy of a certificate of exemption, claiming 
exemption under Sec. 1209.52 from those who claim such exemptions;
    (5) The amount of assessments remitted; and
    (6) The basis, if necessary, to show why the remittance is less than 
the

[[Page 89]]

number of pounds of mushrooms determined under paragraph (a)(4) 
multiplied by the applicable assessment rate.
    (b) If determined necessary by the Council and approved by the 
Secretary, each importer shall file with the Council periodic reports, 
on a form provided by the Council, containing at least the following 
information:
    (1) The importer's name, address, and telephone number;
    (2) The quantity of mushrooms entered or withdrawn for consumption 
in the United States during the period covered by the report; and
    (3) The amount of assessments paid to the U.S. Customs Service at 
the time of such entry or withdrawal.
    (c) The words final report shall be shown on the last report at the 
end of each fiscal year.



Sec. 1209.61  Books and records.

    Each persons who is subject to this subpart shall maintain and make 
available for inspection by the Council or the Secretary such books and 
records as are deemed necessary by the Council, with the approval of the 
Secretary, to carry out the provisions of this subpart and any rules and 
regulations issued hereunder, including such books and records as are 
necessary to verify any reports required. Such books and records shall 
be retained for at least two years beyond the fiscal year of their 
applicability.



Sec. 1209.62  Confidential treatment.

    All information obtained from books, records, or reports under the 
Act, this subpart, and the rules and regulations issued thereunder shall 
be kept confidential by all persons, including all employees and former 
employees of the Council, all officers and employees and former officers 
and employees of the Department, and all officers and employees and 
former officers and employees of contracting and subcontracting agencies 
or agreeing parties having access to such information. Such information 
shall not be available to Council members, producers, importers, or 
first handlers. Only those persons having a specific need for such 
information to effectively administer the provisions of this subpart 
shall have access to such information. Only such information so obtained 
as the Secretary deems relevant shall be disclosed by them, and then 
only in a suit or administrative hearing brought at the direction, or on 
the request, of the Secretary, or to which the Secretary or any officer 
of the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.

                              Miscellaneous



Sec. 1209.70  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, rules or 
regulations, reports, or other substantive actions proposed and prepared 
by the Council shall be submitted to the Secretary for approval.



Sec. 1209.71  Suspension or termination.

    (a) Whenever the Secretary finds that this subpart or any provision 
thereof obstructs or does not tend to effectuate the declared policy of 
the Act, the Secretary shall terminate or suspend the operation of this 
subpart or such provision thereof.
    (b)(1) Five years after the date on which this subpart becomes 
effective, the Secretary shall conduct a referendum among producers and 
importers to determine whether they favor continuation, termination, or 
suspension of this subpart.

[[Page 90]]

    (2) Effective beginning three years after the date on which this 
subpart becomes effective, the Secretary, on request of a representative 
group comprising 30 percent or more of the number of mushroom producers 
and importers, may conduct a referendum to determine whether producers 
and importers favor termination or suspension of this subpart.
    (3) Whenever the Secretary determines that suspension or termination 
of this subpart is favored by a majority of the mushroom producers and 
importers voting in a referendum under paragraphs (b) (1) or (2) who, 
during a representative period determined by the Secretary, have been 
engaged in producing and importing mushrooms and who, on average, 
annually produced and imported more than 50 percent of the volume of 
mushrooms produced and imported by all those producers and importers 
voting in the referendum, the Secretary shall:
    (i) Suspend or terminate, as appropriate, collection of assessments 
within six months after making such determination; and
    (ii) Suspend or terminate, as appropriate, all activities under this 
subpart in an orderly manner as soon as practicable.
    (4) Referenda conducted under this subsection shall be conducted in 
such manner as the Secretary may prescribe.



Sec. 1209.72  Proceedings after termination.

    (a) Upon the termination of this subpart, the Council shall 
recommend not more than five of its members to the Secretary to serve as 
trustees for the purpose of liquidating the affairs of the Council. Such 
persons, upon designation by the Secretary, shall become trustees of all 
the funds and property owned, in the possession of, or under the control 
of the Council, including any claims unpaid or property not delivered, 
or any other claim existing at the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Council under any contract or 
agreement entered into by it under this subpart;
    (3) From time to time account for all receipts and disbursements, 
and deliver all property on hand, together with all books and records of 
the Council and of the trustees, to such persons as the Secretary may 
direct; and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Council or the trustees under this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered under this subpart shall be subject to the same 
obligations imposed upon the Council and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information 
programs, plans, or projects authorized under this subpart.



Sec. 1209.73  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any rule and regulation issued under 
this subpart, or the issuance of any amendment to such provisions, shall 
not:
    (a) Affect or waive any right, duty, obligation, or liability that 
shall have arisen or may hereafter arise in connection with any 
provision of this subpart or any such rules or regulations;
    (b) Release or extinguish any violation of this subpart or any such 
rules or regulations; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.



Sec. 1209.74  Personal liability.

    No member or employee of the Council shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission

[[Page 91]]

of such member or employee under this subpart, except for acts of 
dishonesty or willful misconduct.



Sec. 1209.75  Patents, copyrights, inventions, publications, and product formulations.

    Any patents, copyrights, inventions, publications, or product 
formulations developed through the use of funds received by the Council 
under this subpart shall be the property of the United States Government 
as represented by the Council and shall, along with any rents, 
royalties, residual payments, or other income from the rental, sale, 
leasing, franchising, or other uses of such patents, copyrights, 
inventions, publications, or product formulations inure to the benefit 
of the Council and be considered income subject to the same fiscal, 
budget, and audit controls as other funds of the Council. Upon 
termination of this subpart, Sec. 1209.72 shall apply to determine 
disposition of all such property.



Sec. 1209.76  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Council or by any interested person affected by the provisions of 
the Act, including the Secretary.



Sec. 1209.77  Separability.

    If any provision of this subpart is declared invalid, or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



                    Subpart B--Rules and Regulations

    Source: 58 FR 8197, Feb. 11, 1993, unless otherwise noted.

                               Definitions



Sec. 1209.200  Terms defined.

    Unless otherwise defined in this subpart, the definitions of terms 
used in this subpart shall have the same meaning as the definitions in 
Subpart A--Mushroom Promotion, Research, and Consumer Information Order 
of this part.

                          Nomination Procedures



Sec. 1209.231  Nominations.

    Nominations shall be made at regional caucuses of producers or 
importers, or by mail ballot in accordance with the procedures 
prescribed in Sec. 1209.31 of this part. Proxy voting by producers and 
importers shall not be permitted at a regional caucus or in a mail 
ballot. Each regional caucus and mail ballot shall be scheduled so as to 
ensure that the nominations for each position that will be open at the 
beginning of the following year are received by the Secretary by August 
1, or such other date approved by the Secretary.



Sec. 1209.233  Regional caucus chairpersons.

    (a) Regional caucus chairpersons shall be elected by a simple 
majority vote of eligible voters in attendance. Such elections shall be 
coordinated by the Council, except for the initial elections, which 
shall be coordinated by a representative of the Secretary.
    (b) Regional caucus chairpersons will coordinate the entire 
nomination process. In conducting the nominations process, each regional 
caucus chairperson shall ensure that:
    (1) Voting for producer nominees is limited to producers, and voting 
for importer nominees is limited to importers; and
    (2) Producer candidates for nomination are producers, and importer 
candidates for nomination are importers.
    (c) Within 14 days after completion of each regional caucus, each 
chairperson shall provide the Secretary with the following information:
    (1) The identification of that region's two nominees for each open 
position on the Council; and
    (2) A typed copy of the regional caucus's minutes.
    (d) The chairperson of each regional caucus shall provide nominees 
with qualification statements and other specified information. Each 
nominee will be contacted by the chairperson and asked to forward such 
completed documentation to the Council within 14 days after completion 
of the regional caucus, except for the initial nominees, which shall be 
asked to forward such

[[Page 92]]

completed documentation to the Secretary.
    (e) The tenure of the chairperson shall only be for the duration of 
the regional caucus and the preparation of required documentation.



Sec. 1209.235  Mail balloting.

    (a) After the initial regional caucuses, the Council may conduct 
nominations of individuals as candidates for appointment to the Council 
by mail ballot in lieu of a regional caucus.
    (b)(1) In the event of a mail ballot, all qualified individuals in a 
region interested in serving as a member on the Council or persons who 
are interested in nominating an individual to serve on the Council shall 
submit to the Council in writing such information as name, mailing 
address, number of pounds of mushrooms produced or imported, or such 
other information as may be required, in order to place such individual 
on the ballot.
    (2) Notice of mail balloting to nominate candidates for a position 
on the Council shall be publicized by the Council to producers or 
importers in the region involved, and to the Secretary, at least 120 
days before the region's nominee ballot is issued.
    (3) In proposing nominees for inclusion on a mail ballot, proposed 
nominations must be received by the Council at least 30 days before the 
region's nominee ballot is issued.
    (c) Once proposed nominations have been submitted from the 
applicable region, the Council shall cause each proposed nomination, if 
the individual qualifies, to be placed on the region's nominee ballot. 
The Council then shall mail a ballot to each known producer or importer 
within the region.
    (d) Distribution of ballots shall be announced by press releases, 
furnishing pertinent information on balloting, issued by the Council 
through newspapers and other publications having general circulation 
among producers in the mushroom producing areas involved or among 
mushroom importers.
    (e) Each producer or importer shall cast a ballot for each open 
position on the Council assigned to the region in accordance with the 
procedures prescribed in Sec. 1209.31 of this part. The completed ballot 
must be returned to the Council or its designee within 30 days after the 
ballot is issued.
    (f) Within 45 days after a mail ballot is issued, the Council shall 
validate the ballots cast, tabulate the votes, and provide the Secretary 
with the results of the vote and the identification of the region's two 
nominees for each open position on the Council.
    (g) The Council shall provide nominees with qualification statements 
and other specified information. Each nominee selected in the mail 
ballot will be contacted by the Council and asked to forward such 
completed documentation to the Council within 14 days of such 
notification.



Sec. 1209.237  Appointment.

    If an employee, partner, officer, or shareholder of a producer or 
importer is a current member of the Council, no nominee who is also an 
employee, partner, officer, or shareholder of such producer or importer 
shall be appointed to the Council. A Council member shall be 
disqualified from serving on the Council if such individual ceases to be 
affiliated with a producer or importer within the region the Council 
member represents.

                                 General



Sec. 1209.239  Financial statements.

    (a) As requested by the Secretary, the Council shall prepare and 
submit financial statements to the Secretary on a periodic basis. Each 
such financial statement shall include, but not be limited to, a balance 
sheet, income statement, and expense budget. The expense budget shall 
show expenditures during the time period covered by the report, year-to-
date expenditures, and the unexpended budget.
    (b) Each financial statement shall be submitted to the Secretary 
within 30 days after the end of the time period to which it applies.
    (c) The Council shall submit annually to the Secretary an annual 
financial statement within 90 days after the end of the fiscal year to 
which it applies.

[[Page 93]]

                               Assessments



Sec. 1209.251  Payment of assessments.

    (a) Each first handler responsible for collecting assessments on 
domestic mushrooms shall collect the amounts assessed and remit such 
amounts to the Council on a monthly basis not later than the fifteenth 
day of the month following the month in which the mushrooms were 
marketed to or through the first handler.
    (b) Each producer responsible for paying any assessment amount on 
the producer's own mushrooms shall remit such amount to the Council on a 
monthly basis not later than the fifteenth day of the month following 
the month in which the mushrooms were marketed by the producer.
    (c) Each importer shall be responsible for remittance to the Council 
of any assessment amount not collected by the U.S. Customs Service at 
the time of entry or withdrawal for consumption into the United States. 
Any such assessment amount shall be remitted to the Council on a monthly 
basis not later than the fifteenth day of the month following the month 
of entry or withdrawal for consumption into the United States. Any 
person who imports mushrooms, as principal or as an agent, broker, or 
consignee for any person who produces mushrooms outside the United 
States for marketing in the United States shall be considered an 
importer.
    (d) Remittance shall be by check, draft, or money order payable to 
the Mushroom Council, and shall be accompanied by a report, on a form 
provided by the Council.
    (e) A late payment charge shall be imposed on any first handler or 
importer who fails to make timely remittance to the Council of the total 
assessment amount for which the person is liable. Such late payment 
charge shall be imposed on any assessments not received by the last day 
of the month following the month in which the mushrooms involved were 
marketed or, in the case of imports, not collected by the U.S. Customs 
Service at the time of entry or withdrawal for consumption into the 
United States. This one-time late payment charge shall be 10 percent of 
the assessments due before interest charges have accrued. The late 
payment charge will not be applied to any late payments postmarked 
within 15 days after the end of the month such assessments are due.
    (f) In addition to the late payment charge, interest shall be 
charged at a rate of one and one-half percent per month on the 
outstanding balance, including the late payment charge and any accrued 
interest, of any account that remains delinquent beyond the last day of 
the second month following the month the mushrooms involved were 
marketed. However, first handlers paying their assessments, in 
accordance with paragraph (h)(2) of this section, will not be subject to 
the one and one-half percent per month interest under this paragraph 
until the last day of the second month after such assessments are due 
under paragraph (h)(2) of this section. In the case of imports, such a 
rate of interest will be charged to any account that remains delinquent 
on any assessments not collected by the U.S. Customs Service at the time 
of entry or withdrawal for consumption into the United States. Such a 
rate of interest will continue to be charged monthly until the 
outstanding balance is paid to the Council.
    (g) Any assessment determined by the Council at a date later than 
prescribed by this section, because of a person's failure to submit a 
report to the Council when due, shall be considered to have been payable 
by the date it would have been due if the report had been filed on time. 
A late payment charge and monthly interest charges on the outstanding 
balance shall be applicable to such unpaid assessment in accordance with 
paragraphs (e) and (f) of this section.
    (h) In lieu of the monthly assessment payment and reporting 
requirements of Sec. 1209.260 of this subpart and Sec. 1209.60 of this 
part, the Council may permit a first handler to make advance payment of 
the total estimated assessment amount due to the Council for the ensuing 
fiscal year, or portion thereof, prior to the actual determination of 
assessable mushrooms.

[[Page 94]]

    (1) Each person shall provide an initial report estimating 
assessable mushrooms. The Council may request additional information on 
such estimate.
    (2) Each person shall provide a final report of actual marketings 
during the period involved and remit any unpaid assessments not later 
than the fifteenth day of the month following the end of the period 
covered.
    (3) Any person whose prepayment exceeds the amount paid shall be 
reimbursed for the amount of overpayment. The Council shall not, in any 
case, be obligated to pay interest on any advance payment.



Sec. 1209.252  Exemption procedures.

    (a) Any person who produces or imports, on average, 500,000 pounds 
or less of mushrooms annually and who desires to claim an exemption from 
assessments during a fiscal year as provided in Sec. 1209.52 of this 
part shall apply to the Council, on a form provided by the Council, for 
a certificate of exemption. Such persons shall certify that their 
production or importation of mushrooms shall not exceed 500,000 pounds, 
on average, for the fiscal year for which the exemption is claimed. 
Pursuant to this section, the term on average shall be calculated by 
averaging a person's estimated production or importation for the fiscal 
year for which an exemption is claimed with such person's production or 
importation in the preceding fiscal year.
    (b) On receipt of an application, the Council shall determine 
whether an exemption may be granted. The Council then will issue, if 
deemed appropriate, a certificate of exemption to each person that is 
eligible to receive one. Each person who is exempt from assessment must 
provide an exemption number to the first handler in order not to be 
subject to collection of an assessment on mushrooms. First handlers and 
importers, except as otherwise authorized by the Council, shall maintain 
records showing the exemptee's name and address along with the exemption 
number assigned by the Council. Importers who are exempt from assessment 
shall be eligible for reimbursement of assessments collected by the U.S. 
Customs Service and shall apply to the Council for reimbursement of such 
assessments paid.
    (c) Any person who desires to renew the exemption from assessments 
for a subsequent fiscal year shall reapply to the Council, on a form 
provided by the Council, for a certificate of exemption.
    (d) The Council may require persons receiving an exemption from 
assessments to provide to the Council reports on the disposition of 
exempt mushrooms.

                                 Reports



Sec. 1209.260  Reports.

    Each first handler shall be required to report monthly to the 
Council such information as may be required under Sec. 1209.60(a) of 
this part. In addition, each first handler shall be required to provide 
the tax identification number or social security number of each producer 
the first handler has dealt with during the time period covered by the 
report.

[58 FR 8197, Feb. 11, 1993, as amended at 60 FR 13614, Mar. 14, 1995]

                              Miscellaneous



Sec. 1209.280  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq. is OMB control 
number 0581-0093, except for the Council nominee background statement 
form which is assigned OMB control number 0505-0001.



Subpart C--Procedure for the Conduct of Referenda in Connection With the 
      Mushroom Promotion, Research, and Consumer Information Order

    Source: 62 FR 66975, Dec. 23, 1997, unless otherwise noted.



Sec. 1209.300  General.

    A referendum to determine whether eligible producers and importers 
favor continuation of the Mushroom Promotion, Research, and Consumer 
Information Order shall be conducted in accordance with these 
procedures.

[[Page 95]]



Sec. 1209.301  Definitions.

    Unless otherwise defined below, the definition of terms used in 
these procedures shall have the same meaning as the definitions in the 
Order.
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Order means the Mushroom Promotion, Research, and Consumer 
Information Order, including an amendment to the Order.
    (c) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (d) Representative period means the period designated by the 
Secretary.
    (e) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and wife who have title to, or leasehold interest in, 
mushroom production facilities and equipment as tenants in common, joint 
tenants, tenants by the entirety, or, under community property laws, as 
community property, and
    (2) So-called ``joint ventures'', wherein one or more parties to the 
agreement, informal or otherwise, contributed capital and others 
contributed labor, management, equipment, or other services, or any 
variation of such contributions by two or more parties so that it 
results in the production or importation of fresh mushrooms and the 
authority to transfer title to the mushrooms so produced or imported.
    (f) Eligible producer means any person or entity defined as a 
producer who produces, on average, over 500,000 pounds annually of fresh 
mushrooms during the representative period and who:
    (1) Owns or shares in the ownership of mushroom production 
facilities and equipment resulting in the ownership of the mushrooms 
produced;
    (2) Rents mushroom production facilities and equipment resulting in 
the ownership of all or a portion of the mushrooms produced;
    (3) Owns mushroom production facilities and equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the mushrooms produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce mushrooms who share the risk of loss and receive a share 
of the mushrooms produced. No other acquisition of legal title to 
mushrooms shall be deemed to result in persons becoming eligible 
producers.
    (g) Eligible importer means any person or entity defined as an 
importer who imports, on average, over 500,000 pounds annually of fresh 
mushrooms during the representative period. Importation occurs when 
commodities originating outside the United States are entered or 
withdrawn from the U.S. Customs Service for consumption in the United 
States. Included are persons who hold title to foreign-produced 
mushrooms immediately upon release by the U.S. Customs Service, as well 
as any persons who act on behalf of others, as agents or brokers, to 
secure the release of mushrooms from the U.S. Customs Service when such 
mushrooms are entered or withdrawn for consumption in the United States.



Sec. 1209.302  Voting.

    (a) Each person who is an eligible producer or importer, as defined 
in this subpart, at the time of the referendum and during the 
representative period, shall be entitled to cast only one ballot in the 
referendum. However, each producer in a landlord-tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to produce mushrooms, in which more than one of the 
parties is a producer, shall be entitled to cast one ballot in the 
referendum covering only such producer's share of the ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate producer or importer, or an administrator, executor, 
or trustee of an eligible producing or importing entity may cast a 
ballot on behalf of

[[Page 96]]

such producer or importer entity. Any individual so voting in a 
referendum shall certify that such individual is an officer or employee 
of the eligible producer or importer, or an administrator, executor, or 
trustee of an eligible producing or importing entity, and that such 
individual has the authority to take such action. Upon request of the 
referendum agent, the individual shall submit adequate evidence of such 
authority.
    (c) Ballots are to be cast by mail or fax.



Sec. 1209.303  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under the supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information including that needed for ascertaining:
    (1) Whether the person voting, or on whose behalf the vote is cast, 
is an eligible voter;
    (2) The total volume of mushrooms produced by the voting producer 
during the representative period; and
    (3) The total volume of mushrooms imported by the voting importer 
during the representative period.
    (c) Give reasonable advance public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible producers and importers, whose names and 
addresses are known to the referendum agent, the instructions on voting, 
a ballot, and a summary of the terms and conditions of the Order. No 
person who claims to be eligible to vote shall be refused a ballot.
    (e) Collect and safeguard ballots received by fax.
    (f) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results.
    (g) Prepare a report on the referendum.
    (h) Prepare an announcement of the results for the public.



Sec. 1209.304  Subagents.

    The referendum agent may appoint any individual or individuals 
deemed necessary or desirable to assist the agent in performing such 
agent's functions hereunder. Each individual so appointed may be 
authorized by the agent to perform any or all of the functions which, in 
the absence of such appointment, shall be performed by the agent.



Sec. 1209.305  Ballots.

    The referendum agent and subagents shall accept all ballots cast; 
but, should they, or any of them, deem that a ballot should be 
challenged for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.



Sec. 1209.306  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare and 
submit to the Administrator a report on results of the referendum, the 
manner in which it was conducted, the extent and kind of public notice 
given, and other information pertinent to analysis of the referendum and 
its results.



Sec. 1209.307  Confidential information.

    The ballots and other information or reports that reveal, or tend to 
reveal, the identity or vote of any person covered under the Act shall 
be held confidential and shall not be disclosed.

[[Page 97]]



PART 1210--WATERMELON RESEARCH AND PROMOTION PLAN--Table of Contents




             Subpart--Watermelon Research and Promotion Plan

                               Definitions

1210.301  Secretary.
1210.302  Act.
1210.303  Plan.
1210.304  Board.
1210.305  Watermelon.
1210.306  Producer.
1210.307  Handle.
1210.308  Handler.
1210.309  Person.
1210.310  Fiscal period and marketing year.
1210.311  Programs and projects.
1210.312  Promotion.
1210.313  Research.
1210.314  Importer.
1210.315  United States.

                   National Watermelon Promotion Board

1210.320  Establishment and membership.
1210.321  Nominations and selection.
1210.322  Term of office.
1210.323  Acceptance.
1210.324  Vacancies.
1210.325  Procedure.
1210.326  Compensation and reimbursement.
1210.327  Powers.
1210.328  Duties.

                         Research and Promotion

1210.330  Policy and objective.
1210.331  Programs and projects.

                        Expenses and Assessments

1210.340  Budget and expenses.
1210.341  Assessments.
1210.342  Exemption from assessment.
1210.343  [Reserved]
1210.344  Operating reserve.

                       Reports, Books, and Records

1210.350  Reports.
1210.351  Books and records.
1210.352  Confidential treatment.

                              Miscellaneous

1210.360  Right of the Secretary.
1210.361  Personal liability.
1210.362  Influencing government action.
1210.363  Suspension or termination.
1210.364  Proceedings after termination.
1210.365  Effect of termination or amendment.
1210.366  Separability.
1210.367  Patents, copyrights, inventions, and publications.

 Subpart--Procedures for Nominating Members to the National Watermelon 
                             Promotion Board

                      Producer and Handler Members

1210.400  Terms defined.
1210.401  District conventions.
1210.402  Voter and board member nominee eligibility.
1210.403  Voting procedures.

                            Importer Members

1210.404  Importer member nomination and selection.

                              Public Member

1210.405  Public member nominations and selection.

                     Subpart--Rules and Regulations

                               Definitions

1210.500  Terms defined.

                                 General

1210.501  Realignment of districts.
1210.502  [Reserved]
1210.504  Contracts.
1210.505  Department of Agriculture costs.

                               Assessments

1210.515  Levy of assessments.
1210.516  [Reserved]
1210.517  Determination of handler.
1210.518  Payment of assessments.
1210.519  Failure to report and remit.
1210.520  Refunds.
1210.521  Reports of disposition of exempted watermelons.

                                 Records

1210.530  Retention period for records.
1210.531  Availability of records.
1210.532  Confidential books, records, and reports.

                              Miscellaneous

1210.540  OMB assigned numbers.

    Authority: 7 U.S.C. 4901-4916.

    Source: 53 FR 51091, Dec. 20, 1988, unless otherwise noted.



             Subpart--Watermelon Research and Promotion Plan

    Source: 54 FR 24545, June 8, 1989, unless otherwise noted.

[[Page 98]]

                               Definitions



Sec. 1210.301  Secretary.

    ``Secretary'' means the Secretary of Agriculture of the United 
States or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec. 1210.302  Act.

    ``Act'' means the Watermelon Research and Promotion Act of 1985 
(Title XVI, Subtitle C of Pub. L. 99-198, 99th Congress, effective 
January 1, 1986, 99 Stat. 1622), as amended.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10797, Feb. 28, 1995]



Sec. 1210.303  Plan.

    ``Plan'' means this watermelon research and promotion Plan issued by 
the Secretary pursuant to the Act.



Sec. 1210.304  Board.

    ``Board'' means the National Watermelon Promotion Board, hereinafter 
established pursuant to Sec. 1210.320.



Sec. 1210.305  Watermelon.

    ``Watermelon'' means all varieties of the Family Curcubitaceae; 
Genus and Species; Citrullus Lanatus, popularly referred to as 
watermelon grown by producers in the United States or imported into the 
United States.

[60 FR 10797, Feb. 28, 1995]



Sec. 1210.306  Producer.

    ``Producer'' means any person engaged in the growing of 10 acres or 
more of watermelons including any person who owns or shares the 
ownership and risk of loss of such watermelon crop.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10797, Feb. 28, 1995]



Sec. 1210.307  Handle.

    ``Handle'' means to grade, pack, process, sell, transport, purchase, 
or in any other way to place or cause watermelons to which one has title 
or possession to be placed in the current of commerce. Such term shall 
not include the transportation or delivery of field run watermelons by 
the producer thereof to a handler for grading, sizing or processing.



Sec. 1210.308  Handler.

    ``Handler'' means any person (except a common or contract carrier of 
watermelons owned by another person) who handles watermelons, including 
a producer who handles watermelons of the producer's own production. For 
the purposes of this subpart, the term ``handler'' means the ``first'' 
person who performs the handling functions.



Sec. 1210.309  Person.

    ``Person'' means any individual, group of individuals, partnership, 
corporation, association, cooperative, or other entity.



Sec. 1210.310  Fiscal period and marketing year.

    ``Fiscal period'' and ``marketing year'' mean the 12 month period 
from January 1 to December 31 or such other period which may be approved 
by the Secretary.



Sec. 1210.311  Programs and projects.

    ``Programs'' and ``projects'' mean those research, development, 
advertising, or promotion programs or projects developed by the Board 
pursuant to Sec. 1210.331.



Sec. 1210.312  Promotion.

    ``Promotion'' means any action taken by the Board, pursuant to the 
Act, to present a favorable image for watermelons to the public with the 
express intent of improving the competitive position of watermelons in 
the marketplace and stimulating sales of watermelons, and shall include, 
but not be limited to, paid advertising.



Sec. 1210.313  Research.

    ``Research'' means any type of systematic study or investigation, 
and/or the evaluation of any study or investigation designed to advance 
the image, desirability, usage, marketability, production, or quality of 
watermelons.



Sec. 1210.314  Importer.

    ``Importer'' means any person who imports watermelons into the 
United

[[Page 99]]

States as a principal or as an agent, broker, or consignee for any 
person who produces watermelons outside of the United States for sale in 
the United States.

[60 FR 10797, Feb. 28, 1995]



Sec. 1210.315  United States.

    ``United States'' means each of the several States and the District 
of Columbia.

[60 FR 10797, Feb. 28, 1995]

                   National Watermelon Promotion Board



Sec. 1210.320  Establishment and membership.

    (a) There is hereby established a National Watermelon Promotion 
Board, hereinafter called the ``Board.'' The Board shall be composed of 
producers, handlers, importers, and one public representative appointed 
by the Secretary. An equal number of producer and handler 
representatives shall be nominated by producers and handlers pursuant to 
Sec. 1210.321. The Board shall also include one or more representatives 
of importers, who shall be nominated in such manner as may be prescribed 
by the Secretary. The public representative shall be nominated by the 
Board members in such manner as may be prescribed by the Secretary. If 
producers, handlers, and importers fail to select nominees for 
appointment to the Board, the Secretary may appoint persons on the basis 
of representation as provided in Sec. 1210.324. If the Board fails to 
adhere to procedures prescribed by the Secretary for nominating a public 
representative, the Secretary shall appoint such representative.
    (b) Membership on the Board shall be determined on the basis of two 
handler and two producer representatives for each of seven districts in 
the contiguous States of the United States. Such districts as hereby 
established have approximately equal production volume according to the 
three-year average production as set forth in the USDA Crop Production 
Annual Summary Reports for 1979, 1980, and 1981. They are:

District 1--South Florida including all areas south of State Highway 
50.
District 2--North Florida including all areas north of State Highway 
50.
District 3--The States of Alabama and Georgia.
District 4--The States of South Carolina, North Carolina, Virginia, 
Delaware, Maryland, West Virginia, Pennsylvania, New Jersey, New York, 
Ohio, Michigan, Connecticut, Rhode Island, Massachusetts, Vermont, New 
Hampshire, and Maine.
District 5--The States of Mississippi, Kentucky, Tennessee, Louisiana, 
Arkansas, Missouri, Illinois, Indiana, Iowa, Kansas, Nebraska, Oklahoma, 
Wisconsin, Minnesota, North Dakota, South Dakota, Colorado, and New 
Mexico.
District 6--The State of Texas.
District 7--The States of Arizona, California, Nevada, Utah, Oregon, 
Idaho, Wyoming, Washington, and Montana.

    (c) After two years, the Board shall review the districts to 
determine whether realignment of the districts is necessary and at least 
every five years thereafter the Board shall make such a review. In 
making such review, it shall give consideration to:
    (1) The most recent three years USDA production reports or Board 
assessment reports if USDA production reports are unavailable;
    (2) Shifts and trends in quantities of watermelon produced, and
    (3) Other relevant factors.

As a result of this review, the Board may realign the districts subject 
to the approval of the Secretary. Any such realignment shall be 
recommended by the Board to the Secretary at least six months prior to 
the date of the call for nominations and shall become effective at least 
30 days prior to such date.
    (d) Importer representation on the Board shall be proportionate to 
the percentage of assessments paid by importers to the Board, except 
that at least one representative of importers shall serve on the Board.
    (e) Not later than 5 years after the date that importers are subject 
to the Plan, and every 5 years thereafter, the Secretary shall evaluate 
the average annual percentage of assessments paid by importers during 
the 3-year period preceding the date of the evaluation and adjust, to 
the extent practicable, the number of importer representatives on the 
Board.
    (f) The Board consists of 14 producers, 14 handlers, at least one 
importer,

[[Page 100]]

and one public member appointed by the Secretary.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10797, Feb. 28, 1995]



Sec. 1210.321  Nominations and selection.

    The Secretary shall appoint the members of the Board from 
nominations to be made in the following manner:
    (a) There shall be two individuals nominated for each vacant 
position.
    (b) The Board shall issue a call for nominations by February first 
of each year in which an election is to be held. The call shall include 
at a minimum, the following information:
    (1) A list of the vacancies and qualifications as to producers and 
handlers by district and to importers nationally for which nominees may 
be submitted.
    (2) The date by which the nominees shall be submitted to the 
Secretary for consideration to be in compliance with Sec. 1210.323 of 
this subpart.
    (3) A list of those States, by district, entitled to participate in 
the nomination process.
    (4) The date, time, and location of any next scheduled meeting of 
the Board, national and State producer or handler associations, 
importers, and district conventions, if any.
    (c) Nominations for producer and handler positions that will become 
vacant shall be made by district convention in the district entitled to 
nominate. Notice of such convention shall be publicized to all producers 
and handlers within such district, and the Secretary at least ten days 
prior to said event. The notice shall have attached to it the call for 
nominations from the Board. The responsibility for convening and 
publicizing the district convention shall be that of the then members of 
the Board from that district.
    (d) Nominations for importers positions that become vacant may be 
made by mail ballot, nomination conventions, or by other means 
prescribed by the Secretary. The Board shall provide notice of such 
vacancies and the nomination process to all importers through press 
releases and any other available means as well as direct mailing to 
known importers. All importers may participate in the nomination 
process: Provided, That a person who both imports and handles 
watermelons may vote for importer members and serve as an importer 
member if that person imports 50 percent or more of the combined total 
volume of watermelons handled and imported by that person.
    (e) All producers and handlers within the district may participate 
in the convention: Provided, That a person that produces and handles 
watermelons may vote for handler members only if the producer purchased 
watermelons from other producers, in a combined total volume that is 
equal to 25 percent or more of the producer's own production; or the 
combined total volume of watermelon handled by the producer from the 
producer's own production and purchases from other producer's production 
is more than 50 percent of the producer's own production; and provided 
further, That if a producer or handler is engaged in the production or 
handling of watermelons in more than one State or district, the producer 
or handler shall participate within the State or district in which the 
producer or handler so elects in writing to the Board and such election 
shall remain controlling until revoked in writing to the Board.
    (f) The district convention chairperson shall conduct the selection 
process for the nominees in accordance with procedures to be adopted at 
each such convention, subject to requirements set in Sec. 1210.321(e).
    (1) No State in Districts 3, 4, 5, and 7 as currently constituted 
shall have more than three producers and handlers representatives 
concurrently on the Board.
    (2) Each State represented at the district convention shall have one 
vote for each producer position and one vote for each handler position 
from the District on the Board, which vote shall be determined by the 
producers and handlers from that State by majority vote. Each State 
shall further have an additional vote for each five hundred thousand 
hundredweight volume as determined by the three year average annual crop 
production summary reports of the USDA, or if such reports are not 
published, then the three year average of the Board assessment reports; 
Provided, That for the first two calls for nominees, the USDA Crop 
Production

[[Page 101]]

Annual Summary Reports for 1979, 1980, and 1981 will be controlling as 
to any additional production volume votes.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995]



Sec. 1210.322  Term of office.

    (a) The term of office of Board members shall be three years.
    (b) Except in the case of mid-term vacancies, the term of office 
shall begin on January 1, or such other date as may be recommended by 
the Board and approved by the Secretary.
    (c) Board members shall serve during the term of office for which 
they are selected and have qualified, and until their successors are 
selected and have qualified.
    (d) No person shall serve more than two successive terms of office.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995; 60 
FR 13515, Mar. 13, 1995]



Sec. 1210.323  Acceptance.

    Each person nominated for membership on the Board shall qualify by 
filing a written acceptance with the Secretary. Such written acceptance 
shall accompany the nominations list required by Sec. 1210.321.



Sec. 1210.324  Vacancies.

    (a) In the event any member of the Board ceases to be a member of 
the category of members from which the member was appointed to the 
Board, such position shall automatically become vacant.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to the 
Secretary that the member be removed from office. If the Secretary finds 
the recommendation of the Board shows adequate cause, the Secretary 
shall remove such member from office. Further, without recommendation of 
the Board, a member may be removed by the Secretary upon showing of 
adequate cause, if the Secretary determines that the person's continual 
services would be detrimental to the purposes of the Act.
    (c) To fill any vacancy caused by the failure of any person selected 
as a member of the Board to qualify, or in the event of the death, 
removal, resignation, or disqualification of any member, a successor 
shall be nominated and selected in the manner specified in 
Sec. 1210.321, except that said nomination and replacement shall not be 
required if the unexpired term of office is less than six months. In the 
event of failure to provide nominees for such vacancies, the Secretary 
may appoint other eligible persons.



Sec. 1210.325  Procedure.

    (a) A simple majority of Board members shall constitute a quorum and 
any action of the Board shall require the concurring votes of a majority 
of those present and voting. At assembled meetings all votes shall be 
cast in person.
    (b) For routine and noncontroversial matters which do not require 
deliberation and the exchange of views, and for matters of an emergency 
nature when there is not enough time to call an assembled meeting, the 
Board may act upon a majority of concurring votes of its members cast by 
mail, telegraph, telephone, or by other means of communication; 
Provided, That each member receives an accurate, full, and substantially 
identical explanation of each proposition. Telephone votes shall be 
promptly confirmed in writing. All votes shall be recorded in the Board 
minutes.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995]



Sec. 1210.326  Compensation and reimbursement.

    Board members shall serve without compensation but shall be 
reimbursed for reasonable expenses incurred by them in the performance 
of their duties as Board members.



Sec. 1210.327  Powers.

    The Board shall have the following powers subject to Sec. 1210.363:
    (a) To administer the provisions of this Plan in accordance with its 
terms and conditions;
    (b) To make rules and regulations to effectuate the terms and 
conditions of this Plan;

[[Page 102]]

    (c) To require its employees to receive, investigate, and report to 
the Secretary complaints of violations of this Plan; and
    (d) To recommend to the Secretary amendments to this Plan.



Sec. 1210.328  Duties.

    The Board shall, among other things, have the following duties:
    (a) To meet, organize, and select from among its members a president 
and such other officers as may be necessary; to select committees and 
subcommittees of board members; to adopt such rules for the conduct of 
its business as it may deem advisable; and it may establish working 
committees of persons other than Board members.
    (b) To employ such persons as it may deem necessary and to determine 
the compensation and define the duties of each; and to protect the 
handling of Board funds through fidelity bonds;
    (c) To prepare and submit for the Secretary's approval, prior to the 
beginning of each fiscal period, a recommended rate of assessment and a 
fiscal period budget of the anticipated expenses in the administration 
of this Plan, including the probable costs of all programs and projects;
    (d) To develop programs and projects, which must be approved by the 
Secretary before becoming effective, and enter into contracts or 
agreements, with the approval of the Secretary, for the development and 
carrying out of programs or projects of research, development, 
advertising or promotion, and the payment of the costs thereof with 
funds received pursuant to this Plan;
    (e) To keep minutes, books, and records which clearly reflect all of 
the acts and transactions of the Board. Minutes of each Board meeting 
shall be promptly reported to the Secretary;
    (f) To prepare and submit to the Secretary such reports from time to 
time as may be prescribed for appropriate accounting with respect to the 
receipt and disbursement of funds entrusted to the Board;
    (g) To cause the books of the Board to be audited by a certified 
public accountant at least once each fiscal period, and at such other 
time as the Board may deem necessary. The report of such audit shall 
show the receipt and expenditure of funds received pursuant to this 
part. Two copies of each such report shall be furnished to the Secretary 
and a copy of each such report shall be made available at the principal 
office of the Board for inspection by producers, handlers, and 
importers;
    (h) To investigate violations of the Plan and report the results of 
such investigations to the Secretary for appropriate action to enforce 
the provisions of the Plan;
    (i) To periodically prepare, make public, and make available to 
producers, handlers, and importers reports of its activities carried 
out.
    (j) To give the Secretary the same notice of meetings of the Board 
and its subcommittees as is given to its members;
    (k) To act as intermediary between the Secretary and any producer, 
handler, or importer;
    (l) To furnish the Secretary such information as the Secretary may 
request;
    (m) To notify watermelon producers, handlers, and importers of all 
Board meetings through press releases or other means;
    (n) To appoint and convene, from time to time, working committees 
drawn from producers, handlers, importers, and the public to assist in 
the development of research and promotion programs for watermelons; and
    (o) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of programs or projects to effectuate the declared purpose of 
the Act.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995]

                         Research and Promotion



Sec. 1210.330  Policy and objective.

    It shall be the policy of the Board to carry out an effective, 
continuous, and coordinated program of research, development, 
advertising, and promotion in order to:
    (a) Strengthen watermelons' competitive position in the marketplace,
    (b) Maintain and expand existing domestic and foreign markets, and

[[Page 103]]

    (c) Develop new or improved markets.

It shall be the objective of the Board to carry out programs and 
projects which will provide maximum benefit to the watermelon industry.



Sec. 1210.331  Programs and projects.

    The Board shall develop and submit to the Secretary for approval any 
programs or projects authorized in this section. Such programs or 
projects shall provide for:
    (a) The establishment, issuance, effectuation and administration of 
appropriate programs or projects for advertising and other sales 
promotion of watermelons designed to strengthen the position of the 
watermelon industry in the marketplace and to maintain, develop, and 
expand markets for watermelon;
    (b) Establishing and carrying out research and development projects 
and studies to the end that the acquisition of knowledge pertaining to 
watermelons or their consumption and use may be encouraged or expanded, 
or to the end that the marketing and use of watermelons may be 
encouraged, expanded, improved, or made more efficient: Provided, That 
quality control, grade standards, supply management programs or other 
programs that would otherwise limit the right of the individual 
watermelon producer to produce watermelons shall not be conducted under, 
or as a part of, this Plan;
    (c) The development and expansion of watermelon sales in foreign 
markets;
    (d) A prohibition on advertising or other promotion programs that 
make any reference to private brand names or use false or unwarranted 
claims on behalf of watermelons or false or unwarranted statements with 
respect to the attributes or use of any competing product;
    (e) Periodic evaluation by the Board of each program or project 
authorized under this Plan to insure that each program or project 
contributes to an effective and coordinated program of research and 
promotion and submission of such evaluation to the Secretary. If the 
Board or the Secretary finds that a program or project does not further 
the purposes of the Act, then the Board or the Secretary shall terminate 
such program or project; and
    (f) The Board to enter into contracts or make agreements for the 
development and carrying out of research and promotion and pay for the 
costs of such contracts or agreements with funds collected pursuant to 
Sec. 1210.341.

                        Expenses and Assessments



Sec. 1210.340  Budget and expenses.

    (a) Prior to the beginning of each fiscal period, or as may be 
necessary thereafter, the Board shall prepare and recommend a budget on 
a fiscal period basis of its anticipated expenses and disbursements in 
the administration of this Plan, including probable costs of research, 
development, advertising, and promotion. The Board shall also recommend 
a rate of assessment calculated to provide adequate funds to defray its 
proposed expenditures and to provide for a reserve as set forth in 
Sec. 1210.344.
    (b) The Board is authorized to incur such expenses for research, 
development, advertising, or promotion of watermelons, such other 
expenses for the administration, maintenance, and functioning of the 
Board as may be authorized by the Secretary, and any referendum and 
administrative costs incurred by the Department of Agriculture. The 
funds to cover such expenses shall be paid from assessments received 
pursuant to Sec. 1210.341.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995]



Sec. 1210.341  Assessments.

    (a) During the effective period of this subpart, assessments shall 
be levied on all watermelons produced and first handled in the United 
States and all watermelons imported into the United States for 
consumption as human food. No more than one assessment on a producer, 
handler, or importer shall be made on any lot of watermelons. The 
handler shall be assessed an equal amount on a per unit basis as the 
producer. If a person performs both producing and handling functions on 
any same lot of watermelons, both assessments shall be paid by such 
person. In the case of an importer, the assessment shall be equal to the 
combined rate for

[[Page 104]]

domestic producers and handlers and shall be paid by the importer at the 
time of entry of the watermelons into the United States.
    (b) Assessment rates shall be fixed by the Secretary in accordance 
with section 1647(f) of the Act. No assessments shall be levied on 
watermelons grown by producers of less than 10 acres of watermelons.
    (c) Each handler, as defined, is responsible for payment to the 
Board of both the producer's and the handler's assessment pursuant to 
regulations issued hereunder. The handler may collect producer 
assessments from the producer or deduct such assessments from the 
proceeds paid to the producer on whose watermelons the assessments are 
made. The handler shall maintain separate records for each producer's 
watermelons handled, including watermelons produced by said handler. In 
addition, the handler shall indicate the total quantity of watermelons 
handled by the handler, including those that are exempt under this Plan, 
and such other information as may be prescribed by the Board.
    (d) Each importer shall be responsible for payment of the assessment 
to the Board on watermelons imported into the United States through the 
U.S. Customs Service or in such other manner as may be established by 
rules and regulations approved by the Secretary.
    (e) Producer-handlers and handlers shall pay assessments to the 
Board at such time and in such manner as the Board, with the Secretary's 
approval, directs, pursuant to regulations issued under this part. Such 
regulations may provide for different handlers or classes of handlers 
and different handler payment and reporting schedules to recognize 
differences in marketing practices or procedures used in any State or 
production area.
    (f) There shall be a late payment charge imposed on any handler or 
importer who fails to remit to the Board the total amount for which any 
such handler or importer is liable on or before the payment due date 
established by the Board under paragraph (e) of this section. The amount 
of the late payment charge shall be set by the Board subject to approval 
by the Secretary.
    (g) There shall also be imposed on any handler or importer subject 
to a late payment charge, an additional charge in the form of interest 
on the outstanding portion of any amount for which the handler or 
importer is liable. The rate of such interest shall be prescribed by the 
Board subject to approval by the Secretary.
    (h) The Board is hereby authorized to accept advance payment of 
assessments by handlers and importers that shall be credited toward any 
amount for which the handlers and importers may become liable. The Board 
shall not be obligated to pay interest on any advance payment.
    (i) The Board is hereby authorized to borrow money for the payment 
of administrative expenses subject to the same fiscal, budget, and audit 
controls as other funds of the Board.
    (j) The Board may authorize other organizations to collect 
assessments in its behalf with the approval of the Secretary. Any 
reimbursement by the Board for such services shall be based on 
reasonable charges for services rendered.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10798, Feb. 28, 1995]



Sec. 1210.342  Exemption from assessment.

    (a) The Board may exempt watermelons used for nonfood purposes from 
the provisions of this Plan and shall establish adequate safeguards 
against improper use of such exemptions.
    (b) Importers of less than 150,000 pounds of watermelons per year 
shall be entitled to apply for a refund that is equal to the rate of 
assessment paid by domestic producers.
    (c) The Secretary may adjust the quantity of the weight exemption 
specified in paragraph (b) of this section on the recommendation of the 
Board after an opportunity for public notice and comment to reflect 
significant changes in the 5-year average yield per acre of watermelons 
produced in the United States.
    (d) The Board shall have the authority to establish rules, with the 
approval of the Secretary, for certifying

[[Page 105]]

whether a person meets the definition of a producer under section 
1210.306.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.343  [Reserved]



Sec. 1210.344  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal periods excess funds in a reserve so 
established; Provided, That funds in the reserve shall not exceed 
approximately two fiscal periods' expenses. Such reserve funds may be 
used to defray any expenses authorized under this subpart.

                       Reports, Books, and Records



Sec. 1210.350  Reports.

    (a) Each handler shall maintain a record with respect to each 
producer for whom watermelons were handled and for watermelons produced 
and handled by the handler. Handlers shall report to the Board at such 
times and in such manner as the Board may prescribe by regulations 
whatever information as may be necessary in order for the Board to 
perform its duties. Such reports may include, but shall not be limited 
to, the following information:
    (1) Total quantity of watermelons handled for each producer and by 
the handler, including those which are exempt under this Plan;
    (2) Total quantity of watermelons handled for each producer and by 
the handler, on which the producer assessment was collected;
    (3) Name and address of each person from whom an assessment was 
collected, the amount collected from each person, and the date such 
collection was made; and
    (4) Name and address of each person claiming exemption from 
assessment and a copy of each such person's claim of exemption.
    (b) Each importer of watermelons shall maintain a separate record 
that includes a record of:
    (1) The total quantity of watermelons imported into the United 
States that are included under the terms of this Plan;
    (2) The total quantity of watermelons that are exempt from the Plan; 
and
    (3) Such other information as may be prescribed by the Board.
    (c) Each importer shall report to the Board at such times and in 
such manner as it may prescribe such information as may be necessary for 
the Board to perform its duties under this part.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.351  Books and records.

    Each handler and importer subject to this Plan shall maintain, and 
during normal business hours make available for inspection by employees 
of the Board or Secretary, such books and records as are necessary to 
carry out the provisions of this Plan and the regulations issued 
thereunder, including such records as are necessary to verify any 
required reports. Such records shall be maintained for 2 years beyond 
the fiscal period of their applicability.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.352  Confidential treatment.

    (a) All information obtained from the books, records, or reports 
required to be maintained under Secs. 1210.350 and 1210.351 shall be 
kept confidential and shall not be disclosed to the public by any 
person. Only such information as the Secretary deems relevant shall be 
disclosed to the public and then only in a suit or administrative 
hearing brought at the direction, or on the request, of the Secretary, 
or to which the Secretary or any officer of the United States is a 
party, and involving this Plan: Except that nothing in this subpart 
shall be deemed to prohibit:
    (1) The issuance of general statements based on the reports of a 
number of handlers or importers subject to this Plan if such statements 
do not identify the information furnished by any person; or
    (2) The publication by direction of the Secretary of the name of any 
person violating this Plan together with a statement of the particular 
provisions of this Plan violated by such person.
    (b) Any disclosure of confidential information by any employee of 
the

[[Page 106]]

Board, except as required by law, shall be considered willful 
misconduct.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]

                              Miscellaneous



Sec. 1210.360  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive actions proposed and prepared by the Board 
shall be submitted to the Secretary for approval.



Sec. 1210.361  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly with others, in any way 
whatsoever to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, as such member or employee, 
except for acts of dishonesty or willful misconduct.



Sec. 1210.362  Influencing government action.

    No funds received by the Board under this Plan shall in any manner 
be used for the purpose of influencing governmental policy or action, 
except for making recommendations to the Secretary as provided in this 
subpart.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.363  Suspension or termination.

    (a) Whenever the Secretary finds that this Plan or any provision 
thereof obstructs or does not tend to effectuate the declared policy of 
the Act, the Secretary shall terminate or suspend the operation of this 
Plan or such provision thereof.
    (b) The Secretary may conduct a referendum at any time and shall 
hold a referendum on request of the Board or at least 10 percent of the 
combined total of the watermelon producers, handlers, and importers to 
determine if watermelon producers, handlers, and importers favor 
termination or suspension of this Plan. The Secretary shall suspend or 
terminate this Plan at the end of the marketing year whenever the 
Secretary determines that the suspension or termination is favored by a 
majority of the watermelon producers, handlers, and importers voting in 
such referendum who, during a representative period determined by the 
Secretary, have been engaged in the production, handling, or importing 
of watermelons and who produced, handled, or imported more than 50 
percent of the combined total of the volume of watermelons produced, 
handled, or imported by those producers, handlers, and importers voting 
in the referendum. For purposes of this section, the vote of a person 
who both produces and handles watermelons will be counted as a handler 
vote if the producer purchased watermelons from other producers, in a 
combined total volume that is equal to 25 percent or more of the 
producer's own production; or the combined total volume of watermelon 
handled by the producer from the producer's own production and purchases 
from other producer's production is more than 50 percent of the 
producer's own production. Provided, That the vote of a person who both 
imports and handles watermelons will be counted as an importer vote if 
that person imports 50 percent or more of the combined total volume of 
watermelons handled and imported by that person. Any such referendum 
shall be conducted by mail ballot.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.364  Proceedings after termination.

    (a) Upon the termination of this Plan, the Board shall recommend not 
more than five of its members to the Secretary to serve as trustees for 
the purpose of liquidating the affairs of the Board. Such persons, upon 
designation by the Secretary, shall become trustees of all funds and 
property then in possession or under control of the Board, including 
claims for any funds unpaid or property not delivered or any other claim 
existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into by it pursuant to Sec. 1210.328(d);

[[Page 107]]

    (3) From time-to-time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to person or persons as the Secretary may 
direct; and
    (4) Upon the request of the Secretary execute such assignments or 
other instruments necessary or appropriate to vest in such person or 
persons full title and right to all the funds, property, and claims 
vested in the Board or the trustees pursuant to this section.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this section shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) A reasonable effort shall be made by the Board or its trustees 
to return to producers, handlers and importers any residual funds not 
required to defray the necessary expenses of liquidation. If it is found 
impractical to return such remaining funds to producers, handlers and 
importers such funds shall be disposed of in such manner as the 
Secretary may determine to be appropriate.

[54 FR 24545, June 8, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.365  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this Plan or any regulation issued pursuant thereto, or 
the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this Plan or any regulation issued thereunder; or
    (b) Release or extinguish any violation of this Plan or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any other person with respect to any such 
violation.



Sec. 1210.366  Separability.

    If any provision of this Plan is declared invalid or the 
applicability thereof to any person or circumstance is held invalid, the 
validity of the remainder of this Plan or applicability thereof to other 
persons or circumstances shall not be affected thereby.



Sec. 1210.367  Patents, copyrights, inventions, and publications.

    Any patents, copyrights, inventions, product formulations, or 
publications developed through the use of funds collected under the 
provisions of this Plan shall be the property of the United States 
government as represented by the Board. Funds generated by such patents, 
copyrights, inventions, product formulations, or publications shall be 
considered income subject to the same fiscal, budget, and audit controls 
as other funds of the Board. Upon termination of this part, 
Sec. 1210.364 shall apply to determine the disposition of all such 
property.



 Subpart--Procedures for Nominating Members to the National Watermelon 
                             Promotion Board

    Source: 54 FR 38205, Sept. 15, 1989, unless otherwise noted.

                      Producer and Handler Members



Sec. 1210.400  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall have the same meaning as the definitions of such 
terms which appear in Subpart--Watermelon Research and Promotion Plan.



Sec. 1210.401  District conventions.

    (a) Except for the initial district convention in each district, 
which will be called and opened by a representative of the Secretary, 
the Board shall call and open all district conventions.
    (b) District conventions are to be held to nominate producers and 
handlers as candidates for membership on the National Watermelon 
Promotion Board. Each district, as defined in Sec. 1210.501, is entitled 
to two producer and two handler members on the Board.
    (c) There shall be two individuals nominated for each vacant 
position. In multi-State districts, no one State shall have nominees for 
more than

[[Page 108]]

three of the four district positions on the Board.
    (d) All producers and handlers within each district may participate 
in that district's convention: Provided, That they meet the eligibility 
provisions set forth in Sec. 1210.402 of this subpart.
    (e) The convention chairperson shall be elected as provided in 
Sec. 1210.403(b) of this subpart.
    (f) The Board member nomination process shall be conducted by the 
chairperson in conformance with the provisions of Sec. 1210.321 of the 
Plan and Sec. 1210.403 of this subpart. At the conclusion of the 
district convention for the initial term of office, the chairperson will 
provide the Secretary with:
    (1) The identification of that district's two nominees for each 
producer and handler position on the Board, and
    (2) A typed copy of the district convention's minutes.

This information must be provided by the chairperson to the Board staff 
in a manner that will ensure receipt, at the address specified in the 
call for the district convention, within 14 calendar days of the 
district convention's completion, but not later than July 8 for 
appointments to become effective on the following January 1. The Board 
staff must forward such information to the Secretary, in a manner that 
will ensure receipt, within 21 calendar days of completion of the 
district convention, but not later than July 15 for appointments to 
become effective on the following January 1. Further, the chairperson 
will immediately arrange for completion of qualification statements and 
other specified information by each nominee, and each nominee shall 
qualify by forwarding such information to the Board's office within 14 
calendar days of completion of the district convention, but not later 
than July 8 for appointments to become effective on the following 
January 1. The Board staff must forward the completed qualification 
statements and other specified information to the Secretary, in a manner 
that will ensure receipt within 21 calendar days of completion of the 
district convention, but not later than July 15 for appointments to 
become effective on the following January 1.

[54 FR 38205, Sept. 15, 1989, as amended at 58 FR 3355, Jan. 8, 1993; 59 
FR 18948, Apr. 21, 1994; 60 FR 10799, Feb. 28, 1995]



Sec. 1210.402  Voter and board member nominee eligibility.

    (a) All producers and handlers within a district may participate in 
their district convention for the purpose of nominating candidates for 
appointment to the Board: Provided, That a producer who both produces 
and handles watermelons may vote for handler member nominees and serve 
as a handler member nominee only if the producer purchased watermelons 
from other producers, in a combined total volume that is equal to 25 
percent or more of the producer's own production or the combined total 
volume of watermelons handled by the producer from the producer's own 
production and purchases from other producer's production is more than 
50 percent of the producer's own production; and Provided further, That 
if a producer or handler is engaged in the production or handling of 
watermelons in more than one State or district, the producer or handler 
shall participate within the State or district in which the producer or 
handler so elects in writing to the Board and such election shall remain 
controlling until revoked in writing to the Board. For the purpose of 
participation in initial nominating conventions, such election shall be 
made in writing, at the address provided, to the Department official 
identified in the call for a district convention.
    (b) Any individual, group of individuals, partnership, corporation, 
association, cooperative or any other entity which is engaged in the 
production, first handling or importing of watermelons is considered a 
person and as such is entitled to only one vote, except that such person 
may cast proxy votes as provided in Sec. 1210.403 and Sec. 1210.404 of 
this subpart.
    (c) All producers and handlers attending their district conventions 
may be candidates for one or more of the positions of State 
spokesperson, district

[[Page 109]]

convention chairperson, and producer or handler nominee.

[54 FR 38205, Sept. 15, 1989, as amended at 60 FR 10799, Feb. 28, 1995]



Sec. 1210.403  Voting procedures.

    (a) Proxy voting by producers and handlers for producer and handler 
nominees shall be permitted at all district conventions: Provided, That 
producers may cast proxy votes for producers only, and handlers may cast 
proxy votes for handlers only. In non-multi-State districts, proxy 
voting shall be permitted for all producer and handler nominee balloting 
to determine the districts' nominees. In multi-State districts, proxy 
voting shall be permitted for all producers and handlers participating 
in a State's balloting to determine the State's nominees. No other proxy 
voting, such as for district convention chairperson, shall be allowed. 
Any person wanting to cast proxy votes must demonstrate authorization to 
do so. Authority to cast a proxy vote on behalf of another person shall 
be demonstrated through documentation containing:
    (1) The proxy voter's name, address, and telephone number;
    (2) Signature and date signed;
    (3) A certification identifying the proxy voter as a producer or a 
handler; and
    (4) A statement identifying the person being given authority by the 
proxy voter to cast the proxy vote.

All proxy documentation must be received by the Board at its 
headquarters address at least two weeks before the district convention 
is scheduled to convene. For the purpose of the initial district 
convention, all proxy documentation must be forwarded to the Department 
representative identified in the call for the district convention in a 
manner that will ensure receipt, at the address specified in the call, 
at least 72 hours before the district convention is scheduled to 
convene. The Board, or in the case of the initial conventions the 
Department representative identified in the call or other representative 
of the Department, may challenge any proxy vote and disqualify any 
challenged vote for cause. In the case of duplicate proxy authorizations 
by any person, only the first authorization, determined by date will be 
allowed. In the case of duplicate dates, the proxy which is received 
first will be allowed.
    (b) In non-multi-State districts, convention chairpersons shall be 
elected by a majority vote of the eligible voters in attendance. In 
multi-State districts, the election shall be by majority vote of all 
States present with each State's vote(s) determined by a majority vote 
of the eligible voters of that State in attendance. Each such State is 
entitled to one vote, plus one additional vote for each 500,000 
hundredweight volume of production in the State as determined by the 
three-year average annual crop production summary reports of the 
Department or, if such reports are not published, then the three-year 
average of the Board's assessment reports: Provided, That for the first 
two conventions, the Department's Crop Production Annual Summary Reports 
for 1979, 1980, and 1981 will be controlling as to any additional 
production volume votes.
    (c) In multi-State districts 3, 4, 5 and 7, the convention 
chairperson will direct the eligible producer voters and handler voters 
from each State to caucus separately for the purpose of electing a State 
spokesperson for each group. Election of each State spokesperson shall 
be by simple majority of all individual voters in attendance. In lieu of 
written ballots, a State spokesperson may be elected by voice vote or a 
show of hands. The role of the State spokesperson is to coordinate State 
voting and to cast all State votes.
    (d) Convention chairpersons will coordinate the entire producer and 
handler nomination process. In conducting the nomination process, each 
convention chairperson will ensure that:
    (1) Voting for producer nominees is limited to producers, and voting 
for handler nominees is limited to handlers; and
    (2) Producer candidates for nomination are producers, and handler 
candidates for nomination are handlers.
    (e) Voting, for producer and handler nominees, in non-multi-State 
districts shall be on the basis of one vote per person, except that 
persons authorized to cast proxy votes shall be allowed to cast all 
proxy votes not disallowed by the Board or the Department. Election

[[Page 110]]

of nominees shall be on the basis of a simple majority of all eligible 
votes cast.
    (f) Voting for producer and handler nominees in multi-State 
districts shall be on a State by State basis. Producers and handlers 
from each State shall caucus separately, at the district convention, for 
the purpose of determining which nominees shall receive their State's 
vote(s) for membership on the Board. Each State's vote(s) shall be based 
on a simple majority of all votes (including proxy votes) cast by 
producers or handlers voting in their State's caucus. Each State 
represented at a multi-State district convention shall have one vote for 
each producer position and one vote for each handler position from the 
district on the Board. Each State shall further have an additional vote 
toward each position for each 500,000 hundredweight volume of production 
in the State as determined by the three-year average annual crop 
production summary reports of the Department or, if such reports are not 
published, then the three-year average of the Board's assessment 
reports: Provided, That for the first two calls for nominees, the 
Department's Crop Production Annual Summary Reports for 1979, 1980, and 
1981 will be controlling as to any additional production volume votes. 
Each State spokesperson will cast the State's vote(s) for each nominee 
position. Election of nominees shall be on the basis of a simple 
majority of all State votes cast.
    (g) During the voting for convention chairperson, State 
spokesperson, and Board member nominee, should no candidate receive the 
required simple majority on the first ballot, the number of candidates 
may be reduced by dropping one or more of the lowest vote recipients 
from the list of candidates. The balloting will be repeated until the 
position is filled.
    (h) Two nominees shall be elected for each of the producer and 
handler positions from each district on the Board. The two nominees for 
each position shall be elected simultaneously. The convention 
chairperson will open the floor to the nomination of candidates for 
possible election as a Board member nominee for each available position. 
Each position will be dealt with separately (i.e., candidates for one 
position will be nominated and then elected before the convention moves 
on to the next available position). Each eligible voter may vote for two 
of the nominees on one ballot. The two nominees receiving the greatest 
number of votes and at least a simple majority of the votes cast will be 
elected as the district's Board member nominees for the position. No 
individual elected as a nominee for Board membership may be a candidate 
on subsequent Board member nominee ballots (i.e., two different producer 
names and two different handler names must be submitted as nominees for 
each producer and handler position from each district to the Secretary 
of Agriculture). There shall be no designation of first and second 
choice nominees.

[54 FR 38205, Sept. 15, 1989, as amended at 58 FR 3355, Jan. 8, 1993]

                            Importer Members



Sec. 1210.404  Importer member nomination and selection.

    (a) The Board shall include one or more representatives of 
importers, who shall be appointed by the Secretary from nominations 
submitted by watermelon importers. Importers' representation on the 
Board shall be proportionate to the percentage of assessments paid by 
importers to the Board, except that at least one representative of 
importers shall serve on the Board if importers are subject to the Plan. 
Nominations for importer positions that become vacant shall be made by 
importers at nomination conventions or by mail ballot.
    (b) The initial nomination of importer members shall be made not 
later than 90 days after the Plan is amended.
    (c) There shall be two individuals nominated for each vacant 
position. The importer receiving the highest number of votes for a 
vacancy shall be the first choice nominee, and the importer receiving 
the second highest number of votes shall be the second choice nominee 
submitted to the Secretary.
    (d) Any individual, group of individuals, partnership, corporation, 
association, cooperative or any other entity which is engaged in the 
production,

[[Page 111]]

first handling or importing of watermelons is considered a person and as 
such is entitled to only one vote, except that such person may cast 
proxy votes as provided in paragraph (e)(1) of this section.
    (e) Nomination Conventions. If nominations are made by nomination 
conventions, the Board shall widely publicize such conventions and 
provide importers and the Secretary at least 10 days notice prior to 
each convention.
    (1) Proxy voting by importers shall be permitted at all conventions. 
Any person wanting to cast proxy votes must demonstrate authorization to 
do so. Authority to cast a proxy vote on behalf of another person shall 
be demonstrated through documentation containing:
    (i) The proxy voter's name, address, and telephone number;
    (ii) Signature and date signed;
    (iii) A certification identifying the proxy voter as an importer; 
and
    (iv) A statement identifying the person being given authority by the 
proxy voter to cast the proxy vote.
    (2) The Board shall provide to the Secretary a typed copy of each 
convention's minutes and shall arrange for completion of qualification 
statements and other specified information by each nominee and forward 
such to the Secretary within 14 calendar days of completion of a 
convention.
    (f) Mail balloting. If nominations are conducted by mail ballot, the 
Board shall request importers to submit nominations of eligible 
importers. It is the importer's responsibility to prove the individual's 
eligibility. After the names of nominees are received, the Board shall 
print ballots and ask eligible importers to vote to nominate their 
candidates. After the vote is received, the Board shall tabulate the 
results and shall send to the Department the nominees in order of 
preference. The Board shall provide the Secretary with a report on the 
results, number of importers participating in the vote, and the volume 
of imports, and shall arrange for completion of qualification statements 
and other specified information by each nominee and forward such to the 
Secretary within 14 calendar days of receiving the ballots.
    (g) Any individual who both imports and handles watermelons will be 
considered an importer if that person imports 50 percent or more of the 
combined total volume of watermelons handled and imported by that 
person.

[60 FR 10800, Feb. 28, 1995]

                              Public Member



Sec. 1210.405  Public member nominations and selection.

    (a) The public member shall be nominated by the other members of the 
Board. The public member shall have no direct financial interest in the 
commercial production or marketing of watermelons except as a consumer 
and shall not be a director, stockholder, officer or employee of any 
firm so engaged. The Board shall nominate two individuals for the public 
member position. Voting for public member nominees shall require a 
quorum of the Board and shall be on the basis of one vote per Board 
member. Election of nominees shall be on the basis of a simple majority 
of those present and voting. Such election shall be held prior to August 
1, 1990, and every third August first thereafter. The Board may 
prescribe such additional qualifications, administrative rules and 
procedures for selection and voting for public member nominees as it 
deems necessary and the Secretary approves.
    (b) Each person nominated for the position of public member on the 
Board shall qualify by filing a written acceptance with the Secretary 
within 14 calendar days of completion of the Board meeting at which 
public member nominees were selected.

[55 FR 13256, Apr. 10, 1990. Redesignated and amended at 60 FR 10800, 
Feb. 28, 1995]



                     Subpart--Rules and Regulations

    Source: 55 FR 13256, Apr. 10, 1990, unless otherwise noted.

                               Definitions



Sec. 1210.500  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall have the same meaning as the definitions of such 
terms which

[[Page 112]]

appear in subpart--Watermelon Research and Promotion Plan.

                                 General



Sec. 1210.501  Realignment of districts.

    Pursuant to Sec. 1210.320(c) of the Plan, the districts shall be as 
follows:

District 1--South Florida, including all areas south of State Highway 
50.
District 2--North Florida, including all areas north of State Highway 
50.
District 3--The States of Alabama, Georgia, and Mississippi.
District 4--The States of Connecticut, Delaware, Indiana, Kentucky, 
Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New 
York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, 
Tennessee, Vermont, Virginia, and West Virginia.
District 5--The States of California--north of San Luis Obispo, Kern, 
and San Bernardino counties, Colorado, Idaho, Illinois, Iowa, Kansas, 
Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Oklahoma, 
Oregon, South Dakota, Utah, Washington, Wisconsin, and Wyoming.
District 6--The States of Arkansas, Louisiana, and Texas.
District 7--The State of Arizona, the remainder of the State of 
California, including San Luis Obispo, Kern, and San Bernardino 
counties, and the State of New Mexico.


[59 FR 18948, Apr. 21, 1994]



Sec. 1210.502  [Reserved]



Sec. 1210.504  Contracts.

    The Board, with the approval of the Secretary, may enter into 
contracts or make agreements with persons for the development and 
submission to it of programs or projects authorized by the Plan and for 
carrying out such programs or projects. Contractors shall agree to 
comply with the provisions of this part. Subcontractors who enter into 
contracts or agreements with a Board contractor and who receive or 
otherwise utilize funds allocated by the Board shall be subject to the 
provisions of this part. All records of contractors and subcontractors 
applicable to contracts entered into by the Board are subject to audit 
by the Secretary.



Sec. 1210.505  Department of Agriculture costs.

    Pursuant to Sec. 1210.340, the Board shall reimburse the Department 
of Agriculture for referendum and administrative costs incurred by the 
Department with respect to the Plan. The Board shall pay those costs 
incurred by the Department for the conduct of Department duties under 
the Plan as determined periodically by the Secretary. The Department 
will bill the Board monthly and payment shall be due promptly after the 
billing of such costs. Funds to cover such expenses shall be paid from 
assessments collected pursuant to Sec. 1210.341.

[55 FR 13256, Apr. 10, 1990, as amended at 60 FR 10800 Feb. 28, 1995]

                               Assessments



Sec. 1210.515  Levy of assessments.

    (a) An assessment of two cents per hundredweight shall be levied on 
all watermelons produced for ultimate consumption as human food, and an 
assessment of two cents per hundredweight shall be levied on all 
watermelons first handled for ultimate consumption as human food. An 
assessment of four cents per hundredweight shall be levied on all 
watermelons imported into the United States for ultimate consumption as 
human food at the time of entry in the United States.
    (b) The import assessment shall be uniformly applied to imported 
watermelons that are identified by the numbers 0807.10.30007 and 
0807.10.40005 in the Harmonized Tariff Schedule of the United States or 
any other number used to identify fresh watermelons for consumption as 
human food. The U.S. Customs Service (USCS) will collect assessments on 
such watermelons at the time of entry and will forward such assessment 
as per the agreement between USCS and USDA. Any importer or agent who is 
exempt from payment of assessments may submit the Board adequate proof 
of the volume handled by such importer for the exemption to be granted.

[[Page 113]]

    (c) Watermelons used for non-human food purposes are exempt from 
assessment requirements but are subject to the safeguard provisions of 
Sec. 1210.521.

[55 FR 13256, Apr. 10, 1990, as amended at 60 FR 10800, Feb. 28, 1995]



Sec. 1210.516  [Reserved]



Sec. 1210.517  Determination of handler.

    The producer and handler assessments on each lot of watermelons 
handled shall be paid by the handler. Unless otherwise provided in this 
section, the handler responsible for payment of assessments shall be the 
first handler of such watermelons. The first handler is the person who 
initially performs a handling function as heretofore defined. Such 
person may be a fresh shipper, processor, or other person who first 
places the watermelons in the current of commerce.
    (a) The following examples are provided to aid in the identification 
of first handlers:
    (1) Producer grades, packs, and sells watermelons of own production 
to a handler. In this instance, it is the handler, not the producer, who 
places the watermelons in the current of commerce. The handler is 
responsible for payment of the assessments.
    (2) Producer packs and sells watermelons of that producer's own 
production from the field, roadside stand, or storage to a consumer, 
trucker, retail or wholesales outlet, or other buyer who is not a 
handler of watermelons. The producer places the watermelons in the 
current of commerce and is the first handler.
    (3) Producer purchases watermelons from another producer. The 
producer purchasing the watermelons is the first handler.
    (4) Producer delivers field-run watermelons of own production to a 
handler for preparation for market and entry into the current of 
commerce. The handler, in this instance, is the first handler, 
regardless of whether the handler subsequently handles such watermelons 
for the account of the handler or for the account of the producer.
    (5) Producer delivers field-run watermelons of own production to a 
handler for preparation for market and return to the producer for sale. 
The producer in this instance, is the first handler, except when the 
producer subsequently sells such watermelons to a handler.
    (6) Producer delivers watermelons of own production to a handler who 
takes title to such watermelons. The handler who purchases such 
watermelons from the producer is the first handler.
    (7) Producer supplies watermelons to a cooperative marketing 
association which sells or markets the watermelons and makes an 
accounting to the producer, or pays the proceeds of the sale to the 
producer. In this instance, the cooperative marketing association 
becomes the first handler upon physical delivery to such cooperative.
    (8) Handler purchases watermelons from a producer's field for the 
purpose of preparing such watermelons for market or for transporting 
such watermelons to storage for subsequent handling. The handler who 
purchases such watermelons from the producer is the first handler.
    (9) Broker/Commission House receives watermelons from a producer and 
sells such watermelons in the Broker's/Commission House's name. In this 
instance, the Broker/Commission House is the first handler, regardless 
of whether the Broker/ Commission House took title to such watermelons.
    (10) Broker/Commission House, without taking title or possession of 
watermelons, sells such watermelons in the name of the producer. In this 
instance, the producer is the first handler.
    (11) Processor utilizes watermelons of own production in the 
manufacture of rind pickles, frozen, dehydrated, extracted, or canned 
products for human consumption. In so handling watermelons the processor 
is the first handler.
    (12) Processor purchases watermelons from the producer thereof. In 
this instance, the processor is the first handler even though the 
producer may have graded, packed, or otherwise handled such watermelons.
    (b) In the event of a handler's death, bankruptcy, receivership, or 
incapacity to act, the representative of the handler or the handler's 
estate shall be

[[Page 114]]

considered the handler of the watermelons for the purpose of this 
subpart.

[55 FR 13256, Apr. 10, 1990, as amended at 58 FR 3356, Jan. 8, 1993]



Sec. 1210.518  Payment of assessments.

    (a) Time of payment. The assessment on domestically produced 
watermelons shall become due at the time the first handler handles the 
watermelons for non-exempt purposes. The assessment on imported 
watermelons shall become due at the time of entry, or withdrawal, into 
the United States.
    (b) Responsibility for payment. (1) The first handler is responsible 
for payment of both the producer's and the handler's assessment. The 
handler may collect the producer's assessment from the producer or 
deduct such producer's assessment from the proceeds paid to the producer 
on whose watermelons the producer assessment is made. Any such 
collection or deduction of producer assessment shall be made not later 
than the time when the first handler handles the watermelons.
    (2) The U.S. Customs Service shall collect assessments on imported 
watermelons from importers and forward such assessments under an 
agreement between the U.S. Customs Service and the U.S. Department of 
Agriculture. Importers shall be responsible for payment of assessments 
directly to the Board of any assessments due but not collected by the 
U.S. Customs Service at the time of entry, or withdrawal, on watermelons 
imported into the United States for human consumption.
    (c) Payment direct to the Board. (1) Except as provided in paragraph 
(b) and (e) of this section, each handler and importer shall remit the 
required producer and handler assessments, pursuant to Sec. 1210.341 of 
the Plan, directly to the Board not later than 30 days after the end of 
the month such assessments are due. Remittance shall be by check, draft, 
or money order payable to the National Watermelon Promotion Board, or 
NWPB, and shall be accompanied by a report, preferably on Board forms, 
pursuant to Sec. 1210.350. To avoid late payment charges, the 
assessments must be mailed to the Board and postmarked within 30 days 
after the end of the month such assessments are due.
    (2) Pursuant to Sec. 1210.350 of the Plan, each handler shall file 
with the Board a report for each month that assessable watermelons were 
handled. All handler reports shall contain at least the following 
information:
    (i) The handler's name, address, and telephone number;
    (ii) Date of report (which is also the date of payment to the 
Board);
    (iii) Period covered by the report;
    (iv) Total quantity of watermelons handled during the reporting 
period;
    (v) Date of last report remitting assessments to the Board; and
    (vi) Listing of all persons for whom the handler handled 
watermelons, their addresses, hundredweight handled, and total 
assessments remitted for each producer. In lieu of such a list, the 
handler may substitute copies of settlement sheets given to each person 
or computer generated reports, provided such settlement sheets or 
computer reports contain all the information listed above.
    (vii) Name, address, and hundredweight handled for each person 
claiming exemption for assessment.
    (viii) If the handler handled watermelons for persons engaged in the 
growing of less than 10 acres of watermelons, the report shall indicate 
the name and address of such person and the quantity of watermelons 
handled for such person.
    (3) The words ``final report'' shall be shown on the last report at 
the close of the handler's marketing season or at the end of each fiscal 
period if such handler markets assessable watermelons on a year-round 
basis.
    (4) Prepayment of assessments. (i) In lieu of the monthly assessment 
and reporting requirements of paragraph (b) of this section, the Board 
may permit handlers to make an advance payment of their total estimated 
assessments for the crop year to the Board prior to their actual 
determination of assessable watermelons. The Board shall not be 
obligated to pay interest on any advance payment.
    (ii) Handlers using such procedures shall provide a final annual 
report of actual handling and remit any unpaid assessments not later 
than 30 days after the end of the last month of the designated handler's 
marketing season

[[Page 115]]

or at the end of each fiscal period if such handler markets assessable 
watermelons on a year-round basis.
    (iii) Handlers using such procedures shall, after filing a final 
annual report, receive a reimbursement of any overpayment of 
assessments.
    (iv) Handlers using such procedures shall, at the request of the 
Board to verify a producer's refund claim, provide the Board with a 
handling report on any and all producers for whom the handler has 
provided handling services but has not yet filed a handling report with 
the Board.
    (v) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board on request.
    (d) Late payment charges and interest. (1) A late payment charge 
shall be imposed on any handler and importer who fails to make timely 
remittance to the Board of the total producer and handler and importer 
assessments for which any such handler and importer is liable. Such late 
payment shall be imposed on any assessments not received before the 
fortieth day after the end of the month such assessments are due. This 
one-time late payment charge shall be 10 percent of the assessments due 
before interest charges have accrued. The late payment charge will not 
be applied to any late payments postmarked within 30 days after the end 
of the month such assessments are due.
    (2) In addition to the late payment charge, one and one-half percent 
per month interest on the outstanding balance, including the late 
payment charge and any accrued interest, will be added to any accounts 
for which payment has not been received by the last day of the second 
month following the month of handling; Provided, that, handlers paying 
their assessments in accordance with paragraph (c)(4)(ii), will not be 
subject to the one and one-half percent per month interest under this 
paragraph until the last day of the second month after such assessments 
are due under paragraph (c)(4)(ii). Such interest will continue monthly 
until the outstanding balance is paid to the Board.
    (e) Payment through cooperating agency. The Board may enter into 
agreements, subject to approval of the Secretary, authorizing other 
organizations, such as a regional watermelon association or State 
watermelon board, to collect assessments in its behalf. In any State or 
area in which the Board has entered into such an agreement, the 
designated handler shall pay the assessment to such agency in the time 
and manner, and with such identifying information as specified in such 
agreement. Such an agreement shall not provide any cooperating agency 
with authority to collect confidential information from handlers or 
producers. To qualify, the cooperating agency must on its own accord 
have access to all information required by the Board for collection 
purposes. If the Board requires further evidence of payment than 
provided by the cooperating agency, it may acquire such evidence from 
individual handlers. All such agreements are subject to the requirements 
of the Act, Plan, and all applicable rules and regulations under the Act 
and the Plan.

[55 FR 13256, Apr. 10, 1990; 55 FR 20443, May 17, 1990, as amended at 56 
FR 15808, Apr. 18, 1991; 60 FR 10801, Feb. 28, 1995]



Sec. 1210.519  Failure to report and remit.

    Any handler and importer who fails to submit reports and remittances 
according to the provisions of Sec. 1210.518 shall be subject to 
appropriate action by the Board which may include one or more of the 
following actions:
    (a) Audit of the handler's and importer's books and records to 
determine the amount owed the Board.
    (b) Establishment of an escrow account for the deposit of 
assessments collected. Frequency and schedule of deposits and 
withdrawals from the escrow account shall be determined by the Board 
with the approval of the Secretary.
    (c) Referral to the Secretary for appropriate enforcement action.

[55 FR 13256, Apr. 10, 1990, as amended at 60 FR 10801, Feb. 28, 1995]



Sec. 1210.520  Refunds.

    Each importer of less than 150,000 pounds of watermelons during any 
calendar year shall be entitled to apply for a refund of the assessments 
paid in

[[Page 116]]

an amount equal to the amount paid by domestic producers.
    (a) Application form. The Board shall make available to all 
importers a refund application form.
    (b) Submission of refund application to the Board. The refund 
application form shall be submitted to the Board within 90 days of the 
last day of the year the watermelons were actually imported. The refund 
application form shall contain the following information:
    (1) Importer's name and address;
    (2) Number of hundredweight of watermelon on which refund is 
requested;
    (3) Total amount to be refunded;
    (4) Proof of payment as described below; and
    (5) Importer's signature.
    (c) Proof of payment of assessment. Evidence of payment of 
assessments satisfactory to the Board shall accompany the importer's 
refund application. An importer must submit a copy of the importer's 
report or a cancelled check. Evidence submitted with a refund 
application shall not be returned to the applicant.
    (d) Payment of refund. Immediately after receiving the properly 
executed application for refund, the Board shall make remittance to the 
applicant.

[60 FR 10801, Feb. 28, 1995]



Sec. 1210.521  Reports of disposition of exempted watermelons.

    The Board may require reports by handlers or importers on the 
handling/importing and disposition of exempted watermelons and/or on the 
handling of watermelons for persons engaged in growing less than 10 
acres of watermelons or in the case of importers, the importing of less 
than 150,000 pounds per year. Authorized employees of the Board or the 
Secretary may inspect such books and records as are appropriate and 
necessary to verify the reports on such disposition.

[60 FR 10801, Feb. 28, 1995]

                                 Records



Sec. 1210.530  Retention period for records.

    Each handler and importer required to make reports pursuant to this 
subpart shall maintain and retain for at least 2 years beyond the 
marketing year of their applicability:
    (a) One copy of each report made to the Board; and
    (b) Such records as are necessary to verify such reports.

[55 FR 13256, Apr. 10, 1990, as amended at 60 FR 10801, Feb. 28, 1995]



Sec. 1210.531  Availability of records.

    Each handler and importer required to make reports pursuant to this 
subpart shall make available for inspection and copying by authorized 
employees of the Board or the Secretary during regular business hours, 
such records as are appropriate and necessary to verify reports required 
under this subpart.

[55 FR 13256, Apr. 10, 1990, as amended at 60 FR 10801, Feb. 28, 1995]



Sec. 1210.532  Confidential books, records, and reports.

    All information obtained from the books, records, and reports of 
handlers and importers and all information with respect to refunds of 
assessments made to importers shall be kept confidential in the manner 
and to the extent provided for in Sec. 1210.352.

[60 FR 10801, Feb. 28, 1995]

                              Miscellaneous



Sec. 1210.540  OMB assigned numbers.

    The information collection and recordkeeping 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 0581-0093, except that

[[Page 117]]

Board member nominee background information sheets are assigned OMB 
Control Number 0505-0001.

[58 FR 3356, Jan. 8, 1993]



PART 1214--KIWIFRUIT RESEARCH, PROMOTION, AND CONSUMER INFORMATION ORDER--Table of Contents




                        Subparts A-B  [Reserved]

Subpart C--Procedure for the Conduct of Referenda in Connection With the 
      Kiwifruit Research, Promotion, and Consumer Information Order

Sec.
1214.200  General.
1214.201  Definitions.
1214.202  Voting.
1214.203  Instructions.
1214.204  Subagents.
1214.205  Ballots.
1214.206  Referendum report.
1214.207  Confidential information.

    Authority: 7 U.S.C. 7461-7473.

    Source: 62 FR 54312, Oct. 17, 1997, unless otherwise noted.



                        Subparts A-B  [Reserved]



Subpart C--Procedure for the Conduct of Referenda in Connection With the 
      Kiwifruit Research, Promotion, and Consumer Information Order



Sec. 1214.200  General.

    A referendum to determine whether eligible producers and importers 
favor the issuance of a proposed Kiwifruit Research, Promotion, and 
Consumer Information Order shall be conducted in accordance with this 
subpart.



Sec. 1214.201  Definitions.

    Unless otherwise defined in this section, the definition of terms 
used in this subpart shall have the same meaning as the definitions in 
the Order.
    (a) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (b) Order means the Kiwifruit Research, Promotion, and Consumer 
Information Order.
    (c) Referendum agent or agent means the individual or individuals 
designated by the Secretary to conduct the referendum.
    (d) Representative period means the period designated by the 
Secretary.
    (e) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity. For 
the purpose of this definition, the term ``partnership'' includes, but 
is not limited to:
    (1) A husband and wife who has title to, or leasehold interest in, 
kiwifruit production facilities and equipment as tenants in common, 
joint tenants, tenants by the entirety, or, under community property 
laws, as community property, and
    (2) So-called ``joint ventures,'' wherein one or more parties to the 
agreement, informal or otherwise, contributed capital and others 
contributed labor, management, equipment, or other services, or any 
variation of such contributions by two or more parties so that it 
results in the production or importation of kiwifruit and the authority 
to transfer title to the kiwifruit so produced or imported.
    (f) Eligible producer means any person or entity defined as a 
producer who produced 500 pounds or more of kiwifruit during the 
representative period and who:
    (1) Owns or shares in the ownership of kiwifruit production 
facilities and equipment resulting in the ownership of the kiwifruit 
produced;
    (2) Rents kiwifruit production facilities and equipment resulting in 
the ownership of all or a portion of the kiwifruit produced;
    (3) Owns kiwifruit production facilities and equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the kiwifruit produced; or
    (4) Is a party in a landlord-tenant relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce kiwifruit who share the risk of loss and receive a share 
of the kiwifruit produced. No other acquisition of legal

[[Page 118]]

title to kiwifruit shall be deemed to result in persons becoming 
eligible producers.
    (g) Eligible importer means any person or entity defined as an 
importer who imported 10,000 pounds or more during the representative 
period. Importation occurs when commodities originating outside the 
United States are entered or withdrawn from the U.S. Customs Service for 
consumption in the United States. Included are persons who hold title to 
foreign-produced kiwifruit immediately upon release by the U.S. Customs 
Service, as well as any persons who act on behalf of others, as agents 
or broker, to secure the release of kiwifruit from the U.S. Customs 
Service when such kiwifruit are entered or withdrawn for consumption in 
the United States.
    (h) Kiwifruit means all varieties of fresh kiwifruit classified 
under the species Actinidia deliciosa or the genus Actinidia, whose 
fruit is a large berry, oval in shape, with a brown skin covered in 
hairs, which are grown in or imported into the United States.



Sec. 1214.202  Voting.

    (a) Each person who is an eligible producer or importer, as defined 
in this subpart, at the time of the referendum and during the 
representative period, shall be entitled to cast only one ballot in the 
referendum. However, each producer in a landlord-tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to produce kiwifruit, in which more than one of the 
parties is a producer, shall be entitled to cast one ballot in the 
referendum covering only such producer's share of the ownership.
    (b) Proxy voting is not authorized, but an officer or employee of an 
eligible corporate producer or importer, or an administrator, executor, 
or trustee of an eligible producing or importing entity may cast a 
ballot on behalf of such producer or importer entity. Any individual so 
voting in a referendum shall certify that such individual is an officer 
or employee of the eligible producer or importer, or an administrator, 
executor, or trustee of an eligible producing or importing entity, and 
that such individual has the authority to take such action. Upon request 
of the referendum agent, the individual shall submit adequate evidence 
of such authority.
    (c) All ballots are to be cast by mail.



Sec. 1214.203  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
provided in this subpart, under the supervision of the Administrator. 
The Administrator may prescribe additional instructions, not 
inconsistent with the provisions of this section, to govern the 
procedure to be followed by the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
during which ballots may be cast.
    (b) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information including that needed for ascertaining:
    (1) Whether the person voting, or on whose behalf the vote is cast, 
is an eligible voter;
    (2) The total volume of kiwifruit produced by the voting producer 
during the representative period; and
    (3) The total volume of kiwifruit imported by the voting importer 
during the representative period.
    (c) Give reasonable advance public notice of the referendum:
    (1) By utilizing available media or public information sources, 
without incurring advertising expense, to publicize the dates, places, 
method of voting, eligibility requirements, and other pertinent 
information. Such sources of publicity may include, but are not limited 
to, print and radio; and
    (2) By such other means as the agent may deem advisable.
    (d) Mail to eligible producers and importers, whose names and 
addresses are known to the referendum agent, the instructions on voting, 
a ballot, and a summary of the terms and conditions of the proposed 
Order. No person who claims to be eligible to vote shall be refused a 
ballot.
    (e) At the end of the voting period, collect, open, number, and 
review the ballots and tabulate the results in presence of an agent of 
the Office of Inspector General.

[[Page 119]]

    (f) Prepare a report on the referendum.
    (g) Announce the results to the public.



Sec. 1214.204  Subagents.

    The referendum agent may appoint any individual or individuals 
deemed necessary or desirable to assist the agent in performing such 
agent's functions in this subpart. Each individual so appointed may be 
authorized by the agent to perform any or all of the functions which, in 
the absence of such appointment, shall be performed by the agent.



Sec. 1214.205  Ballots.

    The referendum agent and subagents shall accept all ballots cast; 
but, should they, or any of them, deem that a ballot should be 
challenged for any reason, the agent or subagent shall endorse above 
their signature, on the ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefore, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Ballots invalid under this subpart shall not be 
counted.



Sec. 1214.206  Referendum report.

    Except as otherwise directed, the referendum agent shall prepare and 
submit to the Administrator a report on results of the referendum, the 
manner in which it was conducted, the extent and kind of public notice 
given, and other information pertinent to analysis of the referendum and 
its results.



Sec. 1214.207  Confidential information.

    The ballots and other information or reports that reveal, or tend to 
reveal, the vote of any person covered under the Act and the voting list 
shall be held confidential and shall not be disclosed.



PART 1215--POPCORN PROMOTION, RESEARCH, AND CONSUMER INFORMATION--Table of Contents




 Subpart A--Popcorn Promotion, Research, and Consumer Information Order

                               Definitions

Sec.
1215.1  Act.
1215.2  Board.
1215.3  Board member.
1215.4  Commerce.
1215.5  Consumer information.
1215.6  Department.
1215.7  Fiscal year.
1215.8  Industry information.
1215.9  Marketing.
1215.10  Part and subpart.
1215.11  Person.
1215.12  Popcorn.
1215.13  Process.
1215.14  Processor.
1215.15  Programs, plans, and projects.
1215.16  Promotion.
1215.17  Research.
1215.18  Secretary.
1215.19  State.
1215.20  United States.

                              Popcorn Board

1215.21  Establishment and membership.
1215.22  Nominations and appointment.
1215.23  Acceptance.
1215.24  Term of office.
1215.25  Vacancies.
1215.26  Removal.
1215.27  Procedure.
1215.28  Compensation and reimbursement.
1215.29  Powers.
1215.30  Duties.

   Promotion, Research, Consumer Information, and Industry Information

1215.40  Programs, plans, and projects.
1215.41  Contracts.

                        Expenses and Assessments

1215.50  Budget and expenses.
1215.51  Assessments.
1215.52  Exemption from assessment.
1215.53  Influencing governmental action.

                       Reports, Books, and Records

1215.60  Reports.
1215.61  Books and records.
1215.62  Confidential treatment.

[[Page 120]]

                              Miscellaneous

1215.70  Right of the Secretary.
1215.71  Suspension or termination.
1215.72  Proceedings after termination.
1215.73  Effect of termination or amendment.
1215.74  Personal liability.
1215.75  Patents, copyrights, inventions, publications, and product 
          formulations.
1215.76  Amendments.
1215.77  Separability.

                    Subpart B--Rules and Regulations

                               Definitions

1215.100   Terms defined.

                          Exemption Procedures

1215.300  Exemption procedures.

                              Miscellaneous

1215.400  OMB control numbers.

    Authority: 7 U.S.C. 7481-7491.

    Source: 62 FR 39389, July 22, 1997, unless otherwise noted.



 Subpart A--Popcorn Promotion, Research, and Consumer Information Order

                               Definitions



Sec. 1215.1  Act.

    Act means the Popcorn Promotion, Research, and Consumer Information 
Act of 1995, Subtitle E of Title V of the Federal Agriculture 
Improvement and Reform Act of 1996, Pub. L. 104-127, 7 U.S.C. 7481-7491, 
and any amendments thereto.



Sec. 1215.2  Board.

    Board means the Popcorn Board established under section 575(b) of 
the Act.



Sec. 1215.3  Board member.

    Board member means an officer or employee of a processor appointed 
by the Secretary to serve on the Popcorn Board as a representative of 
that processor.



Sec. 1215.4  Commerce.

    Commerce means interstate, foreign, or intrastate commerce.



Sec. 1215.5  Consumer information.

    Consumer information means information and programs that will assist 
consumers and other persons in making evaluations and decisions 
regarding the purchasing, preparing, and use of popcorn.



Sec. 1215.6  Department.

    Department means the United States Department of Agriculture.



Sec. 1215.7  Fiscal year.

    Fiscal year means the 12-month period from January 1 through 
December 31 each year, or such other period as recommended by the Board 
and approved by the Secretary.



Sec. 1215.8  Industry information.

    Industry information means information and programs that will lead 
to the development of new markets, new marketing strategies, or 
increased efficiency for the popcorn industry, or activities to enhance 
the image of the popcorn industry.



Sec. 1215.9  Marketing.

    Marketing means the sale or other disposition of unpopped popcorn 
for human consumption in a channel of commerce but shall not include 
sales or disposition to or between processors.



Sec. 1215.10  Part and subpart.

    Part means the Popcorn Promotion, Research, and Consumer Information 
Order and all rules and regulations and supplemental orders issued 
thereunder, and the term subpart means the Popcorn Promotion, Research, 
and Consumer Information Order.



Sec. 1215.11  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other legal entity.



Sec. 1215.12  Popcorn.

    Popcorn means unpopped popcorn (Zea Mays L) that is commercially 
grown, processed in the United States by shelling, cleaning, or drying, 
and introduced into a channel of commerce.



Sec. 1215.13  Process.

    Process means to shell, clean, dry, and prepare popcorn for the 
market, but does not include packaging popcorn

[[Page 121]]

for the market without also engaging in another activity described in 
this paragraph.



Sec. 1215.14  Processor.

    Processor means a person engaged in the preparation of unpopped 
popcorn for the market who owns or who shares the ownership and risk of 
loss of such popcorn and who processes and distributes over 4 million 
pounds of popcorn in the market per year.



Sec. 1215.15  Programs, plans, and projects.

    Programs, plans, and projects means promotion, research, consumer 
information, and industry information plans, studies, projects, or 
programs conducted pursuant to this part.



Sec. 1215.16  Promotion.

    Promotion means any action, including paid advertising, to enhance 
the image or desirability of popcorn.



Sec. 1215.17  Research.

    Research means any type of study to advance the image, desirability, 
marketability, production, product development, quality, or nutritional 
value of popcorn.



Sec. 1215.18  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.



Sec. 1215.19  State.

    State means each of the 50 States and the District of Columbia.



Sec. 1215.20  United States.

    United States means all of the States.

                              Popcorn Board



Sec. 1215.21  Establishment and membership.

    (a) There is hereby established a Popcorn Board of nine members. The 
number of members on the Board may be changed by regulation: Provided, 
That the Board consist of not fewer than four members and not more than 
nine members. The Board shall be composed of popcorn processors 
appointed by the Secretary under Sec. 1215.24.
    (b) For purposes of nominating and appointing processors to the 
Board, the Secretary shall, to the extent practicable, take into account 
the geographic distribution of popcorn production.
    (c) No more than one officer or employee of a processor may serve as 
a Board member at the same time.



Sec. 1215.22  Nominations and appointment.

    (a) All nominations for appointments to the Board established under 
Sec. 1215.21 shall be made as follows:
    (1) As soon as practicable after the effective date of this subpart, 
nominations for appointment to the initial Board shall be obtained from 
processors by the Secretary. In any subsequent year in which an 
appointment to the Board is to be made, nominations for positions for 
which the term will expire at the end of that year shall be obtained 
from processors at least six months prior to the expiration of terms.
    (2) Except for initial Board members, whose nomination process will 
be initiated by the Secretary, the Board shall issue a call for 
nominations in each year for which an appointment to the Board is to be 
made. The call shall include, at a minimum, the following information:
    (i) A list of the vacancies for which nominees may be submitted and 
qualifications for nomination; and
    (ii) The date by which the names of nominees shall be submitted to 
the Secretary for consideration to be in compliance with paragraph (a) 
of this section.
    (3)(i) Nominations for each position shall be made by processors. 
Notice shall be publicized to all processors.
    (ii) All processors may participate in submitting nominations.
    (4) Two nominees must be submitted for each vacancy. If processors 
fail to nominate a sufficient number of nominees, additional nominees 
shall be obtained in a manner prescribed by the Secretary.

[[Page 122]]

    (b) The Secretary shall appoint the members of the Board from 
nominations made in accordance with paragraph (a).
    (1) The Secretary may reject any nominee submitted. If there is an 
insufficient number of nominees from whom to appoint members to the 
Board as a result of the Secretary's rejecting such nominees, additional 
nominees shall be submitted to the Secretary in a manner prescribed by 
the Secretary.
    (2) Whenever processors cannot agree on nominees for a position on 
the Board under the preceding provisions of this section, or whenever 
they fail to nominate individuals for appointment to the Board, the 
Secretary may appoint members in such a manner as the Secretary 
determines appropriate.
    (3) If a processor nominates more than one officer or employee, only 
one may be appointed to the Board by the Secretary.



Sec. 1215.23  Acceptance.

    Each individual nominated for membership of the Board shall qualify 
by filing a written acceptance with the Secretary at the time of 
nomination.



Sec. 1215.24  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that members appointed to the initial Board shall serve, to the 
extent practicable, proportionately for terms of two, three, and four 
years.
    (b)(1) Except with respect to terms of office of the initial Board, 
the term of office for each Board member shall begin on the date the 
member is seated at the Board's annual meeting or such other date that 
may be approved by the Secretary.
    (2) The term of office for the initial Board member shall begin 
immediately following the appointment by the Secretary.
    (c) Board members shall serve during the term of office for which 
they are appointed and have qualified, and until their successors are 
appointed and have qualified.
    (d) No Board member may serve more than two consecutive three-year 
terms, except as provided in Sec. 1215.25(d). Initial members serving 
two- or four-year terms may serve one successive three-year term.



Sec. 1215.25  Vacancies.

    (a) To fill any vacancy occasioned by the death, removal, 
resignation, or disqualification of any member of the Board, the 
Secretary may appoint a successor from the most recent nominations 
submitted for positions on the Board or the Secretary may obtain 
nominees to fill such vacancy in such a manner as the Secretary deems 
appropriate.
    (b) Each such successor appointment shall be for the remainder of 
the term vacated.
    (c) A vacancy will not be required to be filled if the unexpired 
term is less than six months.
    (d) If an unexpired term is less than 1.5 years, serving the term 
shall not prevent the appointee from serving two successive three-year 
terms.
    (e) A Board member shall be disqualified from serving on the Board 
if such individual ceases to be affiliated with the processor the member 
represents.



Sec. 1215.26  Removal.

    If a member of the Board consistently refuses to perform the duties 
of a member of the Board, or if a member of the Board is known to be 
engaged in acts of dishonesty or willful misconduct, the Board may 
recommend to the Secretary that the member be removed from office. 
Further, without recommendation of the Board, a member may be removed by 
the Secretary upon showing of adequate cause, including the failure by a 
member to submit reports or remit assessments required under this part, 
if the Secretary determines that such member's continued service will be 
detrimental to the achievement of the purposes of the Act.



Sec. 1215.27  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum.
    (b) Each member of the Board will be entitled to one vote on any 
matter put to the Board, and the motion will carry if supported by a 
simple majority of those voting. At assembled meetings of the Board, all 
votes will be cast in person.

[[Page 123]]

    (c) In lieu of voting at a properly convened meeting and, when in 
the opinion of the chairperson of the Board such action is considered 
necessary, the Board may take action upon the concurring votes by a 
majority of its members by mail, telephone, facsimile, or any other 
means of communication. If appropriate, any such action shall be 
confirmed promptly in writing. In that event, all members must be given 
prior notice and provided the opportunity to vote. Any action so taken 
shall have the same force and effect as though such action had been 
taken at a properly convened meeting of the Board. All votes shall be 
recorded in Board minutes.
    (d) Meetings of the Board may be conducted by electronic 
communications, provided that each member is given prior notice of the 
meeting and has the opportunity to be present either physically or by 
electronic connection.
    (e) The organization of the Board and the procedures for conducting 
meetings of the Board shall be in accordance with its bylaws, which 
shall be established by the Board and approved by the Secretary.



Sec. 1215.28  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for necessary and reasonable expenses incurred by such 
members in the performance of their responsibilities under this subpart.



Sec. 1215.29  Powers.

    The Board shall have the following powers:
    (a) To administer the Order in accordance with its terms and 
provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of the Order;
    (c) To select committees and subcommittees of Board members, 
including an executive committee, and to adopt such bylaws and other 
rules for the conduct of its business as it may deem advisable;
    (d) To appoint or employ such individuals as it may deem necessary, 
define the duties, and determine the compensation of such individuals;
    (e) To disseminate information to processors or industry 
organizations through programs or by direct contact using the public 
postal system or other systems;
    (f) To propose, receive, evaluate and approve budgets, plans and 
projects of popcorn promotion, research, consumer information and 
industry information, as well as to contract with the approval of the 
Secretary with appropriate persons to implement plans and projects;
    (g) To receive, investigate, and report to the Secretary for action 
any complaints of violations of the Order;
    (h) To recommend to the Secretary amendments to the order;
    (i) To accept or receive voluntary contributions;
    (j) To invest, pending disbursement pursuant to a program, plan or 
project, funds collected through assessments authorized under this Act 
provided for in Sec. 1215.51, and any other funds received by the Board 
in, and only in, obligations of the United States or any agency thereof, 
in general obligations of any State or any political subdivision 
thereof, in any interest bearing account or certificate of deposit or a 
bank that is a member of the Federal Reserve System, or in obligations 
fully guaranteed as to principal and interest by the United States;
    (k) With the approval of the Secretary, to enter into contracts or 
agreements with national, regional, or State popcorn processor 
organizations, or other organizations or entities, for the development 
and conduct of programs, plans or projects authorized under Sec. 1215.40 
and for the payment of the cost of such programs with assessments 
received pursuant to this subpart; and
    (l) Such other powers as may be approved by the Secretary.



Sec. 1215.30  Duties.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson and such other officers as may be 
necessary;

[[Page 124]]

    (b) To evaluate or develop, and submit to the Secretary for 
approval, promotion, research, consumer information, and industry 
information programs, plans or projects;
    (c) To prepare for each fiscal year, and submit to the Secretary for 
approval at least 60 days prior to the beginning of each fiscal year, a 
budget of its anticipated expenses and disbursements in the 
administration of this subpart, as provided in Sec. 1215.50;
    (d) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (e) To prepare and make public, at least annually, a report of its 
activities carried out, and an accounting for funds received and 
expended;
    (f) To cause its financial statements to be prepared in conformity 
with generally accepted accounting principles and to be audited by an 
independent certified public accountant in accordance with generally 
accepted auditing standards at least once each fiscal year and at such 
other times as the Secretary may request, and submit a copy of each such 
audit to the Secretary;
    (g) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or a representative 
of the Secretary, may attend such meetings;
    (h) To submit to the Secretary such information as may be requested 
pursuant to this subpart;
    (i) To keep minutes, books and records that clearly reflect all the 
acts and transactions of the Board. Minutes of each Board meeting shall 
be promptly reported to the Secretary;
    (j) To act as intermediary between the Secretary and any processor;
    (k) To investigate violations of the Act, order, and regulations 
issued under the order, conduct audits, and report the results of such 
investigations and audits to the Secretary for appropriate action to 
enforce the provisions of the Act, order, and regulations; and
    (l) To work to achieve an effective, continuous, and coordinated 
program of promotion, research, consumer information, and industry 
information designed to strengthen the popcorn industry's position in 
the marketplace, maintain and expand existing markets and uses for 
popcorn, develop new markets and uses for popcorn, and to carry out 
programs, plans, and projects designed to provide maximum benefits to 
the popcorn industry.

   Promotion, Research, Consumer Information, and Industry Information



Sec. 1215.40  Programs, plans, and projects.

    (a) The Board shall receive and evaluate, or on its own initiative 
develop, and submit to the Secretary for approval any program, plan or 
project authorized under this subpart. Such programs, plans or projects 
shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate programs for promotion, research, consumer information, and 
industry information with respect to popcorn; and
    (2) The establishment and conduct of research with respect to the 
sale, distribution, marketing, and use of popcorn, and the creation of 
new uses thereof, to the end that the marketing and use of popcorn may 
be encouraged, expanded, improved, or made more acceptable.
    (b) No program, plan, or project shall be implemented prior to its 
approval by the Secretary. Once a program, plan, or project is so 
approved, the Board may take appropriate steps to implement it.
    (c) Each program, plan, or project implemented under this subpart 
shall be reviewed or evaluated periodically by the Board to ensure that 
it contributes to an effective program of promotion, research, consumer 
information, or industry information. If it is found by the Board that 
any such program, plan, or project does not contribute to an effective 
program of promotion, research, consumer information, or industry 
information, then the

[[Page 125]]

Board shall terminate such program, plan, or project.
    (d) In carrying out any program, plan, or project, no reference to a 
brand name, trade name, or State or regional identification of any 
popcorn will be made. In addition, no program, plan, or project shall 
make use of unfair or deceptive acts or practices with respect to the 
quality, value, or use of any competing product.



Sec. 1215.41  Contracts.

    The Board shall not contract with any processor for the purpose of 
promotion or research. The Board may lease physical facilities from a 
processor for such promotion or research, if such an arrangement is 
determined to be cost effective by the Board and approved by the 
Secretary. Any contract or agreement shall provide that:
    (a) The contractor or agreeing party shall develop and submit to the 
Board a program, plan or project together with a budget or budgets that 
shall show the estimated cost to be incurred for such program, plan, or 
project;
    (b) Any such program, plan, or project shall become effective upon 
approval by the Secretary;
    (c) The contracting or agreeing party shall keep accurate records of 
all of its transactions and make periodic reports to the Board of 
activities conducted, submit accountings for funds received and 
expended, and make such other reports as the Secretary or the Board may 
require; and the Secretary may audit the records of the contracting or 
agreeing party periodically; and
    (d) Any subcontractor who enters into a contract with a Board 
contractor and who receives or otherwise uses funds allocated by the 
Board shall be subject to the same provisions as the contractor.

                        Expenses and Assessments



Sec. 1215.50  Budget and expenses.

    (a) At least 60 days prior to the beginning of each fiscal year, and 
as may be necessary thereafter, the Board shall prepare and submit to 
the Secretary a budget for the fiscal year covering its anticipated 
expenses and disbursements in administering this subpart.
    (b) Each budget shall include:
    (1) A rate of assessment for such fiscal year calculated, subject to 
Sec. 1215.51(b), to provide adequate funds to defray its proposed 
expenditures and to provide for a reserve as set forth in paragraph (g) 
of this section;
    (2) A statement of the objectives and strategy for each program, 
plan, or project;
    (3) A summary of anticipated revenue, with comparative data for at 
least one preceding year;
    (4) A summary of proposed expenditures for each program, plan, or 
project; and
    (5) Staff and administrative expense breakdowns, with comparative 
data for at least one preceding year.
    (c) In budgeting plans and projects of promotion, research, consumer 
information, and industry information, the Board shall expend assessment 
and contribution funds on:
    (1) Plans and projects for popcorn marketed in the United States or 
Canada in proportion to the amount of assessments projected to be 
collected on domestically marketed popcorn (including Canada); and
    (2) Plans and projects for exported popcorn in proportion to the 
amount of assessments projected to be collected on exported popcorn 
(excluding Canada).
    (d) The Board is authorized to incur such reasonable expenses, 
including provision for a reasonable reserve, as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning, and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. Such expenses 
shall be paid from funds received by the Board.
    (e) The Board may accept voluntary contributions, but these shall 
only be used to pay expenses incurred in the conduct of programs, plans, 
and projects approved by the Secretary. Such contributions shall be free 
from any encumbrances by the donor and the Board shall retain complete 
control of their use. The Board may also receive funds provided through 
the Foreign Agricultural Service of the United States Department of 
Agriculture for foreign marketing activities.

[[Page 126]]

    (f) As stated in section 75(f)(4)(A)(ii) of the Act, the Board shall 
reimburse the Secretary, from funds received by the Board, for costs 
incurred by the Secretary in implementing and administering this 
subpart: Provided, That the costs incurred by the Secretary to be 
reimbursed by the Board, excluding legal costs to defend and enforce the 
order, shall not exceed 15 percent of the projected annual revenues of 
the Board.
    (g) The Board may establish an operating monetary reserve and may 
carry over to subsequent fiscal periods excess funds in any reserve so 
established, except that the funds in this reserve shall not exceed 
approximately one fiscal year's expenses. Such reserve funds may be used 
to defray any expenses authorized under this subpart.
    (h) With the approval of the Secretary, the Board may borrow money 
for the payment of administrative expenses, subject to the same fiscal, 
budget, and audit controls as other funds of the Board during its first 
year of operation only.



Sec. 1215.51  Assessments.

    (a) Any processor marketing popcorn in the United States or for 
export shall pay an assessment on such popcorn at the time of 
introduction to market at a rate as established in Sec. 1215.51(c) and 
shall remit such assessment to the Board in such form and manner as 
prescribed by the Board.
    (b) Any person marketing popcorn of that person's own production to 
consumers in the United States either directly or through retail or 
wholesale outlets, shall remit to the Board an assessment on such 
popcorn at the rate set forth in paragraph Sec. 1215.51(c), and in such 
form and manner as prescribed by the Board.
    (c) Except as otherwise provided, the rate of assessment shall be 5 
cents per hundredweight of popcorn. The rate of assessment may be raised 
or lowered as recommended by the Board and approved by the Secretary, 
but shall not exceed 8 cents per hundredweight in any fiscal year.
    (d) The collection of assessments under this section shall commence 
on all popcorn processed in the United States on or after the date 
established by the Secretary, and shall continue until terminated by the 
Secretary. If the Board is not constituted on the date the first 
assessments are to be collected, the Secretary shall have the authority 
to receive assessments on behalf of the Board and may hold such 
assessments until the Board is constituted, then remit such assessments 
to the Board.
    (e) Each person responsible for remitting assessments under 
paragraphs (a) and (b) of this section shall remit the amounts due from 
assessments to the Board on a quarterly basis no later than the last day 
of the month following the last month in the previous quarter in which 
the popcorn was marketed, in such manner as prescribed by the Board.
    (f) The Board shall impose a late payment charge on any person who 
fails to remit to the Board the total amount for which the person is 
liable on or before the payment due date established under this section. 
The amount of the late payment charge shall be prescribed in rules and 
regulations as approved by the Secretary.
    (g) The Board shall impose an additional charge on any person 
subject to a late payment charge, in the form of interest on the 
outstanding portion of any amount for which the person is liable. The 
rate of interest shall be prescribed in rules and regulations as 
approved by the Secretary.
    (h) In addition, persons failing to remit total assessments due in a 
timely manner may also be subject to penalties and actions under federal 
debt collection procedures as set forth in 7 CFR 3.1 through 3.36.
    (i) Any assessment that is determined to be owing at a date later 
than the payment due established under this section, due to a person's 
failure to submit a report to the Board by the payment due date, shall 
be considered to have been payable on the payment due date. Under such a 
situation, paragraphs (f), (g), and (h) of this section shall be 
applicable.
    (j) The Board, with the approval of the Secretary, may enter into 
agreements authorizing other organizations or entities to collect 
assessments on its behalf. Any such organization or entity

[[Page 127]]

shall be required to maintain the confidentiality of such information as 
is required by the Board for collection purposes. Any reimbursement by 
the Board for such services shall be based on reasonable charges for 
services rendered.
    (k) The Board is hereby authorized to accept advance payment of 
assessments for the fiscal year by any person, that shall be credited 
toward any amount for which such person may become liable. The Board 
shall not be obligated to pay interest on any advance payment.



Sec. 1215.52  Exemption from assessment.

    (a) Persons that process and distribute 4 million pounds or less of 
popcorn annually, based on the previous year, shall be exempted from 
assessment.
    (b) To claim such exemption, such persons shall apply to the Board, 
in the form and manner prescribed in the rules and regulations.



Sec. 1215.53  Influencing governmental action.

    No funds received by the Board under this subpart shall in any 
manner be used for the purpose of influencing legislation or 
governmental policy or action, except to develop and recommend to the 
Secretary amendments to this subpart.

                       Reports, Books, and Records



Sec. 1215.60  Reports.

    (a) Each processor marketing popcorn directly to consumers, and each 
processor responsible for the remittance of assessments under 
Sec. 1215.51, shall be required to report quarterly to the Board, on a 
form provided by the Board, such information as may be required under 
this subpart or any rule and regulations issued thereunder. Such 
information shall be subject to Sec. 1215.62 and include, but not be 
limited to, the following:
    (1) The processor's name, address, telephone number, and Social 
Security Number or Employer Identification Number;
    (2) The date of report, which is also the date of payment to the 
Board;
    (3) The period covered by the report;
    (4) The number of pounds of popcorn marketed or in any other manner 
are subject to the collection of assessments;
    (5) The amount of assessments remitted;
    (6) The basis, if necessary, to show why the remittance is less than 
the number of pounds of popcorn divided by 100 and multiplied by the 
applicable assessment rate; and
    (7) The amount of assessments remitted on exports (not including 
Canada).
    (b) The words ``final report'' shall be shown on the last report at 
the end of each fiscal year.



Sec. 1215.61  Books and records.

    Each person who is subject to this subpart shall maintain and make 
available for inspection by the Board or the Secretary such books and 
records as are deemed necessary by the Board, with the approval of the 
Secretary, to carry out the provisions of this subpart and any rules and 
regulations issued hereunder, including such books and records as are 
necessary to verify any reports required. Such books and records shall 
be retained for at least two years beyond the fiscal year of their 
applicability.



Sec. 1215.62  Confidential treatment.

    (a) All information obtained from books, records, or reports under 
the Act, this subpart, and the rule and regulations issued thereunder 
shall be kept confidential by all persons, including all employees, 
agents, and former employees and agents of the Board; all officers, 
employees, agents, and former officers, employees, and agents of the 
Department; and all officers, employees, agents, and former officers, 
employees, and agents of contracting and subcontracting agencies or 
agreeing parties having access to such information. Such information 
shall not be available to Board members or processors. Only those 
persons having a specific need for such information to administer 
effectively the provisions of this part shall have access to such 
information. Only such information so obtained as the Secretary deems 
relevant shall be disclosed by

[[Page 128]]

them, and then only in a suit or administrative hearing brought at the 
direction, or on the request, of the Secretary, or to which the 
Secretary or any officer of the United States is a party, and involving 
this part.
    (b) No information obtained under the authority of this part may be 
made available to any agency or officer of the Federal Government for 
any purpose other than the implementation of the Act and any 
investigatory or enforcement action necessary for the implementation of 
the Act.
    (c) Nothing in paragraph (a) of this section may be deemed to 
prohibit:
    (1) The issuance of general statements based upon the reports of the 
number of persons subject to this part or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person;
    (2) The publication, by direction of the Secretary, of the name of 
any person who has violated this part, together with a statement of the 
particular provisions of this part violated by such person.
    (d) Any person who knowingly violated the provisions of this 
section, on conviction, shall be subject to a fine of not more than 
$1,000 or to imprisonment for not more than 1 year, or both, or if the 
person is an officer, employee, or agent of the Board or the Department, 
that person shall be removed from office or terminated from employment 
as applicable.

                              Miscellaneous



Sec. 1215.70  Right of the Secretary.

    All fiscal matters, programs, plans, or projects, contracts, rules 
or regulations, reports, or other substantive actions proposed and 
prepared by the Board shall be submitted to the Secretary for approval.



Sec. 1215.71  Suspension or termination.

    (a) Whenever the Secretary finds that this subpart or any provision 
thereof obstructs or does not tend to effectuate the declared policy of 
the Act, the Secretary shall terminate or suspend the operation of this 
subpart or such provision thereof.
    (b) The Secretary may conduct additional referenda to determine 
whether processors favor termination or suspension of this subpart three 
years after the effective date, on the request of a representative group 
comprising 30 percent or more of the number of processors who have been 
engaged in processing during a representative period as determined by 
the Secretary.
    (c) Whenever the Secretary determines that suspension or termination 
of this subpart is favored by two-thirds or more of the popcorn 
processors voting in a referendum under paragraph (b) of this section 
who, during a representative period determined by the Secretary, have 
been engaged in the processing, the Secretary shall:
    (1) Suspend or terminate, as appropriate, collection of assessments 
within six months after making such determination; and
    (2) Suspend or terminate, as appropriate, all activities under this 
subpart in an orderly manner as soon as practicable.
    (d) Referenda conducted under this subsection shall be conducted in 
such manner as the Secretary may prescribe.



Sec. 1215.72  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of, or under the control of 
the Board, including any claims unpaid or property not delivered, or any 
other claim existing at the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreement entered into by it under this subpart;
    (3) From time to time account for all receipts and disbursements, 
and deliver all property on hand, together with all books and records of 
the Board and of the trustees, to such persons as the Secretary may 
direct; and

[[Page 129]]

    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such other persons 
full title and right to all of the funds, property, and claims vested in 
the Board or the trustees under this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered under this subpart shall be subject to the same 
obligations imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information or industry information 
programs, plans, or projects authorized under this subpart.



Sec. 1215.73  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any rule and regulation issued under 
this subpart, or the issuance of any amendment to such provisions, shall 
not:
    (a) Affect or waive any right, duty, obligation, or liability that 
shall have arisen or may hereafter arise in connection with any 
provision of this subpart or any such rules or regulations;
    (b) Release or extinguish any violation of this subpart or any such 
rules or regulations; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.



Sec. 1215.74  Personal liability.

    No member or employee of the Board shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission of such member or employee under this subpart, 
except for acts of dishonesty or willful misconduct.



Sec. 1215.75   Patents, copyrights, inventions, publications, and product formulations.

    Any patents, copyrights, inventions, publications, or product 
formulations developed through the use of funds received by the Board 
under this subpart shall be the property of the United States Government 
as represented by the Board and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, 
publications, or product formulations inure to the benefit of the Board 
and be considered income subject to the same fiscal, budget, and audit 
controls as other funds of the Board. Upon termination of this subpart, 
Sec. 1215.72 shall apply to determine disposition of all such property.



Sec. 1215.76  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board or by any interested persons affected by the provisions of the 
Act, including the Secretary.



Sec. 1215.77  Separability.

    If any provision of this subpart is declared invalid, or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof to other persons or circumstances shall not be affected thereby.



                    Subpart B--Rules and Regulations

                               Definitions



Sec. 1215.100  Terms defined.

    Unless otherwise defined in this subpart, the definitions of terms 
used in this subpart shall have the same meaning as the definitions in 
Subpart A--Popcorn Promotion, Research, and Consumer Information Order 
of this part.

[[Page 130]]

                          Exemption Procedures



Sec. 1215.300  Exemption procedures.

    (a) Any processor who markets 4 million pounds or less of popcorn 
annually and who desires to claim an exemption from assessments during a 
fiscal year as provided in Sec. 1214.52 of this part shall apply to the 
Board, on a form provided by the Board, for a certificate of exemption. 
Such processor shall certify that the processor's marketing of popcorn 
during the previous fiscal year was 4 million pounds or less.
    (b) Upon receipt of an application, the Board shall determine 
whether an exemption may be granted. The Board then will issue, if 
deemed appropriate, a certificate of exemption to each person that is 
eligible to receive one.
    (c) Any person who desires to renew the exemption from assessments 
for a subsequent fiscal year shall reapply to the Board, on a form 
provided by the Board, for a certificate of exemption.
    (d) The Board may require persons receiving an exemption from 
assessments to provide to the Board reports on the disposition of exempt 
popcorn.

                              Miscellaneous



Sec. 1215.400  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control 
number 0581-0093, except for the Promotion Board nominee background 
statement form which is assigned OMB control number 0505-0001.



PART 1220--SOYBEAN PROMOTION, RESEARCH, AND CONSUMER INFORMATION--Table of Contents




             Subpart A--Soybean Promotion and Research Order

                               Definitions

Sec.
1220.101  Act.
1220.102  Board.
1220.103  Commerce.
1220.104  Committee.
1220.105  Consumer information.
1220.106  [Reserved]
1220.107  Cooperator organization.
1220.108  Department.
1220.109  Eligible organization.
1220.110  First purchaser.
1220.111  Fiscal period.
1220.112  Industry information.
1220.113  Marketing.
1220.114  National nonprofit producer-governed organization.
1220.115  Net market price.
1220.116  Part and subpart.
1220.117  Plans and projects.
1220.118  Person.
1220.119  Producer.
1220.120  [Reserved]
1220.121  Promotion.
1220.122  Qualified State Soybean Board.
1220.123  Referendum.
1220.124  [Reserved]
1220.125  Research.
1220.126  Secretary.
1220.127  Soybean products.
1220.128  Soybeans.
1220.129  State and United States.
1220.130  Unit.

                          United Soybean Board

1220.201  Membership of board.
1220.202  Term of office.
1220.203  Nominations.
1220.204  Appointment.
1220.205  Nominee's agreement to serve.
1220.206  Vacancies.
1220.207  Alternate members.
1220.208  Removal.
1220.209  Procedure.
1220.210  Compensation and reimbursement.
1220.211  Powers of the Board.
1220.212  Duties.

                 Soybean Program Coordinating Committee

1220.213  Establishment and membership.
1220.214  Term of office.
1220.215  Vacancies.
1220.216  Procedure.
1220.217  Compensation and reimbursement.
1220.218  Officers of the Committee.
1220.219  Powers of the Committee.
1220.220  Duties of the Committee.

                        Expenses and Assessments

1220.222  Expenses.
1220.223  Assessments.
1220.224-1220.227  [Reserved]
1220.228  Qualified State Soybean Boards.
1220.229  Influencing governmental action.
1220.230  Promotion, research, consumer information, and industry 
          information.

                       Reports, Books, and Records

1220.241  Reports.
1220.242  Books and records.
1220.243  Confidential treatment.

                              Miscellaneous

1220.251  Proceedings after termination.

[[Page 131]]

1220.252  Effect of termination or amendment.
1220.253  Personal liability.
1220.254  Patents, copyrights, inventions, and publications.
1220.255  Amendments.
1220.256  Separability.
1220.257  OMB control numbers.

                    Subpart B--Rules and Regulations

                               Definitions

1220.301  Terms defined.

                               Assessments

1220.310  Assessments.
1220.311  Collection and remittance of assessments.
1220.312  Remittance of assessments and submission of reports to United 
          Soybean Board or Qualified State Soybean Board.
1220.313  Qualified State Soybean Boards.
1220.314  Document evidencing payment of assessments.
1220.330--120.332  [Reserved]

                        Subparts C-F  [Reserved]

    Authority: 7 U.S.C. 6301-6311.



             Subpart A--Soybean Promotion and Research Order

    Source: 56 FR 31049, July 9, 1991, unless otherwise noted.

                               Definitions



Sec. 1220.101  Act.

    The term Act means the Soybean Promotion, Research, and Consumer 
Information Act, subtitle E of title XIX, of the Food, Agriculture, 
Conservation and Trade Act of 1990, Public Law No. 101-624, and any 
amendments thereto.



Sec. 1220.102  Board.

    The term Board means the United Soybean Board established under 
Sec. 1220.201 of this subpart.



Sec. 1220.103  Commerce.

    The term commerce means interstate, foreign, or intrastate commerce.



Sec. 1220.104  Committee.

    The term Committee means the Soybean Program Coordinating Committee 
established under Sec. 1220.213 of this subpart.



Sec. 1220.105  Consumer information.

    The term consumer information means information that will assist 
consumers and other persons in making evaluations and decisions 
regarding the purchase, preparation, and use of soybeans or soybean 
products.



Sec. 1220.106  [Reserved]



Sec. 1220.107  Cooperator organization.

    The term Cooperator Organization means the American Soybean 
Association, or any successor organization to the American Soybean 
Association, which conducts foreign market development activities on 
behalf of soybean producers.



Sec. 1220.108  Department.

    Department means the United States Department of Agriculture.



Sec. 1220.109  Eligible organization.

    The term eligible organization means any organization which has been 
certified by the Secretary pursuant to Sec. 1220.203 of this subpart as 
being eligible to submit nominations for initial membership on the 
Board.



Sec. 1220.110  First purchaser.

    The term first purchaser means--
    (a) except as provided in paragraph (b) of this section, any person 
buying or otherwise acquiring from a producer soybeans produced by such 
producer; or
    (b) In any case in which soybeans are pledged as collateral for a 
loan issued under any Commodity Credit Corporation price support loan 
program and the soybeans are forfeited by the producer in lieu of loan 
repayment, the Commodity Credit Corporation.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31095, July 14, 1992]



Sec. 1220.111  Fiscal period.

    The term fiscal period means the calendar year or such other annual 
period as the Board may determine with the approval of the Secretary.



Sec. 1220.112  Industry information.

    The term industry information means information and programs that 
will

[[Page 132]]

lead to the development of new markets, new marketing strategies, or 
increased efficiency for the soybean industry, and activities to enhance 
the image of the soybean industry.



Sec. 1220.113  Marketing.

    The term marketing means the sale or other disposition of soybeans 
or soybean products in any channel of commerce.



Sec. 1220.114  National nonprofit producer-governed organization.

    The term national nonprofit producer-governed organization means an 
organization that--
    (a) Is a nonprofit organization pursuant to section 501(c) (3), (5) 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5) and (6)); 
and
    (b) Is governed by a Board of directors of agricultural producers 
representing soybean producers on a national basis;



Sec. 1220.115  Net market price.

    The term net market price means--
    (a) except as provided in paragraph (b) of this section, the sales 
price, or other value received by a producer for soybeans after 
adjustments for any premium or discount based on grading or quality 
factors, as determined by the Secretary; or
    (b) For soybeans pledged as collateral for a loan issued under any 
Commodity Credit Corporation price support loan program, and where the 
soybeans are forfeited by the producer in lieu of loan repayment, the 
principal amount of the loan.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31095, July 14, 1992]



Sec. 1220.116  Part and subpart.

    Part means the Soybean Promotion and Research Order and all rules 
and regulations issued pursuant to the Act and the Order, and the Order 
itself shall be a ``Subpart'' of such part.



Sec. 1220.117  Plans and projects.

    Plans and Projects means promotion, research, consumer information, 
and industry information plans, studies, or projects pursuant to 
Sec. 1220.230.



Sec. 1220.118  Person.

    The term person means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other legal 
entity.



Sec. 1220.119  Producer.

    The term producer means any person engaged in the growing of 
soybeans in the United States who owns, or who shares the ownership and 
risk of loss of, such soybeans.



Sec. 1220.120  [Reserved]



Sec. 1220.121  Promotion.

    The term promotion means any action, including paid advertising, 
technical assistance, and trade servicing activities, to enhance the 
image or desirability of soybeans or soybean products in domestic and 
foreign markets, and any activity designed to communicate to consumers, 
importers, processors, wholesalers, retailers, government officials, or 
other information relating to the positive attributes of soybeans or 
soybean products or the benefits of importation, use, or distribution of 
soybeans and soybean products.



Sec. 1220.122  Qualified State Soybean Board.

    The term Qualified State Soybean Board means a State soybean 
promotion entity that is authorized by State law and elects to be the 
Qualified State Soybean Board for the State in which it operates 
pursuant to Sec. 1220.228(a)(1). If no such entity exists in a State, 
the term Qualified State Soybean Board means a soybean producer-governed 
entity--
    (a) That is organized and operating within a State;
    (b) That receives voluntary contributions and conducts soybean 
promotion, research, consumer information, or industry information 
programs; and
    (c) That meets the criteria, established by the Board and approved 
by the Secretary, relating to the qualifications of such entity to 
perform its duties under this part as determined by the Board, and is 
certified by the Board under Sec. 1220.228(a)(2), with the approval of 
the Secretary.

[[Page 133]]



Sec. 1220.123  Referendum.

    The term Referendum means a referendum, other than referenda defined 
in Sec. 1220.106 and Sec. 1220.124, to be conducted by the Secretary 
pursuant to the Act whereby producers shall be given the opportunity to 
vote to determine whether the continuance of this subpart is favored by 
a majority of producers voting.



Sec. 1220.124  [Reserved]



Sec. 1220.125  Research.

    The term research means any type of study to advance the image, 
desirability, marketability, production, product development, quality, 
or functional or nutritional value of soybeans or soybean products, 
including any research activity designed to identify and analyze 
barriers to export sales of soybeans and soybean products.



Sec. 1220.126  Secretary.

    The term Secretary means the Secretary of Agriculture of the United 
States or any other officer or employee of the Department to whom there 
has been delegated, the authority to act in the Secretary's stead.



Sec. 1220.127  Soybean products.

    The term soybean products means products produced in whole or in 
part from soybeans or soybean byproducts.



Sec. 1220.128  Soybeans.

    The term soybeans means all varieties of Glycine max or Glycine 
soja.



Sec. 1220.129  State and United States.

    The terms State and United States include the 50 States of the 
United States of America, the District of Columbia, and the Commonwealth 
of Puerto Rico.



Sec. 1220.130  Unit.

    The term unit shall mean each State, or group of States, which is 
represented on the Board.

                          United Soybean Board



Sec. 1220.201  Membership of board.

    (a) For the purposes of nominating and appointing producers to the 
Board, the United States shall be divided into 30 geographic units and 
the number of Board members from each unit, subject to paragraphs (d) 
and (e) of this section shall be as follows:

------------------------------------------------------------------------
                                                                  No. of
                              Unit                               members
------------------------------------------------------------------------
Illinois.......................................................       4
Iowa...........................................................       4
Minnesota......................................................       4
Indiana........................................................       4
Missouri.......................................................       3
Ohio...........................................................       3
Arkansas.......................................................       3
Nebraska.......................................................       3
South Dakota...................................................       3
Mississippi....................................................       2
Kansas.........................................................       2
Louisiana......................................................       2
Tennessee......................................................       2
North Carolina.................................................       2
Kentucky.......................................................       2
Michigan.......................................................       2
North Dakota...................................................       2
Maryland.......................................................       2
Wisconsin......................................................       2
Virginia.......................................................       1
Georgia........................................................       1
South Carolina.................................................       1
Alabama........................................................       1
Delaware.......................................................       1
Texas..........................................................       1
Pennsylvania...................................................       1
Oklahoma.......................................................       1
New Jersey.....................................................       1
Eastern Region (New York, Massachusetts, Connecticut, Florida,        1
 Rhode Island, Vermont, New Hampshire, Maine, West Virginia,
 District of Columbia, and Puerto Rico.........................
Western Region (Montana, Wyoming, Colorado, New Mexico, Idaho,        1
 Utah, Arizona, Washington, Oregon, Nevada, California, Hawaii,
 and Alaska)...................................................
------------------------------------------------------------------------

    (b) The Board shall be composed of soybean producers appointed by 
the Secretary from nominations submitted pursuant to Sec. 1220.203. A 
soybean producer may only be nominated by the unit in which that soybean 
producer is a resident or producer.
    (c) At the end of each three (3) year period, the Board shall review 
the geographic distribution of soybean production volume throughout the 
United States and may recommend to the Secretary a modification of 
paragraph (e) of this section, to best reflect the geographic 
distribution of soybean production volume in the United States. The 
Secretary may amend this subpart to make the changes recommended by the 
Board in levels of productions used to determine per unit 
representation. A unit may not, as a result of any modifications under 
this subsection, lose Board seats to which it is entitled at

[[Page 134]]

the time this subpart is initially issued unless its average annual 
production, as determined under paragraph (e)(6) of this section, 
declines below the levels required for representation, as specified in 
paragraphs (e) (1) through (5) of this section.
    (d) At the end of each three (3) year period, the Secretary shall 
review the volume of production (minus the volume of production for 
which refunds have been paid) of each unit provided representation under 
paragraph (a) of this section, and shall adjust the boundaries of any 
unit and the number of Board members from each such unit to conform with 
the criteria set out in paragraphs (e) (1) through (5) of this section.
    (e) The following formula will be used to determine the number of 
directors for each unit who shall serve on the Board:
    (1)(i) Except as provided in paragraph (e)(1)(ii) of this section, 
each State will be considered as a separate unit.
    (ii) States which do not have annual average soybean production 
equal to or greater than three million (3,000,000) bushels shall be 
grouped, to the extent practicable, into geographically contiguous units 
each of which, to the extent practicable, have a combined annual soybean 
production level which is equal to or greater than three million 
(3,000,000) bushels and each such unit shall be entitled to at least one 
representative on the Board.
    (2) Each unit that has an annual average soybean production of less 
than fifteen million (15,000,000) bushels shall be entitled to one 
representative on the Board.
    (3) Each unit which has an annual average soybean production of 
fifteen million (15,000,000) or more bushels but less than seventy 
million (70,000,000) bushels shall be entitled to two (2) 
representatives on the Board.
    (4) Each unit which has an annual average soybean production of 
seventy million (70,000,000) or more bushels but less than two hundred 
million (200,000,000) bushels shall be entitled to three (3) 
representatives on the Board.
    (5) Each unit which has an annual average soybean production of two 
hundred million (200,000,000) bushels or more shall be entitled to four 
(4) representatives on the Board.
    (6) For the purposes of this section, average annual soybean 
production shall be determined by using the average of the production 
for the State or unit over the five previous years, excluding the year 
in which production was the highest and the year in which production was 
the lowest.
    (f) [Reserved]

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995; 62 FR 37489, July 14, 1997; 62 FR 41485, Aug. 
1, 1997]



Sec. 1220.202  Term of office.

    (a) The members of the Board shall serve for terms of 3 years, 
except that the members appointed to the initial Board shall serve, 
proportionately, for terms of 1, 2, and 3 years.
    (b) Each member shall continue to serve until a successor is 
appointed by the Secretary and has accepted the position.
    (c) No member shall serve more than three consecutive 3-year terms 
in such capacity.



Sec. 1220.203  Nominations.

    All nominations for appointments to the Board under Sec. 1220.204 
shall be made in the following manner:
    (a) After the issuance of this subpart by the Secretary, nominations 
shall be obtained by the Secretary as specified in paragraphs (a), (b), 
and (c) of this section from Qualified State Soybean Boards or for 
initial Board nominations, eligible organizations deemed qualified to 
nominate pursuant to paragraph (f) of the section. A Qualified State 
Soybean Board, or for initial Board nominations, an eligible 
organization shall only submit nominations for positions on the Board 
representing the unit, as established under Sec. 1220.201, in which such 
Qualified State Soybean Board operates.
    (b) If the Secretary determines that a unit is not represented by a 
Qualified State Soybean Board or for initial Board nominations, an 
eligible organization, then the Secretary may solicit nominations from 
organizations which represent producers in that unit and from producers 
residing in that unit. A caucus may be held in such units for

[[Page 135]]

the purpose of collectively submitting nominations to the Secretary.
    (c) Where there is more than one State comprising a unit, the 
Secretary shall take into consideration the nominations submitted by 
Qualified State Soybean Boards or for initial Board nominations, 
eligible organizations, within the unit. A caucus may be held in such 
units for the purpose of collectively submitting nominations to the 
Secretary. The Secretary shall consider the proportional levels of 
production in each State comprising the unit when appointing members to 
the Board representing that unit.
    (d) At least two nominations shall be submitted for each position to 
be filled.
    (e) Nominations may be submitted in order of preference and for the 
initial Board, in order of preference for staggered terms. Should the 
Secretary reject any nomination submitted and there are insufficient 
nominations submitted from which appointments can be made, the Secretary 
may request additional nominations under paragraph (a) or (b) of this 
section, whichever provision is applicable for such unit.
    (f) Any organization authorized pursuant to State law to collect 
assessments from producers may notify the Secretary of the 
organization's intent to nominate members to the initial Board for the 
State or unit, as established under Sec. 1220.201, in which such 
organization operates and is authorized by State law. Such eligibility 
shall be based only upon the criteria established pursuant to 
Sec. 1220.228(a)(1). There shall only be one organization authorized per 
State pursuant to this section to submit nominations to the initial 
Board. If no such entity exists in a State, any organization meeting 
those requirements of Sec. 1220.228(a)(2) may request eligibility to 
submit nominations.



Sec. 1220.204  Appointment.

    From the nominations made pursuant to Sec. 1220.203, the Secretary 
shall appoint the members of the Board on the basis of representation 
provided for in Sec. 1220.201.



Sec. 1220.205  Nominee's agreement to serve.

    Any producer nominated to serve on the Board shall file with the 
Secretary at the time of nomination a written agreement to:
    (a) Serve on the Board if appointed; and
    (b) Agree to disclose any relationship with any soybean promotion 
entity or with any organization that has or is being considered for a 
contractual relationship with the Board.



Sec. 1220.206  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request nominations for a successor pursuant to Sec. 1220.203, and such 
successor shall be appointed pursuant to Sec. 1220.204.



Sec. 1220.207  Alternate members.

    (a) The Secretary shall solicit, pursuant to the procedures of 
Sec. 1220.203, nominations for alternate members of the Board.
    (b) The Secretary shall appoint one alternate member of the Board 
for each unit which has only one member pursuant to Sec. 1220.204 and 
Sec. 1220.205.
    (c) Alternate members of the Board may attend meetings of the Board 
as a voting member upon the following circumstances:
    (1) A member of the Board for the unit which the alternate member 
represents is absent; and
    (2) Such member, or in the case of incapacitation or death of the 
member, a relative, has contacted the appropriate officer of the Board 
to inform such officer of such absence;
    (d) An alternate member of the Board, when attending Board meetings 
in an official capacity, shall have the rights, duties and obligations 
of a Board member.



Sec. 1220.208  Removal.

    If the Secretary determines that any person appointed under this 
part fails or refuses to perform his or her duties properly or engages 
in acts of dishonesty or willful misconduct, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the

[[Page 136]]

Board or Committee may be removed by the Secretary if the Secretary 
determines that the person's continued service would be detrimental to 
the purposes of the Act.



Sec. 1220.209  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum.
    (b)(1) Except for roll call votes, each member of the Board will be 
entitled to one vote on any matter put to the Board and the motion will 
carry if supported by a simple majority of those voting.
    (2)(i) If a member requests a roll call vote, except as provided in 
paragraph (b)(2)(ii) of this section, each unit as established under 
Sec. 1220.201, shall cast one vote for each percent, or portion of a 
percent, of the average total amount of assessments remitted to the 
Board that was remitted from the unit (minus refunds) during each of the 
three previous fiscal years of the Board under Sec. 1220.223.
    (ii)(A) During the first fiscal year of the Board, the percentage 
used to determine the votes given to a unit will be based on annual 
average soybean production of the three previous years. If a unit is 
represented by more than one member, each member representing the unit 
shall receive an equal percentage of the votes allocated to the unit.
    (B) During the second and third year this subpart is in effect, the 
percentage used to determine the votes given to a unit will be based 
upon averaging the unit's percentage of annual assessments remitted to 
the Board (minus refunds).
    (iii) Should a member representing a unit not be present, then the 
other members representing such unit shall vote, on an equal basis if 
there is more than one member representing the unit present, the number 
of votes which the absent member would have been entitled to vote.
    (iv) A motion will carry on a roll call vote if approved by both a 
simple majority of all votes cast and a simple majority of all units 
voting (with the vote of each unit determined by a simple majority of 
all votes cast by members in that unit).
    (3) A member may not cast votes by proxy.
    (c) In lieu of a properly convened meeting and, when in the opinion 
of the chairperson of the Board such action is considered necessary, the 
Board may take action upon the concurring votes of a majority of its 
members, or if a roll call vote is requested, a simple majority of all 
votes cast and a simple majority of all units voting by mail, telephone, 
facsimile, or telegraph, but any such action by telephone shall be 
confirmed promptly in writing. In the event that such action is taken, 
all members must be notified and provided the opportunity to vote. Any 
action so taken shall have the same force and effect as though such 
action had been taken at a regular or special meeting of the Board.
    (d) On or after the end of the three-year period beginning on the 
effective date of this subpart, the Board may recommend to the Secretary 
changes in the voting procedures of the Board described in paragraph (b) 
of this section.



Sec. 1220.210  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for necessary and reasonable expenses incurred by them in 
the performance of their responsibilities under this subpart.



Sec. 1220.211  Powers of the Board.

    The Board shall have the following powers:
    (a) To receive and evaluate, or on its own initiative develop, and 
budget for plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Secretary regarding such proposals;
    (b) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (c) To make rules to effectuate the terms and provisions of this 
subpart;
    (d) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (e) To disseminate information to producers or producer 
organizations through programs or by direct contact

[[Page 137]]

utilizing the public postage system or other systems;
    (f) To assign responsibilities relating to budget and program 
development to the Committee as provided in Sec. 1220.219.
    (g) To select committees and subcommittees of Board members, and to 
adopt such rules for the conduct of its business as it may deem 
advisable;
    (h) To contract with Qualified State Soybean Boards to implement 
plans or projects;
    (i) To recommend to the Secretary amendments to this subpart; and
    (j) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1220.223 in, and only in, obligations 
of the United States or any agency thereof, in general obligations of 
any State or any political subdivision thereof, in any interest-bearing 
account or certificate of deposit of a bank which is a member of the 
Federal Reserve System, or in obligations fully guaranteed as to 
principal and interest by the United States.



Sec. 1220.212  Duties.

    The Board shall have the following duties:
    (a) To meet not less than three times annually, or more often if 
required for the Board to carry out its responsibilities pursuant to 
this subpart.
    (b) To organize and select from among its members a chairperson, 
vice chairperson, a treasurer and such other officers as may be 
necessary.
    (c) To appoint from its members an executive committee and to 
delegate to the committee authority to administer the terms and 
provisions of this subpart under the direction of the Board and within 
the policies determined by the Board.
    (d) To employ or contract for such persons to perform administrative 
functions as it may deem necessary and define the duties and determine 
the compensation of each.
    (e) To develop and submit to the Secretary for approval, promotion, 
research, consumer information, and industry information plans or 
projects.
    (f) To prepare, and submit to the Secretary for approval, budgets on 
a fiscal period basis of its anticipated expenses and disbursements in 
the administration of this subpart, including probable costs of 
promotion, research, consumer information, and industry information 
plans or projects, and also including a description of the proposed 
promotion, research, consumer information, and industry information 
programs contemplated therein.
    (g) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it.
    (h) With the approval of the Secretary, to enter into contracts or 
agreements with appropriate parties, including national nonprofit 
producer-governed organizations, for the development and conduct of 
activities authorized under Sec. 1220.230 of this subpart and for the 
payment of the cost thereof with funds collected through assessments 
pursuant to Sec. 1220.223. Provided, that the Board shall contract with 
only one national nonprofit producer-governed organization to administer 
all projects within a program area.
    Any such contract or agreement shall provide that:
    (1) The contractor shall develop and submit to the Board a plan or 
project together with a budget or budgets which shall show the estimated 
cost to be incurred for such plan or project;
    (2) Any such plan or project shall become effective only upon 
approval of the Secretary; and
    (3) The contracting party shall keep complete and accurate records 
of all of its transactions and make periodic reports to the Board of 
activities conducted pursuant to a contract and an accounting for funds 
received and expended, and such other reports as the Secretary or the 
Board may require. The Board and Secretary may audit the records of the 
contracting party periodically.
    (i) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended.
    (j) [Reserved]

[[Page 138]]

    (k) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may require and to submit a copy of each such audit to the 
Secretary.
    (l) To give the Secretary the same notice of meetings of the Board 
and committees as is given to members in order that the Secretary, or a 
representative of the Secretary, may attend such meetings.
    (m) To submit to the Secretary such information pursuant to this 
subpart as may be requested.
    (n) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybean 
and soybean products produced in the United States.

[56 FR 31049, July 9, 1991, as amended at 60 FR 29962, June 7, 1995; 60 
FR 58500, Nov. 28, 1995]

                 Soybean Program Coordinating Committee



Sec. 1220.213  Establishment and membership.

    (a) The Board may establish, with the approval of the Secretary, a 
Soybean Program Coordinating Committee to assist in the administration 
of this subpart. The Committee shall consist of 15 members. The 
Committee shall be composed of 10 Board members elected by the Board and 
5 producers elected by the Cooperator Organization.
    (b) Board representation on the Committee shall consist of the 
Chairperson and Treasurer of the Board, and eight additional members 
duly elected by the Board to serve on the Committee. The eight 
representatives to the Committee elected by the Board shall, to the 
extent practicable, reflect the geographic and unit distribution of 
soybean production.
    (c) Cooperator Organization representation on the Committee shall 
consist of five members elected by the Cooperator Organization Board of 
Directors. The Cooperator Organization shall submit to the Secretary the 
names of the representatives elected by the Cooperator Organization to 
serve on the Committee, the manner in which such election was held, and 
verify that such representatives are producers. The prospective 
Cooperator Organization representatives shall file with the Secretary a 
written agreement to serve on the Committee and to disclose any 
relationship with any soybean entity or with any organization that has 
or is being considered for a contractual relationship with the Board. 
When the Secretary is satisfied that the above conditions are met, the 
Secretary shall certify such representatives as eligible to serve on the 
Committee.



Sec. 1220.214  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec. 1220.215  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Cooperator Organization, depending upon which organization is 
represented by the vacancy, shall submit the name of a successor for the 
position in the manner utilized to appoint representatives pursuant to 
Sec. 1220.213 above.



Sec. 1220.216  Procedure.

    (a) Attendance of at least 12 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds (\2/3\) of the members present. The Committee shall establish 
rules concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than 
twelve of its members by mail, telephone, facsimile, or telegraph. 
Action taken by this emergency procedure is valid only if all members 
are notified and provided the opportunity to vote and any telephone vote 
is confirmed promptly in writing. Any action so taken shall have the 
same

[[Page 139]]

force and effect as though such action had been taken at a properly 
convened meeting of the Committee.
    (c) A member may not cast votes by proxy.



Sec. 1220.217  Compensation and reimbursement.

    The members of the Committee shall serve without compensation but 
shall be reimbursed by the Board for necessary and reasonable expenses 
incurred by them in the performance of their responsibilities under this 
subpart.



Sec. 1220.218  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The Chairperson of the Board shall be Chairperson of the 
Committee.
    (b) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec. 1220.219  Powers of the Committee.

    If established by the Board, the Committee may have the following 
powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of soybeans and soybean 
products as well as plans or projects for promotion, research, consumer 
information, and industry information and to make recommendations to the 
Board regarding such proposals; and
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable.



Sec. 1220.220  Duties of the Committee.

    If established by the Board, the Committee may have the following 
duties:
    (a) To meet and to organize;
    (b) To prepare and submit to the Board for approval, budgets on a 
fiscal period basis of proposed costs of promotion, research, consumer 
information, and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information, and industry information programs contemplated 
therein;
    (c) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees as is given to members in order that the 
Secretary, or the Secretary's representative, may attend such meetings;
    (d) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (e) To encourage the coordination of programs of promotion, 
research, consumer information, and industry information designed to 
strengthen the soybean industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for soybeans 
and soybean products.

                        Expenses and Assessments



Sec. 1220.222  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve) as the Secretary finds are 
reasonable and likely to be incurred by the Board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with the provisions of this subpart. However, 
during any fiscal year, expenses incurred by the Board for 
administrative staff costs and their benefits shall not exceed l percent 
of the projected level of assessments, net of projected refunds, of the 
Board for that fiscal year. Such expenses shall be paid from assessments 
received pursuant to Sec. 1220.223. The administrative expenses of the 
Board, including the cost of administrative staff, shall not exceed 5 
percent of the projected level of assessments, net of projected refunds, 
of the Board for that fiscal year.
    (b) The Board shall reimburse the Secretary, from assessments 
received pursuant to Sec. 1220.223, for administrative costs incurred 
after an Order has been submitted to the Department pursuant to section 
1968(b) of the Act; Provided, that the Board shall only be required to 
reimburse the Secretary for one-half (50%) of the costs incurred by the 
Secretary to conduct the refund referendum relating to continuation of 
authority to pay refunds.
    (c)(1) The Board may, with the approval of the Secretary, authorize 
a credit to Qualified State Soybean Boards of up to 5 percent of the 
amount

[[Page 140]]

to be remitted to the Board pursuant to Sec. 1220.223 and Sec. 1220.228 
of this subpart to offset collection and compliance costs relating to 
such assessments and for fees paid to State governmental agencies or 
first purchasers for collection of the assessments where the payment of 
such fees by the Qualified State Soybean Board is required by State law 
enacted prior to November 28, 1990.
    (2) The portion of the credit authorized in paragraph (c)(1) of this 
section which compensates Qualified State Soybean Boards for fees paid 
to State governmental agencies or first purchasers for collection of the 
assessments where the payment of such fees by the Qualified State 
Soybean Board is required by State law enacted prior to November 28, 
1990:
    (i) Shall not exceed one-half of such fees paid to State 
governmental agencies or first purchasers, and;
    (ii) Shall not exceed 2.5 percent of the amount of assessments 
collected and remitted to the Board.
    (3) Except for that portion of the credit issued pursuant to 
paragraph (c)(2) of this section, credits authorized by paragraph (c)(1) 
of this section will be included as part of the Board's administrative 
expenses.



Sec. 1220.223  Assessments.

    (a)(1) Except as prescribed by regulations approved by the Secretary 
or as otherwise provided in this section, each first purchaser of 
soybeans shall collect an assessment from the producer, and each 
producer shall pay such assessment to the first purchaser, at the rate 
of one-half of one percent (0.5%) of the net market price of the 
soybeans purchased. Each first purchaser shall remit such assessment to 
the Board or to a Qualified State Soybean Board, as provided in 
paragraph (a)(5) of this section.
    (2) Any producer marketing processed soybeans or soybean products of 
that producer's own production, shall remit to a Qualified State Soybean 
Board or to the Board, as provided in paragraph (a)(5) of this section, 
an assessment on such soybeans or soybean products at a rate of one-half 
of one percent (0.5%) of the net market price of the soybeans involved 
or the equivalent thereof.
    (3) In determining the assessment due from each producer under 
paragraph (a)(1) or (a)(2) of this section, a producer who is 
contributing to a Qualified State Soybean Board shall receive a credit 
from the Board for contributions to such Qualified State Soybean Board 
on any soybeans assessed under this section in an amount not to exceed 
one-quarter of one percent of the net market price of the soybeans 
assessed.
    (4) In order for a producer to receive the credit provided for in 
paragraph (a)(3) of this section, the Qualified State Soybean Board or 
the first purchaser must establish to the satisfaction of the Board that 
the producer has contributed to a Qualified State Soybean Board.
    (5)(i) If the soybeans, for which an assessment is paid, were grown 
in a State other than the State which is the situs of the first 
purchaser, the first purchaser that collects the assessment shall remit 
the assessment and information as to the State of origin of the soybeans 
to the Qualified State Soybean Board operating in the State in which the 
first purchaser is located. The Qualified State Soybean Board operating 
in the State in which the first purchaser is located shall remit such 
assessments to the Qualified State Soybean Board operating in the State 
in which the soybeans were grown. If no such Qualified State Soybean 
Board exists in such State, then the assessments shall be remitted to 
the Board. The Board, with the approval of the Secretary, may authorize 
Qualified State Soybean Boards to propose modifications to the foregoing 
``State of Origin'' rule to ensure effective coordination of assessment 
collections between Qualified State Soybean Boards.
    (ii)(A) If a producer pledges soybeans grown by that producer as 
collateral for a loan issued by the Commodity Credit Corporation and if 
that producer forfeits said soybeans in lieu of loan repayment, the 
Commodity Credit Corporation shall at the time of the loan settlement, 
collect from the producer the assessments due based on 0.5 percent of 
the principal loan amount received by the producer and remit the

[[Page 141]]

assessment to the Qualified State Soybean Board in the State in which 
the soybeans were pledged, or if no Qualified State Soybean Board exists 
in such State, the Board.
    (B) If a producer redeems and subsequently markets soybeans which 
have been pledged as collateral for a loan issued by the Commodity 
Credit Corporation, the first purchaser shall collect and remit the 
assessments due pursuant to paragraph (a)(1) of this section; or if a 
producer markets such soybeans as processed soybeans or as soybean 
products, the producer shall remit the assessment pursuant to paragraph 
(a)(2) of this section.
    (iii) Qualified State Soybean Boards and the Board shall coordinate 
assessment collection procedures to ensure that producers marketing 
soybeans are required to pay only one assessment per bushel of soybeans 
and collections are adjusted among States on a mutually agreeable basis.
    (b) The collection of assessments pursuant to paragraph (a) of this 
section, shall commence on and after the date assessments are required 
to be paid and shall continue until terminated by the Secretary. If the 
Board is not constituted on the date the first assessments are to be 
collected, the Secretary shall have the authority to receive the 
assessments on behalf of the Board, and to hold such assessments until 
the Board is constituted, then remit such assessments to the Board.
    (c)(1) Each person responsible for the collection of assessments 
under paragraph (a) of this section, shall collect and remit the 
assessments to the Board or a Qualified State Soybean Board on a monthly 
basis or as required by State law, but no less than quarterly, unless 
the Board, with the approval of the Secretary, has specifically 
authorized otherwise.
    (2) Any unpaid assessments due the Board or a Qualified State 
Soybean Board from a person responsible for remitting assessments to the 
Board or a Qualified State Soybean Board pursuant to paragraph (a) of 
this section, shall be increased two percent (2%) each month beginning 
with the day following the date such assessments were due under this 
subpart. Any remaining amount due shall be increased at the same rate on 
the corresponding day of each month thereafter until paid.
    (3) The amounts payable pursuant to this section shall be computed 
monthly on unpaid assessments and shall include any unpaid late charges 
previously applied pursuant to this section.
    (4) For the purpose of this section, any assessment that was 
determined at a date later than prescribed by this subpart because of a 
person's failure to submit a report to the Board or a Qualified State 
Soybean Board when due, shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.
    (d) Prior to the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure that each Qualified 
State Soybean Board is provided credit in accordance with the provisions 
of section 1969(n)(1) and subject to section 1969(n)(3) of the Act.
    (e) Following the continuance referendum, the Board, pursuant to 
procedures approved by the Secretary, shall ensure annually that each 
Qualified State Soybean Board is provided credit in accordance with the 
provisions of section 1969(n)(2) and subject to section 1969(n)(3) of 
the Act.

[56 FR 31049, July 9, 1991, as amended at 56 FR 42923, Aug. 30, 1991; 57 
FR 31096, July 14, 1992]



Secs. 1220.224-1220.227  [Reserved]



Sec. 1220.228  Qualified State Soybean Boards.

    (a)(1) Any soybean promotion entity that is authorized by State 
statute to collect assessments required by State law from soybean 
producers may notify the Board of its election to be the Qualified State 
Soybean Board for the State in which it operates so that producers may 
receive credit pursuant to Sec. 1220.223(a)(3) for contributions to such 
organization. Only one such entity may make such election or be 
qualified pursuant to paragraph (a)(2) of this section. Such entity, 
upon making such election, agrees to the following:

[[Page 142]]

    (i) To conduct activities as defined in Sec. 1220.230 that are 
intended to strengthen the soybean industry's position in the 
marketplace;
    (ii) Provide a report describing the manner in which assessments are 
collected and the procedure utilized to ensure that assessments due are 
paid;
    (iii) Collect assessments paid on soybeans marketed within the State 
and establish procedures for ensuring compliance with this subpart with 
regard to the payment of such assessments;
    (iv) Remit to the Board each assessment paid and remitted to it, 
minus authorized credits issued pursuant to Sec. 1220.222(c) and credits 
issued to producers pursuant to Sec. 1220.223(a)(3), and other required 
deductions by the last day of the month following the month in which the 
assessment was remitted to it unless the Board determines a different 
date for remittance of assessments;
    (v)-(vi) [Reserved]
    (vii) Furnish the Board with an annual report by a certified public 
accountant or an authorized State agency of all funds remitted to such 
Board pursuant to this subpart; and
    (viii) Not use funds it collects pursuant to this subpart to fund 
plans or projects which make use of any unfair or deceptive acts or 
practices with respect to the quality, value or use of any product that 
competes with soybeans or soybean products; and
    (ix)(A) Except as otherwise provided in paragraph (a)(1)(ix)(B) of 
this section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (B) The prohibition in paragraph (a)(1)(ix)(A) of this section, 
shall not apply to--
    (1) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under the Order;
    (2) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (3) The development and recommendation of amendments to this 
subpart.
    (2) If no entity elects to serve as a Qualified State Soybean Board 
within a State pursuant to paragraph (a)(1) of this section, any State 
soybean promotion entity that is organized and operating within a State, 
and receives assessments or contributions from producers and conducts 
soybean or soybean product promotion, research, consumer information, or 
industry information programs, may apply for certification as the 
Qualified State Soybean Board for such State so that producers may 
receive credit pursuant to Sec. 1220.223(a)(3) for contributions to such 
organizations. All provisions of this subpart applicable to Qualified 
State Soybean Boards will be applicable to such entity. The Board shall 
review such applications for certification and shall make a 
determination as to the certification of each applicant.
    (b) In order for the State soybean entity to be certified by the 
Board pursuant to paragraph (a)(2) of this section, as a Qualified State 
Soybean Board, the entity must:
    (1) Conduct activities as defined in Sec. 1220.230 that are intended 
to strengthen the soybean industry's position in the marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such State entity will collect 
assessments paid on soybeans marketed within the State and establish 
procedures for ensuring compliance with this subpart with regard to the 
payment of such assessments;
    (4) Certify to the Board that such organization will remit to the 
Board each assessment paid and remitted to it, minus credits issued 
pursuant to Sec. 1220.222(c) and authorized credits issued to producers 
pursuant to Sec. 1220.223(a)(3), and other required deductions by the 
last day of the month following the month in which the assessment was 
remitted to it unless the

[[Page 143]]

Board determines a different date for remittance of assessments;
    (5)-(6)  [Reserved]
    (7) Certify to the Board that it will furnish the Board with an 
annual report by a certified public accountant or an authorized State 
agency of all funds remitted to such Board pursuant to this subpart; and
    (8) Not use funds it collects pursuant to this subpart to fund plans 
or projects which make use of any unfair or deceptive acts or practices 
with respect to the quality, value or use of any product that competes 
with soybeans or soybean products; and
    (9)(i) Except as otherwise provided in paragraph (b)(9)(ii) of this 
section, funds collected or received by the Qualified State Soybean 
Board under this subpart shall not be used in any manner for the purpose 
of influencing any action or policy of the United States Government, any 
foreign or State government, or any political subdivision thereof.
    (ii) The prohibition in paragraph (b)(9)(i) of this section, shall 
not apply to--
    (A) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart;
    (B) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof; or
    (C) The development and recommendation of amendments to this 
subpart.
    (c) Notwithstanding any other provisions of this subpart, and 
provided that activities of a Qualified State Soybean Board are 
authorized under the Act and this subpart, the Board shall not have the 
authority to:
    (1) Establish guidelines, regulations, or rules which would restrict 
or infringe upon a Qualified State Soybean Board's authority to 
determine administrative or program expenditure allocations or 
administrative or program implementation; and
    (2) Direct Qualified State Soybean Boards to participate or not 
participate in program activities or implementation.
    (d) The Board shall establish procedures, after an opportunity for 
public comment and subject to approval of the Secretary, which provide 
Qualified State Soybean Boards with a right to present information to 
the Board prior to any determinations relating to nonparticipation as a 
Qualified State Soybean Board following initial election or 
determination as a Qualified State Soybean Board.

[56 FR 31049, July 9, 1991, as amended at 60 FR 58500, Nov. 28, 1995; 61 
FR 50694, Sept. 27, 1996]



Sec. 1220.229  Influencing governmental action.

    (a) Except as otherwise provided in paragraph (b) of this section, 
funds collected or received by the Board under this subpart shall not be 
used in any manner for the purpose of influencing any action or policy 
of the United States Government, any foreign or State government, or any 
political subdivision thereof.
    (b) The prohibition in paragraph (a) of this section shall not apply 
to--
    (1) The development and recommendation of amendments to this 
subpart;
    (2) The communication to appropriate government officials of 
information relating to the conduct, implementation, or results of 
promotion, research, consumer information, and industry information 
under this subpart; or
    (3) Any action designed to market soybeans or soybean products 
directly to a foreign government or political subdivision thereof.



Sec. 1220.230  Promotion, research, consumer information, and industry information.

    (a) The Board shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans or projects 
authorized in this subpart. Such plans or projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate promotion, research, consumer information, and industry 
information activities with respect to soybean and soybean products;

[[Page 144]]

    (2) The establishment and conduct of research, and studies with 
respect to the sale, distribution, marketing and utilization of soybean 
and soybean products and the creation of new products thereof, to the 
end that marketing and utilization of soybean and soybean products may 
be encouraged, expanded, improved or made more acceptable; and
    (3) Such other activities as are authorized by the Act and this 
subpart.
    (b) Each plan or project described in paragraph (a) of this section, 
shall be periodically reviewed or evaluated by the Board to ensure that 
each such plan or project contributes to an effective program of 
promotion, research, consumer information, and industry information. If 
it is found by the Board that any such plan or project does not further 
the purposes of the Act, then the Board shall terminate such plan or 
project.
    (c) No such plans or projects shall make use of unfair or deceptive 
acts or practices with respect to the quality, value or use of any 
competing product. In carrying out any plan or project funded by the 
Board described in paragraph (a) of this section, no preference shall be 
given to a brand or trade name of any soybean product without the 
approval of the Board and the Secretary.

                       Reports, Books, and Records



Sec. 1220.241  Reports.

    Each producer marketing processed soybeans or soybean products of 
that producer's own production and each first purchaser responsible for 
the collection of assessments under Sec. 1220.223 shall be required to 
report to the Board periodically such information as may be required by 
the regulations recommended by the Board and approved by the Secretary. 
Such information may include but not be limited to the following:
    (a) The number of bushels of soybeans purchased, initially 
transferred, or which, in any other manner, is subject to the collection 
of assessment;
    (b) The amount of assessments remitted;
    (c) The basis, if necessary, to show why the remittance is less than 
one-half percent (0.5%) of the net market price per bushel of soybeans 
purchased multiplied by the number of bushels purchased; and
    (d) The date any assessment was paid.



Sec. 1220.242  Books and records.

    (a) Except as provided in paragraph (b) of this section, each person 
who is subject to this subpart shall maintain and make available for 
inspection by the Board or Secretary such books and records as are 
necessary to carry out the provisions of this subpart and the 
regulations issued under this part, including such records as are 
necessary to verify any reports required. Such records shall be retained 
for at least two years beyond the fiscal period of their applicability.
    (b) Any producer who plants less than 25 acres of soybeans annually 
and does not market such soybeans shall not be required to maintain 
books or records pursuant to this subpart.



Sec. 1220.243  Confidential treatment.

    Except as otherwise provided in the Act, financial or commercial 
information that is obtained under the Act and this subpart and that is 
privileged and confidential shall be kept confidential by all persons, 
including employees and former employees of the Board, all officers and 
employees and all former officers and employees of the Department, and 
by all officers and employees and all former officers and employees of 
contracting agencies having access to such information, and shall not be 
available to Board members or any other producers. Only those persons 
having a specific need for such information in order to effectively 
administer the provisions of this part shall have access to such 
information.

                              Miscellaneous



Sec. 1220.251  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property, owned, in

[[Page 145]]

the possession of or under the control of the Board, including any 
unpaid claims or property not delivered or any other claims existing at 
the time of such termination.
    (b) The trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Sec. 1220.212(h);
    (3) From time to time account for all receipts and disbursements; 
and
    (4) Deliver all property on hand, together with all books and 
records of the Board and of the trustees, to such persons as the 
Secretary may direct, and upon the request of the Secretary, execute 
such assignments or other instruments necessary or appropriate to vest 
in such persons full title and right to all of the funds, property, and 
claims vested in the Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information, or industry information plans 
or projects authorized pursuant to this subpart.



Sec. 1220.252  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any rule issued pursuant hereto, or 
the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.



Sec. 1220.253  Personal liability.

    No member, employee or agent of the Board, including employees, 
agents or board members of Qualified State Soybean Boards, acting 
pursuant to authority provided in this subpart, shall be held personally 
responsible, either individually or jointly, in any way whatsoever, to 
any person for errors in judgment, mistakes, or other acts of either 
commission or omission, of such member or employee, except for acts of 
dishonesty or willful misconduct.



Sec. 1220.254  Patents, copyrights, inventions, and publications.

    (a) Any patents, copyrights, inventions, or publications developed 
through the use of funds remitted to the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
inure to the benefit of the Board. Upon termination of this subpart, 
Sec. 1220.251 shall apply to determine disposition of all such property.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
if patents, copyrights, inventions, or publications are developed by the 
use of funds remitted to the Board under this subpart. Should patents, 
copyrights, inventions or publications be developed through the use of 
funds remitted to the Board under this subpart and funds contributed by 
another organization or person, ownership and related rights to such 
patents, copyrights, inventions, or publications shall be determined by 
agreement between the Board and the party contributing funds towards the 
development of such patent, copyright, invention or publication.



Sec. 1220.255  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by any Qualified State Soybean Board recognized, or by any 
interested person affected by the provisions of the Act, including the 
Secretary.

[[Page 146]]



Sec. 1220.256  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart of the applicability 
thereof to other persons or circumstances shall not be affected thereby.



Sec. 1220.257  OMB control numbers.

    The control number assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act, Public Law 96-511, is OMB number 0581-0093, 
except Board member nominee information sheets are assigned OMB number 
0505-0001.

[56 FR 31049, July 9, 1991, as amended at 61 FR 50694, Sept. 27, 1996]



                    Subpart B--Rules and Regulations

    Source: 57 FR 29439, July 2, 1992, unless otherwise noted.

                               Definitions



Sec. 1220.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in subpart A of this part.

                               Assessments



Sec. 1220.310  Assessments.

    (a) A 0.5 percent of the net market price per bushel assessment on 
soybeans marketed shall be paid by the producer of the soybeans in the 
manner designated in Sec. 1220.311.
    (b) If more than one producer shares the proceeds received for the 
soybeans marketed, each such producer is obligated to pay that portion 
of the assessments which is equivalent to each producer's proportionate 
share of the proceeds.
    (c) Failure of the first purchaser to collect the assessment on each 
bushel of soybeans marketed as designated in Sec. 1220.311 shall not 
relieve the producer of the producer's obligation to pay the assessment 
to the appropriate Qualified State Soybean Board or the United Soybean 
Board as required in Sec. 1220.312.



Sec. 1220.311  Collection and remittance of assessments.

    (a) Except as otherwise provided in this section, each first 
purchaser making payment to a producer for soybeans marketed by a 
producer shall collect from that producer at the time of settlement of 
that producer's account an assessment at the rate of 0.5 percent of the 
net market price per bushel of soybeans marketed and shall be 
responsible for remitting the assessment to the Qualified State Soybean 
Board or the United Soybean Board as provided in Sec. 1220.312. The 
first purchaser shall give to the producer a receipt indicating payment 
of the assessment. The receipt shall be any document issued by the first 
purchaser that contains the information requested in Sec. 1220.314(a).
    (b) A first purchaser who purchases soybeans pursuant to a contract 
with a producer, either on a volume basis or on a per acre basis, shall 
be responsible for remitting the assessment due on soybeans purchased as 
required in Sec. 1220.312. Such assessment shall be based upon 0.5 
percent of the net market price specified or established in the contract 
and shall be collected at the time of payment to the producer. If the 
net market price is not specified or established in the contract the 
assessment shall be based on fair market value as specified in paragraph 
(c) of this section below.
    (c) Any producer marketing processed soybeans or soybean products of 
that producer's own production either directly or through retail or 
wholesale outlets shall be responsible for remitting to the Qualified 
State Soybean Board or the United Soybean Board pursuant to 
Sec. 1220.312, an assessment on the number of bushels of soybeans 
processed or manufactured into soybean products at the rate 0.5 percent 
of the net market price of the soybeans involved or the equivalent 
thereof. The assessment shall attach upon date of sale of the processed 
soybeans or soybean products and shall be based upon the posted county 
price for soybeans on the date of the sale as posted at the local ASCS 
office for the county in

[[Page 147]]

which the soybeans are grown. The producer shall remit the assessment in 
the manner provided in Sec. 1220.312.
    (d) Any producer marketing processed soybeans or soybean products of 
that producer's own production shall be responsible for remitting to the 
Qualified State Soybean Board or the United Soybean Board pursuant to 
Sec. 1220.312, an assessment on the number of bushels of soybeans 
processed or manufactured into soybean products at the rate of 0.5 
percent of the net market price of the soybeans involved or the 
equivalent thereof. The assessment shall attach upon the date of final 
settlement for such processed soybeans or soybean products and shall be 
based upon the posted county price for soybeans on the date of final 
settlement as posted at the local ASCS office for the county in which 
the soybeans are grown. The producer shall remit the assessment in the 
manner provided in Sec. 1220.312.
    (e) A producer delivering soybeans of the producer's own production 
against a soybean futures contract shall be responsible for remitting an 
assessment at the rate of 0.5 percent of net market price as specified 
in settlement documents. The assessment shall attach at the time of 
delivery and the producer shall remit the assessment due in accordance 
with Sec. 1220.312.
    (f) A producer who forfeits soybeans of that producer's own 
production which were pledged as collateral on a loan issued by 
Commodity Credit Corporation shall pay an assessment. The assessment 
shall attach upon the date the settlement statement is prepared and 
issued to the producer by the Commodity Credit Corporation and shall be 
0.5 percent of the principal amount of the loan for the soybeans as 
specified by Commodity Credit Corporation in the settlement statement. 
The Commodity Credit Corporation shall collect the assessment and then 
remit the assessment due in accordance with Sec. 1220.312.



Sec. 1220.312  Remittance of assessments and submission of reports to United Soybean Board or Qualified State Soybean Board.

    (a) Each first purchaser and each producer responsible for the 
remittance of assessments shall remit assessments and submit a report of 
assessments to the Qualified State Soybean Board in the State in which 
each first purchaser or each producer responsible for the remittance of 
assessments is located or if there is no Qualified State Soybean Board 
in such State, then to the United Soybean Board as provided in this 
section.
    (b) First purchasers and producers responsible for remitting 
assessments shall remit assessments and reports on a monthly or 
quarterly basis depending on the State or region in which the first 
purchasers or producers are located. The reporting period for each State 
and region shall be as follows:

 
              Monthly                             Quarterly
 
Arkansas                             Alabama
Delaware                             Florida
Iowa                                 Georgia
Kansas                               Illinois
Kentucky                             Indiana
Louisiana                            Maryland
Michigan                             North Dakota
Minnesota                            Nebraska
Missouri                             New Jersey
Mississippi                          Ohio
North Carolina                       Oklahoma
South Carolina                       Pennsylvania
Tennessee                            South Dakota
Texas                                Virginia
Wisconsin
Eastern Region
Western Region
 

    (c) Reports. Each first purchaser or producer responsible for 
remitting assessments shall make reports on forms made available by the 
United Soybean Board or on Qualified State Soybean Board forms which 
contain the information required in Sec. 1220.241 and are approved by 
the Board. A first purchaser with multiple facilities or purchasing 
locations within a State shall have the option to submit a single, 
consolidated report specifying the combined volume of soybeans purchased 
or the net market value of all soybeans purchased from the producers in 
the State. Reports shall be submitted with assessments due in accordance 
with the provisions of paragraph (d) of this section.
    (d) Remittances. Each first purchaser or producer responsible for 
remitting assessments shall remit all assessments to the Qualified State 
Soybean Board, its designee, or the United Soybean Board. All 
assessments shall be remitted in the form of a check or money order 
payable to the order of

[[Page 148]]

the applicable Qualified State Soybean Board or the United Soybean Board 
and shall be sent to the designated address not later than the last day 
of the month following the month or quarter in which the soybeans, 
processed soybeans, or soybean products were marketed and shall be 
accompanied by the reports required by paragraph (c) of this section. 
All remittances shall be received subject to collection and payment at 
par.
    (e) Receipt of Reports and Remittances. The timeliness of receipt of 
reports and assessments by the Board or Qualified State Soybean Board 
shall be based on the applicable postmark date or the date actually 
received by the Board or the Qualified State Soybean Board whichever is 
earlier.

[57 FR 29439, July 2, 1992, as amended at 58 FR 40732, July 30, 1993; 60 
FR 58500, Nov. 28, 1995]



Sec. 1220.313  Qualified State Soybean Boards.

    The following State soybean promotion organizations shall be 
Qualified State Soybean Boards. First purchasers and producers 
responsible for remitting assessments located in States which have a 
Qualified State Soybean Board shall remit assessments accompanied by the 
required reports to the Qualified State Soybean Board in the State in 
which the first purchaser or producer responsible for remitting 
assessments is located.

(1) Alabama Soybean Producers Board
(2) Arkansas Soybean Promotion Board
(3) Delaware Soybean Board
(4) Florida Soybean Advisory Council
(5) Georgia Agricultural Commodity Commission for Soybeans
(6) Illinois Soybean Program Operating Board
(7) Iowa Soybean Promotion Board
(8) Indiana Soybean Development Council, Inc.
(9) Kansas Soybean Commission
(10) Kentucky Soybean Promotion Board
(11) Louisiana Soybean Promotion Board
(12) Maryland Soybean Board
(13) Soybean promotion Committee of Michigan
(14) Minnesota Soybean Research and Promotion Council
(15) Mississippi Soybean Promotion Board
(16) Missouri Soybean Merchandising Council
(17) Nebraska Soybean Development, Utilization, and Marketing Board
(18) New Jersey Soybean Board
(19) North Carolina Soybean Producers Association
(20) North Dakota Soybean Council
(21) Ohio Soybean Council Board of Trustees
(22) Oklahoma Soybean Commission
(23) Pennsylvania Soybean Board
(24) South Carolina Soybean BoardI25(25) South Dakota Soybean Research 
and Promotion Council
(26) Tennessee Soybean Promotion Board
(27) Texas Soybean Producers Board
(28) Virginia Soybean Board
(29) Wisconsin Soybean Marketing Board, Inc.



Sec. 1220.314  Document evidencing payment of assessments.

    (a) Each first purchaser responsible for remitting an assessment to 
a Qualified State Soybean Board or the United Soybean Board is required 
to give to the producer from whom the first purchaser collected an 
assessment written evidence of payment of the assessment containing the 
following information:
    (1) Name and address of the first purchaser.
    (2) Name of producer who paid assessment.
    (3) Number of bushels sold.
    (4) Net market price.
    (5) Total assessments paid by the producer.
    (6) Date.
    (7) State in which soybeans were grown.
    (b) [Reserved]



Secs. 1220.330-1220.332  [Reserved]



                        Subparts C-F  [Reserved]



PART 1230--PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION--Table of Contents




   Subpart A--Pork Promotion, Research, and Consumer Information Order

                               Definitions

Sec.
1230.1  Act.
1230.2  Department.
1230.3  Secretary.
1230.4  Board.
1230.5  Consumer information.
1230.6  Council.
1230.7  Customs Service.
1230.8  Delegate Body.
1230.9  Fiscal period.
1230.10  Imported.

[[Page 149]]

1230.11  Imported pork and pork products.
1230.12  Importer.
1230.13  Market.
1230.14  Market value.
1230.15  Part and subpart.
1230.16  Person.
1230.17  Plans and projects.
1230.18  Porcine animal.
1230.19  Pork.
1230.20  Pork product.
1230.21  Producer.
1230.22  Promotion.
1230.23  Research.
1230.24  State.
1230.25  State association.
1230.26  State where produced.

                  National Pork Producers Delegate Body

1230.30  Establishment and membership.
1230.31  Nomination and appointment of producer members.
1230.32  Conduct of election.
1230.33  Appointment of importer members.
1230.34  Term of office.
1230.35  Vacancies.
1230.36  Procedure.
1230.37  Officers.
1230.38  Compensation and reimbursement.
1230.39  Powers and duties of the Delegate Body.

                           National Pork Board

1230.50  Establishment and membership.
1230.51  Term of office.
1230.52  Nominations.
1230.53  Nominee's agreement to serve.
1230.54  Appointment.
1230.55  Vacancies.
1230.56  Procedure.
1230.57  Compensation and reimbursement.
1230.58  Powers and duties of the Board.

              Promotion, Research, and Consumer Information

1230.60  Promotion, research, and consumer information.

                        Expenses and Assessments

1230.70  Expenses.
1230.71  Assessments.
1230.72  Distribution of assessments.
1230.73  Uses of distributed assessments.
1230.74  Prohibited use of distributed assessments.
1230.75  Adjustment of accounts.
1230.76  Charges.
1230.77  [Reserved]

                       Reports, Books, and Records

1230.80  Reports.
1230.81  Books and records.
1230.82  Confidential treatment.

                              Miscellaneous

1230.85  Proceedings after termination.
1230.86  Effect of termination or amendment.
1230.87  Personal liability.
1230.88  Patents, copyrights, inventions, and publications.
1230.89  Amendments.
1230.90  Separability.
1230.91  Paperwork Reduction Act assigned number.

                    Subpart B--Rules and Regulations

                               Definitions

1230.100  Terms defined.

                               Assessments

1230.110  Assessments on imported pork and pork products.
1230.111  Remittance of assessments on domestic porcine animals.
1230.112  Rate of assessment.
1230.115  Submission of annual financial statements.

                              Miscellaneous

1230.120  OBM control number assigned pursuant to the Paperwork 
          Reduction Act.

                          Subpart C  [Reserved]

 Subpart D--Procedures for Nominations and Elections of Pork Producers 
  and Nominations of Importers for Appointment to the Initial National 
                      Pork Producers Delegate Body

1230.501-1230.512  [Reserved]

    Authority: 7 U.S.C. 4801-4819.



   Subpart A--Pork Promotion, Research, and Consumer Information Order

    Source: 51 FR 31903, Sept. 5, 1986, unless otherwise noted.

                               Definitions



Sec. 1230.1  Act.

    Act means the Pork Promotion, Research, and Consumer Information Act 
of 1985 (7 U.S.C. 4801-4819) and any amendments thereto.



Sec. 1230.2  Department.

    Department means the United States Department of Agriculture.



Sec. 1230.3  Secretary.

    Secretary means the Secretary of Agriculture of the United States or 
any

[[Page 150]]

other officer or employee of the Department of Agriculture to whom 
authority has been delegated or may hereafter be delegated to act in the 
Secretary's stead.



Sec. 1230.4  Board.

    Board means the National Pork Board established pursuant to 
Sec. 1230.50.



Sec. 1230.5  Consumer information.

    Consumer information means an activity intended to broaden the 
understanding of the sound nutritional attributes of pork and pork 
products, including the role of pork and pork products in a balanced, 
healthy diet.



Sec. 1230.6  Council.

    Council means the National Pork Producers Council, a nonprofit 
corporation of the type described in section 501(c)(5) of the Internal 
Revenue Code of 1954 and incorporated in the State of Iowa.



Sec. 1230.7  Customs Service.

    Customs Service means the United States Customs Service of the 
United States Department of Treasury.



Sec. 1230.8  Delegate Body.

    Delegate Body means the National Pork Producers Delegate Body 
established pursuant to Sec. 1230.30.



Sec. 1230.9  Fiscal period.

    Fiscal period means the 12-month period ending on December 31 or 
such other consecutive 12-month period as the Secretary or Board may 
determine.



Sec. 1230.10  Imported.

    Imported means entered, or withdrawn from a warehouse for 
consumption, in the customs territory of the United States.



Sec. 1230.11  Imported pork and pork products.

    Imported pork and pork products means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of pork, including those products which have been 
assigned one or more of the following numbers in Schedule 1 of the 
Tariff Schedules of the United States Annotated (1985): 106.4020; 
106.4040; 106.8000; 106.8500; 107.1000; 107.1500; 107.3020; 107.3040; 
107.3060; 107.3515; 107.3525; 107.3540; and 107.3560.



Sec. 1230.12  Importer.

    Importer means a person who imports porcine animals, pork, or pork 
products into the United States.



Sec. 1230.13  Market.

    Market means to sell, slaughter for sale, or otherwise dispose of a 
porcine animal in commerce.



Sec. 1230.14  Market value.

    Market value means, with respect to porcine animals which are sold, 
the price at which they are sold. With respect to porcine animals 
slaughtered for the sale by the producer, the term means the most recent 
annual seven-market average for barrows and gilts, as published by the 
Department. With respect to imported porcine animals, the term means the 
declared value. With respect to imported pork and pork products, the 
term means an amount which represents the value of the live porcine 
animals from which the pork or pork products were derived, based upon 
the most recent annual seven-market average for barrows and gilts, as 
published by the Department.



Sec. 1230.15  Part and subpart.

    Part means the Pork Promotion, Research, and Consumer Information 
Order and all rules, regulations, and supplemental orders issued 
thereunder, and the aforesaid order shall be a ``subpart of such part.



Sec. 1230.16  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, organization, cooperative, or other entity.



Sec. 1230.17  Plans and projects.

    Plans and projects means promotion, research, and consumer 
information plans, studies, or projects.



Sec. 1230.18  Porcine animal.

    Porcine animal means a swine, that is raised as (a) a feeder pig, 
that is, a

[[Page 151]]

young pig sold to another person to be finished for slaughtering over a 
period of more than 1 month; (b) for breeding purposes as seed stock and 
included in the breeding herd; and (c) a market hog, slaughtered by the 
producer or sold to be slaughtered, usually within 1 month of such 
transfer.



Sec. 1230.19  Pork.

    Pork means the flesh of a porcine animal.



Sec. 1230.20  Pork product.

    Pork product means an edible product produced or processed in whole 
or in part from pork.



Sec. 1230.21  Producer.

    Producer means a person who produces porcine animals in the United 
States for sale in commerce.



Sec. 1230.22  Promotion.

    Promotion means any action, including but not limited to paid 
advertising and retail or food service merchandising, taken to present a 
favorable image for porcine animals, pork, or pork products to the 
public, or to educate producers with the intent of improving the 
competitive position and stimulating sales of porcine animals, pork, or 
pork products.



Sec. 1230.23  Research.

    Research means any action designed to advance, expand, or improve 
the image, desirability, nutritional value, usage, marketability, 
production, or quality of porcine animals, pork, or pork products, 
including the dissemination of the results of such research.



Sec. 1230.24  State.

    State means each of the 50 States.



Sec. 1230.25  State association.

    State association means the single organization of producers in a 
State that is organized under the laws of that State and is recognized 
by the chief executive officer of such State as representing such 
State's producers. If no such organization exists in a State as of 
January 1, 1986, the Secretary may recognize an organization that 
represents not fewer than 50 producers who market annually an aggregate 
of not less than 10 percent of the pounds of porcine animals marketed in 
such State. The Secretary may cease to recognize a State association and 
instead recognize another organization of producers in a State as that 
State's association if the Secretary determines either that a majority 
of the members of the existing State association are not producers or 
that a majority of the members of the other organization seeking 
recognition are producers and that such organization better represents 
the economic interests of producers.



Sec. 1230.26  State where produced.

    State where produced means with respect to a porcine animal marketed 
as a feeder pig or as breeding stock, the State in which that porcine 
animal was born, and with respect to a porcine animal that is marketed 
as a market hog, the State in which that porcine animal was fed for 
market.

                  National Pork Producers Delegate Body



Sec. 1230.30  Establishment and membership.

    (a) There is hereby established a National Pork Producers Delegate 
Body which shall consist of producers and importers appointed by the 
Secretary.
    (b)(1) At least two producer members shall be allocated to each 
State, but any State that has more than 300 but less than 601 shares 
shall receive three producer members; each State with more than 600 but 
less than 1,001 shares shall receive four producer members and each 
State with more than 1,000 shares shall receive an additional member in 
excess of four for each 300 additional shares in excess of 1,000 shares, 
rounded to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to each State on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to such State.
    (c)(1) The number of importer members to be appointed shall be 
determined by allocating three such members for the first 1,000 shares. 
Importers shall receive an additional member in

[[Page 152]]

excess of three for each 300 shares in excess of 1,000 shares, rounded 
to the nearest 300.
    (2) [Reserved]
    (3) In each fiscal period, shares shall be assigned to importers on 
the basis of one share for each $1,000 (rounded to the nearest $1,000) 
of the net amount of assessments attributable to importers.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec. 1230.31  Nomination and appointment of producer members.

    (a) [Reserved]
    (b) Delegate Body nominations for appointment as producer members 
shall be submitted to the Secretary in the number requested by the 
Secretary by each State association either after an election conducted 
in accordance with Sec. 1230.32 and by nominating the producers who 
receive the highest number of votes in such State; or pursuant to a 
selection process that is approved by the Secretary, is given public-
notice at least one week in advance by publication in a newspaper or 
newspapers of general circulation in such State and in pork production 
and agriculture trade publications, and provides complete and equal 
access to every producer who has paid all assessments due under this 
subpart and who has not demanded any refund of an assessment paid 
pursuant to this subpart in the period since the selection of the 
previous Delegate Body;
    (c) The Secretary shall appoint the producer members of each 
Delegate Body from the nominations submitted in accordance with this 
section, except that if a State association does not submit nominations 
in the required manner or number, or if a State has no State 
association, the Secretary shall select producer members from that State 
after consultation with representatives of the pork industry in that 
State.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec. 1230.32  Conduct of election.

    If a State association selects nominees for appointment to the 
Delegate Body through an election, it shall be conducted in the 
following manner:
    (a) Elections shall be administered by the Board and the Board shall 
determine the timing of any elections.
    (b) Producers who are residents of that State may be named as 
candidates for election to be nominees for appointment to the Delegate 
Body:
    (1) By a nominating committee of producers in that State appointed 
by the Board; or
    (2) The number of pork producers in a State shall be determined by 
the Department based on the latest available Department information, 
which tabulates by State the number of farming operations with porcine 
animals.
    (c) To be eligible to vote in an election to nominate producer 
members from a State, a person must:
    (1) Be a producer who is a resident of that State;
    (2) Have paid all assessments due pursuant to this subpart; and
    (3) Not have demanded any refund of an assessment paid pursuant to 
this subpart in the period since the selection of the previous Delegate 
Body.
    (d) The Board shall cause notices of any election to be published at 
least one week prior to the election in a newspaper or newspapers of 
general circulation in that State, and in pork production and 
agricultural trade publications. The notices shall set forth the period 
of time and places for voting and such other information as the Board 
considers necessary.
    (e) The identity of any person who voted and the manner in which any 
person voted shall be kept confidential.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]



Sec. 1230.33  Appointment of importer members.

    The Secretary shall appoint the importer members of each Delegate 
Body after consultation with importers.



Sec. 1230.34  Term of office.

    (a) The members of the Delegate Body shall serve for terms of one 
year, except that the members of the initial Delegate Body shall serve 
only until the completion of the nomination and appointment process of 
the succeeding Delegate Body.
    (b) Each member of the Delegate Body shall serve until that member's

[[Page 153]]

term expires, or a successor is appointed, whichever occurs later.



Sec. 1230.35  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Delegate Body, the Secretary 
shall appoint a successor for the unexpired term of such member from 
nominations made either by the appropriate State association or by 
importers, depending upon whether the vacancy is a producer or importer 
vacancy.



Sec. 1230.36  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Delegate Body, but only if that 
majority is also entitled to cast a majority of the shares (including 
fractions thereof). Any action of the Delegate Body, including any 
motion or nomination presented to it for a vote, shall require a 
majority vote, that is, the concurring votes of a majority of the shares 
cast on that action. The Delegate Body shall give timely notice of its 
meetings. The Delegate Body shall give the Secretary the same notice of 
its meetings as it gives to its members in order that the Secretary or a 
representative of the Secretary may attend meetings.
    (b) The number of votes that may be cast by a producer member if 
present at a meeting shall be equal to the number of shares attributable 
to the State of such member divided by the number of producer members 
from such State. The number of votes that may be cast by an importer 
member if present at a meeting shall be equal to the number of shares 
allocated to importers divided by the number of importer members.



Sec. 1230.37  Officers.

    The Delegate Body shall elect its Chairperson by a majority vote at 
the first annual meeting, but at each annual meeting after the first, 
the President of the Board shall serve as the Delegate Body's 
Chairperson.



Sec. 1230.38  Compensation and reimbursement.

    The members of the Delegate Body shall serve without compensation 
but may be reimbursed by the Board for actual transportation expenses 
incurred by them in exercising their powers and duties under this 
subpart. Such expenses shall be paid from funds received by the Board 
pursuant to Sec. 1230.72.



Sec. 1230.39  Powers and duties of the Delegate Body.

    The Delegate Body shall have the following powers and duties:
    (a) To meet annually;
    (b) To recommend the rate of assessment prescribed by the initial 
order and any increase in such rate;
    (c) To determine the percentage of the net assessments attributable 
to porcine animals produced in a State that each State association shall 
receive; and
    (d) To nominate not less than 23 persons, including producers from a 
minimum of 12 States or importers, for appointment to the initial Board 
and not less than one and one-half persons (rounded up to the nearest 
person) for each vacancy on the Board that requires nominations 
thereafter. Each nomination shall be by a majority vote of the Delegate 
Body voting in person in accordance with Sec. 1230.36.

                           National Pork Board



Sec. 1230.50  Establishment and membership.

    There is hereby established a National Pork Board of 15 members 
consisting of producers representing at least 12 States or importers 
appointed by the Secretary from nominations submitted pursuant to 
Sec. 1230.39(d). The Board shall be deemed to be constituted once the 
Secretary makes the appointments to the Board.



Sec. 1230.51  Term of office.

    (a) The members of the Board shall serve for terms of three years, 
except that the members appointed to the initial Board shall be 
designated for, and shall serve terms as follows: One-third of such 
members shall serve for one year terms; One-third shall serve for two 
year terms; and the remaining One-third shall serve for three year 
terms.

[[Page 154]]

    (b) Each member of the Board shall serve until the member's term 
expires, or until a successor is appointed, unless the member is removed 
pursuant to Sec. 1230.55(b).
    (c) No member shall serve more than two consecutive terms provided 
that those members serving an initial term of one year are eligible to 
serve two additional consecutive terms, but in no event, more than seven 
years in total.
    (d) The first year of the terms of the initial Board shall begin 
immediately on appointment by the Secretary and continue until July 1, 
1988. In subsequent years, the term of office shall begin on July 1.



Sec. 1230.52  Nominations.

    Nominations for members of the Board shall be made by the Delegate 
Body in accordance with Sec. 1230.39(d).



Sec. 1230.53  Nominee's agreement to serve.

    Any person nominated to serve on the Board shall file with the 
Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed;
    (b) Disclose any relationship with the Council or a State 
association or any organization that has a contract with the Board and 
thereafter disclose, at any time while serving on the Board, any 
relationship with any organization that applies to the Board for a 
contract; and
    (c) Withdraw from participation in deliberations, decisionmaking, or 
voting on matters concerning any entity referred to in paragraph (b) of 
this section, if an officer or member of the executive committee of such 
entity.



Sec. 1230.54  Appointment.

    From the nominations submitted pursuant to Sec. 1230.39(d), the 
Secretary shall appoint 15 producers or importers as members of the 
Board, but in no event shall the Secretary appoint producer members 
representing fewer than 12 States.



Sec. 1230.55  Vacancies.

    (a) To fill any vacancy occasioned by the death, removal, 
resignation, or disqualification of any member of the Board, the 
Secretary shall appoint a successor for the unexpired term of such 
member from the most recent list of nominations made by the Delegate 
Body.
    (b) If a member of the Board fails or refuses to perform the duties 
of a member of the Board, or if a member of the Board engages in acts of 
dishonesty or willful misconduct, the Board may recommend to the 
Secretary that that member be removed from office. If the Secretary 
finds that the recommendation of the Board demonstrates adequate cause, 
the Secretary shall remove such member from office. A person appointed 
under this part or any employee of the Board may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec. 1230.56  Procedure.

    (a) A majority of the members shall constitute a quorum at a 
properly convened meeting of the Board. Any action of the Board shall 
require the concurring votes of at least a majority of those present and 
voting. The Board shall give timely notice of its meetings. The Board 
shall give the Secretary the same notice of its meetings, including the 
meetings of its committees, as it gives to its members in order that the 
Secretary, or a representative of the Secretary, may attend the 
meetings.
    (b) The Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, telegraph or by other means 
of communication when, in the opinion of the President of the Board, 
such action must be taken before a meeting can be called. Action taken 
by this emergency procedure is valid only if all members are notified 
and provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing and recorded in the Board minutes. Any action so 
taken shall have the same force and effect as though such action had 
been taken at a properly convened meeting of the Board.

[[Page 155]]



Sec. 1230.57  Compensation and reimbursement.

    The members of the Board shall serve without compensation but shall 
be reimbursed for reasonable expenses incurred by them in the exercise 
of their powers and the performance of their duties under this subpart. 
Such expenses shall be paid from funds received by the Board pursuant to 
Sec. 1230.72.



Sec. 1230.58  Powers and duties of the Board.

    The Board shall have the following powers and duties:
    (a) To meet not less than annually, and to organize and elect from 
among its members, by majority vote, a President and such other officers 
as may be necessary;
    (b) To receive and evaluate, or, on its own initiative, develop, and 
budget for proposals for plans and projects and to submit such plans and 
projects to the Secretary for approval;
    (c) To administer directly or through contract the provisions of 
this subpart in accordance with its terms and provisions;
    (d) To develop and submit to the Secretary for the Secretary's 
approval, plans and projects conducted either by the Board or others;
    (e) To prepare and submit to the Secretary for the Secretary's 
approval, which is required for the following to be implemented:
    (1) Budgets on a fiscal period basis of its anticipated expenses and 
disbursements in the administration of this subpart, including the 
projected cost of plans and projects to be conducted by the Board 
directly or by way of contract or agreement; and
    (2) The budget, plans, or projects for which State associations are 
to receive funds under Sec. 1230.72, including a general description of 
the proposed plan and project contemplated therein;
    (f) With the approval of the Secretary, to enter into contracts or 
agreements with any person for the development and conduct of activities 
authorized under this subpart and for the payment of the cost thereof 
with funds collected through assessments pursuant to Sec. 1230.71. Any 
such contract or agreement shall provide that:
    (1) The contracting party shall develop and submit to the Board a 
plan or project together with a budget or budgets which shall show the 
estimated cost to be incurred for such plan or project;
    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
relevant transactions and make periodic reports to the Board of relevant 
activities conducted and an accounting for funds received and expended, 
and such other reports as the Secretary or the Board may require. The 
Secretary or employees of the Board may audit periodically the records 
of the contracting party;
    (g) To appoint or employ staff persons as it may deem necessary, to 
define the duties and determine the compensation of each, to protect the 
handling of Board funds through fidelity bonds, and to conduct routine 
business.
    (h) To disseminate information to or communicate with producers or 
State associations through programs or by direct contact utilizing the 
public postage system or other systems;
    (i) To select committees and subcommittees of Board members and to 
adopt such rules and by laws for the conduct of its business as it may 
deem advisable;
    (j) To utilize advisory committees of persons other than Board 
members to assist in the development of plans or projects and pay the 
reasonable expenses and fees of the members of such committees;
    (k) To prescribe rules and regulations necessary to effectuate the 
terms and provisions of this subpart;
    (l) To recommend to the Secretary amendments to this subpart;
    (m) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1230.71 in, and only in, an obligation 
of the United States, a general obligation of any State or any political 
subdivision thereof, an interest-bearing account or certificate of 
deposit of a bank that is a member of the Federal Reserve System, or an 
obligation fully guaranteed as to principal and interest by the United 
States.

[[Page 156]]

    (n) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and prepare and submit such 
reports as the Secretary may prescribe from time to time, and to make 
appropriate accounting with respect to the receipt and disbursement of 
all funds entrusted to it;
    (o) To prepare and make public and available to producers and 
importers at least annually, a report of its activities carried out and 
an accounting of funds received and expended;
    (p) To have an audit of its financial statements conducted by a 
certified public accountant in accordance with generally accepted 
auditing standards at the end of each fiscal period and at such other 
times as the Secretary may request, and to submit a copy of each such 
audit report to the Secretary;
    (q) To receive, investigate, and report to the Secretary complaints 
of violations of the provisions of this subpart;
    (r) To submit to the Secretary such information pursuant to this 
subpart as the Secretary may request; and
    (s) To carry out an effective and coordinated program of promotion, 
research, and consumer information designed to strengthen the position 
of the pork industry in the marketplace and maintain, develop, and 
expand markets for pork and pork products.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988]

              Promotion, Research, and Consumer Information



Sec. 1230.60  Promotion, research, and consumer information.

    (a) The Board shall receive and evaluate, or, on its own initiative, 
develop, and submit to the Secretary for approval, any plans and 
projects. Such plans and projects shall provide for:
    (1) The establishment, issuance, effectuation, and administration of 
appropriate plans and projects for promotion, research, and consumer 
information with respect to pork and pork products designed to 
strengthen the position of the pork industry in the marketplace and to 
maintain, develop, and expand domestic and foreign markets for pork and 
pork products;
    (2) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing, and utilization of pork 
and pork products and the creation of new products thereof, to the end 
that marketing and utilization of pork and pork products may be 
encouraged, expanded, improved, or made more acceptable.
    (b) Each plan and project shall be periodically reviewed or 
evaluated by the Board to ensure that the plan and project contributes 
to an effective and coordinated program of promotion, research, and 
consumer information. If it is found by the Board that any such plan and 
project does not further the purposes of the Act, the Board shall 
terminate such plan and project.
    (c) No plan or project shall make a false or misleading claim on 
behalf of pork or a pork product or a false or misleading statement with 
respect to an attribute or use of a competing product.
    (d) No plan or project shall undertake to advertise or promote pork 
or pork products by private brand or trade name unless such 
advertisement or promotion is specifically approved by the Board, with 
the concurrence of the Secretary.

                        Expenses and Assessments



Sec. 1230.70  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve that would permit an effective 
promotion, research, and consumer information program to continue in 
years when the amount of assessments may be reduced) as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
administration, maintenance, and functioning and to enable it to 
exercise its powers and perform its duties in accordance with the 
provisions of this subpart, including financing plans and projects. Such 
expenses shall be paid from assessments collected pursuant to 
Sec. 1230.71 and other funds available to the Board, including 
donations.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1230.71, for reasonable administrative 
expenses incurred by the

[[Page 157]]

Department with respect to this subpart after January 1, 1986, including 
any expenses reasonably incurred for the conduct of elections of 
nominees for appointment to the initial Delegate Body and for the 
conduct of referenda.



Sec. 1230.71  Assessments.

    (a)(1) Each producer producing in the United States a porcine animal 
raised as a feeder pig that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid on that animal as a 
feeder pig.
    (2) Each producer producing in the United States a porcine animal 
raised for slaughter that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid on that animal as a 
market hog.
    (3) Each producer producing in the United States a porcine animal 
raised for slaughter that such producer slaughters for sale shall pay an 
assessment on that animal unless such producer demonstrates to the Board 
by appropriate documentation that an assessment was previously paid on 
that animal as a market hog.
    (4) Each producer producing in the United States a porcine animal 
raised for breeding stock that is sold shall pay an assessment on that 
animal, unless such producer demonstrates to the Board by appropriate 
documentation that an assessment was previously paid by a person on that 
animal as breeding stock.
    (5) Each importer importing a porcine animal, pork, or pork product 
into the United States shall pay an assessment on that porcine animal, 
pork, or pork product, unless such importer demonstrates to the Board by 
appropriate documentation that an assessment was previously paid for 
that porcine animal, pork, or pork product.
    (b)(1) Each purchaser of a porcine animal raised by a producer as a 
feeder pig or market hog shall collect an assessment on such porcine 
animal if an assessment is due pursuant to paragraph (a) of this 
section, and shall remit that assessment to the Board. For the purposes 
of collection and remittance of assessments, any person engaged as a 
commission merchant, auction market, or livestock market in the business 
of receiving such porcine animals for sale on commission for or on 
behalf of a producer shall be deemed to be a purchaser.
    (2) Assessments on porcine animals raised as breeding stock which 
are sold by a commission merchant, auction, market, or livestock market 
in the business of receiving such porcine animals for sale on commission 
for or on behalf of a producer shall be collected and remitted by the 
commission merchant, auction market, or livestock market selling such 
porcine animals.
    (3) Each producer of porcine animals slaughtered for sale by the 
producer or sold directly to a consumer in connection with a custom 
slaughter operation shall remit an assessment to the Board if an 
assessment is due pursuant to paragraph (a) of this section.
    (4) Assessments on domestic porcine animals shall be remitted in the 
form of a negotiable instrument made payable to the ``National Pork 
Board,'' which, together with the reports required by Sec. 1230.80, 
shall be sent to the address designated by the Board.
    (5) Each importer of a porcine animal, pork, or pork product shall 
remit an assessment to the Customs Service at the time such porcine 
animal, pork, or pork product is imported or in such manner as may be 
established by regulations prescribed by the Board and approved by the 
Secretary, if an assessment is due pursuant to paragraph (a) of this 
section.
    (c) The initial rate of assessment shall be 0.25 percent of market 
value.
    (d) The rate of assessment may, upon the recommendation of the 
Delegate Body, be increased by regulations prescribed by the Board and 
approved by the Secretary by no more than 0.1 percent of such market 
value per fiscal period to a total of not more than 0.5 percent of 
market value.
    (e) Assessments on imported pork and pork products shall be 
expressed in an amount per pound for each type of pork or pork product 
subject to assessment, which shall be established by

[[Page 158]]

regulations prescribed by the Board and approved by the Secretary.

[51 FR 31903, Sept. 5, 1986; 51 FR 36383, Oct. 10, 1986; 53 FR 1910, 
Jan. 25, 1988; 53 FR 30245, Aug. 11, 1988; 56 FR 6, Jan. 2, 1991]



Sec. 1230.72  Distribution of assessments.

    Assessments remitted to the Board shall be distributed as follows:
    (a) Each State association shall receive on a monthly basis, a 
percentage determined by the Delegate Body or 16.5 percent, whichever is 
higher, of the net assessments attributable to that State. The net 
assessments attributable to a State is the total amount of assessments 
received from producers in a State.
    (b) A State association which was conducting a pork promotion 
program in the period from July 1, 1984 to June 30, 1985, shall receive 
additional amounts at such times as the Board may determine, so that the 
total amount received on an annual basis would be equal to the amount 
that would have been collected in such State pursuant to the pork 
promotion program in existence in such State from July 1, 1984, to June 
30, 1985, had the porcine animals subject to assessment, been produced 
from July 1, 1984, to June 30, 1985, and been subject to the rates of 
assessment then in effect from such State to the Council and other 
national entities involved in pork promotion, research, and consumer 
information. This paragraph shall apply to a State association only if 
the annual amount determined under this paragraph would be greater than 
the annual amount determined under paragraph (a) of this section.
    (c) The Council shall receive on a monthly basis 35 percent of the 
net assessments until after the referendum is conducted, and 25 percent 
thereafter and until 12 months after the referendum.

[51 FR 31903, Sept. 5, 1986, as amended at 60 FR 58501, Nov. 28, 1995]



Sec. 1230.73  Uses of distributed assessments.

    (a) Each State association shall use its distribution of assessments 
pursuant to Sec. 1230.72, as well as any proceeds from the investment of 
such funds pending their use, for financing plans and projects and the 
administrative expenses incurred in connection therewith, including the 
cost of administering nominations and elections of producer members of 
the Delegate Body.
    (b) The Council shall use its distribution of assessments pursuant 
to Sec. 1230.72, as well as any proceeds from the investment of such 
funds pending their use, for financing plans and projects and the 
Council's administrative expenses.
    (c) The Board shall use its distribution of assessments pursuant to 
Sec. 1230.72, as well as any proceeds from the investment of such funds 
pending their use, for:
    (1) Financing plans and projects;
    (2) The Board's expenses for the Board's administration, 
maintenance, and functioning as authorized by the Secretary;
    (3) Accumulation of a reserve not to exceed one fiscal period's 
budget to permit continuation of an effective promotion, research, and 
consumer information program in years when assessment amounts may be 
reduced; and
    (4) The Secretary's administrative costs in carrying out this part.



Sec. 1230.74  Prohibited use of distributed assessments.

    (a) No funds collected under this subpart shall in any manner be 
used for the purpose of influencing legislation as that term is defined 
in section 4911 (d) and (e)(2) of the Internal Revenue Code of 1954, or 
for the purpose of influencing governmental policy or action except in 
recommending to the Secretary amendments to this part.
    (b) Organizations receiving distributions of assessments from the 
Board shall furnish the Board with annual financial statements audited 
by a certified public accountant of all funds distributed to such 
organizations pursuant to this subpart and any other reports as may be 
required by the Secretary or the Board in order to verify the use of 
such funds.

[51 FR 31903, Sept. 5, 1986, as amended at 53 FR 30245, Aug. 11, 1988; 
60 FR 33683, June 29, 1995]



Sec. 1230.75  Adjustment of accounts.

    Whenever the Board or the Department determines, through an audit of 
a

[[Page 159]]

person's reports, records, books or accounts or through some other means 
that additional money is due the Board or that money is due such person 
from the Board, such person shall be notified of the amount due. Any 
amount due the Board shall be remitted to the Board by the next date for 
remitting assessments as provided in Sec. 1230.71(b)(3). Any overpayment 
to the Board shall be credited to the account of the person remitting 
the overpayment and shall be applied against amounts due in succeeding 
months except that the Board shall make prompt payment when an 
overpayment cannot be adjusted by a credit.



Sec. 1230.76  Charges.

    Any assessment not paid when due shall be increased 1.5 percent each 
month beginning with the day following the date such assessment was due. 
Any remaining amount due, which shall include any unpaid charges 
previously made pursuant to this section, shall be increased at the same 
rate on the corresponding day of each month thereafter until paid. For 
the purpose of this section, any assessment that was determined at a 
date later than prescribed by this subpart because of a person's failure 
to submit a report to the Board when due shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due. The timeliness of a payment to the Board shall be based 
on the applicable postmark date or the date actually received by the 
Board, whichever is earlier.



Sec. 1230.77  [Reserved]

                       Reports, Books, and Records



Sec. 1230.80  Reports.

    Each person responsible for collecting or remitting any assessment 
under Sec. 1230.71(b) shall report at the time for remitting assessments 
to the Board the following information:
    (a) The quantity and market value of the porcine animals subject to 
assessment;
    (b) The amount of assessment collected;
    (c) The month the assessment was collected;
    (d) The State where the porcine animals were produced; and
    (e) Such other information as may be required by regulations 
prescribed by the Board and approved by the Secretary.



Sec. 1230.81  Books and records.

    Each person who is subject to this subpart shall maintain and, 
during normal business hours, make available for inspection by employees 
of the Board and the Secretary such books and records as are necessary 
to carry out the provision of this subpart, including such records as 
are necessary to verify any required reports. Such records shall be 
retained for at least two years beyond the fiscal period of their 
applicability.



Sec. 1230.82  Confidential treatment.

    All information obtained from the books, records or reports required 
to be maintained under Secs. 1230.80 and 1230.81 of this subpart shall 
be kept confidential by all persons, including employees and agents and 
former employees and agents of the Board, all officers and employees and 
all former officers and employees of the Department, and by all officers 
and all employees and all former officers and employees of contracting 
parties having access to such information, and shall not be available to 
Board members. Only those persons having a specific need for such 
information in order to effectively implement, administer, or enforce 
the provisions of this subpart shall have access to such information. In 
addition, only such information so furnished or acquired shall be 
disclosed as the Secretary deems relevant and then only in a suit or 
administrative hearing brought at the direction, or upon the request, of 
the Secretary or to which the Secretary or any officer of the United 
States is a party, and involving this subpart. Nothing in this section 
shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of persons subject to this subpart or of statistical data 
collected therefrom, which statements or data do not identify the 
information furnished by any person; or

[[Page 160]]

    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a statement of the particular provisions of this subpart violated 
by such person.

                              Miscellaneous



Sec. 1230.85  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
not more than five of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of, or under the control of, 
the Board, including unpaid claims or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreement;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand together with all books and records of the 
Board and of the trustees, to such persons as the Secretary may direct; 
and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
plans and projects authorized pursuant to this subpart.



Sec. 1230.86  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant hereto, 
or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, 
the Secretary, or any person with respect to any such violation.



Sec. 1230.87  Personal liability.

    No member or employee of the Board shall be held personally liable, 
either individually or jointly, in any way whatsoever to any person for 
errors in judgment, mistakes, or other acts of either commission or 
omission, as such member or employee, except for acts of dishonesty or 
willful misconduct.



Sec. 1230.88  Patents, copyrights, inventions, and publications.

    Any patents, copyrights, trademarks, inventions, or publications 
developed through the use of funds collected under the provisions of 
this subpart shall be the property of the United States Government as 
represented by the Board, and shall, along with any rents, royalties, 
residual payments, or other income from the rental, sale, leasing, 
franchising, or other uses of such patents, copyrights, inventions, or 
publications inure to the benefit of the Board as income and be subject 
to the same fiscal, budget, and audit controls as other funds of the 
Board. Upon termination of this subpart, Sec. 1230.85 shall apply to 
determine disposition of all such property.



Sec. 1230.89  Amendments.

    The Secretary may from time to time amend provisions of this part. 
Any interested person or organization affected by the provisions of the 
Act may propose amendments to the Secretary.



Sec. 1230.90  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances

[[Page 161]]

is held invalid, the validity of the remainder of this subpart or the 
applicability thereof to other persons or circumstances shall not be 
affected thereby.



Sec. 1230.91  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping requirements contained 
in this subpart have been approved by the Office of Management and 
Budget (OMB) under the provisions of 44 U.S.C. Chapter and have been 
assigned OMB Control Number 0851-0151.



                    Subpart B--Rules and Regulations

    Source: 53 FR 1911, Jan. 25, 1988, unless otherwise noted.

                               Definitions



Sec. 1230.100  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms in Subpart A of this part.

                               Assessments



Sec. 1230.110  Assessments on imported pork and pork products.

    (a) The following HTS categories of imported live porcine animals 
are subject to assessment at the rate specified.

------------------------------------------------------------------------
        Live porcine animals                      Assessment
------------------------------------------------------------------------
0103.10.0000........................  0.45 percent Customs Entered
                                       Value.
0103.91.0000........................  0.45 percent Customs Entered
                                       Value.
0103.92.0000........................  0.45 percent Customs Entered
                                       Value.
------------------------------------------------------------------------

    (b) The following HTS categories of imported pork and pork products 
are subject to assessment at the rates specified.

------------------------------------------------------------------------
                                                    Assessment
         Pork and pork products          -------------------------------
                                             Cents/lb        Cents/kg
------------------------------------------------------------------------
0203.11.0000............................             .33         .727518
0203.12.1010............................             .33         .727518
0203.12.1020............................             .33         .727518
0203.12.9010............................             .33         .727518
0203.12.9020............................             .33         .727518
0203.19.2010............................             .38         .837748
0203.19.2090............................             .38         .837748
0203.19.4010............................             .33         .727518
0203.19.4090............................             .33         .727518
0203.21.0000............................             .33         .727518
0203.22.1000............................             .33         .727518
0203.22.9000............................             .33         .727518
0203.29.2000............................             .38         .837748
0203.29.4000............................             .33         .727518
0206.30.0000............................             .33         .727518
0206.41.0000............................             .33         .727518
0206.49.0000............................             .33         .727518
0210.11.0010............................             .33         .727518
0210.11.0020............................             .33         .727518
0210.12.0020............................             .33         .727518
0210.12.0040............................             .33         .727518
0210.19.0010............................             .38         .837748
0210.19.0090............................             .38         .837748
1601.00.2010............................             .46        1.014116
1601.00.2090............................             .46        1.014116
1602.41.2020............................             .50        1.102300
1602.41.2040............................             .50        1.102300
1602.41.9000............................             .33         .727518
1602.42.2020............................             .50        1.102300
1602.42.2040............................             .50        1.102300
1602.42.4000............................             .33         .727518
1602.49.2000............................             .46        1.014116
1602.49.4000............................             .38         .837748
------------------------------------------------------------------------


[[Page 162]]


[63 FR 45936, Aug. 28, 1998]



Sec. 1230.111  Remittance of assessments on domestic porcine animals.

    Assessments on domestic porcine animals shall be remitted to the 
National Pork Board pursuant to Sec. 1230.71(b) in accordance with the 
following remittance schedule.
    (a) Monthly assessments totaling $25 or more shall be remitted to 
the Board by the 15th day of the month following the month in which the 
porcine animals were marketed or by the 15th day following the end of a 
Board-approved, consecutive 4-week period in which the porcine animals 
were marketed.
    (b) Assessments totaling less than $25 during each month of a 
quarter in which the porcine animals were marketed may be accumulated 
and remitted by the 15th day of the month following the end of a 
quarter. The quarters shall be: January through March; April through 
June; July through September; October through December.
    (c) Assessments totaling $25 or more during any month of a quarter 
must be remitted by the 15th day of the month following the month of the 
quarter in which the assessments totaled $25 or more, together with any 
unremitted assessments from the previous month(s) of the quarter, if 
applicable.
    (d) Assessments collected during any calendar quarter and not 
previously remitted as described in paragraphs (b) or (c) of this 
section must be remitted by the 15th day of the month following the end 
of the quarter regardless of the amount.

[56 FR 6, Jan. 2, 1991]



Sec. 1230.112  Rate of assessment.

    In accordance with Sec. 1230.71(d) the rate of assessment shall be 
0.45 percent of market value.

[60 FR 29965, June 7, 1995]



Sec. 1230.115  Submission of annual financial statements.

    State Pork Producer Associations, as defined in Sec. 1230.25, that 
receive distributions of assessments pursuant to Sec. 1230.72 and that 
receive less than $30,000 in assessments annually, may satisfy the 
requirements of Sec. 1230.74(b) by providing to the Board unaudited 
annual financial statements prepared by State association staff members 
or individuals who prepare annual financial statements, provided that 
two members of the State association attest to and certify such 
financial statements. Notwithstanding any provisions of the Order to the 
contrary, State associations that receive less than $30,000 in 
distributed assessments annually and submit unaudited annual financial 
statements to the Board shall be required to submit an annual financial 
statement audited by a certified public accountant at least once every 5 
years, or more frequently if deemed necessary by the Board or the 
Secretary. The Board may elect to conduct its own audit of the annual 
financial statements of State Pork Producer Associations that receive 
less than $2,000 in distributed assessments annually, every 5 years in 
lieu of the required financial statements.

[60 FR 33683, June 29, 1995]

                              Miscellaneous



Sec. 1230.120  OMB control number assigned pursuant to the Paperwork Reduction Act.

    The information collection and recordkeeping 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 0851-0151.



                          Subpart C  [Reserved]



 Subpart D--Procedures for Nominations and Elections of Pork Producers 
  and Nominations of Importers for Appointment to the Initial National 
                      Pork Producers Delegate Body



Sec. 1230.501-1230.512  [Reserved]



PART 1240--HONEY RESEARCH, PROMOTION, AND CONSUMER INFORMATION ORDER--Table of Contents




                               Definitions

Sec.
1240.1  Secretary.
1240.2  Act.

[[Page 163]]

1240.3  Person.
1240.4  Honey.
1240.5  Honey products.
1240.6  Producer.
1240.7  Handle.
1240.8  Handler.
1240.9  Producer-packer.
1240.10  Importer.
1240.11  Exporter.
1240.12  Promotion.
1240.13  Research.
1240.14  Consumer education.
1240.15  Marketing.
1240.16  Committee.
1240.17  State association.
1240.18  Honey Board.
1240.19  State.
1240.20  Fiscal period and marketing year.
1240.21  Plans and projects.
1240.22  Part and subpart.

                               Honey Board

1240.30  Establishment and membership.
1240.31  Term of office.
1240.32  Nominations.
1240.34  Vacancies.
1240.35  Procedure.
1240.36  Attendance.
1240.37  Powers.
1240.38  Duties.

               Research, Promotion, and Consumer Education

1240.39  Research, promotion, and consumer education.

                        Expenses and Assessments

1240.40  Budget and expenses.
1240.41  Assessments.
1240.42  Exemption from assessment.
1240.43  State assessment plan refund.
1240.44  Operating reserve.

                       Reports, Books, and Records

1240.50  Reports.
1240.51  Books and records.
1240.52  Confidential treatment.

                              Miscellaneous

1240.60  Influencing governmental action.
1240.61  Right of the Secretary.
1240.62  Suspension or termination.
1240.63  Proceedings after termination.
1240.64  Effect of termination or amendment.
1240.65  Personal liability.
1240.66  Separability.
1240.67  Patents, copyrights, inventions, product formulations, and 
          publications.

                 Subpart--General Rules and Regulations

1240.100  Terms defined.
1240.105  Definitions.
1240.106  Communications.
1240.107  Policy and objective.
1240.108  Contracts.
1240.109  Procedure.
1240.110  U.S. Department of Agriculture costs.
1240.111  First handler and producer-packer.
1240.113  Importer.
1240.114  Exemption procedures.
1240.115  Levy of assessments.
1240.116  Payment of assessments.
1240.118  Reports of disposition of exempted honey.
1240.119  Reporting period and reports.
1240.120  Retention period for records.
1240.121  Availability of records.
1240.122  Confidential books, records, and reports.
1240.123  Right of the Secretary.
1240.124  Personal liability.
1240.125  OMB control numbers.

 Subpart--Procedure for the Conduct of Referenda in Connection With the 
        Honey Research, Promotion, and Consumer Information Order

1240.200  General.
1240.201  Definitions.
1240.202  Voting.
1240.203  Instructions.
1240.204  Subagents.
1240.205  Ballots.
1240.206  Referendum report.
1240.207  Confidential information.

    Authority: 7 U.S.C. 4601-4612.

    Source: 51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, 
unless otherwise noted.

                               Definitions



Sec. 1240.1  Secretary.

    Secretary means the Secretary of Agriculture of the United States, 
or any other officer or employee of the Department of Agriculture to 
whom authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his/her stead.



Sec. 1240.2  Act.

    Act means the Honey Research, Promotion, and Consumer Information 
Act (Pub. L. 98-590) and any amendments thereto.



Sec. 1240.3  Person.

    Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.



Sec. 1240.4  Honey.

    Honey means the nectar and saccharine exudations of plants which are

[[Page 164]]

gathered, modified, and stored in the comb by honey bees.



Sec. 1240.5  Honey products.

    Honey products means products wherein honey is a principal 
ingredient.



Sec. 1240.6  Producer.

    Producer means any person who produces honey in any State for sale 
in commerce.



Sec. 1240.7  Handle.

    Handle means to process, package, sell, transport, purchase or in 
any other way place honey or honey products, or cause them to be placed, 
in the current of commerce. Such term shall include selling unprocessed 
honey that will be consumed without further processing or packaging. 
Such term shall not include the transportation of unprocessed honey by 
the producer to a handler or transportation by a commercial carrier of 
honey, whether processed or unprocessed for the account of the handler 
or producer.



Sec. 1240.8  Handler.

    Handler means any person who handles honey or honey products.



Sec. 1240.9  Producer-packer.

    Producer-packer means any person who is both a producer and handler 
of honey or honey products.



Sec. 1240.10  Importer.

    Importer means any person who imports honey or honey products into 
the United States as principal or as an agent, broker, or consignee for 
any person who produces honey outside of the United States for sale in 
the United States, and who is listed in the import records as the 
importer of record for such honey or honey products.

[56 FR 37456, Aug. 7, 1991]



Sec. 1240.11  Exporter.

    Exporter means any person who exports honey or honey products from 
the United States.

[56 FR 37456, Aug. 7, 1991]



Sec. 1240.12  Promotion.

    Promotion means any action, including paid advertising and public 
relations, to present a favorable image for honey or honey products to 
the public with the express intent of improving the competitive position 
and stimulating sales of honey or honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.13  Research.

    Research means any type of systematic study or investigation, and/or 
the evaluation of any study or investigation designed to advance the 
image, desirability, usage, marketability, production, or quality of 
honey or honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.14  Consumer education.

    Consumer education means the act of providing information to the 
public on the usage and care of honey and honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.15  Marketing.

    Marketing means the sale or other disposition in commerce of honey 
or honey products.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.16  Committee.

    Committee means or the National Honey Nominations Committee means 
the Committee established pursuant to Sec. 1240.32.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.17  State association.

    State association or association means that organization of 
beekeepers in a State which is generally recognized as

[[Page 165]]

representing the beekeepers of that State.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.18  Honey Board.

    Honey Board or the Board means the administrative body established 
pursuant to Sec. 1240.30.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.19  State.

    State means any of the fifty States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.20  Fiscal period and marketing year.

    Fiscal period and marketing year means the 12-month period ending on 
December 31 or such other consecutive 12-month period as shall be 
recommended by the Board and approved by the Secretary.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.21  Plans and projects.

    Plans and projects means those research, promotion, and consumer 
education plans, studies, or projects established pursuant to 
Secs. 1240.38 and 1240.39.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.22  Part and subpart.

    Part means the Honey Research, Promotion, and Consumer Information 
Order and all rules, regulations, and supplemental orders issued 
thereunder, and the order shall be a ``subpart'' of such part.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986. Redesignated at 
56 FR 37456, Aug. 7, 1991]

                               Honey Board



Sec. 1240.30  Establishment and membership.

    A Honey Board (hereinafter called the Board) is hereby established 
to administer the terms and provisions of this part. The Board shall 
consist of thirteen (13) members, each of whom shall have an alternate. 
Seven members and seven alternates shall be honey producers; two members 
and two alternates shall be honey handlers; two members and two 
alternates shall be either honey importers or exporters of which at 
least one member and alternate shall be an importer; one member and one 
alternate shall be an officer or employee of a honey marketing 
cooperative; and, one member and one alternate shall be selected to 
represent the general public. The Board shall be appointed by the 
Secretary from nominations submitted by the National Honey Nominations 
Committee, pursuant to Sec. 1240.32.

[56 FR 37456, Aug. 7, 1991]



Sec. 1240.31  Term of office.

    The members of the Board and their alternates shall serve for terms 
of three years, except the members of the initial Board shall be 
designated for, and shall serve terms as follows: Four members and 
alternates shall serve for one-year terms; four shall serve for two-year 
terms; and five shall serve for three-year terms. No member or alternate 
shall serve more than two consecutive terms: Provided, That those 
members and alternates serving the initial term of one year may serve 
two additional consecutive three-year terms. The term of office for the 
initial Board shall begin immediately on appointment by the Secretary. 
In subsequent years, the term of office shall begin on April 1. Each 
member and alternate member shall continue to serve until his/her 
successor is selected and has accepted.



Sec. 1240.32  Nominations.

    All nominations to the Board authorized under Sec. 1240.30 herein 
shall be made in the following manner.
    (a) Establishment of National Honey Nominations Committee. (1) There 
is hereby established a National Honey

[[Page 166]]

Nominations Committee, hereinafter called the Committee, which shall 
consist of not more than one member from each State, appointed by the 
Secretary from nominations submitted by each State Association. Wherever 
there is more than one eligible association within a State, the 
Secretary shall designate the association most representative of the 
honey producers, handlers, importers and exporters not exempt under 
sections 1240.42 (a) and (b) to make nominations for that State.
    (2) If a State Association does not submit a nomination for the 
Committee, the Secretary may select a member of the honey industry from 
that State to represent that State on the Committee. However, if a State 
which is not one of the top twenty honey producing States (as determined 
by the Secretary) does not submit a nomination, such State shall not be 
represented on the Committee.
    (3) Members of the Committee shall serve for three-year terms, 
except members of the initial Committee shall serve for terms as 
follows: One-third of such members shall serve one-year terms; one-third 
shall serve two-year terms; and one-third shall serve three-year terms. 
No member shall serve more than two consecutive three-year terms: 
Provided, That those members serving the initial term of one year may 
serve two additional consecutive three-year terms. The term of office 
for the initial Committee shall begin immediately on appointment by the 
Secretary. In subsequent years, the term of office shall begin on 
January 1.
    (4) The Committee shall select its Chairperson by a majority vote.
    (5) The members of the Committee shall serve without compensation, 
but shall be reimbursed for necessary and reasonable expenses incurred 
in performing their duties as members of the Committee and approved by 
the Board. Such expenses shall be paid from funds collected by the Board 
pursuant to Sec. 1240.41.
    (b) Nominations to the Board. (1) Except for the member and 
alternate who represent the general public, the Committee shall nominate 
the members and alternate members of the Honey Board and submit such 
nominations promptly to the Secretary for approval. The Committee shall 
also submit a list of candidates to the Secretary for the public member 
and alternate public member position. The Secretary may choose from that 
list of names or, at his/her discretion, choose other candidates to fill 
the public member and alternate position.
    (2) After the first meeting, the Committee shall meet annually to 
make such nominations, or at the determination of the Chairperson, the 
Committee may conduct its business by mail ballot in lieu of an annual 
meeting.
    (3) A majority of the Committee shall constitute a quorum for voting 
at an annual meeting. In the event of a mail ballot, votes must be 
received from a majority of the Committee to constitute a quorum.
    (4) At least 50 percent of the members from the twenty leading 
honey-producing states must vote in any nomination of members to the 
Board.
    (5) For the purpose of nominating producer members to the Board, the 
Secretary shall establish seven regions on the basis of the production 
of honey. For the purpose of facilitating initial nominations to the 
Honey Board, the following regions shall be the initial regions:

Region 1: Washington, Oregon, Idaho, California, Nevada, Utah, Alaska, 
and Hawaii.
Region 2: Montana, Wyoming, Nebraska, Kansas, Colorado, Arizona, and New 
Mexico.
Region 3: North Dakota and South Dakota.
Region 4: Minnesota, Iowa, Wisconsin, and Michigan.
Region 5: Texas, Oklahoma, Missouri, Arkansas, Tennessee, Louisiana, 
Mississippi, and Alabama.
Region 6: Florida, Georgia, and Puerto Rico.
Region 7: Illinois, Indiana, Ohio, Kentucky, Virginia, North Carolina, 
South Carolina, West Virginia, Maryland, District of Columbia, Delaware, 
New Jersey, New York, Pennsylvania, Connecticut, Rhode Island, 
Massachusetts, New Hampshire, Vermont, and Maine.

    (6) Every five years, the Board shall review the regions to 
determine whether new regions should be established. In making such 
review, it shall give consideration to:
    (i) The average quantity of honey produced during the most recent 
three years;

[[Page 167]]

    (ii) Shifts and trends in quantities of honey produced;
    (iii) The equitable relationship of Board membership and districts; 
and
    (iv) Other relevant factors.

As a result of this review, the Board may recommend for the Secretary's 
approval the reestablishment of such regions. Any such reestablishment 
of regions shall be made at least six months prior to the date on which 
terms of office of the Board begin each year and shall become effective 
at least 30 days prior to such date.
    (7) In nominating producer members to the Board, no producer-packer 
who, during any three of the preceding five years, purchased for resale 
more honey than such producer-packer produced shall be eligible for 
nomination or appointment to the Honey Board as a producer or as an 
alternate to such producer.
    (8) The initial Committee shall within 90 days of the announcement 
of issuance of this order, or such other period as prescribed by the 
Secretary, submit in a manner prescribed by the Secretary the following 
nominations:
    (i) One producer member and one alternate producer member from each 
of the seven regions established by the Secretary;
    (ii) Two handler members and two alternate handler members from 
recommendations made by industry organizations representing handler 
interests;
    (iii) Two importer members or one importer and one exporter member, 
and two alternate importer members or one importer and one exporter 
alternate member from recommendations made by industry organizations 
representing importer and/or exporter interests; and
    (iv) One member and one alternate who are officers or employee of 
honey marketing cooperatives.
    (v) For subsequent years, the Committee shall submit its nominations 
to the Secretary one month before the new Board terms begin.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.34  Vacancies.

    (a) In the event any member of the Board ceases to be a member of 
the category of members from which the member was appointed to the 
Board, such position shall automatically become vacant, except that if, 
as a result of the adjustment of the boundaries of the regions in 
accordance with Sec. 1240.32(b)(6), a producer member or alternate is no 
longer from the region from which such person was appointed, such member 
or alternate may serve out the term for which such person was appointed.
    (b) If a member of the Board consistently refuses to perform the 
duties of a member of the Board, or if a member of the Board engages in 
acts of dishonesty or willful misconduct, the Board may recommend to the 
Secretary that he/she be removed from office. If the Secretary finds the 
recommendation of the Board shows adequate cause, he/she shall remove 
such member from office.
    (c) Should any member position become vacant, the alternate of that 
member shall automatically assume the position of said member. At its 
next meeting, the Honey Nominations Committee shall nominate a 
replacement for said alternate. Should the positions of both a member 
and such member's alternate become vacant, successors for the unexpired 
terms of such member and alternate shall be nominated and appointed in 
the manner specified in Secs. 1240.30 and 1240.32, except that said 
nomination and replacement shall not be required if said unexpired terms 
are less than six months.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.35  Procedure.

    (a) Seven members, including alternates acting in place of members 
of the Board, shall constitute a quorum; Provided, That such alternates 
shall serve only whenever the member is absent from a meeting or is 
disqualified. Any action of the Board shall require the concurring votes 
of a majority of those present and voting. At assembled meetings, all 
votes shall be cast in person.
    (b) In matters of an emergency nature when there is not enough time 
to

[[Page 168]]

call an assembled meeting of the Board, the Board may act upon the 
concurring votes of a majority of its members by mail, telephone, 
telegraph, or by other means of communication: Provided, That each 
proposition is explained accurately, fully, and substantially 
identically to each member. All telephone votes shall be promptly 
confirmed in writing and recorded in the Board minutes.



Sec. 1240.36  Attendance.

    Members of the Board and the members of any special panels shall be 
reimbursed for reasonable out-of-pocket expenses incurred when 
performing Board business. The Board shall have the authority to request 
the attendance of alternates of any or all meetings, notwithstanding the 
expected or actual presence of the respective members.



Sec. 1240.37  Powers.

    The Board shall have the following powers subject to Sec. 1240.61:
    (a) To administer this subpart in accordance with its terms and 
provisions of the Act;
    (b) To make rules and regulations to effectuate the terms and 
conditions of this subpart;
    (c) To require its employees to receive, investigate, and report to 
the Secretary complaints of violations of this part; and
    (d) To recommend to the Secretary amendments to this part.



Sec. 1240.38  Duties.

    The Board shall have, among other things, the following duties:
    (a) To meet and organize and to select from among its members a 
chairperson and such other officers as may be necessary; to select 
committees and subcommittees from its membership and consultants; to 
adopt such rules, regulations, and by-laws for the conduct of its 
business as it may deem advisable.
    (b) To employ such persons as it may deem necessary and to determine 
the compensation and define the duties of each; and to protect the 
handling of Board funds through fidelity bonds;
    (c) To prepare and submit to the Secretary for his/her approval, a 
budget on a fiscal period basis of its anticipated expenses in the 
administration of this part including the probable costs of all programs 
or projects and to recommend a rate of assessment with respect thereto;
    (d) To investigate violations of the order and report the results of 
such investigations to the Secretary for appropriate action to enforce 
the provisions of the order.
    (e) To develop programs and projects and to enter into contracts or 
agreements with the approval of the Secretary for the development and 
carrying out of programs or projects of research, development, 
advertising, promotion, or education, and the payment of the costs 
thereof with funds collected pursuant to this part;
    (f) To maintain minutes, books, and records and prepare and submit 
to the Secretary such reports from time to time as may be required for 
appropriate accounting with respect to the receipt and disbursement of 
funds entrusted to it;
    (g) To periodically prepare and make public and to make available to 
producers and importers, reports of its activities carried out, and at 
least once each fiscal period to make public an accounting of funds 
received and expended;
    (h) To cause its books to be audited by a certified public 
accountant at the end of each fiscal period and to submit a copy of each 
audit to the Secretary;
    (i) To give to the Secretary the same notice of meetings of the 
Board and subcommittees as is given to members in order that 
representatives of the Secretary may attend such meetings;
    (j) To submit to the Secretary such information pertaining to this 
subpart as he/she may request;
    (k) To notify honey producers, producer-packers, handlers, 
importers, and exporters of all Board meetings through press releases or 
other means;
    (l) To appoint and convene, from time to time, working committees 
drawn from producers, honey handlers, importers, exporters, members of 
the wholesale or retail outlets for honey, or other members of the 
public to assist in the development of research, promotion, and consumer 
education programs for honey; and

[[Page 169]]

    (m) To develop and recommend such rules and regulations to the 
Secretary for approval as may be necessary for the development and 
execution of projects or activities to effectuate the declared purpose 
of the Act.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991]

               Research, Promotion, and Consumer Education



Sec. 1240.39  Research, promotion, and consumer education.

    The Board shall develop and submit to the Secretary for approval any 
plans or projects authorized in this section. Such plans or projects 
shall provide for:
    (a) The establishment, issuance, effectuation and administration of 
appropriate plans or projects for consumer education, advertising, and 
promotion of honey and honey products designed to strengthen the 
position of the honey industry in the marketplace and to maintain, 
develop, and expand markets for honey and honey products;
    (b) The establishment and conduct of marketing research and 
development projects to the end that the acquisition of knowledge 
pertaining to honey and honey products or their consumption and use may 
be encouraged or expanded, or to the end that the marketing and 
utilization of honey and honey products may be encouraged, expanded, 
improved or made more efficient: Provided, That quality control, grade 
standards, supply management programs, or other programs that would 
otherwise limit the right of the individual honey producer to produce 
honey shall not be conducted under, or as a part of this subpart;
    (c) The development and expansion of honey and honey product sales 
in foreign markets;
    (d) A prohibition on advertising or other promotion programs that 
make any false or unwarranted claims on behalf of honey or its products 
or false or unwarranted statements with respect to the attributes or use 
of any competing product;
    (e) Periodic evaluation by the Board of each plan or project 
authorized under this part to insure that each plan or project 
contributes to an effective and coordinated program of research, 
education, and promotion and submit such evaluation to the Secretary. If 
the Board or the Secretary finds that a plan or project does not further 
the purposes of the Act, then the Board shall terminate such plan or 
project; and
    (f) The Board to enter into contracts or make agreements for the 
development and carrying out of research, promotion, and consumer 
education, and pay for the costs of such contracts or agreements with 
funds collected pursuant to Sec. 1240.41.

                        Expenses and Assessments



Sec. 1240.40  Budget and expenses.

    (a) At the beginning of each fiscal period, or as may be necessary 
thereafter, the Board shall prepare and recommend a budget on a fiscal 
period basis of its anticipated expenses and disbursements in the 
administration of the Order, including expenses of the Committee and 
probable costs of research, promotion, and consumer education.
    (b) The Board is authorized to incur expenses for research, 
promotion, and consumer education, such other expenses for the 
administration, maintenance, and functioning of the Board and the 
Committee as may be authorized by the Secretary, any operating reserve 
established pursuant to Sec. 1240.44, and those administrative costs 
incurred by the Department specified in paragraph (c) of this section. 
The funds to cover such expenses shall be paid from assessments 
collected pursuant to Sec. 1240.41, donations from any person not 
subject to assessments under this order and other funds available to the 
Board including those collected pursuant to Sec. 1240.67 and subject to 
the limitations contained therein.
    (c) The Board shall reimburse the Department from assessments for 
administrative costs incurred by the Department with respect to this 
order after its promulgation. The Department shall also be reimbursed 
for administrative expenses incurred by it for the conduct of referenda.

[[Page 170]]



Sec. 1240.41  Assessments.

    (a) Each producer and importer shall pay to the Board, upon demand, 
his/her pro rata share of such expenses as may be approved by the 
Secretary pursuant to Sec. 1240.40. Such pro rata share shall be the 
amount established by the Secretary pursuant to paragraph (c) of this 
section.
    (b) Except as provided in Sec. 1240.42 and in paragraphs (e), (f), 
and (g) of this section, the first handler shall be responsible for the 
collection of such assessment from the producer and payment thereof to 
the Board. The first handler shall maintain separate records for each 
producer's honey handled, including honey produced by said handler.
    (c) The assessment on honey shall be levied at a rate fixed by the 
Secretary which shall be $0.01 per pound of honey or honey used in honey 
products.
    (d) Should a deficit occur during any fiscal period, funds to cover 
the deficit may be obtained by increasing the rate of assessment subject 
to the limitations in paragraph (c) of this section. The increased rate 
of assessment shall be applied to all honey and the honey used in 
products wherein honey is the primary ingredient sold in the States 
during that particular fiscal period so that the total payments by each 
person during each fiscal period will be proportional to the total value 
of the honey and honey products sold during that period.
    (e) The importer of imported honey and honey products shall pay the 
assessment to the Board at the time of entry of such honey and honey 
products into any State.
    (f) Producer-packers shall pay to the Board the assessment on the 
honey for which they act as first handler.
    (g) Whenever a loan is made on honey under the Honey Loan-Price 
Support Program, the Secretary shall provide that the assessment be 
deducted from the proceeds of the loan or the loan deficiency payment, 
if applicable, and that the amount of such assessment shall be forwarded 
to the Board, except that the assessment shall not be deducted by the 
Secretary in the case of a honey marketing cooperative that has already 
deducted the assessment. As soon as practicable after the assessment is 
deducted from the loan funds or loan deficiency payment, the Secretary 
shall provide the producer with proof of payment of the assessment.
    (h) Should a first handler or the Secretary fail to collect an 
assessment from a producer, the producer shall be responsible for the 
payment of the assessment to the Board.
    (i) Assessments shall be paid to the Board at such time and in such 
manner as the Board, with the Secretary's approval, directs pursuant to 
regulations issued hereunder. Such regulations may provide for different 
handler, importer, or producer-packer payment schedules so as to 
recognize differences in marketing or purchasing practices and 
procedures.
    (j) There shall be a late payment charge imposed on any handler, 
importer, or producer-packer who fails to remit to the Board the total 
amount for which any such handler, importer, or producer-packer is 
liable on or before the payment due date established by the Board under 
paragraph (h) of this section. The amount of the late payment charge 
shall be set by the Board subject to approval by the Secretary.
    (k) There shall also be imposed on any handler, importer, or 
producer-packer subject to a late payment charge, an additional charge 
in the form of interest on the outstanding portion of any amount for 
which the handler, importer, or producer-packer is liable. The rate of 
such interest shall be prescribed by the Board subject to approval by 
the Secretary, but shall not exceed the maximum legal rate of interest, 
if any, as established by Congress.
    (l) The Board is hereby authorized to accept advance payment of 
assessments by handlers, importers, or producer-packers that shall be 
credited toward any amount for which the handlers, importers or 
producer-packers may become liable. The Board is not obligated to pay 
interest on any advance payment.
    (m) The Board is hereby authorized to borrow money for the payment 
of expenses subject to the same fiscal,

[[Page 171]]

budget, and audit controls as other funds of the Board.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37456, Aug. 7, 1991]



Sec. 1240.42  Exemption from assessment.

    (a) A producer who produces less than 6,000 pounds of honey per 
year, or a producer-packer who produces and handles less than 6,000 
pounds of honey per year or an importer who imports less than 6,000 
pounds of honey per year on honey which such person distributes directly 
through local retail outlets such as roadside stands, farmers markets, 
groceries, or other outlets as otherwise determined by the Secretary, 
during such year shall be eligible for an exemption from the assessment.
    (b) A producer or importer who consumes honey at home or donates 
honey to a nonprofit, government, or other entity, as determined 
appropriate by the Secretary, rather then sell such honey, shall be 
exempt from the assessment on that honey so consumed or donated, except 
for honey donated that is later sold in a commercial outlet by a donee 
or donee's assignee.
    (c) To claim such exemption, a producer, producer-packer, or 
importer shall submit an application to the Board stating the basis on 
which the person claims the exemption for such year.
    (d) If, after a person claims an exemption from assessments for any 
year under this subparagraph, and such person no longer meets the 
requirements of this subparagraph for an exemption, such person shall 
file a report with the Board in the form and manner prescribed by the 
Board and pay an assessment on or before March 15 of the subsequent year 
on all honey produced or imported by such person during the year for 
which the person claimed the exemption.
    (e) The Board may recommend to the Secretary that honey exported 
from the States be exempted from the provisions of this order, and 
include procedures for the refund of assessments on such honey and such 
safeguards as may be necessary to prevent improper use of this 
exemption.
    (f) The Board shall determine those States that are operating a 
program with objectives comparable to the objectives of the Act and 
recommend to the Secretary that they be exempted from a portion of the 
assessments collected by the Federal program. The amount of such 
assessments subject to exemption shall not exceed the amount authorized 
by the State plan on January 1, 1985, unless a State provides evidence 
that it was in the process of promulgating a different assessment level 
on January 1, 1985, then the new assessment level promulgated will be 
exempt upon approval of the honey producers in that State. Producers 
having an exemption from a portion of the assessments under this order, 
due to payment of assessments to a State plan, shall be required to 
furnish evidence to the Board that the assessments to the State plan 
have been paid.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37457, Aug. 7, 1991]



Sec. 1240.43  State assessment plan refund.

    Any State authority operating pursuant to a State assessment plan 
satisfying the conditions of paragraph (a) of this section may obtain a 
refund of assessments collected by the Board on honey and/or honey 
products produced in that State except as provided in paragraph (b) of 
this section.
    (a) Refunds shall be paid only if the Secretary certifies that the 
State assessment plan:
    (1) Is comparable to the program established under the Act and this 
part; and
    (2) Was in existence and in operation on January 1, 1985.
    (b) Refunds shall be made directly to States, and in no event shall 
exceed the amount collected by the Board on honey produced in the 
requesting State, and the amount of any refund shall be limited in 
accordance with the provisions of this subpart.

[56 FR 64476, Dec. 10, 1991]



Sec. 1240.44  Operating reserve.

    The Board may establish an operating monetary reserve and may carry 
over to subsequent fiscal periods excess funds in any reserve so 
established: Provided, That the funds in the reserve

[[Page 172]]

shall not exceed one fiscal period's budget. Subject to approval by the 
Secretary, such reserve funds may be used to defray any expenses 
authorized under this part.

                       Reports, Books, and Records



Sec. 1240.50  Reports.

    Each handler, importer, or producer-packer subject to this part 
shall be required to report to the employees of the Board, at such times 
and in such manner as it may prescribe, such information as may be 
necessary for the Board to perform its duties. Such reports shall 
include, but shall not be limited to the following:
    (a) For handlers or producer-packers, total quantity of honey 
acquired during the reporting period; total quantity handled during such 
period; amount of honey acquired from each producer, giving name and 
address of each producer; assessments collected or collectible during 
the reporting period; quantity of honey processed for sale from 
producer-packer's own production; and record of each transaction for 
honey on which assessment had already been paid, including statement 
from seller that assessment had been paid.
    (b) For importers, total quantity of honey imported during the 
reporting period and a record of each importation of honey during such 
period, giving quantity, date, and port of entry.
    (c) For persons who have an exemption from assessments under 
Sec. 1240.42 (a) and (b), such information as deemed necessary by the 
Board, and approved by the Secretary, concerning the exemption including 
disposition of exempted honey.

[56 FR 37457, Aug. 7, 1991, as amended at 59 FR 22493, May 2, 1994]



Sec. 1240.51  Books and records.

    Each handler, importer, producer-packer, or any person who receives 
an exemption from assessments shall maintain and during normal business 
hours make available for inspection by employees of the Board or the 
Secretary, such books and records as are necessary to carry out the 
provisions of this subpart and the regulations issued thereunder, 
including such records as are necessary to verify any required reports. 
Such records shall be maintained for two years beyond the first period 
of their applicability.

[56 FR 37457, Aug. 7, 1991]



Sec. 1240.52  Confidential treatment.

    All information obtained from the books, records, or reports 
required to be maintained under Secs. 1240.50 and 1240.51 shall be kept 
confidential and shall not be disclosed to the public by any person. 
Only such information as the Secretary deems relevant shall be disclosed 
to the public and then only in a suit or administrative hearing brought 
at the direction, or upon the request, of the Secretary, or to which the 
Secretary or any officer of the United States is a party, and involving 
this subpart: Except that nothing in this subpart shall be deemed to 
prohibit:
    (a) The issuance of general statements based upon the reports of a 
number of handlers or importers subject to any order, if such statements 
do not identify the information furnished by any person;
    (b) The publication by direction of the Secretary, of the name of 
any person convicted of violating this subpart, together with a 
statement of the particular provisions of the Order violated by such 
person.
    (c) Any disclosure of any confidential information by any employee 
of the Board shall be considered willful misconduct.

                              Miscellaneous



Sec. 1240.60  Influencing governmental action.

    No funds collected by the Board under this order shall in any manner 
be used for the purpose of influencing governmental policy or action, 
except for making recommendations to the Secretary as provided for in 
this subpart.



Sec. 1240.61  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive actions proposed and prepared by the Board 
shall be submitted to the Secretary for approval.

[[Page 173]]



Sec. 1240.62  Suspension or termination.

    (a) The Secretary shall, whenever he/she finds that this subpart or 
any provision thereof obstructs or does not tend to effectuate the 
declared policy of the Act, terminate or suspend the operation of this 
subpart or such provisions thereof.
    (b) Except as otherwise provided in paragraph (c) of this section, 
five years from the date the Secretary issues an order authorizing the 
collection of assessments on honey under provisions of this subpart, and 
every five years thereafter, the Secretary shall conduct a referendum to 
determine if honey producers and importers favor the termination or 
suspension of this subpart.
    (c) In lieu of the first referendum otherwise required to be 
conducted under paragraph (b) of this section for the order in effect, 
the Secretary shall conduct a referendum to determine if honey producers 
and importers favor:
    (1) Continuation of the order; and
    (2) Termination of the authority for producers and importers to 
obtain a refund of assessments under Sec. Sec. 1240.43 (a) and (b).
    (d) The Secretary shall hold a referendum on the request of the 
Board, or when petitioned by 10 percent or more of the honey producers 
and importers to determine if the honey producers and importers favor 
termination or suspension of this subpart.

[51 FR 26148, July 21, 1986; 51 FR 29210, Aug. 15, 1986, as amended at 
56 FR 37457, Aug. 7, 1991]



Sec. 1240.63  Proceedings after termination.

    (a) Upon the termination of this subpart, the Board shall recommend 
to the Secretary not more than five of its members to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all funds 
and property then in possession or under control of the Board, including 
claims for any funds unpaid or property not delivered or any other claim 
existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contracts or 
agreements entered into by it pursuant to Sec. 1240.38;
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such person as the Secretary may direct; 
and
    (4) Upon the direction of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such person full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligations as imposed upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be returned to the persons who contributed such 
funds, or paid assessments, or if not practicable, shall be turned over 
to the Department to be utilized, to the extent practicable, in the 
interest of continuing one or more of the honey research or education 
programs hitherto authorized.



Sec. 1240.64  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or any regulation issued thereunder, or the 
issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may thereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or of any 
regulation issued thereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of any person, with respect to any such violation.



Sec. 1240.65  Personal liability.

    No member, alternate member, or employee of the Board shall be held

[[Page 174]]

personally responsible, either individually or jointly with others, in 
any way whatsoever to any person for errors in judgment, mistakes, or 
other acts, either of commission or omission, as such member, alternate 
member, or employee, except for acts of dishonesty or willful 
midconduct.



Sec. 1240.66  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstance is held invalid, the 
validity of the remainder of this subpart, or the applicability thereof 
to other persons or circumstances shall not be affected thereby.



Sec. 1240.67  Patents, copyrights, inventions, product formulations, and publications.

    Except for a reasonable royalty paid by the Board to the inventor of 
a patented invention, any patents, copyrights, inventions, product 
formulations, or publications developed through the use of funds 
collected under the provisions of this subpart shall be the property of 
the Honey Board. Funds generated by such patents, copyrights, 
inventions, product formulations, or publications shall inure to the 
benefit of the Board and shall be considered income subject to the same 
fiscal, budget, and audit controls as other funds of the Board.

[56 FR 37457, Aug. 7, 1991]



                 Subpart--General Rules and Regulations

    Source: 52 FR 3103, Feb. 2, 1987, unless otherwise noted.



Sec. 1240.100  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall have the same meaning as the definitions of such 
terms which appear in Subpart--Honey Research, Promotion, and Consumer 
Information Order. Additional terms are defined in Sec. 1240.105.



Sec. 1240.105  Definitions.

    (a) Principal ingredient means fifty-one percent or more by weight 
of the total ingredients contained in honey products.
    (b) First handler means the person who first handles honey.
    (c) Order means the Honey Research, Promotion, and Consumer 
Information Order which appears in this part.
    (d) United States means the fifty States, the District of Columbia, 
and the Commonwealth of Puerto Rico.



Sec. 1240.106  Communications.

    Communications in connection with the Order and all rules, 
regulations, and supplemental Orders issued thereunder shall be 
addressed to the National Honey Board, 421 21st Street, Longmont, 
Colorado 80501-1421.

[56 FR 37458, Aug. 7, 1991]



Sec. 1240.107  Policy and objective.

    (a) It shall be the policy of the Board to carry out an effective 
and continous coordinated program of marketing research, development, 
advertising, and promotion in order to help maintain and expand existing 
domestic and foreign markets for honey and to develop new or improved 
markets.
    (b) It shall be the objective of the Board to carry out programs and 
projects which will provide maximum benefit to the honey industry and no 
undue preference shall be given to any of the various industry segments.



Sec. 1240.108  Contracts.

    The Board, with the approval of the Secretary, may enter into 
contracts or make agreements with persons for the development and 
submission to it of plans or projects authorized by the Order and for 
carrying out of such plans or projects. Contractors shall agree to 
comply with the provisions of this part. Subcontractors who enter into 
contracts or agreements with a primary contractor and who receive or 
otherwise utilize funds allocated by the Board shall be subject to the 
provisions of this part. All records of contractors and subcontractors 
applicable to contracts entered into by the Board are subject to audit 
by the Secretary.



Sec. 1240.109  Procedure.

    The Organization of the Board and the procedure for conducting 
meetings

[[Page 175]]

of the Board shall be in accordance with the By-Laws of the Board.



Sec. 1240.110  U.S. Department of Agriculture costs.

    The Board shall reimburse the U.S. Department of Agriculture (USDA) 
from assessments for administrative costs incurred by USDA with respect 
to the Order after its promulgation and for any administrative expenses 
incurred by USDA for the conduct of referenda. The Board shall pay those 
administrative costs incurred by USDA for the conduct of its duties 
under the Order as determined periodically by the Secretary. USDA will 
bill the Board quarterly and payment shall be due promptly after the 
billing of such costs.



Sec. 1240.111  First handler and producer-packer.

    Persons who are first handlers or producer-packers include but are 
not limited to the following:
    (a) When a producer delivers honey from his or her own production to 
a packer or processor for processing in preparation for marketing and 
consumption, the packer or processor is the first handler, regardless of 
whether he or she handles the honey for his or her own account or for 
the account of the producer or the account of other persons.
    (b) When a producer delivers honey to a handler who takes title to 
such honey, and places it in storage, such handler is the first handler.
    (c) When a producer delivers honey to a commercial storage facility 
for the purpose of holding such honey under his or her own account for 
later sale, the first handler of such honey would be identified on the 
basis of later handling of such honey.
    (d) When a producer packages and sells honey of his or her own 
production at a roadside stand or other facility to consumers or sells 
to wholesale or retail outlets or other buyers, the producer is a 
producer-packer.
    (e) When a producer sells unprocessed or processed honey from his or 
her own production directly to a commercial user or food processor who 
utilizes such honey as an ingredient in the manufacture of formulated 
products, the producer is a producer-packer.
    (f) When a producer uses honey from his or her own production in the 
manufacture of formulated products for his or her own account and for 
the account of others, the producer is the producer-packer.
    (g) When a producer delivers a lot of honey to a processor who 
processes and packages a portion of such lot of honey for his or her own 
account and sells the balance of the lot, with or without further 
processing, to another processor or commercial user, the first processor 
is the first handler for all the honey.
    (h) When a producer supplies honey to a cooperative marketing 
organization which sells or markets the honey, with or without further 
processing and packaging, the cooperative marketing organization becomes 
the first handler upon physical delivery to such cooperative.
    (i) When a producer uses honey from his or her own production for 
feeding his or her own bees, such honey is not handled at that time. 
Honey in any form sold and shipped to any persons for the purpose of 
feeding bees is handled and is subject to assessment. The buyer of the 
honey for feeding bees is the first handler.



Sec. 1240.113  Importer.

    Each lot of honey and honey products imported into the United States 
is subject to assessment under this part. Such assessment shall be paid 
by the importer of such honey and honey products at the time of entry or 
withdrawal for consumption into the United States. Any person who 
imports honey or honey products into the United States as principal, 
agent, broker, or consignee for honey produced outside the United States 
and imported into the United States shall be the importer.



Sec. 1240.114  Exemption procedures.

    (a) Producers who produce, producer-packers who produce and handle, 
and importers who import honey and who wish to claim an exemption from 
assessments pursuant to Sec. Sec. 1240.42 (a) and (b) should submit an 
application to the Board for a certificate of exemption.

[[Page 176]]

    (b) Upon receipt of the claim for exemption, the Board shall 
investigate, to the extent practicable, the request for exemption. The 
Board will then issue, if deemed appropriate, an exemption certificate 
to each person who is eligible to receive one.
    (c) The Secretary, upon recommendation by the Board, may exempt that 
portion of assessments collected under a qualified State plan; Provided, 
That the State plan meets all of the requirements in Sec. 1240.42(d) of 
the Order.
    (1) First handlers collecting assessments from producers for the 
State plan and the Board shall forward that portion of assessments 
collected under the order in excess of the State assessment to the 
Board.
    (2) Upon request of the Board, producers having an exemption from a 
portion of the assessments under this Order due to payment of 
assessments under a State plan, shall be required to furnish evidence to 
the Board that the assessments to the State have been paid.

[52 FR 3103, Feb. 2, 1987, as amended at 56 FR 37458, Aug. 7, 1991; 59 
FR 22493, May 2, 1994]



Sec. 1240.115  Levy of assessments.

    (a) Time of payment. The assessment shall become due at the time 
assessable honey is first handled or entered or withdrawn for 
consumption into the United States pursuant to this part.
    (b) An assessment of one cent per pound is levied on honey produced 
in the United States, on imported honey entered or withdrawn for 
consumption into the United States, and on honey used in imported honey 
products entered or withdrawn for consumption into the United States 
except that assessments shall not be levied on the following:
    (1) Any persons other than importers holding a valid exemption 
certificate during the twelve month period ending on December 31;
    (2) That portion of honey which does not enter the current of 
commerce which is utilized solely to sustain a producers or producer-
packer's own colonies of bees;
    (3) That portion of otherwise assessable honey which is contained in 
imported products wherein honey is not a principal ingredient. Honey 
subject to assessment shall be assessed only once.
    (c) The assessment on each lot of honey handled in the United States 
shall be paid by the first handler who handles, or by the producer-
packer who produces and handles such honey.
    (1) The first handler shall collect and pay assessments to the Board 
unless such handler has received documentation acceptable to the Board 
that the assessment has been previously paid.
    (2) A producer-packer shall pay, or collect and pay, assessments to 
the Board unless--
    (i) Such producer-packer has obtained an exemption from the Board 
applicable to the honey which that producer-packer produced or produced 
and handled; or
    (ii) Has received documentation acceptable to the Board that the 
assessment has been previously paid.
    (d) Assessments shall be levied with respect to honey pledged as 
collateral for a loan or loan deficiency payment under the Commodity 
Credit Corporation (CCC) Honey Price Support Program in accordance with 
an agreement entered into between the Honey Board and the CCC. The 
assessment will be deducted from the proceeds of the loan or loan 
deficiency payment by the CCC and forwarded to the Board, except that 
the assessment shall not be deducted in the case of a honey marketing 
cooperative that has already deducted the assessment or that portion of 
the assessment paid to a qualified State plan exempted by the Board. The 
Secretary, through the CCC, shall provide for the producer to receive a 
statement of the amount of the assessment deducted from the loan funds 
or loan deficiency payment promptly after each occasion when an 
assessment is deducted from any such loan funds or payment under this 
subsection.
    (e) The U.S. Customs Service (USCS) will collect assessments on all 
honey or honey products where honey is the principal ingredient imported 
under its tariff schedule (HTS heading numbers 0409.00.00 and 
2106.90.9988) at the time of entry or withdrawal for consumption and 
forward such assessment as per the agreement between the USCS and USDA. 
Any importer or agent who is exempt from payment of assessments

[[Page 177]]

pursuant to Sec. 1240.42 (a) and (b) of the Order may apply to the Board 
for reimbursement of such assessment paid.
    (f) A late payment charge shall be imposed on any handler, producer-
packer, or importer except as otherwise authorized by the Board, who 
fails to pay to the Board within the time prescribed in this subpart the 
total amount of assessment due for which any such handler, importer, or 
producer-packer is liable. Fifteen days after the assessment becomes due 
a one-time late payment charge of 10 percent will be added to any 
outstanding funds due the Board.
    (g) In addition to the late payment charge, one and one-half percent 
per month interest on the outstanding balance except as otherwise 
authorized by the Board, will be added to any accounts delinquent over 
30 days and will continue monthly until the outstanding balance is paid 
to the Board.

[52 FR 3103, Feb. 2, 1987, as amended at 53 FR 37731, Sept. 28, 1988; 56 
FR 37458, Aug. 7, 1991; 61 FR 29462, June 11, 1996; 61 FR 38356, July 
24, 1996]



Sec. 1240.116  Payment of assessments.

    (a) Responsibility for payment. Unless otherwise authorized by the 
Board under the Act and Order, the first handler or producer-packer 
shall collect the assessment from the producer, or deduct such 
assessment from the proceeds paid to the producer on whose honey the 
assessment is made, and remit the assessments to the Board. The first 
handler or producer-packer shall furnish the producer with evidence of 
such payment. Any such collection or deduction of assessment shall be 
made not later than the time when the assessment becomes payable to the 
Board. Failure of the handler or producer-packer to collect or deduct 
such assessment does not relieve the handler or producer-packer of his 
or her obligation to remit the assessment to the Board. However, should 
a first handler or the Secretary fail to collect an assessment from a 
producer, the producer shall be responsible for the payment of the 
assessment to the Board. Assessments on imported honey and honey 
products shall be collected as specified in Sec. 1240.115(e); Provided, 
That importers shall be responsible for payment of any assessment amount 
not collected by the U.S. Customs Service at the time of entry or 
withdrawal for consumption into the United States.
    (b) Payment directly to the Board. Except as provided in paragraph 
(c) of this section, each first handler and producer-packer shall pay 
the required assessment pursuant to Sec. 1240.41 of the Order directly 
to the Board at the address referenced in Sec. 1240.106, for each 
reporting period specified in Sec. 1240.119, on or before the 15th day 
following the end of such period. Payment shall be in the form of a 
check, draft, or money order payable to the Board and shall be 
accompanied by a report on Board forms pursuant to Sec. 1240.50.
    (c) Prepayment of assessment. (1) In lieu of the monthly assessment 
payment specified in Sec. 1240.119 of this subpart, the Board may permit 
first handlers or producer-packers to make advance payments of their 
total estimated assessments for the season to the Board prior to their 
actual determination of assessable honey.
    (2) Persons using such procedure shall provide a monthly accounting 
of actual handling and assessments.
    (3) Specific requirements, instructions, and forms for making such 
advance payments shall be provided by the Board upon request.
    (d) Payment through cooperating agency. The Board may enter into 
agreements subject to approval of the Secretary authorizing other 
organizations to collect assessments in its behalf. All such agreements 
are subject to the requirements of the Act, Order, and all applicable 
rules and regulations under the Act and the Order.

[52 FR 3103, Feb. 2, 1987, as amended at 56 FR 37458, Aug. 7, 1991]



Sec. 1240.118  Reports of disposition of exempted honey.

    The Board may require reports by first handlers, producer-packers, 
importers, or any persons who receive an exemption from assessments 
under Sec. 1240.42 (a) and (b) on the handling and disposition of 
exempted honey. Also, authorized employees of the Board or the Secretary 
may inspect such books

[[Page 178]]

and records as are appropriate and necessary to verify the reports on 
such disposition.

[56 FR 37458, Aug. 7, 1991]



Sec. 1240.119  Reporting period and reports.

    (a) For the purpose of the payment of assessments, a calendar month 
shall be considered the reporting period; however, other accounting 
periods may be used when registered with and approved by the Board in 
writing.
    (b) Pursuant to Sec. 1240.50 of the Order, handlers and producer-
packers shall file with the Board a report for each reporting period.
    (1) All reports shall contain at least the following information:
    (i) The handler's or producer-packer's name and address;
    (ii) Date of report (which is also date of payment to the Board);
    (iii) Period covered by report; and
    (iv) Total quantity of honey determined as assessable during the 
reporting period.
    (2) Handlers or producer-packers who collect assessments from 
producers or withhold assessments for their accounts or pay the 
assessments themselves shall also include with each report a list of all 
such producers whose honey was handled during the period, their 
addresses, and to total assessable quantities handled for each such 
producer.
    (c) Each importer shall file with the Board a monthly report 
containing at least the following information:
    (1) The importer's name and address.
    (2) The quantity of honey and honey products entered or withdrawn 
for consumption into the United States.
    (3) The amount of assessment paid on honey and honey products 
entered or withdrawn for consumption into the United States to the U.S. 
Customs Service at the time of entry or withdrawal for consumption.
    (4) The amount of any honey and honey products on which the 
assessment was not paid to the U.S. Customs Service at the time of entry 
or withdrawal for consumption into the United States.
    (d) In the event of a first handler's, producer-packer's, or 
importer's death, bankruptcy, receivership, or incapacity to act, the 
representative of the handler, producer-packer, or importer or his or 
her estate, shall be considered the first handler, producer-packer, or 
importer for the purposes of this part.



Sec. 1240.120  Retention period for records.

    Each first handler, producer-packer, importer, or any person who 
receives an exemption from assessments under Sec. Sec. 1240.42 (a) and 
(b) required to make reports pursuant to this subpart shall maintain and 
retain for at least two years beyond the marketing year of their 
applicability: One copy of each report made to the Board, records of all 
exempt producers, producer-packers, and importers including 
certification of exemption as necessary to verify the address of such 
exempt person and such records as are necessary to verify such reports.

[56 FR 37458, Aug. 7, 1991]



Sec. 1240.121  Availability of records.

    Each first handler, producer-packer, importer, or any person who 
receives an exemption from assessments under Secs. 1240.42 (a) and (b) 
and is required to make reports pursuant to this subpart shall make 
available for inspection by authorized employees of the Board or the 
Secretary during regular business hours, such records as are appropriate 
and necessary to verify reports required under this subpart.

[56 FR 37458, Aug. 7, 1991]



Sec. 1240.122  Confidential books, records, and reports.

    All information obtained from the books, records, and reports of 
handlers, producer-packers, importers or any persons who receive an 
exemption from assessments under Sec. 1240.42 (a) and (b) and all 
information with respect to refunds of assessments made to individual 
producers and importers shall be kept confidential in the manner and to 
the extent provided for in Sec. 1240.52 of the Order.

[56 FR 37458, Aug. 7, 1991]



Sec. 1240.123  Right of the Secretary.

    All fiscal matters, programs, projects, rules or regulations, 
reports, or other substantive action proposed

[[Page 179]]

and prepared by the Board shall be submitted to the Secretary for 
approval.



Sec. 1240.124  Personal liability.

    No member of the Board shall be held personally responsible, either 
individually or jointly with others, in any way whatsoever to any person 
for errors in judgment, mistakes, or other acts, either of commission or 
omission, as such member, alternate member, or employee except for acts 
of willful misconduct, gross negligence, or those which are criminal in 
nature.



Sec. 1240.125  OMB control numbers.

    The control numbers assigned to the information collection 
requirements by the Office of Management and Budget pursuant to the 
Paperwork Reduction Act of 1980, Public Law 96-511, are as follows: OMB 
Number 0581-0093, except Board member nominee information sheets which 
are assigned OMB Number 0505-0001.

[56 FR 37458, Aug. 7, 1991]



 Subpart--Procedure for the Conduct of Referenda in Connection With the 
        Honey Research, Promotion, and Consumer Information Order

    Authority: Pub. L. 98-590, 7 U.S.C. 4601-4612.

    Source: 51 FR 17918, May 16, 1986, unless otherwise noted.



Sec. 1240.200  General.

    Referenda to determine whether eligible producers and importers 
favor the termination or suspension of a Honey Research, Promotion, and 
Consumer Information Order shall be conducted in accordance with this 
subpart.

[56 FR 37458, Aug. 7, 1991]



Sec. 1240.201  Definitions.

    (a) Act means the Honey Research, Promotion, and Consumer 
Information Act, Pub. L. 98-590, 98th Congress, approved October 30, 
1984, 7 U.S.C. 4601-4612.
    (b) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead; and Department means the 
U.S. Department of Agriculture.
    (c) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in the Administrator's stead.
    (d) Order means the order (including an amendment to the order) with 
respect to which the Secretary has directed that a referendum be 
conducted.
    (e) Referendum agent means the individual or individuals designated 
by the Secretary to conduct the referendum.
    (f) Representative period means the period designated by the 
Secretary pursuant to section 12 of the Act.
    (g) Person means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity. For the 
purpose of this definition, the term partnership includes, but is not 
limited to:
    (1) A husband and wife who have title to, or leasehold interest in, 
honey bee colonies or beekeeping equipment as tenants in common, joint 
tenants, tenants by the entirety, or, under community property laws, as 
community property, and
    (2) So-called joint ventures wherein one or more parties to the 
agreement, informal or otherwise, contributed capital and others 
contribute labor, management, equipment, or other services, or any 
variation of such contributions by two or more parties, so that it 
results in the production or importation of honey or honey products for 
market and the authority to transfer title to the honey and honey 
products so produced or imported.
    (h) Eligible producer means any person defined as a producer or 
producer-packer in the order who produces, or handles, or produces and 
handles honey or honey products and who does not claim an exemption from 
paying assessments during the representative period and who:
    (1) Owns or shares in the ownership of honey bee colonies or 
beekeeping equipment resulting in the ownership of the honey produced;

[[Page 180]]

    (2) Rents honey bee colonies or beekeeping equipment resulting in 
the ownership of all or a portion of the honey produced; or
    (3) Owns honey bee colonies or beekeeping equipment but does not 
manage them and, as compensation, obtains the ownership of a portion of 
the honey produced;
    (4) Is a party in a lessor-lessee relationship or a divided 
ownership arrangement involving totally independent entities cooperating 
only to produce honey who share the risk of loss and receive a share of 
the honey produced. No other acquisition of legal title to honey shall 
be deemed to result in persons becoming eligible producers.
    (i) Eligible importer means any person defined as an importer in the 
order, engaged in the importation of honey and/or honey products and who 
does not claim an exemption from paying assessments during the 
representative period. Importation occurs when commodities originating 
outside the United States are released from custody of the U.S. Customs 
Service and introduced into the stream of commerce within the United 
States. Included are persons who hold title to foreign-produced honey 
and/or honey products immediately upon release by the Customs Service, 
as well as any persons who act on behalf of others, as agents or 
brokers, to secure the release of honey and/or honey products from 
Customs and introduce them into the current of commerce.
    (j) ``Honey Board'' means the administrative board provided for 
under section 7(c) of the Act.

[51 FR 17918, May 16, 1986, as amended at 56 FR 37459, Aug. 7, 1991]



Sec. 1240.202  Voting.

    (a) Each person who is an eligible producer or importer, as defined 
in this subpart, at the time of the referendum and during the 
representative period, shall be entitled to only one vote in the 
referendum. However, each producer in a landlord-tenant relationship or 
a divided ownership arrangement involving totally independent entities 
cooperating only to produce honey and/or honey products, in which more 
than one of the parties is a producer, shall be entitled to one vote in 
the referendum covering only his or her share of the ownership.
    (b) Proxy voting is not authorized, but an officer or employee of a 
eligible corporate producer or importer, or an administrator, executor, 
or trustee of an eligible producing or importing estate may cast a 
ballot on behalf of such producer, importer or estate. Any individual so 
voting in a referendum shall certify that he or she is an officer or 
employee of the eligible producer or importer, or an administrator, 
executor, or trustee of an eligible producing or importing estate, and 
that he or she has the authority to take such action. Upon request of 
the referendum agent, the individual shall submit adequate evidence of 
such authority.
    (c) Each eligible producer and importer shall be entitled to cast 
only one ballot in the referendum.



Sec. 1240.203  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
of the referendum, and the time when all ballots may be cast.
    (b) Determine whether ballots may be cast by mail, at polling 
places, at meetings of producers or importers, or by any combination of 
the foregoing.
    (c) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information including that needed for ascertaining:
    (1) Whether the person voting, or on whose behalf the vote is cast, 
is an eligible voter,
    (2) The amount of honey produced by the voting producer during the 
representative period,
    (3) The total volume of honey and/or honey products produced and/or 
imported during the representative period, and
    (4) In a joint venture, names of the parties and each one's share of 
ownership.

[[Page 181]]

    (d) Give reasonable advance notice of the referendum:
    (1) By utilizing available media or public information sources 
without advertising expense (including but not limited to, press and 
radio facilities) announcing the dates, places, or methods of voting, 
eligibility requirements, and other pertinent information, and
    (2) By such other means as said agent may deem advisable.
    (e) Make available to eligible producers and importers the 
instructions on voting, appropriate ballot and certification forms, and, 
except in the case of a referendum on the termination or suspension of 
an order, a summary of the terms and conditions of the order: Provided, 
That no person who claims to be eligible to vote shall be refused a 
ballot.
    (f) If ballots are to be cast by mail, cause all the material 
specified in paragraph (e) of this section to be mailed to each eligible 
producer and importer whose name and address is known to the referendum 
agent.
    (g) If ballots are to be cast at polling places or meetings, 
determine the necessary number of polling or meeting places, designate 
them, announce the time of each meeting or the hours during which each 
polling place will be open, provide the material specified in paragraph 
(e) of this section, and provide for appropriate custody of ballot forms 
and delivery to the referendum agent of ballot cast.
    (h) At the conclusion of the referendum, canvass the ballots, 
tabulate the results, and except as otherwise directed, report the 
outcome to the Administrator and promptly thereafter submit the 
following:
    (1) All ballots received by the agent and appointees, together with 
a certificate to the effect that the ballots forwarded are all of the 
ballots cast and received by such persons during the referendum period;
    (2) A list of all challenged ballots deemed to be invalid; and
    (3) A tabulation of the results of the referendum and a report 
thereon, including a detailed statement explaining the method used in 
giving publicity to the referendum and showing other information 
pertinent to the manner in which the referendum was conducted.

[51 FR 17918, May 16, 1986, as amended at 56 FR 37459, Aug. 7, 1991]



Sec. 1240.204  Subagents.

    The referendum agent may appoint any person or persons deemed 
necessary or desirable to assist said agent in performing his or her 
functions hereunder. Each person so appointed may be authorized by said 
agent to perform, in accordance with the requirements herein set forth, 
any or all of the following functions (which, in the absence of such 
appointment, shall be performed by said agent):
    (a) Give public notice of the referendum in the manner specified 
herein;
    (b) Preside at a meeting where ballots are to be cast or as poll 
officer at a polling place;
    (c) Distribute ballots and the afore-said texts to producers and 
importers and receive any ballots which are cast; and
    (d) Record the name and address of each person receiving a ballot 
from, or casting a ballot with, said subagent and inquire into the 
eligibility of such person to vote in the referendum.



Sec. 1240.205  Ballots.

    The referendum agent and his or her appointees shall accept all 
ballots cast; but, should they, or any of them, deem that a ballot 
should be challenged for any reason, said agent or appointee shall 
endorse above his or her signature, on said ballot, a statement to the 
effect that such ballot was challenged, by whom challenged, the reasons 
therefor, the results of any investigations made with respect thereto, 
and the disposition thereof. Ballots invalid under this subpart shall 
not be counted.



Sec. 1240.206  Referendum report.

    Except as otherwise directed, the Administrator shall prepare and 
submit to the Secretary a report on results of the referendum, the 
manner in which it was conducted, the extent and kind of public notice 
given, and other information pertinent to analysis of the referendum and 
its results.

[[Page 182]]



Sec. 1240.207  Confidential information.

    All ballots cast and the contents thereof (whether or not relating 
to the identity of any person who voted or the manner in which any 
person voted) and all information furnished to, compiled by, or in 
possession of, the referendum agent shall be treated as confidential.



PART 1250--EGG RESEARCH AND PROMOTION--Table of Contents




                Subpart--Egg Research and Promotion Order

                               Definitions

Sec.
1250.301  Secretary.
1250.302  Act.
1250.303  Fiscal period.
1250.304  Egg Board or Board.
1250.305  Egg producer or producer.
1250.306  Commercial eggs or eggs.
1250.307  Person.
1250.308  United States.
1250.309  Handler.
1250.310  Promotion.
1250.311  Research.
1250.312  Marketing.
1250.313  Eligible organization.
1250.314  Plans and projects.
1250.315  Part and subpart.
1250.316  Representative of a producer.

                                Egg Board

1250.326  Establishment and membership.
1250.327  Term of office.
1250.328  Nominations.
1250.329  Selection.
1250.330  Acceptance.
1250.331  Vacancies.
1250.332  Alternate members.
1250.333  Procedure.
1250.334  Compensation and reimbursement.
1250.335  Powers of the Board.
1250.336  Duties.

                   Research, Education, and Promotion

1250.341  Research, education, and promotion.

                        Expenses and Assessments

1250.346  Expenses.
1250.347  Assessments.
1250.348  Exemptions.
1250.349  Collecting handlers and collection.
1250.350  [Reserved]
1250.351  Influencing governmental action.

                       Reports, Books, and Records

1250.352  Reports.
1250.353  Books and records.
1250.354  Confidential treatment.

                     Certification of Organizations

1250.356  Certification of organizations.

                              Miscellaneous

1250.357  Suspension and termination.
1250.358  Proceedings after termination.
1250.359  Effect of termination or amendment.
1250.360  [Reserved]
1250.361  Right of the Secretary.
1250.362  Amendments.
1250.363  Separability.

                     Subpart--Rules and Regulations

                               Definitions

1250.500  Terms defined.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act

1250.501  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

                                 General

1250.505  Communications.
1250.506  Policy and objective.
1250.507  Contracts.
1250.508  Procedure.
1250.509  USDA costs.
1250.510  Determination of Board membership.

                Assessments, Collections, and Remittances

1250.514  Levy of assessments.
1250.515  Reporting period and payment.
1250.516  Collecting handlers and collection.
1250.517  Remittance to Egg Board.
1250.518  Receipts for payment of assessments.
1250.519  Late-payment charge.

                Registration, Certification, and Reports

1250.528  Registration of collecting handlers.
1250.529  Reports.
1250.530  Certification of exempt producers.

                                 Records

1250.535  Retention of records.
1250.536  Availability of records.
1250.537  Confidentiality.

            Patents, Copyrights, Trademarks, and Information

1250.542  Patents, copyrights, trademarks, and information.

                           Personal Liability

1250.547  Personal liability.

    Authority: 7 U.S.C. 2701-2718.

[[Page 183]]



                Subpart--Egg Research and Promotion Order

    Source: 40 FR 59190, Dec. 22, 1975, unless otherwise noted.

                               Definitions



Sec. 1250.301  Secretary.

    ``Secretary'' means the Secretary of Agriculture or any other 
officer or employee of the Department of Agriculture to whom there has 
heretofore been delegated, or to whom there may hereafter be delegated, 
the authority to act in his stead.



Sec. 1250.302  Act.

    ``Act'' means the Egg Research and Consumer Information Act and as 
it may be amended (Pub. L. 93-428).



Sec. 1250.303  Fiscal period.

    ``Fiscal period'' means the calendar year unless the Egg Board, with 
the approval of the Secretary, selects some other budgetary period.



Sec. 1250.304  Egg Board or Board.

    ``Egg Board'' or ``Board'' or other designatory term adopted by such 
Board, with the approval of the Secretary, means the administrative body 
established pursuant to Sec. 1250.326.



Sec. 1250.305  Egg producer or producer.

    ``Egg producer'' or ``producer'' means any person who either:
    (a) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (b) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual argeement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.



Sec. 1250.306  Commercial eggs or eggs.

    ``Commercial eggs'' or ``eggs'' means eggs from domesticated 
chickens which are sold for human consumption either in shell egg form 
or for further processing into egg products.



Sec. 1250.307  Person.

    ``Person'' means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.



Sec. 1250.308  United States.

    ``United States'' means the 48 contiguous States of the United 
States of America and the District of Columbia.



Sec. 1250.309  Handler.

    ``Handler'' means any person who receives or otherwise acquires eggs 
from an egg producer, and processes, prepares for marketing, or markets, 
such eggs, including eggs of his own production.



Sec. 1250.310  Promotion.

    ``Promotion'' means any action, including paid advertising, to 
advance the image or desirability of eggs, egg products, spent fowl, or 
products of spent fowl.



Sec. 1250.311  Research.

    ``Research'' means any type of research to advance the image, 
desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or products of spent fowl, or the evaluation of 
such research.



Sec. 1250.312  Marketing.

    ``Marketing'' means the sale or other disposition of commercial 
eggs, egg

[[Page 184]]

products, spent fowl, or products of spent fowl in any channel of 
commerce.



Sec. 1250.313  Eligible organization.

    ``Eligible organization'' means any organization, association, or 
cooperative which represents egg producers of any egg producing area of 
the United States certified by the Secretary pursuant to Sec. 1250.356.



Sec. 1250.314  Plans and projects.

    ``Plans'' and ``projects'' means those research, consumer and 
producer education, advertising, marketing, product development, and 
promotion plans, studies, or projects pursuant to Sec. 1250.341.



Sec. 1250.315  Part and subpart.

    ``Part'' means the Egg Research and Promotion Order and all rules, 
regulations, and supplemental order issued pursuant to the act and the 
order. ``Subpart'' refers to the aforesaid order or any other portion or 
segment of this part.



Sec. 1250.316  Representative of a producer.

    ``Representative of a producer'' means the owner, officer, or an 
employee of a producer who has been duly authorized to act in the place 
and stead of the producer.

                                Egg Board



Sec. 1250.326  Establishment and membership.

    There is hereby established an Egg Board, hereinafter called the 
``Board,'' composed of 18 egg producers or representatives of egg 
producers, and 18 specific alternates, all appointed by the Secretary 
from nominations submitted by eligible organizations, associations, or 
cooperatives, or by other producers pursuant to Sec. 1250.328.



Sec. 1250.327  Term of office.

    The members of the Board, and their alternates, shall serve for 
terms of 2 years, except initial appointments shall be, proportionately, 
for terms of 2 and 3 years. Each member and alternate member shall 
continue to serve until his successor is appointed by the Secretary and 
has qualified. No member shall serve for more than three consecutive 
terms.



Sec. 1250.328  Nominations.

    All nominations authorized under Sec. 1250.326 shall be made in the 
following manner:
    (a) Within 30 days of the approval of this order by referendum, 
nominations shall be submitted to the Secretary for each geographic area 
as specified in paragraph (d) of this section by eligible organizations, 
associations, or cooperatives certified pursuant to Sec. 1250.356, or, 
if the Secretary determines that a substantial number of egg producers 
are not members of, or their interests are not represented by, any such 
eligible organization, association, or cooperative, then from 
nominations made by such egg producers in the manner authorized by the 
Secretary;
    (b) After the establishment of the initial Board, the nominations 
for subsequent Board members and alternates shall be submitted to the 
Secretary not less than 60 days prior to the expiration of the terms of 
the members and alternates previously appointed to the Board;
    (c) Where there is more than one eligible organization, association, 
or cooperative within each geographic area, as defined by the Secretary, 
they may caucus for the purpose of jointly nominating two qualified 
persons for each member and for each alternate member to be appointed. 
If joint agreement is not reached with respect to any such nominations, 
or if no caucus is held within a defined geographic area, each eligible 
organization, association, or cooperative may submit to the Secretary 
two nominations for each appointment to be made;
    (d) The number of members of the initial Board, and their 
alternates, who shall be appointed from each area are: Area 1-3, Area 2-
4, Area 3-2, Area 4-2, Area 5-4, and Area 6-3, for a total of 18 members 
from all areas. Changes to the Board as provided in paragraph (e) of 
this section shall be accomplished by determining the percentage of 
United States egg production in each area times 18 (total Board 
membership) and rounding to the nearest whole number; and

[[Page 185]]

    (e) After the establishment of the initial Board, the area grouping 
of the 48 contiguous States of the United States, including the area 
distribution of the 18 members of the Board and their alternates, shall 
be reviewed at any time not to exceed 5 years by the Board, or by a 
person or agency designated by the Board to perform such review, and the 
results shall be reported to the Secretary along with any 
recommendations by the Board regarding whether the delineation of the 
areas and the area distribution of the Board should continue without any 
change, or whether changes should be made in either the areas or the 
number of Board members to be appointed from each area, providing that 
each area shall be represented by not less than one Board member and any 
action recommended shall be subject to the approval of the Secretary.

[40 FR 59190, Dec. 22, 1975, as amended at 60 FR 66861, Dec. 27, 1995]



Sec. 1250.329  Selection.

    From the nominations made pursuant to Sec. 1250.328, the Secretary 
shall appoint the members of the Board, and an alternate for each such 
member, on the basis of representations provided for in Sec. 1250.326, 
Sec. 1250.327, and Sec. 1250.328.



Sec. 1250.330  Acceptance.

    Any person appointed by the Secretary as a member, or as an 
alternate member, of the Board shall qualify by filing a written 
acceptance with the Secretary within a period of time prescribed by the 
Secretary.



Sec. 1250.331  Vacancies.

    To fill any vacancy occasioned by the failure to qualify of any 
person appointed as a member, or as an alternate member, of the Board, 
or in the event of the death, removal, resignation, or disqualification 
of any member or alternate member of the Board, a successor for the 
unexpired term of such member or alternate member of the Board shall be 
nominated, qualified, and appointed in the manner specified in 
Sec. 1250.326, Sec. 1250.328(b), Sec. 1250.329, and Sec. 1250.330, 
except that replacement of a Board member, or alternate, with an 
unexpired term of less than 6 months is not necessary.



Sec. 1250.332  Alternate members.

    An alternate member of the Board, during the absence of the member 
for whom he is the alternate, shall act in the place and stead of such 
member and perform such other duties as assigned. In the event of the 
death, removal, resignation, or disqualification of a member, his 
alternate shall act for him until a successor for such member is 
appointed and qualified.



Sec. 1250.333  Procedure.

    (a) A majority of the members, including alternates acting for 
members of the Board, shall constitute a quorum, and any action of the 
Board shall require the concurring votes of at least a majority of those 
present and voting. At assembled meetings, all votes shall be cast in 
person.
    (b) For routine and noncontroversial matters which do not require 
deliberation and exchange of views, and in matters of an emergency 
nature when there is not enough time to call an assembled meeting of the 
Board, the Board may also take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing.



Sec. 1250.334  Compensation and reimbursement.

    The members of the Board, and alternates when acting as members, 
shall serve without compensation but shall be reimbursed for necessary 
and reasonable expenses, as approved by the Board, incurred by them in 
the performance of their duties under this subpart.



Sec. 1250.335  Powers of the Board.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) To receive, investigate, and report to the Secretary complaints 
of violations of this subpart; and
    (d) To recommend to the Secretary amendments to this subpart.

[[Page 186]]



Sec. 1250.336  Duties.

    The Board shall have the following duties:
    (a) To meet and organize and to select from among its members a 
chairman and such other officers as may be necessary, to select 
committees and subcommittees of Board members, to adopt such rules for 
the conduct of its business as it may deem advisable, and it may 
establish advisory committees of persons other than Board members;
    (b) To appoint or employ such persons as it may deem necessary and 
to define the duties and determine the compensation of each;
    (c) To prepare and submit to the Secretary for his approval budgets 
on a fiscal-period basis of its anticipated expenses and disbursements 
in the administration of this subpart, including probable cost of plans 
and projects as estimated in the budget or budgets submitted to it by 
prospective contractors, with the Board's recommendations with respect 
thereto. In preparing a budget for each of the 1994 and subsequent 
fiscal years, the Board shall, to the maximum extent practicable, 
allocate a proportion of funds for research projects comparable to the 
proportion of funds allocated for research projects in the Board's 
fiscal year 1993 budget.
    (d) With the approval of the Secretary, to enter into contracts or 
agreements with persons, including, but not limited to, State, regional, 
or national agencies or State, regional, or national egg organizations 
which administer research, education, or promotion programs, advertising 
agencies, public relations firms, public or private research 
organizations, advertising and promotion media, and egg producer 
organizations, for the development and submission to it of plans and 
projects authorized by Sec. 1250.341 and for the carrying out of such 
plans or projects when approved by the Secretary, and for the payment of 
the cost thereof with funds collected pursuant to Sec. 1250.347. Any 
such contracts or agreements shall provide that such contractors shall 
develop and submit to the Board a plan or project together with a budget 
or budgets which shall show estimated costs to be incurred for such plan 
or project, and that any such plan or project shall become effective 
upon approval by the Secretary. Any such contract or agreement shall 
also provide that the contractor shall keep accurate records of all of 
its transactions and make periodic reports to the Board of activities 
carried out and an accounting for funds received and expended, and such 
other reports as the Secretary may require;
    (e) To review and submit to the Secretary any plans or projects 
which have been developed and submitted to it by the prospective 
contractor, together with its recommendations with respect to the 
approval thereof by the Secretary;
    (f) To maintain such books and records and prepare and submit such 
reports from time to time to the Secretary as he may prescribe, and to 
make appropriate accounting with respect to the receipt and disbursement 
of all funds entrusted to it;
    (g)-(h) [Reserved]
    (i) To prepare and make public, at least annually, a report of 
activities carried out and an accounting for funds received and 
expended;
    (j) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and submit a copy of each such audit to the 
Secretary;
    (k) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that he or his representative may attend 
such meetings;
    (l) To act as an intermediary between the Secretary and any producer 
or handler; and
    (m) To submit to the Secretary such information pursuant to this 
subpart as he may request.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 99, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989; 54 FR 12310, Mar. 24, 1989; 59 FR 38876, 
Aug. 1, 1994; 60 FR 66861, Dec. 27, 1995]

                   Research, Education, and Promotion



Sec. 1250.341  Research, education, and promotion.

    The Board shall develop and submit to the Secretary for approval any 
programs or projects authorized in this section. Such programs or 
projects shall provide for:

[[Page 187]]

    (a) The establishment, issuance, effectuation, and administration of 
appropriate programs or projects for advertising, sales promotion, and 
consumer education with respect to the use of eggs, egg products, spent 
fowl, and products of spent fowl: Provided, however, That any such 
program or project shall be directed towards increasing the general 
demand for eggs, egg products, spent fowl, or products of spent fowl;
    (b) The establishment and carrying on of research, marketing, and 
development projects and studies with respect to sale, distribution, 
marketing, utilization, or production of eggs, egg products, spent fowl, 
and products of spent fowl, and the creation of new products thereof in 
accordance with section 7(b) of the act, to the end that the marketing 
and utilization of eggs, egg products, spent fowl, and products of spent 
fowl may be encouraged, expanded, improved, or made more acceptable, and 
the data collected by such activities may be disseminated;
    (c) The development and expansion of foreign markets and uses for 
eggs, egg products, spent fowl, and products of spent fowl;
    (d) Each program or project authorized under paragraphs (a), (b), 
and (c) of this section shall be periodically reviewed or evaluated by 
the Board to insure that each such program or project contributes to a 
coordinated national program of research, education, and promotion 
contributing to the maintenance of markets and for the development of 
new markets for and of new products from eggs, egg products, spent fowl, 
and products of spent fowl. If it is found by the Board that any such 
program or project does not further the national purpose of the act, 
then the Board shall terminate such program or project; and
    (e) No advertising or promotion programs shall use false or 
unwarranted claims or make any reference to private brand names of eggs, 
egg products, spent fowl, and products of spent fowl or use unfair or 
deceptive acts or practices with respect to quality, value, or use of 
any competing product.

                        Expenses and Assessments



Sec. 1250.346  Expenses.

    The Board is authorized to incur such expenses as the Secretary 
finds are reasonable and likely to be incurred by the Board for its 
maintenance and functioning and to enable it to exercise its powers and 
perform its duties in accordance with the provisions of this subpart. 
The total costs incurred by the Board for a fiscal period in collecting 
producer assessments and having an administrative staff shall not exceed 
an amount of the projected total assessments to be collected by the 
Board for such fiscal period that the Secretary determines to be 
reasonable. The funds to cover such expenses shall be paid from 
assessments received pursuant to Sec. 1250.347.

[40 FR 59190, Dec. 22, 1975, as amended at 54 FR 100, Jan. 4, 1989, and 
54 FR 11493, Mar. 21, 1989]



Sec. 1250.347  Assessments.

    Each handler designated in Sec. 1250.349 and pursuant to regulations 
issued by the Board shall collect from each producer, except for those 
producers specifically exempted in Sec. 1250.348, and shall pay to the 
Board at such times and in such manner as prescribed by regulations 
issued by the Board an assessment at a rate not to exceed 10 cents per 
30-dozen case of eggs, or the equivalent thereof, for such expenses and 
expenditures, including provisions for a reasonable reserve and those 
administrative costs incurred by the Department of Agriculture after 
this subpart is effective, as the Secretary finds are reasonable and 
likely to be incurred by the Board and the Secretary under this subpart, 
except that no more than one such assessment shall be made on any case 
of eggs.

[59 FR 64560, Dec. 15, 1994]



Sec. 1250.348  Exemptions.

    The following shall be exempt from the specific provisions of the 
Act:
    (a) Any egg producer whose aggregate number of laying hens at any 
time during a 3-consecutive-month period

[[Page 188]]

immediately prior to the date assessments are due and payable has not 
exceeded 75,000 laying hens. The aggregate number of laying hens owned 
by a trust or similar entity shall be considered ownership by the 
beneficiaries of the trust or other entity. Ownership of laying hens by 
an egg producer also shall include the following:
    (1) In cases in which the producer is an individual, laying hens 
owned by such producer or members of such producer's family that are 
effectively under the control of such producer, as determined by the 
Secretary;
    (2) In cases in which the producer is a general partnership or 
similar entity, laying hens owned by the entity and all partners or 
equity participants in the entity; and
    (3) In cases in which the producer holds 50 percent or more of the 
stock or other beneficial interest in a corporation, joint stock 
company, association, cooperative, limited partnership, or other similar 
entity, laying hens owned by the entity. Stock or other beneficial 
interest in an entity that is held by the following shall be considered 
as held by the producer:
    (i) Members of the producer's family described in paragraph (a)(1);
    (ii) A general partnership or similar entity in which the producer 
is a partner or equity participant;
    (iii) The partners or equity participants in an entity of the type 
described in (a)(3)(ii); or
    (iv) A corporation, joint stock company, association, cooperative, 
limited partnership, or other similar entity in which the producer holds 
50 percent or more of the stock or other beneficial interests.
    (b) Any egg producer owning a flock of breeding hens whose 
production of eggs is primarily utilized for the hatching of baby 
chicks.
    (c) In order to qualify for exemption from the provisions of the Act 
under this section, producers claiming such exemption must comply with 
Sec. 1250.530 regarding certification of exempt producers and other such 
regulations as may be prescribed by the Secretary as a condition to 
exemption from the provisions of the Act under this section.

[55 FR 6973, Feb. 28, 1990, as amended at 59 FR 38876, Aug. 1, 1994]



Sec. 1250.349  Collecting handlers and collection.

    (a) Handlers responsible for collecting the assessment specified in 
Sec. 1250.347 shall be any one of the following:
    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec. 1250.309,
    (2) A producer who grades, cartons, breaks, or otherwise performs a 
function of a handler under Sec. 1250.309 for eggs of his own 
production, or
    (3) Such other persons as designated by the Board under rules and 
regulations issued pursuant to this subpart.
    (b) Handlers shall collect and remit to the Egg Board all 
assessments collected in the manner and in the time specified by the 
Board pursuant to rules and regulations issued by the Board.
    (c) Handlers shall maintain such records as the Egg Board may 
prescribe pursuant to rules and regulations issued by the Board.
    (d) The Board with the approval of the Secretary may authorize other 
organizations or agencies to collect assessments in its behalf.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec. 1250.350  [Reserved]



Sec. 1250.351  Influencing governmental action.

    No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action except to recommend to the Secretary amendments to this subpart.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

                       Reports, Books, and Records



Sec. 1250.352  Reports.

    Each handler subject to this subpart and other persons subject to 
section 7(c) of the act may be required to report to the Board 
periodically such information as is required by regulations and will 
effectuate the purposes of the act, which information may include but 
not be limited to the following:


[[Page 189]]


    (a) Number of cases of eggs handled;
    (b) Number of cases of eggs on which an assessment was collected;
    (c) Name and address of person from whom any assessment was 
collected; and
    (d) Date collection of assessment was made on each case of eggs 
handled.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec. 1250.353  Books and records.

    Each handler subject to this subpart and persons subject to section 
7(c) of the act shall maintain and make available for inspection by the 
Board or the Secretary such books and records as are necessary to carry 
out the provisions of the subpart and the regulations issued hereunder, 
including such records as are necessary to verify any reports required. 
Such records shall be retained for at least 2 years beyond the fiscal 
period of their applicability.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]



Sec. 1250.354  Confidential treatment.

    (a) All information obtained from such books, records, or reports 
shall be kept confidential by all officers and employees of the 
Department of Agriculture and the Board, and only such information so 
furnished or acquired as the Secretary deems relevant shall be disclosed 
by them, and then only in a suit or administrative hearing brought at 
the direction, or upon the request of the Secretary, or to which the 
Secretary or any officer of the United States is a party and involving 
this subpart. Nothing in this paragraph shall be deemed to prohibit (1) 
the issuance of general statements based upon the reports of the number 
of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person, (2) the publication, by direction of the Secretary, of 
general statements relating to refunds made by the Egg Board during any 
specific period of time, or (3) the publication, by direction of the 
Secretary, of the name of any person violating this subpart together 
with a statement of the particular provisions of this subpart violated 
by such person.
    (b) All information with respect to refunds, except as provided in 
paragraph (a)(2) of this section, made to individual producers shall be 
kept confidential by all officers and employees of the Department of 
Agriculture and the Board.

[40 FR 59190, Dec. 22, 1975. Redesignated at 55 FR 6973, Feb. 28, 1990]

                     Certification of Organizations



Sec. 1250.356  Certification of organizations.

    Any organization may request the Secretary for certification of 
eligibility to participate in nominating members and alternate members 
on the Board to represent the geographic area in which the organization 
represents egg producers. Such eligibility shall be based in addition to 
other available information upon a factual report submitted by the 
organization which shall contain information deemed relevant and 
specified by the Secretary for the making of such determination, 
including, but not limited to, the following:
    (a) Geographic territory covered by the organization's active 
membership;
    (b) Nature and size of the organization's active membership, 
proportion of total of such active membership accounted for by producers 
of commercial eggs, a chart showing the egg production by State in which 
the organization has members, and the volume of commercial eggs produced 
by the organization's active membership in such State(s);
    (c) The extent to which the commercial egg producer membership of 
such organization is represented in setting the organization's policies;
    (d) Evidence of stability and permanency of the organization;
    (e) Sources from which the organization's operating funds are 
derived;
    (f) Functions of the organization; and
    (g) The organization's ability and willingness to further the aims 
and objectives of the act.

The primary consideration in determining the eligibility of an 
organization shall be whether its egg producer membership consists of a 
substantial number of egg producers who produce a substantial volume of 
the applicable geographic area's commercial eggs to

[[Page 190]]

reasonably warrant its participation in the nomination of members for 
the Board or to request the issuance of an order. The Secretary shall 
certify any organization which he finds to be eligible under this 
section and his determination as to eligibility shall be final.

                              Miscellaneous



Sec. 1250.357  Suspension and termination.

    (a) The Secretary shall, whenever he finds that this subpart or any 
provision thereof obstructs or does not tend to effectuate the declared 
policy of the act, terminate or suspend the operation of this subpart or 
such provision.
    (b) The Secretary may conduct a referendum at any time, and shall 
hold a referendum on request of 10 percent or more of the number of egg 
producers voting in the referendum approving this subpart, to determine 
whether egg producers favor the termination or suspension of this 
subpart, and the Secretary shall suspend or terminate such subpart at 
the end of 6 months after he determines that suspension or termination 
of the subpart is approved or favored by a majority of the egg producers 
voting in such referendum who, during a representative period determined 
by the Secretary, have been engaged in the production of commercial 
eggs, and who produced more than 50 percent of the volume of eggs 
produced by the egg producers voting in the referendum.



Sec. 1250.358  Proceedings after termination.

    (a) Upon the termination of this subpart the Board shall recommend 
not more than six of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property then in the possession or under control of the Board, 
including claims for any funds unpaid or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall: (1) Continue in such capacity until 
discharged by the Secretary, (2) carry out the obligations of the Board 
under any contracts or agreements entered into by it pursuant to 
Sec. 1250.336, (3) from time to time account for all receipts and 
disbursements and deliver all property on hand, together with all books 
and records of the Board and of the trustees, to such person as the 
Secretary may direct, and (4) upon the request of the Secretary, execute 
such assignments or other instruments necessary or appropriate to vest 
in such person full title and right to all of the funds, property, and 
claims vested in the Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be disposed of, 
to the extent practicable, in the interest of continuing one or more of 
the research or promotion programs hitherto authorized.



Sec. 1250.359  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant hereto, 
or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have risen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued hereunder; or
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.



Sec. 1250.360  [Reserved]



Sec. 1250.361  Right of the Secretary.

    All fiscal matters, programs or projects, rules or regulations, 
reports, or other substantive action proposed and prepared by the Board 
shall be submitted to the Secretary for his approval.

[[Page 191]]



Sec. 1250.362  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by an organization certified pursuant to section 16 of the 
act, or by any interested person affected by the provisions of the act, 
including the Secretary.



Sec. 1250.363  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart of the applicability 
thereof to other persons or circumstances shall not be affected thereby.



                     Subpart--Rules and Regulations

    Source: 41 FR 22925, June 8, 1976, unless otherwise noted.

                               Definitions



Sec. 1250.500  Terms defined.

    Unless otherwise defined in this subpart, definitions of terms used 
in this subpart shall be those definitions of terms defined in the Egg 
Research and Consumer Information Act, hereinafter called the Act, and 
the Egg Research and Promotion Order, hereinafter called the Order.
    (a) Act. ``Act'' means the Egg Research and Consumer Information Act 
as it may be amended (Pub. L. 93-428).
    (b) Secretary. ``Secretary'' means the Secretary of Agriculture or 
any other officer or employee of the Department of Agriculture to whom 
there has heretofore been delegated, or to whom there may hereafter be 
delegated, the authority to act in his stead.
    (c) Egg Board or Board. ``Egg Board'' or ``Board'' or other 
designatory term adopted by such Board, with the approval of the 
Secretary, means the administrative body established pursuant to 
Sec. 1250.326.
    (d) Fiscal period. ``Fiscal period'' means the calendar year unless 
the Egg Board, with the approval of the Secretary, selects some other 
budgetary period.
    (e) Egg producer or producer. ``Egg producer'' or ``producer'' means 
any person who either:
    (1) Is an egg farmer who acquires and owns laying hens, chicks, and/
or started pullets for the purpose of and is engaged in the production 
of commercial eggs; or
    (2) Is a person who supplied or supplies laying hens, chicks, and/or 
started pullets to an egg farmer for the purpose of producing commercial 
eggs pursuant to an oral or written contractual agreement for the 
production of commercial eggs. Such person is deemed to be the owner of 
such laying hens unless it is established in writing, to the 
satisfaction of the Secretary or the Egg Board, that actual ownership of 
the laying hens is in some other party to the contract. In the event the 
party to an oral contract who supplied or supplies the laying hens 
cannot be readily identified by the Secretary or the Egg Board, the 
person who has immediate possession and control over the laying hens at 
the egg production facility shall be deemed to be the owner of such hens 
unless written notice is provided to the Secretary or the Egg Board, 
signed by the parties to said oral contract, clearly stating that the 
eggs are being produced under a contractual agreement and identifying 
the party (or parties) under said contract who is the owner of the hens.
    (f) Commercial eggs or eggs. ``Commercial eggs'' or ``eggs'' means 
eggs from domesticated chickens which are sold for human consumption 
either in shell egg form or for further processing into egg products.
    (g) Person. ``Person'' means any individual, group of individuals, 
partnership, corporation, association, cooperative, or any other entity.
    (h) Handle. ``Handle'' means to grade, carton, process, transport, 
purchase, or in any way place eggs or cause eggs to be placed in the 
current of commerce. Such term shall not include the washing, the 
packing in cases, or the delivery by the producer of his own nest run 
eggs.
    (i) Handler. ``Handler'' means any person who receives or otherwise 
acquires eggs from an egg producer, and processes, prepares for 
marketing, or

[[Page 192]]

markets such eggs, including eggs of his own production.
    (j) Egg products. ``Egg products'' means products produced, in whole 
or in part, from eggs.
    (k) Cooperating agency. ``Cooperating agency'' means any person with 
which the  Egg  Board  has  entered into an agreement pursuant to 
Sec. 1250.517(c).
    (l) Case. ``Case'' means the standard shipping package containing 
30-dozen eggs or the equivalent thereof.
    (m) Plans and projects. ``Plans'' and ``projects'' mean those 
research, consumer and producer education, advertising, marketing, 
product development, and promotion plans, studies, or projects pursuant 
to Sec. 1250.341.
    (n) Representative of a producer. ``Representative of a producer'' 
means the owner, officer, or an employee of a producer who has been duly 
authorized to act in the place and stead of the producer.
    (o) Hen or laying hen. ``Hen'' or ``laying hen'' means a 
domesticated female chicken 20 weeks of age or over, raised primarily 
for the production of commercial eggs.
    (p) Hatching eggs. ``Hatching eggs'' means eggs intended for use by 
hatcheries for the production of baby chicks.
    (q) United States. ``United States'' means the 48 contiguous States 
of the United States of America and the District of Columbia.
    (r) Promotion. ``Promotion'' means any action, including paid 
advertising, to advance the image or desirability of eggs, egg products, 
spent fowl, or products of spent fowl.
    (s) Research. ``Research'' means any type of research to advance the 
image, desirability, marketability, production, or quality of eggs, egg 
products, spent fowl, or products of spent fowl, or the evaluation of 
such research.
    (t) Consumer education. ``Consumer education'' means any action to 
advance the image or desirability of eggs, egg products, spent fowl, or 
products of spent fowl.
    (u) Marketing. ``Marketing'' means the sale or other disposition of 
commercial eggs, egg products, spent fowl, or products of spent fowl, in 
any channel of commerce.
    (v) Commerce. ``Commerce'' means interstate, foreign, or intrastate 
commerce.
    (w) Spent fowl. ``Spent fowl'' means hens which have been in 
production of commercial eggs and have been removed from such production 
for slaughter.
    (x) Products of spent fowl. ``Products of spent fowl'' means 
commercial products produced from spent fowl.
    (y) Started pullet. ``Started pullet'' means a hen less than 20 
weeks of age.
    (z) Shell egg packer. ``Shell egg packer'' means any person grading 
eggs into their various qualities.
    (aa) Egg breaker. ``Egg breaker'' means any person subject to the 
Egg Products Inspection Act (21 U.S.C. 1031 et seq.) engaged in the 
breaking of shell eggs or otherwise involved in preparing shell eggs for 
use as egg products.
    (bb) Nest run eggs. ``Nest run eggs'' means eggs which are packed as 
they come from the production facilities without having been sized and/
or candled with the exception that some checks, dirties, or obvious 
undergrades may have been removed and provided further that the eggs may 
have been washed.

  OMB Control Numbers Assigned Pursuant to the Paperwork Reduction Act



Sec. 1250.501  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    (a) Purpose. This section collects and displays the control numbers 
assigned to information collection requirements by the Office of 
Management and Budget contained in 7 CFR part 1250 pursuant to the 
Paperwork Reduction Act of 1980, Pub. L. 96-511.
    (b) Display.

------------------------------------------------------------------------
                                                             Current OMB
        7 CFR section where identified and described           control
                                                                number
------------------------------------------------------------------------
Sec.:
  1250.523.................................................    0581-0098
  1250.528.................................................    0581-0098
  1250.529.................................................    0581-0098
  1250.530.................................................    0581-0098
  1250.535.................................................    0581-0098
------------------------------------------------------------------------


[[Page 193]]

(Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621-1627) and 
Egg Research and Consumer Information Act, as amended (7 U.S.C. 2701-
2718))

[48 FR 56566, Dec. 22, 1983]

                                 General



Sec. 1250.505  Communications.

    Communications in connection with the Order shall be addressed to 
the Egg Board at its business address.



Sec. 1250.506  Policy and objective.

    (a) It shall be the policy of the Egg Board to carry out an 
effective and continuous coordinated program of research, consumer and 
producer education, advertising, and promotion designed to strengthen 
the egg industry's position in the marketplace, and maintain and expand 
domestic and foreign markets and uses for eggs, egg products, spent 
fowl, and products of spent fowl of the United States.
    (b) It shall be the objective of the Egg Board to carry out programs 
and projects which will provide maximum benefit to the egg industry and 
no undue preference shall be given to any of the various industry 
segments.



Sec. 1250.507  Contracts.

    The Egg Board, with the approval of the Secretary, may enter into 
contracts with persons for the development and submission to it of plans 
or projects authorized by the Order and for carrying out of such plans 
or projects. Contractors shall agree to comply with the provisions of 
the Order, this subpart, and applicable provisions of the U.S. Code 
relative to contracting with the U.S. Department of Agriculture. 
Subcontractors who enter into contracts or agreements with a primary 
contractor and who receive or otherwise utilize funds allocated by the 
Egg Board shall be subject to the provisions of this subpart.



Sec. 1250.508  Procedure.

    The organization of the Egg Board and the procedure for conducting 
meetings of the Board shall be in accordance with the By-Laws of the 
Board.



Sec. 1250.509  USDA costs.

    Pursuant to Sec. 1250.347 of the Order, the Board shall pay those 
administrative costs incurred by the U.S. Department of Agriculture for 
the conduct of its duties under the Order as determined periodically by 
the Secretary. Payment shall be due promptly after the billing for such 
costs.



Sec. 1250.510  Determination of Board membership.

    (a) Pursuant to Sec. 1250.328 (d) and (e) of the Order, the 48 
contiguous States of the United States shall be grouped into 6 
geographic areas, as follows:

Area 1 (North Atlantic States)--Connecticut, Delaware, Maine, Maryland, 
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 
Island, Vermont, Virginia, West Virginia, and the District of Columbia;
Area 2 (South Atlantic States)--Alabama, Florida, Georgia, Kentucky, 
North Carolina, South Carolina, and Tennessee;
Area 3 (East North Central States)--Indiana, Michigan, and Ohio;
Area 4 (West North Central States)--Illinois, Iowa, Minnesota, Nebraska, 
North Dakota, South Dakota, and Wisconsin;
Area 5 (South Central States)--Arkansas, Colorado, Kansas, Louisiana, 
Mississippi, Missouri, New Mexico, Oklahoma, and Texas;
Area 6 (Western States)--Arizona, California, Idaho, Montana, Nevada, 
Oregon, Utah, Washington, and Wyoming.

    (b) Board representation among the 6 geographic areas is apportioned 
to reflect the percentage of United States egg production in each area 
times 18 (total Board membership). The number of members of the Board, 
beginning with the 1995-96 term, are: Area 1--3, Area 2--3, Area 3--3, 
Area 4--3, Area 5--3, Area 6--3. Each member will have an alternate 
appointed from the same area.

[59 FR 12155, Mar. 16, 1994]

                Assessments, Collections, and Remittances



Sec. 1250.514  Levy of assessments.

    An assessment rate of 10 cents per case of commercial eggs is levied 
on each case of commercial eggs handled for the account of each 
producer. Each

[[Page 194]]

case of commercial eggs shall be subject to assessment only once. 
Producers meeting the requirements of Sec. 1250.348 are exempt from the 
provisions of the Act including this section.

[55 FR 6974, Feb. 28, 1990, as amended at 59 FR 64560, Dec. 15, 1994]



Sec. 1250.515  Reporting period and payment.

    (a) For the purpose of the payment of assessments, either a calendar 
month or a 4-week accounting period shall be considered the reporting 
period; however, other accounting periods may be used when approved by 
the Board on an individual basis. Each collecting handler shall register 
his reporting period with the Board. All changes in reporting periods 
shall be requested in writing and subject to approval by the Board.
    (b) Each producer shall pay the required assessment on his 
commercial eggs pursuant to Sec. 1250.514 to the collecting handler 
designated in Sec. 1250.516 on or before the date of final settlement 
between the producer and the collecting handler for the eggs received by 
the collecting handler during each reporting period.



Sec. 1250.516  Collecting handlers and collection.

    (a) Handlers responsible for collecting the assessments shall be any 
of the following:
    (1) The first person to whom eggs are sold, consigned, or delivered 
by producers and who grades, cartons, or breaks such eggs. Such shell 
egg breaker or egg packer must collect and remit to the Board the 
assessments on all eggs handled except eggs for which there is a 
certification of exemption or eggs for which there is a statement 
indicating that an assessment has already been paid;
    (2) A person who buys or receives nest run eggs from a producer and 
who does not grade, carton, or break such eggs. Such person shall 
collect the assessment from the producer and remit to the Egg Board on 
all such eggs, except for which there is a certification of exemption or 
eggs for which there is a statement indicating that an assessment has 
already been paid;
    (3) Except as otherwise provided in paragraph (a)(4) of this 
section, a producer who grades, cartons, or breaks eggs of his own 
production shall be responsible for remitting the assessment to the 
Board on all eggs produced. This would include the eggs which he grades, 
cartons, or breaks as well as the nest run eggs which are graded, 
cartoned, or broken by another handler. Such a producer who remits the 
assessment on nest run eggs to the Board shall provide the handler 
specified in paragraph (a) (1) or (2) of this section with a written 
statement that the assessment has already been paid on the nest run 
eggs; or
    (4) Upon approval of the Board, any person who handles eggs for a 
producer under a written contract that includes express provisions that 
said handler will remit the assessment on such eggs to the Board shall 
be the collecting handler notwithstanding the fact that the producer may 
have graded, cartoned, or otherwise processed the eggs.

    Following are some examples to aid in identification of collecting 
handlers:
    (i) Producer sells, assigns, consigns, or otherwise delivers nest 
run eggs of his own production to a shell egg packer or breaker for 
preparation for market--the shell egg packer or breaker is the 
collecting handler and is responsible for remitting to the Egg Board;
    (ii) Producer grades, cartons, breaks, or otherwise prepares for 
marketing a portion of the eggs of his own production and delivers the 
remaining portion of his nest run eggs to a shell egg packer or 
breaker--the producer is the collecting handler and shall remit the 
assessment on his total production to the Board;
    (iii) Producer sells all or a portion of his eggs in nest run form 
to a handler who is not a shell egg packer or breaker--the handler is 
responsible for collecting the assessment and remitting it to the Egg 
Board except for eggs covered by a statement indicating that an 
assessment has already been paid;
    (iv) A shell egg packer or breaker who buys or receives nest run 
eggs from a handler who is not a shell egg packer or breaker--the 
handler is the collecting handler and shall remit such assessment to the 
Board;
    (v) A shell egg packer or egg breaker buys nest run or graded eggs 
including undergrade eggs from another shell egg packer or egg breaker--
the first shell egg packer or breaker is the collecting handler and 
shall remit such assessments to the Board.


[[Page 195]]


    (b) In the event of a producer's death, bankruptcy, receivership, or 
incapacity to act, the representative of the producer or his estate, or 
the person acting on behalf of creditors, shall be considered the 
producer of the eggs for the purpose of this subpart.
    (c) The collecting handler may collect the assessment directly from 
the producer or deduct the assessment from the proceeds due or paid to 
the producer on whose eggs the assessment is made.

[41 FR 22925, June 8, 1976, as amended at 42 FR 60724, Nov. 29, 1977]



Sec. 1250.517  Remittance to Egg Board.

    (a) The collecting handler responsible for remittance of assessments 
to the Board is not relieved of this obligation as a result of his 
failure to collect payment of the assessment from the egg producer(s).
    (b) Each collecting handler required to remit the assessments on the 
eggs handled during each reporting period, specified in 
Sec. 1250.515(a), shall remit the assessments directly to the Egg Board 
by check, draft, or money order payable to the Egg Board on or before 
the 15th day after the end of said reporting period together with a 
report pursuant to Sec. 1250.529. The assessment for each reporting 
period shall be calculated on the basis of the gross volume of eggs 
subject to assessment received by the collecting handler during each 
reporting period.
    (c) Remittance through cooperating agency.
    (1) In any State or specified geographic area the Egg Board, with 
the approval of the Secretary, may designate by agreement a cooperating 
agency to collect the assessments in its behalf. Every collecting 
handler within such a State or geographic area shall remit the 
assessments for each reporting period, specified in Sec. 1250.515(a), to 
the designated cooperating agency by check, draft, or money order 
payable to said cooperating agency on or before the 15th day after the 
end of said reporting period together with a report pursuant to 
Sec. 1250.529.
    (2) On or before the 20th day after the end of each reporting 
period, each designated cooperating agency shall remit to the Egg Board 
the total amount of all assessments received from collecting handlers 
for said reporting period together with all collecting handler reports. 
In addition, each designated cooperating agency shall submit to the Egg 
Board such information as is required by the designation agreement with 
the Egg Board.



Sec. 1250.518  Receipts for payment of assessments.

    (a) Each collecting handler shall give each producer whose eggs are 
subject to assessment a receipt for the commercial eggs handled by said 
collecting handler showing payment of the assessment. This receipt may 
be on a separate receipt form or included as part of the invoice or 
settlement sheet for the eggs, but in either event shall contain the 
following information:
    (1) Name, address, and identification number of the collecting 
handler;
    (2) Name and address of the producer who paid the assessment;
    (3) Number of cases of eggs on which assessment was paid and the 
total amount of the assessment; and
    (4) Date on which assessment was paid by producer.
    (b) All eggs sold, consigned, or delivered from a collecting handler 
to another handler, excluding cartoned eggs and loose graded eggs sold 
to the bakeries, restaurants, and institutions, shall be accompanied 
with the collecting handler's written statement that the assessment on 
the lot of eggs covered by the invoice has been paid or that lot of eggs 
or portion thereof is exempt from assessment under provisions of 
Sec. 1250.514.



Sec. 1250.519  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec. 1250.347 
shall be increased by a late-payment charge of 1.5 percent each month 
beginning with the day following the date such assessments are 30 days 
past due. Any remaining amount due, which shall include any unpaid 
charges previously made pursuant to this section, shall be increased at 
the same rate on the corresponding day of each month thereafter until 
paid. Assessments that are not paid when due because of a person's 
failure to submit a handler report to the Board as required shall accrue 
late-

[[Page 196]]

payment charges from the time such assessments should have been 
remitted. The timeliness of a payment to the Board shall be based on the 
applicable postmark date or the date payment is actually received by the 
Board, whichever is earlier.

[58 FR 34697, June 29, 1993]

                 Registration, Certification and Reports



Sec. 1250.528  Registration of collecting handlers.

    All collecting handlers shall, prior to August 1, 1976, register 
with the Egg Board by filing a registration statement. Registered 
collecting handlers will receive an identification number which must 
appear on all required reports and official communications with the Egg 
Board. New businesses subject to this subpart beginning after August 1, 
1976, shall register with the Egg Board within 30 days following the 
beginning of operations. The statement of registration shall include:
    (a) Name and complete address of the collecting handler;
    (b) Name of individual(s) responsible for filing reports with the 
Egg Board; and
    (c) Type of reporting period desired.



Sec. 1250.529  Reports.

    (a) Collecting handler reports. (1) Each collecting handler shall 
make reports on forms made available or approved by the Egg Board. Each 
collecting handler shall prepare a separate report form each reporting 
period. Each report shall be mailed to the Egg Board within 15 days 
after the close of the reporting period and shall contain the following 
information:
    (i) Date of report;
    (ii) Reporting period covered by the report;
    (iii) Name and address of collecting handler and identification 
number;
    (iv) Total number of cases of eggs handled, total number of cases of 
eggs subject to collection of assessment, total number of cases of eggs 
exempt under Sec. 1250.514 from collection of assessment, total number 
of cases of imported eggs handled, and total number of cases of eggs 
received from another handler and on which an assessment was already 
collected;
    (v) The names and addresses of producers subject to assessment 
supplying eggs to the handlers and number of cases of eggs received from 
each producer;
    (vi) Total amount of assessment due for eggs handled during the 
reporting period and remitted with the report; and
    (vii) Such other information as may be required by the Board.
    (2) Collecting handler reports shall be filed each reporting period 
following registration until such time as the Egg Board is notified in 
writing that the collecting handler has ceased to do business. During 
reporting periods in which the collecting handler does not handle any 
eggs, his report form shall state ``No Eggs Handled.''
    (b) The Egg Board may require all persons subject to section 7(c) of 
the Act to make reports as needed for the enforcement and administration 
of the Order and as approved by the Secretary.



Sec. 1250.530  Certification of exempt producers.

    Egg producers not subject to the provisions of the Act pursuant to 
Sec. 1250.348 shall file with all handlers to whom they sell eggs a 
statement certifying their exemption from the provisions of the Act in 
accordance with the criterion of Sec. 1250.348. Certification shall be 
made on forms approved and provided by the Egg Board to collecting 
handlers for use by exempt producers. The certification form shall be 
filed with each handler within 10 days after the first sale of eggs to 
such handler after March 1, 1990, and annually thereafter on or before 
January 1 as long as the producer continues to do business with the 
handler. A copy of the certificate of exemption shall be forwarded to 
the Egg Board by the handler within 30 days of receipt. The 
certification shall list the following:
    (a) The name and address of the producer;
    (b) Basis for producer exemption according to the requirements of 
Sec. 1250.348; and
    (c) The signature of the producer.

[[Page 197]]


If the exempt producer becomes subject to the provisions of the Act 
pursuant to the requirements of Sec. 1250.348, that producer shall 
notify, within 10 days, all handlers with whom he has filed a 
certificate of exemption.

[55 FR 6974, Feb. 28, 1990]

                                 Records



Sec. 1250.535  Retention of records.

    (a) Each person required to make reports pursuant to this subpart 
shall maintain and retain for at least 2 years beyond the fiscal period 
of their applicability:
    (1) One copy of each report submitted to the Egg Board;
    (2) Records of all exempt producers including certification of 
exemption as necessary to verify the address of each exempt producer; 
and
    (3) Such other records as are necessary to verify reports submitted 
to the Egg Board.
    (b) Egg producers subject to Sec. 1250.514 shall maintain and retain 
for at least 2 years beyond the period of their applicability:
    (1) Receipts, or copies thereof, for payment of assessments; and
    (2) Such records as are necessary to verify monthly levels of egg 
production.



Sec. 1250.536  Availability of records.

    Each handler and egg producer subject to this subpart and all 
persons subject to section 7(c) of the Act shall make available for 
inspection and copying by authorized employees of the Egg Board and/or 
the Secretary during regular business hours, such information as is 
appropriate and necessary to verify compliance with this subpart.



Sec. 1250.537  Confidentiality.

    All information obtained by officers and employees of the Department 
of Agriculture, the Egg Board, or any person under contract by the Egg 
Board or otherwise acting on behalf of the Egg Board from the books, 
records, and reports of persons subject to this subpart, and all 
information with respect to refunds of assessments made to individual 
producers, shall be kept confidential in the manner and to the extent 
provided in Sec. 1250.353 of the Order.

            Patents, Copyrights, Trademarks, and Information



Sec. 1250.542  Patents, copyrights, trademarks, and information.

    Patents, copyrights, trademarks, and information accruing from work 
pursuant to any plan or project undertaken by any person on behalf of 
the Egg Board, financed by assessment funds or other revenues of the Egg 
Board; shall become property of the U.S Government as represented by the 
Egg Board; and such patents, copyrights, trademarks, and information may 
be licensed subject to approval by the Secretary of Agriculture. Upon 
termination of the Order, the Egg Board shall transfer custody of all 
such patents, copyrights, trademarks, and information to the Secretary 
of Agriculture pursuant to the procedure provided for in Sec. 1250.358 
who shall utilize them in a manner that he determines to be in the best 
interest of egg producers. Funds generated from the use of patents, 
copyrights, trademarks, and information by the Egg Board will be 
considered income subject to the same fiscal, budget, and audit control 
as the other funds of the Egg Board. Ownership of inventions made by 
employees of the Board shall be determined in accordance with Executive 
Order 10096.

[41 FR 22925, June 8, 1976; 41 FR 23930, June 14, 1976]

                           Personal Liability



Sec. 1250.547  Personal liability.

    No member, alternate member, employee, or agent of the Board in the 
performance of his duties with the Board shall be held personally 
responsible either individually or jointly with others, in anyway 
whatsoever, to any person for errors in judgment, mistakes, or other 
acts, either of commission or omission, by such member, alternate 
member, employee, or agent, except for acts of dishonesty or willful 
misconduct.

[[Page 198]]



PART 1260--BEEF PROMOTION AND RESEARCH--Table of Contents




              Subpart A--Beef Promotion and Research Order

                               Definitions

Sec.
1260.101  Department.
1260.102  Secretary.
1260.103  Board.
1260.104  Committee.
1260.105  Person.
1260.106  Collecting person.
1260.107  State.
1260.108  United States.
1260.109  Unit.
1260.110  [Reserved]
1260.111  Fiscal year.
1260.112  Federation.
1260.113  Established national nonprofit industry-governed 
          organizations.
1260.114  Eligible organization.
1260.115  Qualified State beef council.
1260.116  Producer.
1260.117  Importer.
1260.118  Cattle.
1260.119  Beef.
1260.120  Beef products.
1260.121  Imported beef or beef products.
1260.122  Promotion.
1260.123  Research.
1260.124  Consumer information.
1260.125  Industry information.
1260.126  Plans and projects.
1260.127  Marketing.
1260.128  Act.
1260.129  Customs Service.
1260.130  Part and subpart.

              Cattlemen's Beef Promotion and Research Board

1260.141  Membership of Board.
1260.142  Term of office.
1260.143  Nominations.
1260.144  Nominee's agreement to serve.
1260.145  Appointment.
1260.146  Vacancies.
1260.147  Procedure.
1260.148  Compensation and reimbursement.
1260.149  Powers of the Board.
1260.150  Duties of the Board.
1260.151  Expenses.

                   Beef Promotion Operating Committee

1260.161  Establishment and membership.
1260.162  Term of office.
1260.163  Vacancies.
1260.164  Procedure.
1260.165  Compensation and reimbursement.
1260.166  Officers of the Committee.
1260.167  Powers of the Committee.
1260.168  Duties of the Committee.
1260.169  Promotion, research, consumer information and industry 
          information.

                               Assessments

1260.172  Assessments.
1260.173-1260.174  [Reserved]
1260.175  Late-payment charge.
1260.176  Adjustment of accounts.
1260.181  Qualified State beef councils.

                       Reports, Books and Records

1260.201  Reports.
1260.202  Books and records.
1260.203  Confidential treatment.

                              Miscellaneous

1260.211  Proceedings after termination.
1260.212  Effect of termination or amendment.
1260.213  Removal.
1260.214  Personal liability.
1260.215  Patents, copyrights, inventions and publications.
1260.216  Amendments.
1260.217  Separability.

                    Subpart B--Rules and Regulations

1260.301  Terms defined.
1260.310  Domestic assessments.
1260.311  Collecting persons for purposes of collection of assessments.
1260.312  Remittance to the Cattlemen's Board or Qualified State Beef 
          Council.
1260.313  Document evidencing payment of assessments.
1260.314  Certification of non-producer status for certain transactions.
1260.315  Qualified State Beef Councils.
1260.316  Paperwork Reduction Act assigned number.

                          Subpart C  [Reserved]

  Subpart D--Beef Promotion and Research: Certification and Nomination 
    Procedures for the Cattlemen's Beef Promotion and Research Board

1260.500  General.
1260.510  Definitions.
1260.520  Responsibility for administration of regulations.
1260.530  Certification of eligibility.
1260.540  Application for certification.
1260.550  Verification of information.
1260.560  Review of certification.
1260.570  Notification of certification and the listing of certified 
          organizations.
1260.580-1260.600  [Reserved]
1260.610  Acceptance of appointment.
1260.620  Confidential treatment of information.
1260.630  Paperwork Reduction Act assigned number.
1260.640  Application for Certification Form.

    Authority: 7 U.S.C. 2901-2911.

[[Page 199]]



              Subpart A--Beef Promotion and Research Order

    Source: 51 FR 26138, July 18, 1986, unless otherwise noted.

                               Definitions



Sec. 1260.101  Department.

    ``Department'' means the United States Department of Agriculture.



Sec. 1260.102  Secretary.

    ``Secretary'' means the Secretary of Agriculture of the United 
States or any other officer or employee of the Department to whom there 
has heretofore been delegated, or to whom there may hereafter be 
delegated, the authority to act in the Secretary's stead.



Sec. 1260.103  Board.

    ``Board'' means the Cattlemen's Beef Promotion and Research Board 
established pursuant to the Act and this subpart.



Sec. 1260.104  Committee.

    ``Committee'' means the Beef Promotion Operating Committee 
established pursuant to the Act and this subpart.



Sec. 1260.105  Person.

    ``Person'' means any individual, group of individuals, partnership, 
corporation, association, cooperative, or any other entity.



Sec. 1260.106  Collecting person.

    ``Collecting person'' means the person making payment to a producer 
for cattle, or any other person who is responsible for collecting and 
remitting an assessment pursuant to the Act, the order and regulations 
prescribed by the Board and approved by the Secretary.



Sec. 1260.107  State.

    ``State'' means each of the 50 States.



Sec. 1260.108  United States.

    ``United States'' means the 50 States and the District of Columbia.



Sec. 1260.109  Unit.

    ``Unit'' means each State, group of States or class designation 
which is represented on the Board.



Sec. 1260.110  [Reserved]



Sec. 1260.111  Fiscal year.

    ``Fiscal year'' means the calendar year or such other annual period 
as the Board may determine.



Sec. 1260.112  Federation.

    ``Federation'' means the Beef Industry Council of the National Live 
Stock and Meat Board, or any successor organization to the Beef Industry 
Council, which includes as its State affiliates the qualified State beef 
councils.



Sec. 1260.113  Established national nonprofit industry-governed organizations.

    ``Established national nonprofit industry-governed organizations'' 
means organizations which:
    (a) Are nonprofit organizations pursuant to sections 501(c) (3), (5) 
or (6) of the Internal Revenue Code (26 U.S.C. 501(c) (3), (5) and (6));
    (b) Are governed by a board of directors representing the cattle or 
beef industry on a national basis; and
    (c) Were active and ongoing before the enactment of the Act.



Sec. 1260.114  Eligible organization.

    ``Eligible organization'' means any organization which has been 
certified by the Secretary pursuant to the Act and this part as being 
eligible to submit nominations for membership on the Board.



Sec. 1260.115  Qualified State beef council.

    ``Qualified State beef council'' means a beef promotion entity that 
is authorized by State statute or a beef promotion entity organized and 
operating within a State that receives voluntary assessments or 
contributions; conducts beef promotion, research, and consumer and 
industry information programs; and that is certified by the Board 
pursuant to this subpart as the beef promotion entity in such State.

[[Page 200]]



Sec. 1260.116  Producer.

    ``Producer'' means any person who owns or acquires ownership of 
cattle; provided, however, that a person shall not be considered a 
producer within the meaning of this subpart if (a) the person's only 
share in the proceeds of a sale of cattle or beef is a sales commission, 
handling fee, or other service fee; or (b) the person (1) acquired 
ownership of cattle to facilitate the transfer of ownership of such 
cattle from the seller to a third party, (2) resold such cattle no later 
than ten (10) days from the date on which the person acquired ownership, 
and (3) certified, as required by regulations prescribed by the Board 
and approved by the Secretary, that the requirements of this provision 
have been satisfied.



Sec. 1260.117  Importer.

    ``Importer'' means any person who imports cattle, beef, or beef 
products from outside the United States.



Sec. 1260.118  Cattle.

    ``Cattle'' means live domesticated bovine animals regardless of age.



Sec. 1260.119  Beef.

    ``Beef'' means flesh of cattle.



Sec. 1260.120  Beef products.

    ``Beef products'' means edible products produced in whole or in part 
from beef, exclusive of milk and products made therefrom.



Sec. 1260.121  Imported beef or beef products.

    ``Imported beef or beef products'' means products which are imported 
into the United States which the Secretary determines contain a 
substantial amount of beef including those products which have been 
assigned one or more of the following numbers in the Tariff Schedule of 
the United States: 106.1020, 106.1040, 106.1060, 106.1080, 107.2000, 
107.2520, 107.4000, 107.4500, 107.4820, 107.4840, 107.5220, 107.5240, 
107.5500, 107.6100, 107.6200, 107.6300.



Sec. 1260.122  Promotion.

    ``Promotion'' means any action, including paid advertising, to 
advance the image and desirability of beef and beef products with the 
express intent of improving the competitive position and stimulating 
sales of beef and beef products in the marketplace.



Sec. 1260.123  Research.

    ``Research'' means studies relative to the effectiveness of market 
development and promotion efforts, studies relating to the nutritional 
value of beef and beef products, other related food science research, 
and new product development.



Sec. 1260.124  Consumer information.

    ``Consumer information'' means nutritional data and other 
information that will assist consumers and other persons in making 
evaluations and decisions regarding the purchasing, preparing, and use 
of beef and beef products.



Sec. 1260.125  Industry information.

    ``Industry information'' means information and programs that will 
lead to the development of new markets, marketing strategies, increased 
efficiency, and activities to enhance the image of the cattle industry.



Sec. 1260.126  Plans and projects.

    ``Plans and projects'' means promotion, research, consumer 
information and industry information plans, studies or projects 
conducted pursuant to this subpart.



Sec. 1260.127  Marketing.

    ``Marketing'' means the sale or other disposition in commerce of 
cattle, beef or beef products.



Sec. 1260.128  Act.

    ``Act'' means the Beef Promotion and Research Act of 1985, Title 
XVI, Subtitle A of the Food Security Act of 1985, Pub. L. 99-198 and any 
amendments thereto.



Sec. 1260.129  Customs Service.

    ``Customs Service'' means the United States Customs Service of the 
United States Department of the Treasury.

[[Page 201]]



Sec. 1260.130  Part and subpart.

    ``Part'' means the Beef Promotion and Research Order and all rules 
and regulations issued pursuant to the Act and the order, and the order 
itself shall be a ``subpart'' of such Part.

              Cattlemen's Beef Promotion and Research Board



Sec. 1260.141  Membership of Board.

    (a) For Board nominations and appointments beginning with those in 
1996, the United States shall be divided into 39 geographical units and 
1 unit representing importers, and the number of Board members from each 
unit shall be as follows:

                          Cattle and Calves \1\
------------------------------------------------------------------------
                                                      (1,000
                    State/unit                        head)    Directors
------------------------------------------------------------------------
1. Alabama........................................      1,677          2
2. Arizona........................................        863          1
3. Arkansas.......................................      1,837          2
4. California.....................................      4,617          5
5. Colorado.......................................      2,967          3
6. Florida........................................      1,977          2
7. Georgia........................................      1,477          1
8. Idaho..........................................      1,720          2
9. Illinois.......................................      1,813          2
10. Indiana.......................................      1,163          1
11. Iowa..........................................      4,183          4
12. Kansas........................................      6,067          6
13. Kentucky......................................      2,617          3
14. Louisiana.....................................        943          1
15. Michigan......................................      1,210          1
16. Minnesota.....................................      2,750          3
17. Mississippi...................................      1,353          1
18. Missouri......................................      4,600          5
19. Montana.......................................      2,583          3
20. Nebraska......................................      6,017          6
21. New Mexico....................................      1,437          1
22. New York......................................      1,503          2
23. North Carolina................................      1,063          1
24. North Dakota..................................      1,857          2
25. Ohio..........................................      1,480          1
26. Oklahoma......................................      5,333          5
27. Pennsylvania..................................      1,783          2
28. South Carolina................................        513          1
29. South Dakota..................................      3,833          4
30. Tennessee.....................................      2,450          2
31. Texas.........................................  \1\ 4,667         15
32. Utah..........................................        867          1
33. Virginia......................................      1,713          2
34. Wisconsin.....................................      3,883          4
35. Wyoming.......................................      1,383          1
36. Northwest.....................................  .........          2
  Alaska..........................................          9
  Hawaii..........................................        173
  Washington......................................      1,353
                                                   ---------------------
      Total.......................................      1,535
                                                   =====================
37. Northeast.....................................  .........          1
  Connecticut.....................................         76
  Delaware........................................         30
  Maine...........................................        116
  Massachusetts...................................         69
  New Hampshire...................................         49
  New Jersey......................................         67
  Rhode Island....................................          7
  Vermont.........................................        292
                                                   ---------------------
      Total.......................................        706
                                                   =====================
38. Mid-Atlantic..................................  .........          1
  District of Columbia............................          0
  Maryland........................................        310
  West Virginia...................................        477
                                                   ---------------------
      Total.......................................        787
                                                   =====================
39. Western.......................................  .........          2
  Nevada..........................................        497
  Oregon..........................................      1,420
                                                   ---------------------
      Total.......................................      1,917
                                                   =====================
40. Importer \2\..................................      7,016         7
------------------------------------------------------------------------
\1\ 1993, 1994, and 1995 average.
\2\ 1992, 1993, and 1994 average.

    (b) The Board shall be composed of cattle producers and importers 
appointed by the Secretary from nominations submitted pursuant to the 
Act and regulations of this Part. A producer may only be nominated to 
represent the unit in which that producer is a resident.
    (c) At least every three (3) years, and not more than every two (2) 
years, the Board shall review the geographic distribution of cattle 
inventories throughout the United States and the volume of imported 
cattle, beef, and beef products and, if warranted, shall reapportion 
units and/or modify the number of Board members from units in order to 
best reflect the geographic distribution of cattle production volume in 
the United States and the volume of imported cattle, beef, or beef 
products into the United States.
    (d) The Board may recommend to the Secretary a modification in the 
number of cattle per unit necessary for representation on the Board.
    (e) The following formula will be used to determine the number of 
Board members who shall serve on the Board for each unit:
    (1) Each geographic unit or State that includes a total cattle 
inventory equal to or greater than five hundred thousand (500,000) head 
of cattle shall be entitled to one representative on the Board;

[[Page 202]]

    (2) States which do not have total cattle inventories equal to or 
greater than five hundred thousand (500,000) head of cattle shall be 
grouped, to the extent practicable, into geographically contiguous units 
each of which have a combined total inventory of not less than 500,000 
head of cattle and such unit(s) shall be entitled to at least one 
representative on the Board;
    (3) Importers shall be represented by a single unit, with the number 
of Board members representing such unit based upon a conversion of the 
total volume of imported cattle, beef or beef products into live animal 
equivalencies;
    (4) Each unit shall be entitled to representation by an additional 
Board member for each one million (1,000,000) head of cattle within the 
unit which exceeds the initial five hundred thousand (500,000) head of 
cattle within the unit qualifying such unit for representation.
    (f) In determining the volume of cattle within the units, the Board 
and the Secretary shall utilize the information received by the Board 
pursuant to Secs. 1260.201 and 1260.202 industry data and data published 
by the Department.

[51 FR 26138, July 18, 1986, as amended at 55 FR 20445, May 17, 1990; 58 
FR 12999, Mar. 9, 1993; 60 FR 62020, Dec. 4, 1995]



Sec. 1260.142  Term of office.

    (a) The members of the Board shall serve for terms of three (3) 
years, except that the members appointed to the initial Board shall 
serve, proportionately, for terms of 1, 2, and 3 years. To the extent 
practicable, the terms of Board members from the same unit shall be 
staggered for the initial Board.
    (b) Each member shall continue to serve until a successor is 
appointed by the Secretary.
    (c) No member shall serve more than two consecutive 3-year terms in 
such capacity.



Sec. 1260.143  Nominations.

    All nominations authorized under this section shall be made in the 
following manner:
    (a) Nominations shall be obtained by the Secretary from eligible 
organizations. An eligible organization shall only submit nominations 
for positions on the Board representing units in which such eligible 
organization can establish that it is certified as an eligible 
organization to submit nominations for that unit. If the Secretary 
determines that a unit is not represented by an eligible organization, 
then the Secretary may solicit nominations from organizations, and 
producers residing in that unit.
    (b) Nominations for representation of the importer unit may be 
submitted by--
    (1) Organizations which represent importers of cattle, beef or beef 
products, as determined by the Secretary, or
    (2) Individual importers of cattle, beef or beef products. 
Individual importers submitting nominations for representation of the 
importer unit must establish to the satisfaction of the Secretary that 
the persons submitting the nominations are importers of cattle, beef or 
beef products.
    (c) After the establishment of the initial Board, the Department 
shall announce when a vacancy does or will exist. Nominations for 
subsequent Board members shall be submitted to the Secretary not less 
than sixty (60) days prior to the expiration of the terms of the members 
whose terms are expiring, in the manner as described in this section. In 
the case of vacancies due to reasons other than the expiration of a term 
of office, successor Board members shall be appointed pursuant to 
Sec. 1260.146.
    (d) Where there is more than one eligible organization representing 
producers in a unit, they may caucus and jointly nominate two qualified 
persons for each position representing that unit on the Board for which 
a member is to be appointed. If joint agreement is not reached with 
respect to any such nominations, or if no caucus is held, each eligible 
organization may submit to the Secretary two nominees for each 
appointment to be made to represent that unit.



Sec. 1260.144  Nominee's agreement to serve.

    Any producer or importer nominated to serve on the Board shall file 
with the Secretary at the time of the nomination a written agreement to:
    (a) Serve on the Board if appointed; and

[[Page 203]]

    (b) Disclose any relationship with any beef promotion entity or with 
any organization that has or is being considered for a contractual 
relationship with the Board.



Sec. 1260.145  Appointment.

    (a) From the nominations made pursuant to Sec. 1260.143, the 
Secretary shall appoint the members of the Board on the basis of 
representation provided for in Sec. 1260.141.
    (b) Producers or importers serving on the Federation Board of 
Directors shall not be eligible for appointment to serve on the Board 
for a concurrent term.



Sec. 1260.146  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Board, the Secretary shall 
request that nominations for a successor for the vacancy be submitted by 
the eligible organization(s) representing producers or importers of the 
unit represented by the vacancy. If no eligible organization(s) 
represents producers or importers in such unit, then the Secretary shall 
determine the manner in which nominations for the vacancy are submitted.



Sec. 1260.147  Procedure.

    (a) At a properly convened meeting of the Board, a majority of the 
members shall constitute a quorum, and any action of the Board at such a 
meeting shall require the concurring votes of at least a majority of 
those present at such meeting. The Board shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Board emergency 
action is considered necessary, and in lieu of a properly convened 
meeting, the Board may take action upon the concurring votes of a 
majority of its members by mail, telephone, or telegraph, but any such 
action by telephone shall be confirmed promptly in writing. In the event 
that such action is taken, all members must be notified and provided the 
opportunity to vote. Any action so taken shall have the same force as 
though such action had been taken at a regular or special meeting of the 
Board.



Sec. 1260.148  Compensation and reimbursement.

    The members of the Board shall serve without compensation, but shall 
be reimbursed for necessary and reasonable expenses incurred by them in 
the performance of their duties under this subpart.



Sec. 1260.149  Powers of the Board.

    The Board shall have the following powers:
    (a) To administer the provisions of this subpart in accordance with 
its terms and provisions;
    (b) To make rules and regulations to effectuate the terms and 
provisions of this subpart;
    (c) To receive or initiate, investigate, and report to the Secretary 
complaints of violations of the provisions of this subpart;
    (d) To adopt such rules for the conduct of its business as it may 
deem advisable;
    (e) To recommend to the Secretary amendments to this subpart; and
    (f) With the approval of the Secretary, to invest, pending 
disbursement pursuant to a plan or project, funds collected through 
assessments authorized under Sec. 1260.172, in, and only in, obligations 
of the United States or any agency thereof, in general obligations of 
any State or any political subdivision thereof, in any interest-bearing 
account or certificate of deposit of a bank that is a member of the 
Federal Reserve System, or in obligations fully guaranteed as to 
principal and interest by the United States.



Sec. 1260.150  Duties of the Board.

    The Board shall have the following duties:
    (a) To meet not less than annually, and to organize and select from 
among its members a chairperson, a vice-chairperson and a treasurer and 
such other officers as may be necessary;
    (b) To elect from its members an Executive Committee of no more than 
11 and no less than 9 members, whose

[[Page 204]]

membership shall, to the extent practicable, reflect the geographic 
distribution of cattle numbers or their equivalent. The vice-chairperson 
of the Board shall serve as chairperson of the Executive Committee and 
the chairperson and the treasurer of the Board shall serve as members of 
the Executive Committee;
    (c) To delegate to the Executive Committee the authority to 
administer the terms and provisions of this subpart under the direction 
of the Board and within the policies determined by the Board;
    (d) To elect from its members 10 representatives to the Beef 
Promotion Operating Committee which shall be composed of 10 members from 
the Board and 10 members elected by the Federation;
    (e) To utilize the resources, personnel, and facilities of 
established national nonprofit industry-governed organizations;
    (f) To review and, if approved, submit to the Secretary for 
approval, budgets prepared by the Beef Promotion Operating Committee on 
a fiscal period basis of the Committee's anticipated expenses and 
disbursements in the administration of the Committee's responsibilities, 
including probable costs of promotion, research, and consumer 
information and industry information plans or projects, and also 
including a general description of the proposed promotion, research, 
consumer information and industry information programs contemplated 
therein;
    (g) To prepare and submit to the Secretary for approval budgets on a 
fiscal period basis of the Board's overall anticipated expenses and 
disbursements, including the Committee's anticipated expenses and 
disbursements, in the administration of this subpart;
    (h) To maintain such books and records, which shall be available to 
the Secretary for inspection and audit, and to prepare and submit such 
reports from time to time to the Secretary, as the Secretary may 
prescribe, and to make appropriate accounting with respect to the 
receipt and disbursement of all funds entrusted to it;
    (i)-(j)  [Reserved]
    (k) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (l) To cause its books to be audited by a certified public 
accountant at least once each fiscal period and at such other times as 
the Secretary may request, and submit a copy of each such audit to the 
Secretary;
    (m) To give the Secretary the same notice of meetings of the Board 
as is given to members in order that the Secretary, or his 
representative may attend such meetings;
    (n) To review applications submitted by State beef promotion 
organizations pursuant to Sec. 1260.181 and to make determinations with 
regard to such applications;
    (o) To submit to the Secretary such information pursuant to this 
subpart as may be requested; and
    (p) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the beef industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995]



Sec. 1260.151  Expenses.

    (a) The Board is authorized to incur such expenses (including 
provision for a reasonable reserve), as the Secretary finds are 
reasonable and likely to be incurred by the board for its maintenance 
and functioning and to enable it to exercise its powers and perform its 
duties in accordance with this subpart. Administrative expenses incurred 
by the board shall not exceed 5 percent of the projected revenue of that 
fiscal period. Expenses authorized in this paragraph shall be paid from 
assessments collected pursuant to Sec. 1260.172.
    (b) The Board shall reimburse the Secretary, from assessments 
collected pursuant to Sec. 1260.172, for administrative costs incurred 
by the Department to carry out its responsibilities pursuant to this 
subpart after the effective date of this subpart.
    (c) [Reserved]
    (d) Expenditures for the maintenance and expansion of foreign 
markets for beef and beef products shall be limited to an amount equal 
to or less than the

[[Page 205]]

total amount of assessments paid pursuant to Sec. 1260.172(a).

[51 FR 26138, July 18, 1986, as amended at 53 FR 52631, Dec. 29, 1988 
and 54 FR 15918, Apr. 20, 1989; 60 FR 58502, Nov. 28, 1995]

                   Beef Promotion Operating Committee



Sec. 1260.161  Establishment and membership.

    (a) There is hereby established a Beef Promotion Operating Committee 
of 20 members. The Committee shall be composed of 10 Board members 
elected by the Board and 10 producers elected by the Federation.
    (b) Board representation on the Committee shall consist of the 
chairperson, vice-chairperson and treasurer of the Board, and seven 
representatives of the Board who will be duly elected by the Board to 
serve on the Committee. The seven representatives to the Committee 
elected by the Board shall, to the extent practical, reflect the 
geographic and unit distribution of cattle numbers, or the equivalent 
thereof.
    (c) Federation representation on the Committee shall consist of the 
Federation chairperson, vice-chairperson, and eight duly elected 
producer representatives of the Federation Board of Directors who are 
members or ex officio members of the Board of Directors of a qualified 
State beef council. The eight representatives of the Federation elected 
to serve on the Committee shall, to the extent practical, reflect the 
geographic distribution of cattle numbers. The Federation shall submit 
to the Secretary the names of the representatives elected by the 
Federation to serve on the Committee and the manner in which such 
election was held and that such representatives are producers and are 
members or ex officio members of the Board of Directors of a qualified 
State beef council on the Federation Board of Directors. The prospective 
Federation representatives shall file with the Secretary a written 
agreement to serve on the Committee and to disclose any relationship 
with any beef promotion entity or with any organization that has or is 
being considered for a contractual relationship with the Board or the 
Committee. When the Secretary is satisfied that the above conditions are 
met, the Secretary shall certify such representatives as eligible to 
serve on the Committee.



Sec. 1260.162  Term of office.

    (a) The members of the Committee shall serve for a term of 1 year.
    (b) No member shall serve more than six consecutive terms.



Sec. 1260.163  Vacancies.

    To fill any vacancy occasioned by the death, removal, resignation, 
or disqualification of any member of the Committee, the Board or the 
Federation, depending upon which organization is represented by the 
vacancy, shall submit the name of a successor for the position in the 
manner utilized to elect representatives pursuant to Sec. 1260.161 (b) 
and (c) of this section.



Sec. 1260.164  Procedure.

    (a) Attendance of at least 15 members of the Committee shall 
constitute a quorum at a properly convened meeting of the Committee. Any 
action of the Committee shall require the concurring votes of at least 
two-thirds of the members present. The Committee shall establish rules 
concerning timely notice of meetings.
    (b) When in the opinion of the chairperson of the Committee 
emergency action must be taken before a meeting can be called, the 
Committee may take action upon the concurring votes of no less than two-
thirds of its members by mail, telephone, or telegraph. Action taken by 
this emergency procedure is valid only if all members are notified and 
provided the opportunity to vote and any telephone vote is confirmed 
promptly in writing. Any action so taken shall have the same force and 
effect as though such action had been taken at a properly convened 
meeting of the Committee.



Sec. 1260.165  Compensation and reimbursement.

    The members of the Committee shall serve without compensation but 
shall be reimbursed for necessary and reasonable expenses incurred by 
them in the performance of their duties under this subpart.

[[Page 206]]



Sec. 1260.166  Officers of the Committee.

    The following persons shall serve as officers of the Committee:
    (a) The chairperson of the Board shall be chairperson of the 
Committee.
    (b) The chairperson of the Federation shall be vice-chairperson of 
the Committee.
    (c) The treasurer of the Board shall be treasurer of the Committee.
    (d) The Committee shall elect or appoint such other officers as it 
may deem necessary.



Sec. 1260.167  Powers of the Committee.

    The Committee shall have the following powers:
    (a) To receive and evaluate, or on its own initiative, develop and 
budget for plans or projects to promote the use of beef and beef 
products as well as projects for research, consumer information and 
industry information and to make recommendations to the Secretary 
regarding such proposals;
    (b) To select committees and subcommittees of Committee members, and 
to adopt such rules for the conduct of its business as it may deem 
advisable;
    (c) To establish committees of persons other than Committee members 
to advise the Committee and pay the necessary and reasonable expenses 
and fees of the members of such committees.



Sec. 1260.168  Duties of the Committee.

    The Committee shall have the following duties:
    (a) To meet and to organize;
    (b) To contract with established national nonprofit industry-
governed organizations to implement programs of promotion, research, 
consumer information and industry information;
    (c) To disseminate information to Board members;
    (d) To prepare and submit to the Board for approval budgets on a 
fiscal-period basis of its anticipated expenses and disbursements in the 
administration of its responsibilities, including probable costs of 
promotion, research, consumer information and industry information plans 
or projects, and also including a general description of the proposed 
promotion, research, consumer information and industry information 
programs contemplated therein;
    (e) To develop and submit to the Secretary for approval promotion, 
research, consumer information and industry information plans or 
projects;
    (f) With the approval of the Secretary to enter into contracts or 
agreements with established national nonprofit industry-governed 
organizations for the implementation and conduct of activities 
authorized under Secs. 1260.167 and 1260.169 and for the payment of the 
cost of such activities with funds collected through assessments 
pursuant to Sec. 1260.172. Any such contract or agreement shall provide 
that:
    (1) The contractors shall develop and submit to the Committee a 
budget or budgets which shall show the estimated cost to be incurred for 
such activity or project;
    (2) Any such plan or project shall become effective upon approval of 
the Secretary; and
    (3) The contracting party shall keep accurate records of all of its 
transactions and make periodic reports to the Committee or Board of 
activities conducted and an accounting for funds received and expended, 
and such other reports as the Secretary, the Committee or the Board may 
require. The Secretary or agents of the Committee or the Board may audit 
periodically the records of the contracting party;
    (g) To prepare and make public, at least annually, a report of its 
activities carried out and an accounting for funds received and 
expended;
    (h) To give the Secretary the same notice of meetings of the 
Committee and its subcommittees and advisory committees in order that 
the Secretary, or his representative, may attend such meetings;
    (i) To submit to the Board and to the Secretary such information 
pursuant to this subpart as may be requested; and
    (j) To encourage the coordination of programs of promotion, 
research, consumer information and industry information designed to 
strengthen the cattle industry's position in the marketplace and to 
maintain and expand domestic and foreign markets and uses for beef and 
beef products.

[[Page 207]]



Sec. 1260.169  Promotion, research, consumer information and industry information.

    The Committee shall receive and evaluate, or on its own initiative, 
develop and submit to the Secretary for approval any plans and projects 
for promotion, research, consumer information and industry information 
authorized by this subpart. Such plans and projects shall provide for:
    (a) The establishment, issuance, effectuation, and administration of 
appropriate plans or projects for promotion, research, consumer 
information and industry information, with respect to beef and beef 
products designed to strengthen the beef industry's position in the 
marketplace and to maintain and expand domestic and foreign markets and 
uses for beef and beef products;
    (b) The establishment and conduct of research and studies with 
respect to the sale, distribution, marketing, and utilization of beef 
and beef products and the creation of new products thereof, to the end 
that marketing and utilization of beef and beef products may be 
encouraged, expanded, improved or made more acceptable in the United 
States and foreign markets;
    (c) Each plan or project authorized under paragraph (a) and (b) of 
this section shall be periodically reviewed or evaluated by the 
Committee to ensure that each such plan or project contributes to an 
effective program of promotion, research, consumer information and 
industry information. If it is found by the Committee that any such plan 
or project does not further the purposes of the Act, then the Committee 
shall terminate such plan or project;
    (d) In carrying out any plan or project of promotion or advertising 
implemented by the Committee, no reference to a brand or trade name of 
any beef product shall be made without the approval of the Board and the 
Secretary. No such plans or projects shall make use of any unfair or 
deceptive acts or practices, including unfair or deceptive acts or 
practices with respect to the quality, value or use of any competing 
product; and
    (e) No funds collected by the Board under this subpart shall in any 
manner be used for the purpose of influencing governmental policy or 
action, except to recommend to the Secretary amendments to this part.

                               Assessments



Sec. 1260.172  Assessments.

    (a) Domestic assessments. (1) Except as prescribed by regulations 
approved by the Secretary, each person making payment to a producer for 
cattle purchased from such producer shall be a collecting person and 
shall collect an assessment from the producer, and each producer shall 
pay such assessment to the collecting person, at the rate of one dollar 
($1) per head of cattle purchased and such collecting person shall remit 
the assessment to the Board or to a qualified State beef council 
pursuant to Sec. 1260.172(a)(5).
    (2) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, or for export purposes, shall remit 
to a qualified State beef council or to the Board an assessment on such 
cattle at the rate of one dollar ($1) per head of cattle or the 
equivalent thereof.
    (3) In determining the assessment due from each producer pursuant to 
Sec. 1260.172(a), a producer who is contributing to a qualified State 
beef council(s) shall receive a credit from the Board for contributions 
to such Council, but not to exceed 50 cents per head of cattle assessed.
    (4) In order for a producer described in Sec. 1260.172(a) to receive 
the credit authorized in Sec. 1260.172(a)(3), the qualified State beef 
council or the collecting person must establish to the satisfaction of 
the Board that the producer has contributed to a qualified State beef 
council.
    (5) Each person responsible for the remittance of the assessment 
pursuant to Sec. 1260.172 (a) (1) and (2) shall remit the assessment to 
the qualified State beef council in the State from which the cattle 
originated prior to sale, or if there is no qualified State beef council 
within such State, the assessment shall be remitted directly to the 
Board. However, the Board, with the approval of the Secretary, may 
authorize qualified

[[Page 208]]

State beef councils to propose modifications to the foregoing ``State of 
origin'' rule to ensure effective coordination of assessment collections 
between qualified State beef councils. Qualified State beef councils and 
the Board shall coordinate assessment collection procedures to ensure 
that producers selling or marketing cattle in interstate commerce are 
required to pay only one assessment per individual sale of cattle. For 
the purpose of this subpart, ``State of origin'' rule means the State 
where the cattle were located at time of sale, or the State in which the 
cattle were located prior to sale if such cattle were transported 
interstate for the sole purpose of sale. Assessments shall be remitted 
not later than the 15th day of the month following the month in which 
the cattle were purchased or marketed.
    (6) If a State law or regulation promulgated pursuant to State law 
requires the payment and collection of a mandatory, nonrefundable 
assessment of more fifty (50) cents per head on the sale and purchase of 
cattle, or the equivalent thereof for beef and beef products as 
described in Sec. 1260.172 (a)(1) and (2) for use by a qualified State 
beef council to fund activities similar to those described in 
Sec. 1260.169, and such State law or regulation authorizes the issuance 
of a credit of that amount of the assessment which exceeds fifty (50) 
cents to producers who waive any right to the refund of the assessment 
credited by the State due pursuant to this subpart, then any producer 
subject to such State law or regulation who pays only the amount due 
pursuant to such State law or regulation and this subpart, including any 
credits issued, shall thereby waive that producer's right to receipt 
from the Board of a refund of such assessment for that portion of such 
refund for which the producer received credit pursuant to such State law 
or regulation.
    (b) Importer assessments. (1) Importers of cattle, beef, and beef 
products into the United States shall pay an assessment to the Board 
through the U.S. Customs Service, or in such other manner as may be 
established by regulations approved by the Secretary.
    (2) The assessment rates for imported cattle, beef, and beef 
products are as follows:

------------------------------------------------------------------------
                 Live Cattle                          Assessment
------------------------------------------------------------------------
0102.10.00103...............................  $1.00/hd
0102.10.00201...............................  $1.00/hd
0102.10.00309...............................  $1.00/hd
0102.10.00504...............................  $1.00/hd
0102.90.20004...............................  $1.00/hd
0102.90.40206...............................  $1.00/hd
0102.90.40402...............................  $1.00/hd
0102.90.40607...............................  $1.00/hd
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                        Assessment
             Beef and Beef Products              -----------------------
                                                   cents/lb    cents/kg
------------------------------------------------------------------------
0201.10.00103...................................         .77    1.697542
0201.10.00906...................................         .20    0.440920
0201.20.20009...................................         .28    0.617288
0201.20.40005...................................         .27    0.595242
0201.20.60000...................................         .20    0.440920
0201.30.20007...................................         .28    0.617288
0201.30.40003...................................         .27    0.595242
0201.30.60008...................................         .27    0.595242
0202.10.00102...................................         .77    1.697542
0202.10.00905...................................         .20    0.440920
0202.20.20008...................................         .28    0.617288
0202.20.40004...................................         .27    0.595242
0202.20.60009...................................         .20    0.440920
0202.30.20006...................................         .28    0.617288
0202.30.40002...................................         .27    0.595242
0202.30.60007...................................         .27    0.595242
0206.10.00000...................................         .20    0.440920
0206.21.00007...................................         .20    0.440920
0206.22.00006...................................         .20    0.440920
0206.29.00009...................................         .20    0.440920
0210.20.00002...................................         .35    0.771610
1601.00.40003...................................         .25    0.551150
1601.00.60204...................................         .25    0.551150
1602.50.05004...................................         .35    0.771610
1602.50.09000...................................         .35    0.771610
1602.50.10203...................................         .35    0.771610
1602.50.10409...................................         .35    0.771610
1602.50.20201...................................         .37    0.815702
1602.50.20407...................................         .37    0.815702
1602.50.60006...................................         .38    0.837748
------------------------------------------------------------------------

    (3) The Board may prescribe by regulation, with the approval of the 
Secretary, an increase or decrease in the level of assessments for 
imported beef and beef products based upon revised determinations of 
live animal equivalencies.
    (4) The assessments due upon imported cattle, beef and beef products 
shall be remitted to the Customs Service upon importation of the cattle, 
beef or beef products into the United States, or in such other manner as 
may be provided by regulations prescribed by the Board and approved by 
the Secretary.
    (c) The collection of assessments pursuant to Sec. 1260.172 (a) and 
(b) shall begin

[[Page 209]]

with respect to cattle purchased or cattle, beef, and beef products 
imported on and after the effective date of this section and shall 
continue until terminated by the Secretary.
    (d) Money remitted pursuant to this subpart shall be in the form of 
a negotiable instrument made payable as appropriate to the qualified 
State beef council or the ``Cattlemen's Beef Promotion and Research 
Board.'' Such remittances and the reports specified in Sec. 1260.201 
shall be mailed to the location designated by the Board.

[51 FR 26138, July 18, 1986, as amended at 53 FR 52631, Dec. 29, 1988 
and 54 FR 15918, Apr. 20, 1989; 54 FR 28019, July 5, 1989]



Sec. 1260.173-1260.174  [Reserved]



Sec. 1260.175  Late-payment charge.

    Any unpaid assessments due to the Board pursuant to Sec. 1260.172 
shall be increased 2.0 percent each month beginning with the day 
following the date such assessments were due. Any remaining amount due, 
which shall include any unpaid charges previously made pursuant to this 
section, shall be increased at the same rate on the corresponding day of 
each month thereafter until paid. For the purposes of this section, any 
assessment that was determined at a date later than prescribed by this 
subpart because of a person's failure to submit a report to the Board 
when due shall be considered to have been payable by the date it would 
have been due if the report had been filed when due. The timeliness of a 
payment to the Board shall be based on the applicable postmark date or 
the date actually received by the qualified State beef council or Board, 
whichever is earlier.



Sec. 1260.176  Adjustment of accounts.

    Whenever the Board or the Department determines that money is due 
the Board or that money is due any person from the Board, such person 
shall be notified of the amount due. The person shall then remit any 
amount due the Board by the next date for remitting assessments as 
provided in Sec. 1260.172. Overpayments shall be credited to the account 
of the person remitting the overpayment and shall be applied against 
amounts due in succeeding months except that the Board shall make prompt 
payment when an overpayment cannot be adjusted by a credit.



Sec. 1260.181  Qualified State beef councils.

    (a) Any beef promotion entity that is authorized by State statute or 
is organized and operating within a State, that receives assessments or 
contributions from producers and conducts beef promotion, research, 
consumer information and/or industry information programs may apply for 
certification of qualification so that producers may receive credit 
pursuant to Sec. 1260.172(a)(3) for contributions to such organization. 
The Board shall review such applications for certification and shall 
make a determination as to certification of such applicant.
    (b) In order for the State beef council to be certified by the Board 
as a qualified State beef council, the council must:
    (1) Conduct activities as defined in Sec. 1260.169 that are intended 
to strengthen the beef industry's position in the marketplace;
    (2) Submit to the Board a report describing the manner in which 
assessments are collected and the procedure utilized to ensure that 
assessments due are paid;
    (3) Certify to the Board that such council will collect assessments 
paid on cattle originating from the State or unit within which the 
council operates and shall establish procedures for ensuring compliance 
with this subpart with regard to the payment of such assessments;
    (4) Certify to the Board that such organization shall remit to the 
Board assessments paid and remitted to the council, minus authorized 
credits issued to producers pursuant to Sec. 1260.172(a)(3), by the last 
day of the month in which the assessment was remitted to the qualified 
State beef council unless the Board determines a different date for 
remittance of assessments.
    (5) [Reserved]
    (6) Certify to the Board that the council will furnish the Board 
with an annual report by a certified public accountant of all funds 
remitted to such

[[Page 210]]

council pursuant to this subpart and any other reports and information 
the Board or Secretary may request; and
    (7) Not use council funds collected pursuant to this subpart for the 
purpose of influencing governmental policy or action, or to fund plans 
or projects which make use of any unfair or deceptive acts or practices 
including unfair or deceptive acts or practices with respect to the 
quality, value or use of any competing product.

[51 FR 26138, July 18, 1986, as amended at 60 FR 58502, Nov. 28, 1995]

                       Reports, Books and Records



Sec. 1260.201  Reports.

    Each importer, person marketing cattle, beef or beef products of 
that person's own production directly to consumers, and each collecting 
person making payment to producers and responsible for the collection of 
the assessment under Sec. 1260.172 shall report to the Board 
periodically information required by regulations prescribed by the Board 
and approved by the Secretary. Such information may include but is not 
limited to the following:
    (a) The number of cattle purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, and the 
dates of such transaction;
    (b) The number of cattle imported; or the equivalent thereof of beef 
or beef products;
    (c) The amount of assessment remitted;
    (d) The basis, if necessary, to show why the remittance is less than 
the number of head of cattle multiplied by one dollar; and,
    (e) The date any assessment was paid.

    Effective Date Note:  The regulations implementing the reporting and 
recordkeeping provisions contained in Sec. 1260.201 will be submitted 
for approval to the Office of Management and Budget and will not become 
effective prior to (OMB) approval.



Sec. 1260.202  Books and records.

    Each person subject to this subpart shall maintain and make 
available for inspection by the Secretary the records required by 
regulations prescribed by the Board and approved by the Secretary that 
are necessary to carry out the provisions of this subpart, including 
records necessary to verify any required reports. Such records shall be 
maintained for the period of time prescribed by the regulations issued 
hereunder.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

    Effective Date Note:  The regulations implementing the reporting and 
recordkeeping provisions contained in Sec. 1260.202 will be submitted 
for approval to the Office of Management and Budget and will not become 
effective prior to (OMB) approval.



Sec. 1260.203  Confidential treatment.

    All information obtained from such books, records or reports 
required under the Act and this subpart shall be kept confidential by 
all persons, including employees and agents and former employees and 
agents of the Board, all officers and employees and all former officers 
and employees of the Department, and by all officers and employees and 
all former officers and employees of contracting organizations having 
access to such information, and shall not be available to Board members 
or any other producers or importers. Only those persons having a 
specific need for such information in order to effectively administer 
the provisions of this subpart shall have access to this information. In 
addition, only such information so furnished or acquired as the 
Secretary deems relevant shall be disclosed by them, and then only in a 
suit or administrative hearing brought at the direction, or upon the 
request, of the Secretary, or to which the Secretary or any officer of 
the United States is a party, and involving this subpart. Nothing in 
this section shall be deemed to prohibit:
    (a) The issuance of general statements based upon the reports of the 
number of persons subject to this subpart or statistical data collected 
therefrom, which statements do not identify the information furnished by 
any person; and
    (b) The publication, by direction of the Secretary, of the name of 
any person who has been adjudged to have violated this subpart, together 
with a

[[Page 211]]

statement of the particular provisions of the subpart violated by such 
person.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]

                              Miscellaneous



Sec. 1260.211  Proceedings after termination.

    (a) Upon the termination of this subpart the Board shall recommend 
not more than 11 of its members to the Secretary to serve as trustees 
for the purpose of liquidating the affairs of the Board. Such persons, 
upon designation by the Secretary, shall become trustees of all the 
funds and property owned, in the possession of or under the control of 
the Board, including unpaid claims or property not delivered or any 
other claim existing at the time of such termination.
    (b) The said trustees shall:
    (1) Continue in such capacity until discharged by the Secretary;
    (2) Carry out the obligations of the Board under any contract or 
agreements entered into by it pursuant to Secs. 1260.150 and 1260.168.
    (3) From time to time account for all receipts and disbursements and 
deliver all property on hand, together with all books and records of the 
Board and of the trustees, to such persons as the Secretary may direct; 
and
    (4) Upon the request of the Secretary, execute such assignments or 
other instruments necessary or appropriate to vest in such persons full 
title and right to all of the funds, property, and claims vested in the 
Board or the trustees pursuant to this subpart.
    (c) Any person to whom funds, property, or claims have been 
transferred or delivered pursuant to this subpart shall be subject to 
the same obligation imposed upon the Board and upon the trustees.
    (d) Any residual funds not required to defray the necessary expenses 
of liquidation shall be turned over to the Secretary to be used, to the 
extent practicable, in the interest of continuing one or more of the 
promotion, research, consumer information or industry information plans 
or projects authorized pursuant to this subpart.

[51 FR 26138, July 18, 1986; 51 FR 26686, July 25, 1986]



Sec. 1260.212  Effect of termination or amendment.

    Unless otherwise expressly provided by the Secretary, the 
termination of this subpart or of any regulation issued pursuant 
thereto, or the issuance of any amendment to either thereof, shall not:
    (a) Affect or waive any right, duty, obligation, or liability which 
shall have arisen or which may hereafter arise in connection with any 
provision of this subpart or any regulation issued thereunder;
    (b) Release or extinguish any violation of this subpart or any 
regulation issued thereunder; or,
    (c) Affect or impair any rights or remedies of the United States, or 
of the Secretary, or of any person, with respect to any such violation.



Sec. 1260.213  Removal.

    If any person appointed under this part fails or refuses to perform 
his or her duties properly or engages in acts of dishonesty or willful 
misconduct, the Board or Committee may recommend to the Secretary that 
that person be removed from office. If the Secretary finds that the 
recommendation demonstrates adequate cause, the Secretary shall remove 
the person from office. A person appointed or certified under this part 
or any employee of the Board or Committee may be removed by the 
Secretary if the Secretary determines that the person's continued 
service would be detrimental to the purposes of the Act.



Sec. 1260.214  Personal liability.

    No member, employee or agent of the Board or the Committee, 
including employees or agents of a qualified State beef council acting 
on behalf of the Board, shall be held personally responsible, either 
individually or jointly, in any way whatsoever, to any person for errors 
in judgment, mistakes or other acts of either commission or omission, or 
such member or employee, except for acts of dishonesty or willful 
misconduct.



Sec. 1260.215  Patents, copyrights, inventions and publications.

    (a) Any patents, copyrights, inventions or publications developed

[[Page 212]]

through the use of funds collected by the Board under the provisions of 
this subpart shall be the property of the U.S. Government as represented 
by the Board, and shall, along with any rents, royalties, residual 
payments, or other income from the rental, sale, leasing, franchising, 
or other uses of such patents, copyrights, inventions, or publications, 
ensure to the benefit of the Board. Upon termination of this subpart, 
Sec. 1260.211 shall apply to determine disposition of all such property.
    (b) Should patents, copyrights, inventions or publications be 
developed through the use of funds collected by the Board under this 
subpart and funds contributed by another organization or person, 
ownership and related rights to such patents, copyrights, inventions or 
publications shall be determined by agreement between the Board and the 
party contributing funds towards the development of such patent, 
copyright, invention or publication in a manner consistent with 
paragraph (a) of this section.



Sec. 1260.216  Amendments.

    Amendments to this subpart may be proposed, from time to time, by 
the Board, or by any organization or association certified pursuant to 
the Act and this part, or by any interested person affected by the 
provisions of the Act, including the Secretary.



Sec. 1260.217  Separability.

    If any provision of this subpart is declared invalid or the 
applicability thereof to any person or circumstances is held invalid, 
the validity of the remainder of this subpart or the applicability 
thereof of other persons or circumstances shall not be affected thereby.



                    Subpart B--Rules and Regulations

    Source: 53 FR 5754, Feb. 26, 1988, unless otherwise noted.



Sec. 1260.301  Terms defined.

    As used throughout this subpart, unless the context otherwise 
requires, terms shall have the same meaning as the definition of such 
terms as appears in Subpart A of this part.



Sec. 1260.310  Domestic assessments.

    (a) A $1.00 per head assessment on cattle sold shall be paid by the 
producer of the cattle in the manner designated in Sec. 1260.311.
    (b) If more than one producer shares the proceeds received for the 
cattle sold, each such producer is obligated to pay that portion of the 
assessments which are equivalent to the producer's proportionate share 
of the proceeds.
    (c) Failure of the collecting person to collect the assessment on 
each head of cattle sold as designated in Sec. 1260.311 shall not 
relieve the producer of his obligation to pay the assessment to the 
appropriate qualified State beef council or the Cattlemen's Board as 
required in Sec. 1260.312.



Sec. 1260.311  Collecting persons for purposes of collection of assessments.

    Collecting persons for purposes of collecting and remitting the 
$1.00 per head assessment shall be:
    (a) Except as provided in paragraph (b) and (c) of this section, 
each person making payment to a producer for cattle purchased in the 
United States shall collect from the producer an assessment at the rate 
of $1.00 per head of cattle purchased and shall be responsible for 
remitting assessments to the qualified State beef council or the 
Cattlemen's Board as provided in Sec. 1260.312. The collecting person 
shall collect the assessment at the time the collecting person makes 
payment or any credit to the producer's account for the cattle 
purchased. The person paying the producer shall give the producer a 
receipt indicating payment of the assessment.
    (b) Any producer marketing cattle of that producer's own production 
in the form of beef or beef products to consumers, either directly or 
through retail or wholesale outlets, shall be responsible for remitting 
to the qualified State beef council or the Cattlemen's Board pursuant to 
Sec. 1260.312, an assessment on such cattle at the rate of $1.00 per 
head of cattle or the equivalent thereof. The obligation to remit the 
assessment shall attach upon slaughter of the cattle, and the producer 
responsible for remitting the assessment shall remit the assessment in 
the manner provided in Sec. 1260.312. For the purposes

[[Page 213]]

of this subpart, a producer marketing cattle of the producer's own 
production in the form of beef or beef products shall be considered a 
collecting person.
    (c) In the States listed below there exists a requirement that 
cattle be brand inspected by State authorized inspectors prior to sale. 
In addition, when cattle are sold in the sales transactions listed below 
in those States, these State authorized inspectors are authorized to, 
and shall, collect assessments due as a result of the sale of cattle. In 
those transactions in which inspectors are responsible for collecting 
assessments, the person paying the producer shall not be responsible for 
the collection and remittance of such assessments. The following chart 
identifies the party responsible for collecting and remitting 
assessments in these States:

----------------------------------------------------------------------------------------------------------------
                                                                                       Sales to an
            State               Sales through      Sales to a        Sales to a       order buyer/      Country
                               auction market   slaughter/packet       feedlot           dealer        sales\1\
----------------------------------------------------------------------------------------------------------------
Arizona.....................  CP                CP                CP                B                 B
California..................  CP                CP                B                 B-CP              B
Colorado....................  CP                B                 B                 B                 B
Idaho.......................  CP                CP                B                 B                 B
Montana.....................  CP                B                 B                 B                 B
Nebraska....................  CP                CP                B-CP              B-CP              B-CP
Oregon......................  CP                B-CP              B                 B                 B
New Mexico..................  CP                B-CP              B-CP              B-CP              B-CP
Utah........................  CP                B-CP              B                 B                 B
Washington..................  CP                CP                B                 B-CP              B
Wyoming.....................  CP                B                 B                 B                 B
----------------------------------------------------------------------------------------------------------------
Key:
B--Brand inspector has responsibility to collect and remit assessments due.
CP--The person paying the producer shall be the collecting person and has responsibility to collect and remit
  the assessments due.
B-CP--Brand inspector has responsibility to collect; however, when there has not been a physical brand
  inspection the person paying the producer shall be the collecting person and has the responsibility to collect
  and remit assessments due.
\1\ For the purpose of this subpart, the term ``country sales'' shall include any sales not conducted at an
  auction or livestock market and which is not a sale to a slaughter/packer, feedlot or an order buyer or
  dealer.

    (d) For cattle delivered on futures contracts, the commission firm 
or the market agency representing the seller in the delivery of cattle 
shall be the collecting person.
    (e) In a case where a producer sells cattle as part of a custom 
slaughter operation, the producer shall be the collecting person in the 
same manner as if the cattle were slaughtered for sale.



Sec. 1260.312  Remittance to the Cattlemen's Board or Qualified State Beef Council.

    Each person responsible for the collection and remittance of 
assessments shall transmit assessments and a report of assessments to 
the qualified State beef council of the State in which such person 
resides or if there is no qualified State beef council in such State, 
then to the Cattlemen's Board as follows:
    (a) Reports. Each collecting person shall make reports on forms made 
available or approved by the Cattlemen's Board. Each collecting person 
shall prepare a separate report for each reporting period. Each report 
shall be mailed to the qualified State beef council of the State in 
which the collecting person resides, or its designee, or if there exists 
no qualified State beef council in such State, to the Cattlemen's Board. 
Each report shall contain the following information:
    (1) The number of cattle purchased, initially transferred or which, 
in any other manner, is subject to the collection of assessment, and the 
dates of such transactions;
    (2) The amount of assessment remitted;
    (3) The basis, if necessary, to show why the remittance is less than 
the number of head of cattle multiplied by one dollar; and
    (4) The date any assessment was paid.
    (b) Reporting periods. Each calendar month shall be a reporting 
period and the period shall end at the close of business on the last 
business day of the month.
    (c) Remittances. The remitting person shall remit all assessments to 
the qualified State beef council or its designee, or, if there is no 
qualified State beef council, to the Cattlemen's Board

[[Page 214]]

at P.O. Box 27-275; Kansas City, Missouri 64180-0001, with the report 
required in paragraph (a) of this section not later than the 15th day of 
the following month. All remittances sent to a qualified State beef 
council or the Cattlemen's Board by the remitting persons shall be by 
check or money order payable to the order of the qualified State beef 
council or the Cattlemen's Board. All remittances shall be received 
subject to collection and payment at par.



Sec. 1260.313  Document evidencing payment of assessments.

    Each collecting person responsible for remitting an assessment to a 
qualified State beef council or the Board, other than a producer 
slaughtering cattle of the producer's own production for sale, is 
required to give the producer from whom the collecting person collected 
an assessment written evidence of payment of the Beef Promotion and 
Research Assessments. Such written evidence serving as a receipt shall 
contain the following information:
    (a) Name and address of the collecting person.
    (b) Name of producer who paid assessment.
    (c) Number of head of cattle sold.
    (d) Total assessments paid by the producer.
    (e) Date.



Sec. 1260.314  Certification of non-producer status for certain transactions.

    (a) The assessment levied on each head of cattle sold shall not 
apply to cattle owned by a person:
    (1) If the person certifies that the person's only share in the 
proceeds of a sale of cattle, beef, or beef products is a sales 
commission, handling fee or other service fee; or
    (2) If the person:
    (i) Certifies that the person acquired ownership of cattle to 
facilitate the transfer of ownership of such cattle from the seller to a 
third party,
    (ii) Establishes that such cattle were resold not later than 10 days 
from the date on which the person acquired ownership; and
    (iii) Certifies that the assessment levied upon the person from whom 
the person purchased the cattle, if an assessment was due, has been 
collected and has been remitted, or will be remitted in a timely 
fashion.
    (b) Each person seeking non-producer status pursuant to 
Sec. 1260.116 of this part shall provide the collecting person with a 
Statement of Certification of Non-Producer Status on a form approved by 
the Board and the Secretary.
    (c) A copy of the Statement of Certification of Non-Producer Status 
shall be forwarded, upon request, by the collecting person to the 
qualified State beef council or the Cattlemen's Board.



Sec. 1260.315  Qualified State Beef Councils.

    The following State beef promotion entities have been certified by 
the Board as qualified State beef councils:

Alabama Cattlemen's Association
Arizona Beef Council
Arkansas Beef Council
California Beef Council
Colorado Beef Council
Florida Beef Council, Inc.
Georgia Beef Board, Inc.
Idaho Beef Council
Illinois Beef Council
Indiana Beef Council
Iowa Beef Cattle Producers Association
Kansas Beef Council
Kentucky Beef Cattle Association
Louisiana Beef Industry Council
Maryland Beef Council
Michigan Beef Industry Commission
Minnesota Beef Council
Mississippi Cattle Industry Board
Missouri Beef Industry Council
Montana Beef Council
Nebraska Beef Industry Development Board
Nevada Beef Council
New Mexico Beef Council
New York Beef Industry Council
North Carolina Cattlemen's Association
North Dakota Beef Commission
Ohio Beef Council
Oklahoma Beef Commission
Oregon Beef Council
Pennsylvania Beef Council, Inc.
South Carolina Cattle and Beef Board
South Dakota Beef Industry Council
Tennessee Beef Industry Council
Texas Beef Industry Council
Utah Beef Council
Vermont Beef Council
Virginia Cattle Industry Board
Washington State Beef Commission
West Virginia Beef Industry
Wisconsin Beef Council

[[Page 215]]

Wyoming Beef Council



Sec. 1260.316  Paperwork Reduction Act assigned number.

    The information collection and recordkeeping 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 0851-0152.



                          Subpart C  [Reserved]



  Subpart D--Beef Promotion and Research: Certification and Nomination 
    Procedures for the Cattlemen's Beef Promotion and Research Board

    Source: 51 FR 11559, Apr. 4, 1986, unless otherwise noted. 
Redesignated at 51 FR 26138, July 18, 1986, and further redesignated at 
51 FR 35197, Oct. 1, 1986. Redesignated also at 53 FR 9858, Mar. 28, 
1988.



Sec. 1260.500  General.

    State organizations or associations shall be certified by the 
Secretary as provided for in the Beef Promotion and Research Act of 1985 
to be eligible to make nominations of cattle producers to the Board. 
Additionally, where there is no eligible organization or association in 
a State, the Secretary may provide for nominations in the manner 
prescribed in this subpart. Organizations or associations determined by 
the Secretary to represent importers of cattle, beef, and beef products 
may submit nominations for membership on the Board in a manner 
prescribed by the Secretary in this subpart. The number of nominees 
required for each allotted position will be determined by the Secretary.



Sec. 1260.510  Definitions.

    As used in this subpart:
    Act means the Beef Promotion and Research Act of 1985 (7 U.S.C. 
2901-2918).
    Beef means the flesh of cattle.
    Beef products means edible products produced in whole or in part 
from beef, exclusive of milk and milk products produced therefrom.
    Board means the Cattlemen's Beef Promotion and Research Board 
established under section 5(1) of the Act.
    Cattle means live, domesticated bovine animals regardless of age.
    Department means the United States Department of Agriculture.
    Importer means a person who imports cattle, beef, or beef products 
from outside the United States.
    Livestock and Seed Division means the Livestock and Seed Division of 
the Department's Agricultural Marketing Service.
    Producer means a person who owns or acquires ownership of cattle, 
except that a person shall not be considered to be a producer if the 
person's only share in the proceeds of a sale of cattle or beef is a 
sales commission, handling fee, or other service fee.
    Secretary means the Secretary of Agriculture of the United States, 
or any officer or employee of the Department to whom authority has 
heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in the Secretary's stead.
    State means each of the 50 States.
    Unit means a State or combination of States which has a total 
inventory of not less than 500,000 head of cattle; or importers.



Sec. 1260.520  Responsibility for administration of regulations.

    The Livestock and Seed Division shall have the responsibility for 
administering the provisions of this subpart.



Sec. 1260.530  Certification of eligibility.

    (a) State organizations or associations: Requirements for 
certification. (1) To be eligible for certification to nominate producer 
members to the Board, State organizations or associations must meet all 
of the following criteria:
    (i) Total paid membership must be comprised of at least a majority 
of cattle producers or represent at least a majority of cattle producers 
in a State or unit.
    (ii) Membership must represent a substantial number of producers who 
produce a substantial number of cattle in such State or unit.
    (iii) There must be a history of stability and permanency.

[[Page 216]]

    (iv) There must be a primary or overriding purpose of promoting the 
economic welfare of cattle producers.
    (2) Written evidence of compliance with the certification criteria 
shall be contained in a factual report submitted to the Secretary by all 
applicant State organizations or associations.
    (3) The primary consideration in determining the eligibility of a 
State organization or association shall be based on the criteria set 
forth in this section. However, the Secretary may consider any 
additional information that the Secretary deems relevant and 
appropriate.
    (4) The Secretary shall certify any State organization or 
association which he determines complies with the criteria in this 
section, and his eligibility determination shall be final.
    (b) Organizations or associations representing importers. The 
determination by the Secretary as to the eligibility of importer 
organizations or associations to nominate members to the Board shall be 
based on applications containing the following information:
    (1) The number and type of members represented (i.e., beef, or 
cattle importers, etc.).
    (2) Annual import volume in pounds of beef and beef products and/or 
the number of head of cattle.
    (3) The stability and permanency of the importer organization or 
association.
    (4) The number of years in existence.
    (5) The names of the countries of origin for cattle, beef, or beef 
products imported.

The Secretary may also consider additional information that the 
Secretary deems relevant and appropriate. The Secretary's determination 
as to eligibility shall be final.



Sec. 1260.540  Application for certification.

    (a) State organizations or associations. Any State organization or 
association which meets the eligibility criteria specified in 
Sec. 1260.530(a) for certification is entitled to apply to the Secretary 
for such certification of eligibility to nominate producers for 
appointment to the Board. To apply, such organization or association 
must submit a completed ``Application for Certification of Organization 
or Association,'' Form LS-25, contained in Sec. 1260.640. It may be 
reproduced or additional copies may be obtained from the Livestock and 
Seed Division; Agricultural Marketing Service, USDA; 14th and 
Independence Avenue, SW., Room 2610-S; Washington, DC 20250. (Telephone: 
202/447-2650.)
    (b) Importer organizations or associations. Any organization or 
association whose members import cattle, beef, or beef products into the 
United States may apply to the Secretary for determination of 
eligibility to nominate importers under the Act. Applications shall be 
in writing and shall contain the information required by Sec. 1260.530. 
Interested organizations or associations may contact the Livestock and 
Seed Division; Agricultural Marketing Service, USDA; 14th and 
Independence Avenue, SW., Room 2610-S; Washington, DC 20250; (Telephone: 
202/447-2650) for information concerning application procedures.



Sec. 1260.550  Verification of information.

    The Secretary may require verification of the information to 
determine eligibility for certification to make nominations under the 
Act.



Sec. 1250.560  Review of certification.

    The Secretary may terminate or suspend certification or eligibility 
of any organization or association if it ceases to comply with the 
certification or eligibility criteria set forth in this subpart. The 
Secretary may require any information deemed necessary to ascertain 
whether the organization or association may remain certified or eligible 
to make nominations.



Sec. 1260.570  Notification of certification and the listing of certified organizations.

    Organizations and associations shall be notified in writing as to 
whether they are eligible to nominate producer members to the Board. A 
copy of the certification or eligibility determination shall be 
furnished to certified or eligible organizations and associations. 
Copies shall also be maintained on file in the Livestock and Seed 
Division office, where they will be available for inspection.

[[Page 217]]



Secs. 1260.580-1260.600  [Reserved]



Sec. 1260.610  Acceptance of appointment.

    Producers and importers nominated to the Board must signify in 
writing their intent to serve if appointed.



Sec. 1260.620  Confidential treatment of information.

    All documents and information submitted to or obtained by the 
Department shall be kept confidential by all employees of the 
Department, except that the Secretary may issue general statements based 
upon the information collected from a number of different sources. These 
general statements will not identify any information as having been 
furnished by any one source.



Sec. 1260.630  Paperwork Reduction Act assigned number.

    The OMB has approved the information collection request contained in 
this subpart under the provisions of 44 U.S.C. Chapter 35, and OMB 
Control Number 0581-152 has been assigned.



Sec. 1260.640  Application for Certification Form.

    The following official form, ``Application for Certification of 
Association or Organization,'' must be completed and submitted to the 
Department by eligible State organizations or associations seeking 
certification by the Secretary. This form may be reproduced.

[[Page 218]]

[GRAPHIC] [TIFF OMITTED] TC04SE91.000



PART 1270--WOOL AND MOHAIR ADVERTISING AND PROMOTION [RESERVED]




    Authority: 7 U.S.C. 1781-1787.

[[Page 219]]



            CHAPTER XIII--NORTHEAST DAIRY COMPACT COMMISSION




  --------------------------------------------------------------------
Part                                                                Page
1300            Over-order price regulations................         221
1301            Definitions.................................         223
1303            Handlers reports............................         228
1304            Classification of milk......................         230
1305            Class price.................................         233
1306            Compact over-order producer price...........         233
1307            Payments for milk...........................         235
1308            Administrative assessment...................         237
1361            Rulemaking procedures.......................         237
1371            Producer referendum.........................         242
1381            Rules of practice governing proceedings on 
                    petitions to modify or to be exempted 
                    from compact over-order price 
                    regulations.............................         244

[[Page 221]]



PART 1300--OVER-ORDER PRICE REGULATIONS--Table of Contents




Sec.
1300.1  Compact Commission.
1300.2  Continuity and separability of provisions.
1300.3  Handler responsibility for records and facilities.
1300.4  Termination of obligation.

    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29638, May 30, 1997, unless otherwise noted.



Sec. 1300.1  Compact Commission.

    (a) Designation. The agency for the administration of the Pricing 
Regulation shall be the compact commission.
    (b) Powers. The compact commission shall have the following powers:
    (1) Administer the pricing regulation in accordance with its terms 
and provisions;
    (2) Make rules and regulations to effectuate the terms and 
provisions of the pricing regulation;
    (3) Receive and investigate complaints of violations;
    (4) Recommend amendments.
    (c) Duties. The compact commission shall perform all the duties 
necessary to administer the terms and provisions of the pricing 
regulation, including, but not limited to the following:
    (1) Employ and fix the compensation of persons necessary to enable 
them to exercise their powers and perform their duties;
    (2) Pay out of funds provided by the administrative assessment all 
expenses necessarily incurred in the maintenance and functioning of 
their office and in the performance of their duties;
    (3) Keep records which will clearly reflect the transactions 
provided for in the pricing regulation;
    (4) Announce publicly at its discretion, by such means as it deems 
appropriate, the name of any handler who, after the date upon which he 
is required to perform such act, has not:
    (i) Made reports required by the pricing regulation;
    (ii) Made payments required by the pricing regulation; or
    (iii) Made available records and facilities as required pursuant to 
Sec. 1300.3;
    (5) Prescribe reports required of each handler under the pricing 
regulation. Verify such reports and the payments required by the pricing 
regulation by examining records (including such papers as copies of 
income tax reports, fiscal and product accounts, correspondence, 
contracts, documents or memoranda,) of the handler, and the records of 
any other person that are relevant to the handler's obligation under the 
pricing regulation, by examining such handler's milk handling 
facilities; and by such other investigation as the compact commission 
deems necessary for the purpose of ascertaining the correctness of any 
report or any obligation under the pricing regulation. Reclassify fluid 
milk product received by any handler if such examination and 
investigation discloses that the original classification was incorrect;
    (6) Furnish each regulated handler a written statement of such 
handler's accounts with the compact commission promptly each month. 
Furnish a corrected statement to such handler if verification discloses 
that the original statement was incorrect; and
    (7) Prepare and disseminate publicly for the benefit of producers, 
handlers, and consumers such statistics and other information covering 
operation of the pricing regulation and facts relevant to the provisions 
thereof (or proposed provisions) as do not reveal confidential 
information.



Sec. 1300.2  Continuity and separability of provisions.

    (a) Effective time. The provisions of this pricing regulation or any 
amendment to the pricing regulation shall become effective at such time 
as the compact commission may declare and shall continue in force until 
suspended or terminated.
    (b) Suspension or termination. The compact commission shall suspend 
or terminate any or all of the provisions of the pricing regulation 
whenever they find that such provision(s) obstructs or does not tend to 
effectuate the declared policy of the compact. The pricing regulation 
shall terminate whenever the provisions of the compact authorizing it 
cease to be in effect.
    (c) Continuing obligations. If upon the suspension or termination of 
any or all

[[Page 222]]

of the provisions of the pricing regulation there are any obligations 
arising under the pricing regulation, the final accrual or ascertainment 
of which requires acts by any handler, by the compact commission, or by 
any other person, the power and duty to perform such further acts shall 
continue notwithstanding such suspensions or termination.



Sec. 1300.3  Handler responsibility for records and facilities.

    Each handler shall maintain and retain records of his operations and 
make such records and his facilities available to the compact 
commission. If adequate records of a handler, or of any other person, 
that are relevant to the obligation of such handler are not maintained 
and made available, any fluid milk product required to be reported by 
such handler for which adequate records are not available shall not be 
considered accounted for or established as used in a class other than 
the highest price class.
    (a) Records to be maintained. (1) Each handler shall maintain 
records of his operations (including, but not limited to, records of 
purchases, sales, processing, packaging and disposition) as are 
necessary to verify whether such handler has any obligation under the 
pricing regulation and if so, the amount of such obligation. Such 
records shall be such as to establish for each plant or other receiving 
point for each month:
    (i) The quantities of fluid milk product contained in, or 
represented by, products received in any form, including inventories on 
hand at the beginning of the month, according to form, time and source 
of each receipt;
    (ii) The utilization of all fluid milk product showing the 
respective quantities of such fluid milk product in each form disposed 
of or on hand at the end of the month; and
    (iii) Payments to producers, dairy farmers and cooperative 
associations, including the amount and nature of any deductions and the 
disbursement of money so deducted.
    (2) Each handler shall keep such other specific records as the 
compact commission deems necessary to verify or establish such handler's 
obligation under the pricing regulation.
    (b) Availability of records and facilities. Each handler shall make 
available all records pertaining to such handler's operation and all 
facilities the compact commission finds are necessary to verify the 
information required to be reported by the pricing regulation and/or to 
ascertain such handler's reporting, monetary or other obligation under 
the pricing regulation. Each handler shall permit the compact commission 
to observe plant operations and equipment and make available to the 
compact commission such facilities as are necessary to carry out their 
duties.
    (c) Retention of records. All records required under the pricing 
regulation to be made available to the compact commission shall be 
retained by the handler for a period of three years to begin at the end 
of the month to which such records pertain. If, within such a three year 
period, the compact commission notifies the handler in writing that the 
retention of such records, or of specified records, is necessary in 
connection with a proceeding or court action specified in such notice, 
the handler shall retain such records, or specified records, until 
further written notification from the compact commission. The compact 
commission shall give further written notification to the handler 
promptly upon the termination of the litigation or when the records are 
no longer necessary in connection therewith.



Sec. 1300.4  Termination of obligation.

    The provision of this section shall apply to any obligation under 
the pricing regulation for the payment of money:
    (a) Except as provided in paragraphs (b) and (c) of this section, 
the obligation of any handler to pay money required to be paid under the 
terms of the pricing regulation shall terminate two years after the last 
day of the month during which the compact commission receives the 
handler's report of receipts and utilization on which such obligation is 
based, unless within such a two year period, the compact commission 
notifies the handler in writing that such money is due and payable. 
Service of such written notice shall be complete upon mailing to the 
handler's last known address and it shall contain

[[Page 223]]

but need not be limited to the following information:
    The amount of the obligation;
    (2) The month(s) on which such obligation is based; and
    (3) If the obligation is payable to one or more producers or to a 
cooperative association, the name of such producer(s) or such 
cooperative association, or if the obligation is payable to the compact 
commission, the account for which it is to be paid;
    (b) If a handler fails or refuses, with respect to any obligation 
under the pricing regulation, to make available to the compact 
commission all records required by the pricing regulation to be made 
available, the compact commission may notify the handler in writing, 
within the two year period provided for in paragraph (a) of this 
section, of such failure or refusal. If the compact commission so 
notifies a handler, the said two year period with respect to such 
obligation shall not begin to run until the first day of the month 
following the month during which all such records pertaining to such 
obligation are made available to the compact commission;
    (c) Notwithstanding the provisions of paragraphs (a) and (b) of this 
section, a handler's obligation under the pricing regulation to pay 
money shall not be terminated with respect to any transaction involving 
fraud or willful concealment of a fact, material to the obligation, on 
the part of the handler against whom the obligation is sought to be 
imposed; and
    (d) Unless the handler files a petition to the compact commission to 
commence litigation within the applicable two year period indicated 
below, the obligation of the compact commission:
    (1) To pay a handler any money which such handler claims to be due 
him under the terms of the pricing regulation shall terminate two years 
after the end of the month during which the fluid milk product involved 
in the claim were received; or
    (2) To refund any payment made by a handler (including a deduction 
or offset by the compact commission) shall terminate two years after the 
end of the month during which payment was made by the handler.



PART 1301--DEFINITIONS--Table of Contents




Sec.
1301.1  Compact.
1301.2  Commission.
1301.3  Northeast Dairy Compact Regulated Area.
1301.4  Plant.
1301.5  Pool plant.
1301.6  Partially regulated plant.
1301.7  Non pool plant.
1301.8  Milk.
1301.9  Handler.
1301.10  Producer-handler.
1301.11  Producer.
1301.12  Producer milk.
1301.13  Exempt milk.
1301.14  Fluid milk product.
1301.15  Fluid cream product.
1301.16  Filled milk.
1301.17  Cooperative association.
1301.18  Person.
1301.19  Route disposition.
1301.20  Distributing plant.
1301.21  Supply plant.
1301.22  State dairy regulation.
1301.23  Diverted milk.

    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29639, May 30, 1997, unless otherwise noted.



Sec. 1301.1  Compact.

    Compact means the Northeast Dairy Compact as approved by section 147 
of the Federal Agriculture Improvement and Reform Act (Fair Act), Pub. 
L. 104-127.



Sec. 1301.2  Commission.

    Commission means the commission established by the Northeast Dairy 
Compact.



Sec. 1301.3  Northeast Dairy Compact Regulated Area.

    Northeast Dairy Compact Regulated Area hereinafter called the 
Regulated Area means all territory within the boundaries of the states 
of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and 
Vermont. All waterfront facilities connected therewith and craft moored 
thereat, and all territory therein occupied by any governmental 
installation, institution, or other similar establishment.



Sec. 1301.4  Plant.

    Plant means the land and buildings, together with their 
surroundings, facilities and equipment, whether owned

[[Page 224]]

or operated by one or more persons, constituting a single operating unit 
or establishment for the receiving, processing or packaging of milk or 
milk products. The term plant shall not include:
    (a) Distribution points (separate premises used primarily for the 
transfer to vehicles of packaged fluid milk products moved there from 
processing and packaging plants); or
    (b) Bulk reload points (separate premises used for the purpose of 
transferring bulk milk from one tank truck to another tank truck while 
en route from dairy farmers' farms to a plant). If stationary storage 
tanks are used for transferring milk at the premises, the operator of 
the facility shall make an advance written request to the compact 
commission that the facility be treated as a reload point; otherwise it 
shall be a plant. The cooling of milk, collection or testing of samples, 
and washing and sanitizing of tank trucks at the premises shall not 
disqualify it as a bulk reload point.



Sec. 1301.5  Pool plant.

    Pool plant means any milk plant located in the regulated area.



Sec. 1301.6  Partially regulated plant.

    Partially regulated plant means a milk plant not located in the 
regulated area but having Class I distribution in the regulated area, or 
receipts from producers located in the regulated area.



Sec. 1301.7  Non pool plant.

    Non pool plant means any milk plant that is not a pool plant 
pursuant to section 1301.5 and not a partially regulated plant pursuant 
to section 1301.6.



Sec. 1301.8  Milk.

    Milk means the lacteal secretion of cows and includes all skim, 
butterfat, or other constituents obtained from separation or any other 
process and as defined pursuant to prevailing standards of identity.



Sec. 1301.9  Handler.

    Handler means:
    (a) Any person, except a producer-handler, who operates a pool 
plant;
    (b) Any person who operates a partially regulated plant;
    (c) Any person who operates any other plant, or a pool bulk tank 
unit as defined under the Federal order, from which fluid milk products 
are disposed of, directly or indirectly, in the regulated area;
    (d) Any cooperative association with respect to the milk that is 
moved from farms in tank trucks operated by, or under contract to, the 
association to pool plants or as diverted milk to non pool plants for 
the account of, and at the direction of, the association. The 
association shall be considered as the handler who received the milk 
from the dairy farmers. However, the cooperative association shall not 
be the handler with respect to the milk moved from any farm if the 
association and the operator of the pool plant to which milk from such 
farm is moved both submit a request in writing, on or before the due 
date for filing the monthly reports of receipts and utilization, that 
the operator of the pool plant be considered as the handler who received 
the milk from the dairy farmer, and the pool plant operator's request 
states that the pool plant operator is purchasing the milk from such 
farm on the basis of the farm bulk tank measurement readings and the 
butterfat tests of samples of the milk taken from the farm bulk tank; or
    (e) Any person who does not operate a plant but who engages in the 
business of receiving fluid milk products for resale and distributes to 
retail or wholesale outlets packaged fluid milk products received from 
any plant described in paragraph (a), (b) or (c) of this section.



Sec. 1301.10  Producer-handler.

    Producer-handler means any person who, during the month is both a 
dairy farmer and a handler and who meets all of the following 
conditions:
    (a) Provides as the person's own enterprise and at the person's own 
risk the maintenance, care, and management of the dairy herd and other 
resources and facilities that are used to produce milk, to process and 
package such milk at the producer-handler's own plant, and to distribute 
it as route disposition.

[[Page 225]]

    (b) The person's own route disposition constitutes the majority of 
the route disposition from the plant.
    (c) The producer-handler receives no fluid milk products except from 
such handler's own production and from pool handlers, either by transfer 
or diversion.



Sec. 1301.11  Producer.

    Producer means:
    (a) A dairy farmer who produces milk in the regulated area that is 
moved to a pool plant or a partially regulated plant, having Class I 
distribution in the regulated area;
    (b) A dairy farmer who produces milk outside of the regulated area 
that is moved to a pool plant, provided that on more than half of the 
days on which the handler caused milk to be moved from the dairy 
farmer's farm during December 1996, December 1997, and December 1998, 
all of that milk was physically moved to a pool plant in the regulated 
area. Or: to be considered a qualified producer, on more than half of 
the days on which the handler caused milk to be moved from the dairy 
farmer's farm during the current month and for five (5) months 
subsequent to July of the preceding calendar year, all of that milk must 
have moved to a pool plant, provided that the total amount of milk at a 
pool plant eligible to qualify producers who did not qualify in December 
1996, December 1997, and December 1998 shall not exceed the total bulk 
receipts of fluid milk products less:
    (1) Producers receipts as described in paragraph (a) of this section 
and producer receipts as described in paragraph (b) of this section who 
are qualified based on December 1996, December 1997, and December 1998; 
and
    (2) The volume of milk excluded from producer milk pursuant to 
Secs. 1301.23 (d) and (e), and 1304.2 (c) and (d).
    (c) A dairy farmer who produces milk outside of the regulated area 
that is moved to a partially regulated plant and allocated to Class I 
pursuant to Section 1304.5. However, the term shall not include:
    (1) A producer handler;
    (2) A dairy farmer who is a local or state government that has non-
producer status for the month under section Sec. 1301.13(c);
    (3) A dairy farmer who is a governmental agency that is operating a 
plant from which there is route disposition in the regulated area;
    (4) Dairy farmer milk received at a pool plant or a partially 
regulated plant which is rejected and segregated in the handler's normal 
operations for receiving milk and which receipts are accepted and 
disposed of by the handler as salvaged product rather than milk.

[62 FR 29639, May 30, 1997, as amended at 62 FR 62825, Nov. 25, 1997; 63 
FR 65523, Nov. 27, 1998]



Sec. 1301.12  Producer milk.

    Producer milk means milk that the handler has received from 
producers and is physically moved to a pool plant in the regulated area 
or is diverted pursuant to Sec. 1301.23(d). The quantity of milk 
received by a handler from producers shall include any milk of a 
producer that was not received at any plant but which the handler or an 
agent of the handler has accepted, measured, sampled, and transferred 
from the producer's farm tank into a tank truck during the month. Such 
milk shall be considered as having been received at the pool plant at 
which other milk from the same farm of that producer is received by the 
handler during the month, except that in the case of a cooperative 
association in its capacity as a handler under Sec. 1301.9(d), the milk 
shall be considered as having been received at a plant in the zone 
location of the pool plant, or pool plants within the same zone, to 
which the greatest aggregate quantity of the milk of the cooperative 
association in such capacity was moved during the current month or the 
most recent month.

[63 FR 65523, Nov. 27, 1998]



Sec. 1301.13  Exempt milk.

    Exempt milk means:
    (a) Fluid milk products received at a pool plant in bulk from a non 
pool plant to be processed and packaged, for which an equivalent 
quantity of package fluid milk products is returned to the operator of 
the non pool plant during the same month, if the receipt of

[[Page 226]]

bulk fluid milk products and return of packaged fluid milk products 
occur during an interval in which the facilities of the non pool plant 
at which the fluid milk products are usually processed and packaged are 
temporarily unusable because of fire, flood, storm or similar 
extraordinary circumstances completely beyond the non pool plant 
operator's control;
    (b) Packaged fluid milk products received at a pool plant from a non 
pool plant in return for an equivalent quantity of bulk fluid milk 
products moved from a pool plant for processing and packaging during the 
same month, if the movement of bulk fluid milk products and receipt of 
package fluid milk products occur during an interval in which the 
facilities of the pool plant at which the fluid milk products are 
usually processed and packaged are temporarily unusable because of fire, 
flood, storm, or similar extraordinary circumstances completely beyond 
the pool plant operator's control;
    (c) Milk received at a pool plant in bulk from the dairy farmer who 
produced it, to the extent of the quantity of any packaged fluid milk 
products returned to the dairy farmer, if:
    (1) The dairy farmer is a State or local government that is not 
engaged in the route disposition of any of the returned products, and
    (2) The dairy farmer has by written notice to the compact commission 
and the receiving handler, elected non-producer status for a period of 
not less than 12 months beginning with the month in which the election 
was made and continuing for each subsequent month until canceled in 
writing, and the election is in effect for the current month.
    (d) All fluid milk product disposed outside of the regulated area.
    (e) Effective April 1, 1998, all fluid milk distributed by handlers 
in eight-ounce containers under open and competitive bid contracts for 
the 1998-1999 contract year with School Food Authorities in New England, 
as defined by 7 CFR 210.2, to the extent that the school authorities can 
demonstrate and document that the costs of such milk have been increased 
by operation of the Compact Over-order Price Regulation. In no event 
shall such increase exceed the amount of the Compact over-order 
obligation. Documentation of increased costs shall be in accordance with 
a memorandum of understanding entered into between the Compact 
Commission and the appropriate state agencies not later than May 1, 
1998. The memorandum of understanding shall include provisions for 
certification by supplying vendor/processors that their bid and contract 
cost structures do in fact incorporate the over-order price obligation, 
in whole or in part, and provisions for defining the components of cost 
structure to be provided in support of such certification. The 
memorandum shall also establish the procedure for providing 
reimbursement to the school food service programs, including the 
scheduling of payments and the amount to be escrowed by the Commission 
to account for such payments.

[62 FR 29639, May 30, 1997, as amended at 63 FR 10110, Feb. 27, 1998]



Sec. 1301.14  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than nine percent butterfat, that are in bulk or are packaged, 
distributed and intended to be used as beverages. Such products include, 
but are not limited to: Milk, skim milk, low fat milk, milk drinks, 
buttermilk, and filled milk, including any such beverage products that 
are flavored, culture, modified with added nonfat milk solids, 
sterilized, concentrated (to not more than 50 percent total milk 
solids), or reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.

[[Page 227]]



Sec. 1301.15  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing nine percent or more butterfat, with or without the 
addition of other ingredients.



Sec. 1301.16  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with 
skimmed milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milk fat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than six percent 
nonmilk fat (or oil).



Sec. 1301.17  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary of Agriculture of the United States 
determines:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, known as the ``Capper-Volstead Act';
    (b) To have full authority in the sale of milk of its members; and
    (c) To be engaged in making collective sales of, or marketing milk 
or its products for its members.



Sec. 1301.18  Person.

    Person means any individual, partnership, corporation, association, 
or other business unit.



Sec. 1301.19  Route disposition.

    Route disposition means distribution of Class I milk by a handler to 
retail or wholesale outlets, which include vending machines but do not 
include plants or distribution points. The route disposition of a 
handler shall be attributed to the processing and packaging plant from 
which the Class I milk is moved to retail or wholesale outlets without 
intermediate movement to another processing and packaging plant.



Sec. 1301.20  Distributing plant.

    Distributing plant means a processing and packaging plant.



Sec. 1301.21  Supply plant.

    Supply plant means a plant at which facilities are maintained and 
used for washing and sanitizing cans and to which milk is moved from 
dairy farmers' farms in cans and is there accepted, weighed or measured, 
sampled, and cooled, or it is a plant to which milk is moved from dairy 
farmers' farms in tank trucks.



Sec. 1301.22  State dairy regulation.

    State dairy regulation means any state regulation of dairy prices, 
and associated assessments, whether by statute, marketing order or 
otherwise.



Sec. 1301.23  Diverted milk.

    Diverted milk means milk, other than that excluded under 
Sec. 1301.11 from being considered as received from a producer, that 
meets the conditions set forth in paragraph (a) or (b) of this section 
and is not excluded from diverted milk under paragraph (c) of this 
section.
    (a) Milk that a handler in its capacity as the operator of a pool 
plant reports as having been moved from a dairy farmer's farm to the 
pool plant, but which the handler caused to be moved from the farm to 
another plant, if the handler specifically reports such movement to the 
other plant as a movement of diverted milk, and the conditions of 
paragraph (a) (1) or (2) of this section have been met. Milk that is 
diverted milk under this paragraph shall be considered to have been 
received at the pool plant from which it was diverted.
    (1) During any two (2) months subsequent to July of the preceding 
calendar year, or during the current month, on more than half of the 
days on which the handler caused milk to be moved from the dairy 
farmer's farm during the month, all of the milk that the handler caused 
to be moved from that farm was physically received as producer milk at 
the handler's pool plant or at another of the handler's pool plants that 
is not longer operated as a plant.
    (2) During the current month and not more than five (5) other months 
subsequent to July of the preceding calendar year, milk from the dairy 
farmer's farm was received at or diverted from the handler's pool plant 
as producer

[[Page 228]]

milk, and during the current month all of the milk from that farm that 
the handler reported as diverted milk was moved from the farm in a tank 
truck in which it was intermingled with milk from other farms, the milk 
from a majority of which farms was diverted from the same pool plant in 
accordance with the preceding provisions of this paragraph.
    (b) Milk that a cooperative association in its capacity as a handler 
under Sec. 1301.9 (d) caused to be moved from a dairy farmer's farm to a 
plant other than a pool plant if the association specifically reports 
the movement to such plant as a movement of diverted milk, and the 
conditions of paragraph (b) (1) or (2) or this section have been met. 
Milk that is diverted under this paragraph shall be considered to have 
been received by the cooperative association in its capacity as a 
handler under Sec. 1301.9 (d).
    (1) During any two (2) months subsequent to July of the preceding 
calendar year, or during the current month, on more than half of the 
days on which the cooperative association in its capacity as a handler 
under Sec. 1301.9 (d) caused milk to be moved from the farm as producer 
milk during the month, all of the milk that the association caused to be 
moved from the farm was physically received at a pool plant.
    (2) During the current month and not more than five (5) other months 
subsequent to July of the preceding calendar year, the cooperative 
association in its capacity as a handler under Sec. 1301.9(d) caused 
milk to be moved from the dairy farmer's farm as producer milk, and 
during the current month all of the milk from that farm that the 
cooperative association in its capacity as a handler under 
Sec. 1301.9(d) reported as diverted milk was moved from the farm in a 
tank truck in which it was intermingled with milk from other farms, the 
milk from a majority of which farms was diverted by the association in 
accordance with the preceding provisions of this paragraph.
    (c) Milk moved, as described in paragraphs (a) and (b) of this 
section, from dairy farmer's farms to partially regulated plants in 
excess of 35 percent in the months of September through November and 45 
percent in other months, of the total quantity of producer milk received 
(including diversions) by the handler during the month shall not be 
diverted milk. Such milk, and any other milk reported as diverted milk 
that fails to meet the requirements set forth in this section, shall be 
considered as having been moved directly from the dairy farmers' farms 
to the plant of physical receipt, and if that plant is a nonpool plant 
the milk shall be excluded from producer milk.
    (d) Milk moved, as described in paragraphs (a) and (b) of this 
section, from a dairy farmer's farm to a plant located outside of the 
regulated area, except a partially regulated plant having Class I 
disposition in the regulated area, the volume of milk (including milk 
transferred pursuant to Sec. 1304.2(c)) in excess of the percentage of 
total producer receipts, pursuant to paragraph (e) of this section, 
shall be excluded from producer milk. This paragraph will not apply to 
milk normally associated with a pool plant which was caused to be 
diverted because the facilities of the pool plant are temporarily 
unusable because of fire, flood, storm, equipment failure or similar 
extraordinary circumstances completely beyond the pool plant operator 
control, provided both the handler and the operator of the pool plant 
notify the Commission within two (2) days following such occurrence;
    (e) Milk diverted in excess of the following percentage of total 
producer receipts shall be excluded from producer milk:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
January, February, July, December............................         10
March, April, May, June......................................         13
August, September, October, November.........................          8
------------------------------------------------------------------------


[62 FR 29639, May 30, 1997, as amended at 63 FR 65523, Nov. 27, 1998]



PART 1303--HANDLERS REPORTS--Table of Contents




Sec.
1303.1  Reports of receipts and utilization.
1303.2  Other reports of receipts and utilization.
1303.3  Reports regarding individual producers and dairy farmers.
1303.4  Notices to producers.

    Authority: 7 U.S.C. 7256.

[[Page 229]]


    Source: 62 FR 29642, May 30, 1997, unless otherwise noted.



Sec. 1303.1  Reports of receipts and utilization.

    On or before the eighth day after the end of each month, each 
handler shall report for such month to the compact commission, in the 
detail and on the forms prescribed by the compact commission as follows:
    (a) Each handler, with respect to each of the handler's pool plants 
shall report the quantities of fluid milk products contained in or 
represented by:
    (1) Receipts of producer milk (including the specific quantities of 
diverted milk and receipts from the handler's own production);
    (2) Receipts of milk from cooperative association in their capacity 
as handlers under Sec. 1301.9(d);
    (3) Receipts of fluid milk products from other pool plants;
    (4) Receipts of fluid milk products from partially regulated plants;
    (5) Inventories at the beginning and end of the month of fluid milk 
products;
    (6) All Class I utilization or disposition of milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated plant shall report 
with respect to such plant in the same manner as prescribed for reports 
required by paragraph (a) of this section. Receipts of milk that would 
have been producer milk if the plant had been fully regulated shall be 
reported in lieu of producer milk.
    (c) Each handler described in Sec. 1301.9 (d) shall report:
    (1) The quantities of all fluid milk product contained in receipts 
of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler shall report bulk milk received at a handler's pool 
plant from a cooperative association in its capacity as the operator of 
a pool plant or as a handler under Sec. 1301.9 (d), if such milk was 
rejected by the handler subsequent to such handler's receipt of the milk 
on the basis that it was not of marketable quality at the time the milk 
was delivered to the handler's plant, and such milk was removed from the 
plant in bulk form by the cooperative association and was replaced in 
the other milk from the association. Except for purposes of this 
paragraph and Sec. 1303.2 (a), such milk that was so removed from the 
handler's plant shall be treated for all other purposes of the pricing 
regulation as though it had not been delivered to and received at the 
handler's plant.
    (e) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to the handler's receipts and 
utilization of milk, filled milk, and milk products in such manner as 
the compact commission may prescribe.
    (f) Any handler who operates a pool plant which has no Class I 
disposition and receives no milk from producers is exempted from 
reporting to the compact commission under this section.



Sec. 1303.2  Other reports of receipts and utilization.

    (a) Each handler who intends to have a receipt of unmarketable milk 
replaced with the other milk in the manner described under Sec. 1303.1 
shall give the compact commission, at the request and in accordance with 
instructions of the compact commission, advance notice of the handler's 
intention to have such milk replaced.
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Sec. 1303.1 and Sec. 1303.3 each handler shall report 
such other information as the compact commission deems necessary to 
verify or establish such handler's obligation under the order.



Sec. 1303.3  Reports regarding individual producers and dairy farmers.

    (a) Each handler shall report on or before the 15th day after the 
end of each month the information required by the compact commission 
with respect to producer additions, producer withdrawals, changes in 
farm locations, and changes in the name of farm operators.
    (b) Each handler that is not a cooperative association, upon request 
from any such association, shall furnish it with information with 
respect to each of its producer members from whose farm the handler 
begins, resumes, or

[[Page 230]]

stops receiving milk at his pool plant. Such information shall include 
the applicable date, the producer-member's post office address and farm 
location, and, if known, the plant at which his milk was previously 
received, or the reason for the handler's failure to continue receiving 
milk from his farm. In lieu of providing the information directly to the 
association, the handler may authorize the compact commission to furnish 
the association with such information, derived from the handler's 
reports and records.
    (c) Each handler shall submit to the compact commission within ten 
(10) days after their request made not earlier than twenty (20) days 
after the end of the month, his producer payroll for the month, which 
shall show for each producer:
    (1) The daily and total pounds of milk delivered and its average 
butterfat test; and
    (2) The net amount of the handler's payments to the producer, with 
the prices, deductions, and charges involved.



Sec. 1303.4  Notices to producers.

    Each handler shall furnish each producer from whom he receives milk 
the following information regarding the weight and butterfat test of the 
milk:
    (a) Whenever he receives milk from the producer on the basis of farm 
bulk tank measurements, the handler shall give the producer at the time 
the milk is picked up at the farm a receipt indicating the measurement 
and the equivalent pounds of milk received;
    (b) Whenever he receives milk from the producer on a basis other 
than farm bulk tank measurements, the handler shall give the producer 
within three (3) days after receipt of the milk a written notice of the 
quantity so received;
    (c) If butterfat tests of the producer's milk are determined from 
fresh milk samples, the handler shall give the producer within ten (10) 
days after the end of each month a written notice of the producer's 
average butterfat test for the month. Such notice shall not be required 
if the handler has given the producer a written notice of the butterfat 
test for each of the sampling periods within the month; and
    (d) If butterfat tests of the producer's milk are determined from 
composite milk samples, the handler shall give the producer within seven 
(7) days after the end of each sampling period a written notice of the 
producer's average butterfat test for the period.



PART 1304--CLASSIFICATION OF MILK--Table of Contents




Sec.
1304.1  Classification of milk.
1304.2  Classification of transfers and diversions.
1304.3  General classification rules.
1304.4  Classification of producer milk at a pool plant.
1304.5  Classification of producer milk at a partially regulated plant.

    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29643, May 30, 1997, unless otherwise noted.



Sec. 1304.1  Classification of milk.

    All fluid milk products required to be reported by a handler 
pursuant to this section shall be classified as follows:
    (a) Class I milk shall be all fluid milk products disposed of in the 
regulated area, and in packaged inventory of fluid milk products at the 
end of the month, except as otherwise provided in paragraphs (b), (c), 
and (d) of this section;
    (b) Fluid milk products:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or six percent or more 
nonmilk fat (or oil) that resembles a fluid cream product, except as 
otherwise provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b) (1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the compact 
commission is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:

[[Page 231]]

    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high 
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form:
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) All fluid milk products:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products in bulk form and products 
specified in paragraph (b)(1) of this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i)-(iv) of this section, that are 
disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (v)(4) (i)-(iv) of this section, that are 
dumped by a handler. The compact commission may require notification by 
the handler of such dumping in advance for the purpose of having the 
opportunity to verify such disposition. In any case, classification 
under this paragraph requires a handler to maintain adequate records of 
such use, if advance notification of such dumping is not possible, or if 
the compact commission so requires, the handler must notify the compact 
commission on the next business day following such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the compact commission.
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1301.14 and the fluid 
cream product definition pursuant to Sec. 1301.15.
    (d) All fluid milk products used to produce nonfat dry milk.



Sec. 1304.2  Classification of transfers and diversions

    (a) Transfers and diversions to pool plants. Fluid milk products 
transferred or diverted from a pool plant to another pool plant or 
partially regulated plant shall be classified as Class I milk unless the 
operators of both plants request not to classify it Class I. In either 
case, the classification of such transfers or diversion shall be subject 
to the following conditions;
    (1) The fluid milk products classified in Class I shall be limited 
to the amount of fluid milk products, respectively, remaining in Class I 
at the transferee-plant or diverted-plant.

[[Page 232]]

    (2) [Reserved]
    (b) Transfers and diversions to producers-handlers. Fluid milk 
products transferred or diverted from a pool plant to a producer-handler 
shall be classified as Class I.
    (c) Transfers to plants located outside of the regulated area. Fluid 
milk products (not including bulk transfers of skim milk, condensed 
milk, bulk milk transferred and classified Class I by a federal market 
order and milk processed (i.e., pasturized, homogenized, or blended) 
transferred in bulk from a pool plant to a plant located outside of the 
regulated area, except a partially regulated plant having Class I 
disposition in the regulated area, the volume of milk (including milk 
diverted pursuant to Sec. 1301.23(d)) in excess of the percentage of 
total producer receipts, pursuant to paragraph (d) of this section, 
shall be excluded from producer milk. The transferred milk excluded 
pursuant to this paragraph shall be prorated to all sources of milk 
received at this plant unless the operator of the plant selects the 
sources to be excluded. This paragraph will not apply to any pool plant 
in which the facilities are temporarily unusable because of fire, flood, 
storm, equipment failure or similar extraordinary circumstances 
completely beyond the pool plant operator's control; provided, the 
operator of the pool plant notifies the Commission within two (2) days 
following such occurrence;
    (d) Milk transferred in excess of the following percentages of total 
producer receipts shall be excluded from producer milk:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
January, February, July, December............................         10
March, April, May, June......................................         13
August, September, October, November.........................          8
------------------------------------------------------------------------


[62 FR 29643, May 30, 1997, as amended at 63 FR 65524, Nov. 27, 1998]



Sec. 1304.3  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1304.4, the following rules shall apply:
    (a) Each month the compact commission shall correct for mathematical 
and other obvious errors all reports filed pursuant to Sec. 1303.1 and 
shall compute separately for each pool plant and for each cooperative 
association with respect to milk for which it is the handler pursuant to 
Sec. 1301.9(d) the pounds of skim milk and butterfat, respectively, in 
Class I in accordance with Secs. 1304.1 and 1304.2;
    (b) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1301.9(d) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative; and
    (c) If receipts from more than one pool plant are to be assigned, 
the receipts shall be assigned in sequence according to the zone 
locations of the plants, beginning with the plant in the lowest-numbered 
zone for assignments to Class I milk.



Sec. 1304.4  Classification of producer milk at a pool plant.

    For each month the compact commission shall determine the 
classification of producer milk of each handler described in 
Sec. 1301.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1301.9(d) by allocating the handler's 
receipts of fluid milk products to the handler's utilization pursuant to 
paragraphs (a) and (b) of this section.
    (a) Fluid milk products shall be allocated in the following manner:
    (1) Subtract from the total pounds of fluid milk products in Class I 
the pounds of fluid milk products in:
    (i) Beginning inventory packaged fluid milk products;
    (ii) Receipts of Class I fluid milk products from other pool plants 
and partially regulated plants;
    (iii) Disposition of Class I fluid milk products outside of the 
regulated area;
    (iv) Receipts of exempt fluid milk products pursuant to section 
1301.13 (a), (b), and (c).
    (b) The quantity of producer milk in Class I shall be the combined 
pounds of fluid milk product remaining in Class I.



Sec. 1304.5  Classification of producer milk at a partially regulated plant.

    For each month the compact commission shall determine the 
classification of producer milk of each handler described in 
Sec. 1301.9(b) for each of the

[[Page 233]]

handler's partially regulated plants separately by allocating the 
handler's receipts of fluid milk products to the handler's utilization 
pursuant to paragraphs (a) through (c) of this section.
    (a) Subtract from the total pounds of fluid milk products in Class I 
the pounds of fluid milk products in:
    (1) Receipts of Class I fluid milk products from pool plants if 
reported and classified Class I by the pool plant;
    (2) Disposition of Class I fluid milk products outside of the 
regulated area;
    (3) Receipts of exempt fluid milk products pursuant to Section 
1301.13 (a), (b), and (c) of this chapter.
    (b) The quantity of producer milk in Class I shall be the combined 
pounds of fluid milk product remaining in Class I, not to exceed the 
total pounds of fluid milk products disposed of in the regulated area.
    (c) Producer milk will be allocated pursuant to paragraph (b) of 
this section in the following manner:
    (1) Receipts from producers located in the regulated area;
    (2) Receipts of diverted pool milk;
    (3) Receipts from producers not located in the regulated area shall 
then be assigned to any remaining Class I in the regulated area.

[62 FR 29643, May 30, 1997, as amended at 62 FR 62825, Nov. 25, 1997]



PART 1305--CLASS PRICE--Table of Contents




Sec.
1305.1  Compact over-order class I price and compact over-order 
          obligation.
1305.2  Announcement of compact over-order class I price and compact 
          over-order obligation.
1305.3  Equivalent price.

    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29644, May 30, 1997, unless otherwise noted.



Sec. 1305.1  Compact over-order class I price and compact over-order obligation.

    The compact over-order Class I price per hundredweight of milk shall 
be as follows:
    (a) The class I price shall be $16.94 per hundredweight.
    (b) The compact over-order obligation shall be computed as follows:
    (1) The compact Class I price ($16.94);
    (2) Deduct Federal Order #1 Zone 1, Class I price;
    (3) The remainder shall be the compact over-order obligation.

[62 FR 62825, Nov. 25, 1997]



Sec. 1305.2  Announcement of compact over-order class I price and compact over-order obligation.

    The compact commission shall announce publicly on or before the 5th 
day of each month the Class I over-order price and the compact over-
order obligation for the following month.



Sec. 1305.3  Equivalent price.

    If, for any reason, a price specified in this part for use in 
computing class prices or for other purposes is not reported or 
published in the manner described in this part, the compact commission 
shall use one determined by the commission to be equivalent to the price 
that is specified.



PART 1306--COMPACT OVER-ORDER PRODUCER PRICE--Table of Contents




Sec.
1306.1  Handler's value of milk for computing basic over-order producer 
          price.
1306.2  Partially regulated plant operator's value of milk for computing 
          basic over-order producer price.
1306.3  Computation of basic over-order producer price.
1306.4  Announcement of basic over-order producer price.

    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29644, May 30, 1997, unless otherwise noted.



Sec. 1306.1  Handler's value of milk for computing basic over-order producer price.

    For the purpose of computing the basic over-order producer price, 
the compact commission shall determine for each month the value of milk 
of each handler with respect to each of the handler's pool plants and of 
each handler described in Sec. 1301.9 (d) of the chapter with respect to 
milk that was not received at a pool plant, as directed in this section. 
Any pool plant that does not exceed a daily average of 300 quarts of 
disposition in the compact regulated area in the month shall not be 
subject to the compact over-order

[[Page 234]]

obligation. The total assessment for each handler is to be calculated by 
multiplying the pounds of Class I fluid milk products as determined 
pursuant to Sec. 1304.1 (a) by the compact over-order obligation.

[62 FR 62826, Nov. 25, 1997]



Sec. 1306.2  Partially regulated plant operator's value of milk for computing basic over-order producer price.

    For the purpose of computing the basic over-order producer price, 
the compact commission shall determine for each month the value of milk 
disposition in the regulated area by the operator of a partially 
regulated plant as directed in this section. Any partially regulated 
plant that does not exceed a daily average of 300 quarts of disposition 
in the compact regulated area in the month shall not be subject to the 
compact over-order obligation. The total assessment for each handler is 
to be calculated by multiplying the pounds of Class I fluid milk 
products as determined pursuant to Sec. 1304.1 (a) of this chapter by 
the compact over-order obligation.

[62 FR 62826, Nov. 25, 1997]



Sec. 1306.3  Computation of basic over-order producer price.

    The compact commission shall compute the basic over-order producer 
price per hundredweight applicable to milk received at plants as 
follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1306.1 and Sec. 1306.2 of this chapter for all handlers from whom 
the compact commission has received at the Compact Commission's office 
prior to the 9th day after the end of the month the reports for the 
month prescribed in Sec. 1303.1 and the payments for the preceding month 
required under Sec. 1307.3 (a) of this chapter.
    (b) Subtract 3% of the total value computed pursuant to paragraph 
(a) above for the purpose of retaining a reserve for WIC pursuant to the 
Formal Agreement for reimbursement of WIC Program costs entered into 
between the Commission and the six New England State WIC Program 
Directors, as approved by the Food and Consumer Service of the United 
States Department of Agriculture (USDA);
    (c) In any month when the average percentage increase in production 
in the regulated area comes within 0.25 of the average percentage 
increase in production for the nation, subtract from the total value 
computed pursuant to paragraph (a) above, for the purpose of retaining a 
reserve, an amount estimated by the Commission in consultation with the 
USDA for anticipated costs to reimburse the Commodity Credit Corporation 
(CCC) at the end of its fiscal year for any surplus milk purchases. 
Should those funds not be needed because no surplus purchases were made 
by the CCC at the end of its fiscal year, it is to be disbursed as 
follows:
    (1) Any producer who has received payment from a handler pursuant to 
Sec. 1307.4 shall become eligible to receive a pro rata disbursement by 
submitting to the Commission documentation that the producer did not 
increase production of milk during and after the month on which the 
regional rate of production increase met or exceeded the national rate 
of production increase, as compared to the same period in the preceeding 
year. Such documentation shall be filed with the Commission not later 
than 45 days after the end of the fiscal year.
    (2) The Commission shall calculate the amount of refund to be 
provided to each eligible producer by taking into account the total 
amount of retained proceeds, the total production of milk by all 
producers eligible for refunds, and the total amount of production by 
each eligible producer.
    (d) Beginning with the August 1998 pool, subtract from the total 
value computed pursuant to paragraph (a) of this section, an amount 
estimated by the Commission for the purpose of retaining a reserve for 
payment of obligations pursuant to Sec. 1301.13(e) of this chapter. 
Surplus funds from this reserve shall be returned to the producer-
settlement fund.
    (e) Add an amount equal to not less than one-half of the unobligated 
balance of the producer-settlement fund at the close of business on the 
8th day after the end of the month;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:

[[Page 235]]

    (1) The total hundredweight of producer milk;
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1306.2(a); and
    (g) Subtract not less than four (4) cents nor more than five (5) 
cents for the purpose of retaining a cash balance in the producer-
settlement fund. The result shall be the basic over-order producer price 
for the month.

[62 FR 62826, Nov. 25, 1997, as amended at 63 FR 46388, Sept. 1, 1998]



Sec. 1306.4  Announcement of basic over-order producer price.

    The compact commission shall announce publicly on or before: The 
13th day after the end of each month the over-order producer price 
resulting from the adjustment of the basic over-order producer price for 
such month, as computed under Sec. 1306.3.



PART 1307--PAYMENTS FOR MILK--Table of Contents




Sec.
1307.1  Producer-settlement fund.
1307.2  Handlers' producer-settlement fund debits and credits.
1307.3  Payments to and from the producer-settlement fund.
1307.4  Payments to producers.
1307.5  [Reserved]
1307.6  Statements to producers.
1307.7  Adjustment of accounts.
1307.8  Charges on overdue accounts.

    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29645, May 30, 1997, unless otherwise noted.



Sec. 1307.1  Producer-settlement fund.

    (a) The compact commission shall establish and maintain a separate 
fund known as the producer-settlement fund. It shall deposit into the 
fund all amounts received from handlers under Sec. 1307.3, Sec. 1307.7, 
and Sec. 1307.8 of this Chapter and the amount subtracted under 
Sec. 1306.3(f). It shall pay from the fund all amounts due handlers 
under Sec. 1307.3, Sec. 1307.7, and Sec. 1307.8 and the amount added 
under Sec. 1306.3(d) subject to their right to offset any amounts due 
from the handler under these sections and under Sec. 1308.1 of this 
chapter.
    (b) All amounts subtracted under Sec. 1306.3(f), including interest 
earned thereon, shall remain in the producer-settlement fund as an 
obligated balance until it is withdrawn for the purpose of effectuating 
Sec. 1306.3(d).
    (c) The compact commission shall place all monies subtracted under 
Sec. 1306.3(b), 1306.3(c), and 1306.3(f) in an interest-bearing bank 
account or accounts in a bank or banks duly approved as a Federal 
depository for such monies, or invest them in short-term U.S. Government 
securities.

[62 FR 62826, Nov. 25, 1997]



Sec. 1307.2  Handlers' producer-settlement fund debits and credits.

    On or before the 15th day after the end of the month, the compact 
commission shall render a statement to each handler showing the amount 
of the handler's producer-settlement fund debit or credit, as calculated 
in this section.
    (a) The producer-settlement fund debit for each plant and each 
cooperative association in its capacity as a handler under Sec. 1301.9 
(d) of this chapter shall be the value computed pursuant to Secs. 1306.1 
and 1306.2.
    (b) The producer-settlement fund credit for each plant and each 
cooperative association in its capacity as a handler under Sec. 1301.9 
(d) shall be computed as specified in this paragraph.
    (1) Multiply the quantities of producer milk that were reported by 
pool plants pursuant to Sec. 1303.1 and the quantities or route 
disposition in the marketing area by partially regulated plants for 
which a value was determined pursuant to Sec. 1306.2(a) by the basic 
over-order producer price computed under Sec. 1306.3.
    (2) For any cooperative association in its capacity as a handler 
under Sec. 1301.9 (d), multiply the quantities of all producer milk 
reported pursuant to Sec. 1303.1(c) by the basic over-order producer 
price computed under Sec. 1306.3.

[62 FR 62826, Nov. 25, 1997]



Sec. 1307.3  Payments to and from the producer-settlement fund.

    (a) On or before the 18th day after the end of the month, each 
handler shall pay to the compact commission the handler's producer-
settlement fund debit for the month as determined under Sec. 1307.2(a).

[[Page 236]]

    (b) On or before the 20th day after the end of the month, the 
compact commission shall pay to each handler the handler's producer-
settlement fund credit for the month as determined under Sec. 1307.2(b). 
If the unobligated balance in the producer-settlement fund is 
insufficient to make such payments, the compact commission shall reduce 
uniformly such payments and shall complete them as soon as the funds are 
available.



Sec. 1307.4  Payments to producers.

    (a) On or before the 20th day after the end of the month, each 
handler shall make payment to each producer for the milk received from 
him during the month at not less than the basic over-order producer 
price per hundredweight computer under Sec. 1306.3. If the handler has 
not received full payment for the compact commission under 
Sec. 1307.3(b) by the date payments are due under this paragraph, he may 
reduce pro rata his payments to producers by an amount not to exceed 
such underpayment. Such payments shall be completed after receipt of the 
balance due from the compact commission by the next following date for 
making payments under this paragraph.
    (b) If the handler's net payment to a producer is for an amount less 
than the total amount due the producer under this section, the burden 
shall rest upon the handler to prove to the compact commission that each 
deduction from the total amount due is properly authorized and properly 
chargeable to the producer.
    (c) In making payment to producers under paragraph (b) of this 
section for milk diverted from a pool plant the handler may elect to pay 
such producers at the price of the plant from which the milk was 
diverted, if the resulting net payment to each producer is not less than 
the otherwise required under this section and the rate of payment and 
the deduction shown on the statement required to be furnished under 
Sec. 1307.6 are those used in computing the payment.
    (d) If a handler claims that the required payment cannot be made 
because the producer is deceased or cannot be located, such payment 
shall be made to the producer-settlement fund, and in the event that the 
handler subsequently locates and pays the producer or a lawful claimant, 
or in the event that the handler no longer exists and a lawful claim is 
later established, the compact commission shall make such payment from 
the producer-settlement fund to the handler or to the lawful claimant, 
as the case may be.
    (e) If not later than the date when such payment is required to be 
made, legal proceedings have been instituted by the handler for the 
purpose of administrative or judicial review of the compact commission 
findings upon verification as provided above such payment shall be made 
to the producer-settlement fund and shall be held in reserve until such 
time as the above-mentioned proceedings have been completed or until the 
handler submits proof to the compact commission that the required 
payment has been made to the producer in which latter event the payment 
shall be refunded to the handler.
    (f) At a partially regulated plant each handler shall make payments, 
on a pro rata basis, to all producers and dairy farmers for milk 
(excluding diverted pool producer milk) received from them during the 
month, the payment received pursuant to Sec. 1307.3(b).

[62 FR 29645, May 30, 1997, as amended at 62 FR 62827, Nov. 25, 1997]



Sec. 1307.5  [Reserved]



Sec. 1307.6  Statements to producers.

    In making the payments to producers required under Sec. 1307.4, each 
handler and each cooperative shall furnish each producer, in addition to 
the information required under Federal and State regulations, a 
supporting statement, in such form acceptable to the commission, which 
shall show: The rate and amount of the compact over-order producer 
price.



Sec. 1307.7  Adjustment of accounts.

    (a) Whenever the compact commission verification of a handler's 
reports or payments discloses an error in payments to or from the 
compact commission under Sec. 1307.3 or Sec. 1308.1, the compact 
commission shall promptly issue to the handler a charge bill or a 
credit, as the case may be, for the amount of

[[Page 237]]

the error. Adjustment charge bills issued during the period beginning 
with the 10th day of the prior month and ending with the 9th day of the 
current month shall be payable by the handler to the market 
administrator on or before the 18th day of the current month. Adjustment 
credits issued during that period shall be payable by the compact 
commission to the handler on or before the 20th day of the current 
month.
    (b) Whenever the compact commission's verification of a handler's 
payments discloses payment to a producer or a cooperative association of 
an amount less than is required by Sec. 1307.4, the handler shall make 
payment of the balance due the producer not later than the 20th day 
after the end of the month in which the handler is notified of the 
deficiency.



Sec. 1307.8  Charges on overdue accounts.

    Any producer-settlement fund account balance due from or to a 
handler under Sec. 1307.3, Sec. 1307.7 or Sec. 1307.8 for which 
remittance has not been received in or paid from the compact commission 
office by close of business on the 18th day of any month, shall be 
increased one percent effective the following day.



PART 1308--ADMINISTRATIVE ASSESSMENT--Table of Contents




    Authority: 7 U.S.C. 7256.

    Source: 62 FR 29646, May 30, 1997, unless otherwise noted.



Sec. 1308.1  Assessment for pricing regulations administration.

    On or before the 18th day after the end of the month, each handler 
shall pay to the compact commission his pro rata share of the expense of 
administration of this pricing regulation. The payment shall be at the 
rate of 3.2 cents per hundredweight. The payment shall apply to:
    (a) The quantity of fluid milk products disposed in the regulated 
area from a pool plant for which a value is determined under 
Sec. 1306.1;
    (b) The quantity of fluid milk products disposed in the regulated 
area from a cooperative association in its capacity as a handler under 
Section 1301.9(d) for which a value is determined under Section 1306.1; 
and
    (c) The quantity distributed as route disposition in the regulated 
area from a partially regulated plant for which a value is determined 
under Sec. 1306.2.



PART 1361--RULEMAKING PROCEDURES--Table of Contents




Sec.
1361.1  Applicability.
1361.2  Commencement of proceedings.
1361.3  Notice.
1361.4  Submission of written comment and exhibits independent of the 
          hearing.
1361.5  Conduct of the hearing.
1361.6  Availability of the transcript.
1361.7  Additional comment and proposed findings by interested persons.
1361.8  Commission deliberation and decision; proposed regulation; 
          proposed findings.
1361.9  Effective date of regulation.
1361.10  Handler's right to petition for administrative review; Judicial 
          review.
1361.11  Ex parte communications.

    Authority: 7 U.S.C. 7256.

    Source: 63 FR 37756, July 14, 1998, unless otherwise noted.



Sec. 1361.1  Applicability.

    This section applies to:
    (a) The establishment of a compact over-order price regulation, as 
defined in subsection 2(8) of the Compact, including any provision with 
respect to milk supply under subsection 9(f) of the Compact;
    (b) Any amendment of such over-order price regulation or provision 
with respect to milk supply; and
    (c) Any process initiated by the Compact Commission in which the 
subjects and issues involved relate to such price regulation or 
provision with respect to milk supply or, proposed amendment thereto.



Sec. 1361.2  Commencement of proceedings.

    (a) Upon the Commission's initiative. The Compact Commission may 
commence a rulemaking proceeding on its own initiative, including upon 
the recommendation of the Committee on Regulations and Rulemaking.
    (b) Upon the request of a state delegation. A state delegation may 
request

[[Page 238]]

the initiation of a rulemaking proceeding by presenting its request to 
the Committee on Regulations and Rulemaking. The Committee on 
Regulations and Rulemaking shall make a recommendation to the Compact 
Commission, through the Chair, as to whether the state delegation's 
request should be pursued; provided that the state delegation may in any 
event place its request before the Compact Commission for its 
consideration.
    (c) Upon petition of any person or organization. In its sole 
discretion, the Compact Commission may commence a rulemaking proceeding 
upon petition of any person. Such persons or organizations may include 
individual milk producers or handlers, any organization of milk 
producers or handlers, general farm organizations, consumer or public 
interest groups, and local, state or federal officials.
    (1) A person or organization petitioning for commencement of a 
rulemaking proceeding shall submit to the Compact Commission a statement 
in support of the petition. This statement shall include a brief written 
explanation of how the proposal will promote the purposes of the 
Compact.
    (2) Petitions submitted under this paragraph shall be forwarded to 
the Committee on Regulations and Rulemaking for review. If that 
Committee determines the proposal will tend to promote the purposes of 
the Compact, the Committee shall notify the Chair of its determination. 
The Chair shall then convene the Compact Commission to determine whether 
the Commission desires to initiate a rulemaking proceeding based upon 
the petition.
    (3) If the Committee on Regulations and Rulemaking determines the 
proposal will not tend to promote the purposes of the Compact, the 
Committee, through the Chair, shall promptly notify the petitioner of 
its decision. Notice of denial shall include a brief statement of the 
grounds for the denial. Upon the request of the petitioner, and in the 
discretion of the Chair, the Commission may review the denial of a 
petition by the Committee on Regulations and Rulemaking.
    (d) Commencement of proceedings. At the discretion of the Compact 
Commission, the Chair shall commence any rulemaking proceeding. The 
Chair shall commence the proceeding by serving notice in accordance with 
Sec. 1361.3.



Sec. 1361.3  Notice.

    (a) Contents of the notice--subject matter. Notice filed by the 
Chair of the Commission shall include a concise summary of the proposed 
price regulation and provision with respect to milk supply, or proposed 
amendment, or a concise statement that such regulation or amendment is 
the subject and issue involved. If for specific, proposed regulation or 
amendment, the notice shall identify the geographic area and persons to 
be covered, and a proposed effective date. The notice shall also 
identify the Compact as the legal authority under which the price 
regulation is proposed.
    (b) Contents of the notice--date, time and place of hearing. Notice 
shall be given of the date, time and place of the hearing to be held by 
the Compact Commission in accordance with section 11 of the Compact. The 
date of the hearing shall be at least 15 days after the publication of 
notice as provided in paragraph (d) of this section.
    (c) Right to provide comment. The notice shall identify the right of 
any person to participate in the rulemaking proceeding by the submission 
of written comment, either as part of, or independent of, the hearing.
    (d) Publication of notice and supplemental publicity. The Chair 
shall give notice under this section as follows:
    (1) By publication in the Federal Register;
    (2) By publication in the official register of each participating 
state and as otherwise required by the laws of the states. If the laws 
of a particular state do not require publication of notice in a 
newspaper of general circulation within that state, the Compact 
Commission shall provide for such publication; and
    (3) By correspondence to interested persons in accordance with a 
list of such persons compiled by the Compact Commission. Any interested 
person may have his or her name added to the list by making a written 
request to the Compact Commission.
    (e) Notice may also be provided by:

[[Page 239]]

    (1) Forwarding copies of the notice to the governors of such other 
states as the Chair determines should be notified; or
    (2) At the discretion of the Compact Commission, by issuance of a 
press release containing the contents of the notice or a summary of the 
contents of the notice to those newspapers in the area proposed to be 
subjected to regulation as will reasonably tend to bring the notice to 
the attention of interested persons; or
    (3) Such other notice as directed by the Compact Commission.



Sec. 1361.4  Submission of written comment and exhibits independent of the hearing.

    Any person may submit to the Compact Commission written comment and 
exhibits independent of the hearing. Comment and exhibits may be 
submitted at any time until the closing date of the post-hearing comment 
period established under Sec. 1361.7. The comment and exhibits shall be 
made part of the record of the rulemaking proceeding if they identify 
the author's name, address and occupation and if they include a sworn, 
notarized statement indicating that the comment is presented based upon 
the author's personal knowledge or belief.



Sec. 1361.5  Conduct of the hearing.

    (a) Presiding officer. The Chair of the Commission shall be the 
presiding officer, or in his or her absence, the Vice-Chair. In the 
absence of either officer, the Compact Commission shall elect a 
presiding officer from those members present at the hearing or retain a 
qualified member of the public to serve as presiding officer.
    (b) Authority of the presiding officer. The presiding officer shall 
have the authority to:
    (1) Regulate the course of the hearing;
    (2) Administer oaths and affirmations;
    (3) Rule upon issues of evidence and procedure and receive 
affidavits; and
    (4) Present questions to the Compact Commission for its 
determination.
    (c) Recording of notice. At the opening of the hearing, the 
presiding officer shall certify for the record the provision of notice 
under Sec. 1361.3.
    (d) Transcript. The Secretary of the Compact Commission shall cause 
a complete transcript to be kept of the hearing proceeding. The 
Secretary shall certify a true copy of the record of all testimony and 
exhibits entered into evidence.
    (e) Appearance; right to appear. Any person shall be given an 
opportunity to appear, either in person or through a representative, 
subject to reasonable procedures (e.g., regarding time allowed for 
testimony) established by the presiding officer. Witnesses shall provide 
their names, addresses and occupations for the record before proceeding 
to testify. A person acting as representative on behalf of another shall 
so identify himself or herself, provide his or her name, address and 
occupation for the record, and shall provide any other information as 
required by the presiding officer.
    (f) Testimony. Persons shall be sworn or make affirmation before 
testifying. Any member of the Compact Commission or designated staff may 
ask questions of a person giving testimony.
    (g) Evidence. To the degree possible, evidence shall be presented in 
a form consistent with the provisions of section 9(e) of the Compact. 
Evidence which is relevant and material to the subject matter of the 
hearing and is of a type commonly relied upon by reasonably prudent 
persons shall be admissible. Evidence that is irrelevant, immaterial or 
unduly repetitious shall be excluded. As possible, the relevancy of 
evidence shall be determined by reference to the provisions of section 
9(e) of the Compact.
    (1) Exclusion of evidence; objections and offers of proof. The 
presiding officer may act to exclude evidence on his or her own or upon 
a request by any Compact Commission member. The person testifying may 
object to a ruling to exclude evidence. The person shall state the 
reasons for the objection, and provide an offer of proof, consisting of 
a statement of the substance of the testimony or that which is expected 
to be shown by the answer; provided that the presiding officer may limit 
the length of time allowed for the offer of proof. The record shall 
reflect the objection,

[[Page 240]]

the stated basis for the objection and the offer of proof. The presiding 
officer shall either overrule the objection, and exclude the evidence 
from the record, or stay a ruling on the objection to permit action by 
the Compact Commission at a future time. If the Compact Commission, upon 
consideration of the objection and offer of proof, permits the evidence, 
it shall reopen the record and allow the testimony to be entered. Only 
evidence so received by proper objection and offer of proof may be the 
subject of future consideration. The person testifying shall be notified 
within three days of the Compact Commission's ruling on the objection.
    (2) Exhibits, documentary and real evidence. All written statements, 
charts, tabulations or similar data offered in evidence at the hearing 
shall be made part of the record upon identification by the witness and 
upon satisfactory showing of its authenticity, relevance and 
materiality. At the discretion of the presiding officer, any part of an 
exhibit that is irrelevant or immaterial may be excluded and the 
remainder admitted.
    (3) Cost conclusions. Conclusory statements regarding costs shall be 
admissible only if supported by actual cost data based on actual 
operations of producers, handlers or retailers, as appropriate. 
Projections or estimates of costs shall be considered only where the 
actual costs or other data upon which such projections or estimates are 
provided as part of the analysis.
    (4) Commission evidence. The Compact Commission may introduce the 
results and data of any inquiry or investigation conducted by the 
Commission, or any other evidence it deems appropriate. The Commission 
may also designate as evidence all or part of the record of prior 
hearings before the Commission.
    (5) Official notice. The Compact Commission may take official notice 
of such matters as are judicially noticed by the courts of the United 
States and any other matter of technical, scientific or commercial fact 
of established character. Matters taken by official notice shall be so 
designated in the record. Interested persons shall be given adequate 
notice of this action, at the hearing or afterward, and opportunity to 
demonstrate that the facts are inaccurate or were erroneously noticed.



Sec. 1361.6  Availability of the transcript.

    (a) Availability. A copy of the hearing transcript shall be 
available for review at the Compact Commission place of business during 
its official business hours, within 48 hours of the completion of the 
hearing, unless otherwise specified by the presiding officer at the 
close of the hearing.
    (b) Copies. A copy of the transcript may be obtained upon written 
request and payment of reasonable cost per page.



Sec. 1361.7  Additional comment and proposed findings by interested persons.

    At the conclusion of the hearing, the presiding officer shall 
announce that persons who have participated in the hearing may submit 
comment and proposed findings of fact. The comment or findings, or both, 
shall be received within fourteen calendar days of the conclusion of the 
hearing, unless otherwise specified in the published notice of proposed 
rulemaking. Any proposed findings shall be presented in a form 
consistent with the finding requirements of Sec. 1361.8, and shall be 
based solely on evidence included in the record. Page numbers of the 
transcript, where supporting evidence appears, shall be cited whenever 
possible.



Sec. 1361.8  Commission deliberation and decision; proposed regulation; proposed findings.

    (a) Commission deliberation and decision. The Compact Commission 
shall convene as a whole as soon as is practicable after the close of 
the post-hearing comment period. In accordance with the requirements of 
section 4 of the Compact, the Commission shall vote to decide whether to 
propose for referendum a Compact over-order price regulation and 
provision with regard to milk supply, or amendment thereof. A majority 
of the individual Commission members, with at least one member from each 
delegation, shall constitute a quorum for this deliberative meeting of 
the Compact Commission.

[[Page 241]]

    (b) Proposed regulation. If approved, the Compact Commission shall 
devise the proposed price regulation, and provision with respect to milk 
supply, or an amendment, by incorporating those provisions of sections 9 
and 10 of the Compact as are necessary and appropriate. The regulation 
shall be set forth in sufficient detail so as to provide sufficient 
notice of its requirements to those subject to the regulation.
    (c) Proposed findings. If a proposed regulation or amendment is 
approved, the Compact Commission shall prepare proposed findings of 
fact, in a form consistent with the requirements of section 12 of the 
Compact, with respect to:
    (1) Whether the public interest will be served by the establishment 
of minimum milk prices to dairy farmers;
    (2) What level of prices will assure that producers receive a price 
sufficient to cover their costs of production and will elicit an 
adequate supply of milk for the inhabitants of the regulated area and 
for manufacturing purposes;
    (3) Whether the major provisions of the regulation or amendment, 
other than those establishing the Compact over-order price, are in the 
public interest and are reasonably designed to achieve the purposes of 
the regulation or amendment; and
    (4) The need for a producer referendum in accordance with part 1371.



Sec. 1361.9  Effective date of regulation.

    A Compact over-order price or amendment approved by referendum under 
part 1371 shall become effective in accordance with a schedule for 
administration established between the Compact Commission and the 
applicable Federal Market Order Administrator. Notice of the substance 
of the approved regulation or amendment, including the effective date, 
shall be given in accordance with Sec. 1361.3. In addition, the Compact 
Commission shall ensure actual notice by certified mail, return receipt 
requested, to all milk processors who will be subject to the terms of 
the regulation on the effective date. The Compact Commission may provide 
notice to any other interested persons.



Sec. 1361.10  Handler's right to petition for administrative review; Judicial review.

    (a) Petition. In accordance with section 16(b) of the Compact, and 
pursuant to the provisions of part 1381, any handler subject to an order 
of the Compact Commission establishing a Compact over-order price 
regulation may petition the Commission for hearing and review.
    (b) Judicial review.--In accordance with the provisions of section 
16(c) of the Compact, such handler shall have a right to judicial review 
of the Compact Commission's ruling with respect to the handler's 
petition for review.



Sec. 1361.11  Ex parte communications.

    (a) Following notice of a hearing, pursuant to Sec. 1361.3, and 
prior to the conclusion of a producer referendum, or the final decision 
of the Commission, whichever is later, no Compact Commission member or 
Commission staff person shall discuss ex parte the merits of the 
rulemaking proceeding with any person having an interest in the 
proceeding or with any representative of such person.
    (b) Following notice of a hearing, pursuant to Sec. 1361.3, and 
prior to the conclusion of a producer referendum, or the final decision 
of the Commission, whichever is later, Compact Commission members shall 
not discuss among themselves the merits of the rulemaking proceeding 
except as part of the formal meeting of the Commission convened for this 
purpose under Sec. 1361.8.
    (c) A Compact Commission member or Commission staff person who 
receives a written or oral communication prohibited by this section 
shall disclose the substance of such communication on the record. As 
necessary and appropriate, the Commission may act accordingly to nullify 
the effect of the prohibited communication.
    (d) This section shall not be construed to apply to requests for 
status reports or requests on other procedural matters.

[[Page 242]]



PART 1371--PRODUCER REFERENDUM--Table of Contents




Sec.
1371.1  Definitions.
1371.2  Purpose.
1371.3  Referendum procedure.
1371.4  Referendum agent.
1371.5  Confidentiality of ballots.
1371.6  Publication of referendum results.
1371.7  Ballots.
1371.8  Qualified cooperative block vote.

    Authority: 7 U.S.C. 7256.

    Source: 63 FR 37758, July 14, 1998, unless otherwise noted.



Sec. 1371.1  Definitions.

    As used in this part, and in addition to the terms defined herein, 
the terms defined in Article II, section 2 of the Compact and in 7 CFR 
part 1301 shall apply with equal force and effect.
    Approved by producers means that at least two-thirds of the eligible 
producers who cast a vote approve the proposed order or amendment.
    Cooperative block vote means a vote of approval or disapproval of a 
proposed order or amendment, cast in a producer referendum, by a 
qualified cooperative on behalf of its members or stockholders who are 
eligible producers.
    Eligible producer means a producer who, during the representative 
period determined by the Commission, has been engaged in the production 
of milk, the price of which would be regulated under the proposed order 
or amendment.
    Producer referendum means the balloting process by which the 
Commission determines whether a proposed order or amendment is approved 
by eligible producers.
    Qualified cooperative means a cooperative association of producers, 
qualified under the provisions of the Act of Congress of February 18, 
1922, as amended, known as the Capper-Volstead Act, bona fide engaged in 
marketing milk, or in rendering services for or advancing the interests 
of producers of milk, but shall not include any cooperative which has 
been formed to act as a common marketing agency for both cooperatives 
and individual producers.
    Representative period means that period of time designated by the 
Commission for the purpose of determining who is a producer eligible to 
participate in a producer referendum.



Sec. 1371.2  Purpose.

    Prior to issuing, or amending, any regulation establishing a Compact 
over-order price regulation, including any provision with respect to 
milk supply, the Compact Commission shall conduct a producer referendum 
for the purpose of ascertaining whether the issuance or amendment of 
such regulation is approved by producers.



Sec. 1371.3  Referendum procedure.

    The Commission shall certify the referendum procedure at the time it 
approves a final regulation. The referendum procedure shall include:
    (a) A designated representative period for determining eligible 
producers;
    (b) The date by which the ballots will be distributed to eligible 
producers and qualified cooperatives;
    (c) The date by which all qualified cooperatives must mail notices 
to eligible producer members as required by Sec. 1371.9(b) and (c);
    (d) The date by which all ballots must be received at the Commission 
office;
    (e) A designated referendum agent; and
    (f) Any other procedures necessary for the conduct of the particular 
producer referendum.



Sec. 1371.4  Referendum agent.

    The designated referendum agent shall:
    (a) Verify all ballots, cast individually or by block vote, with 
respect to timeliness, producer eligibility, cooperative identification, 
authenticity and other steps taken to avoid duplication of ballots.
    (b) Mark ballots determined to be invalid ``disqualified'' with a 
notation of the reason for disqualification. Disqualified ballots shall 
not be considered in determining approval or disapproval of the 
regulation.
    (c) Compute and certify the following:
    (1) The total number of ballots cast;
    (2) The total number of ballots disqualified;

[[Page 243]]

    (3) The total number of verified ballots cast in favor of the 
regulation or amendment;
    (4) The total number of verified ballots cast in opposition to the 
regulation or amendment;
    (5) Whether two-thirds of all verified ballots were cast in the 
affirmative.
    (d) Report to the Executive Director of the Compact Commission the 
certified computations and results of the referendum under section (c); 
and
    (e) At the completion of his or her work, seal all ballots, 
including the disqualified ballots, and submit a final report to the 
Executive Director stating all actions taken in connection with the 
referendum. The final report shall include all ballots cast and all 
other information furnished to or compiled by the Referendum Agent.



Sec. 1371.5  Confidentiality of ballots.

    The ballots cast, the identity of any person or cooperative, or the 
manner in which any person or cooperative voted, and all information 
furnished to or compiled by the Referendum Agent shall be regarded as 
confidential.



Sec. 1371.6  Publication of referendum results.

    The Executive Director shall publish the certified results of the 
referendum in the Federal Register.



Sec. 1371.7  Ballots.

    (a) The Compact Commission shall prepare and ensure the prompt 
distribution of a ballot to all eligible producers consistent with the 
dates prescribed in the referendum procedure under Sec. 1361.3.
    (b) The ballot shall describe the terms and conditions of the 
referendum and be accompanied by an official copy of the proposed 
regulation or amendment. The ballot shall provide notice that a producer 
may register his or her approval or disapproval with the Compact 
Commission either directly or through his or her cooperative. The ballot 
shall indicate that any qualified cooperative eligible to block vote 
must provide written notice to each eligible producer as to whether and 
how it intends to cast its vote. The notice shall also identify the 
final due date for the Commission's receipt of the completed ballot.



Sec. 1371.8  Qualified cooperative block vote.

    (a) Qualified cooperatives may block vote on behalf of their 
eligible producer members in accordance with section 13(c) of the 
Compact. The Compact Commission shall ensure that each qualified 
cooperative is notified of its right to cast a block vote on behalf of 
eligible members in each producer referendum by the date prescribed 
pursuant to Sec. 1371.3(b).
    (b) A qualified cooperative shall, before casting its ballot in any 
referendum, give prior written notice to each of its eligible producers 
of how it intends to cast its vote. The notice and ballot shall be on 
the form provided by the Commission and shall be mailed by the 
cooperative to eligible producer members as prescribed in the producer 
referendum procedure pursuant to Sec. 1371.3. The notice shall make 
express reference to the ballot documentation provided by the Compact 
Commission, and may include a copy of such documentation.
    (c) Any qualified cooperative that does not intend to block vote 
shall give written notice to each of its members on a form approved by 
the Compact Commission. The notice shall be mailed by the cooperative to 
eligible producer members as prescribed in the producer referendum 
procedure pursuant to Sec. 1371.3. The notice shall make express 
reference to the ballot documentation provided by the Compact 
Commission, and may include a copy of such documentation.
    (d) Each qualified cooperative shall certify to the Compact 
Commission, on the form provided by the Commission, that it is qualified 
to block vote and that it has provided proper and timely notice of 
either the ballot cast or of the decision that the cooperative is not 
casting a block vote. The cooperative shall mail a copy of the notice to 
the Commission no later than two days after mailing of notice to 
members. Cooperatives that are voting shall also submit the original 
executed ballot in a separate envelope marked ``Referendum Ballot,'' or 
as otherwise provided

[[Page 244]]

in the referendum procedure pursuant to Sec. 1371.3.
    (e) If the ballot submitted to the Commission by a qualified 
cooperative differs in any significant way from the notice of its ballot 
sent to member producers, then the Commission may take appropriate 
remedial action.
    (f) A producer who is a member of a cooperative that has provided 
notice of its intent to cast a block vote to approve or not to approve a 
proposed order or not to cast a block vote and who by ballot expresses 
his approval or disapproval of the proposed order, shall notify the 
Compact Commission as to the name of the cooperative of which he or she 
is a member, and the Commission shall remove such producer's name from 
the list certified by such cooperative with its corporate vote. If the 
producer lists the name of a cooperative that is different from the 
cooperative identified by the ballot number, as determined by the 
representative period for the referendum, the latter will control.



PART 1381--RULES OF PRACTICE GOVERNING PROCEEDINGS ON PETITIONS TO MODIFY OR TO BE EXEMPTED FROM COMPACT OVER-ORDER PRICE REGULATIONS--Table of Contents




Sec.
1381.1  Definitions.
1381.2  Institution of proceedings.
1381.3  Contents of petition.
1381.4  Conduct of proceedings.
1381.5  Judicial appeal; escrow.

    Authority: U.S.C. 7256.

    Source: 62 FR 35065, June 30, 1997, unless otherwise noted.



Sec. 1381.1  Definitions.

    As used in this part, the terms defined in Article II, section 2 of 
the Compact shall apply with equal force and effect. In addition, unless 
the context otherwise requires:
    (a) Administrative assessment shall include the assessment imposed 
upon Handlers under 7 CFR 1308.1 for their pro rata share of the expense 
of administering a Compact pricing regulation, as announced each month 
by the Federal Order #1 Market Administrator and authorized under 7 
U.S.C. 7256.
    (b) Chair shall mean the Chair of the Northeast Dairy Compact 
Commission.
    (c) Handler shall mean any person subject to a Compact Over-order 
price regulation or administrative assessment, or to whom a Compact 
Over-order price or administrative assessment is sought to be made 
applicable.
    (d) Compact Over-order price regulation shall mean the prices 
regulated under the provisions of 7 CFR parts 1300, 1301, 1303-1307, as 
announced each month by the Federal Order #1 Market Administrator and 
authorized under 7 U.S.C. 7256.
    (e) Order shall include a Compact Over-order price regulation.



Sec. 1381.2  Institution of proceedings.

    Any handler desiring to complain that any order, Compact over-order 
price, or administrative assessment, or any provision of such order or 
assessment, or any obligation imposed in connection therewith is not in 
accordance with law shall file with the Commission a petition in 
writing, along with 5 copies of the same.



Sec. 1381.3  Contents of petition.

    A petition shall contain:
    (a) The correct name, address, and principal place of business of 
the petitioner. If petitioner is a corporation, such fact shall be 
stated, together with the name of the State of incorporation, the date 
of incorporation, and the names, addresses, and respective positions, 
held by its officers; if an unincorporated association, the names and 
addresses of its officers, and the respective positions held by them; if 
a partnership, the name and address of each partner.
    (b) Reference to the specific terms or provisions of the regulation, 
order, or notice of administrative assessment, or the interpretation or 
application thereof, which are complained of.
    (c) A full statement of the facts (avoiding a mere repetition of 
detailed evidence) upon which the petition is based, setting forth 
clearly and concisely the nature of the petitioner's business and the 
manner in which petitioner claims to be affected by the terms or 
provisions of the regulation,

[[Page 245]]

order or administrative assessment, or the interpretation or 
applications thereof, which are complained of.
    (d) A statement of the grounds on which the terms or provisions of 
the regulation, order, or administrative assessment or the 
interpretation or application thereof, which are complained of are 
challenged as not being in accordance with law.
    (e) Any prayer for specific relief which the petitioner desires the 
Commission to grant;
    (f) An affidavit by the petitioner, or if the petitioner, or if the 
petitioner is not an individual by an officer of the petitioner having 
knowledge of the facts stated in the petition, verifying the petition 
and stating that it is filed in good faith and not for the purposes of 
the delay. The affidavit may include a request for an oral hearing on 
the petition. Such request shall set forth specific grounds 
demonstrating the need for such a hearing.
    (g) Any additional affidavit evidence supporting the petition.
    (h) Petitioner's prayer for relief may include a request that 
payments due or payable during the pendency of the administrative appeal 
or longer pursuant to Sec. 1381.5(b), be placed in an escrow account 
established by the Commission. If a request for escrow is made, 
petitioner may make payment into a Commission established escrow account 
while the Commission rules upon petitioner's request in accordance with 
Sec. 1381.4(b)(5). Any petitioner who refuses to make payment during 
this period shall be liable for payment of interest on such withheld 
funds, at the federal statutory rate set forth in 28 U.S.C 1961, plus 
such additional penalties as are appropriate under Article VI, Section 
17 of the Compact.

[62 FR 35065, June 30, 1997; 62 FR 36651, July 9, 1997]



Sec. 1381.4  Conduct of proceedings.

    (a) Appointment of Commission hearing panel. Upon receipt of a 
petition, the Chair shall appoint from one to three Commission members 
who shall consider the petition. For panels greater than one member, the 
Chair shall designate a chief hearing officer. The Commission panel 
chosen by the Chair shall consist of Commission members who are not 
members of the state delegation in which the Handler is incorporated or 
has its principal place of business, who have no pecuniary interest in 
the outcome, and who are otherwise fair and impartial.
    (b) Preliminary matters. The panel shall meet within 15 days of 
their appointment to determine whether to:
    (1) Limit the taking of evidence to affidavits, and thereby make 
their decision solely on the basis of the record before them without an 
oral hearing. In making this determination, the panel shall consider:
    (i) The nature of the petition before them;
    (ii) The nature of any facts in dispute that may necessitate an oral 
hearing; and
    (iii) Whether the petitioner will be unduly prejudiced by limiting 
the taking of evidence to affidavits without benefit of an oral hearing.
    (2) Require the production by affidavit or additional information, 
documents, reports, answers, records, accounts, papers or other data and 
documentary evidence necessary to the proper resolution of the matter.
    (3) Compel the production of documentary evidence by subpoena 
throughout all signatory states pursuant to section 16(a) of the 
Compact.
    (4) Consolidate two or more petitions pertaining to the same order 
or issue and the evidence relied upon under such consolidated proceeding 
may be embodied in a single decision.
    (5) Grant or deny petitioner's request for the establishment of an 
escrow account, if such request has been made. The panel shall deny such 
a request only if it has otherwise ensured adequate protection to the 
handler with respect to the payments of sums due and challenged in the 
petition.
    (c) The panel shall promptly notify petitioner by certified mail of 
the results of its deliberations under paragraphs (a) and (b) of this 
section. The panel's notice shall include a concise statement of the 
basis for its decisions under those paragraphs. The notice shall include 
a time and place for an oral hearing, if any, and the deadline for the 
submission of any additional information required by the panel. The 
notice shall also set forth the date by

[[Page 246]]

which the panel will issue its proposed findings of fact, conclusions 
and decision, as computed under paragraph (g) of this section. If a 
request has been made for the establishment of an escrow account and 
such request has been granted, the notice shall also include a procedure 
for the making of escrow payments. If such request is denied, any 
payments made and held in escrow may be released for disbursement by the 
Commission.
    (d) The panel may take official notice of such matters as are 
judicially noticed by the courts of the United States and of any other 
matter of technical, scientific or commercial fact of established 
character: Provided, That interested parties shall be given adequate 
notice of matters so noticed and shall be given adequate opportunity to 
show that such facts are inaccurate or are erroneously noticed.
    (e) The panel shall:
    (1) Exclude, insofar as practicable, evidence which is immaterial, 
irrelevant or unduly repetitious: Provided, That interested parties 
shall be given adequate notice of such exclusion and an opportunity to 
show that such evidence has been erroneously excluded.
    (2) Not discuss ex parte the merits of the proceeding with any 
person who is or who has been connected in any manner with the 
proceeding.
    (f) Oral hearing. (1) Any oral hearing shall be conducted at a time 
and place determined by the panel.
    (2) Testimony presented at the hearing shall be:
    (i) Upon oath or affirmation administered by the panel and subject 
to reasonable cross examination; and
    (ii) Reported verbatim.
    (3) As part of the hearing, the panel may require the appearance of 
any witness, or the production of additional information, documents, 
reports, answers, records, accounts, papers, and other data and 
documentary evidence necessary to the proper resolution of the matter.
    (4) If appropriate, the panel shall compel the appearance of 
witnesses, the giving of testimony or the production of documentary 
evidence by subpoena throughout all signatory states pursuant to section 
16(a) of the Compact.
    (5) The panel shall exclude evidence which is immaterial, 
irrelevant, or unduly repetitious.
    (6) The panel shall rule on offers of proof and otherwise reasonably 
regulate the course of the hearing.
    (g) Proposed findings of fact, conclusions and decision. (1) Within 
45 days of the panel's appointment, or, in the event an oral hearing is 
held, within 60 days, the panel shall issue proposed findings of fact, 
conclusions and a decision based upon the evidence in the record. The 
proposed findings, conclusions and decision shall be served upon the 
petitioner by certified mail.
    (2) Petitioner may submit a response to the panel's proposed 
findings of fact, conclusions and decision, along with supporting 
reasons. Such response shall be received by the Commission within 20 
days of petitioner's receipt of the panel's proposed findings, 
conclusions and decision.
    (3) The panel may modify, alter or amend its proposed findings, 
conclusions and decision in accordance with petitioner's response, as it 
deems appropriate.
    (h) Final ruling by the Commission. (1) Unless the panel so notifies 
the Commission of the need for an extension of time, at its first 
regularly scheduled meeting following the deadline for the receipt of 
petitioner's response to the panel's proposed findings, conclusions and 
decision, the Commission shall make a final ruling upon the petition. 
The Commission's determination shall be based upon the panel's final or 
modified proposed findings, conclusions and decision. The Commission 
shall also consider the petitioner's response to the panel's original 
proposed findings, conclusion and decision. The record shall also be 
available for review by the Commission.
    (2) The Commission's final ruling shall be served by certified mail 
upon the petitioner and be filed in the Commission offices, and be made 
available for public inspection and copying in accordance with the 
bylaws.
    (3) Any commissioner shall (on either the Commissioner's own motion 
or on motion of the petitioner) disqualify himself or herself from 
consideration of the Commission's final ruling on the panel's decision 
if that commissioner's

[[Page 247]]

impartiality might reasonably be questioned.



Sec. 1381.5  Judicial appeal; escrow.

    (a) As set forth in section 16(c) of the Compact, as approved by 7 
U.S.C. 7256, the district courts of the United States, in any district 
in which a handler is an inhabitant or has his principal place of 
business, have jurisdiction to review a final ruling of the Commission 
made pursuant to Sec. 1381.4(h), provided that a complaint is filed 
within thirty days from the date of the entry of that final ruling.
    (b) A petitioner who has been granted the establishment of an escrow 
account as part of the administrative proceeding and who has timely 
appealed may request that its payments be placed into escrow pending the 
appeal. Upon such a request, the Commission shall hold the money in 
escrow until the date that a timely judicial complaint is filed plus a 
period of ten days. The Commission may also, for good cause shown, 
continue to hold the money placed in escrow pending the ultimate 
resolution of any appeal, or for such other period as the Commission may 
establish.

[[Page 249]]



               CHAPTER XIV--COMMODITY CREDIT CORPORATION,






                        DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------


  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.



1404.1  General statement.

    This part sets forth the manner in which a person may assign a cash 
payment which is made by the Farm Service Agency (FSA) or the Commodity 
Credit Corporation (CCC). Such payments may only be assigned in the 
manner set forth in this part.



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]



1404.5  [Reserved]



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



    Editorial Note: For Federal Register citations to regulations for 
previous program years not included in this volume, see the List of CFR 
Sections Affected in the Finding Aids section of this volume.



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

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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

[[Page 327]]

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

[[Page 332]]

    (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.



Sec. 1423.8  OMB control numbers assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
(7 CFR part 1423, Subpart--Standards for Approval for Dry and Cold 
Storage Warehouses for Processed Agricultural Commodities, Extracted 
Honey, and Oils) have been approved by the Office of Management and 
Budget under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB Numbers 0560-0052, 0560-0044, 0560-0064, 0560-0065, 0560-
0034, and 0560-0041.


[Amdt. 3, 50 FR 42513, Oct. 21, 1985]



PART 1425--COOPERATIVE MARKETING ASSOCIATIONS--Table of Contents




Sec.
1425.1  Applicability.
1425.2  Administration.
1425.3  Definitions.
1425.4  Approval.
1425.5  Confidentiality.
1425.6  Approved CMA's.
1425.7  Suspension and termination of approval.
1425.8  Ownership and control.
1425.9  Open membership.
1425.10  Financial ratio requirement.
1425.11-1425.12  [Reserved]
1425.13  Uniform marketing agreement.
1425.14  Member business.
1425.15  Vested authority.
1425.16  Payment limitation.
1425.17  Eligible commodity and pooling.
1425.18  Distribution of proceeds.
1425.19  Member cooperatives.
1425.20  [Reserved]
1425.21  Records required.
1425.22  Inspection and investigation.
1425.23  Reports.
1425.24  OMB control number assigned pursuant to Paperwork Reduction 
          Act.
1425.25  Appeals.

    Authority: 7 U.S.C. 1441 and 1421, 7 U.S.C. 7231-7237; and 15 U.S.C. 
714b, 714c, and 714j.

    Source: 63 FR 17312, Apr. 9, 1998, unless otherwise noted.



Sec. 1425.1  Applicability.

    This part sets forth the terms and conditions an approved 
Cooperative Marketing Association (CMA) must meet to obtain commodity 
marketing assistance loans (loans) and loan deficiency payments (LDP's) 
from CCC on behalf of its members. A CMA meeting these terms and 
conditions may obtain loans and LDP's for any eligible commodity for 
which a loan and LDP program is in effect.



Sec. 1425.2  Administration.

    On behalf of CCC, the Farm Service Agency will administer the 
provisions of this part under the general direction and supervision of 
the Deputy Administrator for Farm Programs. In the field, the provisions 
of this part will be administered by the State and county FSA 
committees.



Sec. 1425.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration. The terms defined in parts 718 
of this title and parts 1421 and 1427 of this chapter shall also be 
applicable, except where those definitions conflict with the definitions 
in this section.
    Active member is a member who has utilized the services offered by a 
CMA in one of the three preceding CMA fiscal years or such shorter 
period as may be provided in the CMA's articles of incorporation or 
bylaws.
    Approved cooperative marketing association (CMA) is a cooperative 
approved by CCC to participate in loan and LDP programs for any 
authorized commodity.
    Authorized commodity is a commodity for which a CMA is approved by 
CCC to obtain loans or LDP's. Commodities for which a CMA may be 
approved by CCC are barley, canola, corn, cotton, flaxseed, mustard 
seed, oats, rapeseed, rice, safflower, sorghum, soybeans, sunflower 
seed, and wheat.
    Cooperative is a business owned and controlled by the producers who 
use its services and operated under generally accepted cooperative 
principles.
    Eligible commodity is a commodity which meets the commodity's 
eligibility requirements set forth in chapter XIV of this title, and is 
produced and delivered to the CMA from a producer eligible for loan or 
LDP.

[[Page 354]]

    Loan pool is any CMA pool containing commodities used by the CMA to 
obtain either loans or LDP's.
    Market gain is the sum of loan rate, minus the repayment rate on 
loans repaid with less than the loan rate, plus for LDP's, the same 
rate, times the quantity of commodity. Market gains cannot exceed the 
producer's applicable payment limitation as set out in part 1400 of this 
chapter.
    Member is a producer who:
    (a) Has fully paid for membership stock or earned equity credits in 
the CMA;
    (b) Has executed a uniform marketing agreement with the CMA; and
    (c) Is entitled to all CMA membership rights.



Sec. 1425.4  Approval.

    (a) For a cooperative to gain CMA status to participate in a 
marketing assistance loan or LDP program for the 1997 through 2002 crop 
years, a cooperative must submit an application for approval to CCC. An 
application must include:
    (1) A completed Form CCC-846 indicating commodities for which it 
seeks approval;
    (2) A balance sheet, dated within the last year, prepared for the 
cooperative and accompanied by a letter from an independent Certified 
Public Accountant, certifying that the balance sheet was prepared in 
accordance with generally accepted accounting principles;
    (3) A copy of the articles of incorporation or articles of 
association and all marketing agreements for loan pools, together with a 
certification that this material is current;
    (4) Resolutions made by the cooperative's board of directors stating 
the cooperative will abide by provisions of this part, the 
nondiscrimination provisions thereof, and all other related CCC 
policies;
    (5) A detailed description of how proceeds from each loan pool will 
be distributed to members as provided for in Sec. 1425.18;
    (6) An executed form CCC-Cotton G, Cotton Cooperative Loan 
Agreement, by cooperatives applying for approval to participate in the 
cotton loan and LDP program; and
    (7) Other information as requested by CCC concerning the 
organizational, operational, financial or any other aspect of the 
cooperative requested by CCC related to the cooperative's proposed 
methods of conducting CCC loan and LDP business.
    (b) A CMA must submit, on an annual basis, the following information 
to CCC:
    (1) A completed Form CCC-846-1, which shall disclose:
    (i) The number of active and inactive CMA members;
    (ii) The CMA's allocated equity;
    (iii) The CMA's unallocated equity; and
    (iv) Quantity of each loan pool commodity delivered to the CMA for 
marketing and the portion of such commodities received from active 
members during the prior year.
    (2) The CMA's latest balance sheet. This balance sheet must be dated 
within the past year and be accompanied by a letter from an independent 
Certified Public Accountant certifying that the balance sheet was 
prepared in accordance with generally accepted accounting principles.
    (c) A CMA shall furnish information to CCC within thirty calendar 
days relating to any:
    (1) Change in its articles of incorporation and loan pool marketing 
agreements;
    (2) Resolution affecting loan or LDP operations;
    (3) Change to the CMA's name, address, phone number, or related data 
shown on the CCC-846-1;
    (4) Change in loan pool operations with an explanation and 
justification; and
    (5) Additional information CCC may request related to the CMA's 
continued approval by CCC.
    (d) CCC may require a CMA to submit a new initial application 
instead of a recertification application when it questions whether the 
CMA is operating according to documents previously submitted.



Sec. 1425.5  Confidentiality.

    Information submitted to CCC related to trade secrets, financial or 
commercial operations, or the financial condition of a CMA, whether for 
initial

[[Page 355]]

approval or continued approval, shall be kept confidential by the 
officers, agents, and employees of CCC and the Department of Agriculture 
except as required to be disclosed by law.



Sec. 1425.6  Approved CMA's.

    (a) CCC shall, in accordance with the provisions of this part, 
approve a CMA to obtain marketing assistance loans and LDP's.
    (b) CCC may approve a CMA to participate in a marketing assistance 
loan and LDP program for the 1997 through 2002 crop as:
    (1) Unconditionally approved; or
    (2) Conditionally approved.
    (c) If CCC determines a CMA is in substantial but not total 
compliance with the requirements of this part, CCC may make the approval 
conditional on CMA coming into full compliance within a reasonable 
period of time as specified in the notification of conditional approval.
    (d) A CMA is approved to participate in a marketing assistance loan 
and LDP program until the CMA's approval is suspended or terminated by 
CCC.



Sec. 1425.7  Suspension and termination of approval.

    (a) CCC may suspend a CMA from obtaining loans and LDP's when CCC 
determines the CMA has not:
    (1) Operated according to the CMA's application for approval or its 
last recertification submission;
    (2) Complied with applicable regulations;
    (3) Corrected deficiencies of the CMA's operation as noted by CCC; 
or
    (4) Violated any of its agreements with CCC.
    (b) A suspension may be lifted when CCC determines the CMA has 
complied with all requirements for approval. When suspensions are not 
lifted within 1 year, or a shorter time period if so indicated in CCC's 
suspension notification, the CMA's approval automatically terminates.
    (c) CCC may terminate a CMA's approval by giving the CMA written 
notice of the termination.
    (d) A CMA may, when it does not have any marketing assistance loans 
outstanding, through written notice to CCC, voluntarily terminate its 
participation in a loan and LDP program.
    (e) CCC may, on demand, call all outstanding CCC loans made to a 
suspended or terminated CMA. When loans are called, CCC will provide at 
least 10 calendar days written notice to the CMA. Commodities pledged as 
collateral for loans must be repaid by the date specified by CCC. If 
redemption is not made by the date specified, title to the commodity 
shall vest in CCC and CCC shall have no obligation to pay the 
commodity's market value above the principal amount of such loans.



Sec. 1425.8  Ownership and control.

    (a) CMA's must be owned and controlled by active members of the CMA.
    (b) The CMA must provide evidence that:
    (1) Active members own more than 50 percent of its allocated equity; 
and
    (2) A majority of directors are active members of the CMA or 
authorized representatives of active members.
    (c) An applicant cooperative or a CMA, not under the ownership or 
control, of its active members, may be approved by CCC if it is able to 
establish that, by retiring the equity of its inactive members or by 
obtaining new members, it can vest ownership and control in its active 
members, as required by this section, by a date specified by CCC.



Sec. 1425.9  Open membership.

    (a) The CMA shall provide CCC documented proof that the CMA admits 
every membership applicant who is eligible under the statute regulating 
the CMA.
    (b) Notwithstanding paragraph (a) of this section, a CMA may refuse 
membership to an applicant whose admission would prejudice, hinder, or 
otherwise obstruct the interests or purposes of the CMA.



Sec. 1425.10  Financial ratio requirement.

    To be financially able to make advances to their members and to 
market their commodities, CMA's shall have a current ratio of at least 1 
dollar of current assets for each 1 dollar of current liabilities 
(current ratio of 1:1 or better) on the balance sheet it submits to

[[Page 356]]

CCC with its initial application or annual recertification required in 
Sec. 1425.4.



Secs. 1425.11-1425.12  [Reserved]



Sec. 1425.13  Uniform marketing agreement.

    (a) A CMA must enter into a uniform marketing agreement with each 
member who delivers a commodity to a loan pool.
    (b) The identification number used by the member to report acreage 
on applicable farms to FSA must appear on the marketing agreement.



Sec. 1425.14  Member business.

    (a) At least 50 percent of a crop of an authorized commodity 
acquired by, or delivered to, a CMA for marketing must be produced by 
its members for the CMA to obtain a loan or LDP for such crop. CCC may, 
for a period not to exceed 2 years, waive this requirement if:
    (1) The CMA can establish to CCC that such authorization is 
necessary for the efficient operation of the CMA; and
    (2) The CMA's plan, approved by CCC, will bring the CMA into 
compliance with the provisions of this section.
    (b) Commodities purchased or acquired from CCC and processed 
products acquired from other processors or merchandisers shall not be 
considered in determining the volume of member or nonmember business.



Sec. 1425.15  Vested authority.

    The marketing agreement between the CMA and its members shall give 
the CMA the authority to pledge the commodity as collateral for a loan, 
to place a lien on such commodity, and to market the commodity on behalf 
of its members even though the individual members retain the right, in 
effect, to determine the price at which the commodity can be marketed by 
the CMA.



Sec. 1425.16  Payment limitation.

    CMA's shall monitor market gains they receive from CCC on behalf of 
their members and not obtain market gains for a member above the 
member's payment limitation determined in accordance with part 1400 of 
this chapter.



Sec. 1425.17  Eligible commodity and pooling.

    (a) A CMA may establish separate loan pools as needed for quantities 
of a commodity.
    (b) Loans and, if applicable, LDP's will be available to CMA's for 
any eligible commodity in a loan pool as provided in paragraph (e) of 
this section and the beneficial interest provisions of parts 1421 and 
1427 of this chapter.
    (c) A pool shall be eligible for loans and LDP's if:
    (1) All of the commodity in the pool is eligible for loans or LDP's, 
except as provided in paragraphs (d) and (e) of this section;
    (2) The commodity was delivered by members to the CMA for their 
benefit;
    (3) The commodity was delivered and the members are eligible for 
loans and LDP's;
    (4) Members retain the right to share in marketing proceeds from the 
commodity in accordance with Sec. 1425.18; and
    (5) Members agreed to accept a payment of initial advances from the 
CMA in accordance with Sec. 1425.18(a).
    (d) Ineligible commodities may be included in eligible pools when:
    (1) The CMA inadvertently included ineligible quantities based on 
grade, quality, bale weight or repacking in the case of cotton, or other 
factors; or
    (2) There are eligibility discrepancies within FSA records, the 
producer has certified to the CMA that the commodity is eligible for 
loan, and there is no market gain or LDP involved in the loan pool for 
the crop year.
    (e) A CMA may, for a period of time as specified in Handbook 1-CMA, 
include a commodity that is ineligible based on FSA records when the 
producer has certified to the CMA the commodity is eligible. In these 
instances, CCC specifies a time period during which CMA's may obtain 
loan or LDP's on the applicable quantity while the eligibility status is 
resolved. If the final resolution is that the commodity was ineligible, 
the CMA must repay any loans outstanding with principal plus interest 
and any market gains obtained plus interest from the date of receiving 
the market gain through the repayment date.
    (f) The CMA must have in inventory a quantity of commodity delivered 
by

[[Page 357]]

members of each class and grade at least equal to the quantity each 
class and grade pledged as loan collateral.
    (g) Loans will be available to the CMA for the quantity of a farm-
stored commodity that is, pursuant to such CMA marketing agreement with 
a member, part of the CMA's loan pool.
    (h) A CMA shall have identity-preserved loan pool commodities stored 
in approved warehouses while the commodities are pledged as collateral 
for loan.
    (i) Loan eligibility for commingled commodities stored on a farm or 
in a warehouse may be transferred to an approved warehouse.
    (j) Commodities pledged as collateral for CCC loans shall be free 
and clear of all liens and encumbrances based on a CMA's financial 
agreements or the CMA shall obtain a completed form CCC-679, Lien 
Waiver. When liens are applicable based on CMA financial agreements, the 
CMA shall provide CCC the completed CCC-679. CMA's shall not take any 
action to cause a lien or encumbrance to be placed on a commodity after 
a loan is approved.
    (k) If a loan or LDP is obtained for any quantity in a loan pool, 
allocations of costs and expenses among separate pools for the commodity 
in the pool shall be made according to generally accepted accounting 
principles.
    (l) A CMA shall not apply marketing losses from a commodity not used 
to obtain a loan or LDP against the marketing proceeds of a commodity 
used to obtain a loan or LDP.
    (m) CMA's shall not carry forward losses from one loan pool and 
apply them against a subsequent loan pool without CCC's authorization. 
CCC may grant authorization when it determines that carrying forward the 
loss complies with CCC's loan and LDP program intent.
    (n) The CMA is responsible to CCC for any loss related to 
commodities the CMA pledged as collateral for loan or used to obtain LDP 
related to:
    (1) The CMA failing to comply with these regulations;
    (2) Changes in quantity or quality of either warehouse or farm 
stored commodities; or
    (3) Liens based on either the CMA's or its members' financial 
agreements.



Sec. 1425.18  Distribution of proceeds.

    (a)(1) If CCC makes loans or LDP's for any quantity in a loan pool, 
the related proceeds shall be distributed to members participating in 
the pool:
    (i) Based on the quantity and quality of the commodity delivered by 
each member;
    (ii) Less any authorized charges for services performed or paid by 
the CMA necessary to condition the commodity or otherwise make the 
commodity eligible for loans or LDP's; and
    (iii) Within 15 work days from the date the CMA receives loan or LDP 
proceeds from CCC, except when loans are redeemed within 15 work days of 
the date of the loan.
    (2) CMA's may credit advances to its members made before loans and 
LDP's are obtained against the distribution of loan and LDP proceeds 
requirement in paragraph (a)(1)(iii) of this section.
    (b)(1) Except as provided in paragraph (b)(2) of this section, loan 
pool proceeds shall not be combined with non-loan pool proceeds and the 
CMA shall distribute loan pool proceeds according to the information it 
provided CCC in accordance with Sec. 1425.4(b)(7).
    (2) Sales proceeds from a loan pool may be combined with sales 
proceeds from other pools if the proceeds from such pools are allocated 
among the pools according to the quantity and quality of the commodity 
included in the pools.
    (3) Loan and LDP proceeds shall only be issued to members involved 
in pools used for loans or LDP's.
    (4) When notified by CCC that loan and LDP distributions to a member 
must be reduced for a program year, farm, or crop, a CMA shall not make 
subsequent pool distributions and shall reimburse CCC for distributions 
previously issued, if applicable.



Sec. 1425.19  Member cooperatives.

    A CMA may obtain loans or LDP's on behalf of a member cooperative 
when the member cooperative is itself a CMA operating in accordance with 
this part. Loans and LDP's are restricted based on the CMA obtaining the 
loan or LDP.

[[Page 358]]



Sec. 1425.20  [Reserved]



Sec. 1425.21  Records required.

    (a) A CMA shall maintain records for each loan or LDP commodity 
showing the quantity:
    (1) Received from each member and nonmember;
    (2) Eligible for loans and LDP's;
    (3) By quality factors specified in the applicable commodity 
regulations including class, grade, and quality, where applicable; and
    (4) Of unprocessed inventory broken down by items 1 through 3 above.
    (b) Except as provided in paragraph (c) of this section, inventory 
shall be allocated in the following manner until all inventory in a loan 
pool is depleted:
    (1) For processed commodities, the pool's inventory shall be 
adjusted when the commodity is withdrawn from inventory for processing; 
and
    (2) For commodities that are not processed, the pool's inventory 
shall be allocated to the pool and the pool's inventories adjusted when 
the commodity is shipped.
    (c) Records of loan and non-loan pool dispositions do not have to be 
maintained separately when sales proceeds from pools are allocated 
according to the quantity and quality of commodity in the pools.



Sec. 1425.22  Inspection and investigation.

    (a) The books, documents, papers, and records of the CMA and 
subsidiaries shall be maintained for five years after the applicable 
crop year and shall be available to CCC for inspection and examination 
at all reasonable times.
    (b) At any time after an application is received, CCC shall have the 
right to examine all books, documents, papers, and determine whether the 
CMA is operating or has operated in accordance with the regulations in 
this part, its articles of incorporation or articles association, and 
agreements with producers, the representations made by the CMA in its 
application for approval, and, where applicable, its agreements with 
CCC.



Sec. 1425.23  Reports.

    (a) CMA's shall annually provide CCC a report of all commodity 
deliveries involved in loans and LDP's by FSA farm number for each 
member.
    (b) When requested by CCC, CMA's shall report market gains received 
on behalf of each member.



Sec. 1425.24  OMB control number assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR 1425) 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 number 0560-0040.



Sec. 1425.25  Appeals.

    A CMA 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.



PART 1427--COTTON--Table of Contents




    Subpart A--Regulations for the Nonrecourse Cotton Loan and Loan 
                      Deficiency Payment Programs.

Sec.
1427.1  Applicability.
1427.2  Administration.
1427.3  Definitions.
1427.4  Eligible producer.
1427.5  General eligibility requirements.
1427.6  Disbursement of loans.
1427.7  Maturity of loans.
1427.8  Amount of loan.
1427.9  Classification of cotton.
1427.10  Approved storage.
1427.11  Warehouse receipts.
1427.12  Liens.
1427.13  Fees, charges and interest.
1427.14  [Reserved]
1427.15  Special procedure where funds are advanced.
1427.16  Reconcentration of cotton.
1427.17  Custodial offices.
1427.18  Liability of the producer.
1427.19  Repayment of loans.
1427.20  Handling payments and collections not exceeding $9.99.
1427.21  Settlement.
1427.22  Death, incompetency, or disappearance.
1427.23  Cotton loan deficiency payments.
1427.24  [Reserved]
1427.25  Determination of the prevailing world market price and the 
          adjusted world price for upland cotton.
1427.26  Paperwork Reduction Act assigned numbers.

[[Page 359]]

  Subpart B--Regulations for the Upland Cotton First Handler Marketing 
                          Certificate Program.

1427.50  Applicability.
1427.51  Administration.
1427.52  Definitions.
1427.53  Eligible upland cotton.
1427.54  Eligible first handlers.
1427.55  Upland cotton first handler agreement.
1427.56  Form of payment.
1427.57  Payment rate.
1427.58  Payment.

Subpart C--Regulations for the Upland Cotton User Marketing Certificate 
                                Program.

1427.100  Applicability.
1427.101  Administration.
1427.102  Definitions.
1427.103  Eligible upland cotton.
1427.104  Eligible domestic users and exporters.
1427.105  Upland Cotton Domestic User/Exporter Agreement.
1427.106  Form of payment.
1427.107  Payment rate.
1427.108  Payment.
1427.109  Contract cancellations.

    Subpart D--Regulations for the Recourse Seed Cotton Loan Program

1427.160  Applicability.
1427.161  Administration.
1427.162  Definitions.
1427.163  Disbursement of loans.
1427.164  Eligible producer.
1427.165  Eligible seed cotton.
1427.166  Insurance.
1427.167  Liens.
1427.168  [Reserved]
1427.169  Fees, charges, and interest.
1427.170  Quantity for loan.
1427.171  Approved storage.
1427.172  Settlement.
1427.173  Foreclosure.
1427.174  Maturity of seed cotton loans.
1427.175  Liability of the producer.

 Subpart E--Standards for Approval of Warehouses for Cotton and Cotton 
                                 Linters

1427.1081  General statement and administration.
1427.1082  Basic standards.
1427.1083  Bonding requirements for net worth.
1427.1084  Examination of warehouses.
1427.1085  Exceptions.
1427.1086  Approval of warehouse, requests for reconsideration.
1427.1087  Exemption from requirements.
1427.1088  Contract fees.
1427.1089  OMB Control Numbers assigned pursuant to Paperwork Reduction 
          Act.

    Authority: 7 U.S.C. 7231-7237; and 15 U.S.C. 714b and 714c.



    Subpart A--Regulations for the Nonrecourse Cotton Loan and Loan 
                      Deficiency Payment Programs.

    Source:  61 FR 37601, July 18, 1996, unless otherwise noted.



Sec. 1427.1  Applicability.

    (a) The regulations of this subpart are applicable to the 1996 
through 2002 crops of upland cotton and extra long staple cotton. These 
regulations set forth the terms and conditions under which the 
nonrecourse cotton loan program and the loan deficiency payment program 
shall be administered by the Commodity Credit Corporation (CCC). 
Additional terms and conditions shall be set forth in the note and 
security agreement and loan deficiency payment application which must be 
executed by a producer to receive loans and loan deficiency payments.
    (b) The basic loan rates, the schedule of premiums and discounts, 
and forms applicable to the nonrecourse cotton loan and loan deficiency 
payment programs are available in State and county Farm Service Agency 
(FSA) offices (State and county offices, respectively). The forms for 
use in connection with the programs in this subpart shall be prescribed 
by CCC.
    (c) Loans and loan deficiency payments shall not be available for 
any cotton 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. 1427.2  Administration.

    (a) The nonrecourse loan and loan deficiency payment programs which 
are applicable to a crop of cotton shall be administered under the 
general supervision of the Executive Vice President, CCC, 
(Administrator, FSA), or a designee and shall be carried out 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 subpart.

[[Page 360]]

    (c) The State committee shall take any action required by these 
regulations which 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 which is not in accordance with the 
regulations of this subpart; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this subpart.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC (Administrator, FSA), 
or a designee from determining any question arising under the cotton 
loan and loan deficiency payment programs or from reversing or modifying 
any determination made by the State or county committee.
    (e) The Deputy Administrator for Farm Programs, FSA, may authorize 
State or county committees to waive or modify deadlines and other 
program requirements in cases where lateness or failure to meet such 
other program requirements does not adversely affect the operation of 
the nonrecourse cotton loan or loan deficiency payment programs.
    (f) A representative of CCC may execute loan note and security 
agreements and loan deficiency payment applications and related 
documents only under the terms and conditions determined and announced 
by CCC. Any such document which is not executed in accordance with such 
terms and conditions, including any purported execution prior to the 
date authorized by CCC, is null and void.



Sec. 1427.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration regarding the cotton loan and 
loan deficiency payment programs. The terms defined in parts 718 of this 
title and 1412 of this chapter shall also be applicable.
    Approved cooperative marketing association (CMA) means a cooperative 
marketing association approved in accordance with part 1425 of this 
chapter which has executed Form CCC-Cotton G, Cotton Cooperative Loan 
Agreement.
    Charges means all fees, costs, and expenses incurred by CCC in 
insuring, carrying, handling, storing, conditioning, and marketing the 
cotton 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 
cotton.
    Cotton clerk means a person approved by CCC to assist producers in 
preparing loan and loan deficiency documents.
    Cotton means upland cotton and extra loan staple cotton meeting the 
definition set forth in the definitions of ``upland cotton'' and ``extra 
long staple (ELS) cotton'' in this section, respectively, and excludes 
cotton not meeting such definitions.
    Extra long staple (ELS) cotton means any of the following varieties 
of cotton which is produced in the United States and is ginned on a 
roller gin:
    (1) American-Pima;
    (2) Sea Island;
    (3) Sealand;
    (4) All other varieties of the Barbadense species of cotton, and any 
hybrid thereof; and
    (5) Any other variety of cotton in which one or more of these 
varieties predominate.
    Financial institution means:
    (1) A bank in the United States which accepts demand deposits; and
    (2) An association organized pursuant to Federal or State law and 
supervised by Federal or State banking authorities.
    Form A loans means a nonrecourse loan executed on Form CCC--Cotton 
A, Cotton Producer's Note and Security Agreement.
    Form G loans means a nonrecourse loan to a CMA on eligible cotton 
delivered to the CMA by eligible members of the CMA.
    Loan servicing agent means a legal entity that enters into a written 
agreement with CCC to act as a loan servicing agent for CCC in making 
and servicing Form A cotton loans. The loan servicing agent may perform, 
on behalf of CCC, only those services which are specifically prescribed 
by CCC including, but not limited to, the following:
    (1) Preparing and executing loan and loan deficiency payment 
documents;

[[Page 361]]

    (2) Disbursing loan and loan deficiency payment proceeds;
    (3) Handling reconcentration of cotton in accordance with 
Sec. 1427.16;
    (4) Accepting loan repayments;
    (5) Handling documents involved with forfeiture of loan collateral 
to CCC; and
    (6) Providing loan, loan deficiency payment, and accounting data to 
CCC for statistical purposes.
    Lint cotton means cotton which has passed through the ginning 
process.
    Seed cotton means cotton which has not passed through the ginning 
process.
    Servicing agent bank means the bank designated as the financial 
institution for a CMA or loan servicing agent.
    Upland cotton means planted and stub cotton which is produced in the 
United States from other than pure strain varieties of the Barbadense 
species, any hybrid thereof, or any other variety of cotton which one or 
more of these varieties predominate.
    Warehouse receipt means a receipt issued with respect to a bale of 
cotton by a warehouse with an existing cotton storage agreement, 
approved by CCC, in accordance with Secs. 1427.1081 through 1427.1089, 
that is:
    (1) A negotiable, machine card type warehouse receipt that is pre-
numbered and pre-punched;
    (2) An electronic warehouse receipt record issued by such warehouse 
recorded in a central filing system or systems maintained in one or more 
locations which are approved by FSA or CCC to operate such system; or
    (3) Other such acceptable evidence of title, as determined by CCC.



Sec. 1427.4  Eligible producer.

    (a) An eligible producer of a crop of cotton shall be a person 
(i.e., an individual, partnership, association, corporation, CMA, 
estate, trust, State or political subdivision or agency thereof, or 
other legal entity) which:
    (1) Produces such a crop of cotton as a landowner, landlord, tenant, 
or sharecropper;
    (2) Meets the requirements of this part; and
    (3) Meets the requirements of parts 12 and 718 of this title, and 
parts 1405 and 1412 of this chapter.
    (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 estate 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 trust. Loan and 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 and 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 and security agreement or loan deficiency payment 
application signed by the minor is co-signed 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) Two or more producers may obtain a single joint loan or loan 
deficiency payment with respect to the eligible cotton if the cotton is 
jointly owned by such producers. The cotton in a bale may have been 
produced by two or more eligible producers on one or more farms if the 
bale is not a repacked bale.
    (e) Loans may be made to a warehouse operator who, in the capacity 
of a producer, tenders to CCC warehouse

[[Page 362]]

receipts issued by such warehouse operator on cotton produced by such 
warehouse operator only in those States where the issuance and pledge of 
such warehouse receipts are valid under State law.
    (f) A CMA may obtain loans and loan deficiency payments on eligible 
cotton on behalf of their members who are eligible to receive loans or 
loan deficiency payments with respect to a crop of cotton. For purposes 
of this subpart, the term ``producer'' includes a CMA.



Sec. 1427.5  General eligibility requirements.

    (a) To receive loans or loan deficiency payments for a crop of 
cotton, a producer must execute a note and security agreement or loan 
deficiency payment application on or before May 31 of the year following 
the year in which such crop is normally harvested.
    (1) Form A loan documents or loan deficiency payment applications 
must be signed by the producer and mailed or delivered to applicable 
county office or loan servicing agent within 15 calendar days after the 
producer signs such documents and within the period of loan 
availability. A producer, except for a CMA, must request loans and loan 
deficiency payments:
    (i) At the county office which, in accordance with part 718 of this 
title, is responsible for administering programs for the farm on which 
the cotton was produced; or
    (ii) From a loan servicing agent.
    (2) Form G loan documents and requests for loan deficiency payments 
by a CMA must be signed by the CMA and delivered to CCC or the servicing 
agent bank within the period of loan availability.
    (b) For a bale of cotton to be eligible for a loan or loan 
deficiency payment, the bale must:
    (1) Be tendered to CCC by an eligible producer;
    (2) Be in existence and good condition, be covered by fire 
insurance, be stored in a warehouse with an existing cotton storage 
agreement in accordance with Secs. 1427.1081 through 1427.1089 at the 
time of disbursement of the loan or loan deficiency payment proceeds, 
except as provided in Sec. 1427.23(f), and be stored in approved storage 
as determined in accordance with Sec. 1427.10;
    (3) Be represented by a warehouse receipt meeting the requirements 
of Sec. 1427.11, except as provided in Sec. 1427.23(a)(4);
    (4) Not be false-packed, water-packed, mixed-packed, re-ginned, or 
repacked;
    (5) Not be compressed to universal density at a warehouse where side 
pressure has been applied;
    (6) Not have been sold, nor any sales option on such cotton granted, 
to a buyer under a contract which provides that the buyer may direct the 
producer to pledge the cotton to CCC as collateral for a loan or to 
obtain a loan deficiency payment;
    (7) Not have been previously sold and repurchased or pledged as 
collateral for a CCC loan and redeemed except as provided in 
Sec. 1427.172(b)(4);
    (8) Not be cotton for which a loan deficiency payment has been 
previously made;
    (9) Weigh at least 325 pounds net weight;
    (10) Be packaged in materials which meet the specifications adopted 
by the Joint Cotton Industry Bale Packaging Committee sponsored by the 
National Cotton Council of America for the applicable crop year or which 
are identified and approved by the Joint Cotton Industry Bale Packaging 
Committee as experimental packaging materials for the applicable crop 
year.
    (i) Copies of the applicable crop year specifications for cotton 
bale packaging materials published by the Joint Cotton Industry Bale 
Packaging Committee are available upon request at the county office and 
at the following address: Joint Cotton Industry Bale Packaging 
Committee, National Cotton Council of America, P.O. Box 12285, Memphis, 
Tennessee 38112. Copies may be inspected at the South Agriculture 
Building, room 4089 A, 1400 Independence Avenue SW., Washington, DC, 
between 8 a.m. and 4:30 p.m., Monday through Friday.
    (ii) Information with respect to experimental packaging material may 
be obtained from the Joint Cotton Industry Bale Packaging Committee.
    (11) Be ginned by a ginner:

[[Page 363]]

    (i) Who has entered the tare weight of the bale (bagging and ties 
used to wrap the bale) on the gin bale tag or otherwise furnish 
warehouse operator the tare weight; and
    (ii) Who has entered into CCC-809, Cooperating Ginners' Bagging and 
Bale Ties Certification and Agreement, or certified that the bale is 
wrapped with bagging and bale ties meeting the requirements of paragraph 
(b)(10) and;
    (12) Be production from acreage that has been reported timely in 
accordance with part 718 of this title.
    (c) In addition to the requirements of paragraph (b), for ELS cotton 
the bale must:
    (1) Be a Grade and staple length specified in the schedule of loan 
rates for ELS cotton;
    (2) Not have a micronaire reading of 2.6 or less; and
    (3) Not have noted on the classing record the presence of spindle 
twist, preparation, grass, oil, and/or other extraneous matter.
    (d) In addition to the requirements of paragraph (b), for upland 
cotton the bale must:
    (1) Have been produced on a farm with a production flexibility 
contract in accordance with part 1412 of this chapter;
    (2) Have been graded by using a High Volume Instrument;
    (3) Be a grade, staple length, and leaf specified in the schedule of 
premiums and discounts for grade, staple, and leaf for upland cotton;
    (4) Have a strength reading greater than 18 grams per tex, rounded 
to whole grams;
    (5) Have a micronaire specified in the schedule of micronaire 
premiums and discounts for upland cotton;
    (6) Have a extraneous matter specified in the schedule of discounts 
for extraneous matter for upland cotton; and
    (e)(1) To be eligible to receive loans or loan deficiency payments, 
a producer must have the beneficial interest in the cotton which is 
tendered to CCC for a loan or loan deficiency payment. The producer must 
always have had the beneficial interest in the cotton unless, before the 
cotton was harvested, the producer and a former producer whom the 
producer tendering the cotton to CCC has succeeded had such an interest 
in the cotton. Cotton 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 shall be eligible for 
loans whether succession to the cotton occurs before or after harvest as 
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 cotton if the producer retains control, 
title, and risk of loss in the cotton, including the right to make all 
decisions regarding the tender of the cotton to CCC for loans or loan 
deficiency payments and does any or all of the following:
    (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 
cotton 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; and beneficial interest in the commodity, as 
specified in 7 CFR part 1427, 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 
Commodity Credit Corporation loan which is secured by such commodity; 
(2) the date the Commodity Credit Corporation claims title to such 
commodity; or (3) such other date as provided in this option.

    (ii) Enters into a contract to sell the cotton 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 to enter into such contract, except as provided in part 1425 of 
this chapter; or
    (iii) Executes Form CCC-605, Designation of Agent. Such designation:
    (A) Allows the producer to authorize an agent or subsequent agent to 
redeem all or a portion of the cotton pledged as collateral for a loan;
    (B) Identifies the warehouse receipts for which the authorization is 
given;

[[Page 364]]

    (C) Expires upon maturity of the loan;
    (D) Allows agents so designated by the producer to designate a 
subsequent agent by endorsement of the form by the agent;
    (E) Must be presented at the time the loan is repaid at the county 
office or loan servicing agent where the loan originated if the agent or 
subsequent agent exercises any authority granted by the producer; and
    (F) May be canceled by the producer by providing the custodial 
office a written request signed and dated by the producer showing the 
name of the agent, the loan number, and the bales applicable to the Form 
CCC-605. The effective date of the cancellation shall be the date the 
request is received by the custodial office.
    (3) If loans or loan deficiency payments are made available to 
producers through a CMA, the beneficial interest in the cotton must 
always have been in the producer-member who delivered the cotton to the 
CMA or its member cooperative, except as otherwise provided in this 
section. Cotton delivered to such a CMA shall not be eligible to receive 
a loan or a loan deficiency payment if the producer-member who delivered 
the cotton does not retain the right to share in the proceeds from the 
marketing of the cotton as provided in part 1425 of this chapter.
    (f) If the person tendering cotton for a loan or a loan deficiency 
payment is a landowner, landlord, tenant, or sharecropper, such cotton 
must represent such person's separate share of the crop and must not 
have been acquired by such person directly or indirectly from a 
landowner, landlord, tenant, or sharecropper.
    (g) Each bale of upland cotton sampled by the warehouse operator 
upon initial receipt which has not been sampled by the ginner must not 
show more than one sample hole on each side of the bale. If more than 
one sample is desired when the bale is received by the warehouse 
operator, the sample shall be cut across the width of the bale, broken 
in half or split lengthwise, and otherwise drawn in accordance with AMS 
dimension and weight requirements. This requirement will not prohibit 
sampling of the cotton at a later date if authorized by the producer.

[61 FR 37601, July 18, 1996, as amended at 62 FR 19023, Apr. 18, 1997]



Sec. 1427.6  Disbursement of loans.

    (a) Disbursement of loans to individual producers may be made by:
    (1) County offices;
    (2) Loan servicing agent; or
    (3) An approved cotton clerk who has entered into a written 
agreement with CCC on Form CCC-810.
    (b) Loan proceeds may be disbursed by CCC or a servicing bank agent 
bank to CMA's.
    (c) The loan documents shall not be presented for disbursement 
unless the cotton covered by the mortgage or pledged as security is 
eligible in accordance with Sec. 1427.5. If the cotton was not eligible 
cotton at the time of disbursement, the total amount disbursed under the 
loan, and charges plus interest shall be refunded promptly.



Sec. 1427.7  Maturity of loans.

    (a)(1) Form A loans and Form G loans mature on demand by CCC and no 
later than the last day of the 10th calendar month from the first day of 
the month in which the loan or loan advance is disbursed.
    (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.
    (b) If the loan is not repaid by the loan maturity date, title to 
the cotton shall vest in CCC the day after such maturity date and CCC 
shall have no obligation to pay for any market value which such cotton 
may have in excess of the amount of the loan, plus interest and charges.



Sec. 1427.8  Amount of loan.

    (a) The loan rates for crops of upland cotton and ELS cotton will be 
determined and announced by CCC and made available at State and county 
offices.
    (b) The quantity of cotton which may be pledged as collateral for a 
loan shall be the net weight of the eligible cotton as shown on the 
warehouse receipt issued by an approved warehouse, except that in the 
case of a bale which has a net weight of more than 600

[[Page 365]]

pounds, the weight to be used in determining the amount of the loan on 
the bale shall be 600 pounds. Cotton pledged as collateral for loans on 
the basis of reweights will not be accepted by CCC.
    (c) The amount of the loan for each bale will be determined by 
multiplying the net weight of the bale, as determined under paragraph 
(b) by the applicable loan rate.
    (d) CCC will not increase the amount of the loan made with respect 
to any bale of cotton as a result of a redetermination of the quantity 
or quality of the bale after it is tendered to CCC, except that if it is 
established to the satisfaction of CCC that a bona fide error was made 
with respect to the weight of the bale or the classification for the 
bale, such error may be corrected.



Sec. 1427.9  Classification of cotton.

    (a) References made to ``classification'' in this subpart shall 
include grade, staple length, and micronaire, and for upland cotton, 
leaf, extraneous matter, and strength readings. All cotton tendered for 
loan must be classed by an Agricultural Marketing Service (AMS) Cotton 
Classing Office (Cotton Classing Office) or other entity approved by CCC 
and tendered on the basis of such classification.
    (b) An AMS cotton classification or other entity's classification 
acceptable by CCC showing the classification of a bale must be based 
upon a representative sample drawn from the bale in accordance with 
instructions to samplers drawing samples under the Smith-Doxey program.
    (c) If the producer's cotton has not been classed or sampled in a 
manner acceptable by CCC, the warehouse shall sample such cotton and 
forward the samples to the Cotton Classing Office or other entity 
approved by CCC serving the district in which the cotton is located. 
Such warehouse must be licensed by AMS or be approved by CCC to draw 
samples for submission to the Cotton Classing Office or other entity 
approved by CCC.
    (d) If a sample has been submitted for classification, another 
sample shall not be drawn, except for a review classification.
    (e) Where review classification is not involved, if through error or 
otherwise two or more samples from the same bale are submitted for 
classification, the loan rate shall be based on the classification 
having the lower loan value.
    (f) If a review classification is obtained, the loan value of the 
cotton represented thereby will be based on such review classification.



Sec. 1427.10  Approved storage.

    (a) Eligible cotton may be pledged as collateral for loans only if 
stored at warehouses approved by CCC.
    (1) Persons desiring approval of their facilities should communicate 
with the Kansas City Commodity Office, P.O. Box 419205, Kansas City, 
Missouri 64141-6205.
    (2) The names of approved warehouses may be obtained from the Kansas 
City Commodity Office or from State or county offices.
    (b) When the operator of a warehouse receives notice from CCC that a 
loan has been made by CCC on a bale of cotton, the operator shall, if 
such cotton is not stored within the warehouse, promptly place such 
cotton within such warehouse.
    (c) Warehouse charges paid by a producer will not be refunded by 
CCC.
    (d) 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. 1427.23.



Sec. 1427.11  Warehouse receipts.

    (a) Producers may obtain loans on eligible cotton represented by 
warehouse receipts only if the warehouse receipts meet the definition of 
a warehouse receipt and provide for delivery of the cotton to bearer or 
are properly assigned by endorsement in blank, so as to vest title in 
the holder of the receipt or are otherwise acceptable to CCC. The 
warehouse receipt must:
    (1) Contain the gin bale number;
    (2) Contain the warehouse receipt number;
    (3) Be dated on or prior to the date the producer signs the note and 
security agreement.
    (b) Warehouse receipts, in accordance with Sec. 1427.3, when issued 
as block

[[Page 366]]

warehouse receipts will be accepted when authorized by CCC only if the 
owner of the warehouse issuing the block warehouse receipt owns the 
cotton represented by the block warehouse receipt and the warehouse is 
not licensed under the U.S. Warehouse Act.
    (c)(1) Each receipt must set out in its written or printed terms the 
tare and the net weight of the bale represented thereby. The net weight 
shown on the warehouse receipt shall be the difference between the gross 
weight as determined by the warehouse at the warehouse site and the tare 
weight. The warehouse receipt may show the net weight established at a 
gin if:
    (i) The gin is in the immediate vicinity of the warehouse and is 
operated under common ownership with such warehouse or in any other case 
in which the showing of gin weights on the warehouse receipts is 
approved by CCC; and
    (ii) Gin weights are permitted by the licensing authority for the 
warehouse.
    (2) The tare shown on the receipt shall be the tare furnished to the 
warehouse by the ginner or entered by the ginner on the gin bale tag. A 
machine card type warehouse receipt reflecting an alteration in gross, 
tare, or net weight will not be accepted by CCC unless it bears, on the 
face of the receipt, the following legend or similar wording approved by 
CCC, duly executed by the warehouse or an authorized representative of 
the warehouse:

    Corrected (gross, tare, or net) weight,
    (Name of warehouse),
    By (Signature or initials),
    Date.

    (3) Alterations in other inserted data on a machine card type 
warehouse receipt must be initialed by an authorized representative of 
the warehouse.
    (d) If warehouse storage charges have been paid, the receipt must 
show that date through which the storage charges have been paid.
    (e) If warehouse receiving charges have been paid or waived, the 
warehouse receipt must show such fact. Except for bales stored in the 
States of Alabama, Florida, Georgia, North Carolina, South Carolina, and 
Virginia, if receiving charges due on the bale include a charge, if any, 
for a new set of ties for compressing flat bales tied with ties which 
cannot be reused, the warehouse receipt must indicate the receiving 
charges and include a charge for new set of ties. If the bale is stored 
at a warehouse not having compress facilities and bales shipped from the 
warehouse are normally compressed in transit, the warehouse receipt must 
show the bale ties are not suitable for reuse when the bale is 
compressed and charges will be assessed by the nearest compress in line 
of transit for furnishing new bale ties.
    (f) In any case where loan collateral is forfeited, any unpaid 
storage or receiving charges will be paid to the warehouse by CCC after 
loan maturity or as soon as practicable after the cotton is ordered 
shipped by CCC.
    (g) The warehouse receipt must show the compression status of the 
bale; i.e., flat, modified flat, standard, gin standard, standard 
density (short), gin universal, universal density (short), or warehouse 
universal density. The receipt must show if the compression charge has 
been paid, or if the warehouse claims no lien for such compression.

[61 FR 37601, July 18, 1996, as amended at 62 FR 19023, Apr. 18, 1997]



Sec. 1427.12  Liens.

    If there are any liens or encumbrances on the cotton tendered as 
collateral for a loan, waivers that fully protect the interest of CCC 
must be obtained before disbursement even though the liens or 
encumbrances are satisfied from the loan proceeds. No additional liens 
or encumbrances shall be placed on the cotton after the loan is 
approved.



Sec. 1427.13  Fees, charges and interest.

    (a) A producer shall pay a nonrefundable loan service fee to CCC or, 
if applicable, to a loan servicing agent, at a rate determined by CCC. 
Any such fee shall be in addition to any cotton clerk fee paid to a 
cotton clerk in accordance with paragraph (b) of this section. The 
amount of such fees is available in State and county offices and are 
shown on the note and security agreement and shall be deducted from the 
loan proceeds.
    (b) Cotton clerks may only charge fees for the preparation of loan 
or loan

[[Page 367]]

deficiency payment documents at the rate determined by CCC.
    (1) Such fees may be deducted from the loan or loan deficiency 
payment proceeds instead of the fees being paid in cash.
    (2) The amount of such fees is available in State and county offices 
and is shown on the note and security agreement.
    (c) Interest which 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 
upland cotton which has been redeemed in accordance with Sec. 1427.19 at 
a level which is less than the principal amount of the loan plus charges 
and interest.
    (d) For each crop of upland cotton, the producer, as defined in the 
Cotton Research and Promotion Act (7 U.S.C. Chapter 2101), shall remit 
to CCC an assessment which shall be transmitted by CCC to the Cotton 
Board and shall be deducted from the:
    (1) Loan proceeds for a crop of cotton and shall be at a rate equal 
to one dollar per bale plus up to one percent of the loan amount; and
    (2) Loan deficiency payment proceeds for a crop of cotton and shall 
be at a rate equal to up to one percent of the loan deficiency payment 
amount.
    (e) If the producers elects to forfeit the loan collateral to CCC, 
the producer shall pay to CCC, at the rates that are specified in the 
storage agreement between the warehouse and CCC, the following accrued 
warehouse charges:
    (1) All warehouse storage charges associated with the forfeited 
cotton that accrued before the period the cotton was pledged as 
collateral for the loan; and
    (2) Any accrued warehouse receiving charges associated with the 
forfeited cotton, including, if applicable, charges for new ties as 
specified in Sec. 1427.11.



Sec. 1427.14  [Reserved]



Sec. 1427.15  Special procedure where funds are advanced.

    (a) This special procedure is provided to assist persons or firms 
which, in the course of their regular business of handling cotton for 
producers, have made advances to eligible producers on eligible cotton 
to be placed under loan or to receive a loan deficiency payment. A 
person, firm, or financial institution which has made advances to 
eligible producers on eligible cotton may also obtain reimbursement for 
the amounts advanced under this procedure.
    (b) This special procedure shall apply only:
    (1) If such person or firm is entitled to reimbursement from the 
proceeds of the loans or loan deficiency payments for the amounts 
advanced and has been authorized by the producer to deliver the loan or 
loan deficiency payment documents to a county office for disbursement of 
the loans or loan deficiency payments; and
    (2) To loan or loan deficiency payment documents covering cotton on 
which a person or firm has advanced to the producers, including payments 
to prior lienholders and other creditors, the note amounts shown on the 
Form A loan, except for:
    (i) Authorized cotton clerk fees;
    (ii) The research and promotion fee to be collected for transmission 
to the Cotton Board by CCC; and
    (iii) CCC loan service charges.
    (c)(1) All loan or loan deficiency payment documents shall be mailed 
or delivered to the appropriate county office and shall show the entire 
proceeds of the loans or loan deficiency payments, except for CCC loan 
service charges and research and promotion fees, for disbursement to:
    (i) The financial institution which is to allow credit to the person 
or firm which made the loan or loan deficiency payment advances or to 
such financial institution and such person or firm as joint payees; or
    (ii) The person, firm, or financial institution which made the loan 
or loan deficiency payment advances to the producers.
    (2) The documents shall be accompanied by Form CCC-825, Transmittal 
Schedule of Loan and Loan Deficiency Payment Documents, in original and 
two copies, numbered serially for each county office by the person, 
firm, or financial institution which made the loan or loan deficiency 
payment advance. The Form CCC-825 shall show

[[Page 368]]

the amounts invested by the person, firm, or financial institution in 
the loans or loan deficiency payments.
    (3) Upon receipt of the loan or loan deficiency payment documents 
and Form CCC-825, the county office will stamp one copy of the Form CCC-
825 to indicate receipt of the documents and return this copy to the 
person, firm, or financial institution.
    (d) County offices will review the loan or loan deficiency payment 
documents prior to disbursement and will return to the person, firm, or 
financial institution any documents determined not to be acceptable 
because of errors or illegibility. County offices will disburse the 
loans or loan deficiency payments for which loan or loan deficiency 
payment documents are acceptable by issuance of one check to the payee 
indicated on the applicable form and will mail the check to the address 
shown for such payee on the applicable form with a copy of Form CCC-825. 
The Form CCC-825 will show the date of disbursement by a county office 
and amount of interest earned by the person, firm, or financial 
institution.
    (e) The person, firm, or financial institution shall be deemed to 
have invested funds in the loans or loan deficiency payment as of the 
date loan or loan deficiency payment documents acceptable to CCC were 
delivered to a county office or, if received by mail, the date of 
mailing as indicated by postmark or the date of receipt in a county 
office if no postmark date is shown. Patron postage meter date stamp 
will not be recognized as a postmark date.
    (f) Interest will be computed on the total amount invested by the 
person, firm, or financial institution in the loan or loan deficiency 
payment represented by accepted documents from and including the date of 
investment of funds by the person, firm, or financial institution to, 
but not including, the date of disbursement by a county office.
    (1) Interest will be paid at the rate in effect for CCC loans as 
provided in part 1405 of this chapter.
    (2) Interest earned by the person, firm, or financial institution on 
the investment in loans disbursed during a month will be paid by county 
offices after the end of the month.



Sec. 1427.16  Reconcentration of cotton.

    (a) CCC may under certain conditions, before loan maturity, 
compress, store, insure, or reinsure the cotton against any risk, or 
otherwise handle or deal with the cotton as it may deem necessary or 
appropriate for the purpose of protecting the interest therein of the 
producer or CCC.
    (b) CCC may reconcentrate the cotton pledged for the loan from one 
CCC-approved warehouse to another with the written consent of the 
producer and upon the request of the local warehouse and certification 
that there is congestion and lack of storage facilities in the area. 
However, if CCC determines such loan cotton is improperly warehoused and 
subject to damage, or if any of the terms of the loan agreement are 
violated, or if carrying charges are substantially in excess of the 
average of carrying charges available elsewhere and the local warehouse, 
after notice, declines to reduce such charges, such written consent need 
not be obtained.
    (1) The county office, loan servicing agent, or CMA shall arrange 
for reconcentration of the cotton under the direction of the Kansas City 
Commodity Office.
    (2) Any fees, costs, or expenses incident to such actions shall be 
charges against the cotton.
    (3) After the cotton is reconcentrated, the Kansas City Commodity 
Office shall obtain new warehouse receipts, allocate to individual 
bales, shipping and other charges incurred against the cotton, and 
return new warehouse receipts and reconcentration charges applicable to 
each bale to the county office, loan servicing agent, or CMA. Such 
reconcentration charges shall be added to bale loan amounts and must be 
repaid for bales redeemed from loan.



Sec. 1427.17  Custodial offices.

    Forms CCC-Cotton A and CCC-Cotton A-1, collateral warehouse receipts 
and related documents will be maintained in the custody of CCC, the 
county office, the loan servicing agent, or the

[[Page 369]]

servicing agent bank, whichever disbursed the loan evidenced by such 
documents.



Sec. 1427.18  Liability of the producer.

    (a)(1) If a producer makes any fraudulent representation in 
obtaining a loan or loan deficiency payment or in maintaining or 
settling a loan, or disposes of or moves the loan collateral without the 
prior written approval of CCC, such loan or loan deficiency payment 
shall be payable upon demand by CCC. The producer shall be liable for:
    (i) The amount of the loan or loan deficiency payment;
    (ii) Any additional amounts paid by CCC with respect to the loan or 
loan deficiency payment;
    (iii) All other costs which CCC would not have incurred but for the 
fraudulent representation or the unauthorized disposition or movement of 
the loan collateral;
    (iv) Applicable interest on such amounts;
    (v) Liquidated damages in accordance with paragraph (e); and
    (vi) With regard to amounts due for a loan, the payment of such 
amounts may not be satisfied by the forfeiture of loan collateral to CCC 
of cotton with a settlement value that is less than the total of such 
amounts or by repayment of such loan at the lower loan repayment rate as 
prescribed in Sec. 1427.19.
    (2) Notwithstanding any provision 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, the value of such collateral delivered 
to or acquired by CCC shall be equal to the sales price of the cotton 
less any costs incurred by CCC in completing the sale.
    (b) If the amount disbursed under a loan, or in settlement thereof, 
or loan deficiency payment exceeds the amount authorized by this 
subpart, the producer shall be liable for repayment of such excess, plus 
interest. In addition, the commodity pledged as collateral for such loan 
shall not be released to the producer until such excess is repaid.
    (c) If the amount collected from the producer in satisfaction of the 
loan or loan deficiency payment is less than the amount required in 
accordance with this subpart, the producer shall be personally liable 
for repayment of the amount of such deficiency plus applicable interest.
    (d) If more than one producer executes a note and security agreement 
or loan deficiency payment application with CCC, each such producer 
shall be jointly and severally liable for the violation of the terms and 
conditions of the note and security agreement or loan deficiency payment 
application and the regulations set forth in this subpart. Each such 
producer shall also remain liable for repayment of the entire loan or 
loan deficiency payment amount until the loan is fully repaid without 
regard to such producer's claimed share in the cotton pledged as 
collateral for the loan or for which the loan deficiency payment was 
made. In addition, such producer may not amend the note and security 
agreement or loan deficiency payment application with respect to the 
producer's claimed share in such cotton after execution of the note and 
security agreement or loan deficiency payment application by CCC.
    (e) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC if a producer makes 
any fraudulent representation in obtaining a loan or loan deficiency 
payment or in maintaining or settling a loan or disposing of or moving 
the loan collateral without the prior written approval of CCC. 
Accordingly, if CCC determines that the producer has violated the terms 
or conditions of Form CCC-Cotton A, Form CCC-Cotton AA, or Form CCC-709, 
as applicable, liquidated damages shall be assessed on the quantity of 
the cotton which 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

[[Page 370]]

    (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 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.
    (f) For first and second offenses, if CCC determines that a producer 
acted in good faith when the violation occurred, CCC shall:
    (1) Require repayment of the loan principal and charges, plus 
interest applicable to the loan quantity affected by the violation or 
for loan deficiency payment, the loan deficiency payment amount 
applicable to the loan deficiency quantity involved with the violation, 
and charges plus interest from the date the loan deficiency payment was 
made; and
    (2) Assess liquidated damages in accordance with paragraph (e);
    (3) If the producer fails to pay such amounts within 30 calendar 
days from the date of notification, CCC shall call the applicable loan 
involved in the violation and require repayment of any market gain 
previously realized for the applicable loan, plus any interest 
previously waived and any storage paid by CCC, or for loan deficiency 
payment, require repayment of the loan deficiency payment and charges 
plus interest from the date the loan deficiency payment was made.
    (g) For cases other than first or second offenses, or any offense 
for which CCC cannot determine good faith when the violation occurred, 
CCC shall:
    (1) Assess liquidated damages in accordance with paragraph (e); and
    (2) Call the applicable loan involved in the violation and require 
repayment of any market gain previously realized for the applicable 
loan, plus any interest previously waived and any storage paid by CCC, 
and with respect to a loan deficiency payment, require repayment of the 
loan deficiency payment and charges plus interest from the date the loan 
deficiency payment was made.
    (h) If the county committee acting on behalf of CCC determines that 
the producer has committed a violation in accordance with paragraph (e), 
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 which caused the violation, to 
the county committee; and
    (2) Administrative actions will be taken in accordance with 
paragraph (f) or (g).
    (i) If the loan is called in accordance with this section, the 
producer must repay the loan at principal and charges, plus interest and 
may not repay the loan at the lower of the loan repayment rate in 
accordance with Sec. 1427.19 or utilize the provisions of part 1401 of 
this chapter with respect to such loan.
    (j) Any or all of the liquidated damages assessed in accordance with 
the provisions of paragraph (e) may be waived as determined by CCC.



Sec. 1427.19  Repayment of loans.

    (a) Warehouse receipts will not be released except as provided in 
this section.
    (b) A producer or agent or subsequent agent authorized on Form CCC-
605 may redeem one or more bales of cotton pledged as collateral for a 
loan by payment to CCC of an amount applicable to the bales of cotton 
being redeemed determined in accordance with this section. CCC, upon 
proper payment for the amount due, shall release the warehouse receipts 
applicable to such cotton.
    (c) A producer or agent or subsequent agent authorized on Form CCC-
605, may repay the loan amount for one or more bales of cotton pledged 
as collateral for a loan:
    (1) For upland cotton, at a level that is the lesser of:
    (i) The loan level and charges, plus interest determined for such 
bales; or
    (ii) The adjusted world price, as determined by CCC in accordance 
with Sec. 1427.25, in effect on the day the repayment is received by the 
county office, loan servicing agent, or servicing agent bank that 
disbursed the loan.
    (2) For ELS cotton, by repaying the loan amount and charges, plus 
interest determined for such bales.

[[Page 371]]

    (d) CCC shall determine and publicly announce the adjusted world 
price for each crop of upland cotton on a weekly basis.
    (e) The difference between the loan level, excluding charges and 
interest, and the loan repayment level is the market gain. The total 
amount of any market gain realized by a person is subject to part 1400 
of this chapter.
    (f) Repayment of loans will not be accepted after CCC acquires title 
to the cotton in accordance with Sec. 1427.7.
    (g) Notwithstanding any other provision of this section, CCC will 
not accept repayment of upland cotton at a rate based on the adjusted 
world price beginning at 4 p.m. eastern time each Thursday until an 
announcement of the adjusted world price for the succeeding weekly 
period has been made in accordance with Sec. 1427.25(e). In the event 
that Thursday is a non-workday, such loan repayments will not be 
accepted beginning at 7 a.m. eastern time the next workday until an 
announcement of the adjusted world price for the succeeding weekly 
period has been made in accordance with Sec. 1427.25(e).
    (h) If the upland cotton pledged as collateral is eligible to be 
repaid at a rate less than the loan level and charges, plus interest, 
and the adjusted world price determined in accordance with Sec. 1427.25 
is:
    (1) Below the national average loan rate for upland cotton, CCC will 
pay at the time of loan repayment to the producer or agent or subsequent 
agent authorized on Form CCC-605 the warehouse storage charges which 
have accrued, with respect to the cotton pledged as collateral for such 
loan, during the period the cotton was pledged for loan;
    (2) Above the national average loan rate by less than the sum of the 
accrued interest and warehouse storage charges, that accrued during the 
period the cotton was pledged for loan, CCC will pay at the time of loan 
repayment to the producer or agent or subsequent agent authorized on 
Form CCC-605 that portion of the warehouse storage charges, that accrued 
during the period the cotton was pledged for loan, that are determined 
to be necessary to permit the loan to be repaid at the adjusted world 
price without regard to any warehouse charges that accrued before the 
cotton was pledged for loan; or
    (3) Above the national average loan rate by as much as or more than 
the sum of the accrued interest and warehouse storage charges that 
accrued during the period the cotton was pledged for loan, CCC shall not 
pay any of the accrued warehouse storage charges.



Sec. 1427.20  Handling payments and collections not exceeding $9.99.

    To avoid the administrative costs of making small payments and 
handling small accounts, amounts of $9.99 or less will be paid to the 
producer 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.



Sec. 1427.21  Settlement.

    (a) The settlement of loans shall be made by CCC on the basis of the 
quality and quantity of the cotton delivered to CCC by the producer or 
acquired by CCC.
    (b) Settlements made by CCC with respect to eligible cotton which 
are acquired by CCC which are stored in an approved warehouse shall be 
made on the basis of the entries set forth on the applicable warehouse 
receipt and other accompanying documents.
    (c) If a producer does not pay to CCC the total amount due in 
accordance with a loan, CCC shall take title to the cotton in accordance 
with Sec. 1427.7(b).



Sec. 1427.22  Death, incompetency, or disappearance.

    In the case of death, incompetency, or disappearance of any producer 
who is entitled to the payment of any proceeds in settlement of a loan 
or loan deficiency payment, payment shall, upon proper application to 
the county office or loan servicing agent which disbursed the loan or 
loan deficiency payment, be made to the person or persons who would be 
entitled to such producer's payment as provided in the regulations 
entitled Payment Due Persons Who Have Died, Disappeared, or Have Been 
Declared Incompetent, part 707 of this title.

[[Page 372]]



Sec. 1427.23  Cotton loan deficiency payments.

    (a) Producers may obtain loan deficiency payments for 1996 through 
2002 crops of upland cotton in accordance with this section.
    (b) In order to be eligible to receive such loan deficiency 
payments, the producer of the upland cotton must:
    (1) Comply with all of the upland cotton loan eligibility 
requirements in accordance with this subpart;
    (2) Agree to forgo obtaining such loans;
    (3) File a request for payment for a quantity of eligible cotton in 
accordance with Sec. 1427.5(a) on Form CCC-Cotton AA, Form CCC-709, or 
other form approved by CCC;
    (4) Provide warehouse receipts or, as determined by CCC, a list of 
gin bale numbers for such cotton showing, for each bale, the net weight 
established at the gin;
    (5) Provide classing information for such quantity in accordance 
with Sec. 1427.9; and
    (6) Otherwise comply with all program requirements.
    (c) The loan deficiency payment applicable to a crop of cotton shall 
be computed by multiplying the applicable loan deficiency payment rate, 
as determined in accordance with paragraph (d) of this section, by the 
quantity of the crop the producer is eligible to pledge as collateral 
for a loan.
    (d) The loan deficiency payment rate for a crop of upland cotton 
shall be the amount by which the loan rate determined for a bale of such 
crop exceeds the adjusted world price, as determined by CCC in 
accordance with Sec. 1427.25, in effect on the day the request is 
received by the county office, loan servicing agent, or servicing agent 
bank.
    (e) The total amount of any loan deficiency payments that a person 
may receive is subject to part 1400 of this chapter.
    (f) If the producer enters into an agreement with CCC on or before 
the date of ginning a quantity of eligible upland cotton, and the 
producer has the beneficial interest in such quantity as specified in 
accordance with Sec. 1427.5(c) on the date the cotton was ginned, the 
loan deficiency payment rate applicable to such cotton will be the loan 
deficiency payment rate based on the date the cotton was ginned. 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. 1427.5.
    (g) Notwithstanding any other provision of this section, CCC will 
not accept applications for loan deficiency payments that specify the 
payment rate beginning at 4 p.m. eastern time each Thursday until an 
announcement of the adjusted world price for the succeeding weekly 
period has been made in accordance with Sec. 1427.25(e). In the event 
that Thursday is a non-workday, such applications for loan deficiency 
payments will not be accepted beginning at 7 a.m. eastern time the next 
workday until an announcement of the adjusted world price for the 
succeeding weekly period has been made in accordance with 
Sec. 1427.25(e).



Sec. 1427.24  [Reserved]



Sec. 1427.25  Determination of the prevailing world market price and the adjusted world price for upland cotton.

    (a) The prevailing world market price for upland cotton shall be 
determined by CCC as follows:
    (1) During the period when only one daily price quotation is 
available for each growth quoted for Middling one and three-thirty-
second inch (M 1\3/32\ inch) cotton C.I.F. (cost, insurance, and 
freight) northern Europe, the prevailing world market price for upland 
cotton shall be based upon the average of the quotations for the 
preceding Friday through Thursday for the 5 lowest-priced growths of the 
growths quoted for M 1\3/32\ inch cotton C.I.F. northern Europe.
    (2) During the period when both a price quotation for cotton for 
shipment no later than August/September of the current calendar year 
(current shipment price) and a price quotation for cotton for shipment 
no earlier than October/November of the current calendar year (forward 
shipment price) are available for growths quoted for M 1\3/32\ inch 
cotton C.I.F. northern Europe, the prevailing world market price for 
upland cotton shall be based upon the following: Beginning with the 
first week

[[Page 373]]

covering the period Friday through Thursday which includes April 15 or, 
if both the average of the current shipment prices for the preceding 
Friday through Thursday for the 5 lowest-priced growths of the growths 
quoted for M 1\3/32\ inch cotton C.I.F. northern Europe (Northern Europe 
current price) and the average of the forward shipment prices for the 
preceding Friday through Thursday for the 5 lowest-priced growths of the 
growths quoted for M 1\3/32\ inch cotton C.I.F. northern Europe 
(Northern Europe forward price) are not available during that period, 
beginning with the first week covering the period Friday through 
Thursday after the week which includes April 15 in which both the 
Northern Europe current price and the Northern Europe forward price are 
available, the prevailing world market price for upland cotton shall be 
based upon the result calculated by the following procedure:
    (i) Weeks 1 and 2: (2  x  Northern Europe current price) + Northern 
Europe forward price/3.
    (ii) Weeks 3 and 4: Northern Europe current price + Northern Europe 
forward price/2.
    (iii) Weeks 5 and 6: Northern Europe current price + (2  x  Northern 
Europe forward price)/3.
    (iv) Week 7 through July 31: Northern Europe forward price.
    (3) The prevailing world market price for upland cotton as 
determined in accordance with paragraphs (a)(1) or (a)(2) of this 
section shall hereinafter be referred to as the ``Northern Europe 
price.''
    (4) If quotes are not available for one or more days in the 5-day 
period, the available quotes during the period will be used. If no 
quotes are available during the Friday through Thursday period, the 
prevailing world market price shall be based upon the best available 
world price information, as determined by CCC.
    (b) The prevailing world market price for upland cotton, adjusted in 
accordance with paragraph (c) of this section (adjusted world price), 
shall be applicable to the 1996 through 2002 crops of upland cotton.
    (c) The adjusted world price for upland cotton shall equal the 
Northern Europe price as determined in accordance with paragraph (a) of 
this section, adjusted as follows:
    (1) The Northern Europe price shall be adjusted to average 
designated U.S. spot market location by deducting the average difference 
in the immediately preceding 52-week period between:
    (i)(A) The average of price quotations for the U.S. Memphis 
territory and the California/Arizona territory as quoted each Thursday 
for M 1\3/32\ inch cotton C.I.F. northern Europe during the period when 
only one daily price quotation for such growths is available, or
    (B) The average of the current shipment prices for U.S. Memphis 
territory and the California/Arizona territory as quoted each Thursday 
for M 1\3/32\ inch cotton C.I.F. northern Europe during the period when 
both current shipment prices and forward shipment prices for such 
growths are available; and
    (ii) The average price of M 1\3/32\ inch (micronaire 3.5 through 3.6 
and 4.3 through 4.9, strength 24 through 25 grams per tex) cotton as 
quoted each Thursday in the designated U.S. spot markets.
    (2) The price determined in accordance with paragraph (c)(1) of this 
section shall be adjusted to reflect the price of Strict Low Middling 
(SLM) 1\1/16\ inch (micronaire 3.5 through 3.6 and 4.3 through 4.9, 
strength 24 through 25 grams per tex) cotton (U.S. base quality) by 
deducting the difference, as announced by CCC, between the applicable 
loan rate for a crop of upland cotton for M 1\3/32\ inch (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 24 through 25 grams per tex) 
cotton and the loan rate for a crop of upland cotton of the U.S. base 
quality.
    (3) The price determined in accordance with paragraph (c)(2) shall 
be adjusted to average U.S. location by deducting the difference between 
the average loan rate for a crop of upland cotton of the U.S. base 
quality in the designated U.S. spot markets and the corresponding crop 
year national average loan rate for a crop of upland cotton of the U.S. 
base quality, as announced by CCC.
    (4)(i) The prevailing world market price, as adjusted in accordance 
with paragraphs (c)(1) through (c)(3), may be

[[Page 374]]

further adjusted if it is determined that:
    (A) Such price is less than 115 percent of the current crop-year 
loan level for U.S. base quality cotton, and
    (B) The Friday through Thursday average price quotation for the 
lowest-priced United States growth as quoted for M 1\3/32\ inch cotton 
C.I.F. northern Europe (U.S. Northern Europe price) is greater than the 
average of the quotations for the preceding Friday through Thursday for 
the 5 lowest-priced growths of the growths quoted for M 1\3/32\ inch 
cotton C.I.F. northern Europe.
    (ii) During the period when both current shipment prices and forward 
shipment prices are available for growths quoted for M 1\3/32\ inch 
cotton C.I.F. northern Europe, the U.S. Northern Europe price provided 
in paragraph (c)(4)(i)(B) shall be determined as follows: Beginning with 
the week covering the period Friday through Thursday which includes 
April 15 or, if both the average of the current shipment prices for the 
preceding Friday through Thursday of the lowest-priced United States 
growth as quoted for M 1\3/32\ inch cotton C.I.F. northern Europe (U.S. 
Northern Europe current price) and the average of the forward shipment 
prices for the preceding Friday through Thursday of the lowest-priced 
United States growth quoted for M 1\3/32\ inch cotton C.I.F. northern 
Europe (U.S. Northern Europe forward price) are not available during 
that period, beginning with the first week covering the period Friday 
through Thursday after the week which includes April 15 in which both 
the average of the U.S. Northern Europe current price and the average of 
the U.S. Northern Europe forward price are available, the result 
calculated by the following procedure:
    (A) Weeks 1 and 2: (2 x U.S. Northern Europe current price)+(U.S. 
Northern Europe forward price) /3.
    (B) Weeks 3 and 4: (U.S. Northern Europe current price)+(U.S. 
Northern Europe forward price) /2.
    (C) Weeks 5 and 6: (U.S. Northern Europe current price)+(2 x U.S. 
Northern Europe forward price) /3.
    (D) Week 7 through July 31: U.S. Northern Europe forward price.
    (iii) In determining the U.S. Northern Europe price as provided in 
paragraphs (c)(4)(i)(B) and (c)(4)(ii):
    (A) If quotes for either the U.S. Memphis territory or the 
California/Arizona territory are not available for any week, the 
available quotations will be used.
    (B) If quotes are not available for one or more days in the 5-day 
period, the available quotes during the period will be used.
    (C) If no quotes are available for either the U.S. Memphis territory 
or the California/Arizona territory during the Friday through Thursday 
period, no adjustment will be made.
    (iv)(A) The adjustment shall be based on some or all of the 
following data, as available:
    (1) The U.S. share of world exports;
    (2) The current level of cotton export sales and shipments; and
    (3) Other data determined by CCC to be relevant in establishing an 
accurate prevailing world market price, adjusted to United States 
quality and location.
    (B) The adjustment may not exceed the difference between the U.S. 
Northern Europe price, as determined in paragraphs (c)(4)(i) through 
(c)(4)(iii), and the Northern Europe price, as determined in paragraph 
(a).
    (d) In determining the average difference in the 52-week period as 
provided in paragraph (c)(1):
    (1) If the difference between the average price quotations for the 
U.S. Memphis territory and the California/Arizona territory as quoted 
for M 1\3/32\ inch cotton C.I.F. northern Europe and the average price 
of M 1\3/32\ inch (micronaire 3.5 through 3.6 and 4.3 through 4.9, 
strength 24 through 25 grams per tex) cotton as quoted each Thursday in 
the designated U.S. spot markets for any week is:
    (i) More than 115 percent of the estimated actual cost associated 
with transporting U.S. cotton to northern Europe, then 115 percent of 
such actual cost shall be substituted in lieu thereof for such week.
    (ii) Less than 85 percent of the estimated actual cost associated 
with transporting U.S. cotton to northern Europe, then 85 percent of 
such actual

[[Page 375]]

cost shall be substituted in lieu thereof for such week.
    (2) If a Thursday price quotation for either the U.S. Memphis 
territory or the California/Arizona territory as quoted for M 1\3/32\ 
inch cotton C.I.F. northern Europe is not available for any week, CCC:
    (i) May use the available northern Europe quotation to determine the 
difference between the average price quotations for the U.S. Memphis 
territory and the California/Arizona territory as quoted for M 1\3/32\ 
inch cotton C.I.F. northern Europe and the average price of M 1\3/32\ 
inch (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 24 
through 25 grams per tex) cotton as quoted each Thursday in the 
designated U.S. spot markets for that week, or
    (ii) May not take that week into consideration.
    (3) If Thursday price quotations for any week are not available for 
either,
    (i) both the Memphis territory and the California/Arizona territory 
as quoted for M 1\3/32\ inch cotton C.I.F. northern Europe, or
    (ii) the average price of M 1\3/32\ inch (micronaire 3.5 through 3.6 
and 4.3 through 4.9, strength 24 through 25 grams per tex) cotton as 
quoted in the designated U.S. spot markets, that week will not be taken 
into consideration.
    (e) The adjusted world price for upland cotton as determined in 
accordance with paragraph (c), and the amount of the additional 
adjustment as determined in accordance with paragraph (f), shall be 
announced, to the extent practicable, at 5 p.m. eastern time each 
Thursday continuing through the last Thursday of July 2003. In the event 
that Thursday is a non-workday, the determination will be announced, to 
the extent practicable, at 8 a.m. eastern time the next workday. The 
adjusted world price and the amount of the additional adjustment will be 
effective upon announcement and will remain in effect for a period as 
announced by CCC.
    (f)(1)(i) The adjusted world price, as determined in accordance with 
paragraph (c), shall be subject to further adjustments as provided in 
this section with respect to all qualities of upland cotton eligible for 
loan except the following grades of upland cotton with a staple length 
of 1\1/16\ inch or longer:
    (A) White Grades--Strict Middling and better, leaf 1 through leaf 6; 
Middling, leaf 1 through leaf 6; Strict Low Middling, leaf 1 through 
leaf 6; and Low Middling, leaf 1 through leaf 5;
    (B) Light Spotted Grades--Strict Middling and better, leaf 1 through 
leaf 5; Middling, leaf 1 through leaf 5; and Strict Low Middling, leaf 1 
through leaf 4; and
    (C) Spotted Grades--Strict Middling and better, leaf 1 through leaf 
2; and
    (ii) Grade and Staple length must be determined in accordance with 
Sec. 1427.9. If no such official classification is presented, the coarse 
count adjustment shall not be made.
    (2) The adjustment for upland cotton provided for by paragraph 
(f)(1) shall be determined by deducting from the adjusted world price:
    (i) The difference between the Northern Europe price, and
    (A) During the period when only one daily price quotation for each 
growth quoted for ``coarse count'' cotton C.I.F. northern Europe is 
available the average of the quotations for the corresponding Friday 
through Thursday for the three lowest-priced growths of the growths 
quoted for ``coarse count'' cotton C.I.F. northern Europe; or
    (B) During the period when both current shipment prices and forward 
shipment prices are available for the growths quoted for ``coarse 
count'' cotton C.I.F. northern Europe, the result calculated by the 
following procedure: Beginning with the first week covering the period 
Friday through Thursday which includes April 15 or, if both the average 
of the current shipment prices for the preceding Friday through Thursday 
for the three lowest-priced growths of the growths quoted for ``coarse 
count'' cotton C.I.F. northern Europe (Northern Europe coarse count 
current price) and the average of the forward shipment prices for the 
preceding Friday through Thursday for the three lowest-priced growths of 
the growths quoted for ``coarse count'' cotton C.I.F. northern Europe 
(Northern Europe coarse count forward price) are not available during 
that period, beginning with the first week covering the

[[Page 376]]

period Friday through Thursday after the week which includes April 15 in 
which both the Northern Europe coarse count current price and the 
Northern Europe coarse count forward price are available:
    (1) Weeks 1 and 2: (2 `` x '' Northern Europe coarse count current 
price) + Northern Europe coarse count forward price/3;
    (2) Weeks 3 and 4: Northern Europe coarse count current price + 
Northern Europe coarse count forward price/2;
    (3) Weeks 5 and 6: Northern Europe coarse count current price + (2 
x  Northern Europe coarse count forward price)/3; and
    (4) Week 7 through July 31: The Northern Europe coarse count forward 
price, minus:
    (ii) The difference between the applicable loan rate for a crop of 
upland cotton for M 1\3/32\ inch (micronaire 3.5 through 3.6 and 4.3 
through 4.9, strength 24 through 25 grams per tex) cotton and the loan 
rate for a crop of upland cotton for SLM 1\1/32\ inch (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 24 through 25 grams per tex) 
cotton.
    (iii) The result of the calculation as determined in accordance with 
this paragraph (f)(2) shall hereinafter be referred to as the ``Northern 
Europe coarse count price.''
    (3) With respect to the determination of the Northern Europe coarse 
count price in accordance with paragraph (f)(2)(i):
    (i) If no quotes are available for one or more days of the 5-day 
period, the available quotes will be used;
    (ii) If quotes for three growths are not available for any day in 
the 5-day period, that day will not be taken into consideration; and
    (iii) If quotes for three growths are not available for at least 
three days in the 5-day period, that week will not be taken into 
consideration, in which case the adjustment determined in accordance 
with paragraph (f)(2) for the latest available week will continue to be 
applicable.
    (g) If the 6-week transition periods from using current shipment 
prices to using forward shipment prices in the determination of the 
Northern Europe price in accordance with paragraph (a)(2), and the 
Northern Europe coarse count price in accordance with paragraph 
(f)(2)(i)(B) do not begin at the same time, CCC shall use either current 
shipment prices, forward shipment prices, or any combination thereof, to 
determine the Northern Europe price and/or the Northern Europe coarse 
count price used in the determination of the adjustment for upland 
cotton provided for by paragraph (f)(1) and determined in accordance 
with paragraph (f)(2), in order to prevent distortions in such 
adjustment.
    (h) The adjusted world price, determined in accordance with 
paragraph (c), shall be subject to further adjustments, as determined by 
CCC based upon the Schedule of Premiums and Discounts and the location 
differentials applicable to each warehouse location as announced in 
accordance with the loan program for a crop of upland cotton.



Sec. 1427.26  Paperwork Reduction Act assigned numbers.

    The information collection requirements contained in these 
regulations have been submitted to the Office of Management and Budget 
in accordance with 44 U.S.C. chapter 35 and OMB Control number 0560-
0040, 0560, 0074, 0560-0027, and 0560-0054 was assigned.



  Subpart B--Regulations for the Upland Cotton First Handler Marketing 
                          Certificate Program.

    Source: 56 FR 41434, Aug. 21, 1991, unless otherwise noted.



Sec. 1427.50  Applicability.

    (a) The regulations of this subpart are applicable during the period 
beginning August 1, 1991, and ending July 31, 1996. These regulations 
set forth the terms and conditions under which the Commodity Credit 
Corporation (``CCC'') shall make payments, in the form of commodity 
certificates or cash, to eligible first handlers of upland cotton who 
have entered into an Upland Cotton First Handler Agreement with CCC to 
participate in the first handler marketing certificate program, in 
accordance with Section 103B(a)(5)(B) of the Agricultural Act of 1949, 
as amended.

[[Page 377]]

    (b) If, during the period beginning August 1, 1991, and ending July 
31, 1996, CCC determines that the adjusted world price for upland cotton 
determined in accordance with Sec. 1427.25 is less than the loan 
repayment rate for a crop of upland cotton determined in accordance with 
Sec. 1427.19(c) and that the cotton loan program implemented in 
accordance with Sec. 1427.8 and that the loan deficiency payment program 
implemented in accordance with Sec. 1427.23, have failed to make 
domestically produced upland cotton competitive on the world market, 
then CCC shall make payments in accordance with the provisions of this 
subpart to eligible first handlers of upland cotton.
    (c) Additional terms and conditions are set forth in the Upland 
Cotton First Handler Agreement which must be executed by the first 
handler in order to receive such payments.
    (d) Forms which are used in administering the first handler 
marketing certificate program shall be prescribed by CCC.

[56 FR 41434, Aug. 21, 1991, as amended at 57 FR 14328, Apr. 20, 1992]



Sec. 1427.51  Administration.

    (a) The first handler marketing certificate program shall be 
administered under the general supervision of the Executive Vice 
President, CCC (Administrator, FSA), or a designee, and shall be carried 
out in the field by FSA's Kansas City Commodity Office (KCCO) and Kansas 
City Management Office (KCMO).
    (b) The KCCO and KCMO, and representatives and employees thereof, do 
not have the authority to modify or waive any of the provisions of the 
regulations of this subpart.
    (c) No provision or delegation herein to KCCO or KCMO shall preclude 
the Executive Vice President, CCC, or a designee, from determining any 
question arising under the program or from reversing or modifying any 
determination made by KCCO or KCMO.
    (d) The Executive Vice President, CCC, or a designee, may authorize 
KCCO or KCMO to waive or modify deadlines and other program requirements 
in cases where lateness or failure to meet such other requirements do 
not affect adversely the operation of the first handler marketing 
certificate program.
    (e) A representative of CCC may execute first handler marketing 
certificate payment applications, Upland Cotton First Handler Agreements 
and related documents only under the terms and conditions determined and 
announced by CCC.
    (f) Payment applications, Upland Cotton First Handler Agreements and 
related documents not executed in accordance with the terms and 
conditions determined and announced by CCC, including any purported 
execution prior to the date authorized by CCC, shall be null and void.

[56 FR 41434, Aug. 21, 1991, as amended at 57 FR 14328, Apr. 20, 1992]



Sec. 1427.52  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration. The terms defined in Sec. 1427.3 
of this part and part 1413 of this chapter shall also be applicable.
    Baled lint means cotton which has passed through the ginning process 
and has been baled.
    Loose means samples removed from bales of upland cotton for 
classification purposes which have been rebaled.
    Modified seed cotton cleaning equipment means incline, airline or 
impact seed cotton cleaners which have been modified to remove the 
smaller trash material normally present in raw (unprocessed) motes.
    Person means an individual, corporation, partnership, association, 
or other business entity.
    Raw (unprocessed) motes means lint cleaner waste resulting from the 
ginning process.
    Reginned (processed) motes means semi-processed motes which have 
been further cleaned through one or more stages of modified seed cotton 
cleaning and one or more stages of lint cleaning equipment (sawtooth 
lint cleaning) by the gin, an intermediate processor or an end user, 
which are of a quality suitable, without further processing, for 
spinning, papermaking or other traditional manufacturing uses, and which 
have been rebaled, unless converted to

[[Page 378]]

an end use in a continuous manufacturing process by the end user who 
further cleaned the semi-processed motes.
    Semi-processed motes means raw motes processed at the gin through 
one stage of modified seed cotton cleaning equipment, which have been 
baled, or moved directly into the reginning process.

[56 FR 41434, Aug. 21, 1991, as amended at 56 FR 59853, Nov. 26, 1991]



Sec. 1427.53  Eligible upland cotton.

    (a) For the purposes of this subpart, eligible upland cotton is 
domestically produced 1991 or subsequent crop upland cotton which meets 
the requirements of paragraphs (b) and (c) of this section.
    (b) Eligible upland cotton must be either--
    (1) Baled lint which is not pledged as collateral for a price 
support loan;
    (2) Baled lint which has been pledged as collateral for a price 
support loan but which has been redeemed with cash;
    (3) Baled lint which has been classified by USDA's Agricultural 
Marketing Service as Below Grade;
    (4) Loose; or
    (5) Semi-processed motes.
    (c) Eligible upland cotton must not be:
    (1) Cotton with respect to which a payment, in accordance with the 
provisions of this subpart, has been made available;
    (2) Cotton which was obtained through the exchange of a commodity 
certificate for cotton which had been pledged as collateral for a price 
support loan or from CCC inventory in accordance with the provisions of 
part 1470 of this chapter;
    (3) Domestically produced cotton which has been exported and then 
reimported into the United States;
    (4) Raw (unprocessed) motes;
    (5) Reginned (processed) motes; or
    (6) Textile mill wastes.



Sec. 1427.54  Eligible first handlers.

    (a) For the purposes of this subpart, the following persons shall be 
considered to be eligible first handlers:
    (1) A person regularly engaged in buying or selling eligible upland 
cotton who has entered into an agreement with CCC to participate in the 
first handler marketing certificate program;
    (2) A producer of upland cotton who sells directly to domestic 
textile mills or for export or who tenders upland cotton on a New York 
Futures Exchange number 2 contract and who has entered into an agreement 
with CCC to participate in the first handler marketing certificate 
program; and
    (3) A cooperative marketing association, approved in accordance with 
part 1425 of this chapter, that acquires the upland cotton production of 
its members and that has entered into an agreement with CCC to 
participate in the first handler marketing certificate program.
    (b) Applications for payment in accordance with this subpart must 
contain documentation required by the provisions of the Upland Cotton 
First Handler Agreement and instructions issued by CCC.



Sec. 1427.55  Upland cotton first handler agreement.

    (a) Payments in accordance with this subpart shall be made available 
to eligible first handlers who have entered into an Upland Cotton First 
Handler Agreement with CCC and who have complied with the terms and 
conditions set forth in this subpart, the Upland Cotton First Handler 
Agreement and instructions issued by CCC.
    (b) Upland Cotton First Handler Agreements may be obtained from 
Cotton Branch, CRD, Kansas City Commodity Office, P.O. Box 419205, 
Kansas City, Missouri 64141-6205. In order to participate in the program 
authorized by this subpart, first handlers must execute the Upland 
Cotton First Handler Agreement and forward an original and two copies to 
KCCO.



Sec. 1427.56  Form of payment.

    Payments in accordance with this subpart shall be made available in 
the form of commodity certificates issued in accordance with part 1470 
of this chapter, or in cash, as determined and announced by CCC.

[57 FR 14329, Apr. 20, 1992]



Sec. 1427.57  Payment rate.

    The payment rate for the purposes of calculating payments made 
available

[[Page 379]]

in accordance with this subpart shall be based upon the difference 
between the adjusted world price for upland cotton determined in 
accordance with Sec. 1427.25 and the loan repayment rate determined in 
accordance with Sec. 1427.19 and the Upland Cotton First Handler 
Agreement. A coarse count adjustment shall be applied in accordance with 
Sec. 1427.25(f) and the Upland Cotton First Handler Agreement. Payment 
rates for Below Grade, loose and semi-processed motes shall be based on 
a percentage of the basic rate for baled lint, exclusive of coarse count 
adjustment, as specified in the Upland Cotton First Handler Agreement.



Sec. 1427.58  Payment.

    (a) Payments in accordance with this subpart shall be determined by 
multiplying:
    (1) The payment rate, determined in accordance with Sec. 1427.57, by
    (2) The net weight (gross weight minus the weight of bagging and 
ties), determined as specified in the Upland Cotton First Handler 
Agreement, of eligible upland cotton that is purchased by an eligible 
first handler for either domestic consumption or export during a period 
in which a payment rate is established.
    (b) Eligible upland cotton will be considered to be purchased by the 
first handler on the date title to the cotton passes to the first 
handler, as determined by CCC.
    (c) Payments in accordance with this subpart shall be made available 
upon application for payment and submission of supporting documentation, 
as required by the provisions of the Upland Cotton First Handler 
Agreement and instructions issued by CCC.



Subpart C--Regulations for the Upland Cotton User Marketing Certificate 
                                Program.

    Source: 56 FR 41435, Aug. 21, 1991, unless otherwise noted.



Sec. 1427.100  Applicability.

    (a) The regulations in this subpart are applicable during the period 
beginning August 1, 1991, and ending July 31, 2003. These regulations 
set forth the terms and conditions under which the CCC shall make 
payments, in the form of commodity certificates or cash, to eligible 
domestic users and exporters of upland cotton who have entered into an 
Upland Cotton Domestic User/Exporter Agreement with CCC to participate 
in the upland cotton user marketing certificate program in accordance 
with Section 136(a) of the Federal Agriculture Improvement and Reform 
Act of 1996.
    (b)(1) During the period beginning August 1, 1991, and ending July 
31, 2003, CCC shall issue marketing certificates or cash payments to 
domestic users and exporters in accordance with this subpart in any week 
following a consecutive 4-week period in which--
    (i) The Friday through Thursday average price quotation for the 
lowest-priced United States growth, as quoted for Middling one and three 
thirty-seconds inch (``M 1\3/32\ inch'') cotton, delivered C.I.F. (cost, 
insurance and freight) Northern Europe (``U.S. Northern Europe price'') 
exceeds the Friday through Thursday average price quotation for the five 
lowest-priced growths, as quoted for M 1\3/32\ inch cotton, delivered 
C.I.F. Northern Europe (``Northern Europe price'') by more than 1.25 
cents per pound; and
    (ii) The adjusted world price for upland cotton, determined in 
accordance with Sec. 1427.25, does not exceed 130 percent of the current 
crop year loan level for the base quality of upland cotton.
    (2) Notwithstanding the provisions of paragraph (b)(1) of this 
section, CCC shall not issue marketing certificates or cash payments if, 
for the immediately preceding consecutive 10-week period, the U.S. 
Northern Europe price, adjusted for the value of any certificates or 
cash payments issued under paragraph (b)(1) of this section, exceeds the 
Northern Europe price by more than 1.25 cents per pound.
    (3) Notwithstanding the provisions of this subpart, user marketing 
certificate program payments shall not exceed $701,000,000 during fiscal 
years 1996 through 2002. Any outstanding obligations incurred by CCC to 
exporters under this program before April 5, 1996, will not be subject 
to the $701,000,000 limitation. Obligations incurred by

[[Page 380]]

CCC on or after April 5, 1996, will be charged against the $701,000,000.
    (c) Additional terms and conditions are set forth in the Upland 
Cotton Domestic User/Exporter Agreement which must be executed by the 
domestic user or exporter in order to receive such payments.
    (d) Forms which are used in administering the upland cotton user 
marketing certificate program shall be prescribed by CCC.

[56 FR 41435, Aug. 21, 1991, as amended at 57 FR 14329, Apr. 20, 1992; 
61 FR 37611, July 18, 1996]



Sec. 1427.101  Administration.

    (a) The upland cotton user marketing certificate program shall be 
administered under the general supervision of the Executive Vice 
President, CCC (Administrator, FSA), or a designee and shall be carried 
out in the field by FSA's Kansas City Commodity Office (KCCO) and Kansas 
City Management Office (KCMO).
    (b) The KCCO and KCMO, and representatives and employees thereof, do 
not have the authority to modify or waive any of the provisions of the 
regulations of this subpart.
    (c) No provision or delegation herein to KCCO or KCMO shall preclude 
the Executive Vice President, CCC, or a designee, from determining any 
question arising under the program or from reversing or modifying any 
determination made by KCCO or KCMO.
    (d) The Executive Vice President, CCC, or a designee, may authorize 
KCCO or KCMO to waive or modify deadlines and other program requirements 
in cases where lateness or failure to meet such other requirements do 
not affect adversely the operation of the upland cotton user marketing 
certificate program.
    (e) A representative of CCC may execute upland cotton user marketing 
certificate payment applications, Upland Cotton Domestic User/Exporter 
Agreements and related documents only under the terms and conditions 
determined and announced by CCC.
    (f) Payment applications, Upland Cotton Domestic User/Exporter 
Agreements and related documents not executed in accordance with the 
terms and conditions determined and announced by CCC, including any 
purported execution prior to the date authorized by CCC, shall be null 
and void.

[56 FR 41435, Aug. 21, 1991, as amended at 57 FR 14329, Apr. 20, 1992; 
61 FR 37611, July 18. 1996]



Sec. 1427.102  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration. The terms defined in 
Secs. 1427.3 and 1427.52 of this part and part 1413 of this chapter 
shall also be applicable.
    Bale opening means the removal of the bagging and ties from a bale 
of eligible upland cotton in the normal opening area, immediately prior 
to use, by a manufacturer in a building or collection of buildings where 
the cotton in the bale will be used in the continuous process of 
manufacturing raw cotton into cotton products in the United States.
    Consumption means, the use of eligible cotton by a domestic user in 
the manufacture in the United States of cotton products.
    Cotton product means any product containing cotton fibers that 
result from the use of a bale of cotton in manufacturing.
    Current shipment price means, during the period in which two daily 
price quotations are available for the growth quoted for M 1\3/32\ inch 
cotton, C.I.F. Northern Europe, the price quotation for cotton for 
shipment no later than August/September of the current calendar year.
    Forward shipment price means, during the period in which two daily 
price quotations are available for the growths quoted for M 1\3/32\ inch 
cotton, C.I.F. Northern Europe, the price quotation for cotton for 
shipment no earlier than October/November of the current calendar year.
    Northern Europe current price means the average for the preceding 
Friday through Thursday of the current shipment prices for the five 
lowest-priced growths of the growths quoted for M 1\3/32\ inch cotton, 
C.I.F. Northern Europe.
    Northern Europe forward price means the average for the preceding 
Friday through Thursday of the forward shipment prices for the five 
lowest-priced

[[Page 381]]

growths of the growths quoted for M 1\3/32\ inch cotton, C.I.F. Northern 
Europe.
    Northern Europe price means, during the period in which only one 
daily price quotation is available for the growth quoted for M 1\3/32\ 
inch cotton, C.I.F. Northern Europe, the average of the price quotations 
for the preceding Friday through Thursday of the five lowest-priced 
growths of the growths quoted for M 1\3/32\ inch cotton, C.I.F. Northern 
Europe.
    Optional origin export contract means a contract under which an 
exporter may sell cotton produced in a foreign country with the option 
to substitute cotton produced in the United States.
    U.S. Northern Europe current price means the average for the 
preceding Friday through Thursday of the current shipment prices for the 
lowest-priced United States growth as quoted for M 1\3/32\ inch cotton, 
C.I.F. Northern Europe.
    U.S. Northern Europe forward price means the average for the 
preceding Friday through Thursday of the forward shipment prices for the 
lowest-priced United States growth as quoted for M 1\3/32\ inch cotton, 
C.I.F. Northern Europe.
    U.S. Northern Europe price means, during the period in which only 
one daily price quotation is available for the United States growths 
quoted for M 1\3/32\ inch cotton, C.I.F. Northern Europe, the average of 
the price quotations for the preceding Friday through Thursday of the 
lowest-priced United States growth as quoted for M 1\3/32\ inch cotton, 
C.I.F. Northern Europe.



Sec. 1427.103  Eligible upland cotton.

    (a) For the purposes of this subpart, eligible upland cotton is 
domestically produced baled upland cotton which is--
    (1) Opened by an eligible domestic user on or after August 1, 1991, 
and on or before July 31, 2003, or, excluding cotton covered under 
paragraph (a)(2), exported by an eligible exporter on or after July 18, 
1996 and on or before July 31, 2003, during a Friday through Thursday 
period in which a payment rate, determined in accordance with 
Sec. 1427.107, is in effect, and which meets the requirements of 
paragraphs (b) and (c); or
    (2) Sold for export by an eligible exporter under a written contract 
entered into on or after August 1, 1991, and prior to July 18, 1996 
during a Friday through Thursday period in which a payment rate, 
determined in accordance with Sec. 1427.107, is in effect and which is 
contracted for delivery by the eligible exporter by not later than 
September 30, 1996, and which meets the requirements of paragraphs (b) 
and (c).
    (b) Eligible upland cotton must be either--
    (1) Baled lint, including baled lint classified by USDA's 
Agricultural Marketing Service as Below Grade;
    (2) Loose;
    (3) Semi-processed motes which are of a quality suitable, without 
further processing, for spinning, papermaking or bleaching;
    (4) Reginned (processed) motes.
    (c) Eligible upland cotton must not be--
    (1) Cotton with respect to which a payment, in accordance with the 
provisions of this subpart, has been made available;
    (2) Imported cotton;
    (3) Raw (unprocessed) motes;
    (4) Semi-processed motes which are not of a quality suitable, 
without further processing, for spinning, papermaking or bleaching;
    (5) Textile mill wastes; or
    (6) Semi-processed or reginned (processed) motes which have been 
blended with textile mill waste or other fibers.

[56 FR 41435, Aug. 21, 1991, as amended at 56 FR 59853, Nov. 26, 1991; 
57 FR 14329, Apr. 20, 1992; 61 FR 37611, July 18, 1996]



Sec. 1427.104  Eligible domestic users and exporters.

    (a) For the purposes of this subpart, the following persons shall be 
considered to be eligible domestic users and exporters of upland cotton:
    (1) A person regularly engaged in the business of opening bales of 
eligible upland cotton for the purpose of manufacturing such cotton into 
cotton products in the United States (``domestic user''), who has 
entered into an agreement with CCC to participate in the upland cotton 
user marketing certificate program; or

[[Page 382]]

    (2) A person, including a producer or a cooperative marketing 
association approved in accordance with part 1425 of this chapter, 
regularly engaged in selling eligible upland cotton for exportation from 
the United States (``exporter''), who has entered into an agreement with 
CCC to participate in the upland cotton user marketing certificate 
program.
    (b) Applications for payment in accordance with this subpart must 
contain documentation required by the provisions of the Upland Cotton 
Domestic User/Exporter Agreement and instructions issued by CCC.



Sec. 1427.105  Upland Cotton Domestic User/Exporter Agreement.

    (a) Payments in accordance with this subpart shall be made available 
to eligible domestic users and exporters who have entered into an Upland 
Cotton Domestic User/Exporter Agreement with CCC and who have complied 
with the terms and conditions set forth in this subpart, the Upland 
Cotton Domestic User/Exporter Agreement and instructions issued by CCC.
    (b) Upland Cotton Domestic User/Exporter Agreements may be obtained 
from Cotton Branch, CRD, Kansas City Commodity Office, P.O. Box 419205, 
Kansas City, Missouri 64141-6205. In order to participate in the program 
authorized by this subpart, domestic users and exporters must execute 
the Upland Cotton Domestic User/Exporter Agreement and forward an 
original and two copies to KCCO.



Sec. 1427.106  Form of payment.

    Payments in accordance with this subpart shall be made available in 
the form of commodity certificates issued in accordance with part 1470 
of this chapter, or in cash, as determined and announced by CCC.

[57 FR 14329, Apr. 20, 1992]



Sec. 1427.107  Payment rate.

    (a) The payment rate for the purposes of calculating payments made 
available in accordance with this subpart shall be determined by CCC as 
follows:
    (1) For exporters for cotton shipped on or after July 18, 1996 
(excluding cotton covered under paragraph (a)(2)) and for domestic users 
for bales opened during the period--
    (i) For bales opened beginning the Friday following August 1 and 
ending the week in which the Northern Europe current price and the 
Northern Europe forward price first become available, the payment rate 
shall be the difference between the U.S. Northern Europe price minus 
1.25 cents per pound, and the Northern Europe price in the fourth week 
of a consecutive 4-week period in which the U.S. Northern Europe price 
exceeded the Northern Europe price each week by more than 1.25 cents per 
pound, and the adjusted world price (AWP) did not exceed the current 
crop-year loan level for the base quality of upland cotton by more than 
130 percent in any week of the 4-week period.
    (ii) Beginning the Friday through Thursday week after the week in 
which the NEc price and the NEf price first become available and ending 
the Thursday following July 31, the payment rate shall be the difference 
between the USNEc price, minus 1.25 cents per pound, and the NEc price 
in the fourth week of a consecutive 4-week period in which the USNEc 
price exceeded the NEc price each week by more than 1.25 cents per 
pound, and the AWP did not exceed the current crop-year loan level for 
the base quality of upland cotton by more than 130 percent.
    (iii) For bales opened before August 30, 1991, the payment rate 
shall be zero.
    (2) For exporters prior to July 18, 1996 for cotton which is 
contracted for delivery by not later than September 30, 1996,--
    (i) For contracts entered into beginning the Friday following August 
1 and ending the week in which the Northern Europe current price and the 
Northern Europe forward price first become available which specify 
shipment of the cotton by not later than September 30 of the following 
marketing year, the payment rate shall be the difference between the 
U.S. Northern Europe price minus 1.25 cents per pound, and the Northern 
Europe price in the fourth week of a consecutive 4-week period in which 
the U.S. Northern Europe price exceeded the Northern Europe price each 
week by more than 1.25

[[Page 383]]

cents per pound, and the AWP did not exceed the current crop-year loan 
level for the base quality of upland cotton by more than 130 percent in 
any week of the 4-week period.
    (ii) For contracts entered into during the period beginning the 
Friday through Thursday week after the week in which the Northern Europe 
current price and the Northern Europe forward price first become 
available and ending the Thursday following July 31 which specify 
shipment of the cotton by not later than September 30 of such year, the 
payment rate shall be the difference between the U.S. Northern Europe 
current price minus 1.25 cents per pound and the Northern Europe current 
price in the fourth week of a consecutive 4-week period in which the 
U.S. Northern Europe current price exceeded the Northern Europe current 
price each week by more than 1.25 cents per pound, and the AWP did not 
exceed the current crop-year loan level for the base quality of upland 
cotton by more than 130 percent in any week of the 4-week period.
    (iii) For contracts entered into prior to the Friday through 
Thursday week that includes October 1 which specify shipment after 
September 30 of the year following such contract period, the payment 
rate shall be zero.
    (iv) For contracts entered into during the period beginning the 
Friday through Thursday week that includes October 1 until the Friday 
through Thursday week after the week in which the Northern Europe 
current price and the Northern Europe forward price first become 
available which specify shipment of the cotton after September 30 
following such contract period, payments shall be made whenever the U.S. 
Northern Europe price exceeds the Northern Europe price by more than 
1.25 cents per pound for the preceding consecutive 4-week period and the 
AWP did not exceed the current crop year loan level for the base quality 
of upland cotton by more than 130 percent in any week of such 4-week 
period. The payment rate shall be the lower of:
    (A) The difference between the U.S. Northern Europe price minus 1.25 
cents per pound and the Northern Europe price in the fourth week of such 
4-week period; or
    (B) 2.5 cents per pound.
    (v) For contracts entered into beginning the Friday through Thursday 
week after the week in which the Northern Europe current price and the 
Northern Europe forward price first become available through the third 
Friday through Thursday week after the Northern Europe current price and 
the Northern Europe forward price first become available which specify 
shipment of the cotton after September 30 following such contract 
period, payments shall be made whenever the U.S. Northern Europe current 
price exceeds the Northern Europe current price by more than 1.25 cents 
per pound for the preceding consecutive 4-week period and the AWP did 
not exceed the current crop year loan level for the base quality of 
upland cotton by more than 130 percent in any week of such 4-week 
period. The payment rate shall be the lower of:
    (A) The difference between the U.S. Northern Europe current price 
minus 1.25 cents per pound and the Northern Europe current price in the 
fourth week of such 4-week period; or
    (B) 2.5 cents per pound.
    (vi) Notwithstanding the provisions of paragraphs (a)(2)(iv) and 
(a)(2)(v) of this section, with respect to contracts which specify 
shipment of the cotton after September 30, 1994, but before September 
30, 1995, no payments will be made on contracts made prior to the fourth 
Friday through Thursday week after the Northern Europe current price and 
the Northern Europe forward price first become available during calendar 
year 1994.
    (vii) For contracts entered into during the period beginning the 
fourth Friday through Thursday week after the Northern Europe current 
price and the Northern Europe forward price first become available and 
ending the Thursday following July 31 which specify shipment of the 
cotton after September 30 following such contract period, payments shall 
be made whenever the U.S. Northern Europe forward price exceeds the 
Northern Europe forward price by more than 1.25 cents per pound for the 
preceding consecutive 4-week period and the AWP did not exceed the loan 
level for the upcoming marketing year for the base quality of

[[Page 384]]

upland cotton by more than 130 percent in any week of such 4-week 
period. The payment rate shall be the lower of:
    (A) The difference between the U.S. Northern Europe forward price 
minus 1.25 cents per pound and the Northern Europe forward price in the 
fourth week of such 4-week period; or
    (B) 20 percent of the difference between the U.S. Northern Europe 
forward price minus 1.25 cents per pound and the Northern Europe forward 
price in the fourth week of such 4-week period plus the payment rate for 
which such contracts were eligible in the preceding week.
    (viii) For contracts entered into before August 30, 1991, the 
payment rate shall be zero.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
no payment rate shall be established in a week following a consecutive 
10-week period in which the U.S. Northern Europe price, adjusted for the 
value of any certificate or cash payment issued in accordance with 
paragraph (a) of this section, exceeds the Northern Europe price by more 
than 1.25 cents per pound.
    (c) Notwithstanding the provisions of paragraph (a) of this section, 
whenever a 4-week period contains a combination of Northern Europe 
prices only for one to three weeks and Northern Europe current prices 
and North Europe forward prices only for one to three weeks such as 
occurs in the spring when the Northern Europe price is succeeded by the 
Northern Europe current price and the Northern Europe forward price 
(``spring transition period''), and at the start of a new marketing year 
when the Northern Europe current price and the Northern Europe forward 
price are succeeded by the Northern Europe price (``marketing year 
transition''):
    (1) Under paragraphs (a)(1)(i) and (a)(2)(i) of this section, during 
the marketing year transition period, the Northern Europe forward price 
and the U.S. Northern Europe forward price in combination with the 
Northern Europe price and the U.S. Northern Europe price shall be taken 
into consideration during such 4-week periods to determine whether a 
payment is to be issued.
    (2) Under paragraphs (a)(1)(ii), (a)(2)(ii), and (a)(2)(v) of this 
section, during the spring transition period, the Northern Europe 
current price and the U.S. Northern Europe current price in combination 
with the Northern Europe price and the U.S. Northern Europe price shall 
be taken into consideration during such 4-week periods to determine 
whether a payment is to be issued.
    (d) Notwithstanding any other provision of this section, for 
contracts made by exporters prior to July 18, 1996, that specify 
shipment of the cotton by not later than September 30, 1996,--
    (1) If shipment is completed by October 31 of such year, the payment 
rate shall be the payment rate established for the contract;
    (2) If shipment is not completed by October 31 of such year, the 
payment rate shall be zero.
    (3) If shipment is not completed by December 31 of such year, the 
exporter shall pay liquidated damages to CCC in an amount determined by 
multiplying the quantity of cotton not shipped by the higher of:
    (i) The difference between the highest payment rate paid to, or 
earned by, the exporter between the date the original contract was 
entered into and December 31 of the year in which the original contract 
shipment period ends, regardless of whether the highest payment rate 
paid to, or earned by, the exporter was a current or forward-crop 
payment rate, and the original contract payment rate or, if a 
replacement contract has been made, the replacement contract payment 
rate, or
    (ii) 50 percent of the original contract payment rate.
    (e) For U.S. cotton sold by the exporter under an optional origin 
contract for delivery by not later than September 30, 1996, prior to 
July 18, 1996, the payment rate shall not be established until the 
exporter notifies CCC in writing that the cotton shipped or to be 
shipped was or will be of United States origin. Upon receipt of such 
notification, CCC will establish the payment rate for cotton shipped 
under such contract at the lower of:
    (1) The payment rate in effect when the optional origin contract was 
made, or

[[Page 385]]

    (2) The payment rate in effect on the date of the written 
notification which is submitted to CCC stating that the cotton shipped, 
or to be shipped, under such contract was, or shall be, of United States 
origin.
    (f) For the purposes of this subpart--
    (1) With respect to the determination of the U.S. Northern Europe 
price, the U.S. Northern Europe current price, the U.S. Northern Europe 
forward price, the Northern Europe price, the Northern Europe current 
price and the Northern Europe forward price--
    (i) If daily quotes are not available for one or more days of the 5-
day period, the available quotes during the period will be used.
    (ii) If no daily quotes are available for the entire 5-day period 
for either or both the U.S. Northern Europe price and the Northern 
Europe price during the period when only one daily price quotation is 
available for each growth quoted for M 1-3/32 inch cotton, delivered 
C.I.F. Northern Europe; or the U.S. Northern Europe current price and 
the Northern Europe current price; or the U.S. Northern Europe forward 
price and the Northern Europe forward price, that week will not be taken 
into consideration, in which case CCC may establish a payment rate at a 
level it determines to be appropriate, taking into consideration the 
payment rate determined in accordance with paragraph (a) of this section 
for the latest available week.
    (iii) Beginning July 18, 1996, if no daily quotes are available for 
the entire 5-day period for either or both the USNEc price and the NEc 
price, the marketing year transition shall be implemented immediately as 
provided for in paragraph (c)(1).
    (2) With respect to the determination of the U.S. Northern Europe 
price, the U.S. Northern Europe current price, and the U.S. Northern 
Europe forward price, if a quote for either the U.S. Memphis territory 
or the California/Arizona territory as quoted for M 1-3/32 inch cotton, 
delivered C.I.F. Northern Europe, is not available for each or any day 
of the 5-day period, the available quote will be used.
    (g) Payment rates for loose, reginned motes and semi-processed motes 
which are of a quality suitable, without further processing, for 
spinning, papermaking or bleaching shall be based on a percentage of the 
basic rate for baled lint, as specified in the Upland Cotton Domestic 
User/Exporter Agreement.

[56 FR 41435, Aug. 21, 1991, as amended at 56 FR 59853, Nov. 26, 1991; 
57 FR 14329, Apr. 20, 1992; 57 FR 49639, Nov. 3, 1992; 58 FR 42843, Aug. 
12, 1993; 59 FR 17919, Apr. 15, 1994; 61 FR 37611, July 18, 1996]



Sec. 1427.108  Payment.

    (a) Payments in accordance with this subpart shall be determined by 
multiplying:
    (1) The payment rate, determined in accordance with Sec. 1427.107, 
by
    (2) The net weight (gross weight minus the weight of bagging and 
ties) determined in accordance with paragraph (b) of this section, of 
eligible upland cotton bales that are opened by an eligible domestic 
user or sold for export by an eligible exporter during the Friday 
through Thursday period following a week in which a payment rate is 
established.
    (b) For the purposes of this subpart, the net weight shall be 
determined based upon:
    (1) For domestic users, the weight on which settlement for payment 
of the cotton was based (``landed mill weight'');
    (2) For reginned motes processed by an end user who converted such 
motes, without rebaling, to an end use in a continuous manufacturing 
process, the net weight of the reginned motes after final cleaning;
    (3) For exporters, the shipping warehouse weight or the gin weight 
if the cotton was not placed in a warehouse, of the eligible cotton 
unless the exporter obtains and pays the cost of having all the bales in 
the shipment reweighed by a licensed weigher and furnishes a copy of the 
certified reweights.
    (c) For the purposes of this subpart, eligible upland cotton will be 
considered--
    (1) Purchased by the domestic user on the date the bale is opened in 
preparation for consumption; and
    (2) From August 1, 1991, through July 17, 1996, sold by the exporter 
on the date the contract for sale is confirmed in writing and which is 
contracted for

[[Page 386]]

delivery by not later than September 30, 1996; and
    (3) Excluding cotton covered under paragraph (c)(2), through July 
31, 2003, exported by the exporter on the date that CCC determines is 
the date on which the cotton is shipped.
    (d) Payments in accordance with this subpart shall be made available 
upon application for payment and submission of supporting documentation, 
including proof of purchases and consumption of eligible cotton by the 
domestic user or proof of export of eligible cotton by the exporter, as 
required by the provisions of the Upland Cotton Domestic User/Exporter 
Agreement issued by CCC.

[56 FR 41434, Aug. 21, 1991, as amended at 61 FR 37611, July 18, 1996]



Sec. 1427.109  Contract cancellations.

    (a) For the purposes of this subpart, except as provided in 
paragraph (e) of this section, any contract entered into by an exporter 
that is canceled or amended to reduce the contract quantity shall be 
replaced by the exporter with a subsequent contract (``replacement 
contract'') designated by the exporter at the time a copy of the 
replacement contract is submitted to CCC, as specified in the Upland 
Cotton Domestic User/Exporter Agreement (``the Agreement''). Optional 
origin export contracts that are canceled/amended must be replaced with 
either an optional origin export contract or a contract to export United 
States cotton. The replacement contract shall specify shipment of the 
cotton by not later than September 30 following the shipment date 
specified in the original contract, except if the cancellation/amendment 
of a contract that specified shipment by not later than September 30 
occurs after September 1, the replacement contract shall be entered into 
within 30 days after the cancellation/amendment and shipment shall be 
completed within 30 days after the replacement contract is entered into, 
but in no event may shipment be completed later than December 31. The 
provisions of this paragraph shall apply to--
    (1) All undelivered (open) export contracts (including optional 
origin export contracts) outstanding as of the later of the date the 
Agreement was executed by the exporter or August 29, 1991;
    (2) Any export contracts that were canceled, or amended to reduce 
the contract quantity, between the later of June 18, 1991, or 75 days 
prior to the date the Agreement was executed by the exporter and the 
later of the date the Agreement was executed by the exporter or August 
29, 1991, which are not replaced by the later of the date the Agreement 
was executed by the exporter or August 29, 1991; and
    (3) All new export contracts entered into by the exporter on or 
after August 30, 1991, and prior to July 18, 1996 which are for delivery 
by not later than September 30, 1996.
    (b) Notwithstanding the provisions of Sec. 1427.107, the payment 
rate for a replacement contract shall be the lesser of the payment rate 
in effect on the date of the original contract or the payment rate in 
effect on the date of the replacement contract.
    (c) If shipment of the cotton on any replacement contract is--
    (1) Completed by October 31, the payment rate shall be the payment 
rate determined in accordance with paragraph (b) of this section;
    (2) Not completed by October 31, the payment rate shall be zero;
    (3) Not completed, or a replacement contract is not designated by 
the exporter by December 31, the exporter shall pay liquidated damages 
to CCC in an amount determined by multiplying the quantity of cotton not 
shipped by the higher of:
    (i) The difference between the highest payment rate paid to, or 
earned by, the exporter between the date the original contract was 
entered into and December 31 of the year in which the original contract 
shipment period ends, regardless of whether the highest payment rate 
paid to, or earned by, the exporter was a current or forward-crop 
payment rate, and the payment rate determined in accordance with 
paragraph (b) of this section, or
    (ii) 50 percent of the original contract payment rate.

[[Page 387]]

    (d) Notwithstanding the provisions of paragraphs (a) through (c) of 
this section, with respect to optional origin export contracts, shipment 
of foreign cotton will fulfill the shipment requirements but such cotton 
will be ineligible for payments.
    (e) The provisions of paragraphs (a) through (d) of this section 
will not apply if CCC determines, based upon written evidence provided 
by the exporter, that a contract cancellation, amendment, or failure to 
export is due to reasons beyond the control of the exporter. If, as 
determined by CCC, the cancellation is beyond the control of the 
exporter, replacement contracts are not required, and the assessment of 
liquidated damages by CCC is waived. Documentation to support that 
contract cancellations are beyond the control of the exporter must be 
submitted to CCC. Requests for relief from naming a replacement contract 
will be examined by CCC on a case-by-case basis to determine if relief 
is warranted.

[56 FR 41435, Aug. 21, 1991, as amended at 58 FR 42843, Aug. 12, 1993; 
61 FR 37611, July 18, 1996]



    Subpart D--Regulations for the Recourse Seed Cotton Loan Program

    Source:  61 FR 37612, July 18, 1996, unless otherwise noted.



Sec. 1427.160  Applicability.

    (a) The regulations in this subpart are applicable to the 1996 
through 2002 crops of upland and extra long staple seed cotton. These 
regulations set forth the terms and conditions under which recourse seed 
cotton loans shall be made available by the Commodity Credit Corporation 
(``CCC''). Such loans will be available through March 31 of the year 
following the calendar year in which such crop is normally harvested. 
CCC may change the loan availability period to conform to State or 
locally imposed quarantines. Additional terms and conditions are set 
forth in the note and security agreement which must be executed by a 
producer in order to receive such loans.
    (b) Loan rates and the forms which are used in administering the 
recourse seed cotton loan program for a crop of cotton are available in 
State and county Farm Service Agency (FSA) offices (State and county 
offices, respectively). Loan rates shall be based upon the location at 
which the loan collateral is stored.
    (c) A producer must, unless otherwise authorized by CCC, request the 
loan at the county office which, in accordance with part 718 of this 
title, is responsible for administering programs for the farm on which 
the cotton was produced. A CMA must, unless otherwise authorized by CCC, 
request the loan at a central county office designated by the State 
committee. All note and security agreements and related documents 
necessary for the administration of the recourse seed cotton loan 
program shall be prescribed by CCC and shall be available at State and 
county offices.
    (d) Loans shall not be available for seed cotton 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. 1427.161  Administration.

    (a) The recourse seed cotton loan program which is applicable to a 
crop of cotton shall be administered under the general supervision of 
the Executive Vice President, CCC (Administrator, FSA), or a designee 
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 subpart.
    (c) The State committee shall take any action required by these 
regulations which 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 which is not in accordance with the 
regulations of this subpart; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this subpart.

[[Page 388]]

    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC (Administrator, FSA), 
or a designee from determining any question arising under the recourse 
seed cotton program or from reversing or modifying any determination 
made by the State or county committee.
    (e) The Deputy Administrator, FSA, may authorize State or county 
committees to waive or modify deadlines and other program requirements 
in cases where lateness or failure to meet such other requirements does 
not adversely affect the operation of the recourse seed cotton loan 
program.
    (f) A representative of CCC may execute loan applications and 
related documents only under the terms and conditions determined and 
announced by CCC. Any such document which is not executed in accordance 
with such terms and conditions, including any purported execution prior 
to the date authorized by CCC, shall be null and void.



Sec. 1427.162  Definitions.

    Section 1427.3 of this part shall be applicable to this subpart.



Sec. 1427.163  Disbursement of loans.

    (a) A producer or the producer's agent shall request a loan at the 
county office for the county which, in accordance with part 718 of this 
title, is responsible for administering programs for the farm on which 
the cotton was produced and which will assist the producer in completing 
the loan documents, except that CMA's designated by producers to obtain 
loans in their behalf may, unless otherwise authorized by CCC, obtain 
loans through a central county office designated by the State committee.
    (b) Disbursement of each loan will be made by the county office of 
the county which is responsible for administering programs for the farm 
on which the cotton was produced, except that CMA's designated by 
producers to obtain loans in their behalf may, unless otherwise 
authorized by CCC, obtain disbursement of loans at a central county 
office designated by the State committee. Service charges shall be 
deducted from the loan proceeds. The producer or the producer's agent 
shall not present the loan documents for disbursement unless the cotton 
is in existence and in good condition. If the cotton is not in existence 
and in good condition at the time of disbursement, the producer or the 
agent shall immediately return the check issued in payment of the loan 
or, if the check has been negotiated, the total amount disbursed under 
the loan, and charges plus interest shall be refunded promptly.



Sec. 1427.164  Eligible producer.

    (a) An eligible producer of a crop of cotton shall be a person 
(i.e., an individual, partnership, association, corporation, CMA estate, 
trust, State or political subdivision or agency thereof, or other legal 
entity) which:
    (1) Produces such a crop of cotton as a landowner, landlord, tenant, 
or sharecropper;
    (2) Meets the requirements of this part; and
    (3) Meets the requirements of parts 12 and 718 of this title, and 
part 1412 of this chapter.
    (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 estate 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 trust. Loan and 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 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

[[Page 389]]

applicable loan documents are signed by the guardian;
    (3) Any note and security agreement 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) Two or more producers may obtain a single joint loan with 
respect to cotton which is stored in an approved storage if the cotton 
is jointly owned by such producers. The cotton may have been produced by 
two or more eligible producers on one or more farms.
    (e) A CMA may obtain loans on the eligible production of such cotton 
with respect to such cotton on behalf of the members of the CMA who are 
eligible to receive loans for a crop of cotton. For purposes of this 
subpart, the term ``producer'' includes a CMA.



Sec. 1427.165  Eligible seed cotton.

    (a) Seed cotton pledged as collateral for a loan must be tendered to 
CCC by an eligible producer and must:
    (1) Be in existence and in good condition at the time of 
disbursement of loan proceeds;
    (2) Be stored in identity-preserved lots in approved storage meeting 
requirements of Sec. 1427.171;
    (3) Be insured at the full loan value against loss or damage by 
fire;
    (4) Not have been sold, nor any sales option on such cotton granted, 
to a buyer under a contract which provides that the buyer may direct the 
producer to pledge the seed cotton to CCC as collateral for a loan;
    (5) Not have been previously sold and repurchased; or pledged as 
collateral for a CCC loan and redeemed;
    (6) Be production from acreage that has been reported timely in 
accordance with part 718 of this title; and
    (7) For upland cotton, be production from a farm with a production 
flexibility contract in accordance with part 1412 of this chapter.
    (b) The quality of cotton which may be pledged as collateral for a 
loan shall be the estimated quality of lint cotton in each lot of seed 
cotton as determined by the county office, except that if a control 
sample of the lot of cotton is classed by an Agricultural Marketing 
Service (AMS), Cotton Classing Office or other entity approved by CCC, 
the quality for the lot shall be the quality shown on the applicable 
documentation issued for the control sample.
    (c) To be eligible for loan, the beneficial interest in the seed 
cotton must be in the producer who is pledging the seed cotton as 
collateral for a loan as provided in Sec. 1427.5(c).



Sec. 1427.166  Insurance.

    The seed cotton must be insured at the full loan value against loss 
or damage by fire.



Sec. 1427.167  Liens.

    If there are any liens or encumbrances on the seed cotton tendered 
as collateral for a loan, 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 cotton after the loan is approved.



Sec. 1427.168  [Reserved]



Sec. 1427.169  Fees, charges, and interest.

    (a) A producer shall pay a nonrefundable loan service fee to CCC at 
a rate determined by CCC.
    (b) Interest which accrues with respect to a loan shall be 
determined in accordance with part 1405 of this chapter.



Sec. 1427.170  Quantity for loan.

    (a) The quantity of lint cotton in each lot of seed cotton tendered 
for loan shall be determined by the county office by multiplying the 
weight or estimated weight of seed cotton by the lint turnout factor 
determined in accordance with paragraph (b).
    (b) The lint turnout factor for any lot of seed cotton shall be the 
percentage determined by the county committee representative during the 
initial inspection of the lot. If a control portion of the lot is 
weighed and ginned, the turnout factor determined for the portion of 
cotton ginned will be used for the lot. If a control portion is not 
weighed and ginned, the lint turnout

[[Page 390]]

factor shall not exceed 32 percent for machine-picked cotton and 22 
percent for machine-stripped cotton unless acceptable proof is furnished 
showing that the lint turnout factor is greater.
    (c) Loans shall not be made on more than a percentage established by 
the county committee of the quantity of lint cotton determined as 
provided in this section. If the seed cotton is weighed, the percentage 
to be used shall not be more than 95 percent. If the quantity is 
determined by measurement, the percentage to be used shall not be more 
than 90 percent. The percentage to be used in determining the maximum 
quantity for any loan may be reduced below such percentages by the 
county committee when determined necessary to protect the interests of 
CCC on the basis of one or more of the following risk factors:
    (1) Condition or suitability of the storage site or structure;
    (2) Condition of the cotton;
    (3) Location of the storage site or structure; and
    (4) Other factors peculiar to individual farms or producers which 
related to the preservation or safety of the loan collateral. Loans may 
be made on a lower percentage basis at the producer's request.



Sec. 1427.171  Approved storage.

    Approved storage shall consist of storage located on or off the 
producer's farm (excluding public warehouses) which is determined by a 
county committee representative to afford adequate protection against 
loss or damage and which is located within a reasonable distance, as 
determined by CCC, from an approved gin. If the cotton is not stored on 
the producer's farm, the producer must furnish satisfactory evidence 
that the producer has the authority to store the cotton on such property 
and that the owner of such property has no lien for such storage against 
the cotton. The producer must provide satisfactory evidence that the 
producer and any person having an interest in the cotton including CCC, 
have the right to enter the premises to inspect and examine the cotton 
and shall permit a reasonable time to such persons to remove the cotton 
from the premises.



Sec. 1427.172  Settlement.

    (a) A producer may, at any time prior to maturity of the loan, 
obtain release of all or any part of the loan seed cotton by paying to 
CCC the amount of the loan, plus interest and charges.
    (b)(1) A producer or the producer's agent shall not remove from 
storage any cotton which is pledged as collateral for a loan until prior 
written approval has been received from CCC for removal of such cotton. 
If a producer or the producer's agent obtains such approval, they may 
remove such cotton from storage, sell the seed cotton, have it ginned, 
and sell the lint cotton and cottonseed obtained therefrom. The ginner 
shall inform the county office in writing immediately after the seed 
cotton removed from storage has been ginned and furnish the county 
office the loan number, producer's name, and applicable gin bale 
numbers. If the seed cotton is removed from storage, the loan principal 
plus interest and charges thereon must be satisfied not later than the 
earlier of:
    (i) The date established by the county committee;
    (ii) 5 days after the date of the producer received the AMS 
classification in accordance with Sec. 1427.9 (and the warehouse 
receipt, if the cotton is delivered to a warehouse), representing such 
cotton; or
    (iii) The loan maturity date.
    (2) If the seed cotton or lint cotton is sold, the loan principal, 
interest, and charges must be satisfied immediately.
    (3) A producer, except a CMA, may obtain a nonrecourse loan or loan 
deficiency payment in accordance with subpart A of this part, on the 
lint cotton, but:
    (i) The loan principal, interest, and charges on the seed cotton 
must be satisfied from the proceeds of the nonrecourse loan in 
accordance with subpart A of this part; or
    (ii) The loan deficiency payment must be applied to the loan 
principal, interest, and charges on the outstanding seed cotton loan.
    (4) A CMA must repay the seed cotton loan principal, interest, and 
charges before pledging the cotton for a nonrecourse loan or before a 
loan deficiency payment can be approved in accordance with subpart A of 
this part,

[[Page 391]]

on the lint cotton. If CMA's authorized by producers to obtain loans in 
their behalf remove seed cotton from storage prior to obtaining approval 
to move such cotton, such removal shall constitute conversion of such 
cotton unless the CMA:
    (i) Notifies the county office in writing the following morning by 
mail or otherwise that such cotton has been moved and is on the gin 
yard;
    (ii) Furnishes CCC an irrevocable letter of credit if requested; and
    (iii) Repays the loan principal, plus interest and charges, within 
the time specified by the county committee.
    (5) Any removal from storage shall not be deemed to constitute a 
release of CCC's security interest in the seed cotton or to release the 
producer or CMA from liability for the loan principal, interest, and 
charges if full payment of such amount is not received by the county 
office.
    (c) If, either before or after maturity, the producer discovers that 
the cotton is going out of condition or is in danger of going out of 
condition, the producer shall immediately notify the county office and 
confirm such notice in writing. If the county committee determines that 
the cotton is going out of condition or is in danger of going out of 
condition, the county committee will call for repayment of the loan 
principal, plus interest and charges on or before a specified date. If 
the producer does not repay the loan or have the cotton ginned and 
obtain a nonrecourse loan in accordance with subpart A of this part on 
the lint cotton produced therefrom within the period as specified by the 
county committee, the cotton shall be considered abandoned.
    (d) If the producer has control of the storage site and if the 
producer subsequently loses control of the storage site or there is 
danger of flood or damage to the seed cotton or storage structure making 
continued storage of the cotton unsafe, the producer shall immediately 
either repay the loan or move the seed cotton to the nearest approved 
gin for ginning and shall, at the same time, inform the county office. 
If the producer does not do so, the seed cotton shall be considered 
abandoned.



Sec. 1427.173  Foreclosure.

    Any seed cotton pledged as collateral for a loan which is abandoned 
or which has not been ginned and pledged as collateral for a nonrecourse 
loan in accordance with subpart A of this part by the seed cotton loan 
maturity date may be removed from storage by CCC and ginned and the 
resulting lint cotton warehoused for the account of CCC. The lint cotton 
and cottonseed may be sold, at such time, in such manner, and upon such 
terms as CCC may determine at public or private sale. CCC may become the 
purchaser of the whole or any part of such cotton and cottonseed. If the 
proceeds received from the sales of the cotton are less than the amount 
due on the loan (including principal, interest, ginning charges, and any 
other charges incurred by CCC), the producer shall be liable for such 
difference. If the proceeds received from sale of the cotton are greater 
than the sum of the amount due plus any cost incurred by CCC in 
conducting the sale of the cotton, the amount of such excess shall be 
paid to the producer or, if applicable, to any secured creditor of the 
producer.



Sec. 1427.174  Maturity of seed cotton loans.

    Seed cotton loans mature on demand by CCC but no later than May 31 
following the calendar year in which such crop is normally harvested.



Sec. 1427.175  Liability of the producer.

    (a)(1) If a producer makes any fraudulent representation in 
obtaining a loan, maintaining a loan, or settling a loan or if the 
producer disposes of or moves the loan collateral without the prior 
approval of CCC, such loan amount shall be refunded upon demand by CCC. 
The producer shall be liable for:
    (i) The amount of the loan;
    (ii) Any additional amounts paid by CCC with respect to the loan;
    (iii) All other costs which CCC would not have incurred but for the 
fraudulent representation or the unauthorized disposition or movement of 
the loan collateral;
    (iv) Applicable interest on such amounts; and
    (v) Liquidated damages in accordance with paragraph (e).

[[Page 392]]

    (2) Notwithstanding any provision 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, the value of such collateral acquired 
by CCC shall be equal to the sales price of the cotton less any costs 
incurred by CCC in completing the sale.
    (b) If the amount disbursed under a loan, or in settlement thereof, 
exceeds the amount authorized by this subpart, the producer shall be 
liable for repayment of such excess, plus interest. In addition, seed 
cotton pledged as collateral for such loan shall not be released to the 
producer until such excess is repaid.
    (c) If the amount collected from the producer in satisfaction of the 
loan is less than the amount required in accordance with this subpart, 
the producer shall be personally liable for repayment of the amount of 
such deficiency plus applicable interest.
    (d) 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 security 
agreement and the regulations set forth in this subpart. 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 seed cotton 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 seed cotton, after 
execution of the note and security agreement by CCC.
    (e) The producer and CCC agree that it will be difficult, if not 
impossible, to prove the amount of damages to CCC if a producer makes 
any fraudulent representation in obtaining a loan or in maintaining or 
settling a loan or disposing of or moving the collateral without the 
prior approval of CCC. Accordingly, if CCC or the county committee 
determines that the producer has violated the terms or conditions of the 
note and security agreement, liquidated damages shall be assessed on the 
quantity of the seed cotton which is involved in the violation. If CCC 
or the county committee 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 for the 
first offense;
    (ii) 25 percent of the loan rate applicable to the loan note for the 
second offense; or
    (2) Did not act in good faith with regard to the violation, or for 
cases other than 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.
    (f) For first and second offenses, if CCC or the county committee 
determines that a producer acted in good faith when the violation 
occurred, the county committee shall:
    (1) Require repayment of the loan principal applicable to the loan 
quantity affected by the violation, and charges plus interest applicable 
to the amount repaid;
    (2) Assess liquidated damages in accordance with paragraph (e); and
    (3) If the producer fails to pay such amount within 30 calendar days 
from the date of notification, call the applicable loan involved in the 
violation.
    (g) For cases other than first or second offenses, or any offense 
for which CCC or the county committee cannot determine good faith when 
the violation occurred, the county committee shall:
    (1) Assess liquidated damages in accordance with paragraph (e);
    (2) Call the applicable loan involved in the violation.
    (h) If CCC or the county committee determines that the producer has 
committed a violation in accordance with paragraph (e), the county 
committee shall notify the producer in writing that:
    (1) The producer has 30 calendar days to provide evidence and 
information to the county committee regarding the circumstances which 
caused the violation, and

[[Page 393]]

    (2) Administrative actions will be taken in accordance with 
paragraphs (f) or (g).
    (i) Any or all of the liquidated damages assessed in accordance with 
the provision of paragraph (e) may be waived as determined by CCC.



 Subpart E--Standards for Approval of Warehouses for Cotton and Cotton 
                                 Linters

    Authority: Secs. 4 and 5, 62 Stat. 1070, as amended, 1072, as 
amended (15 U.S.C. 714 b and c).

    Source: 44 FR 67085, Nov. 23, 1979, unless otherwise noted.



Sec. 1427.1081  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 cotton and cotton linters, under a Cotton 
Storage Agreement, which are owned by CCC or held by CCC as security for 
price support loans. This subpart is not applicable to cotton or cotton 
linters purchased in storage 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 the KCCO and a storage 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 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-49, ``Application for Approval of Warehouse 
for Storage of Cotton and/or Cotton Linters,''
    (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 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) Evidence that the warehouseman is licensed by the appropriate 
licensing authority as required under Sec. 1427.1082(a)(2) and such 
other documents or information as CCC may require,
    (4) For warehouseman not operating under the U.S. Warehouse Act, a 
sample copy of the warehouseman's receipts and bale tags, and
    (5) Evidence of applicable fire insurance rates.

[44 FR 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16454, Apr. 
26, 1985]



Sec. 1427.1082  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

[[Page 394]]

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 the amount 
which results from multiplying the maximum storage capacity of the 
warehouse (the total number of bales of cotton or cotton linters which 
the warehouse can accommodate when stored in the customary manner) times 
ten (10) dollars per bale. 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 bond (or acceptable substitute 
security) meeting the requirements of Sec. 1427.1083,
    (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 agreement with CCC,
    (6) Maintain accurate and complete inventory and operating records,
    (7) Use only card type warehouse receipts which are pre-numbered and 
pre-punched or such other document as CCC may prescribe,
    (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 provide adequate 
storage and handling service.
    (b) The warehouseman, officials, or supervisory employees of the 
warehouseman in charge of the warehouse operation 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 operation 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 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985]



Sec. 1427.1083  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 and 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

[[Page 395]]

    (3) It is noncancellable for not less than ninety (90) days or 
includes a 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 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 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985]



Sec. 1427.1084  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 and handling of the commodity and periodically 
thereafter to determine its compliance with CCC's standards and 
requirements.



Sec. 1427.1085  Exceptions.

    Notwithstanding any other provisions of this report:
    (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 cotton 
or cotton linters under CCC programs if the warehouse is licensed under 
the U.S. Warehouse Act for such commodity 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,
    (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 67085, Nov. 23, 1979, as amended by Amdt. 3, 50 FR 16455, Apr. 
26, 1985; 56 FR 11502, Mar. 19, 1991]



Sec. 1427.1086  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. This 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.

[[Page 396]]

    (c) If rejection of approval by CCC is due to the warehouseman's 
failure to meet the standards set forth:
    (1) In Sec. 1427.1082, 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 of 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. 1427.1082(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 16455, Apr. 26, 1985]



Sec. 1427.1087  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 for commodities under CCC 
programs, 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.
    (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.

[44 FR 67085, Nov. 23, 1979, as amended at 44 FR 74797, Dec. 18, 1979]



Sec. 1427.1088  Contract fees.

    (a) Each warehouseman who has a non-federally licensed cotton 
warehouse must pay an annual contract fee for each such warehouse for 
which the warehouseman requests renewal of an existing Cotton Storage 
Agreement or approval of a new Cotton Storage Agreement as follows:
    (1) A warehouseman who has an existing Cotton Storage Agreement with 
CCC for the storage and handling of CCC-owned cotton or cotton pledged 
to CCC as loan collateral must pay an annual contract fee for each 
warehouse approved under such agreement in advance of the renewal date 
of such agreement.
    (2) A warehouseman who does not have an existing Cotton Storage 
Agreement with CCC for the storage and handling of CCC-owned cotton or 
cotton pledged to CCC as loan collateral but who desires such an 
agreement must pay a contract fee for each warehouse for which CCC 
approval is sought prior to the time that the agreement is approved by 
CCC.
    (b) The amount of the contract fee shall be determined and announced 
annually in the Federal Register.

[Amdt. 4, 50 FR 36569, Sept. 9, 1985]



Sec. 1427.1089  OMB Control Numbers assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
(7 CFR part 1427) have been approved by the Office of Management and 
Budget under provisions of 44 U.S.C. Chapter 35 and have been assigned 
OMB Numbers 0560-0040, 0560-0074, 0560-0027, and 0560-0059.

[Amdt. 3, 50 FR 16455, Apr. 26, 1985. Redesignated by Amdt. 4, 50 FR 
36569, Sept. 9, 1985]



PART 1430--DAIRY PRODUCTS--Table of Contents




                Subpart A--Price Support Program for Milk

Sec.
1430.1  Definitions.

[[Page 397]]

1430.2  Price support levels and purchase conditions.
1430.3  Ineligibility for purchase of products produced in States with 
          excessive manufacturing allowances.

    Subpart B--Regulations Governing Reductions in the Price of Milk 
      Marketed by Producers, January 1, 1991, to December 31, 1997

1430.340  General statement.
1430.341  Definitions.
1430.342  Responsibility for administration of regulations.
1430.343  Required reductions and remittances.
1430.344  Refunds--General provisions for eligibility and other 
          requirements.
1430.345  Determination of marketings for refund purposes; Related 
          persons; Refunds for years in which the person whose proceeds 
          were reduced leaves the dairy business.
1430.346  Transfer of milk marketing history for purposes of 
          establishing eligibility for a refund.
1430.347  Availability of records and facilities.
1430.348  Adjustment of accounts.
1430.349  Charges and penalties.
1430.350  Limitation of authority.
1430.351  Estates and trusts; minors.
1430.352  Appeals.
1430.353  Over-disbursement.
1430.354  Death, incompetency, or disappearance.
1430.355  Assignment.
1430.356  Instructions and forms.
1430.357  Scheme or device.
1430.358  Continuing obligations.
1430.359  Administrative review of charges against responsible persons.
1430.360  Offsets and withholdings.
1430.361  Paperwork Reduction Act assigned number.
1430.362  Assessment Termination, Refund Provisions for 1996 
          Assessments, and Clarification of Certain Procedures and 
          Delegations.

  Subpart C--Recourse Loan Program for Commercial Processors of Dairy 
                                Products

1430.400  Definitions.
1430.401  Applicability.
1430.402  Administration.
1430.403  Loan rates.
1430.404  Quantity eligible for loan.
1430.405  Quality eligibility requirements.
1430.406  Storage facility requirements.
1430.407  Availability, disbursement, and maturity of loans.
1430.408  Loan maintenance and liquidation.
1430.409  Miscellaneous provisions.
1430.410  Applicable forms.

    Authority: 7 U.S.C. 7251 and 7252; and 15 U.S.C. 714b and 714c.



                Subpart A--Price Support Program for Milk

    Source:  61 FR 37615, July 18, 1996, unless otherwise noted.



Sec. 1430.1  Definitions.

    For purposes of this subpart, unless the context indicates 
otherwise, the following definitions shall apply:
    AMS means the Agricultural Marketing Service, USDA.
    CCC means the Commodity Credit Corporation, USDA.
    FSA means the Farm Service Agency, USDA.
    Manufacturing allowance means:
    (1) For milk used to produce butter and nonfat dry milk, the amount 
by which the product price value of butter and nonfat dry milk 
manufactured from 100 pounds of milk containing 3.5 pounds of butterfat 
and 8.7 pounds of nonfat milk solids resulting from a State's yields and 
product price formulas exceeds the State's class price for the milk used 
to produce those products; or
    (2) For milk used to produce cheese, the amount by which the product 
price value of cheese manufactured from 100 pounds of milk containing 
3.5 pounds of butterfat and 8.7 pounds of nonfat milk solids resulting 
from a State's yields and product price formulas exceeds the State's 
class price for the milk used to produce cheese.
    Plant means the physical assets of an individual, partnership, 
association, corporation, cooperative, or other business enterprise used 
in the production of dairy products.
    USDA means the United States Department of Agriculture.



Sec. 1430.2  Price support levels and purchase conditions.

    (a)(1) The levels of price support provided to farmers marketing 
milk containing 3.67 percent milkfat from dairy cows are: $10.35 per 
hundredweight for calendar year 1996, $10.20 per hundredweight for 
calendar year 1997, $10.05 per hundredweight for calendar year 1998, and 
$9.90 per hundredweight for calendar year 1999.

[[Page 398]]

    (2) Subject to paragraph (b), price support for milk will be made 
available through CCC purchases of butter, nonfat dry milk, and Cheddar 
cheese, offered subject to the terms and conditions of FSA's purchase 
announcements.
    (3) CCC purchase prices for dairy products will be announced by USDA 
news release.
    (4) CCC may, by special announcement, offer to purchase other dairy 
products to support the price of milk.
    (5) Purchase announcements setting forth terms and conditions of 
purchase may be obtained upon request from the United States Department 
of Agriculture, Farm Service Agency, Procurement and Donations Division, 
Stop 0552, 1400 Independence Ave. SW., Washington, DC 20250-0552, or the 
United States Department of Agriculture, Farm Service Agency, Kansas 
City Commodity Office, P.O. Box 419205, Kansas City, Missouri 64141-
6205.
    (b)(1) The block cheese purchased shall be U.S. Grade A or higher, 
except that the moisture content shall not exceed 38.5 percent; the 
barrel cheese shall be U.S. Extra Grade, except that the moisture 
content shall not exceed 36.5 percent.
    (2) The nonfat dry milk purchased shall be U.S. Extra Grade, except 
that the moisture content shall not exceed 3.5 percent.
    (3) The butter purchased shall be U.S. Grade A or higher.
    (c) The products purchased shall be manufactured in the United 
States from milk produced in the United States and shall not have been 
previously owned by CCC.
    (d) Purchases will be made in carlot weights specified in the 
announcements. Grade and weights shall be evidenced by USDA issued 
inspection certificates.



Sec. 1430.3  Ineligibility for purchase of products produced in States with excessive manufacturing allowances.

    (a) For the period beginning May 1, 1996, and ending December 31, 
1999, no product produced in a plant in a State under State milk pricing 
regulation will be eligible for sale to the CCC under Sec. 1430.2 of 
this subpart, if the State, as determined by the Director, Dairy 
Division, AMS, provides in formulas establishing prices that handlers 
must pay for milk, a manufacturing allowance that exceeds either:
    (1) $1.65 per hundredweight of milk for milk manufactured into 
butter and nonfat dry milk; and
    (2) $1.80 per hundredweight of milk for milk manufactured into 
cheese.
    (b) Prior to a final determination that a State has in effect a 
manufacturing allowance that exceeds the manufacturing allowances 
provided in (a) of this section, the State shall be provided the 
opportunity to present information at a hearing before the Director, 
Dairy Division, AMS. The Director shall establish the procedures for 
such hearing.
    (c) Reconsideration and review of the determinations made under (b) 
of this section may be sought by petition to the Deputy Administrator, 
Marketing Programs, AMS under procedures established by the Deputy 
Administrator.



    Subpart B--Regulations Governing Reductions in the Price of Milk 
       Marketed by Producers, January 1, 1991 to December 31, 1997

    Authority: 7 U.S.C. 1446e.

    Source: 56 FR 4527, Feb. 5, 1991, unless otherwise noted.



Sec. 1430.340  General statement.

    (a) Purpose. This subpart implements the provisions of section 204 
of the Agricultural Act of 1949 as amended and affected by section 
1105(g)(3) of the Omnibus Budget Reconciliation Act of 1990 and sections 
1105(a)(4) and 1105(c) of the Omnibus Budget Reconciliation Act of 1993, 
under which the Secretary of Agriculture is required to provide for a 
reduction in the price received by producers for all milk produced in 
the United States and marketed by producers for commercial use during 
the calendar years 1991 through 1997.
    (b) Amount of the reduction. (1) The amount of the price reduction 
shall be 5 cents per hundredweight of milk marketed by producers for 
commercial use in 1991 and, except as provided by the

[[Page 399]]

provisions of paragraph (b)(2) of this section, 11.25 cents per 
hundredweight of milk marketed by producers for commercial use in the 
calendar years 1992 through 1995 and 10 cents per hundredweight of milk 
marketed by producers for commercial use in the calendar years 1996 and 
1997.
    (2) On or before May 1 of each of the calendar years 1992 through 
1997, the amount of reduction per hundredweight for each such year shall 
be adjusted individually for the remainder of the relevant year to 
compensate for refunds of price reductions made in the preceding 
calendar year which were collected by CCC under this subpart. The 
adjustment shall be announced by the Secretary by the required date.
    (3) The reductions provided for in paragraphs (b) (1) and (2) of 
this section shall be in addition to any other reduction in the price 
received by producers as may be required under law.
    (4) The reductions provided for in paragraphs (b)(1) and (b)(2) of 
this section shall be made and remitted to the CCC in the manner 
prescribed in Sec. 1430.343 of these regulations.
    (5) In addition, the CCC may make provision for the refund of monies 
collected in those cases in which the monies were collected for milk 
marketings later excluded by statutory amendment from coverage of this 
subpart for any of the calendar years 1992 through 1997.
    (c) Refund. To the extent provided for in this subpart, a person may 
recover the entire amount by which prices were, for that producer, 
reduced under paragraphs (b)(1) or (b)(2) of this section for a year, 
if, as determined under the provisions in this subpart, the marketings 
of milk individually by such person and each of the persons who are 
related persons with respect to that person were not greater than the 
marketings of milk by those persons for the preceding year.
    (d) Applicability. The provisions of this subpart shall apply to all 
milk produced in the United States that is marketed for commercial use 
by producers during the calendar years beginning on January 1, 1991, and 
ending December 31, 1997.

[56 FR 4527, Feb. 5, 1991, as amended at 57 FR 30897, July 13, 1992; 58 
FR 61001, Nov. 19, 1993]



Sec. 1430.341  Definitions.

    For purposes of this subpart unless otherwise specified, the 
following terms shall have the following meaning and shall be applied as 
if both the singular and plural forms were used:
    (a) AMS means the Department's Agricultural Marketing Service.
    (b) FSA means the Department's Farm Service Agency.
    (c) Base period means the calendar year immediately preceding the 
calendar year for which a refund is being requested.
    (d) Bovine growth hormone means a synthetic growth hormone produced 
through the process of recombinant DNA techniques that is intended for 
use in bovine animals.
    (e) CCC means the Commodity Credit Corporation.
    (f) Calendar year means, for the relevant year, the 12-month period 
beginning January 1 and ending December 31 of that year.
    (g) County committee means an FSA county committee established under 
16 U.S.C. at 590h.
    (h) Dairy Division means the Dairy Division of the AMS.
    (i) DASCO means the Deputy Administrator, State and County 
Operations, of the FSA.
    (j) Date of FDA BGH approval means the date the FDA pursuant to 
authority under section 512 of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 360b), first approves an application with respect to the use 
of BGH.
    (k) Department means the United States Department of Agriculture.
    (l) FDA means the Food and Drug Administration.
    (m) Milk marketed for commercial use shall include all cow's milk 
which is disposed of in raw or processed form by voluntary or 
involuntary sale, barter or exchange, or by gift.
    (n) Milk marketing means milk marketed for commercial use.
    (o) Person means an individual, partnership, association, 
corporation, cooperative, estate, trust, joint venture, joint operation, 
or other business enterprise or other legal entity, and, whenever 
applicable, a State, a political subdivision of a State, or any agency 
thereof.

[[Page 400]]

    (p) Producer means any person who produced milk through the milking 
of cows.
    (q) Producer's Successor means for purposes of this section only any 
person who receives or is entitled to receive payment for milk as a 
producer in those instances in which the producer will otherwise receive 
no payment for the milk from any source.
    (r) Reduction means that amount by which the price received for milk 
marketed for commercial use by producers is reduced, or is required to 
be reduced, in accordance with the provisions of this subpart.
    (s) Refund means the money that is or may be returned to a producer 
under this subpart by CCC for price reductions made under this subpart.
    (t) Refund period means the calendar year for which a refund is 
being requested.
    (u) Responsible person means:
    (1) Any person who pays, or who is contractually or otherwise 
required to pay, a producer or producer's successor for milk marketed by 
a producer for commercial use, except to the extent that the producer of 
the milk is the responsible person under paragraph (u)(2) of this 
section; Provided, that the responsible persons under this paragraph 
shall include, but are not limited to, handlers of milk, including a 
handler regulated under a Federal milk order to the extent of, but not 
limited to, milk for which payments are transmitted by the handler to a 
Market Administrator under such an order for transmittal by the Market 
Administrator to individual producers; and
    (2) Any producer with respect to milk of the producer's own 
production who markets such milk for commercial use in the form of milk 
or milk products:
    (i) To consumers either directly or through retail or wholesale 
outlets, or
    (ii) To persons located outside of the United States.
    (v) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the Department to whom authority 
has been delegated or to whom authority may hereafter be delegated to 
act in his stead.
    (w) State Committee means an FSA state committee established under 
16 U.S.C. at 590h.
    (x) United States means, except with respect to paragraphs (k), (v), 
and (y) of this section, the following:
    (1) The District of Columbia, and
    (2) All States except for Alaska and Hawaii.
    (y) United States Bank means a bank organized under the laws of the 
United States, a state of the United States, or the District of 
Columbia.
    (z) Vice President, CCC means the Vice President of CCC, who is also 
the Administrator of AMS.

[56 FR 4527, Feb. 5, 1991, as amended at 57 FR 30898, July 13, 1992; 58 
FR 61001, Nov. 19, 1993]



Sec. 1430.342  Responsibility for administration of regulations.

    (a) Collection. The AMS and its Dairy Division shall have the 
responsibility for administering the provisions of this subpart which 
relate to the collection of the reduction in the price to be received by 
producers of milk and the remittance of the reduction to the CCC. 
Administrative subpoenas, as may be determined to be necessary for the 
administration of this subpart and as permitted by law, may be issued by 
the Vice President, CCC, or his designee.
    (b) Refund. DASCO, through the FSA State and county committees, 
shall have the responsibility for administering the provisions of this 
subpart which relate to the establishment and determinations of milk 
marketings during a base period for the purpose of refunds, and all 
other matters relating to refunds including administrative oversight of 
payments and the recovery of overpayments.



Sec. 1430.343  Required reductions and remittances.

    (a) Required reductions. (1) A reduction of five (5) cents per 
hundredweight shall be made in the price received by producers for all 
milk produced in the United States and marketed by producers for 
commercial use during the period beginning on January 1, 1991, and 
ending December 31, 1991.
    (2) Except as provided by the provisions of paragraph (a)(5) of this 
section, a reduction of eleven and twenty-five

[[Page 401]]

hundredths (11.25) cents per hundredweight shall be made in the price 
received by producers for all milk produced in the United States and 
marketed by producers for commercial use during the period beginning on 
January 1, 1992, and ending December 31, 1995.
    (3) Except as provided by the provisions of paragraph (a)(5) of this 
section, a reduction of ten (10.00) cents per hundredweight shall be 
made in the price received by producers for all milk produced in the 
United States and marketed by producers for commercial use during the 
period beginning on January 1, 1996, and ending December 31, 1997.
    (4) The reductions specifically provided for in paragraphs (a)(2), 
(a)(3) and (a)(5) of this section with respect to the price received by 
producers for all milk produced in the United States and marketed by 
producers for commercial use during the period beginning on January 1, 
1992, and ending December 31, 1997, shall, as appropriate, be reduced by 
ten percent during the period beginning on the date of FDA BGH approval 
and ending 90 days after the date of such approval.
    (5) For each of the calendar years 1992 through 1997, the reductions 
as specifically provided for in paragraphs (a)(2) and (a)(3) of this 
section, with respect to marketings of milk for commercial use in those 
respective years, shall be increased on, or before, May 1 of the year 
for the remainder of the year by an amount per hundredweight of milk 
that is necessary in order to compensate for refunds made to producers 
of milk for price reductions collected under this subpart on milk 
marketed for the immediately preceding calendar year.
    (b) Remittances. Each responsible person shall remit to the CCC the 
funds represented by the reductions required by this subpart by the last 
day of the month following the month in which the milk was marketed. For 
all milk marketed outside of the United States by producers, the 
producer shall also remit the funds represented by the reductions to CCC 
by the last day of the month following the month in which the milk was 
marketed, unless the person paying the producer for such milk has 
remitted the funds by that date, in which case the payment shall be 
considered to have been made by the producer and may be retained by CCC 
on that basis. Remittances to the CCC shall be made using negotiable 
instruments payable in United States currency, drawn on a United States 
bank, and made payable to the Commodity Credit Corporation or to the 
CCC. Remittances and reports required under this subpart shall be mailed 
to the location designated by the Dairy Division.
    (c) Remittance report. (1) For each month that a person is a 
responsible person, such person shall, in addition to remitting the 
funds for the reduction, file a report as prescribed by the Dairy 
Division which shall include:
    (i) The identity of the responsible person, including such person's 
business address;
    (ii) The month in which the applicable marketings occurred;
    (iii) The total pounds of milk to which the remittance applies; and
    (iv) Any additional information required by the Dairy Division.
    (2) The report required in paragraph (c)(1) of this section shall be 
submitted by the due date for the remittances required by this subpart.
    (d) Application of Remittances. Funds received by the CCC pursuant 
to this subpart shall be applied first to any outstanding penalty, then 
to late-payment interest and other charges, and then to the principal 
amount due.
    (e) The funds remitted to the CCC under this paragraph shall be 
considered to be included in the payments made to a producer of milk for 
purposes of the minimum price provisions of the Agricultural Adjustment 
Act (7 U.S.C. 601 et seq.), as re-enacted and amended by the 
Agricultural Marketing Agreement Act of 1937.

[56 FR 4527, Feb. 5, 1991, as amended at 58 FR 61001, Nov. 19, 1993]



Sec. 1430.344  Refunds--General provisions for eligibility and other requirements.

    (a) A refund of a reduction in producer proceeds made under this 
subpart may be made only to the extent explicitly provided for in this 
subpart. Such refunds may be made only for milk

[[Page 402]]

marketed by producers in the calendar years 1991 through 1997. The 
monies that may be refunded to a person shall include only the 
reductions in proceeds of that person as provided for in 
Sec. 1430.343(a) pursuant to provisions of the Omnibus Budget 
Reconciliation Act of 1990 and the Omnibus Budget Reconciliation Act of 
1993.
    (b) A person may receive a refund only for reductions actually made 
in that person's producer proceeds for milk and only for those monies 
actually remitted to CCC.
    (c) If other conditions are met, a person may receive a refund of 
the entire refundable reduction made under this subpart for a calendar 
year in that person's milk producer proceeds if for that year the 
marketings of milk for commercial use, individually, of that person and 
each related person with respect to that person were not greater than 
their marketings of milk for commercial use in the applicable base 
period. This calculation will be made separately for the person seeking 
the refund and each related person.
    (d) The person seeking the refund shall be responsible to prove that 
the refund is due. Such person must present all relevant data needed by 
the county committee to establish eligibility for the payment or 
requested by the County Committee for that purpose. That information 
will include all information needed to make the necessary determinations 
concerning related persons. The person seeking the refund for all 
relevant months must present month-by-month marketing data for that 
person and related persons for the relevant time periods.
    (e) If the person seeking the refund was a responsible person for 
such person's own milk production, then such person must also provide 
proof that the required remittances were paid to CCC. If the responsible 
person was a third party, the person seeking the refund shall be 
required to certify whether, to the best of such person's knowledge, the 
reductions to be refunded were remitted to the CCC. If the third party 
did not make full payment for all marketings of all producers for the 
relevant period, the refund eligibility of individual producer shall be 
adjusted in such manner as DASCO determines to be appropriate taking 
into consideration the purposes of this subpart.
    (f) The burden of proof on all refund matters shall lie with the 
person seeking to obtain, or retain, a refund from CCC. Such persons may 
be required to obtain certifications and documentation as needed from 
third parties to establish eligibility for a refund.
    (g) A person may seek a refund as a representative of a producer 
where such representation arises by reason of the death, disappearance 
or incompetency of the producer or by other cause as permitted by DASCO.
    (h) No persons may apply for a refund before the end of the year of 
the reduction to be refunded.
    (i) A complete application for a refund with all necessary 
documentation must be submitted to the county committee by March 15 of 
the year following the year for which the refund is requested, or if 
March 15 is not a business day, the next business day thereafter.
    (j) If an overpayment of a refund is made, such overpayment shall be 
repaid to CCC with interest from the date of the overpayment. The 
repayment shall be due from the person who obtained the overpayment and 
any person who knowingly participated in a scheme or device to obtain 
the overpayment. If the overpayment resulted from a failure to comply 
with the provisions of this subpart, or results from a violation of this 
subpart, the persons responsible shall, in addition, be liable for a 
civil penalty to be paid to CCC. The amount of the penalty may be up to 
the amount equal to the quantity of milk involved in the overpayment 
multiplied by the support price for milk at the time the reduction in 
proceeds was made. These liabilities shall be in addition to any others 
imposed by law.
    (k) All determinations made by county committee with respect to the 
granting of refunds or collection of overpayments shall be subject to 
review by DASCO, as deemed needed by DASCO to assure uniformity of 
treatment and to assure that there is full compliance with the 
provisions of this subpart.

[56 FR 4527, Feb. 5, 1991, as amended at 58 FR 61002, Nov. 19, 1993]

[[Page 403]]



Sec. 1430.345  Determination of marketings for refund purposes; Related persons; Refunds for years in which the person whose proceeds were reduced leaves the 
          dairy business.

    (a) For purposes of calculating refund eligibility under this 
subpart, the marketings of a person for commercial use shall include all 
such marketings for the relevant period in which such person had an 
interest.
    (b) As determined appropriate by DASCO to accomplish the goals of 
the program, the county committee may also consider marketings of milk 
occurring in the base period or in the reduction year of any operation 
with respect to which the person had an interest in the herd, the dairy 
animals, or in the facilities involved in the production at any time 
during the base period or reduction year.
    (c) DASCO may consider a person to be in compliance with the 
requirements for the refund despite a failure to comply with conditions 
otherwise required by this subpart if such relief is deemed to be needed 
to afford fair and equitable treatment and the granting of such relief 
will not impair the accomplishment of the goals of the program.
    (d)(1) Persons considered to be a related person with another person 
for purposes of calculating refund eligibility shall be as follows:
    (i) The spouse and minor child of such person and/or guardian of 
such child;
    (ii) Any corporation in which the person is a stockholder, 
shareholder, or owner of equal to, or greater than, a 10 percent 
interest in such corporation;
    (iii) Any partnership, joint venture, or other enterprise in which 
the person has an ownership interest or financial interest; and
    (iv) Any trust in which the person seeking the refund or any person 
listed paragraphs (d)(1) (i) through (iii) of this section is a 
beneficiary or has a financial interest.
    (2) If the person seeking a refund is a corporation, partnership, or 
other entity, the related persons shall be considered to be:
    (i) Any participant, owner, or stockholder in the entity except, in 
the case of corporations only, persons with less than a 10 percent share 
in the corporation shall not be considered a related person with respect 
to that corporation; and
    (ii) As determined under the provisions of paragraph (d)(1) of this 
section, any person who is a related person with respect to the persons 
identified as a related person to an entity under (d)(2)(i) of this 
section.



Sec. 1430.346  Transfer of milk marketing history for purposes of establishing eligibility for a refund.

    (a) If a producer has acquired the complete dairy operation (i.e., 
all land, all equipment and all dairy cattle at all locations) of a 
family member, the milk marketing history of the acquiring producer may 
be increased by the milk marketing history of the family member. The 
preceding sentence shall apply only if the transferor no longer has any 
interest in any dairy, dairy herd, or in any dairy production. No other 
transfer of a milk marketing history shall be permitted.
    (b) A request for a transfer of the milk marketing history must be 
made to the county committee of the county where the acquiring 
producer's dairy farm is located. A transfer may be approved only if 
adequate records are presented to establish eligibility for the 
transfer.
    (c) For purposes of this section:
    (1) A family member of the transferee of the dairy operation shall 
include all of the following:
    (i) The parent, grandparent, or legal guardian of the transferee;
    (ii) The spouse of a parent or grandparent of the transferee;
    (iii) The transferee's spouse;
    (iv) The son, daughter, grandson or granddaughter of the transferee, 
or the spouse of any such persons;
    (v) Siblings of the transferee and the spouses of such siblings.
    (2) Milk marketing history means the milk marketings by the 
transferor of the dairy operations in the year preceding the year of the 
transfer of the complete dairy operation which could have been used by 
the transferor to claim a refund of a reduction in producer proceeds 
made under this subpart.

[[Page 404]]

    (d) Notwithstanding any other provisions of this subpart, if a milk 
marketing history is transferred:
    (1) The transferor shall not be eligible for a refund of a reduction 
in producer proceeds made in the year of the transfer.
    (2) The marketing of milk in the year of the transfer which could be 
attributed to the transferor shall be considered solely to be marketings 
by the transferee for calculations relating to refunds of reductions 
made in the transfer year or in the following year; and
    (3) The transferee, to the extent that other conditions are met, may 
claim refunds of reduction made in the proceeds of the transferor for 
the transfer year.
    (e) A transfer of milk marketing history under this section shall 
become null and void if the transferor returns to dairying at any time 
prior to the payment of a refund to the transferee which took into 
account the transferor's marketings of milk.



Sec. 1430.347  Availability of records and facilities.

    (a) Records to be maintained. Each responsible person and person 
seeking a refund shall maintain records in a manner that will 
demonstrate compliance with the provisions of this subpart and/or 
eligibility for a refund.
    (b) Availability of records and facilities. Each responsible person 
or other persons affected by the provisions of this subpart shall make 
available to authorized representatives of the CCC or the Department all 
records and facilities pertaining to such person's operations that are 
necessary to determine compliance with the provisions of this subpart.
    (c) Retention of records. All records required under this subpart 
shall be retained by the person required to keep such records for a 
period of three years beginning at the end of the calendar year to which 
such records pertain, or for such longer period as the Dairy Division or 
the CCC may require by notice to such person.



Sec. 1430.348  Adjustment of accounts.

    Except as otherwise provided in this section, whenever the 
responsible person or person obtaining a refund becomes aware through an 
audit or other means that an error in payment or refund has been made, 
such person must immediately notify the CCC of the error and make any 
payment to the CCC that is due the CCC, together with any late-payment 
interest and other charges as are provided for in this subpart. If the 
error is otherwise unknown to the person involved until notice is given 
by the CCC, the underpayment plus late-payment interest and other 
charges provided for in this subpart shall be made by the next date for 
remitting reductions as provided in Sec. 1430.343 or within the time 
specified by the CCC if no subsequent remittances are required by this 
subpart from such person. Overpayments to the CCC by a responsible 
person shall be credited to the account of the responsible person 
remitting the overpayment and shall be applied against amount otherwise 
due to the CCC from the responsible person or refunded if no amounts are 
due to the CCC from such person. Nothing in this section shall reduce 
the liability of a person to the CCC for late-payment interest and other 
charges for underpayment or nonpayment to the CCC.



Sec. 1430.349  Charges and penalties.

    (a) Charge for dishonored negotiable instruments. Each person who 
issues a negotiable instrument to the CCC in connection with this 
subpart that is not honored because of insufficient funds or any other 
reason will be charged $25 plus such additional costs as may apply. The 
amount of this charge shall be in addition to any and all other 
authorized charges and penalties.
    (b) Late-Payment Interest. Any unpaid obligation due the CCC under 
this subpart shall be increased by late-payment interest. Such interest 
shall be assessed in accordance with the provisions of 7 CFR part 1403 
or successor regulations so designated by the Department. The timeliness 
of payment to the CCC shall be determined based on the applicable 
postmark date or the date of receipt by the CCC if no postmark date is 
available or legible.
    (c) Penalties. (1) In addition to other penalties provided for in 
this subpart, a civil penalty payable to the CCC shall

[[Page 405]]

be due from any responsible person who fails to make a reduction in the 
price of milk as required in this subpart and from any person who fails 
to remit to the CCC the funds required to be collected and remitted by 
this subpart, or fails to comply with any other requirement or provision 
of this subpart. Such penalty shall be in addition to any other amount 
due CCC and in addition to any other liability imposed by law. The 
amount of the penalty shall be up to an amount which is equal to the 
support price for milk in effect at the time the failure occurs 
multiplied by the quantity of milk involved. The Vice President, CCC, or 
a designee, may assess a penalty at less than the maximum amount where 
it is determined equitable in those cases where the failure was 
unintentional and such relief can be granted without harm to the 
program.
    (2) The Vice President, CCC, or a designee, shall notify any person 
against whom a penalty is to be assessed of the intention to assess such 
penalty and provide such person with an opportunity for an 
administrative hearing.



Sec. 1430.350  Limitation of authority.

    (a) State and county committees or their designees do not have 
authority to modify or waive any of the provisions of the regulations in 
this subpart.
    (b) A State committee may take any action authorized or required by 
the regulations in this subpart to be taken by a county committee when 
such action has not been taken by the county committee. A State 
committee may also:
    (1) Correct, or require a county committee to correct, any action 
taken by such county committee which is not in accordance with the 
regulations in this subpart, or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations in this subpart.
    (c) No delegation herein to a State or county committee shall 
preclude DASCO, or a designee, from determining any question arising 
under the regulations in this subpart or from reversing or modifying any 
determination made by a State or county committee.



Sec. 1430.351  Estates and trusts; minors.

    (a) For purposes of this subpart, a receiver of an insolvent 
debtor's estate and the trustee of a trust estate may, for the purpose 
of this subpart, be considered to represent an insolvent producer and 
the beneficiaries of a trust, respectively, and the production of the 
receiver or trustee shall be considered to be production of the producer 
which such receiver or trustee represents. Program documents executed by 
the receiver or trustee will be accepted only if they are legally 
authorized and valid and such person has the authority to execute the 
applicable documents.
    (b) A person seeking a refund under the provisions of this part who 
is a minor shall be eligible for a refund under the regulations in this 
subpart only if:
    (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 program documents are signed by the guardian; or
    (3) As determined by DASCO, an acceptable bond is furnished by an 
acceptable surety which protects CCC against any loss as may result to 
CCC in connection with the minor and the administration of this subpart.



Sec. 1430.352  Appeals.

    Except as otherwise provided in this subpart with respect to matters 
under the supervision of AMS, the appeal regulations in 7 CFR part 780 
shall be applicable to appeals of determinations made under this 
subpart.



Sec. 1430.353  Over-disbursement.

    If a refund is disbursed under this subpart which exceeds the amount 
allowed in this subpart, the person receiving payment and that person's 
successors shall be personally liable for repayment of the amount of 
such excess payment plus interest computed in accordance with 7 CFR part 
1403, if applicable, or in the amount allowed by law if part 1403 does 
not apply.

[[Page 406]]



Sec. 1430.354  Death, incompetency, or disappearance.

    In the case of the death, incompetency, or disappearance of any 
person who is entitled to a refund, such refund may be made to the 
person or persons who are specified in 7 CFR part 707. The person 
requesting such refund shall file Form ASCS-325, ``Application for 
Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been 
Declared Incompetent'' as provided in that part or meet such other 
requirements as may be imposed in successor regulations so designated by 
the Department.



Sec. 1430.355  Assignment.

    Any person who may be entitled to a refund may assign his rights to 
such refund in accordance with 7 CFR part 1404 or successor regulations 
as designated by the Department.



Sec. 1430.356  Instructions and forms.

    Such forms and instructions as are necessary for establishing milk 
marketings during the base period and obtaining refunds pursuant to the 
provisions in this subpart may be obtained from the county FSA office.



Sec. 1430.357  Scheme or device.

    (a) Any person who is determined by the CCC to have knowingly 
adopted, or participated in, any scheme or device which tends to defeat, 
or has the effect of defeating, the implementation of, or purposes of, 
the provisions of this subpart, or the program provided for in this 
subpart, or who makes any fraudulent representation or misrepresents any 
fact affecting a determination under this subpart, shall be considered 
to have knowingly violated the provisions of this subpart and shall be 
liable for the civil penalty provided for in this subpart. In such 
event, in addition to any penalties which are due, all amounts which 
would have been due to the CCC for the reductions required by this 
subpart but which were not paid because of the prohibited activity shall 
be immediately payable by such person to the CCC.
    (b) All or any part of the refunds due a person under this part may 
be withheld or required to be refunded to the CCC with interest computed 
in accordance with 7 CFR part 1403 if the person adopts, or participates 
in adopting, any scheme or device designed to evade, or which has the 
effect of evading, the rules and purposes of this part. Such acts shall 
subject the person involved to penalties at the rate provided for in 
this subpart, and such acts include, but are not limited to, concealing 
from the county committee any information having a bearing on the 
application of the rules of this part, submitting false information to 
the county committee, transferring dairy cows to another dairy operation 
in order to meet requirements for refunds, or creating fictitious 
entities. This liability shall be in addition to any other liability 
imposed in accordance with this subpart or any other provision of law.



Sec. 1430.358  Continuing obligations.

    The obligations of any person that arise under this subpart shall 
continue in effect until final payment or other disposition agreed to by 
the CCC even though the reductions provided for in this part may no 
longer be required.



Sec. 1430.359  Administrative review of charges against responsible persons.

    Any responsible person who is adversely affected by any 
determination of liability under the terms and conditions of this 
subpart that relate to the collection of the reductions required by this 
subpart shall be able to obtain further consideration of such 
determination by filing a request for reconsideration with the Director 
of the Dairy Division within 30 days of the date of notice of the 
determination. If, upon reconsideration by the Director, the responsible 
person is dissatisfied with the new determination, such person may 
obtain a review of such determination and an informal hearing by filing 
an appeal with the Vice President, CCC. Such appeal must be filed within 
15 days of the date of the redetermination by the Director. Such appeals 
to the Vice President, CCC, will, to the extent practicable, be 
conducted in the same manner as administrative appeals which are 
conducted under 7 CFR part 780. The decision on such appeal shall 
constitute the final agency action in the matter.

[[Page 407]]



Sec. 1430.360  Offsets and withholdings.

    The CCC may offset or withhold any amounts due the CCC under this 
subpart in accordance with the provisions of 7 CFR part 1403 or 
successor regulations as designated by the Department.



Sec. 1430.361  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the reduction 
related information collection requirements contained in these 
regulations under the provisions of 44 U.S.C. Chapter 35 and OMB number 
0560-0126 has been assigned. Information collection requirements related 
to refunds will be submitted for approval at a later date.



Sec. 1430.362  Assessment Termination, Refund Provisions for 1996 Assessments, and Clarification of Certain Procedures and Delegations.

    (a) Notwithstanding any other provision of this part, no assessment 
shall be collected for milk marketed after April 30, 1996. Amounts 
collected for 1996 marketings shall be refundable as otherwise provided 
for in this subpart so long as, determined pursuant to this subpart, the 
producer's total milk marketings for calendar year 1996 were equal to or 
less than the producer's total marketings for calendar year 1995.
    (b) For purposes of applying the provisions of this subpart:
    (1)(i) No adjustment shall be made for milk marketings in a leap 
year, but rather comparisons between the refund and base period milk 
marketings shall be made on a calendar year basis.
    (ii) If a producer quits marketing milk from a dairy operation 
during the refund period, the comparison of marketings with the 
preceding year shall be made by comparing the marketings of the months 
and days of production in the refund period with the corresponding 
months and days of the base period, subject, in addition, to the 
provisions in paragraph (a).
    (2)(i) A producer under this subpart may be deemed to include the 
combination of all persons or entities with an interest in the 
production of milk on a farm or dairy operation.
    (ii) The addition or removal of an individual or entity, who adds to 
or removes from existing dairy units any dairy cows, to or from those 
with an interest in a dairy operation, shall constitute the formation of 
a new producer and shall be deemed to end the production history on that 
farm or dairy operation of the previous producer.
    (3) All delegations to persons or agencies contained in this subpart 
shall be deemed, as appropriate, to be made to the successor official or 
agency resulting from any reorganization made pursuant to Public Law 
103-354.

[61 FR 37616, July 18, 1996]



  Subpart C--Recourse Loan Program for Commercial Processors of Dairy 
                                Products

    Source:  61 FR 37616, July 18, 1996, unless otherwise noted.



Sec. 1430.400  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of program administration under this subpart. The terms 
defined in parts 1405 and 1421 of this chapter shall also be applicable.
    CCC means the Commodity Credit Corporation, USDA.
    FSA means the Farm Service Agency, USDA.
    Processor means a person or legal entity that commercially processes 
milk into Cheddar cheese, butter, or nonfat dry milk.
    Recourse loan means a loan that requires repayment in full on or 
before the maturity date and forfeiture does not necessarily satisfy the 
loan indebtedness.
    USDA means the United States Department of Agriculture.



Sec. 1430.401  Applicability.

    (a) The regulations in this subpart are applicable to eligible dairy 
products produced after December 31, 1999. These regulations set forth 
the terms and conditions under which CCC will make recourse loans to 
eligible processors. Additional terms and conditions shall be those set 
forth in the loan application and the note and security agreement which 
a processor must execute in order to receive such a loan.

[[Page 408]]

    (b) Loan rates for the eligible dairy products shall be made 
available in FSA State and county offices.
    (c) Recourse loans shall be available as provided in this part for 
eligible Cheddar cheese, butter, and nonfat dry milk.



Sec. 1430.402  Administration.

    (a) The loan program shall be administered under the general 
supervision of the Executive Vice President, CCC (Administrator, FSA), 
and shall be carried out in the field by FSA State and county 
committees.
    (b) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any of the 
provisions of this subpart.
    (c) The State committee shall take any action these regulations 
require which the county committee has not taken. The State committee 
shall also:
    (1) Correct, or require a county committee to correct, a county 
committee action which is not in accordance with the regulations of this 
subpart; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this subpart.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC (Administrator, FSA), 
from determining any question arising under the program or from revising 
or modifying any State or county committee determination.
    (e) The Deputy Administrator, 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 do 
not adversely affect recourse loan program operation.
    (f) A CCC representative may execute loans and related documents 
only under the terms and conditions CCC determines and announces. Any 
such document which is not executed in accordance with such terms and 
conditions, including any purported execution prior to the CCC 
authorized date, is null and void.



Sec. 1430.403  Loan rates.

    (a) The Secretary will announce before January 1, 2000, and 
thereafter, before October 1 of each year, that a recourse loan program 
is available under this subpart, and loan rates for Cheddar cheese, 
butter, and nonfat dry milk based on a milk equivalent value of $9.90 
per hundredweight of milk containing 3.67 percent butterfat.
    (b) Such loan rates will be announced by USDA news release.



Sec. 1430.404  Quantity eligible for loan.

    (a) Any processor is eligible for a recourse loan on eligible dairy 
products owned by such processor.
    (b) The total quantity of eligible dairy product which a processor 
may pledge as collateral for a loan at any single time may not exceed:
    (1) The quantity of eligible dairy products processed during the 
fiscal year in which application is being made; plus
    (2) The quantity of eligible dairy products processed during and 
under loan on September 30 of the prior fiscal year, if such products 
are immediately repledged as collateral for a supplemental loan on 
October 1 of the current fiscal year.
    (c) All eligible dairy products pledged as collateral for a loan are 
required to be stored identity-preserved in eligible storage facilities.
    (d) The processor shall furnish CCC such certification as CCC 
considers necessary to verify compliance with quantitative limitations.



Sec. 1430.405  Quality eligibility requirements.

    (a) For dairy products to be eligible to be pledged as collateral 
for a recourse loan, the processor must furnish CCC such certification 
as CCC considers necessary to verify the following minimum quality 
requirements:
    (1) Cheddar cheese shall be:
    (i) U.S. Grade A or higher and moisture shall not exceed 38.5 
percent for block cheese; or
    (ii) U.S. Extra Grade and moisture shall not exceed 36.5 percent for 
barrel cheese.
    (2) Nonfat dry milk shall be U.S. Extra Grade and moisture shall not 
exceed 3.5 percent; and

[[Page 409]]

    (3) Butter shall be U.S. Grade A or higher.
    (b) Any eligible dairy product pledged as collateral must be free of 
any contamination by either natural or manmade substances and must not 
contain chemicals or other substances which are poisonous or harmful to 
humans or animals.
    (c) CCC shall, at any time, have the right to inspect collateral in 
the storage facilities in which it is stored.



Sec. 1430.406  Storage facility requirements.

    Eligible dairy products will be stored under the terms and 
conditions CCC prescribes.



Sec. 1430.407  Availability, disbursement, and maturity of loans.

    (a)(1) To obtain an initial recourse loan on eligible dairy 
products, a dairy processor:
    (i) Must file a request for an initial recourse loan, as CCC 
prescribes, with the State committee of the State where such processor 
is headquartered or a State committee designated county committee;
    (ii) Must execute a note and security agreement and a storage 
agreement as CCC prescribes; and
    (iii) Shall be responsible for all costs incurred in moving eligible 
dairy products to an eligible storage facility.
    (2) A request for an initial loan must be filed no later than 
September 30 of the fiscal year in which the product was produced, but 
no earlier than January 1, 2000.
    (3) If there are any liens or encumbrances on eligible dairy 
products pledged as collateral for a recourse loan, waivers that fully 
protect CCC's interest 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 eligible dairy product after the 
loan is approved.
    (4) A processor shall pay CCC a loan service fee in connection with 
the disbursement of each loan. The amount of the service fee shall be 
determined and announced by the Executive Vice President, CCC.
    (b) No loan proceeds may be disbursed for dairy products until they 
have actually been produced and are established as being eligible to be 
pledged as loan collateral.
    (c) Loans will mature no later than September 30 following 
disbursement of the loan.
    (1) Loan maturity dates may be accelerated by CCC in accordance with 
Sec. 1430.428 (d) of this subpart.
    (2) CCC may offer supplemental loans at the maturity of initial 
loans.
    (d)(1) A processor may, if supplemental loans are offered, before 
the maturity date of an initial loan, request a supplemental loan by:
    (i) Repaying the initial loan principal plus interest on September 
30;
    (ii) Repledging as collateral for a supplemental loan, on October 1, 
eligible dairy products identified as collateral for an initial loan 
maturing on September 30 of the immediately preceding fiscal year; and
    (iii) Executing a note and security agreement and a storage 
agreement as CCC prescribes.
    (2) Such supplemental loan:
    (i) Shall be requested by the processor no later than September 30 
of the fiscal year in which the initial loan is maturing.
    (ii) Shall be at the loan rate and interest rate applicable to the 
month in which the supplemental loan is disbursed.
    (iii) Shall mature as CCC specifies, but not later than September 30 
following disbursement of the supplemental loan.
    (iv) May only be authorized for 1 fiscal year.
    (e) The county office shall file or record, as required by State 
law, all security agreements which are issued with respect to eligible 
dairy products pledged as collateral for loan. The cost of filing and 
recording shall be paid for by CCC.



Sec. 1430.408  Loan maintenance and liquidation.

    (a) The processor shall:
    (1) Abide by the terms and conditions of the loan application and 
the note and security agreement;
    (2) Pay interest on the principal at a rate determined under part 
1403 of this chapter;

[[Page 410]]

    (3) Be responsible for storage costs through loan maturity;
    (4) Be responsible for any loss in quantity or quality of the loan 
collateral, and
    (5) Be responsible for maintaining the quality and quantity of the 
loan collateral.
    (b) The processor must pay CCC the principal and interest due and 
redeem their collateral no later than the loan maturity date.
    (c) A processor may, at any time before maturity of the loan, redeem 
all or any part of the loan collateral by paying CCC the loan principal 
and interest applicable to the quantity of dairy product redeemed.
    (d) CCC may at any time accelerate the date of repayment of the loan 
indebtedness, including interest. CCC will give the processor notice of 
such acceleration at least 15 days in advance of the accelerated loan 
maturity date.
    (e) Prior to loan maturity:
    (1) The processor may request and obtain prior written approval of 
the loan making office to remove a specified quantity of the loan 
collateral from storage for the purpose of delivering it to a buyer 
before repayment of the loan by executing a Marketing Authorization for 
Loan Collateral (Form CCC-681-1).
    (2) The loan making office will approve such a request when the 
buyer of eligible dairy products agrees to pay CCC an amount necessary 
to satisfy the processor's loan indebtedness regarding the dairy 
products the buyer purchased. Any such approval shall not:
    (i) Constitute a release of CCC's security interest in the dairy 
product, or
    (ii) Relieve the processor of liability for the full amount of the 
loan indebtedness, including interest.
    (f) If a processor's loan indebtedness is not satisfied in 
accordance with the provisions of this section:
    (1) Late payment charges in addition to interest on the processor's 
indebtedness shall accrue at the rate specified in part 1403 of this 
chapter and shall accrue until the debt is paid;
    (2) CCC may, upon notice, with or without removing the collateral 
from storage, sell such collateral at either a public or private sale; 
and
    (3) The processor shall be liable for the deficiency if the net 
proceeds are less than the amount of principal, interest, and any other 
charges incurred by the CCC.
    (g) If CCC determines that the actual eligible quantity serving as 
collateral for a recourse loan is less than the loan quantity because of 
incorrect certification, unauthorized removal, or unauthorized 
disposition, CCC may call all loans of the processor. Such determination 
shall result in the processor being deemed ineligible for loans for at 
least the remainder of the fiscal year.
    (h) The security interests obtained by the CCC as a result of the 
execution of a security agreement by an eligible processor shall be 
superior to all statutory and common law liens on the collateral.



Sec. 1430.409  Miscellaneous provisions.

    (a) CCC will not require the processor to insure the eligible dairy 
product pledged as collateral. However, if the processor insures such 
eligible dairy product and an indemnity is paid thereon, such indemnity 
shall accrue to the benefit of CCC to the extent of CCC's interest in 
the eligible dairy product involved in the loss.
    (b) The regulations the Secretary issues governing offsets and 
withholding set forth at part 3 of this title and part 1403 of this 
chapter are applicable to the program set forth in this subpart.
    (c) A processor may obtain reconsideration and review of 
determinations made under this subpart in accordance with the 
regulations of part 780 of this title.
    (d) CCC, as well as any other U.S. Government agency, shall have the 
right of access to the premises of the processor in order to inspect, 
examine, and make copies of the books, records, accounts, and other 
written data as the examining agency deems necessary to verify 
compliance with the requirements of this subpart. Such books, records, 
accounts, and other written data shall be retained by the processor for 
not less than 3 years from the loan disbursement date.
    (e) Any false certification made for the purpose of enabling a 
processor to obtain or retain a recourse loan to

[[Page 411]]

which it is not entitled will subject the person making such 
certification to liability under applicable federal civil and criminal 
statutes.



Sec. 1430.410  Applicable forms.

    The CCC forms used in connection with the dairy recourse loan 
program will be available from the appropriate State committee or 
designated county committee. For any CCC form that refers to program 
participation by producers, the term ``producer'' shall be deemed to 
mean ``processor'' and the term ``crop year'' shall be deemed to mean 
``fiscal year''.



PART 1435--SUGAR PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1435.1  Applicability.
1435.2  Definitions.
1435.3  Maintenance and inspection of records.

                         Subpart B--Loan Program

1435.100  Applicability.
1435.101  Administration.
1435.102  Loan types.
1435.103  Loan rates.
1435.104  Eligibility requirements.
1435.105  Availability, disbursement, and maturity of loans.
1435.106  Loan maintenance.
1435.107  Loan settlement and foreclosure.
1435.108  Storage facility requirements.
1435.109  Processor storage agreement.
1435.110  Miscellaneous provisions.
1435.111  Applicable forms.

                 Subpart C--Sugar Marketing Assessments

1435.200  General statement.
1435.201  Marketing assessment rates.
1435.202  Remittance.
1435.203  Civil penalties and interest.
1435.204  Refunds.

     Subpart D--Information Reporting and Recordkeeping Requirements

1435.300  General statement.
1435.301  Civil penalties.

    Authority: 7 U.S.C. 7272; and 15 U.S.C. 714b and 714c

    Source:  61 FR 37618, July 18, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1435.1  Applicability.

    These regulations set forth the terms and conditions under which 
Commodity Credit Corporation (CCC) will make loans and enter agreements 
with eligible processors for the 1996-2002 crop years. Additional terms 
and conditions are set forth in the loan application and the note and 
security agreement which the processor must execute in order to receive 
a loan. These regulations stipulate the requirements for making sugar 
marketing assessment payments to CCC for fiscal years 1996 through 2003 
and the information reporting requirements for the 1996-2002 crop years.

[61 FR 37618, July 18, 1996, as amended at 62 FR 34612, June 27, 1997]



Sec. 1435.2  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of program administration. The terms defined in part 718 of 
this title are also applicable.
    Beet sugar means sugar which is processed directly or indirectly 
from sugar beets or sugar beet molasses.
    Cane sugar refiner means a person who processes raw cane sugar into 
refined crystalline sugar or liquid sugar.
    CCC means the Commodity Credit Corporation, USDA.
    Crop year for the 1996 crop means the period from July 1, 1996 
through September 30, 1997. Crop year for the 1997-2001 crops means the 
period from October 1 through September 30, inclusive, and is identified 
by the year in which the crop year begins. For example, the 1997 crop 
year begins on October 1, 1997. The 1997 crop of sugar beets, sugarcane, 
or sugar means domestically-produced sugar beets, domestically-produced 
sugarcane, or sugar processed from domestically-produced sugar beets or 
sugarcane during the 1997 crop year. Crop year for the 2002 crop means 
the period from October 1, 2002 through June 30, 2003. Sugar from 
desugaring molasses is considered to be from the crop year the 
desugaring took place.
    First processor means a person who commercially produces beet sugar 
or raw cane sugar, directly or indirectly,

[[Page 412]]

from domestically-produced sugar beets or sugarcane, or from molasses or 
thick juice derived from domestically-produced sugar beets or sugarcane.
    Market means, relative to any first processor, the shipment in 
conjunction with a sale or other disposition, or the forfeiture to CCC, 
of beet sugar or raw cane sugar by the first processor of such sugar, 
and the movement of raw cane sugar into the refining process. Beet sugar 
or raw cane sugar is deemed to be marketed as of the date of shipment 
from the first processor's facility, the date on which raw cane sugar 
was moved into the refining process, or the date on which sugar was 
forfeited to CCC.
    Nonrecourse loan means a loan for which the eligible sugar offered 
as loan collateral may be delivered or forfeited to CCC, at loan 
maturity, in satisfaction of the loan indebtedness.
    Raw sugar means any sugar which is to be further refined or improved 
in quality.
    Raw value of any quantity of sugar means its equivalent in terms of 
raw sugar testing 96 sugar degrees, as determined by a polarimetric test 
performed in accordance with procedures recognized by the International 
Commission for Uniform Methods of Sugar Analysis (ICUMSA). Direct-
consumption sugar derived from sugar beets and testing 92 or more sugar 
degrees by the polariscope shall be translated into terms of raw value 
by multiplying the actual number of pounds of such sugar by 1.07. Sugar 
derived from sugarcane and testing 92 sugar degrees or more by the 
polariscope shall be translated into terms of raw value in the following 
manner: raw value = {[(actual degree of polarization - 92 )  x  0.0175 ] 
+ 0.93}  x  actual weight. For sugar testing less than 92 sugar degrees 
by the polariscope, derive raw value by dividing the number of pounds of 
the ``total sugar content'' (i.e., the sum of the sucrose and invert 
sugars) thereof by 0.972.
    Recourse loan means a loan that requires repayment in full on or 
before the maturity date and forfeiture of the sugar does not 
necessarily satisfy the loan indebtedness.
    Sugar means any grade or type of saccharine product derived, 
directly or indirectly, from sugarcane or sugar beets and consisting of, 
or containing, sucrose or invert sugar, including all raw sugar, refined 
crystalline sugar, liquid sugar, edible molasses, and cane syrup.
    Sugar beet processor means a person who produces sugar by 
commercially processing sugar beets or sugar beet molasses.
    Sugarcane processor means a person who produces raw cane sugar by 
commercially processing sugarcane or sugarcane molasses.
    Tariff-rate quota means the total of the aggregate quantities of raw 
cane sugar and other sugars, syrups and molasses established, or 
subsequently modified, by the Secretary pursuant to the provisions of 
additional U.S. note 5(a) to chapter 17 of the Harmonized Tariff 
Schedule of the United States (HTS) for imports to be entered, or 
withdrawn from warehouse for consumption, under subheadings 1701.11.10, 
1701.12.10, 1701.91.10, 1701.99.10, 1702.90.10, and 2106.90.44 of the 
HTS or successor subheadings.

[61 FR 37618, July 18, 1996, as amended at 62 FR 34612, June 27, 1997]



Sec. 1435.3  Maintenance and inspection of records.

    (a) CCC, as well as any other U.S. Government agency, has the right 
of access to the premises of any sugar beet processor, sugarcane 
processor, cane sugar refiner, or of any other person having custody of 
records that the examining agency deems necessary to verify compliance 
with the requirements of this part. The examining agency has the right 
to inspect, examine, and make copies of such books, records, accounts, 
and other written or electronic data as the examining agency deems 
relevant.
    (b) Each sugar beet processor, sugarcane processor, and cane sugar 
refiner or any person having custody of the records shall retain such 
books, records, accounts, and other written or electronic data for not 
less than 3 years from the date:
    (1) A loan is disbursed in accordance with subpart B;
    (2) A marketing assessment is remitted to CCC in accordance with 
subpart C; and
    (3) Market data are reported to CCC in accordance with subpart D.

[[Page 413]]



                         Subpart B--Loan Program



Sec. 1435.100  Applicability.

    (a) This subpart is applicable to the 1996 through 2002 crops of 
sugar beets and sugarcane. These regulations set forth the terms and 
conditions under which CCC will make recourse and nonrecourse loans 
available to eligible processors. Additional terms and conditions are 
set forth in the loan application and note and security agreement which 
a processor must execute to receive a loan.
    (b) Loan rates used in administering the loan program are available 
in FSA State and county offices.
    (c) Loans shall not be available for sugar produced from imported 
sugar beets, sugarcane, or molasses.



Sec. 1435.101  Administration.

    (a) The loan program shall be administered under the general 
supervision of the Executive Vice President, CCC, (Administrator, FSA) 
and shall be carried out in the field by FSA State and county 
committees.
    (b) State and county committees, and representatives and employees 
thereof, may not modify or waive any of the provisions of the 
regulations of part 1435.
    (c) The State committee shall take any action part 1435 requires 
which the county committee has not taken. The State committee shall 
also:
    (1) Correct, or require a county committee to correct, a county 
committee action which is not in accordance with part 1435; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with part 1435.
    (d) No provision or delegation herein to a State or county committee 
shall preclude the Executive Vice President, CCC, (Administrator, FSA) 
from determining any question arising under the program or from 
reversing or modifying any State or county committee determination.
    (e) The Deputy Administrator, 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 requirements do not 
adversely affect program operation.
    (f) A CCC representative may execute loans and related documents 
only under the terms and conditions CCC determines and announces. Any 
such document which is not executed in accordance with such terms and 
conditions, including any purported execution prior to the CCC-
authorized date, shall be null and void.



Sec. 1435.102  Loan types.

    (a) CCC will make available to eligible processors of the 1996 
through 2002 crops of domestically-produced sugar beets and sugarcane:
    (1) Recourse loans if the tariff-rate quota is not above 1,500,000 
short tons, raw value, at the time of loan approval and has never been 
above 1,500,000 short tons, raw value, at any time during the fiscal 
year;
    (2) Nonrecourse loans if the tariff rate quota exceeds 1,500,000 
short tons, raw value, at the time of loan approval or has exceeded 
1,500,000 short tons, raw value, at any time during the fiscal year.
    (b) Outstanding recourse loans will be automatically converted to 
nonrecourse loans if the tariff-rate quota is increased to a level above 
1,500,000 short tons, raw value. However, if the recourse loan recipient 
pays the principal amount of the loan, plus interest, within 30 days 
from the date the tariff-rate quota was increased, then the loan will be 
treated for all purposes whatsoever as if it had not been converted to a 
nonrecourse loan. Once nonrecourse loans are made available, they will 
not be converted to recourse loans any time during the fiscal year, even 
if the tariff-rate quota is subsequently reduced to a level equal to, or 
less than, 1,500,000 short tons, raw value.



Sec. 1435.103  Loan rates.

    (a) The national average loan rate for raw cane sugar produced from 
the 1996 through 2002 crops of domestically-grown sugarcane is 18 cents 
per pound, raw value.
    (b) The national average loan rate for refined beet sugar from 1996-
2002-crop domestically-grown sugar beets is 22.90 cents per pound of 
refined beet sugar.
    (c) The loan rates for eligible sugar are adjusted to reflect the 
processing location of the sugar offered as loan

[[Page 414]]

collateral and are available from State and county offices.



Sec. 1435.104  Eligibility requirements.

    (a) An eligible producer is the owner of a portion or all of the 
domestically-produced sugar beets or sugarcane, including share rent 
landowners, at both the time of harvest and the time of delivery to the 
processor, except producers determined to be ineligible as a result of 
the regulations governing highly erodible land and wetland conservation 
found at 7 CFR part 12, regulations governing crop insurance at 7 CFR 
part 400, or the regulations governing controlled substance violations 
at 7 CFR part 718.
    (b) A sugar beet or sugarcane processor is eligible for loans if the 
processor agrees to all the terms and conditions in the loan application 
and the note and security agreement.
    (c) Sugar pledged as collateral during the crop year:
    (1) May not exceed the quantity derived from processing 
domestically-grown sugar beets or sugarcane from eligible producers 
during the applicable crop year;
    (2) Must be processed and owned by the eligible processor and stored 
in suitable storage;
    (3) May not have been processed from imported sugarcane, sugar 
beets, or molasses;
    (4) Must have been processed in the United States or Puerto Rico; 
and
    (5) Must have processor certification in the loan application that 
the sugar is eligible and available to be pledged as collateral.
    (d) Sugar must meet the following minimum quality requirements to be 
eligible to be pledged as loan collateral:
    (1) Refined beet sugar to be pledged as loan collateral must be:
    (i) Dry and free flowing;
    (ii) Free of excessive sediment; and
    (iii) Free of any objectionable color, flavor, odor, or other 
characteristic which would impair its merchantability or which would 
impair or prevent its use for normal commercial purposes.
    (2) Raw cane sugar to be pledged as loan collateral must be:
    (i) Of reasonable grain size;
    (ii) Free from excessive color or moisture; and
    (iii) Free of any objectionable color, flavor, odor, or other 
characteristic which would impair its merchantability or which would 
impair or prevent its use for normal refining or commercial purposes.
    (3) Sugarcane syrup or edible molasses must be free from any 
objectionable color, flavor, odor, or other characteristic which would 
impair the merchantability of such syrup or molasses or would impair or 
prevent the use of such syrup or molasses for normal commercial 
purposes.



Sec. 1435.105  Availability, disbursement, and maturity of loans.

    (a) To obtain a loan, a processor must:
    (1) File a loan request, as CCC prescribes, no later than September 
30, 1997, for the 1996 crop year, no earlier than October 1 and no later 
than September 30 of the applicable crop year for the 1997-2001 crop 
years, and no earlier than October 1, 2002 and no later than June 30, 
2003, for the 2002 crop year, with the State committee of the State 
where such processor is headquartered, or with a county committee 
designated by the State committee;
    (2) Execute a note and security agreement as CCC prescribes; and
    (3) Pay CCC a loan service fee in connection with the disbursement 
of each loan. The Executive Vice President, CCC, will determine and 
announce the service fee amount.
    (b) If there are any liens or encumbrances on sugar pledged as 
collateral for a loan, the processor must obtain waivers that fully 
protect CCC's interest even though the liens or encumbrances are 
satisfied from the loan proceeds. No additional liens or encumbrances 
shall be placed on the sugar after the loan is approved.
    (c) No loan proceeds may be disbursed until the sugar has actually 
been processed and is otherwise established as being eligible to be 
pledged as loan collateral.
    (d) A processor may, within the loan availability period, repledge 
as collateral sugar that previously served as loan collateral for a 
repaid loan.

[[Page 415]]

    (1) In making application for such loan, the processor shall:
    (i) Specify that the loan collateral should be treated as a quantity 
of eligible sugar that previously served as loan collateral for a repaid 
loan; and
    (ii) Designate the loan to which the reoffered loan collateral was 
originally pledged.
    (2) The subsequent loan shall have the same maturity date as the 
original loan.
    (3) Loan collateral repledged that was previously redeemed from CCC 
is not included in determining the total quantity of sugar on which 
loans have been obtained for purposes of Sec. 1435.104.
    (e)(1) Disbursements shall be made without regard to the actual 
polarity of the sugar pledged as loan collateral but shall be made on 
the assumption that the polarity of such sugar is 96 degrees by the 
polariscope.
    (2) Adjustments for polarity are only made at the time of loan 
forfeiture.
    (f)(1) Loans will mature at the earlier of:
    (i) the end of the 9-month period beginning on the 1st day of the 
first month after the month in which the loan is made; or
    (ii) September 30 following disbursement of the loan.
    (2) CCC may accelerate loan maturity dates in accordance with 
Sec. 1435.107(g).
    (g) Processors receiving loans in July, August, or September may 
repledge the sugar as collateral for a supplemental loan. Such 
supplemental loan shall:
    (1) Be requested by the processor during the following October;
    (2) Be recourse or nonrecourse depending on which type of loan is in 
effect according to Sec. 1435.102;
    (3) Be made at the loan rate in effect at the time the supplemental 
loan is made; and
    (4) Mature in 9 months minus the number of whole months that the 
initial loan was in effect.
    (h) No loans will be made after June 30, 2003.

[61 FR 37618, July 18, 1996, as amended at 62 FR 34612, June 27, 1997]



Sec. 1435.106  Loan maintenance.

    (a) All processors receiving loans shall:
    (1) Abide by the terms and conditions of the loan application and 
the note and security agreement; and
    (2) Pay interest on the principal at a rate determined in part 1405.
    (b) The security interests obtained by CCC as a result of the 
execution of security agreements by the processors of sugarcane and 
sugar beets shall be superior to all statutory and common law liens on 
raw cane sugar and refined beet sugar in favor of the producers of 
sugarcane and sugar beets and all prior recorded and unrecorded liens on 
the crops of sugarcane and sugar beets from which the sugar was derived.
    (c) Nonrecourse loan recipients shall pay all eligible producers who 
have delivered or will deliver sugar beets or sugarcane to such 
processor for processing not less than the minimum payment levels CCC 
specifies for the applicable crop year when nonrecourse loans are in 
effect, except that processors who repay a recourse loan within the 30-
day period provided for in Sec. 1435.102(b) are not required to pay the 
minimum payment levels.
    (d) A processor shall maintain eligible sugar of sufficient quality 
and quantity as collateral to satisfy the processor's loan indebtedness 
to CCC. CCC shall not assume any loss in quantity or quality of the loan 
collateral.
    (1) The borrower is responsible for storage costs through the loan 
maturity date.
    (2) Sugar pledged as loan collateral need not be stored identity 
preserved.
    (3) When the proceeds of the sale of the sugar pledged as loan 
collateral are needed to repay all or part of a sugar loan, the 
processor may request and obtain prior written approval from the 
loanmaking office by executing a Market Authorization for Loan 
Collateral (form CCC-681-1) to remove a specified quantity of the loan 
collateral from storage for the purpose of delivering it to a buyer 
prior to repayment of the loan. Any such approval shall be subject to 
the terms and conditions set forth in the applicable form and the 
loanmaking office shall not approve such a request unless the buyer of 
the sugar agrees to pay CCC an amount

[[Page 416]]

necessary to satisfy the processor's loan indebtedness regarding the 
sugar being sold. Any such approval shall not:
    (i) Constitute a release of CCC's security interest in the sugar; or
    (ii) Relieve the processor of liability for the full amount of the 
loan indebtedness, including interest.
    (4) If CCC determines, by actual measurement or otherwise, that the 
actual quantity serving as collateral for a recourse or nonrecourse loan 
is less than the loan quantity, because of incorrect certification, 
unauthorized removal, or unauthorized disposition, CCC may call the loan 
and other outstanding loans. Such determination shall result in the 
processor being ineligible for recourse loans for the remainder of that 
crop year and through the next crop year.



Sec. 1435.107  Loan settlement and foreclosure.

    (a) A processor may, at any time prior to loan maturity, redeem all 
or any part of the loan collateral by paying CCC the applicable 
principal and interest.
    (b) Recourse loan recipients must pay CCC the principal and interest 
on the loan and redeem their sugar collateral no later than the loan 
maturity date.
    (c) Forfeiture will be accepted as payment in full of the principal 
and interest due under a nonrecourse loan, applicable to the quantity of 
sugar delivered, subject to adjustment for polarity, if the processor:
    (1) Notifies in writing the appropriate loanmaking office of the 
processor's intent to forfeit the loan collateral, states the amount of 
loan collateral intended to be forfeited, and delivers the notice to the 
loanmaking office no later than 30 days prior to the maturity date of 
the loan;
    (2) Executes a storage agreement, as CCC prescribes, prior to 
forfeiture or delivers the loan collateral to a CCC-approved storage 
facility upon forfeiture; and
    (3) Pays the following forfeiture penalty on sugar pledged as 
collateral at the time of forfeiture:
    (i) The penalty for raw cane sugar is 1 cent per pound; and
    (ii) The penalty for beet sugar is 1.072 cents per pound; and
    (4) Reduces payments owed producers by the producer's share of the 
aggregate loan forfeiture penalty incurred by the processor. The 
producer's share of the aggregate loan forfeiture penalty is calculated 
as the producer's share of the net selling price of the processor's 
sugar, provided for explicitly or implicitly in the contract between 
producers and processor, times the aggregate loan forfeiture penalty.
    (d) Even though a processor gave notice of intent to forfeit, the 
processor may, at any time prior to maturity of the nonrecourse loan, 
redeem the loan collateral in accordance with this section.
    (e) CCC shall not accept delivery of sugar in settlement of a 
nonrecourse loan in excess of:
    (1) the amount specified in the notice of intent to forfeit; or
    (2) the quantity of sugar which is shown on the note and security 
agreement minus any quantity that was redeemed or released for removal 
in accordance with this section.
    (f) If the processor does not redeem any amount of the nonrecourse 
loan collateral and the conditions of paragraph (c) of this section have 
been fulfilled, the unredeemed nonrecourse loan collateral will, without 
further CCC or processor action, be deemed to have been forfeited and 
delivered to CCC in-store at the processor's storage facility on the day 
following the maturity date of the loan. Title, all rights, and interest 
to the sugar immediately vests in CCC upon delivery.
    (g)(1) CCC may at any time accelerate the date for loan repayment 
indebtedness, including interest. CCC will give the processor notice of 
such acceleration at least 15 days in advance of the accelerated loan 
maturity date.
    (2) In the event of any such acceleration of nonrecourse loans, the 
required notice of intent to forfeit, as set forth in paragraph (d)(1), 
may be given at any time prior to the accelerated maturity date.
    (h) If a processor's recourse or nonrecourse loan indebtedness is 
not satisfied in accordance with the provisions of this section:

[[Page 417]]

    (1) Interest on the processor's indebtedness shall accrue as 
specified in part 1403 in this chapter and shall accrue until the debt 
is paid;
    (2) CCC may, upon notice, with or without removing the collateral 
from storage, sell such collateral at either a public or private sale; 
and
    (3) The processor shall be liable for the deficiency if the net 
proceeds are less than the amount of principal, interest, and any other 
charges incurred by the CCC.



Sec. 1435.108  Storage facility requirements.

    (a) Sugar forfeited to CCC must be delivered in or to a CCC-approved 
storage facility.
    (1) Eligible storage is any storage facility which:
    (i) Meets CCC Standards for Approval of Dry and Cold Storage 
Warehouses for Processed Agricultural Commodities, Extracted Honey, and 
Bulk Oils (part 1423 of this chapter); and
    (ii) Is placed under a storage contract with CCC.
    (2) If the sugar is delivered in or to an ineligible storage 
facility, the processor is responsible for all costs incurred in moving 
the sugar to an eligible storage facility.
    (b) CCC has the right to inspect loan collateral or CCC-owned sugar 
and the storage facilities in which the sugar is situated at any time.
    (c) Regardless of whether CCC inspected the sugar and storage 
facility prior to delivery, the processor is liable to CCC for any 
damages CCC suffers if:
    (1) The processor delivers ineligible sugar to CCC; or
    (2) The processor delivers sugar into ineligible storage.



Sec. 1435.109  Processor storage agreement.

    (a) By executing a note and security agreement, the processor agrees 
to store any forfeited loan collateral on behalf of CCC under the terms 
and conditions specified in this subpart and any storage agreement 
entered into between CCC and the processor. Should the terms of these 
regulations and the terms of the storage agreement conflict, the terms 
set forth in the regulations are applicable.
    (b) The storing processor is responsible for maintaining the quality 
and condition of CCC-owned sugar. The processor is liable to CCC for any 
damages CCC suffers due to the failure of the processor to load out 
sugar meeting the criteria set forth in Sec. 1435.104(d). Also, the 
processor shall store the sugar in the eligible storage where delivered 
for as long as CCC deems necessary.
    (c) If a processor forfeits loan collateral and CCC and the 
processor fails to enter into a storage contract, the processor is 
responsible for all costs incurred in moving the sugar to an eligible 
storage facility.
    (d) A processor storing CCC-owned sugar is responsible for all load-
out expenses in the event that CCC sells the sugar.
    (e) CCC shall make monthly storage payments to the processor for the 
period of time the processor stores the forfeited sugar. The storage 
payment rate shall be as CCC and the processor agree, and according to 
the terms and conditions CCC sets forth when executing a note and 
security agreement.



Sec. 1435.110  Miscellaneous provisions.

    (a) The regulations issued by the Secretary governing setoffs and 
withholding set forth at part 3 of this title and part 1403 of this 
chapter are applicable to the program set forth in this subpart.
    (b) A producer or processor may obtain reconsideration and review of 
determinations made under this subpart in accordance with the 
regulations at 7 CFR part 780.
    (c) Any false certification, including those made for the purpose of 
enabling a processor to obtain a loan to which it is not entitled, will 
subject the person making such certification to liability under 
applicable Federal civil and criminal statutes.



Sec. 1435.111  Applicable forms.

    CCC forms used for this program are available from the appropriate 
State committee or designated county committee. For purposes of any CCC 
form that refers to program participation by producers, the term 
``producer'' shall be taken to mean ``processor.''

[[Page 418]]



                 Subpart C--Sugar Marketing Assessments



Sec. 1435.200  General statement.

    (a) This subpart sets forth the terms and conditions for the payment 
to CCC of marketing assessments for beet sugar and raw cane sugar 
marketed during fiscal years 1996 through 2003.
    (b) The marketing assessment applies to:
    (1) First processor marketings of all raw cane sugar processed 
during fiscal years 1996 through 2003 from domestically-produced 
sugarcane or sugarcane molasses, and
    (2) First processor marketings of all beet sugar processed during 
fiscal years 1996 through 2003 from domestically-produced sugar beets or 
sugar beet molasses.



Sec. 1435.201  Marketing assessment rates.

    (a) For marketings during fiscal year 1996, the assessment rate per 
pound of beet sugar is 0.2123 cents per pound. The assessment rate for 
fiscal years 1997 through 2003 is 0.2654 cents per pound.
    (b) For marketings during fiscal year 1996, the assessment rate per 
pound of raw cane sugar is 0.1980 cents per pound, raw value. The 
assessment rate for fiscal years 1997 through 2003 is 0.2475 cents per 
pound, raw value.



Sec. 1435.202  Remittance.

    (a) The monthly amount of the beet sugar marketing assessment to be 
remitted to CCC is determined by multiplying the number of pounds of 
beet sugar marketed in the calendar month by the assessment rate.
    (b) The monthly amount of the marketing assessment on raw cane sugar 
to be remitted to CCC is determined by multiplying the number of pounds, 
raw value, of raw cane sugar marketed, or estimated to be marketed in 
accordance with (e)(1) of this section, in the calendar month by the 
assessment rate.
    (c)(1) First processors shall remit marketing assessments to CCC no 
later than the 30th calendar day following the end of the month in which 
the beet sugar or raw cane sugar subject to the assessment was marketed.
    (2) Mailed remittances will be considered timely if they are 
postmarked not later than the 25th calendar day following the month in 
which the beet sugar or cane sugar subject to the assessment was 
marketed.
    (3) CCC must receive electronic remittances by the 30th calendar day 
following the month in which the beet sugar or raw cane sugar subject to 
the assessment was marketed.
    (4) Any processor who fails to file a remittance by the due date 
shall be assessed a civil penalty and interest in accordance with 
Sec. 1435.203.
    (d)(1) First processors shall prepare and submit a fully and 
accurately completed form CCC-80 each month that shows:
    (i) Beet sugar marketings during the previous calendar month; and
    (ii) Raw cane sugar, raw value, marketings during the previous 
calendar month.
    (2) First processors who do not operate on a calendar month basis 
may pay their assessments based on marketings on several extra days or 
fewer days than the calendar month reporting period, consistent with the 
processor's standard accounting period. However:
    (i) Assessments must be paid on all marketings of specific crop year 
sugar in the fiscal year it is due; and
    (ii) The marketing assessments must be remitted monthly and by the 
dates specified in this section.
    (3) The entire assessment that is due and payable shall be remitted 
with the Form CCC-80.
    (e)(1) If, when a raw cane sugar assessment is due and payable, the 
first processor cannot determine the exact raw value of such sugar, an 
estimate of raw value based on the recent experience of the processor 
shall be made and the assessment submitted on the estimated quantity.
    (2) Whenever an assessment is based on an estimate of raw value 
pursuant to (e)(1), any necessary adjustments to the quantity of raw 
sugar subject to the assessment shall be made by filing a corrected Form 
CCC-80 no later than 30 calendar days after the last day of the month in 
which the estimated assessment was paid. If, according to the corrected 
Form CCC-80:

[[Page 419]]

    (i) The assessment was underpaid, the first processor shall remit 
the additional assessment due with the corrected Form CCC-80, and
    (ii) If the assessment was overpaid, the first processor shall 
subtract the overpayment from any assessment due at the time the 
corrected Form CCC-80 is filed, or if none is due at that time, from the 
assessment next due.
    (f) By October 30 of each year, first processors shall determine the 
quantity of beet sugar or raw cane sugar on hand that was produced 
during the preceding fiscal year but not marketed by September 30 of 
such preceding fiscal year and shall remit a marketing assessment to CCC 
as if the sugar had been marketed in September of such preceding fiscal 
year. Such sugar is not subject to a second assessment when it is 
marketed.
    (g) First processors shall send remittances and CCC-80 forms as CCC 
specifies.



Sec. 1435.203  Civil penalties and interest.

    (a) A first processor is liable for a civil penalty of up to 100 
percent of the relevant national average loan rate times the marketings 
of beet sugar or raw cane sugar involved in the violation if the 
processor:
    (1) Fails to remit, on a timely basis, the entire amount of any 
marketing assessment in accordance with this subpart;
    (2) Fails to submit Form CCC-80 fully and accurately completed; or
    (3) Fails to maintain and permit inspection of records as required 
by Sec. 1435.204.
    (b) In addition to any civil penalty assessed in accordance with 
this section, interest on unpaid assessments or deficiencies in 
assessments paid is due and payable at the rate specified in part 1403 
of this chapter beginning on the 1st day of the month after the 
marketing assessment was due in accordance with Sec. 1435.203. Interest 
shall continue to accrue until such amount is paid. However, if full 
payment of an assessment is received within 30 calendar days of the date 
on which the assessment was due, no interest shall apply.
    (c) The Controller, CCC, shall assess civil penalties and interest.
    (d) Affected first processors may request reconsideration of civil 
penalties by filing a request, within 30 days of receipt of certified 
written notification by the Controller, CCC, of such assessment of civil 
penalties, with the Executive Vice President, CCC, Stop 0501, 1400 
Independence Ave. SW, Washington, D.C. 20250-0501.
    (e) After reconsideration, affected first processors may appeal 
civil penalties by filing a notice of appeal, within 30 calendar days of 
receipt of certified written notification by the Executive Vice 
President, CCC, of an affirmation of the assessment of civil penalties, 
with the National Appeals Division in accordance with part 780 of this 
chapter.



Sec. 1435.204  Refunds.

    Marketing assessments are nonrefundable. However, upon presentation 
of evidence acceptable to the Controller, CCC, adjustments to an 
assessment may be made by CCC to reflect the actual marketings of beet 
sugar or raw cane sugar, or a first processor may adjust the amount of 
the assessment due in accordance with Sec. 1435.202.



     Subpart D--Information Reporting and Recordkeeping Requirements



Sec. 1435.300  General statement.

    (a) Every sugar beet processor, sugarcane processor, and cane sugar 
refiner shall report, on a monthly basis on CCC required forms, its 
imports and receipts, processing inputs, production, distribution, 
stocks, and other information necessary to administer sugar programs.
    (b) Any processor must, upon CCC's request, provide such information 
as CCC deems appropriate for determining regional loan rates.
    (c) The sugar information reporting and recordkeeping requirements 
of this subpart are administered under the general supervision of the 
Executive Vice President, CCC.



Sec. 1435.301  Civil penalties.

    (a) Any processor or refiner who willfully fails or refuses to 
furnish the information, or who willfully furnishes false data required 
under Sec. 1435.300, is

[[Page 420]]

subject to a civil penalty of no more than $10,000 for each such 
violation.
    (b) The Controller, CCC, shall assess civil penalties and interest.
    (c) Affected first processors may request reconsideration of civil 
penalties by filing a request, within 30 days of receipt of certified 
written notification by the Controller, CCC, of such assessment of civil 
penalties, with the Executive Vice President, CCC, Stop 0501, 1400 
Independence Ave. SW, Washington, D.C. 20250-0501.
    (d) After reconsideration, affected first processors may appeal 
civil penalties by filing a notice of appeal, within 30 calendar days of 
receipt of certified written notification by the Executive Vice 
President, CCC, of an affirmation of the assessment of civil penalties, 
with the National Appeals Division in accordance with part 780 of this 
chapter.



PART 1437--NONINSURED CROP DISASTER ASSISTANCE PROGRAM REGULATIONS FOR THE 1997 AND SUCCEEDING CROP YEARS--Table of Contents




Sec.
1437.1  Applicability.
1437.2  Administration.
1437.3  Definitions.
1437.4  Eligibility.
1437.5  Assistance
1437.6  Area.
1437.7  Yield determinations.
1437.8  Acreage and production reports.
1437.9  Loss requirements.
1437.10  Application for payment and notice of loss.
1437.11  Payments for reduced yield and prevented planting.
1437.12  Multiple benefits.
1437.13  Payment and income limitations.
1437.14  Violations of highly erodible land and wetland conservation 
          provisions.
1437.15  Violations regarding controlled substances.
1437.16  Misrepresentation and scheme or device.
1437.17  Refunds to the CCC.
1437.18  Offsets and assignments.
1437.19  Cumulative liability.
1437.20  Appeals.
1437.21  Estates, trusts, and minors.
1437.22  Death, incompetence, or disappearance.
1437.23  OMB control numbers.

    Authority: 15 U.S.C. 714b and 714c; and 7 U.S.C. 7333

    Source: 61 FR 69005, Dec. 31, 1996, unless otherwise noted.



Sec. 1437.1  Applicability.

    (a) For the 1997 and subsequent crop years, NAP is intended to 
provide eligible producers of eligible crops with protection comparable 
to the catastrophic risk protection plan of crop insurance. NAP is also 
designed to help reduce production risks faced by producers of crops for 
which Federal crop insurance under the Federal Crop Insurance Act, as 
amended is not available. NAP will reduce financial losses that occur 
when natural disasters cause a catastrophic loss of production or 
prevented planting of an eligible crop. Payment eligibility is based on 
an expected yield for the area and the producer's approved yield based 
on actual production history, or a transitional yield if sufficient 
production records are not available. In the case of forage determined 
by CCC to be predominantly grazed in accordance with Sec. 1437.7(j), 
payment eligibility is based on an expected stocking level for the area 
and unit and the actual number of animals grazed and days grazing 
occurred. Production for both the applicable area expected yield and the 
individual producer approved yield for the unit or for forage determined 
by CCC to be predominantly grazed, area and unit expected stocking level 
must each fall below specified percentages in order to be eligible for 
payments under this part.
    (b) The provisions contained in this part are applicable to each 
eligible producer and each eligible crop for which catastrophic coverage 
is not otherwise available.

[62 FR 53930, Oct. 17, 1997]



Sec. 1437.2  Administration.

    (a) NAP is administered under the general supervision of the 
Executive Vice-President, CCC (Administrator, Farm Service Agency), and 
shall be carried out by State and county FSA committees (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.

[[Page 421]]

    (c) The State committee shall take any action required by these 
regulations 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, CCC, 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 requirements does not adversely affect operation of the 
program.
    (f) The State committee will, in accordance with this part, 
recommend the geographical size and shape of the area where a natural 
disaster has occurred, and whether the area eligibility requirement has 
been satisfied. The recommendation of eligibility must be approved by 
the Executive Vice President, CCC, or a designee.
    (g) The Executive Vice President, CCC, or a designee, will determine 
all yields and prices under this part.



Sec. 1437.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the noninsured crop disaster assistance 
program. The terms defined in part 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.
    Act means the Federal Agriculture Improvement and Reform Act of 
1996, Public Law 104-127 (7 U.S.C. 7201 et seq.).
    Actual production history means the history determined in accordance 
with part 400, subpart G, of this title, except that when referring to 
NAP the terms of subpart G will mean as follows:

------------------------------------------------------------------------
              Insurance terms                         NAP terms
------------------------------------------------------------------------
Agent.....................................  Local office representative.
Claim.....................................  Application for payment.
Claim for indemnity.......................  Application for payment.
Indemnity payment.........................  NAP payment.
Insurable acreage.........................  Eligible acreage.
Insurable cause...........................  Natural disaster.
Insurable crop............................  Eligible crop.
Insurance company.........................  Provider.
Insurance purposes........................  NAP purposes.
Insured...................................  Eligible producer.
Insured producer..........................  Eligible producer.
Uninsurable acreage.......................  Ineligible acreage.
Uninsurable production....................  Ineligible production.
Uninsured cause of loss...................  Assigned production
                                             appraisal
Uninsured production......................  Ineligible production
------------------------------------------------------------------------

    Animal unit (AU) means an animal with daily energy requirement 
equating to 15.7 pounds of corn.
    Animal unit day (AUD) means an expression of an expected or actual 
stocking rate.
    Approved yield means an actual production history yield calculated 
and approved by CCC, used to determine any NAP payment in accordance 
with part 400, subpart G, of this title.
    Aquacultural species means any species of aquatic organism grown as 
food for human consumption, or fish raised as feed for fish that are 
consumed by humans, or ornamental fish propagated and reared in an 
aquatic medium by a commercial operator on private property in water in 
a controlled environment. Eligible aquacultural species must be seeded 
in the aquacultural facility and not be growing naturally in the 
facility and must be planted or seeded in containers, wire baskets, net 
pens, or similar devices designed for the protection and containment of 
the seeded aquacultural species.
    Area means the geographic region recommended by the State FSA 
committee, and approved by CCC in accordance with Sec. 1437.6, where a 
natural disaster has occurred which may qualify producers in the area 
for NAP payments.
    Assigned yield means a yield assigned for a crop year in the base 
period, in accordance with part 400, subpart G, of this title, if the 
producer does not file an acceptable production report by the production 
reporting date.
    Average market price means the price, or dollar equivalent on an 
appropriate

[[Page 422]]

basis for an eligible crop established by CCC for determining payment 
amounts under NAP; for example, pound, bushel, ton, and AUD (for forage 
determined by CCC to be predominantly grazed). Such price will be on a 
harvested basis without the inclusion of transportation, storage, 
processing, packing, marketing or other post-harvest expenses and will 
be based, in part, on historical data.
    Carrying capacity means the stocking rate, as determined by CCC, 
expressed as acres per animal unit (AC/AU) or reciprocal, which is 
consistent with maintaining or improving vegetation or related 
resources.
    Catastrophic coverage means a catastrophic risk protection plan of 
insurance offered by FCIC in accordance with part 402 of this title.
    CCC means the Commodity Credit Corporation, a wholly owned 
Government corporation within the United States Department of 
Agriculture.
    County expected yield means the eligible crop yield established by 
the State FSA committee and approved by CCC for the county. Such yield 
information may be obtained from National Agricultural Statistics 
Service, Cooperative States Research, Education, and Extension Service, 
credible nongovernmental studies, yields in similar areas, and similar 
reference material. For planted annual crops, such yield will be based 
on the acreage planted for harvest.
    Crop year means the period of time within which the crop is normally 
grown and designated by the calendar year in which the crop is normally 
harvested in the area. For crops harvested over two calendar years, the 
crop year will be the calendar year in which the majority of the crop 
would have been harvested. For crops grown over more than two calendar 
years, each year in the growing period will be considered as a separate 
crop year designated by the calendar year in which the crop sustained a 
loss. For crops for which catastrophic coverage is available, the crop 
year will be as defined by such coverage.
    Eligible crop means an agricultural commodity for which catastrophic 
coverage is not available and which is commercially produced for food or 
fiber as specified in this part. Eligible crop will also include 
floriculture, ornamental nursery, and Christmas tree crops, turfgrass 
sod, seed crops, aquaculture (including ornamental fish), and industrial 
crops. In the case of a crop that historically has multiple plantings in 
the same crop year that are planted or are prevented from being planted, 
each planting may be considered a different crop for determining 
payments under this part as determined by CCC. In the case of a crop, 
except for forage determined by CCC to be predominantly grazed, that has 
different varieties or types, each variety or type may be considered a 
separate crop for determining payments under this part, if CCC 
determines there is a significant difference in price or yield between 
the varieties or types.
    Expected area yield means the eligible crop yield established and 
approved by CCC for the geographic area.
    Floriculture means cut flowers or similar products of annual and 
perennial flowering plants grown under glass, fiberglass and other rigid 
plastics, film plastic, shade cloth, natural shade, other shade, and 
outdoor in a container or controlled environment for commercial sale.
    Forage means land covered with grass or other similar herbaceous 
vegetation not of a woody plant species, produced under such range 
management practices as are necessary to sustain sufficient quality and 
quantity of grass or similar vegetation each year to be suitable for 
grazing or mechanical harvest to feed livestock in a commercial 
operation. NAP benefits for forage produced on Federal or State owned 
lands are available only for seeded forage.
    Good farming practices means the cultural practices generally used 
in the area for the crop to make normal progress toward maturity and 
produce at least the individual unit approved yield. The practices are 
normally those recognized by Cooperative State Research, Education, and 
Extension Service as compatible with agronomic and weather conditions in 
the area.
    Grazing days means the number of days used in the calculation of the 
carrying capacity for each forage species or type or variety determined 
by CCC to be predominantly grazed.

[[Page 423]]

    Harvested means a single harvest crop is considered harvested when 
the producer has, by hand or mechanically, or by grazing of livestock, 
removed the crop from the field. Crops with multiple harvests in 1 year 
or harvested over multiple years are considered harvested when the 
producer has, by hand or mechanically removed at least one mature crop 
from the field. The mechanically harvested crop is considered harvested 
once it is removed from the field and placed in a truck or other 
conveyance, except hay is considered harvested when in the bale, whether 
removed from the field or not. Grazing is not considered harvesting for 
the purpose of determining an unharvested or prevented planting payment 
factor.
    Livestock means any farm or other animal excluding aquacultural 
species and, including but not limited to domestic avian, ruminant, 
equine, and swine species grown or maintained for any purpose.
    Local office means the FSA office or other USDA office designated by 
CCC.
    Native forage means grass or other vegetation occurring naturally 
without seeding.
    Natural disaster means damaging weather, including but not limited 
to drought, hail, excessive moisture, freeze, tornado, hurricane, 
excessive wind, or any combination thereof; or adverse natural 
occurrence such as earthquake, flood, or volcanic eruption; or related 
condition, including but not limited to heat, insect infestation, or 
disease, which occurs as a result of an adverse natural occurrence or 
damaging weather occurring prior to or during harvest that directly 
causes, accelerates, or exacerbates the destruction or deterioration of 
an eligible crop, as determined by the Secretary.
    Ornamental fish means a decorative fish produced in a commercial 
fishery for sale.
    Ornamental nursery means decorative plants grown in a container or 
controlled environment for commercial sale.
    Ornamental nursery crop means a decorative plant grown in a 
container or controlled environment for commercial sale.
    Prevented planting means the inability to plant a crop with proper 
equipment during the planting period for the crop or commodity. A 
producer must prove that the producer intended to plant the eligible 
crop and that such crop could not be planted due to natural disaster 
reasonably related to the basis for the area designation under 
Sec. 1437.6, as determined by the Executive Vice President. The natural 
disaster that caused the prevented planting must have occurred after the 
final planting date for the previous crop year and before the final 
planting date for the crop year in which a request for NAP payment was 
made. For crops with multiple plantings in a single crop year and one 
crop has been harvested, the natural disaster must occur, after the 
harvest of the harvested crop and before the end of the planting period 
for the next planting of the crop.
    Production report means a written record showing the commodity's 
annual production and used to determine the producer's yield for NAP 
purposes. The report contains yield history by unit, if applicable, 
including planted acreage for annual crops, eligible acreage for 
perennial crops, and harvested and FCIC or CCC appraised production for 
the previous crop years. This report must be supported by verifiable 
written records, measurement of farm-stored production, or by other 
records of production approved by CCC. Information contained in an 
application for payment is considered a production report for the unit 
for the crop year for which the application was filed.
    Qualifying gross revenues means:
    (1) With respect to a person who receives more than 50 percent of 
such person's gross income from farming, ranching, and forestry 
operations, the annual gross income for the taxable year from such 
operations; and
    (2) With respect to a person who receives 50 percent or less of such 
person's gross income from farming, ranching, and forestry operations, 
the person's total gross income for the taxable year from all sources.
    Reseeded or replanted crop means the same crop planted on the same 
acreage after the first planting of the crop has failed.
    Seed crop means a crop produced for the purpose of, or intended for 
use as, commercial propagation for sale.

[[Page 424]]

    Seeded forage means acreage which is mechanically seeded with 
grasses or other vegetation at regular intervals, at least every 7 
years, in accordance with good farming practices.
    Share means the producer's percentage of interest in the eligible 
crop as an owner, operator, or tenant. For the purpose of determining 
eligibility for payments under this part, the producer's share will not 
exceed the producer's share at the earlier of the time of loss or the 
beginning of harvest. Acreage or interest attributed to a spouse, child, 
or member of the same household may be considered part of the producer's 
share unless such individual is considered to be a separate person under 
part 1400 of this chapter.
    Stocking rate means the number of animal units grazing or utilizing 
specific crop acreage for a specific number of days, expressed as animal 
unit days.
    Type and weight range means the identification of animals according 
to the daily energy requirement, as determined by CCC, necessary to 
provide the daily maintenance ration, as determined by CCC, of the 
specific animal.
    Type or Variety means a scientifically recognized subspecies of a 
crop or commodity having a particular characteristic or set of 
characteristics.
    Unit means, for NAP, all acreage of the eligible crop or for 
ornamental nursery, all eligible plant species and sizes except plant 
species or sizes for which catastrophic coverage is available, in the 
county for the crop year:
    (1) In which the person has 100 percent crop share; or
    (2) Which is owned by one person and operated by another person on a 
share basis.
    Value loss crop means ornamental nursery, Christmas trees, 
aquaculture, or other crops as determined by CCC that, due to their 
unique nature do not lend themselves to yield calculations or expected 
yield loss situations. Eligibility for a crop categorized as value loss 
shall be determined based on a loss of value at time of disaster, as 
determined by CCC.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53930, Oct. 17, 1997]



Sec. 1437.4  Eligibility.

    (a) Eligible crops are any commercial agricultural crop (excluding 
livestock and their by-products), commodity, or acreage of a commodity 
grown for food or fiber for which catastrophic coverage is not available 
under part 402 of this title. Except for ornamental nursery and species 
or type or variety of a species of forage determined by CCC to be 
predominantly grazed, different types or varieties of a crop or 
commodity, may be treated as a separate eligible crop, if CCC determines 
there is a significant difference in price or yield.
    (b) NAP payments will be made available for:
    (1) Any commercial crop grown for food;
    (2) Any commercial crop planted and grown for livestock consumption, 
including but not limited to grain and forage crops;
    (3) Any commercial crop grown for fiber, excluding trees grown for 
wood, paper, or pulp products;
    (4) Any commercially produced aquacultural species (including 
ornamental fish);
    (5) Floriculture crops;
    (6) Ornamental nursery crops;
    (7) Christmas tree crops;
    (8) Turfgrass sod;
    (9) Industrial crops;
    (10) Seed crops, where the propagation stock is commercially 
produced for sale as seed stock for other eligible NAP crop production; 
and
    (11) Any crop, for which crop insurance under the Federal Crop 
Insurance Act is available in the county, that is affected by a natural 
disaster that is not named as an insurable peril under the producer's 
crop insurance policy.
    (c) NAP payments will not be available for any acreage in any area 
for any crop for which catastrophic coverage is available, unless the 
loss was caused by a natural disaster that is not covered by 
catastrophic coverage and all other eligibility requirements under this 
part are satisfied.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53931, Oct. 17, 1997]



Sec. 1437.5  Assistance.

    (a) Producers who are eligible to receive NAP payments for crop 
years 1996

[[Page 425]]

through 1998 will receive assistance against loss in yield greater than 
50 percent of the producer's approved yield for the eligible crop 
payable at 60 percent of the established average market price for the 
crop.
    (b) Producers who are eligible to receive NAP payments after crop 
year 1998 will receive assistance against loss in yield greater than 50 
percent of the producer's approved yield for the eligible crop payable 
at 55 percent of the established average market price for the crop.
    (c) CCC will adjust the NAP payment rate for crops that are produced 
with significant and variable expenses that are not incurred because the 
crop acreage was prevented from being planted or planted but not 
harvested.
    (d) NAP payments will be determined by unit based on all the acreage 
and production of the crop and eligible prevented from being planted 
acreage of the crop.
    (e) Each producer's NAP payment will be based on the producer's 
share of the eligible crop.
    (f) Animal Unit Day value will be established by CCC on the basis of 
a 5 year national average corn price per pound, as determined by CCC, 
and the daily energy requirement of one beef cow, as determined by CCC.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53931, Oct. 17, 1997]



Sec. 1437.6  Area.

    (a) For the purposes of this part, acreage affected by a natural 
disaster, or any adjustment thereto, will be included in the area 
recommended by the state FSA committee and submitted to CCC for 
approval, regardless of whether the commodity produced on the affected 
acreage suffered a loss.
    (b) Except for eligible areas identified in paragraph (f) of this 
section, an approved area shall include at least five producers of crops 
on separate and distinct farms for which the area has been approved for 
NAP payments. Notwithstanding this provision, CCC may approve an area 
having fewer than five producers if the Executive Vice President, or a 
designee, determines that such area will suffer significant economic 
consequences as a result of the disaster.
    (c) An area may be designated as follows:
    (1) A county;
    (2) Aggregated acreage that is at least 320,000 acres; or
    (3) Aggregated acreage with not less than $80 million average value 
for all crops produced annually.
    (d) If the aggregated acreage affected by the natural disaster does 
not meet the minimum requirement specified in paragraph (c) (2) or (3) 
of this section, the aggregated acreage will be expanded by adding acres 
from around the affected acreage, until the minimum requirement is met.
    (e) The area may not be defined in any manner that intentionally 
includes or excludes producers or crops.
    (f) Notwithstanding the provisions of paragraphs (a) and (c) of this 
section, for areas outside the 50 states of the United States, the area 
shall include 10 or more producers of the crop except CCC may approve an 
area outside the 50 United States having fewer than 10 producers of the 
crop for which the area is requested if the Executive Vice President 
determines that such area will suffer significant economic consequences 
as a result of the disaster.



Sec. 1437.7  Yield determinations.

    (a) CCC will establish expected area yields or an equivalent measure 
in the event yield data are not available, for eligible crops for each 
county or area for which the NAP is available, using available 
information, which may include, but is not limited to, National 
Agricultural Statistics Service data, Cooperative State Research, 
Education, and Extension Service records, Federal Crop Insurance 
Corporation data, credible nongovernment studies, yields in similar 
areas, and reported approved yield data. For planted annual crops, such 
yields will be based on the acreage planted for harvest.
    (b) CCC may make county yield adjustments taking into consideration 
different yield variations due to different farming practices in the 
county such as: irrigated, nonirrigated, organic, nonorganic, different 
types and varieties of a crop and intended use.
    (c) In establishing expected area yields for eligible crops:

[[Page 426]]

    (1) If the approved area corresponds to a single county, the 
expected area yield will be the yield established by CCC for that 
county, including any adjustments permitted by this section;
    (2) If the approved area encompasses portions of counties or more 
than one county, the expected area yield will be the weighted average of 
the yields established by CCC for those counties in the area, including 
any adjustments permitted by this section; and
    (3) CCC may adjust expected area yields if:
    (i) The cultural practices, including the age of the planting or 
plantings, are different from those used to establish the yield; or
    (ii) The expected area yield established on a state or county level 
is determined to be incorrect for the area.
    (d) CCC will establish approved yields for purposes of providing 
assistance under this part. Approved yields for the eligible crop will 
be based on the producer's actual production history in accordance with 
the provisions of part 400, subpart G, of this title.
    (e) The approved yield established for the producer for the year in 
which the NAP payments are offered will be equal to the average of the 
consecutive crop year yields, as established by CCC, reported and 
certified by that producer for that eligible crop.
    (f) If a producer receives an assigned yield for a year of natural 
disaster because production records were not submitted by the production 
reporting deadline, the producer will be ineligible to receive an 
assigned yield for the year of the next natural disaster unless adequate 
production records for the eligible crop from all the interim crop years 
are provided to the local office. The producer shall receive a zero 
yield for those years the producer is ineligible to receive an assigned 
yield.
    (g) CCC will select certain producers on a random or targeted basis 
and require those selected to provide records acceptable to CCC to 
support the information provided. Producers may also be required to 
support the yield certification at the time of loss adjustment or on 
post-audit. Each certification must be supported by records acceptable 
to CCC. Failure to produce records acceptable to CCC will result in CCC 
establishing the yield in accordance with actual production history and 
may subject the producer to criminal and civil false claims actions 
under various Federal statutes as well as refund of any amount received. 
In addition, sanctions, as set out at Sec. 1437.16, may be imposed for 
false certification.
    (h) Records acceptable to CCC may include:
    (1) Commercial receipts, settlement sheets, warehouse ledger sheets, 
or load summaries if the eligible crop was sold or otherwise disposed of 
through commercial channels provided the records are reliable or 
verifiable; and
    (2) Such documentary evidence as is necessary in order to verify the 
information provided by the producer if the eligible crop has been sold, 
fed to livestock, or otherwise disposed of other than through commercial 
channels such as contemporaneous measurements, truck scale tickets, and 
contemporaneous diaries, provided the records are reliable or 
verifiable.
    (i) Any producer who has a contract to receive a guaranteed payment 
for production, as opposed to delivery, of an eligible crop will have 
the production adjusted upward by the amount of the production 
corresponding to the amount of the contract payment received.
    (j)(1) Producers will not be eligible to receive an assigned yield 
if the acreage of the crop in a county for the crop year has increased 
by more than 100 percent over any year in the preceding seven crop 
years, unless:
    (i) The producer provides adequate records of production costs, 
acres planted, and yield for the crop year for which NAP payments are 
being sought; or
    (ii) CCC determines that the records provided under this paragraph 
are inadequate. CCC may require proof that the eligible crop could have 
been marketed at a reasonable price had the crop been harvested.
    (2) The provisions of this section will not apply if:
    (i) The crop has been inspected prior to the occurrence of a loss by 
a third party acceptable to CCC; or
    (ii) The FSA county executive director, with the concurrence of the 
FSA

[[Page 427]]

state director, makes a recommendation for an exemption from the 
requirements and such recommendation is approved by CCC.
    (k) Prior to the beginning of the crop year, CCC in its own 
discretion will with respect to forage:
    (1) Identify each species or type and variety of forage found in the 
county;
    (2) Categorize each species or type and variety of forage identified 
as either:
    (i) Predominantly mechanical harvested, or
    (ii) Predominantly grazed;
    (3) Establish a carrying capacity for each forage species or type 
and variety identified and determined by CCC to be predominantly grazed;
    (4) Determine total acreage of forage determined by CCC to be 
predominantly grazed; and
    (5) Calculate expected Animal Unit Day by dividing the total acres 
of forage in the county categorized by CCC as predominantly grazed by 
the approved carrying capacity and multiplying the result by the number 
of days of grazing used to determine the carrying capacity.
    (l) In the event CCC receives a notice of loss of forage determined 
by CCC to be predominantly grazed, CCC will:
    (1) Calculate utilized Animal Unit Day by dividing the total acres 
of forage reported to FSA determined by CCC to be predominantly grazed 
by the reported number of animal units grazed and multiplying the result 
by the number of days grazing occurred;
    (2) Subtract the value of supplemental feed fed to the grazing 
livestock during the grazing period from the value of the utilized 
Animal Unit Day, as determined by CCC;
    (3) Determine area utilization by dividing total area utilized 
Animal Unit Day by the expected Animal Unit Day; and
    (4) Determine unit utilization by dividing the unit utilized Animal 
Unit Day by the expected unit Animal Unit Day.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53931, Oct. 17, 1997]



Sec. 1437.8  Acreage and production reports.

    (a) Producers must file one or more acreage reports at the local 
office no later than the date specified by CCC for each crop the 
producer wants to insure future eligibility for the NAP program. The 
acreage report may be filed by the farm operator. Any producer will be 
bound by the acreage report filed by the farm operator unless the 
producer files a separate acreage report prior to the acreage reporting 
date.
    (b) Acreage reports required by paragraph (a) must include all of 
the following information:
    (1) All acreage in the county of the eligible crop (for each 
planting in the event of multiple planting) in which the producer has a 
share;
    (2) The producer's share at the time of planting or the beginning of 
the crop year;
    (3) The FSA farm serial number;
    (4) The crop, practice, intended use, and for forage, the 
predominant species or type and variety and the intended harvest method, 
i.e. grazing or mechanical harvest.
    (5) All persons sharing in the crop (including the identity of any 
person having an interest in the crop as producer) and the person's 
employer identification number or social security number, if the person 
wishes to receive any payment under the Act;
    (6) The date the crop was planted; and
    (7) Acreage prevented from being planted.
    (c) For each crop for which an acreage report is filed in accordance 
with this section, the producer must report the production for that 
acreage by the immediately subsequent crop year acreage reporting date 
for the crop.
    (d) A person's failure to submit the required information by the 
designated acreage reporting dates may result in the denial of payments 
under this part. If there is a change of ownership, operation, or share 
within the farming operation after the acreage reporting date, the local 
office must be notified not later than 30 calendar days after the change 
and proof of the change must be provided to maintain eligibility for 
payments under this part.

[[Page 428]]

    (e) In lieu of a production report, producers of forage that is 
predominantly grazed shall, in the crop year in which the producer files 
a notice of loss, report grazing animals by type and weight range and 
the number of days grazing occurred, and the amount and type of feed fed 
such grazing animals during any grazing period within the crop year.
    (f) Animal Unit Day adjustments, as determined by CCC, may be 
calculated when a producer of forage predominantly grazed, provides 
adequate evidence, as determined by CCC, that unit forage management and 
maintenance practices provide different carrying capacity than practices 
generally provided forage acreage used to calculate the approved county 
expected carrying capacity.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53931, Oct. 17, 1997]



Sec. 1437.9  Loss requirements.

    (a) To qualify for payment under this part, the loss or prevented 
planting of the eligible crop must be due to a natural disaster.
    (b) Assistance under this part will not cover losses due to:
    (1) The neglect or malfeasance of the producer;
    (2) The failure of the producer to reseed or replant to the same 
crop in the county where it is practicable to reseed or replant;
    (3) The failure of the producer to follow good farming practices for 
the commodity and practice;
    (4) Water contained or released by any governmental, public, or 
private dam or reservoir project, if an easement exists on the acreage 
affected for the containment or release of the water;
    (5) Failure or breakdown of irrigation equipment or facilities; or
    (6) Except for tree crops and perennials, inadequate irrigation 
resources at the beginning of the crop year.
    (c) A producer of an eligible crop will not receive payments under 
this part unless the projected average or actual yield for the crop, or 
an equivalent measurement if yield information is not available, in the 
area falls below 65 percent of the expected area yield. Once this area, 
and all other, eligibility requirements have been satisfied:
    (1) A reduced yield payment will be made to a producer if the total 
quantity of the eligible crop that the producer is able to harvest on 
the unit is less than 50 percent of the approved yield for the crop due 
to natural disaster reasonably related to the basis for the area 
designation under Sec. 1437.6, factored for the share of the producer 
for the crop. Production from the entire unit will be used to determine 
whether the producer qualifies for a payment under this part. The 
quantity will not be reduced for any quality consideration unless a zero 
value is established; and
    (2) A prevented planting payment under this part will be made if the 
producer is prevented from planting more than 35 percent of the total 
eligible acreage intended for planting to the eligible crop. Producers 
must have intended to plant the crop and prove that they were prevented 
from planting the crop due to natural disaster reasonably related to the 
basis for the area designation under Sec. 1437.6, and the producer may 
be required to prove that such producer had the resources available to 
plant, grow, and harvest the crop, as applicable.
    (d) NAP payments under this part for prevented planting will not be 
available for:
    (1) Tree crops and other perennials, unless the producer can prove 
resources were available to plant, grow, and harvest the crop, as 
applicable;
    (2) Land that planting history or conservation plans indicate would 
remain fallow for crop rotation purposes; or
    (3) Land used for conservation purposes or intended to be or 
considered to have been left unplanted under any program administered by 
USDA, including the Conservation Reserve Program and Wetland Reserve 
Program.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53932, Oct. 17, 1997]



Sec. 1437.10  Application for payment and notice of loss.

    (a) Any person with a share in the eligible crop who would be 
entitled to a payment under this part must provide a notice of damage or 
loss within 15

[[Page 429]]

calendar days after the occurrence of the prevented planting (the end of 
the planting period) or recognizable damage to the crop. The notice must 
be filed at the local office serving the area where the producer's unit 
is located. The farm operator may provide the notice for all producers 
with an interest in the crop. All producers on a farm will be bound by 
the operator's filing or failure to file the application for payment 
unless the individual producers elect to timely file their notice.
    (b)(1) Applications for payments under this part must be filed, on 
Form FCI-74, by the applicant with the local office no later than the 
first acreage reporting date for the crop in the crop year immediately 
following the crop year in which the loss occurred.
    (2) If the producer chooses not to harvest the crop, all eligible 
acres and crop units for which the producer intends to make an 
application for payment must be left intact until the units have been 
appraised or released by an FCIC or CCC approved loss adjuster.
    (3) If the producer harvests the crop, the producer must provide 
such documentary evidence of crop production as CCC may require which 
may include leaving representative samples of the crop for inspection.
    (c) Failure to make timely application or to supply the required 
documentary evidence shall result in the denial of payments under this 
part.



Sec. 1437.11  Payments for reduced yields and prevented planting.

    In the event that the area loss requirement has been satisfied for 
the crop and:
    (a) The producer has sustained a loss in yield in excess of 50 
percent of the producer's approved yield established for the crop, the 
NAP low yield payment will be determined by:
    (1) Multiplying the producer's approved yield by the total eligible 
acreage planted to the eligible crop;
    (2) Multiplying the product of paragraph (a)(1) by 50 percent;
    (3) Subtracting the total production from the total eligible acreage 
from the result in paragraph (a)(2);
    (4) Multiplying the product of paragraph (a)(3) by the producer's 
share of the eligible crop;
    (5) Multiplying the result of paragraph (a)(4) by the applicable 
payment factor in accordance with Sec. 1437.5(c); and
    (6) Multiplying the result in paragraph (a)(5) by:
    (i) For the 1996 through 1998 crop years, 60 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (b) The producer has been unable to plant at least 35 percent of the 
acreage intended for the eligible crop, the NAP payment will be 
determined by:
    (1) Multiplying the producer's acreage intended to be planted to the 
eligible crop by 35 percent;
    (2) Subtracting the result in (b)(1) from the number of eligible 
prevented planting acres as determined in Sec. 1437.9(c)(2);
    (3) Multiplying the result of (b)(2) by the producer's share of the 
eligible crop;
    (4) Multiplying the producer's approved yield by the result of 
(b)(3);
    (5) Multiplying the result of (b)(4) by the approved prevented 
planting payment factor in accordance with Sec. 1437.5(c); and
    (6) Multiplying the result of (b)(5) by:
    (i) For the 1996 through 1998 crop years, 60 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC.
    (c) The producer has sustained a loss of forage determined by CCC to 
be predominantly grazed in accordance with Sec. 1437.7(l), in excess of 
50 percent of the producer's expected Animal Unit Day established for 
the unit, the NAP payment will be determined by:
    (1) Dividing the unit acreage for each species or type or variety 
identified on

[[Page 430]]

the unit by the approved carrying capacity and multiplying the result by 
the corresponding grazing days used as the basis for determination of 
the carrying capacity, totaling the result for each species or types and 
varieties.
    (2) Multiplying the result of paragraph (c)(1) of this section by 50 
percent.
    (3) Multiplying the number of animals grazed by the daily allowance 
of corn according to type and weight range and divide the result by 
pounds of corn CCC determines is necessary to provide the daily energy 
requirement for one animal unit.
    (4) Multiplying the result of paragraph (c)(3) of this section by 
the number of days grazing occurred to determine gross actual AUD.
    (5) Adding AUD for ineligible causes of loss and incidental 
mechanically harvested Category 1 forage to the result of paragraph 
(c)(4) of this section.
    (6) Subtracting AUD or equivalent value of supplemental feed fed to 
the grazing livestock during the crop year from the result of paragraph 
(c)(5) of this section.
    (7) Subtracting the result of paragraph (c)(6) of this section from 
the result of paragraph (c)(2) of this section. If a zero or negative 
number results, payment cannot be calculated.
    (8) Multiplying the positive result of paragraph (c)(7) of this 
section by:
    (i) For the 1997 through 1998 crop years, 60 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC; or
    (ii) For the 1999 and subsequent years, 55 percent of the average 
market price, as determined by CCC, or any comparable coverage, as 
determined by CCC.

[61 FR 69005, Dec. 31, 1996, as amended at 62 FR 53932, Oct. 17, 1997]



Sec. 1437.12  Multiple benefits.

    If a producer is eligible to receive payments under this part and 
benefits under any other program administered by the Secretary for the 
same crop loss, the producer must choose whether to receive the other 
program benefits or payments under this part. The producer is not 
eligible for both. Such election does not relieve the producer from the 
requirements of making a production and acreage report. However, if the 
other USDA program benefits are not available until after an application 
for benefits has been filed under this part, the producer may refund the 
total amount of the payment to the local office from which the payment 
was received.



Sec. 1437.13  Payment and income limitations.

    (a) NAP payments shall not be made:
    (1) In excess of $100,000 per person per crop year under this part, 
or
    (2) To a person who has qualifying gross revenues in excess of $2 
million for the most recent tax year preceding the year for which 
assistance is requested.
    (b) Simple interest on payments to the producer which are delayed 
will be computed on the net payments ultimately found to be due, from 
and including the 31st day after the latter of the date the producer 
signs, dates, and submits a properly completed application for payment 
on the designated form, the date disputed applications are adjudicated, 
or the date the area and crop is approved for NAP payments. Interest 
will be paid unless the reason for failure to timely pay is due to the 
producer's failure to provide information or other material necessary 
for the computation or payment.



Sec. 1437.14  Violations of highly erodible land and wetland conservation provisions.

    The provisions of part 12 of this title, apply to this part.



Sec. 1437.15  Violations regarding controlled substances.

    The provisions of Sec. 718.11 of this title apply to this part.



Sec. 1437.16  Misrepresentation and scheme or device.

    (a) If CCC determines that any producer has misrepresented any fact 
or has knowingly adopted, participated in, or benefitted from, any 
scheme or device that has the effect of defeating, or is designed to 
defeat the purpose of

[[Page 431]]

this part, such producer will not be eligible to receive any payments 
applicable to the crop year for which the scheme or device was adopted.
    (b) If any misrepresentation, scheme or device, or practice has been 
employed for the purpose of causing CCC to make a payment which 
otherwise would not make under this part:
    (1) CCC will withhold all or part of the payment that would 
otherwise be due.
    (2) All amounts paid by CCC to any such producer, applicable to the 
crop year in which the offense occurred, must be refunded to CCC 
together with interest and other amounts as determined in accordance 
with this part.
    (3) CCC may impose such other penalties or administrative sanctions 
as authorized by section Sec. 1437.19.
    (c) Scheme and device may include, but is not limited to:
    (1) Concealing any information having a bearing on the application 
of the rules of this part;
    (2) Submitting false information to the CCC or any county or state 
FSA committee; or
    (3) Creating fictitious entities for the purpose of concealing the 
interest of a person in the farming operation.



Sec. 1437.17  Refunds to the CCC.

    In the event that there is a failure to comply with any term, 
requirement, or condition for payment made in accordance with this part, 
or the payment was established as a result of erroneous information 
provided by any person, or was erroneously computed, all such payments 
or overpayments will be refunded to CCC on demand, plus interest 
determined in accordance with part 1403 of this chapter.



Sec. 1437.18  Offsets and assignments.

    (a) Except as provided in paragraph (b), 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 payments under this part.
    (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. 1437.19  Cumulative liability.

    (a) The liability of any producer for any payment or refunds, which 
is determined in accordance with this part to be due to CCC will be in 
addition to any other liability of such producer under any civil or 
criminal fraud statute or any other statute or provision of law 
including, but not limited to, 15 U.S.C. 714; 18 U.S.C. 286, 287, 371, 
641, 651, 1001, 1014; 15 U.S.C. 714m; and 31 U.S.C. 3729.
    (b) All producers on the unit receiving payments under this part 
will be jointly and severally liable to repay any unearned payments 
under this part.



Sec. 1437.20  Appeals.

    The appeal, reconsideration, or review of all determinations made 
under this part, except the eligibility provisions for crops, areas, or 
producers for which there are no appeal rights because they are 
determined rules of general applicability, must be in accordance with 
part 780 of this title.



Sec. 1437.21  Estates, trusts, and minors.

    (a) Program documents executed by persons legally authorized to 
represent estates or trusts will be accepted only if such person 
furnishes evidence of the authority to execute such documents.
    (b) A minor who is otherwise eligible will be eligible for payments 
under this part only if such person meets one of the following 
requirements:
    (1) The minor establishes that 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 program documents are executed by the guardian; or
    (3) A bond is furnished under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.

[[Page 432]]



Sec. 1437.22  Death, incompetence, or disappearance.

    In the case of death, incompetence or disappearance of any person 
who is eligible to receive payments under this part, such payments will 
be disbursed in accordance with part 18 of this title.



Sec. 1437.23  OMB control numbers.

    These regulations amend the information collection requirements 
previously approved by the Office of Management and Budget (``OMB'') 
under OMB control number 0563-0016.



PART 1439--EMERGENCY LIVESTOCK ASSISTANCE--Table of Contents




                       Subpart--General Provisions

Sec.
1439.1  General statement.
1439.2  Administration.
1439.3  Definitions.
1439.4  Program availability.
1475.5  Owner eligibility.
1439.6  Eligibility for assistance.
1439.7  Adjustment of total benefits available.
1439.8  Disposition of feed.
1439.9  Payments.
1439.10  Termination and suspension of program.
1439.11  Maintenance of books and records.
1439.12  Liens and claims of creditors; setoffs.
1439.13  Assignments of payments.
1439.14  Limitation of authority.
1439.15  Appeals.
1439.16  Misrepresentation, scheme or device.
1439.17  Refunds to CCC; joint and several liability.
1439.18  Cumulative liability.
1439.19  Estates, trusts, and minors.
1439.20  Death, incompetence, or disappearance.
1439.21  Violations.
1439.22  Benefits limitation.
1439.23  Gross revenue limitation.
1439.24  Paperwork Reduction Act assigned numbers.

            Subpart--Livestock Preservation Donation Program

1439.101  General statement.
1439.102  Eligibility.
1439.103  Assistance.
1439.104  Feeding period.

               Subpart--Emergency Feed Assistance Program

1439.201  General statement.
1439.202  Sale of CCC-owned grain.

                     Subpart--Emergency Feed Program

1439.301  General statement.
1439.302  Cost-share assistance.

               Subpart--Crash Feed Grain Donation Program

1439.401  General statement.
1439.402  Assistance.
1439.403  Feeding period.

              Subpart--Prickly Pear Cactus Burning Program

1439.501  General statement.
1439.502  Definitions.
1439.503  Eligibility.
1439.504  Assistance.

         Subpart--Emergency Feed Grain Donation Program (EFGDP)

1439.601  General statement.
1439.602  Assistance.

           Subpart--Foundation Livestock Relief Program (FLRP)

1439.701  General statement.
1439.702  Assistance.

                  Subpart--Livestock Indemnity Program

1439.800  [Reserved]
1439.801  Applicability.
1439.802  Administration.
1439.803  Definitions.
1439.804  Sign-up period.
1439.805  Proof of loss.
1439.806  Indemnity benefits.
1439.807  Availability of funds.
1439.808  Misrepresentation, scheme or device.
1439.809  Limitations on payments and income.
1439.810  Refunds to CCC; joint and several liability.

             Subpart--American Indian Livestock Feed Program

1439.900  [Reserved]
1439.901  Applicability.
1439.902  Administration.
1439.903  Definitions.
1439.904  Region.
1439.905  Responsibilities.
1439.906  Program availability.
1439.907  Eligibility.
1439.908  Payment application.
1439.909  Payments.
1439.910  Program suspension and termination.
1439.911  Appeals.
1439.912-1439.915  [Reserved]


[[Page 433]]


    Authority: 15 U.S.C. 714b and 714c, 7 U.S.C. 1427 and 1471-1471j.

    Source: 56 FR 33192, July 19, 1991, unless otherwise noted. 
Redesignated at 61 FR 32644, June 25, 1996.

    Editorial note:  Nomenclature changes to part 1439 appear at 61 FR 
32644, June 25, 1996.



                       Subpart--General Provisions



Sec. 1439.1  General statement.

    The regulations in this part set forth the terms and conditions of 
the programs which may be made available to eligible owners for 1990 and 
subsequent livestock feed crop year disasters. The objective of these 
programs is to provide emergency feed assistance to eligible livestock 
owners in a State, county, or area approved by the Executive Vice 
President, CCC, where because of disease, insect infestation, flood, 
drought, fire, hurricane, earthquake, storm, hot weather, or other 
natural disaster, a livestock emergency exists. These programs, except 
the Crash Feed Grain Donation Program, also provide feed assistance to 
eligible livestock owners for the preservation and maintenance of 
livestock in any county contiguous to a county where a livestock feed 
emergency has been determined to exist at any time during an 8-month 
period beginning on the date that such an emergency has been determined 
to exist in the other county. The program or programs which are made 
available in the event of the occurrence of a livestock feed emergency 
shall be determined by the Executive Vice President, CCC. With the 
exception of the Prickly Pear Cactus Burning Program and Crash Feed 
Grain Donation Program contained at Sec. 1439.401 through Sec. 1439.504 
of this part, in order to receive assistance under this part a person 
must enter into a contract with CCC in order to receive such assistance 
from CCC.



Sec. 1439.2  Administration.

    (a) This part shall be administered by CCC under the general 
direction and supervision of the Executive Vice President, CCC. The 
program shall be carried out in the field by State and county Farm 
Service Agency committees (State and county committees).
    (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 in this part, as amended or supplemented.
    (c) The State committee shall take any action required by this part 
which has not been taken by the county committee. The State committee 
shall also:
    (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, 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.



Sec. 1439.3  Definitions.

    In determining the meaning of the provisions of this part, unless 
the context indicates otherwise, words imparting the singular include 
and apply to several persons and things, words imparting the plural 
include the singular, words imparting the masculine gender include the 
feminine, and words used in the present tense include the future as well 
as the present. The following terms shall have the following meanings:
    Actively engaged in livestock production or husbandry, or dairy 
production means:
    (1) Possessing a beneficial interest in eligible livestock as 
defined in this part; and
    (2) Possessing a financial risk in regards to the eligible 
livestock.
    Adjusted CCC Value means the PCP adjusted for loan premiums and 
discounts, as applicable.
    Adjusted total benefits available means the total monetary value of 
assistance for which the owner is eligible to receive as recomputed and 
entered on the addendum to the contract due to changes in feed available 
or changes in livestock during the feeding period.
    Approving official means a representative of CCC who is authorized 
by the Executive Vice President, CCC, to approve an application for 
assistance and

[[Page 434]]

contract made in accordance with this part.
    Area means any part of a State or county including Indian 
reservations.
    FSA means the Farm Service Agency.
    Beef cow means a bovine animal kept for breeding and that is 
pregnant or lactating.
    CCC means the Commodity Credit Corporation.
    Commercial Feedlot means an establishment that is primarily engaged 
in the fattening of beef cattle, goats, swine, and lambs in a confined 
area for a period of at least 30 days, on a fee or contract basis for 
profit.
    Contact person means the person who is designated in the contract as 
the person to receive communications from CCC concerning the contract.
    Contract means the emergency livestock feed program contract, 
appendix and addendum thereto when executed by the livestock owner and 
approved by a representative of the CCC.
    Contracting entity means the owner or owners who enter into an 
emergency livestock feed program contract for payment, to purchase 
necessary grain or roughage under one or more of the programs of this 
part and are party to the same contract.
    County means a county or similar geographic area as determined by 
CCC.
    Crop year means a period determined by CCC which begins when normal 
grazing of new pasture growth becomes available in the spring and ends 
12 months later.
    Dairy cow means a bovine animal which is owned or leased for the 
purpose of producing milk for commercial marketing and that is pregnant 
or lactating.
    DASCO means the Deputy Administrator, or Assistant Deputy 
Administrator State and County Operations, FSA, U.S. Department of 
Agriculture.
    Dry supplemental feed means a dry feed ingredient, or combination of 
dry feed ingredients, derived as by-products from processing feed and 
feed grains, oil seeds, meat, fish, citrus, sugar beets, or dairy 
products that are added to other dry feed materials to improve the 
nutritional balance or performance of the total feed ration. 
Antibiotics, emulsifiers, hormones, minerals, and vitamins, as 
determined and announced by CCC are also included.
    Eligible feed for assistance means any type of feed (feed grain, 
oilseed meal, premix or mixed or processed feed, liquid or dry 
supplemental feed, roughage, pasture, or forage) that best suits the 
owner's livestock operation which is consistent with acceptable feeding 
practices and which was not produced by the owner except for feed grain 
pledged as collateral for a farm stored price support loan or upon which 
assistance has not been provided. Any type of crop not normally 
considered as a feed grain may if the crop will be feed to the owners 
livestock, as determined by CCC, be considered as a feed grain and be 
considered in providing assistance to the owner. If assistance on such 
crop is requested by the owner, all such crops produced by the owner 
shall be considered when making a determination of the monetary value of 
feed available. Such crop shall not be used in determining the monetary 
value of feed production loss.
    Eligible Livestock means beef and dairy cattle, sheep, goats, swine, 
poultry (including egg-producing poultry), equine animals used for food 
or in the production of food, and fish used for food. Buffalo and 
beefalo are also included when maintained on the same basis as beef 
cattle. Eligible livestock used for determining feed assistance are 
those livestock that are part of a foundation herd (including producing 
dairy cattle) or offspring or are purchased as part of a normal 
operation and not to obtain additional benefits under this part. 
Eligible livestock also includes:
    (1) Livestock inherited by the owner, or
    (2) Purchased by the owner as part of a complete farm operation.
    Equine animals means horses, mules, and donkeys, and includes 
animals:
    (1) Used commercially for human food, or
    (2) Kept for producing food and fiber on the owner's farm, such as 
draft horses, or cow ponies. Eligible equine animals are limited to the 
number needed to produce food and fiber on the owner's farm or breed 
horses and mules to be used to produce food and fiber on the owner's 
farm, and does not include

[[Page 435]]

such animals which are used for recreational purposes or are running 
wild or uncontrolled on land owned or leased by the owner.
    Equine animals for food means those horses which are maintained for 
commercial sale of food processors for human consumption.
    Executive Vice President means the Executive Vice President, CCC, or 
a designee of the Executive Vice President.
    Feed available means the owner's current year feed production on 
hand on the date the feeding period begins. Feed available shall also 
include any feed on hand owned by the owner of eligible livestock on the 
date of application as provided in Sec. 1439.6 of this subpart.
    Feed dealer or manufacturer means a person engaged in selling 
processed feed who is approved by the county committee to advance 
processed feed from such person's inventory to approved owners when 
requested to do so by the county committee under a feed dealer's 
agreement executed with CCC.
    Feeding period means: (1) For all livestock except fish for food, 
the period beginning and ending on the dates determined as follows: The 
period shall begin on the later of:
    (i) The date of the application for assistance; or
    (ii) The authorization of the implementation of the program. The 
period shall end on:
    (iii) If both grazing and nongrazing livestock are included, the 
earlier of the date when additional feed is normally expected to become 
available; or
    (iv) The end of the crop year or the end of the grazing period if 
pasture (including wheat pasture) is the only crop produced; or
    (v) If only nongrazing livestock are included on the later or the 
date when additional feed is normally expected to become available or 
the end of the crop year.
    (2) For fish for food, the period beginning and ending on the dates 
determined as follows: The period shall begin on the later of:
    (i) The date of the application for assistance; or
    (ii) The authorization for implementation of the program and the 
period shall end on the earlier of:
    (iii) The estimated date the owner intends to harvest the fish;
    (iv) The anticipated date when water temperature in the pond is 
expected to be 54 degrees Fahrenheit or less;
    (v) The end of the current feeding period established for other 
eligible livestock if other livestock are included on the application; 
or
    (vi) The end of the emergency livestock feed program crop year.
    Fish for food means those fish which are maintained for commercial 
sale to restaurants, food stores, fish haulers, and processors for human 
consumption.
    Foundation Livestock means eligible livestock that are kept for 
breeding and the reproduction of such livestock.
    Goat doe means a female animal kept for breeding that is pregnant or 
lactating.
    Handler means any person approved by the county ASC committee to 
perform designated services in accordance with a grain handler agreement 
executed by such person and CCC.
    Husbander means owner as defined in this subpart.
    Liquid supplemental feed means that which contains protein, urea or 
other nonprotein nitrogen, minerals, and vitamins that are added to 
molasses or other liquids resulting in a product that is mixed, handled, 
and fed in a liquid form. They may also include such products as 
emulsifiers for fat, certain antibiotics, and hormones.
    Livestock producer means the livestock owner as defined in this 
subpart.
    Natural disaster means disease, insect infestation, flood, drought, 
fire, hurricane, earthquake, storm, hot weather, or other natural 
disaster.
    Net Energy Maintenance means for all livestock, except fish for 
food, the appropriate amount of net energy needed to meet the daily 
maintenance needs for livestock based on the weight range by type of 
eligible livestock as provided in this section as determined by CCC. The 
maintenance level for fish for food shall be one percent of the average 
weight of all fish for food owned by the owner times the number of days 
in the feeding period.

[[Page 436]]

    Normal yield means for program crops the yield established for other 
CCC programs. If no yield is established for programs crops, the yield 
shall be based on similar farms. For nonprogram crops, the yield shall 
be the lower of the yield specified by the owner or the average yield 
for the county determined according to NASS, unless the owner can 
substantiate that his or her normal yield is higher than that of NASS. 
Yields determined by NASS shall be based on a 5-year average excluding 
the high and low years.
    Owner means: (1) A person who is actively engaged in farming as 
determined according to part 1497 of this chapter, and is:
    (i) A citizen of, or legal resident alien in the United States; or
    (ii) A farm cooperative, private domestic corporation, partnership, 
or joint operation in which a majority interest is held by members, 
stockholders, or partners who are citizens of, or legal resident aliens 
in the United States;
    (iii) Determined to receive 10 percent or more of the person's gross 
income, as determined by the Secretary, from the production of grain or 
livestock.
    (2) A person that is actively engaged in livestock production or 
husbandry, or dairy production, and is:
    (i) Any Indian tribe under the Indian Self-Determination and 
Education Assistance Act;
    (ii) Any Indian organization or entity chartered under the Indian 
Reorganization Act or entity chartered under the Indian Reorganization 
Act;
    (iii) Any tribal organization under the Indian Self-Determination 
and Education Assistance Act; and
    (iv) Any economic enterprise under the Indian Financing Act of 1974.

The owner must own or jointly own the eligible livestock to be fed with 
the eligible feed which is to be purchased or acquired through donation 
in accordance with this part or with respect to which assistance is 
provided in accordance with this part. An owner who pledges livestock as 
security for a loan shall be considered as the owner for the purpose of 
this part if all other requirements of this part are met. 
Notwithstanding any other provisions of this section, livestock leased 
under a contractual agreement which has been in effect at least 3 months 
for poultry or fish and 6 months for other livestock on the date of 
application for assistance under this part requires the lessee to 
furnish the feed for such livestock and provides for a beneficial 
interest in such livestock such as the right to market a share of the 
increase shall be considered as being owned by the lessee. An owner does 
not include:
    (1) State or local governments or subdivisions thereof; or
    (2) Any individual or entity which is determined to be ineligible to 
receive payments or benefits in accordance with part 1498 of this 
chapter.
    Owner's holdings means all land and livestock located within a 
reasonable travel area, as determined by the county committee, for the 
owner. Owner's holdings shall also include all land and livestock that 
is not within a reasonable travel area, if crops and or livestock from 
such land are normally transported from one operation to the other 
operation to allow the owner to utilize all feed and grazing available 
on all operations.
    Person means a person as determined according to part 1497 of this 
title.
    Posted county price or (PCP) means the daily terminal market price 
for a commodity at a terminal market as determined by CCC, adjusted by 
the county average location differential as determined by CCC.
    Poultry means domesticated chickens, ducks, geese and turkeys.
    Premix means a formulation of one or more microingredients, such as 
vitamins, minerals, drugs, or other ingredients when one type of 
ingredient is evenly mixed with one or more of other types of 
ingredients or with a carrier. One vitamin mixed together solely with 
another kind of vitamin, or one mineral mixed together solely with 
another kind of mineral is not considered a premix.
    Processed feed means feed grain which contains not more than 90 
percent, by weight, of any one feed grain which is ground, rolled, 
steamed, pelletized, or otherwise processed provided that all of the 
ingredients of the whole grain are included in such mixture.
    Program means emergency livestock feed program authorized by this 
part.

[[Page 437]]

    Secretary means the Secretary of Agriculture or a designee of the 
Secretary.
    Sheep ewe means a female animal kept for breeding that is pregnant 
or lactating.
    State means any State of the United States, the Commonwealth of 
Puerto Rico, the Virgin Islands, or Guam.
    State committee, State office, county committee, or county office, 
means the respective ASC committee or FSA office.
    Substantial loss of production means the monetary value of feed 
produced by the owner (including pasture, forage and feed in storage) 
during the crop year which has, because of a natural disaster, suffered 
at least a 40 percent reduction in the yield from normal production 
computed by the county office, or such other amount as determined by the 
Executive Vice President, CCC, to be the normal production produced by 
the owner with respect to lands operated by the owner. Any loss of feed 
production which the approving official determines is attributable to:
    (1) Overgrazing; or
    (2) Farming practices not recognized as being normal in the area, 
shall not be included in determining a substantial loss of production. 
Loss of feed production on crop land leased by the owner, under a new 
lease, after the beginning of the emergency livestock feed program crop 
year shall not be included in determining a substantial loss of 
production. Loss of feed production on pasture land leased by the owner, 
under a new lease, less than 90 days before the authorization to 
implement the emergency livestock feed programs shall not be included in 
determining a substantial loss of production, unless otherwise allowed 
by CCC. The increase in costs of livestock feed because of a natural 
disaster or any other reason shall not be construed to mean that the 
owner has had a loss of production.
    Swine sow means a female animal kept for breeding that is pregnant 
or lactating.
    Total benefits available means the total monetary value of 
assistance for which an owner is eligible as originally computed and 
entered on the contract. Total benefits available is a percentage of the 
lesser of the value of feed production loss or the value of additional 
feed needs.
    Value of additional feed needs means the monetary value needed to 
provide the daily energy requirements for the entire feeding period for 
the eligible livestock after subtracting the monetary value of feed 
available to the owner.
    Value of total feed needs means, except fish for food, the total 
monetary value needed to provide daily energy requirements for eligible 
livestock for the entire feeding period. Feed benefits for fish for food 
shall be as provided in Sec. 1439.6 of this subpart.
    Warehouse means a warehouse which is currently operating in 
accordance with a valid Uniform Grain Storage Agreement executed with 
CCC.
    Weight ranges means the weight range by type of livestock and an 
appropriate amount of energy required to provide the daily maintenance 
needs for livestock as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                      Allowance/
                                                                                            Daily       day in
                   Kind/type                                  Weight range                  energy      lbs. of
                                                                                         requirement     corn
----------------------------------------------------------------------------------------------------------------
(1) Beef cattle: Mcals
    Beef.......................................  Less than 400.........................      3.0 NEm         3.5
    Beef.......................................  400-799...............................      5.2 NEm         6.5
    Beef.......................................  800-1099..............................      7.0 NEm         8.5
    Beef.......................................  1100+.................................     10.8 NEm        12.5
    Beef, cow..................................  All...................................     13.6 NEm        15.7
    Beef, bull.................................  1000+.................................     10.8 NEm        13.0
(2) Dairy cattle:
    Dairy......................................  Less than 400.........................      3.0 NEm         3.5
    Dairy......................................  400-799...............................      5.2 NEm         6.5
    Dairy......................................  800-1099..............................      7.0 NEm         8.5
    Dairy......................................  1100+.................................     10.8 NEm        12.5
    Dairy, cow.................................  Less than 1100........................     20.4 NE1        27.0
    Dairy, cow.................................  1100-1299.............................     23.0 NE1        31.0
    Dairy, cow.................................  1300-1499.............................     24.5 NE1        33.0
    Dairy, cow.................................  1500+.................................     25.7 NE1        34.5
    Dairy, bull................................  1000+.................................     12.0 NEm        14.5

[[Page 438]]

 
(3) Equine:
    Equine.....................................  Less than 450.........................       6.2 DE         4.4
    Equine.....................................  450-649...............................       8.9 DE         6.3
    Equine.....................................  650-874...............................      11.6 DE         8.2
    Equine.....................................  875+..................................      17.3 DE        11.6
(4) Swine: Kcals
    Swine......................................  Less than 45..........................       780 DE          .5
    Swine......................................  45-124................................      1630 DE         1.1
    Swine......................................  125+..................................      2867 DE         1.9
    Swine, sow.................................  235+..................................      9854 DE         6.5
    Swine, boar................................  235+..................................      5446 DE         3.7
(5) Sheep:
    Sheep......................................  Less than 44..........................      315 NEm          .4
    Sheep......................................  44-82.................................      718 NEm          .9
    Sheep......................................  83+...................................      973 NEm         1.1
    Sheep, ewe.................................  150+..................................     1420 NEm         3.1
    Sheep, ram.................................  150+..................................     1556 NEm         1.7
(6) Goats: Mcals
    Goats......................................  Less than 44..........................      .70 DEm          .5
    Goats......................................  44-82.................................     1.59 DEm         1.1
    Goats......................................  83+...................................     2.16 DEm         1.5
    Goats, doe.................................  125+..................................      5.3 DEm         3.5
    Goats, doe, dairy 1994 and subsequent crop   125+..................................      7.6 DEm         5.2
     years.
    Goats, buck................................  125+..................................     3.01 DEm         2.1
(7) Poultry: Kcals
    Poultry....................................  Less than 3.0.........................       150 ME          .1
    Poultry....................................  3.0-7.9...............................       375 ME          .2
    Poultry....................................  8.0+..................................       638 ME         .45
----------------------------------------------------------------------------------------------------------------


Consideration has been given for fetal development, lactation, as 
applicable, in meeting daily energy requirements for maintenance. Weight 
ranges and energy requirements shall not be established for fish used 
for commercial food production but a feed allowance shall be computed in 
accordance with Sec. 1439.6 of this subpart.

[56 FR 33192, July 19, 1991, as amended at 58 FR 62512, Nov. 29, 1993]



Sec. 1439.4  Program availability.

    (a) Whenever the Governor of a State determines that a livestock 
feed emergency due to a natural disaster exists in a State, or an area 
of the State, or a county committee determines that such an emergency 
exists in the county or area within the county, the Governor or the 
county committee may submit a request for a determination by the 
Secretary of a livestock feed emergency in the State, county, or area 
thereof and for emergency livestock feed assistance under this part. Any 
request for a determination that a livestock emergency exists because of 
a slow developing natural disaster such as a drought must be submitted 
by October 31 of the current crop year. A determination that a livestock 
emergency due to natural disaster exists may also be made for a State, 
county or area thereof by the Secretary, whether or not a request for 
assistance is submitted. The request of a Governor or county committee 
for a livestock feed emergency determination and for emergency livestock 
feed assistance shall include recommendations to the Secretary of those 
options that will fully use feed available through local sources. The 
request of the Governor must specify the names of the counties for which 
assistance is requested. The request submitted by a county committee for 
a livestock feed emergency determination must be submitted to the State 
committee and must contain:
    (1) A County Feed Loss Assessment Report, Form CCC-654;
    (2) The rainfall data by month expressed in inches and percent of 
normal for the current calendar year and the two previous calendar years 
if the request is due to the occurrence of drought or excess moisture;
    (3) The type of assistance requested; and

[[Page 439]]

    (4) A report of an on-site visit by the county committee and a State 
committee representative stating existing production conditions.
    (b) The State committee shall forward such a request with a 
recommendation of whether the request should be approved to DASCO.
    (c) The Executive Vice President, CCC, or his designee shall make a 
final determination as to whether a livestock feed emergency exists not 
later than 30 days after receipt of any request made in accordance with 
paragraph (a) of this section and shall notify the Governor or the 
county committee of such determination as applicable and the livestock 
feed programs authorized to be implemented.
    (d) Owners in any county contiguous to a county that has been 
designated as a livestock feed emergency county shall be eligible to 
receive emergency livestock feed assistance under this part, except for 
the Crash Feed Grain Donation Program and Livestock Feed Donation 
Program, at any time during the 8-month period beginning on the date on 
which the emergency was determined exists in the other county.



Sec. 1439.5  Owner eligibility.

    Subject to the terms and conditions in this part, an owner, 
including an Indian tribal member owner who is participating in the 
Indian Acute Distress Donation Program (IADDP), may be approved to 
participate in a program established in accordance with this part.



Sec. 1439.6  Eligibility for assistance.

    (a) Any owner of livestock may file a CCC-652 for participation in a 
program made available by CCC in an approved county. When a CCC-652 is 
filed, the owner or, a duly authorized representative of the owner, 
shall execute the certification contained on the CCC-652.
    (b) The owner, or duly authorized representative of the owner, shall 
enter into a contract with CCC to receive assistance not to exceed the 
amount of eligibility determined on the CCC-653.
    (c) A CCC-652 application worksheet and CCC-651 contract must be 
filed at the county FSA office in an approved county or in a county FSA 
office in a contiguous county.
    (d)(1) The owner, or a duly authorized representative of an owner, 
shall:
    (i) Furnish all the information specified on the CCC-652 and CCC-
651;
    (ii) Certify that the owner meets the requirements of the applicable 
program; and
    (iii) Provide any other information which the approving official 
determines to be necessary to determine the owner's eligibility.
    (2) Applications for assistance due to production losses because of 
a livestock feed emergency determined to exist for 1990 and subsequent 
livestock feed crop year disasters must be filed by December 31 of the 
year in which the disaster occurred.
    (3) With respect to owners in a county contiguous to a county where 
a livestock feed emergency has been determined to exist, owners must 
file not later than the last day of the 8-month period beginning on the 
day the Secretary of Agriculture determines that a livestock feed 
emergency exists in the other county.
    (e)(1) With respect to those programs which require that an eligible 
livestock owner must have suffered a substantial loss of production of 
feed, in determining whether a substantial loss of production of feed 
exists, the normal production of livestock feed and the current year 
livestock feed production harvested by the owner shall be converted to a 
monetary value based on established crop yields or the 5-year average 
yield of the crop excluding the high and low years, obtained from the 
National Agriculture Statistics Service (NASS). The amount of loss of 
livestock feed production shall be determined by CCC by comparing the 
monetary value of normal feed production produced on the owner's 
landholdings including leased land and any other land which is available 
for use by the owner to the monetary value of the actual livestock feed 
production harvested from such holdings. Loss of pasture production 
shall be based on the grazing value per acre of such pasture and the 
percent of loss for such acres. The owner must have suffered a 
substantial monetary value loss of feed normally produced by the owner 
to be eligible to participate in the emergency livestock feed programs.

[[Page 440]]

    (2) A substantial loss of production may, as determined by CCC, 
include feed stocks produced in the current crop year which were damaged 
or destroyed by a natural disaster while in storage. Feed stocks not 
totally destroyed shall be appraised by CCC on the basis of the 
remaining value of such stocks as livestock feed.
    (3) For the 1990 emergency livestock feed program the determination 
of a substantial loss of production with respect to pasture, range, or 
other grazing land shall be computed based on the loss of current year 
grazing after the beginning of the livestock feed program crop year 
through the end of the feeding period. County ASC committees shall 
establish a value per acre for each type of grazing for the county and 
the maximum degree of loss for each type of grazing. Any production loss 
attributed to overgrazing in a prior crop year shall be excluded.
    (4) For the 1991 and subsequent emergency livestock feed program 
crop years, the determination of a substantial loss of production with 
respect to pasture, range, or other grazing land shall be computed based 
on the loss of current year grazing after the beginning of the livestock 
feed program crop year through the end of the feeding period. State ASC 
committees shall establish a carrying capacity for each type of grazing 
in the county. The normal grazing value will be based on the carrying 
capacity and the dollar value of the quantity of forage needed to 
maintain an animal unit for 1 day, as determined by DASCO.
    (5) In determining a substantial loss of production with respect to 
feed grain, silage, green chop, hay, and other roughage, the current 
crop year acreage and normal yields for such crops shall be used. The 
owner with swine, poultry or fish and grazing livestock that selects to 
include only eligible livestock that do not normally graze or use forage 
in the application for assistance shall not receive a loss on roughage, 
grazing, or other crops not suitable for non-grazing livestock.
    (6) The amount of payment on any loss of production otherwise 
computed shall be reduced due to the receipt of other government 
disaster benefits which are received by the person for livestock feed 
normally grown by the owner. No reduction shall be made for CCC-owned 
grain that is donated to eligible Indian livestock owners under the 
Indian Acute Distress Donation Program (IADDP).
    (7) No loss of production shall be determined on acreage 
conservation reserve (ACR) or conserving use (CU) for payment acreage 
during the 5-month restricted haying and grazing period established by 
the State committee for purpose of administering part 1413 of this 
chapter.
    (f) The same monetary value per ton, bushel or hundredweight, as 
applicable, used to determine the value for normal production and feed 
production harvested shall be used to determine a monetary value for 
feed available.
    (g) Current year feed available owned by the owner of eligible 
livestock on the date of application shall include, but is not limited 
to:
    (1) Feed grain, silage, green chop, hay, pasture, and other 
roughage;
    (2) Current crop year production of feed still available including 
any grain pledged as collateral for a CCC price support loan;
    (3) Current crop year feed grain pledged as collateral for a CCC 
price support loan during the current crop year.
    (4) Any current crop year feed that is sold during the current crop 
year by considering the date of delivery of the feed as the date sold;
    (5) Pasture, range, or other grazing land owned by the owner and any 
benefits from any pasture or grazing rights purchased or leased as part 
of the owner's normal operation during the feeding period;
    (6) Grazing benefits from hay or grain crops which are grazed 
instead of or in addition to harvesting during the feeding period, 
including any temporary grazing of crops such as wheat;
    (7) Temporary winter cover crops available for grazing during the 
feeding period;
    (8) Any current year feed produced by the owner utilized in a 
feedlot for the commercial feeding of livestock;
    (9) Any donated feed received during the current year including 
current and prior years production, that is still available on the date 
the application is

[[Page 441]]

filed except for feed grain donated by CCC under the IADDP;
    (10) Any roughage or grazing value available during the feeding 
period from ACR or CU during the 7-month nonrestricted haying and 
grazing period established by the State committee for purposes of 
administering part 1413 of this chapter;
    (11) If haying or grazing of ACR or CU for payment acreage during 
the 5-month restricted period is authorized, any roughage or grazing 
value available from these acreages during the feeding period; and
    (12) Except as otherwise provided in this section, any other feed 
that may be determined by approving officials in accordance with 
instructions issued by DASCO including adjustments based upon other 
government disaster benefits which are received by the person.
    (h) The total monetary value of feed available, for an Indian tribal 
member who is determined eligible to receive assistance under the 
emergency livestock feed programs and receive donated grain under the 
IADDP, shall be the monetary value of the Indian owner's current year 
livestock feed available as determined in paragraphs (g) (1) through 
(12) of this section, less the monetary value, as determined by DASCO, 
of any donated grain received under IADDP.
    (i)(1)(i) The value of total feed needs determined with respect to 
an owner of livestock, other than fish for food, shall not exceed the 
amount obtained by multiplying:
    (A) The average cost of corn, as established by CCC, that is 
determined necessary to provide the energy requirements established for 
each weight class of livestock by type; times
    (B) The number of eligible animals of each type and weight range of 
livestock; times
    (C) The number of days in the feeding period.
    (ii) The livestock owner with swine, poultry or fish and grazing 
livestock shall have the option to include only eligible livestock that 
do not normally graze or use forage in the application for assistance 
under this part.
    (iii) The value of additional feed needs determined with respect to 
an owner shall be the monetary value of the total feed needs less the 
monetary value of feed available including feed grain, hay, silage, 
pasture and range, and any other source of feed, determined by the 
approving official to be available to the owner for feeding eligible 
livestock during the feeding period.
    (iv) The amount of total benefits available determined with respect 
to an owner for the entire feeding period shall be a percentage, as 
determined by DASCO, of the smaller of the monetary value of additional 
feed needs or the monetary value of feed production loss by the owner.
    (2) The value of feed needs determined with respect to an owner of 
fish for food shall not exceed the average pounds of fish owned by the 
owner times the number of days in the feeding period times one percent 
times the cost of feed as determined by DASCO. The average weight of the 
fish shall be determined by:
    (i) Determining the estimated average weight of the fish at the time 
of application;
    (ii) Determining the estimated average weight of the fish on the 
ending date of the feeding period; and
    (iii) Dividing the sum of (i) and (ii) by 2.
    (j)(1) The county committee or designee shall review each CCC-652 
and CCC-651. The county committee and, if designated by the county 
committee, the County Executive Director, is authorized to approve or 
disapprove all CCC-653's and CCC-651's. Each CCC-653 or CCC-651 for a 
county committee member, or an FSA employee, shall be reviewed by the 
State committee after approval by county ASC committee or its designee.
    (2) Each CCC-653 or CCC-651 for a State committee member or State 
Executive Director shall be reviewed by DASCO after approval by the 
county committee or its designee.
    (3) No application or contract shall be approved unless the owner 
meets all eligibility requirements. Information furnished by the owner 
and any other information, including knowledge of the county and State 
committee members concerning the owner's normal operations, shall be 
taken into consideration in making recommendations and approvals. If 
information furnished by

[[Page 442]]

the owner is incomplete or ambiguous and sufficient information is not 
otherwise available with respect to the owner's farming operations in 
order to make a determination as to the owner's eligibility, the owner's 
application and contract shall be denied until sufficient additional 
information is provided by the owner. The owner shall be notified of the 
reason for denial and provided an opportunity to submit additional 
information as requested.
    (4) An owner shall be notified in writing of the action taken with 
respect to a CCC-652 and CCC-651 by the approving official.

[56 FR 33192, July 19, 1991, as amended at 58 FR 62512, Nov. 29, 1993]



Sec. 1439.7  Adjustment of total benefits available.

    (a)(1) The determination of the total benefits available to the 
owner may be decreased or increased after a determination has been made. 
The contact person shall notify all other owners which are a party to 
the CCC-652 and CCC-651 of all changes regarding the application and 
contract.
    (2) If there is an increase or a reduction in the number of the 
owner's eligible livestock, this fact shall be promptly reported to the 
approving official. If necessary an adjustment in the owner's additional 
feed needs and an adjustment in the benefits issued to the owner shall 
be made. This increase or reduction shall be made by revising the 
benefits available on the CCC-653 and CCC-651 by the result of 
multiplying the amount of the change in eligible animals, times the 
number of days remaining in the feeding period times the cost per day to 
provide energy requirements for the applicable weight range by type of 
eligible livestock. After adjusting the benefits available, if 
applicable, the county office shall notify the contact person of the 
current total benefits available.
    (3) If, due to a change in total benefits available, an excess 
amount of assistance was provided to the owner, the owner must refund 
such excess including applicable interest as determined by DASCO.
    (b) If additional feed, including pasture, becomes available to the 
owner from production on any land included in the owner's holdings 
covered by the contract during a feeding period, this fact shall be 
promptly reported to the county office and proper adjustments shall be 
made.
    (c) If any decrease in feed production, including pasture, occurs on 
any land included in the owner's holdings covered by the contract during 
a feeding period, this fact shall be promptly reported to the county 
office and proper adjustments shall be made.



Sec. 1439.8  Disposition of feed.

    (a)(1) Feed grain or other livestock feed obtained under this part 
shall not be exchanged for any ingredients, services, cash, credit, or 
any other thing of value.
    (2) An owner may feed eligible livestock feed to any livestock owned 
or leased, after a determination has been made that the owner's eligible 
livestock were the only livestock used in determining the owner's total 
benefits available.
    (b) The total quantity of feed purchased in accordance with this 
part, for which CCC has provided assistance under contract with the 
owner, must be fed to the owner's livestock within the feeding period. 
The county committee may consider livestock feed as having been fed 
within the feeding period if the county committee determines that 
failure to timely feed the livestock feed was due to conditions beyond 
the control of the owner. The amount of livestock feed remaining which 
may be considered as being timely fed shall not exceed a 10-day supply 
of feed for the owner's eligible livestock.
    (c)(1) If the owner does not feed the feed grain or other livestock 
feed as provided in paragraphs (a) and (b) of this section, with respect 
to the unfed amount the owner shall pay to CCC the following amounts 
plus any applicable interest, as determined by CCC:
    (i) With respect to purchased CCC-owned feed grain, the difference 
between the price paid for such feed grain and the Posted County Price 
(PCP) used to determine the dollar amount paid by the owner thereof, or 
such other value as determined by CCC, based on the price of such feed 
grain in the county where the feed grain was stored; and

[[Page 443]]

    (ii) With respect to cost-share assistance, the amount of assistance 
received; and
    (iii) With respect to CCC-owned feed grain donated to the owner, the 
rate equal to the PCP of the feed grain in the county where the grain 
was stored, on the date the feed grain was made available to the 
livestock owner.
    (2) If the owner has failed to report a change in the livestock 
operation of the owner as required by this subpart and excess assistance 
was provided to the owner, the owner shall pay to CCC the following 
amounts plus any applicable interest, as determined by CCC:
    (i) With respect to purchased CCC-owned feed grain, the difference 
determined under paragraph (c)(1)(i) of this section for any benefits 
received by the owner under the terms of the contract for the purchase 
of such feed grains which was purchased in excess of the quantity that 
CCC would have approved on the contract and made available, if such 
report had been made.
    (ii) With respect to cost-share assistance, the amount of cost-share 
assistance which was received under the terms of the contract, as 
determined by CCC, based on the amount in excess of the amount that CCC 
would have approved on the contract if such report had been made.
    (iii) With respect to CCC-owned feed grain donated to the owner, the 
rate equal to the PCP of the feed grain in the county where the grain 
was stored, on the date the feed grain was made available to the 
livestock owner.



Sec. 1439.9  Payments.

    (a) The total amount of payments which are made by CCC to all 
persons under the contract shall be the amount equal to the total 
benefits available to all persons which comprise the contracting entity. 
Such amount shall be paid by CCC only if it has been determined that the 
persons are eligible to receive such benefits according to the terms and 
conditions of the regulations and the contract. The county office shall 
provide a percentage of the total amount of benefit due upon approval of 
the owner's application for benefits and acceptance of the contract as 
determined by DASCO. The remainder of the total amount of benefits due 
if any will be made after the owner has shown that the terms and 
conditions of the contract have been met. If any terms, conditions, or 
requirements of the regulations and the contract are not met, payments 
and benefits previously provided by CCC which were not earned under the 
provisions of the contract shall be refunded.
    (b) At any time during the period of the contract, the owner shall, 
as requested by the county committee, submit to the county office, 
receipts and sales documents that are required verifying that the owner 
purchased the necessary feed to feed the livestock under the terms and 
conditions of the contract.
    (c) Any receipts or sales documents that may be required of the 
owner by CCC showing that the terms of the contract have been met must 
be submitted by the owner by not later than the tenth working day after 
the end of the feeding period on the contract or addendum.
    (d) Each person's share of the total contract payment shall be 
indicated on the contract, and each person shall receive benefits or 
final payment from CCC according to benefits or payments earned under 
the provisions of the contract.
    (e) The owners who file applications for more than one feeding 
period relating to a crop year shall execute a contract for each 
subsequent feeding period for which the owner is eligible. CCC shall 
provide assistance equal to the amount of benefits determined for the 
owner for the feeding periods that the owner is eligible to receive 
benefits.
    (f) The failure of any contact person to file the necessary receipts 
or sales documents showing that the terms and conditions of this part 
and the contract have been met shall render all of the persons 
ineligible for any payments and benefits under the contract including 
any payments previously made. Payments made shall be refunded to CCC 
with interest, if applicable, as determined under Sec. 1439.17 of this 
subpart.
    (g) Any payments or benefits, as determined under Sec. 1439.17 of 
this subpart, and interest if applicable, made to participating owners 
for benefits on each feeding period shall be refunded to CCC

[[Page 444]]

if the owner does not submit receipts or sales documents to CCC for 
purchases of feed not later than the tenth working day after the end of 
each feeding period on the contract.
    (h) The failure of a livestock owner to comply with regulations and 
contract terms regarding changes that may affect the owner's eligibility 
shall be a violation of the program and shall render the owner 
ineligible to receive program benefits. However, in the event the 
provisions of part 791 of this title are applicable to a specific 
violation, the owner may receive benefits under the program, reduced as 
follows:
    (1) For the owner's first such violation, total benefits available 
to the owner shall be reduced by an amount equal to 5 percent of the 
owner's current total benefits available as specified on the latest CCC-
651-B or CCC-651, as applicable.
    (2) For the owner's second such violation, total benefits available 
to the owner shall be reduced by an amount equal to 25 percent of the 
owner's current total benefits available as specified on the latest CCC-
651-B or CCC-651, as applicable.
    (3) For the owner's third such violation, total benefits available 
to the owner shall be reduced by an amount equal to 50 percent of the 
owner's current total benefits available as specified on the latest CCC-
651-B or CCC-651, as applicable.
    (4) For the owner's fourth such violation, the owner shall be 
ineligible to receive any benefits under the emergency livestock feed 
programs and shall be required to refund any benefits or payments 
already received, plus any applicable interest as determined by CCC.



Sec. 1439.10  Termination and suspension of program.

    (a) The county committee, in the county that requested emergency 
livestock feed program assistance, may at any time during the operation 
of a program recommend suspension or termination of a program. The State 
committee may at any time during the operation of a program suspend or 
terminate a program, with the concurrence of DASCO, for the county that 
requested emergency livestock feed program assistance. DASCO may suspend 
or terminate a program at any time for the county that requested the 
emergency livestock feed programs. The suspension or termination of a 
program in a county shall not apply to any application filed prior to 
the effective date of the suspension or termination of a program. Owners 
who filed an initial application prior to the termination of the program 
shall be eligible to file subsequent applications and contracts.
    (b) Emergency livestock feed program assistance in a county 
contiguous to a county that requested and was determined eligible to 
receive livestock program assistance shall not be suspended or 
terminated.

[56 FR 33192, July 19, 1991, as amended at 58 FR 62513, Nov. 29, 1993]



Sec. 1439.11  Maintenance of books and records.

    Warehouseman, handlers, dealers, and owners shall maintain and 
retain financial books and records which will permit verification of all 
transactions with respect to the provisions of this part for at least 3 
years, following the end of the calendar year in which assistance was 
provided, or for such additional period as CCC may request. An 
examination of such books and records by a duly authorized 
representative of the United States Government shall be permitted at any 
time during business hours. The owner shall, within 30 days after a 
request by the county committee, submit any requested information with 
respect to the owner's livestock feeding operation.



Sec. 1439.12  Liens and claims of creditors; setoffs.

    Any payment or benefit 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 person 
except agencies of the U.S. Government. The regulations governing set-
offs and withholdings found at part 1403 of this chapter shall be 
applicable to this part.



Sec. 1439.13  Assignments of payments.

    Payments which are earned by a person under the emergency livestock 
feed

[[Page 445]]

programs may be assigned in accordance with the provisions of 7 CFR part 
1404.



Sec. 1439.14  Limitation of authority.

    No delegation herein to a State or county committee or a commodity 
office shall preclude the Executive Vice President, CCC, 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 or 
employee of the Department of Agriculture.



Sec. 1439.15  Appeals.

    Any person who is dissatisfied with a determination made with 
respect to this part may make a request for reconsideration or appeal of 
such determination in accordance with the appeal regulations set forth 
at part 780 of this chapter.



Sec. 1439.16  Misrepresentation, scheme or device.

    A person who is determined by the State committee or the county 
committee to have:
    (a) Adopted any scheme or other device which tends to defeat the 
purpose of this program;
    (b) Made any fraudulent representation; or
    (c) Misrepresented any fact affecting a program determination shall 
be ineligible to receive assistance under this program with respect to 
the crop year involved.



Sec. 1439.17  Refunds to CCC; joint and several liability.

    (a) In the event there is a failure to comply with any term, 
requirement, or condition for payment arising under the contract, or 
this part, and if any refund of a payment to CCC shall otherwise become 
due in connection with the contract, or this part, all payments made 
under this part to any person shall be refunded to CCC, together with 
interest as determined in accordance with paragraph (b) of this section 
and late-payment charges as provided for in part 1403 of this chapter.
    (b) All persons in the contracting entity shall be jointly and 
severally liable for any refund, including related charges, which is 
determined to be due CCC for any reason under the terms and conditions 
of the contract or this part.
    (c) Interest shall be applicable to refunds required of the owner if 
CCC determines that payments or other assistance were provided to the 
owner and the owner was not eligible for such assistance. Such interest 
shall be charged at the rate of interest which the United States 
Treasury charges CCC for funds, as of the date CCC made such benefits 
available of the monies or benefits to be refunded. Such interest that 
is determined to be due CCC shall accrue from the date such benefits 
were made available by CCC to the date of repayment or the date interest 
increases in accordance with part 1403 of this chapter. CCC may waive 
the accrual of interest if CCC determines that the cause of the 
erroneous determination was not due to any action of the owner.
    (d) Interest determined in accordance with paragraph (c) of this 
section shall not be applicable to refunds required of the owner because 
of unintentional misaction on the part of the owner, as determined by 
CCC.
    (e) Late payment interest shall be assessed on all refunds in 
accordance with the provisions of, and subject to the rates prescribed 
in, 7 CFR part 1403.
    (f) Persons who are a party to the emergency livestock feed program 
contract must refund to CCC any excess payments made by CCC with respect 
to such contract.
    (g) In the event that the emergency livestock feed program contract 
was established as result of erroneous information provided by any owner 
to CCC, assistance available under the emergency livestock feed program 
contract shall be recomputed and any payments made or due under the 
contract shall be corrected as necessary. Any refund of payments which 
are determined to be required as a result of such recomputations of the 
contract shall be remitted with any applicable interest.
    (h) Any refund of payments, which is determined to be required as a 
result of any violation of the provisions of the

[[Page 446]]

contract by the owner shall be remitted to CCC with any applicable 
interest.

[56 FR 33192, July 19, 1991, as amended at 58 FR 62513, Nov. 29, 1993]



Sec. 1439.18  Cumulative liability.

    The liability of any person for any penalty under this part or for 
any refund to CCC or related charge arising in connection therewith 
shall be in addition to any other liability of such person under any 
civil or criminal fraud statute or any other provision of law including, 
but not limited to, 18 U.S.C. 286, 287, 371, 641, 1001; 15 U.S.C. 714m; 
and 31 U.S.C. 3729.



Sec. 1439.19  Estates, trusts, and minors.

    (a) Program documents executed by persons legally authorized to 
represent estates or trusts will be accepted only if such person 
furnishes evidence of the authority to execute such documents.
    (b) A minor who is an owner shall be eligible for assistance under 
this subpart only if such person 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 program documents are executed by the guardian; or
    (3) A bond is furnished under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec. 1439.20  Death, incompetence, or disappearance.

    In the case of death, incompetence, or disappearance, of any person 
who is eligible to receive assistance in accordance with this part, such 
person or persons specified in part 707 of this title may receive such 
assistance.



Sec. 1439.21  Violations.

    (a) Disposal of grain. (1) If the owner has failed to utilize the 
entire quantity of livestock feed purchased under the terms and 
conditions of the application for assistance and contract of these 
programs, the owner shall not dispose of any remaining quantity of such 
livestock feed except as specified by CCC.
    (2) Except as permitted by CCC, if feed acquired from CCC is made 
available to any other person, or if a delivery order is used for 
obtaining a type of grain other than that specified on the delivery 
order, the owner shall be subject to such civil penalties and to such 
criminal liabilities as are provided by applicable State and Federal 
statutes.
    (b) Fraudulent representations. Any warehouseman, handler, dealer, 
or any other person may be suspended from participation in a program in 
accordance with part 1407 of this chapter if such person has:
    (1) Made a false certification, representation or report in 
accordance with this subpart; or
    (2) Otherwise failed to comply with any provisions of this part or 
any contracts entered into in accordance with this part. The making of 
such fraudulent representations shall make such person liable in 
accordance with applicable State and Federal criminal and civil 
statutes.



Sec. 1439.22  Benefits limitation.

    The total amount of benefits that a person, as determined in 
accordance with part 1497 of this chapter, shall be entitled to receive 
under one or more of the programs established under this part, may not 
exceed $50,000 per livestock feed crop year for which payment is made or 
benefits received.

[58 FR 62513, Nov. 29, 1993]



Sec. 1439.23  Gross revenue limitation.

    A person, as defined in part 1497 of this chapter, as applicable, 
who has annual gross receipts in excess of $2.5 million shall not be 
eligible to receive assistance under this part. For the purpose of this 
determination, annual gross receipts means:
    (a) With respect to a person who receives more than 50 percent of 
such person's gross income from farming and ranching, the total gross 
receipts received from such operations; and
    (b) With respect to a person who receives 50 percent or less of such 
person's gross receipts from farming and ranching, the total gross 
receipts from all sources.

[[Page 447]]



Sec. 1439.24  Paperwork Reduction Act assigned numbers.

    The information collection requirements contained in these 
regulations (7 CFR part 1439) have been approved by OMB under the 
provisions of 44 U.S.C. chapter 35 and have been assigned OMB Number 
0560-0029.



            Subpart--Livestock Preservation Donation Program



Sec. 1439.101  General statement.

    (a) This subpart sets forth the terms and conditions of the 
Livestock Preservation Donation Program. This program shall only be in 
effect upon a determination that a livestock feed emergency exists in a 
State, county or area and it has been announced that this program is in 
effect. Information regarding the availability of the program in a 
county may be obtained from State and county offices.
    (b) In order to be eligible to participate in the program, an owner 
of livestock must have suffered a substantial loss of production of feed 
as defined in Sec. 1439.3 of this part. The objective of the program is 
to provide assistance approved by CCC through a contract with the owner, 
for the owner to receive donated CCC-owned feed grains, for livestock 
owners who are financially unable to purchase feed, or to otherwise 
participate in any other program authorized under this part. The owner 
must establish to the satisfaction of the approving official that:
    (1) Without assistance the owner's livestock would perish or be sold 
at distress prices; and
    (2) The owner has insufficient cash or credit to buy feed for 
eligible livestock.



Sec. 1439.102  Eligibility.

    (a) A livestock owner may be approved to participate in the program 
if it is determined that in addition to the provisions of Secs. 1439.1 
through 1439.24 that:
    (1) The livestock owner's need for replacing and repairing losses of 
buildings, equipment, suppliers, and other related matters will leave 
insufficient cash or credit to buy feed for livestock;
    (2) The livestock owner has insufficient cash or credit to buy feed 
for eligible livestock;
    (3) The owner's livestock would perish or be sold at distress prices 
without donation of feed grains under this program;
    (4) The livestock owner does not have sufficient livestock feed to 
feed the livestock through the period of the emergency; and
    (5) The livestock owner is unable to participate in any other 
emergency livestock feed program which is currently in effect in 
accordance with this part.
    (b) With respect to the determinations made in accordance with 
paragraphs (a)(2) through (4) of this section, the approving official 
must determine that under prevailing local conditions the owner's 
financial resources preclude the owner from obtaining sufficient 
quantities of feed from normal suppliers without:
    (1) Imperiling continuance of the farming operations;
    (2) Placing the owner in default with respect to existing financial 
obligations;
    (3) Causing the owner to engage in unsound borrowing practices; or
    (4) Resulting in excessive disposal of livestock by the owner.
    (c) Purchased feed shall be considered as an available asset in 
determining whether an owner is suffering an undue financial hardship. 
In making this determination, the approving official shall take into 
consideration the normal financial resources of owners in the area. If 
the owner meets the conditions as provided in Sec. 1439.10 of this part, 
the resources of the owner and all of the related persons shall be taken 
into consideration in determining the eligibility of the owner to 
receive assistance.



Sec. 1439.103  Assistance.

    (a) The livestock owner shall establish that the livestock owner's 
operation has been so damaged by the disaster that sufficient cash or 
credit does not exist which may be used to purchase necessary feed grain 
at present market prices. The owner shall not sell or dispose of in any 
way, except by feeding to the owner's livestock, CCC-

[[Page 448]]

donated feed grain. The owner shall reimburse CCC at a rate equal to the 
PCP of the feed grain in the county where the feed grain was stored, on 
the date the feed grain was made available to the livestock owner for 
any CCC-donated grain which is on hand after the end of the emergency 
period that exceeds a 10-day supply.
    (b) CCC shall designate the kind of CCC-owned feed grain to be 
donated under this program and the delivery point at which such feed 
grain shall be made available. The delivery point may be in the eligible 
designated county, contiguous county, or any other location as 
designated by CCC. In those instances where feed grain is not available 
in the eligible designated county, or contiguous county, CCC may 
reimburse the livestock owner for the cost of transportation of the feed 
grain at a rate determined by DASCO.
    (c) Transportation assistance will be provided to owners based on 
the smaller of the following:
    (1) The loaded mileage from the delivery point where the feed grain 
is made available to the county line of the county in which the 
livestock owner is located; or
    (2) When the owner delivers grain to a feed dealer for processing, 
the loaded mileage from the delivery point where the feed grain is made 
available to such feed dealer's facility.
    (d) The maximum quantity of CCC-donated feed grain made available to 
an owner under this subpart shall be limited to the quantity determined 
by CCC in accordance with Sec. 1439.6 of this part based on the cost of 
CCC-owned feed grain purchased in accordance with Sec. 1439.202(h) of 
this part.



Sec. 1439.104  Feeding period.

    The feeding period established under this subpart for owners shall 
be limited to the number of days determined by DASCO on a case-by-case 
basis.



               Subpart--Emergency Feed Assistance Program



Sec. 1439.201  General statement.

    (a) This subpart sets forth the terms and conditions of the 
Emergency Feed Assistance Program. This program shall be in effect only 
upon a determination that a livestock feed emergency exists in a State, 
county or area and it has been announced that this program is in effect. 
Information regarding the availability of the program in a county may be 
obtained from State and county offices.
    (b) In order to be eligible to participate in the program, an owner 
of livestock must have suffered a substantial loss of production of feed 
as defined in Sec. 1439.3 of this part. The objective of the program is 
to provide livestock owners with the option to purchase a quantity of 
CCC-owned grain, not to exceed the owner's eligibility as stated on the 
contract at a reduced price. An owner who elects to purchase CCC-owned 
feed grain will have the monetary value on the application reduced by 
the result of multiplying the amount of CCC-owned grain purchased times 
an amount determined by DASCO.



Sec. 1439.202  Sale of CCC-owned grain.

    (a) CCC shall designate the kind of CCC-owned feed grain to be sold 
under this program and the delivery point at which such feed grain may 
be made available. The delivery point may be in the eligible county, 
contiguous county, or any other locations as designated by CCC. In those 
instances where feed grain is not available in the eligible county or 
contiguous county, CCC may reimburse the owner for transportation on the 
smaller of:
    (1) The loaded mileage from the delivery point where the feed grain 
is made available to the county line of the county in which the 
livestock owner is located; or
    (2) When the owner delivers grain to a feed dealer for processing, 
the loaded mileage from the delivery point where the feed grain is made 
available to such feed dealer's facility.
    (b) Sales of CCC-owned grain may be made in a quantity which does 
not exceed the quantity determined by CCC in accordance with Sec. 1439.6 
of this part based on a cost provided for in paragraph (h) of this 
subpart, which will permit feeding of grain to eligible livestock by the 
owner by the end of the feeding period.
    (c) After payment is received by CCC, delivery shall be authorized 
by issuance of nontransferable delivery

[[Page 449]]

orders by CCC stating the kind and quantity of grain to be delivered and 
the expiration date in accordance with instructions issued by DASCO. 
Quantities authorized by delivery orders shall not exceed the quantity 
of grain determined in accordance with paragraph (b) of this section.
    (d) The owner shall take physical delivery of the grain as soon as 
possible after issuance of the delivery order but not earlier than the 
date of such issuance and not later than a date determined by DASCO 
which would normally permit feeding of the grain as specified in 
paragraph (b) of this section. Title and risk of loss to the grain 
specified in the delivery order and stored at a warehouse or handler's 
facility shall pass to the owner when the owner accepts the grain and 
the owner and warehouseman certify on the delivery order. The owner 
shall promptly present the delivery order to the warehouseman or 
handler. CCC shall not be responsible for storage charges after the 
title passes to the owner but shall be responsible for handling charges 
at a rate not to exceed the rate provided in CCC's agreement with the 
warehouse or the handler. In cases where there is an underdelivery in 
quantity of the eligible grain, the owner shall not make settlement with 
the warehouse or handler but shall promptly notify the county office 
which issued the delivery order and a revised delivery order will be 
issued to the owner or a refund of the value of underdelivered feed 
grain will be made to the owner. Differences in quality between the 
grain accepted by the owner and the grain described in the loading order 
issued to the warehouseman or handler by CCC shall be settled between 
the warehouseman or handler and the owner.
    (e)(1) Where CCC-owned feed grain is not available in an area in 
which an eligible county is located and there are no CCC-approved 
warehouses or handlers in such area, CCC may ship the required quantity 
of feed grain to the area and consign such grain to the county 
committee. Title and risk of loss shall pass to the owner upon delivery 
of the feed grain into the owner's conveyance or whenever the owner 
takes possession of the feed grain if such possession occurs prior to 
placing the feed grain in such conveyance.
    (2) The sale price shall not be subject to adjustment for the grade 
and quality actually delivered into the owner's conveyance.
    (3) The feed grain shall be weighed at destination if scales 
approved by CCC are available. If such scales are not available, 
settlement weights shall be as determined by CCC.
    (4) CCC shall bear charges for transportation to the delivery point, 
for unloading the feed grain from the carrier's conveyance, for loading 
the feed grain into the owner's conveyance, and for determining the 
weight of the feed grain.
    (f)(1) An owner may elect to receive eligible feed grain under the 
provisions of this subpart from feed grain stored on the livestock 
owner's farm if such grain has been pledged as collateral for a farm-
stored CCC price support loan. Payment for such feed grain shall be made 
to CCC at the county office where the livestock feed programs 
application was filed. Feed grain acquired by the owner shall not be 
exchanged for any ingredient, service, cash, credit, or any other thing 
of value.
    (2) An owner may elect to receive eligible feed grain under the 
provisions of this section through a feed dealer provided the owner 
executes a power of attorney as provided on Form ASCS-211, authorizing 
the feed dealer to execute the delivery order on behalf of the owner. 
Payment for feed grain shall be made to CCC at the county office where 
the application for feed grain is filed when requesting the delivery 
order. Feed grain purchased by a feed dealer on behalf of the owner 
shall not be exchanged for any ingredient, service, cash, credit, or any 
other thing of value.
    (3) The feed dealer shall provide such county office, in writing, 
the names of agents, such as company representatives, authorized to sign 
the delivery order on behalf of the feed dealer at the time of delivery 
of feed grain. The feed dealer shall:
    (i) Take delivery of the feed grain before the expiration date of 
the delivery order;

[[Page 450]]

    (ii) Take physical delivery of the feed grain at each warehouse 
where the feed grain is located;
    (iii) Not be reimbursed for transportation of feed grain received on 
behalf of the applicant; and
    (iv) Present to such county office a statement signed by the owner 
and feed dealer certifying that the processed feed contained feed grain 
in the same quantity, type, and same or better grade as purchased by the 
owner.
    (g) An owner who desires to have grain pelletized, ground, rolled, 
custom mixed, or otherwise processed may do so if the feed is processed 
from the feed grain purchased from CCC or the feed accepted from the 
processor is processed from the same kind of feed grain stated on the 
delivery order which grades the same or better as compared to such feed 
grain. The quantity of feed grain processed by the processor and 
delivered to the owner shall be the same quantity as the feed grain 
purchased from CCC, except for minor milling losses. CCC shall not be 
responsible for any charges involving processing, bagging, added freight 
incurred for processing in transit or any other cost which is incurred 
which would not have been incurred except for the processing of such 
feed grain.
    (h) The sales price of eligible feed grain made available by CCC in 
response to any livestock feed emergency determined to exist shall be;
    (1) For grain purchased from CCC-owned inventory, 50 percent of the 
PCP; and
    (2) For grain purchased by the owner which had previously been 
pledged as collateral for such owner's farm-stored price support loan, 
50 percent of the ajdusted CCC value as determined by CCC on the date 
the payment is received in the county in which the feed grain is stored.
    (3) If no such PCP is established, the sales price shall be 
established at a comparable rate in accordance with instructions issued 
by DASCO.
    (i) The quantity of feed grain delivered to an owner shall not 
exceed the total quantity approved for sale by CCC by more than 5 
percent. Differences in quantity between the grain delivered to the 
owner and the quantity of grain described in the delivery order issued 
to the warehouseman or handler that was removed from the delivery point 
in excess of 105 percent shall be considered as open stocks and shall be 
settled between the livestock owner and the warehouseman or handler. 
Differences in quantity between the grain delivered to the livestock 
owner and the quantity of feed grain described in the delivery order 
issued to the warehouseman or handler between 100 and 105 percent shall 
be paid by the owner to CCC at 50 percent of the PCP determined by CCC 
for the commodity in the county in which the feed grain is stored.
    (j) An amount equal to the purchase price times the quantity not 
delivered to the owner shall be refunded to the owner in those cases in 
which the total approved quantity shown on the delivery order and paid 
for by the owner is not delivered to the owner.
    (k) When an owner desires to purchase feed grain pursuant to an 
approved application and contract, the owner must make a payment to CCC, 
in the manner specified in instructions issued by DASCO with respect to 
the quantity of grain to be purchased prior to issuance of a delivery 
order for such feed grain. The county committee may waive such prior 
payment requirement if a State or Federal agency certifies to CCC that 
such agency will finance part or all of the cost of the purchase. If 
such agency agrees to make payment directly to CCC as specified by the 
county committee, such a certification may be accepted by the county 
committee in lieu of cash to the extent of the amount so certified.



                     Subpart--Emergency Feed Program



Sec. 1439.301  General statement.

    (a) This subpart sets forth the terms and conditions of the 
Emergency Feed Program. This program shall be in effect only upon a 
determination that a livestock feed emergency exists in a State, county 
or area, and it has been announced that this program is in effect. The 
objective of the program is to provide monetary assistance to eligible 
owners of livestock for the purchase of necessary feed. Information 
regarding the availability of the program in a

[[Page 451]]

county may be obtained from State and county offices.
    (b) In order to be eligible to participate in the program, an owner 
of livestock must have suffered a substantial loss of production of feed 
as defined in Sec. 1439.3 of the part.



Sec. 1439.302  Cost-share assistance.

    (a) An owner of eligible livestock who has submitted an application 
for participation and a contract has been approved by a representative 
of CCC in accordance with Sec. 1439.1 through Sec. 1439.25 of this part 
shall receive monetary assistance for not more than 50 percent of the 
cost of eligible feed purchased by the owner not to exceed the monetary 
amount stated on the contract provided the owner presents evidence of 
the purchase of feed to the approving official at any time during the 
terms of the contract. If the approving official determines that the 
owner has met the conditions set forth in Sec. 1439.1 through 
Sec. 1439.25 of this part, assistance for the weight range by type of 
eligible livestock may be made available to the owner as provided in 
Sec. 1439.9 of this part.
    (b) In no case may assistance be provided with respect to the value 
of purchased feed which is greater than the total benefits available 
determined in accordance with Sec. 1439.6 of this part.
    (c) Acceptable evidence which may be presented to an approving 
official is limited to a sales document or receipt which:
    (1) Is signed by the seller, unless the approving official waives 
such requirement; and
    (2) Contains:
    (i) The dates of purchase and delivery; and
    (ii) The kind, price, and quantity of feed purchased.
    (d) Eligible costs of feed purchases are limited to the purchase 
price paid by the owner at the point of delivery and may include as 
determined by the approving official:
    (1) Costs normally associated with the preparation of mixed or 
processed feed;
    (2) The cost of leasing or purchasing grazing rights for temporary 
pasture;
    (3) The cost of leasing range or other grazing; and
    (4) The cost of feed for eligible livestock in a feed lot.



               Subpart--Crash Feed Grain Donation Program



Sec. 1439.401  General statement.

    (a) This subpart sets forth the terms and conditions of the Crash 
Feed Grain Donation Program. This program shall be in effect upon a 
determination that a sudden livestock feed emergency in a State, county 
or area requires the implementation of the program. The objective of the 
program is to provide CCC-owned feed grains on a donation basis to 
livestock which are:
    (1) Stranded;
    (2) Unidentified by owner; and
    (3) In danger of perishing after the occurrence of a sudden natural 
disaster.
    (b) The Crash Feed Grain Donation Program is for use after a sudden 
major disaster has occurred and conditions are such that livestock 
cannot be tended to in a normal manner and would probably perish without 
the implementation of this program. Livestock owners who have their 
livestock under control and are capable of caring for them are not 
eligible to receive CCC-donated grain under this subpart.



Sec. 1439.402  Assistance.

    (a) Assistance is for eligible livestock which are commingled, 
stranded, and unidentified as to the livestock owner.
    (b) The State committee, or its designee, shall determine the 
eligibility and the amount of assistance which shall be made available 
in the area for donation under this subpart.
    (c) CCC-owned grain donated under this program shall not be sold or 
disposed of in any way except for feed for the livestock stranded and 
unidentified as to its owner.
    (d) CCC shall designate the kind of CCC-owned grain to be donated 
under this program and the delivery point at which such grain shall be 
made available.
    (e) The maximum amount of CCC-donated grain under this subpart shall 
be limited to the total quantity that the approving official determines 
is needed for the emergency period.

[[Page 452]]

    (f) Assistance shall include the cost of transporting the feed from 
the delivery point to the affected area.

[56 FR 33192, July 19, 1991. Redesignated at 61 FR 32644, June 25, 1996, 
as amended at 62 FR 44392, Aug. 21, 1997]



Sec. 1439.403  Feeding period.

    The feeding period established under this subpart shall not exceed 
the number of days established by DASCO on a case-by-case basis.



              Subpart--Prickly Pear Cactus Burning Program



Sec. 1439.501  General statement.

    This subpart sets forth the terms and conditions of the Prickly Pear 
Cactus Burning Program. This program shall be in effect only upon a 
determination that a livestock feed emergency exists in a State, county 
or area and it has been announced that this program is in effect. 
Information regarding the availability of the program in a county may be 
obtained from State and county FSA offices. The objective of the program 
is to provide cost-share assistance not to exceed 50 percent of the cost 
of propane, butane, or kerosene used to burn the spines from prickly 
pear cactus to make it suitable for livestock feed.



Sec. 1439.502  Definitions.

    Butane means either of two isomeric flammable gaseous paraffin 
hydrocarbons obtained from petroleum or natural gas and used for fuel.
    Kerosene means a flammable hydrocarbon oil obtained by distillation 
of petroleum and used as a fuel.
    Propane means a heavy flammable gaseous paraffin hydrocarbon found 
in crude petroleum and natural gas and used for fuel.



Sec. 1439.503  Eligibility.

    A livestock owner may be approved to participate in the program if 
such owner:
    (a) Is actively engaged in farming and/or ranching and receives 10 
percent or more of total gross annual income from the production of 
grain or livestock;
    (b) Does not have a qualifying gross revenue of more than 
$2,500,000;
    (c) Has prickly pear cactus growing on such owner's holdings;
    (d) Must have eligible livestock as defined in Sec. 1439.3 of this 
part to consume the burned prickly pear cactus; and
    (e) Must feed all of the burned prickly pear cactus to such owner's 
own livestock.



Sec. 1439.504  Assistance.

    (a) The maximum amount of cost-share assistance under this program 
shall be limited to 50 percent or less of the cost of butane, kerosene, 
or propane used to burn the prickly pear not to exceed an amount as 
determined by DASCO.
    (b) Prickly pear cactus made suitable for livestock feed shall not 
be considered as feed on hand in determining whether an owner is 
eligible to participate in this program or any other program implemented 
in accordance with this part.
    (c) Feed obtained from burning prickly pear cactus for which 
assistance is obtained under this part shall only be used by the 
eligible owner to feed such owner's livestock.



         Subpart--Emergency Feed Grain Donation Program (EFGDP)

    Source: 62 FR 44393, Aug. 21, 1997, unless otherwise noted.



Sec. 1439.601  General statement.

    (a)(1) This subpart sets forth the terms and conditions of the 
EFGDP. This program may be authorized only for livestock owners in a 
State or county, by the Deputy Administrator for Farm Programs (DAFP), 
Farm Service Agency (FSA), upon a determination that a sudden livestock 
feed emergency exists and a Presidential disaster declaration has been 
issued for such a State or county as a result of snow and freezing and 
related conditions. Under the program, CCC will provide to the livestock 
owner whose access to livestock and normal livestock feed supplies was 
adversely affected by natural disasters either or both of the following:

[[Page 453]]

    (i) Reimbursement for expenses relating to eligible livestock feed 
purchases and transportation assistance;
    (ii) CCC-owned feed grains on a donation basis.
    (2) Assistance may be given to other persons or entities (public and 
private), who certify that the eligible livestock were, or are, in 
danger of perishing without their immediate assistance. This program 
shall terminate at the conclusion of the 1996 livestock feed crop year.
    (b) The EFGDP is authorized for the 1996 livestock feed crop year 
when both of the following apply:
    (1) The FSA State committee determines and documents a livestock 
feed emergency on a county by county basis, when the danger of eligible 
livestock perishing as a result of snow and freezing and related 
conditions exists in the county, and
    (2) The livestock owner, or other person or entities (public or 
private) certify that the eligible livestock were, or are, in danger of 
perishing without immediate assistance and that normal livestock feed 
supplies were, or are, inaccessible.



Sec. 1439.602  Assistance.

    (a) Assistance is for eligible livestock which are in danger of 
perishing without immediate assistance. Eligible livestock includes beef 
and dairy cattle; buffalo and beefalo; equine animals, including horses, 
mules, donkeys; sheep; goats; and swine.
    (b) Assistance may be provided as any of the following:
    (1) Reimbursement for expenses relating to transportation assistance 
on or after January 10, 1997, specifically related to providing access 
to existing feed supplies or to the livestock;
    (2) Reimbursement for expenses relating to eligible livestock feed 
purchased on or after January 10, 1997; or
    (3) Donation of CCC-owned feed grains.
    (c) Requests for reimbursement for transportation assistance and 
eligible livestock feed purchases shall include verifiable sales 
receipts, service agreements, or any other documentation as determined 
by the FSA county committee.
    (d) Individuals who provide assistance to livestock which is in 
danger of perishing without immediate assistance or where the owner of 
the livestock is not known, shall only receive CCC-owned feed grain on a 
donation basis, not to exceed the amount of feed grain actually used.
    (e) Assistance shall not exceed the monetary value of multiplying 
the number of livestock, by type and weight range, by the allowance per 
day in pounds of corn as determined in accordance with Sec. 1439.3, by 
$0.05 per pound, by a feeding period of 15 days.
    (f) For snow removal, the maximum assistance shall be the lesser of:
    (1) Actual cost to move snow to gain access to the available feed or 
stranded livestock; or
    (2) The maximum assistance calculated in accordance with paragraph 
(e) of this section.
    (g) For feed purchases, the maximum assistance shall be the lesser 
of:
    (1) The monetary value of purchased eligible feed; or
    (2) The maximum assistance calculated in accordance with paragraph 
(e) of this section.
    (h) The maximum assistance for donated grain is a 15 day feed 
allowance calculated in accordance with paragraph (e) of this section.



           Subpart--Foundation Livestock Relief Program (FLRP)

    Source: 62 FR 44393, Aug. 21, 1997, unless otherwise noted.



Sec. 1439.701  General statement.

    (a) This subpart sets forth the terms and conditions of the FLRP. 
This program may be authorized by DAFP, upon a determination that 
foundation livestock owners have been forced to feed excessive 
quantities of livestock feed and a Presidential disaster declaration has 
been issued for the State or county as a result of snow and freezing and 
related conditions. Under the program, CCC will provide cash 
reimbursement for eligible livestock feed purchases to the livestock 
owner and other persons or entities (public and private), whose usage of 
normal livestock feed supplies was adversely affected by natural 
disasters. Cost-share

[[Page 454]]

assistance is provided at 30 percent of the lesser of actual eligible 
livestock feed costs shown on acceptable feed purchase documents or the 
calculated feed allowance for eligible livestock for a period not to 
exceed 30 days. This program shall terminate at the conclusion of the 
1996 livestock feed crop year.
    (b) As determined by DAFP, FLRP may be authorized for any length of 
time not to exceed a 30-day feeding period. Subsequent feeding periods 
of the same or different duration may be designated by DAFP for the same 
or related disaster conditions.



Sec. 1439.702  Assistance.

    (a) Assistance is limited to livestock owners who have eligible 
foundation or replacement livestock, as determined by DAFP. Eligible 
livestock includes beef and dairy cattle, buffalo and beefalo, sheep, 
goats, swine, and equine animals used to raise livestock that will be 
used for human consumption or in the production of food or fiber on the 
owner's farm.
    (b) Assistance shall be provided as a 30 percent cost-share payment 
based on the lesser of:
    (1) Eligible livestock feed purchased and received during the period 
designated by DAFP, or
    (2) The calculated feed allowance for the eligible livestock for up 
to 30 days, as determined by DAFP.
    (c) Requests for reimbursement of eligible livestock feed purchases 
shall include verifiable sales receipts and any other documentation the 
FSA county committee requires.
    (d) Assistance shall not exceed the monetary value of multiplying 
the number of livestock, by type and weight range, by the allowance per 
day in pounds of corn as determined in accordance with Sec. 1439.3, by 
$0.05 per pound, by the number of days in the feeding period designated 
by DAFP.



                  Subpart--Livestock Indemnity Program

    Authority: Pub. L. 105-18, 111 stat. 158.

    Source:  62 FR 33984, June 24, 1997, unless otherwise noted.



Sec. 1439.800  [Reserved]



Sec. 1439.801  Applicability.

    This subpart sets forth the terms and conditions of the Livestock 
Indemnity Program. Benefits shall be provided to eligible livestock 
producers only in areas where a disaster occurred between October 1, 
1996, and June 12, 1997 (inclusive), for which a Presidential 
Designation or Secretarial Declaration was requested for the disaster by 
June 12, 1997, and subsequently approved. Producers in counties that 
were not designated, but rather were contiguous to declared States and 
counties, are not eligible for benefits under this subpart. Benefits 
will be provided with respect to eligible livestock where the death 
occurred in the disaster areas between October 1, 1996, and June 12, 
1997 (inclusive), and where the death of the livestock was reasonably 
related to the disaster which prompted the disaster declaration as 
determined by the Deputy Administrator or a designee. No payments will 
be made under this subpart unless the livestock losses were caused by 
the declared disaster and the disaster occurred between October 1, 1996, 
and June 12, 1997 (inclusive).



Sec. 1439.802  Administration.

    (a) The provisions of Secs. 1439.2, 1439.12 , 1439.14, 1439.15 and 
1439.18 through 1439.20 are applicable to this subpart.
    (b) The provisions of Secs. 1439.1, 1439.4 through 1439.11, 1439.13, 
1439.16, and 1439.21 through 1439.24, are not applicable to this 
subpart.
    (c) The provisions of Sec. 1439.17 (a) through (e) and (h) shall 
apply to this subpart and Sec. 1439.17 (f) and (g) shall not apply to 
this subpart.
    (d) The provisions of Sec. 1439.3 shall apply as set forth in 
Sec. 1439.803 of this subpart.
    (e) Where extreme circumstances precluded the compliance with 
Sec. 1439.804 due to circumstances beyond the applicant's control, the 
county or State committee may request that relief be granted by the 
Deputy Administrator under this section. Except for statutory deadlines, 
the Deputy Administrator may waive or modify deadlines, and other 
program requirements in cases where lateness or failure to meet

[[Page 455]]

such other requirements does not adversely affect operation of the 
program and where the applicant shows circumstances precluded their 
compliance with the deadlines.



Sec. 1439.803  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Livestock Indemnity Program of this 
subpart. The terms defined in section 1439.3 of this title shall also be 
applicable, except where those definitions conflict with the definitions 
set forth in this subpart. The following terms shall have the following 
meanings:
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, Farm Service Agency (FSA), or a designee.
    Eligible livestock means beef and dairy cattle, sheep, goats, swine, 
poultry (including egg-producing poultry), equine animals used for food 
or in the production of food and buffalo and beefalo when maintained on 
the same basis as beef cattle.
    Livestock producer means one who possesses a beneficial interest in 
eligible livestock as defined in this subpart, have a financial risk in 
the eligible livestock; and is a citizen of, or legal resident alien in, 
the United States. A farm cooperative, private domestic corporation, 
partnership, or joint operation in which a majority interest is held by 
members, stockholders, or partners who are citizens of, or legal 
resident aliens in, the United States, if such cooperative, corporation, 
partnership, or joint operation owns or jointly owns eligible livestock 
or poultry will be considered livestock producers. Any Indian tribe (as 
defined in section 4(b) of the Indian Self-Determination and Education 
Assistance Act and Education Assistance Act); any Indian organization or 
entity chartered under the Indian Reorganization Act or chartered under 
the Indian Reorganization Act; any tribal organization under the Indian 
Self-Determination and Education Assistance Act; and any economic 
enterprise under the Indian Financing Act of 1974 will be considered 
livestock producers.



Sec. 1439.804  Sign-up period.

    (a) A request for benefits under this subpart must be submitted to 
the Commodity Credit Corporation (CCC) at the Farm Service Agency county 
office serving the county where the loss occurred. All requests for 
benefits and supporting documentation must be filed in the county office 
by July 25, 1997, or such other date as established by CCC.
    (b) Data furnished by the applicants will be used to determine 
eligibility for program benefits. Furnishing the data is voluntary; 
however, without it program benefits will not be provided.



Sec. 1439.805  Proof of loss.

    (a) Livestock producers must, in accordance with instructions issued 
by the Deputy Administrator, provide adequate proof that the loss of 
eligible livestock occurred in the area of Presidential designation or 
Secretarial declaration and that the death of the eligible livestock was 
reasonably related to the recognized natural disaster. The documentary 
evidence of the loss, quantity of the loss and type of eligible 
livestock claimed for payment shall be reported to CCC together with any 
supporting documentation under paragraph (b) of this section.
    (b) The livestock producer shall provide any available supporting 
documents that will assist the county committee in verifying the loss 
and the quantity of eligible livestock that perished in the natural 
disaster. Examples of the supporting documentation include, but are not 
limited to: purchase records, veterinarian receipts, bank loan papers, 
rendering truck certificates, Federal Emergency Management Agency and 
National Guard records, auction barn receipts, and any other documents 
available to confirm the presence of the livestock and the subsequent 
losses. Certifications of third parties or the producer and other such 
documentation as the county committee determines to be necessary in 
order to verify the information provided by the producer may be 
submitted, subject to review and approval by the county committee. 
Failure to provide documentation that is satisfactory to the

[[Page 456]]

county committee will result in disapproval of the application by the 
county committee.
    (c) In all circumstances, livestock producers shall certify the 
accuracy of the information provided. As provided by various statutes, 
providing a false certification to the government is punishable by 
imprisonment, fines and other penalties. All information provided is 
subject to verification and spot checks by the CCC.



Sec. 1439.806  Indemnity benefits.

    (a) Livestock indemnity payments for losses of eligible livestock as 
determined by CCC are authorized to be made to livestock producers who 
file an Application for Livestock Indemnity Program, Form CCC-661, for 
the specific livestock category in accordance with instructions issued 
by the Deputy Administrator, if the:
    (1) Livestock producer submits an approved proof of loss according 
to Sec. 1439.805; and
    (2) County or State committee determines that because of an eligible 
disaster condition the livestock producer had a loss in the specific 
livestock category in excess of the normal mortality rate established by 
CCC, based on the number of animals in the livestock category that were 
in the producer's inventory at the time of the disaster.
    (b) If the number of losses in the animal category exceeds the 
normal mortality rate established by CCC for such category, the loss of 
eligible livestock that shall be used in making a payment shall be the 
number of animal losses in the animal category that exceed the normal 
mortality threshold established by CCC.
    (c) Payments shall be made in an amount determined by multiplying: 
the national payment rate for the livestock category as determined by 
CCC by the amount specified in (b) of this section. Adjustments shall 
apply in accordance with Sec. 1439.807.
    (d) Payments which are earned by a person under the livestock 
indemnity program may be assigned in accordance with the provisions of 7 
CFR part 1404.



Sec. 1439.807  Availability of funds.

    (a) A uniform percentage of the estimated calculated payment amount, 
as determined by the Deputy Administrator, may be made prior to 
establishing the total amount of claims submitted under this subpart and 
determining whether a national percentage reduction is necessary to 
remain within the appropriation under this subpart.
    (b) In the event that the total amount of claims submitted under 
this subpart exceeds the appropriation, each payment shall be reduced by 
a uniform national percentage. Such payment reductions shall be applied 
after the imposition of applicable payment limitation provisions.



Sec. 1439.808  Misrepresentation, scheme or device.

    No benefits under this subpart will be made to a person who is 
determined by the State committee or the county committee to have:
    (a) Adopted any scheme or other device which tends to defeat the 
purpose of this program;
    (b) Made any fraudulent representation; or
    (c) Misrepresented any fact affecting a program determination.



Sec. 1439.809  Limitations on payments and income.

    (a) No person, as determined in accordance with part 1400 of this 
chapter may receive benefits under this subpart in excess of $50,000. 
Any other benefits obtained under this part will not be included in the 
calculation of the $50,000 for the application of this subpart.
    (b) No person, as defined in Part 1400 of this chapter, as 
applicable, with annual gross receipts in excess of $2.5 million for the 
preceding tax year will be eligible for benefits under this subpart. For 
the purpose of this determination, annual gross receipts means with 
respect to a person who receives more than 50 percent of such person's 
gross income from farming and ranching, the total gross receipts 
received from such operations; and with respect to a person who receives 
50 percent or less of such person's gross receipts from farming and 
ranching, the total gross receipts from all sources.

[[Page 457]]



Sec. 1439.810  Refunds to CCC; joint and several liability.

    (a) Section 1439.17 (a) through (e) shall apply to this subpart.
    (b) Persons who are a party to the livestock indemnity program 
application must refund to CCC any excess payments made by CCC with 
respect to such application.
    (c) In the event that a benefit under this subpart was established 
as the result of erroneous information provided by any person, the 
benefit must be repaid with any applicable interest.



             Subpart--American Indian Livestock Feed Program

    Source: 63 FR 65525, Nov. 27, 1998, unless otherwise noted.



Sec. 1439.900  [Reserved]



Sec. 1439.901  Applicability.

    This subpart sets forth the terms and conditions of a government-to-
government program titled the American Indian Livestock Feed Program 
(AILFP). The AILFP has been allocated a budget of $12.5 million. 
Assistance will be available in those regions that Commodity Credit 
Corporation (CCC) determines have been affected by natural disaster, and 
where a determination is made by the Deputy Administrator for Farm 
Programs that a livestock feed emergency exists on tribal land. Funds 
made available under the AILFP shall be available beginning in crop year 
1997 and subsequent crop years. Payments may become available as 
contracts with tribal governments are approved. If any other benefits 
are received from the Department of Agriculture for the same loss, then 
payments under this part will be reduced accordingly. Payments will 
terminate when funds have been exhausted, without respect to the date of 
any application, or of when any contract has been entered into by any 
tribal government and CCC. Applicants will receive benefits on a first 
come, first served basis.



Sec. 1439.902  Administration.

    (a) This subpart shall be administered by CCC under the general 
supervision of the Deputy Administrator for Farm Programs, Farm Service 
Agency (FSA). This program shall be carried out in the field as 
prescribed in these regulations and as directed in the contract executed 
between the applicable tribal government and CCC, except that in the 
event any contract provision conflicts with these regulations, the 
regulations shall apply.
    (b) Tribal governments, their representatives, and employees do not 
have authority to modify or waive any provisions of the regulations of 
this subpart.
    (c) State and county committees, and representatives and employees 
thereof, do not have the authority to modify or waive any provisions of 
regulations of this subpart.
    (d) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines, and other program requirements 
in cases where the applicant or tribe, as applicable, show that 
circumstances beyond the applicant's or tribe's control precluded 
compliance with the deadline and where lateness or failure to meet such 
other requirements does not adversely affect the operation of the 
program.
    (e) The tribal government will, in accordance with this part and in 
coordination with the U.S. Department of the Interior, Bureau of Indian 
Affairs (BIA) and FSA State and county committees, recommend the 
geographical size and shape of the region where the natural disaster has 
occurred, and whether the regional eligibility requirement has been 
satisfied. Documentation to support the reported natural disaster shall 
be provided by the FSA State office and shall accompany the 
recommendation. The recommendation of eligibility must be acted on by 
the Deputy Administrator.
    (f) The Deputy Administrator will determine all prices with respect 
to implementing the AILFP.
    (g) The FSA State committee will determine crop yields and livestock 
carrying capacity with respect to implementing the AILFP.
    (h) Participation in the AILFP by a tribal government for either the 
tribal government's benefits or for the benefit of any eligible owner is 
voluntary and is with the understanding that CCC

[[Page 458]]

will not reimburse the tribal government or its members for any 
administrative costs associated with the administration or 
implementation of the program.
    (i) The provisions of Secs. 1439.3, 1439.11 through 1439.22, 1439.24 
and 1439.6(i)(1)(i), 1439.8(a), and 1439.9 (d) through (f) shall apply 
to this subpart, and the provisions of Secs. 1439.10(a) and 1439.15, 
shall apply as set forth in Secs. 1439.908 and 1439.909 of this subpart.



Sec. 1439.903  Definitions.

    The definitions set forth in this section shall be applicable to the 
program authorized by this subpart. The terms defined in Sec. 1439.3 
shall also be applicable except where those definitions conflict with 
the definitions set forth in this subpart. The following terms shall 
have the following meanings:
    Animal Unit (AU) means a standard expression of livestock based on a 
net energy maintenance requirement equal to 13.6 megacalories per day.
    Animal Unit Day (AUD) means an expression of expected or actual 
stocking rate equal to one day.
    Approving official means a representative of the tribal government 
who is authorized to approve an application for assistance made in 
accordance with this subpart.
    Carrying capacity means the stocking rate expressed as acres per 
animal unit which is consistent with maintaining or improving vegetation 
or related resources.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or designee.
    Disaster period means the length of time that damaging weather, 
adverse natural occurrence, or related condition has a detrimental 
affect on the production of livestock feed.
    Eligible feed for assistance means any type of feed (feed grain, 
oilseed meal, premix, or mixed or processed feed, liquid or dry 
supplemental feed, roughage, pasture, or forage) that provides net 
energy megacalories and which is consistent with acceptable feeding 
practices and was not produced by the owner.
    Eligible livestock means beef and dairy cattle; buffalo and beefalo 
maintained on the same basis as beef cattle; equine animals used for 
food or used directly in the production of food; sheep; goats; and 
swine.
    Eligible owner means an individual or entity, including the tribe, 
eligible to participate in this program, who:
    (1) Contributes to the production of eligible livestock or their 
products;
    (2) Has such contributions at risk;
    (3) Meets the criteria set forth in Sec. 1439.907 of this subpart; 
and
    (4) Meets eligibility criteria set forth by the tribal government in 
an approved contract.
    Livestock feed emergency means a situation in which a natural 
disaster causes more than a 35 percent reduction in the feed produced in 
a region determined in accordance with Sec. 1439.904 of this subpart for 
a defined period, as determined by CCC. Any loss of feed production 
attributable to overgrazing or other factors not considered to be a 
natural disaster as specified in this subpart shall not be included in 
the loss used to determine if a livestock feed emergency occurred.
    Natural disaster means damaging weather, including but not limited 
to drought, hail, excessive moisture, freeze, tornado, hurricane, 
excessive wind, or any combination thereof; or an adverse natural 
occurrence such as earthquake, flood, or volcanic eruption; or a related 
condition, including but not limited to heat, or insect infestation, 
which occurs as a result of aforementioned damaging weather or adverse 
natural occurrence prior to or during the crop year that directly 
causes, accelerates, or exacerbates the reduction of livestock feed 
production.
    Net energy maintenance means the appropriate amount of net energy 
needed to meet the daily maintenance needs for livestock based on the 
weight range by type of eligible livestock as provided in this section, 
as determined by CCC.
    Region means a geographic area suffering a livestock feed emergency 
because of natural disaster as determined by a tribal government in 
accordance with Sec. 1439.904 of this subpart.
    Tribal governed land means:
    (1) All land within the limits of any Indian reservation;
    (2) Dependent Indian communities;

[[Page 459]]

    (3) Any lands title to which is either held in trust by the United 
States for the benefit of an Indian tribe or Indian, or held by an 
Indian tribe or Indian subject to a restriction by the United States on 
alienation; and
    (4) Land held by an Alaska Native, Alaska Native Village or village 
or regional corporation under the provisions of the Alaska Native Claim 
Settlement Act or other Act relating to Alaska Natives.
    Tribe means an Indian or Alaska Native tribe, band, nation, pueblo, 
village, or community that the Secretary of the Interior acknowledges to 
exist as an Indian tribe pursuant to the Federally Recognized Indian 
Tribe List Act of 1994, 25 U.S.C. 479a.
    Type and weight range means the weight range by type of livestock 
and appropriate amount of energy required to provide the daily 
maintenance needs for livestock, as follows:

----------------------------------------------------------------------------------------------------------------
                Kind/type                         Weight range (lbs.)              Daily energy requirements
----------------------------------------------------------------------------------------------------------------
(1) Beef cattle (Buffalo/Beefalo):
    Beef.................................  Less than 400....................  3.01 NEm Mcal
    Beef.................................  400-799..........................  5.59 NEm Mcal
    Beef.................................  800-1099.........................  7.31 NEm Mcal
    Beef.................................  1100+............................  10.75 NEm Mcal
    Beef, cow............................  All..............................  13.60 NEm Mcal
    Beef, bull...........................  1000+............................  11.18 NEm Mcal
(2) Dairy cattle:
    Dairy................................  Less than 400....................  3.01 NEm Mcal
    Dairy................................  400-799..........................  5.59 NEm Mcal
    Dairy................................  800-1099.........................  7.31 NEm Mcal
    Dairy................................  1100+............................  10.75 NEm Mcal
    Dairy, cow...........................  Less than 1100...................  23.22 NEl Mcal
    Dairy, cow...........................  11-1299..........................  26.66 NEl Mcal
    Dairy, cow...........................  1300-1499........................  28.38 NEl Mcal
    Dairy, cow...........................  1500+............................  29.67 NEl Mcal
    Dairy, bull..........................  1000+............................  12.47 NEm Mcal
(3) Equine:
    Equine...............................  Less than 450....................  6.2 DE Mcal
    Equine...............................  450-649..........................  8.9 DE Mcal
    Equine...............................  650-874..........................  11.6 DE Mcal
    Equine...............................  875+.............................  17.3 DE Mcal
(4) Swine:
    Swine................................  Less than 45.....................  780 DE Kcal
    Swine................................  45-124...........................  1630 DE Kcal
    Swine................................  125+.............................  2867 DE Kcal
    Swine, sow...........................  235+.............................  9854 DE Kcal
    Swine, boar..........................  235+.............................  5446 DE Kcal
(5) Sheep:
    Sheep................................  Less than 44.....................  0.34 NEm Mcal
    Sheep................................  44-82............................  0.77 NEm Mcal
    Sheep................................  83+..............................  0.95 NEm Mcal
    Sheep, ewe...........................  150+.............................  2.66 NEm Mcal
    Sheep, ram...........................  150+.............................  1.46 NEm Mcal
(6) Goats:
    Goats................................  Less than 44.....................  0.43 NEm Mcal
    Goats................................  44-82............................  0.95 NEm Mcal
    Goats................................  83+..............................  1.29 NEm Mcal
    Goats, doe...........................  125+.............................  3.00 NEm Mcal
    Goats, doe, dairy 1994 and subsequent  125+.............................  4.47 NEm Mcal
     crop years.
    Goats, buck..........................  125+.............................  1.80 NEm Mcal
----------------------------------------------------------------------------------------------------------------



Sec. 1439.904  Region.

    (a) The size of a region will consist of:
    (1) An entire reservation, even if the reservation is less than 
320,000 acres; or
    (2) Contiguous acreage of at least 320,000 acres and include land 
acreage of an Indian reservation or tribal governed land. If a region is 
delineated based on minimum size of 320,000 acres, the region shall be 
delineated without regard to the boundary of a reservation or tribal 
governed land. If the acreage affected by the natural disaster does

[[Page 460]]

not meet the minimum acreage requirement specified in this subparagraph, 
acreage will be added from surrounding land until the minimum 
requirement is met.
    (b) The region must:
    (1) Include acreage affected by the natural disaster which is the 
basis for the region's designation;
    (2) Correspond to the shape of the natural disaster to the maximum 
extent possible;
    (3) Be defined in a manner that does not intentionally include or 
exclude owners or crops;
    (4) Contain some acreage of tribal governed land; and
    (5) Have suffered a livestock feed emergency as defined in 
Sec. 1439.903 of this subpart.



Sec. 1439.905  Responsibilities.

    (a) During the operation of this program, CCC shall:
    (1) Provide weather data, crop yields and carrying capacities to 
tribes requesting such information;
    (2) Review contracts submitted by tribal governments requesting 
disaster regions; and
    (3) Act as an agent for disbursing payments to eligible livestock 
owners in approved disaster regions.
    (b) Tribal governments shall be responsible for:
    (1) Approaching CCC to obtain a contract to participate in the AILFP 
based on the tribes' voluntary decisions that participation will benefit 
its members;
    (2) Gathering, organizing, and reporting accurate information 
regarding disaster conditions and region;
    (3) Advising livestock owners in an approved region that they may be 
eligible for payments, in addition to the method and requirements for 
filing applications;
    (4) Accepting applications for payment from individual livestock 
owners;
    (5) Determining that the information provided by individual 
livestock owners on payment applications is accurate and complete and 
that the owner is eligible for payments under this program;
    (6) Submitting only accurate and complete payment applications to 
the designated FSA office acting as an agent for disbursing payments to 
eligible livestock owners.
    (c) The owner or authorized representative, shall:
    (1) Furnish all the information specified on the payment 
application, as requested by CCC;
    (2) Provide any other information which the tribal government deems 
necessary to determine the owner's eligibility; and
    (3) Certify that purchased feed was or will be fed to the owner's 
eligible livestock.



Sec. 1439.906  Program availability.

    (a) When a tribal government determines that a livestock feed 
emergency exists due to a natural disaster, the tribal government may 
submit a properly completed contract requesting approval of a region. 
All contracts requesting region approval must be submitted by the later 
of December 28, 1998, or 30 days after the end of the disaster period 
specified on the contract.
    (b) Properly completed contracts shall consist of:
    (1) A completed form CCC-453, Contract To Participate; and
    (2) A completed form CCC-648, Region Designation And Feed Loss 
Assessment; and
    (3) Supportive documentation as determined by CCC including, but not 
limited to:
    (i) A map of the region delineated according to Sec. 1439.904 of 
this subpart;
    (ii) Historical production data and estimated or actual production 
data for the disaster year;
    (iii) Climatological data provided by the FSA State Office; and
    (iv) A report of an on-site survey.
    (c) The Deputy Administrator shall make a determination as to 
whether a livestock feed emergency exists not later than 30 days after 
receipt of a properly completed contract made in accordance with this 
subpart and shall notify the tribal government and FSA State Office of 
such determination as applicable.
    (d) The feeding period provided in the approved contract will be for 
a term not to exceed 90 days, except as provided in paragraph (e) of 
this section. The feeding period shall not be extended if the livestock 
feed emergency

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no longer exists. Notwithstanding the duration of any feeding period, 
assistance under this subpart terminates immediately and without notice 
according to Sec. 1439.901.
    (e) The tribal government may request to extend the feeding period 
not to exceed an additional 90 days for each extension if disaster 
conditions have not diminished significantly and a livestock feed 
emergency continues.



Sec. 1439.907  Eligibility.

    (a) An eligible owner must own or jointly own the eligible livestock 
for which payments under this subpart are requested. Notwithstanding any 
other provision of this subpart, livestock leased under a contractual 
agreement which has been in effect at least 6 months prior to the date 
of application for assistance made under this subpart shall be 
considered as being owned by the lessee if the lease:
    (1) Requires the lessee to furnish the feed for such livestock; and
    (2) Provides for an interest in such livestock, such as the right to 
market a share of the increase in weight of livestock.
    (b) A State or non-tribal local government or subdivision thereof, 
or any individual or entity determined to be ineligible in accordance 
with Sec. 1400.501 of this chapter are not eligible for benefits under 
this subpart.
    (c) Any eligible owner of livestock, including the tribe, may file a 
CCC-approved AILFP payment application with the tribal government. When 
such a payment application is filed, the owner and an authorized tribal 
government representative shall execute the certification contained on 
such payment application no later than the deadline established by CCC 
upon approval of the region.
    (d) To be eligible for benefits under this subpart, livestock owners 
must own or lease tribal governed land in the delineated region; and 
have had livestock on such land at the time of disaster which is the 
basis for the region's designation
    (e) Eligible livestock owners shall be responsible for providing 
information to the tribal government that accurately reflects livestock 
feed purchases for eligible livestock during the feeding period. False 
or inaccurate information may affect the owner's eligibility.



Sec. 1439.908  Payment application.

    (a) Except as provided in paragraph (d) of this section, payment 
applications from interested eligible owners must be:
    (1) Submitted to the tribal government by the owner no later than a 
date announced by the tribe, such date being no later than the 
applicable date in Sec. 1439.907(c); and
    (2) Submitted by the tribal government to the office designated by 
CCC no later than a date announced by CCC; and
    (3) Accompanied by valid receipts substantiating purchase of 
eligible feed for assistance. Valid receipts must also be accompanied by 
the certification referenced in Sec. 1439.907(d)(3) of this subpart and 
shall contain:
    (i) The date of feed purchase, which must fall within the eligible 
feeding period as approved on the contract;
    (ii) The names and addresses of the buyer and the vendor;
    (iii) The type of feed purchased;
    (iv) The quantity of the feed purchased;
    (v) The cost of the feed; and
    (vi) The vendor's signature if the vendor is not licensed to conduct 
this type of business transaction.
    (b) The tribal government shall review each payment application, as 
specified by CCC, for completeness and accuracy. Except as provided in 
paragraphs (c) and/or (d) of this section, the tribal government shall 
approve those eligible owners and applications meeting the requirements 
of this subpart.
    (c) No approving tribal government member shall review and approve a 
payment application for any operation for which such member has a direct 
or indirect interest. Such payment application may be reviewed for 
approval by a member of the tribal government who is not related to the 
applicant by blood or marriage.
    (d) Tribal governments do not have the authority to approve a 
payment application for any operation for which the tribe has a direct 
or indirect interest. Payment applications for tribal owned livestock 
shall contain an original signature of a member of the tribal

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government, signing as representing all owners of the tribal owned 
livestock, who possesses the authority to sign documents on behalf of 
the tribe and shall be submitted to an office designated by the 
Secretary for approval.
    (e) No payment application, as specified by CCC, shall be approved 
unless the owner meets all eligibility requirements. Information 
submitted by the owner and any other information, including knowledge of 
the tribal government concerning the owner's normal operations, shall be 
taken into consideration in making recommendations and approvals. If 
either the payment application is incomplete or information furnished by 
the owner is incomplete or ambiguous and sufficient information is not 
otherwise available with respect to the owner's farming operation in 
order to make a determination as to the owner's eligibility, the owner's 
payment application, as specified by CCC, shall be denied. The tribal 
government shall be responsible for notifying the owner of the reason 
for the denial and shall provide the owner an opportunity to submit 
additional information as requested.
    (f) All payment applications, as specified by CCC, approved by the 
tribal government will be submitted to a designated FSA office for 
calculation of payment.



Sec. 1439.909  Payments.

    (a) Provided all other eligibility requirements of this subpart are 
met and funds are available, all eligible payment applications submitted 
to the designated FSA office shall have payments issued to the applicant 
by CCC.
    (b) If any term, condition, or requirement of these regulations or 
contract are not met, payments and benefits previously provided by CCC 
which were not earned under the provisions of the application shall be 
refunded.
    (c) Each owner's share of the total payment shall be indicated on 
the application, and each owner shall receive benefits or final payment 
from CCC according to benefits or payments earned under the provisions 
of the application.
    (d) CCC may reduce the benefits payable to an applicant under this 
program if CCC has made assistance available to such applicant under any 
other CCC program with respect to the same natural disaster.
    (e) The amount of assistance provided to any owner shall not exceed 
the smaller of either:
    (1) The dollar amount of eligible livestock feed purchased, as 
documented by acceptable purchase receipts, less the dollar amount of 
any sale of livestock feed (whether purchased or produced) by the owner 
during the feeding period; or
    (2) 30 percent of the amount computed by multiplying:
    (i) The number of animal units determined on the basis of the number 
of eligible livestock of each type and weight range; by
    (ii) The smaller of the number of days the owners provided feed to 
eligible livestock or the total days in the contract's feeding period; 
by
    (iii) The Animal Unit Day value, as established by the Deputy 
Administrator for Farm Programs, less the dollar amount of any sale of 
livestock feed (whether purchased or produced) by the owner during the 
feeding period.
    (f) Payments issued in conjunction with this program will not be 
subject to offset for debts incurred through participation in any other 
program conducted by the Department of Agriculture.



Sec. 1439.910  Program suspension and termination.

    (a) The tribal government that requested the AILFP assistance, may 
at any time during the operation of a program recommend suspension or 
termination of the program.
    (b) The Deputy Administrator may suspend or terminate the program at 
any time if:
    (1) The tribal government requests termination or suspension; or
    (2) Funding is exhausted.



Sec. 1439.11  Appeals.

    Any person who is dissatisfied with a CCC determination made with 
respect to this subpart may make a request for reconsideration or appeal 
of such determination in accordance with part 780 of this chapter. Any 
person who is dissatisfied with a determination made by the tribal 
authority should seek reconsideration of such determination with

[[Page 463]]

the tribe. Decisions and determinations made under this subpart not 
rendered by CCC or FSA are not appealable to the National Appeals 
Division.



Secs. 1439.912-1439.915  [Reserved]



PART 1446--PEANUTS--Table of Contents




                      Subpart A--General Provisions

Sec.
1446.101  General statement.
1446.102  Administration.
1446.103  Definitions.
1446.104  Performance based upon action or advice of a representative of 
          the Secretary.
1446.105  Handling payments and collections not exceeding $9.99.

                   Subpart B--Basic Handler Operations

1446.201  General handler provisions.
1446.202  Peanut buyer card and buying point card.
1446.203  Marketing card entries and collection of assessments, 
          penalties and debts.
1446.204  Transmittal of collections of penalties and claims.

                   Subpart C--Warehouse Storage Loans

1446.301  Eligibility of peanuts for price support at the quota loan 
          rate.
1446.302  Eligibility of peanuts for price support at the additional 
          loan rate.
1446.303  Delivery of peanuts for price support advance.
1446.304  Price support loans involving estates, trusts or minors.
1446.305  Additional peanuts ineligible for price support.
1446.306  Commingling of peanuts.
1446.307  Disaster transfer of Segregation 2 or Segregation 3 peanuts 
          from additional loan to quota loan.
1446.308  Loan pools.
1446.309  Immediate buyback and sale of loan peanuts to the storing 
          handler.
1446.310  Additional peanut support levels.
1446.311  Minimum CCC sales price for certain peanuts.

   Subpart D--Handling Contract Additional Peanuts--General Provisions

1446.401  Contracts for additional peanuts for crushing or export.
1446.402  Approval as handler of contract additional peanuts.
1446.403  Letter of credit.
1446.404  Transfer of contracts prior to delivery.
1446.405  Inspection of contract additional peanuts.
1446.406  Commingled storage of contract additional peanuts.
1446.407  Handler transfer of contract additional peanuts or transfer of 
          disposition credit.
1446.408  Decreasing or drawing upon a letter of credit.
1446.409  Access to facilities.
1446.410  Disposition date.
1446.411  Export provisions.
1446.412  Evidence of export.
1446.413  Disposal of meal contaminated by aflatoxin.
1446.414  Processing additional peanuts into products.
1446.415  Prohibition on importation or reentry of contract additional 
          peanuts.
1446.416  Suspension of restrictions on imported peanuts.
1446.417  Loss of peanuts.

  Subpart E--Handling Contract Additional Peanuts--Physical Supervision

1446.501  Accounting for contract additional peanuts acquired under 
          physical supervision.
1446.502  Physical supervision of contract additional peanuts.
1446.503  Disposition requirements under physical supervision.
1446.504  Substitution of quota and additional peanuts.

Subpart F--Handling Contract Additional Peanuts--Nonphysical Supervision

1446.601  Disposition requirements under nonphysical supervision.
1446.602  Disposition credit for peanuts under nonphysical supervision.
1446.603  Disposition credit for peanuts in exported products made from 
          quota peanuts.

               Subpart G--Penalties and Liquidated Damages

1446.701  Excess marketing of quota peanuts.
1446.702  Peanuts ineligible for quota loan.
1446.703  Assessment of penalties against handlers.
1446.704  Reductions of penalties, reconsideration and appeals.
1446.705  Statutory liens against peanuts.
1446.706  Schemes and devices.

       Subpart H--Recordkeeping, Reporting and Paperwork Reduction

1446.801  Recordkeeping and reporting requirements.
1446.802  Examination of records and reports.
1446.803  Retention of records.
1446.804  Information confidential.
1446.805  Penalty for failure to keep records and make reports.

[[Page 464]]

1446.806  Fraud by handler.
1446.807  Paperwork Reduction Act assigned numbers.

    Authority: 7 U.S.C. 7271; 15 U.S.C. 714b and 714c.

    Source: 56 FR 16230, Apr. 19, 1991, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1446.101  General statement.

    This part sets out provisions relating to the 1996 through 2002 
crops of peanuts as authorized and in accordance with the applicable 
provisions of Public Law 104-127. The peanut marketing, storage, 
handling and disposition requirements for peanuts for the 1991 through 
1995 crops shall continue to be governed by the regulations codified in 
this part 1446 as of January 1, 1996. Program announcements will be 
issued to specify national average support rates, and other provisions 
that may be required in order to implement these regulations.

[56 FR 16230, Apr. 19, 1991, as amended at 61 FR 37623, July 18, 1996]



Sec. 1446.102  Administration.

    (a) Responsibility. The Tobacco and Peanuts Division (TPD), Farm 
Service Agency (FSA), will administer this part under the general 
direction and supervision of the Administrator, FSA, or the Executive 
Vice President, Commodity Credit Corporation (CCC), as applicable. In 
the field, these regulations shall be carried out by State and county 
Farm Service Agency (FSA) committees and marketing associations that 
have contracted with CCC for such purposes.
    (b) Limitation of authority. A State or county committee or its 
employees or representatives, or any marketing association or its 
employees or representatives, may not modify or waive any of the 
provisions of this part or any amendment or supplement thereto.
    (c) Supervisory authority. Delegation of authority contained in this 
part shall not preclude the Administrator, FSA, the Executive Vice 
President, CCC, or a designee of such person from determining any 
questions arising under the regulations or from reversing or modifying 
any determinations made pursuant to such delegation.



Sec. 1446.103  Definitions.

    For purposes of this part, the definitions and provisions of parts 
718, 719, 729, 780, 790, 791, 793, 1402, 1403, 1407, 1421, 1422 and 1498 
of this title are incorporated and shall apply except where the context 
or subject matter or provisions of the regulations in this part 
otherwise requires or provides. References contained in this subpart to 
other parts of this chapter or title include any subsequent amendments 
to those referenced parts. Unless the context indicates otherwise, any 
reference to the Executive Vice President of CCC shall also be read to 
mean to any persons designated by the Executive Vice President. Unless 
the context or subject matter otherwise requires, the following words 
and phrases as used in this part and in all related instructions and 
documents shall have the following meanings:
    Additional loan rate. The price support loan rate that is applicable 
to a lot of additional peanuts.
    Additional peanuts. Any peanuts which are marketed from a farm other 
than peanuts marketed or considered marketed as quota peanuts.
    Adequate assets. Assets less liabilities determined by the marketing 
association, acting pursuant to instructions of CCC, to be sufficient to 
assure the export or crushing of contract additional peanuts in 
compliance with the provisions of this part. Assets may include, but are 
not limited to, accounts receivable, value of inventory, equipment, 
plant, property, and investments. Liabilities may include accounts 
payable, mortgages, loans, letters of credit and other obligations.
    Adequate facilities. Weighing, grading, shelling and/or milling 
equipment, storage facilities, and other physical plant and equipment 
owned, leased or subleased by a handler, as determined by the marketing 
association to be sufficient to receive, store, process, and ship all 
the contract additional peanuts to be handled in, by, through, or in 
connection with such facilities into the export or domestic market.
    All other (AO) kernels. The peanut kernels remaining in the total 
kernel

[[Page 465]]

content of a lot of peanuts after excluding sound mature kernels and 
sound split kernels. AO kernels consists of damaged kernels, other 
kernels, and loose shelled kernels, as identified and determined by the 
Federal-State Inspection Service.
    FSA. The Farm Service Agency of the United States Department of 
Agriculture.
    Bright hull Valencia peanuts. Valencia type peanut produced in the 
Southwest for which not more than 25 percent of the shells are damaged 
by:
    (1) Discoloration;
    (2) Cracks or broken ends; or
    (3) Both discoloration and cracks or broken ends.
    Buyback. A term used to describe a marketing transaction in which a 
producer places additional peanuts under loan at the additional loan 
rate and a handler simultaneously purchases such peanuts from the 
marketing association for seed or other domestic edible uses.
    CCC. The Commodity Credit Corporation, an agency and instrumentality 
of the United States within the United States Department of Agriculture.
    Commercial quantity. For purposes of determining penalties that may 
be due if additional peanuts that were exported are subsequently 
reentered into the United States, commercial quantity means any quantity 
of such peanuts that were reentered by any person during any marketing 
year if the total quantity reentered by such person or a related person 
exceeds 200 pounds of farmers stock peanuts or 150 pounds of shelled 
peanuts.
    Concealed rancidity, mold or decay (RMD). Peanut kernels affected by 
rancidity, mold or decay which is not apparent by external examination.
    Contract additional peanuts. Additional peanuts for crushing or 
exportation, or both, for which a contract has been entered into between 
a handler and producer in accordance with this part.
    Crushing. The processing of peanuts to extract oil for food uses and 
meal for uses as allowed by the provisions of this part or the 
processing of peanuts by crushing or otherwise when authorized by the 
Secretary.
    Current marketing year. The marketing year that begins on August 1 
during the calendar year in which the applicable crop of peanuts was 
planted.
    Damaged kernels (DK). Defective whole kernels which ride the screen 
officially designated for the peanut type, and the defective splits 
found in farmers stock which, as determined upon an official inspection 
by an inspector:
    (1) Are rancid, decayed or moldy;
    (2) Have sprouts more than \1/8\ inch long;
    (3) Are affected by insects, worm cuts, web or frass;
    (4) Are dirty, with appearance materially affected;
    (5) Are affected by flesh discoloration or skin discolorations 
affecting more than 25% of the surface; or
    (6) Are affected by freezing, or have any characteristic of freeze 
damage.
    Dark hull Valencia peanuts. Valencia type peanuts that are produced 
in the Southwest and that do not meet the requirements for bright hull 
Valencia peanuts.
    DASCO. The Deputy Administrator, State and County Operations, FSA.
    Director. The Director, or Acting Director, Tobacco and Peanuts 
Division, Farm Service Agency, U.S. Department of Agriculture.
    Dollar value. An amount determined as follows:
    (1) For inspected peanuts, the total of the amounts determined from 
each applicable form ASCS-1007, Inspection Certificate and Sales 
Memorandum, by multiplying the applicable quantity by the quota loan 
rate that would apply to peanuts of the type and quality recorded on 
such form ASCS-1007 without regard to whether such peanuts were found to 
contain visible Aspergillus flavus mold.
    (2) For noninspected peanuts, the amount determined by multiplying 
the quantity involved by the national average price support rate for 
quota peanuts.
    Domestic edible use. Domestic edible use means:
    (1) Use of peanuts for milling to produce domestic food peanuts 
(including the processing of peanuts into flakes);

[[Page 466]]

    (2) Use of peanuts for seed, excluding unique strains which meet 
both of the following requirements:
    (i) They are not commercially available, and
    (ii) They are used exclusively for the production of green peanuts; 
and
    (3) Use of peanuts on a farm.
    Edible export standard for contract additional peanuts. The 
standards for raw shelled or in-shell peanuts of any crop exported for 
human consumption constituting U.S. Standards grade requirements, or 
modifications thereof, and requirements as to wholesomeness, as are 
specified in the outgoing quality regulations for such crop as set forth 
in the Marketing Agreement No. 146, Regulating the Quality of 
Domestically Produced Peanuts (the Peanut Marketing Agreement No. 146), 
except that peanuts shown by the applicable form FV-184-9, Federal-State 
Inspection Certificate (Peanuts), to deviate from these requirements 
shall be considered as meeting such requirements if the handler 
certifies to the marketing association that such deviations are:
    (1) Acceptable to the export buyer; and
    (2) Fall within the range of deviations allowable under the Peanut 
Marketing Agreement No. 146.
    Eligible country. With respect to credit for exportation of 
additional peanuts, any destination outside the United States for which 
an export license may be acquired, except that with respect to the 1991 
crop, neither Canada nor Mexico shall be considered an eligible country 
for the purpose of exporting peanut products other than treated seed 
peanuts.
    Eligible peanuts. Eligible peanuts are farmers stock peanuts that:
    (1) Were produced in the United States by an eligible producer;
    (2) Were planted during the year in which the current marketing year 
begins;
    (3) Are free and clear of any liens and encumbrances, except a 
statutory lien that has resulted from failure to pay a peanut poundage 
quota penalty, unless acceptable waivers are obtained;
    (4) Unless otherwise approved by the Executive Vice President, CCC, 
were produced in the area served by the marketing association through 
which the price support loan is being requested;
    (5) Were not produced on land owned by the Federal Government if 
such land is occupied without a lease permit or other right of 
possession;
    (6) Have been inspected and have an official grade determined by a 
Federal or Federal-State inspector; and
    (7) Must, if delivered to the association in bags in the 
Southwestern area, be in new or thoroughly cleaned used bags which:
    (i) Are made of material other than mesh or net, weighing not less 
than 7\1/2\ ounces nor more than 10 ounces per square yard and 
containing no sisal fibers;
    (ii) Are free from holes;
    (iii) Are finished at the top with either the selvage edge of the 
material, a binding, or a hem; and
    (iv) Are uniform in size with approximately a 2 bushel capacity.
    Eligible producer. An eligible producer for purposes of price 
support under this part shall be a person who meets all of the 
following:
    (1) As a landowner, landlord, tenant, or sharecropper, the person 
produced the peanuts that are being pledged as collateral for a price 
support loan or is a bona fide successor to such person.
    (2) The person has beneficial interest in the peanuts that are being 
pledged as collateral for a price support loan and had such beneficial 
interest before such peanuts were harvested.
    (3) The person is in compliance with the provisions of:
    (i) Part 12 of this title relating to persons producing agriculture 
commodities on wetlands or highly erodible land.
    (ii) Part 796 of this title relating to growing a controlled 
substance.
    (iii) Part 1498 of this title relating to the eligibility of foreign 
persons for loans or benefits.
    (iv) Part 400 of this title relating to crop insurance requirements.
    (4) The person has not marketed 100 percent of a quota peanut crop 
that meets the quality requirements for domestic edible use, through a 
marketing association for the 2 marketing years immediately preceding 
the current marketing year, if handlers have provided the producer with 
written offers,

[[Page 467]]

upon delivery, for the purchase of all the quota peanuts, at a price 
equal to or in excess of the quota support price. If a producer is 
rendered ineligible for quota price support under this or any other 
provision, the producer may appeal the ineligibility determination 
utilizing procedures provided in part 780 of this title.
    (5) That is not ineligible for a price support loan under any other 
provision of law or regulation.
    Export and exportation. A shipment of peanuts or peanut products 
from the United States that is directed to a country outside the United 
States for which a statement, which is signed by the handler and 
specifies the name and address of the consignee, is made available to 
the marketing association or CCC, or, upon request by the marketing 
association or CCC, for which a consignee receipt is made available to 
the marketing association or CCC.
    Farmers stock peanuts. Picked or threshed peanuts produced in the 
United States which have not been changed (except for removal of foreign 
material, LSK's, and excess moisture) from the condition in which picked 
or threshed peanuts are customarily marketed by producers, plus any 
LSK's that are removed from farmers stock peanuts before such farmers 
stock peanuts are marketed.
    Foreign material (FM). Anything other than peanuts, which is found 
in farmers stock peanuts.
    Fragmented peanuts. Peanuts meeting the qualifications for 
fragmented peanuts as defined in the outgoing quality regulations of the 
Peanut Marketing Agreement (No. 146) applicable to the crop year in 
which the peanuts were produced.
    Handler. Any person that acquires peanuts for resale, domestic 
consumption, processing, exportation, or crushing through a business 
involved in buying and selling peanuts or peanut products.
    In-shell peanuts. Cleaned peanuts in the shell which are mature, dry 
and free from:
    (1) LSK's,
    (2) Dirt or other foreign material,
    (3) Pops,
    (4) Paper ends, and
    (5) Damage caused by cracked or broken shells.
    Inspector. A Federal or Federal-State inspector authorized or 
licensed by the Administrator, Agricultural Marketing Service, United 
States Department of Agriculture (USDA), to grade peanuts.
    Liquidated damages. An amount due, but not as a penalty, as an 
amount estimated to be the probable damage to the peanut price support 
program when a producer or handler has taken an action that is contrary 
to the regulations in this part and a determination is made in 
accordance with such regulations that such action may damage the 
administration or efficiency of the price support program.
    Loan rate. The applicable national average support rate announced by 
the Secretary for quota or additional peanuts for the current year, as 
adjusted for differences in grade, type, quality, location and other 
factors.
    Loan value. For eligible farmers stock peanuts, the amount 
determined by multiplying the applicable loan rate, as determined for 
the applicable marketing category, by the net weight of such peanuts 
that are pledged as collateral for a price support loan.
    Loose shelled kernel (LSK). Peanut kernels or portions of kernels 
determined by official inspection to be free of their hulls and 
scattered in farmers stock peanuts.
    Lot--(1) Farmers stock peanuts. That quantity of farmers stock 
peanuts for which one form ASCS-1007 or other inspection certificate is 
issued. For farmers stock peanuts delivered to the marketing association 
for a price support loan advance, a lot shall consist of the contents of 
one vehicle, except that a lot may consist of the contents of two or 
more vehicles if the contents of such vehicles do not exceed a total of 
approximately 24,000 pounds of peanuts.
    (2) Milled peanuts. That quantity of milled or shelled peanuts for 
which one form FV-184-9 or substitute approved for general use by the 
Executive Vice President, CCC, is issued. The lot size of such peanuts 
in bulk or bags shall not exceed 200,000 pounds.

[[Page 468]]

    Marketing association. An area marketing association selected and 
approved by the Secretary which is operated primarily for the purpose of 
conducting loan activities as provided for in this part. The approved 
area marketing associations and the areas served by such associations 
are as follows:
    (1) GFA Peanut Association of Camilla, Georgia (GFA). GFA serves the 
Southeastern area consisting of Puerto Rico, the U.S. Virgin Islands, 
and the States of Alabama, Florida, Georgia, Mississippi and that part 
of South Carolina south and west of the Santee-Congaree-Broad Rivers;
    (2) Peanut Growers' Cooperative Marketing Association of Franklin, 
Virginia (PGCMA). PGCMA serves the Virginia-Carolina area consisting of 
the District of Columbia, and the States of Connecticut, Delaware, 
Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, 
Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont, 
Virginia, West Virginia, Wisconsin and that part of South Carolina north 
and east of the Santee-Congaree-Broad Rivers; and
    (3) Southwestern Peanut Growers Association of Gorman, Texas 
(SWPGA). SWPGA serves the Southwestern area consisting of the States of 
Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Kansas, 
Louisiana, Montana, Nebraska, New Mexico, Nevada, North Dakota, 
Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming, and 
all other territories of the United States not listed in paragraphs (1) 
or (2).
    Marketing card. Form ASCS-1002, Peanut Marketing Card, that has been 
issued in accordance with part 729 of this title for use, at the time of 
each initial marketing of peanuts from a farm, to identify the farm on 
which such peanuts were produced and to provide other pertinent 
information that may be required when such peanuts are marketed.
    Marketing penalties--(1) Producer. For producers, the penalties 
prescribed in part 729 of this title.
    (2) Handler. For handlers, the penalties which are prescribed, 
computed, assessed and collected in accordance with this part and are 
effective for the applicable crop.
    Marketing year. The 12-month period beginning on August 1 of a year 
in which the peanuts are planted and ending on July 31 of the following 
year.
    Net weight. Unless otherwise specified in this part, the gross 
weight of a lot of farmers stock peanuts, as recorded on the form ASCS-
1007, less:
    (1) The weight of any foreign material in such lot; and
    (2) The amount determined by subtracting 7 percentage points from 
any percentage of moisture in excess of 7 percent and multiplying the 
result by the gross weight of such lot excluding foreign material.
    Nonphysical supervision. Supervision of the disposition of 
additional peanuts whereby representatives of the marketing association 
or other representatives of the Secretary can determine, in accordance 
with this part, whether additional peanuts purchased for crushing or 
export have been disposed of in accordance with the provisions of this 
part without the ``physical'' presence of such representatives to verify 
the actual handling and disposition of such peanuts. Such supervision 
shall be conducted in accordance with this part and shall consist of the 
review and analysis of records which handlers are required to make 
available to representatives of the Secretary for the verification of 
proper disposition of additional peanuts under this supervision option.
    Other kernels (OK). The kernels in farmers stock peanuts which pass 
through screens to separate them from the sound mature kernels, but 
excluding sound split kernels, damaged kernels, and broken pieces less 
than \1/4\ of a whole kernel.
    Participating warehouse. A storage facility whose owner or operator 
has entered into a peanut receiving and warehouse contract agreeing to 
the provisions of such contracts for the care, storage and delivery of 
peanuts pledged to CCC as collateral for price support loans.
    Peanut meal. Any meal, cake, pellets, or other forms of residue 
remaining after extraction or expulsion of oil

[[Page 469]]

from peanut kernels, but not including pressed peanuts.
    Peanut product. Any product, other than peanut oil or peanut meal, 
that is manufactured or derived from peanuts including, but not limited 
to, peanut candy, peanut butter, treated seed peanuts, roasted peanuts 
(either shelled or in-shell), pressed peanuts, and peanut granules.
    Peanut receiving and warehouse contract. Form CCC-1028, Peanut 
Receiving and Warehouse Contract (Identity Preserved Storage), or form 
CCC-1028-A, Peanut Receiving and Warehouse Contract (Commingled 
Storage), or any other form approved for general use by CCC for the 
purpose of receiving and warehousing loan collateral peanuts.
    Physical supervision. The supervision, in accordance with this part, 
by representatives of the marketing association or other representatives 
of the Secretary of the handling and disposition of contract additional 
or CCC stocks of additional peanuts which have been sold for crushing or 
export. Such supervision requires, as provided for in this part, the 
``physical'' presence of such representatives to observe the actual 
handling, loading, shelling, transportation, processing, and exportation 
of peanuts which have been purchased or otherwise designated as 
additional peanuts.
    Pools. Accounting pools established by the marketing association in 
accordance with this part for peanuts that have been pledged as 
collateral for price support loans.
    Quota loan rate. The price support loan rate that is applicable to a 
lot of quota peanuts.
    Quota peanuts. Peanuts which are:
    (1) Eligible for domestic edible uses; and
    (2) Marketed or considered marketed from a farm as quota peanuts 
pursuant to the provisions of part 729 of this title and are not in 
excess of the effective farm poundage quota established for the farm on 
which such peanuts were produced.
    Raw peanuts. In-shell peanuts, shelled peanuts, blanched peanuts, or 
any other classification of peanuts as designated by CCC which have not 
passed through any other processing operations.
    Segregations. For purposes of the peanut price support program, 
farmers stock peanuts shall be identified by 1 of 3 segregations, as 
identified and determined by the Federal-State Inspection Service, as 
follows:
    (1) Segregation 1. Segregation 1 peanuts are farmers stock peanuts 
which are free from visible Aspergillus flavus mold and which:
    (i) Have at least 99 percent peanuts of one type;
    (ii) Have not more than:
    (A) 2.49 percent damaged kernels (rounded to nearest whole number);
    (B) 1.00 percent concealed damage caused by rancidity, mold or 
decay;
    (C) 0.50 percent freeze damage;
    (D) 14.49 percent LSK's; and
    (iii) Are free from any offensive odor.
    (2) Segregation 2. Segregation 2 peanuts are farmers stock peanuts 
which are free from visible Aspergillus flavus mold and which either:
    (i) Have less than 99 percent peanuts of one type; or
    (ii) Have more than:
    (A) 2.49 percent damaged kernels (rounded to the nearest whole 
number); or
    (B) 1.00 percent concealed damage caused by rancidity, mold, or 
decay;
    (C) 0.50 percent freeze damage; or
    (D) 14.49 percent LSK's; or
    (iii) Have an offensive odor.
    (3) Segregation 3. Segregation 3 peanuts are farmers stock peanuts 
which, upon visible inspection, are found to contain Aspergillus flavus 
mold: Provided, further, however, that, in accordance with such written 
instructions as the Director may issue, the Director shall permit 
producers at approved buying points as specified by the Director to have 
a Segregation 3 lot reconditioned, one time only, so long as the 
reconditioning is performed at the buying point where the peanuts were 
initially delivered, and then reinspected visually. Such reinspection 
may not occur more than 24 hours from the initial inspection except as 
permitted by the Director and the second grade shall be considered the 
final grade for the farmers stock peanuts.
    Sound mature kernel (SMK). A whole kernel which rides the screen 
officially designated for the peanut type and as

[[Page 470]]

identified and determined by the Federal-State Inspection Service to be 
SMK's.
    Sound split (SS) kernel. A peanut kernel which is a split or broken 
kernel as identified and determined by the Federal-State Inspection 
Service to be a SS kernel.
    Support rate--(1) National average. The national average price 
support rate for quota peanuts, for each of the 1996 through 2002 crops, 
shall be $610.00 per ton. The national average price support rate for 
additional peanuts, for each of the 1996 through 2002 crops, shall be 
the rate announced by the Secretary as set out in Sec. 1446.310.
    (2) By types. With respect to each of the types of peanuts, the 
price support rate by type shall be the rate so announced on an annual 
basis by the Secretary for the particular type of peanuts on the basis 
of the differences between the types and the anticipated weighted 
average on a national basis of the quality factors and other factors 
affecting value for the respective types.
    Total kernel content (TKC). The TKC of a lot of peanuts is the total 
of SMK's, SS kernels, and AO kernels in such lot.
    TPD. The Tobacco and Peanuts Division of FSA.
    Treated seed peanuts. Shelled peanuts that have been modified from 
their original shelled state by a treatment to make them suitable for 
seed purposes.
    Type. The generally known genetic varieties or types of peanuts 
(i.e., Runner, Spanish, Valencia, and Virginia), as identified and 
determined by the Federal-State Inspection Service.
    United States. The 50 States of the United States, Puerto Rico, the 
territories of the United States, and the District of Columbia.
    United States government agency. Any department, bureau, 
administration, or other agency of the Federal Government or corporation 
wholly owned by the Federal Government.
    Valencia type peanuts produced in the Southwest that are suitable 
for cleaning and roasting. Peanuts that are identified, determined and 
classified by the Federal-State Inspection Service as bright hull 
Valencia peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38328, Aug. 13, 1991; 
60 FR 35835, July 12, 1995; 61 FR 37623, July 18, 1996; 62 FR 62692, 
Nov. 25, 1997; 63 FR 41713, Aug. 5, 1998]



Sec. 1446.104  Performance based upon action or advice of a representative of the Secretary.

    The provisions of part 791 of this chapter with respect to 
performance based upon action or advice of any authorized representative 
of the Secretary shall be applicable to this part.



Sec. 1446.105  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 which are due the 
handler will be paid only upon the handler's request. Deficiencies of 
$9.99 or less, including interest, may be disregarded unless demand for 
payment is made by CCC.



                   Subpart B--Basic Handler Operations



Sec. 1446.201  General handler provisions.

    (a) Handler registration and approval. To avoid marketing penalties 
otherwise provided in this part for failure to register as a handler, 
each person who plans to acquire peanuts for processing or resale must 
register as a handler and be approved as a handler in accordance with 
this paragraph.
    (1) Registration. Registration must be made on the form ASCS-1008, 
Application for Handler Card, and must be filed:
    (i) For each marketing year in which such person expects to acquire 
peanuts for processing or resale.
    (ii) With each marketing association that serves the marketing area 
in which such person plans to acquire peanuts during the applicable 
marketing year.
    (iii) Prior to the time such person acquires peanuts, during the 
respective marketing year, within the marketing area served by such 
marketing association.
    (2) Approval. The determination of whether a handler will be 
approved

[[Page 471]]

shall be made by the applicable marketing association in which the 
registration was filed and, in the case of approval, such approval shall 
be evidenced by a handler registration number that is issued by such 
marketing association.
    (b) Handler of loan peanuts. To handle loan peanuts, either quota or 
additional, a person must be approved as a handler and must contract 
with the marketing association on form CCC-1028 or form CCC-1028-A to 
handle such peanuts. To contract to handle loan peanuts, the handler 
must meet all requirements of the applicable warehousing contract with 
respect to receiving, handling and storing loan peanuts.
    (c) Handler of contract additional peanuts. To handle contract 
additional peanuts in a marketing area, a person must be approved as a 
handler for that area in accordance with this part.
    (d) Marketing assessments and marketing penalties. A handler shall 
collect and pay marketing assessments and marketing penalties in 
accordance with the provisions in part 729 of this title.
    (e) Penalties and other remedies. Any handler that fails to register 
in accordance with this section shall be subject to all penalties that 
may apply to handlers under this part and all other remedies that apply 
against handlers. Further, such handler shall be subject to penalties 
for non-registration as may apply.



Sec. 1446.202  Peanut buyer card and buying point card.

    (a) Peanut buyer card. The marketing association which approves a 
handler will assign a registration number to such handler and CCC will 
issue an embossed peanut buyer card which will show the handler's 
registration number, name and address. The handler will use the buyer 
card for identification when buying or selling peanuts.
    (b) Buying point card. CCC will issue a buying point card to the 
Federal-State Inspection Service for delivery to each handler who 
operates a buying point at which peanuts are inspected. The buying point 
card will show a buying point number that will be used to identify the 
physical location of such buying point.



Sec. 1446.203  Marketing card entries and collection of assessments, penalties and debts.

    The handler shall make marketing card entries and shall collect 
assessments, penalties and debts in accordance with the provisions in 
this part and in part 729 of this title.
    (a) Indebtedness to the United States due to peanut marketing 
penalties. As provided in part 729 of this title, if a producer is 
indebted to the United States for a peanut marketing penalty, such 
penalty shall result in a lien in favor of the United States on any 
peanuts in which such producer has an interest and any person who 
acquires peanuts from such producer shall be considered to have notice 
of such lien at the time such lien becomes attached. Except with respect 
to any lien that was perfected before the peanut poundage quota lien 
became attached in those cases not involving peanuts placed in the price 
support loan inventory, any person who acquires peanuts from such 
producer shall deduct the lien amount plus any applicable interest from 
the proceeds otherwise due to such producer as a result of the 
acquisition of the peanuts. Any deducted amount shall be paid to CCC in 
accordance with instructions issued by the Deputy Administrator. In the 
event a required deduction is not made from the proceeds for such 
peanuts, the person who acquires such peanuts shall be liable to CCC for 
the amount of the lien, to the extent of the market value of such 
peanuts or proceeds of the peanuts whichever is higher.
    (b) Farmers Home Administration or Farm Service Agency lien. If a 
Farmers Home Administration or Farm Service Agency lien has been 
recorded on the marketing card that was issued for the use of a producer 
when marketing peanuts, the purchaser of such peanuts shall make the 
check, for the proceeds from such peanuts, payable jointly to the 
producer and the Farm Service Agency. However, if a peanut poundage 
quota lien was also recorded on the marketing card against such 
producer,

[[Page 472]]

the check shall be made payable jointly to the producer, CCC and the 
Farm Service Agency.

[56 FR 16230, Apr. 19, 1991, as amended at 61 FR 37623, July 18, 1996]



Sec. 1446.204  Transmittal of collections of penalties and claims.

    (a) Commercial purchases. A handler shall use form ASCS-1012, 
Buyer's Transmittal of Claims and/or Marketing Penalty, to transmit to 
FSA any marketing penalty or peanut poundage quota lien that is 
collected directly or indirectly from a producer at the time such 
producer marketed peanuts as quota commercial or contract additional 
peanuts. Such collections shall be made in accordance with the 
requirements of part 729 of this title. A collection is considered to 
have been made at the time of marketing the peanuts. Each collection 
shall be sent to the county FSA office which issued the marketing card 
and, unless otherwise approved by the Executive Vice President, CCC, 
shall be sent within 15 days after the collection is made.
    (b) Loan peanuts. Withholdings from the loan value due a producer 
which represent collections of marketing penalties, peanut poundage 
quota liens or U.S. claims shall be transmitted or handled in accordance 
with instructions issued by the marketing association or CCC.



                   Subpart C--Warehouse Storage Loans



Sec. 1446.301  Eligibility of peanuts for price support at the quota loan rate.

    For peanuts to be eligible for a price support loan at the quota 
loan rate such peanuts:
    (a) Must be eligible peanuts that were produced by an eligible 
producer;
    (b) Must be Segregation 1 peanuts;
    (c) If mechanically dried, must contain at least 6 percent moisture;
    (d) Must not contain more than:
    (1) 10.49 percent moisture;
    (2) 10 percent foreign material; or
    (3) 14.49 percent LSK's;
    (e) When added to prior marketing of quota peanuts from the farm, 
must not exceed the effective quota established for the farm on which 
such peanuts were produced.



Sec. 1446.302  Eligibility of peanuts for price support at the additional loan rate.

    (a) General. For peanuts to be eligible for a price support loan at 
the additional loan rate, such peanuts:
    (1) Must be eligible peanuts that were produced by an eligible 
producer;
    (2) must not contain more than:
    (i) 10.49 percent moisture;
    (ii) 10 percent foreign material; or
    (iii) 14.49 percent LSK's.
    (b) Exception to general requirements. Notwithstanding the 
provisions in paragraph (a) of this section:
    (1) Seed peanuts. Peanuts that were produced for seed under the 
auspices of a State agency that controls the production of seed peanuts 
may receive a price support loan at the additional loan rate if:
    (i) Such peanuts are eligible peanuts that were produced by an 
eligible producer; and
    (ii) In accordance with this part, the handler purchases the peanuts 
from the loan inventory for domestic seed use in accordance with this 
part.
    (2) Peanuts with excess moisture, foreign material, or LSK's. 
Peanuts that contain excessive moisture, foreign material, and/or LSK's 
may receive a price support loan at the additional loan rate if the 
marketing association determines:
    (i) That the moisture level is acceptable for storage until such 
peanuts may be crushed; and
    (ii) That the producer made a bona fide effort to clean such peanuts 
prior to offering such peanuts as collateral for a price support loan.



Sec. 1446.303  Delivery of peanuts for price support advance.

    (a) Warehouse storage loans. Any warehouse operator who has entered 
into a contract with the marketing association to receive and store 
peanuts shall inform producers that price support advances are available 
and shall make such advances on eligible peanuts tendered for price 
support as provided in such contract.
    (b) Where available. Unless otherwise approved by the marketing 
association

[[Page 473]]

or by CCC, producers must deliver farmers stock peanuts to any 
participating warehouse that is located in the same marketing area in 
which the peanuts were produced. The names and locations of 
participating warehouses may be obtained from the office of the 
appropriate marketing association or from State or county FSA offices.
    (c) Contract requirements. Any contract for receiving and storing 
peanuts pledged as collateral for a price support loan shall require the 
warehouse operator to:
    (1) Examine the producer's marketing card to determine price support 
eligibility;
    (2) Make entries on the marketing card as required by Sec. 729.304 
of this title and by this part; and
    (3) Execute a form ASCS-1007 in accordance with this part for each 
lot of peanuts on which a price support advance is made.
    (d) Time. Price support advances to eligible producers on peanuts of 
any crop will be available from the beginning of the marketing year 
through the following January 31 or such later date as may be 
established by the Executive Vice President, CCC.
    (e) Inspection. An inspector shall determine the type and quality of 
each lot of farmers stock peanuts that is delivered to a participating 
warehouse for a price support advance from the marketing association.
    (f) Producer agreement. To obtain a price support advance, the 
producer shall provide written authorization to the marketing 
association, and in the form prescribed by the applicable marketing 
association, to pledge the producer's peanuts to CCC as collateral for a 
warehouse storage loan and in so doing, the producer shall relinquish 
any right to redeem or obtain possession of such peanuts.
    (g) Advance to the producer. For each lot of peanuts delivered by a 
producer to a participating warehouse for a price support advance, the 
warehouse operator, acting in behalf of the marketing association:
    (1) Shall inquire of each producer as to whether any liens, other 
than a statutory peanut poundage quota lien, exist on peanuts offered 
for loan and shall note the response on form CCC- 1041, Warehouse 
Receipt and Draft (A failure to make such an inquiry shall render the 
warehouseman liable for the amount of the lien to the extent of any loss 
to CCC);
    (2) Shall advance to the producer the applicable loan value of such 
peanuts. However, if a lien exists, the loan advance draft, form CCC-
1041, shall be made payable jointly to the producer and each known 
lienholder except in those cases in which a peanut poundage quota lien 
was attached, as provided in part 729 of this title before any other 
lien was recorded. In such case the peanut poundage quota lien shall be 
deducted from the proceeds and a draft may be issued for any remaining 
balance;
    (3) Shall deduct from such advances any:
    (i) Marketing penalty;
    (ii) Marketing assessment as provided in part 729 of this title;
    (iii) Peanut poundage quota lien;
    (iv) Assessment or excise tax imposed by State law;
    (v) U.S. claim;
    (vi) Farm storage facility loan installment payment that is 
currently due to CCC; and
    (vii) Any other debt that is owed by such producer to a United 
States government agency.
    (4) As applicable, shall transmit, in accordance with applicable 
instructions, such deducted amounts to the:
    (i) County FSA office;
    (ii) Applicable State agency; or
    (iii) CCC; and
    (5) If such peanuts were produced in the Southwestern area, and upon 
the prior agreement of the producer, may deduct from such advance an 
amount approved by CCC, but not to exceed $2.00 per net weight ton of 
peanuts, to be used in financing the marketing association's peanut 
related activities outside the price support program.

[56 FR 16230, Apr. 19, 1991, as amended at 58 FR 41626, Aug. 5, 1993]



Sec. 1446.304  Price support loans involving estates, trusts or minors.

    (a) Estates and trusts. A receiver or trustee of an insolvent or 
bankrupt debtor's estate, an executor or administrator of a deceased 
person's estate, a guardian of an estate or of a ward or

[[Page 474]]

incompetent person, and trustees of a trust estate may be considered to 
represent the insolvent debtor, the deceased person, the ward or 
incompetent, and the beneficiaries of a trust, respectively, and the 
peanut production of the receiver, executor, administrator, guardian, or 
trustees attributable to the person represented shall be considered to 
be the production of the person represented. Loan documents executed by 
any such person shall be accepted by CCC only if they are valid, as 
determined by CCC, and such person has the authority to sign the 
applicable documents.
    (b) Eligibility of minors. A minor who is otherwise an eligible 
producer shall be eligible for price support only if such minor meets 
one of the following requirements:
    (1) The right of majority has been conferred on such minor by court 
proceedings or by statute; or
    (2) A guardian has been appointed to manage such minor's property 
and the applicable price support documents are signed by the guardian; 
or
    (3) An acceptable bond is furnished under which a surety acceptable 
to CCC guarantees to protect CCC from any loss for which the minor would 
be liable had such minor been an adult.



Sec. 1446.305  Additional peanuts ineligible for price support.

    (a) Marketing penalty. A marketing penalty is due if additional 
peanuts are marketed or considered marketed in any manner other than:
    (1) Through a price support loan at the additional loan rate; or
    (2) Through purchase for crushing or export by a handler who, in 
accordance with this part, has an approved contract with the producer to 
purchase peanuts for such purpose.
    (b) Delivery to avoid penalty. Notwithstanding the provisions in 
paragraph (a) of this section, a person who has produced additional 
peanuts may avoid a marketing penalty on such peanuts through forfeiting 
such peanuts by delivering such peanuts to the marketing association for 
the area where the peanuts were produced and in accordance with 
instructions issued by the marketing association if:
    (1) Such person is not an eligible producer; and
    (2) Such person does not have a contract with a handler to purchase 
such peanuts for crushing or exportation.
    (c) Interest due. A producer who pledges peanuts as collateral for a 
price support loan at the additional loan rate shall refund the loan 
advance on such peanuts with interest if, subsequent to the time the 
peanuts are pledged for the loan, it is brought to the attention of the 
marketing association that such person is not an eligible producer. 
Interest shall be due:
    (1) At the same interest rate that was applicable on funds borrowed 
from CCC by the marketing association on the date the loan was 
disbursed.
    (2) From the date the loan was disbursed to the date of repayment.



Sec. 1446.306  Commingling of peanuts.

    To facilitate handling and marketing, unless prohibited by a 
handler's storage contract with the marketing association, a handler may 
store farmers stock loan peanuts on a commingled basis with peanuts 
owned by such handler if such peanuts are of like crop, type, area, and 
segregation.
    (a) Accounting for commingled peanuts. Except for peanuts purchased 
from CCC for domestic edible use on an in-grade and in-weight basis, 
commingled peanuts shall be exchanged on a dollar value basis. 
Accordingly, when loan peanuts are removed from the warehouse they must 
be inspected as farmers stock peanuts by an inspector and accounted for 
on a dollar value, based on the quota loan rate, less a one-time 
adjustment for shrinkage for each crop.
    (b) Dollar value shrinkage adjustment. For peanuts that are graded 
out and accounted for:
    (1) Before February 1 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (i) 3.5 percent for Virginia-type peanuts; and
    (ii) 3.0 percent for all other peanuts.
    (2) After January 31 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (i) 4.0 percent for Virginia-type peanuts; and
    (ii) 3.5 percent for all other peanuts.

[[Page 475]]

    (c) Maintaining copies of the ASCS-1007's. The handler shall 
maintain a copy of each form ASCS-1007 that was issued for any peanuts 
that are placed in commingled storage and that is issued for any peanuts 
removed from storage.
    (d) Good commercial practice. The handler shall receive, store and 
deliver all such peanuts in accordance with good commercial practice and 
any instructions provided by CCC.



Sec. 1446.307  Disaster transfer of Segregation 2 or Segregation 3 peanuts from additional loan to quota loan.

    (a) Transfer of Segregation 2 and Segregation 3 peanuts. Except as 
otherwise provided in this section, after a producer has completed 
marketing all peanuts produced on the farm, such producer may transfer a 
loan on Segregation 2 or Segregation 3 additional peanuts to a quota 
loan.
    (b) Limitation of amount eligible for transfer. A transfer made in 
accordance with this section shall not exceed the smaller of:
    (1) The difference between:
    (i) The total quantity of Segregation 1 peanuts marketed from the 
farm, plus the amount of peanuts retained on the farm for seed or other 
use, and
    (ii) The effective farm poundage quota, excluding quota pounds 
transferred to the farm in the fall; or
    (2) Twenty-five percent of the effective farm poundage quota, 
excluding quota pounds transferred to the farm in the fall.
    (c) Offset of CCC losses. As provided in this part, if a producer 
transfers an additional loan to a quota loan in accordance with the 
provisions of this section, any pool proceeds otherwise due such 
producer from peanuts in another pool shall be reduced by the amount of 
any losses to CCC on the peanuts so transferred.
    (d) Loan value for transferred peanuts--(1) Segregation 2 peanuts. 
The quota loan value for any lot of Segregation 2 peanuts transferred 
from an additional loan to a quota loan shall be determined by 
multiplying 70 percent of the quota loan rate that otherwise would have 
been applicable for such lot of peanuts as quota peanuts, exclusive of 
any discount for damaged kernels, by the net weight of peanuts being 
transferred and deducting from the result the amount of any special 
discount that may apply for Segregation 2 peanuts transferred in 
accordance with this section.
    (2) Segregation 3 peanuts. The quota loan value for any lot of 
Segregation 3 peanuts transferred from an additional loan to a quota 
loan shall be determined by multiplying 70 percent of the quota loan 
rate that otherwise would have been applicable for such lot of peanuts 
as quota peanuts, exclusive of any discount for damaged kernels, by the 
net weight of peanuts being transferred and deducting from the result 
the amount of any special discount that may apply for Segregation 3 
peanuts transferred in accordance with this section.
    (e) Transfer provisions--(1) Where to apply. Producers who are 
eligible to transfer additional loan peanuts to the quota loan pool in 
accordance with the provisions of this section may apply for such 
transfers with the county FSA office.
    (2) Determination of the amount eligible for transfer. The county 
office shall determine, in accordance with paragraph (b) of this 
section, the quantity of additional peanuts which are eligible for 
transfer.
    (3) Designation of peanuts to be transferred. The producer must 
indicate to the county office the net weight and applicable form ASCS-
1007 serial numbers for the peanuts to be transferred.
    (4) Applicability of marketings. Any peanuts that are transferred 
from an additional loan to a quota loan shall be considered as 
marketings of quota peanuts and the applicable records shall be 
appropriately adjusted.
    (f) Supplemental loan payment. The difference between the additional 
and quota loan rates for such peanuts, less the appropriate adjustment 
for the marketing assessment, shall be advanced by the marketing 
association to the applicable producer.
    (g) Waiver of right to make transfer. Notwithstanding any other 
provisions in this section, an additional loan on Segregation 2 or 
Segregation 3 peanuts shall not be transferred to a quota loan under 
this section with respect to that

[[Page 476]]

quantity of peanuts for which the producer has executed a waiver of the 
right to make such a transfer in order to obtain indemnity benefits from 
the Federal Crop Insurance Corporation or has agreed to such a waiver 
with any other Federal agency.

[56 FR 16230, Apr. 19, 1991, as amended at 57 FR 49633, Nov. 3, 1992; 61 
FR 37624, July 18, 1996]



Sec. 1446.308  Loan pools.

    (a) Establishment of pools. (1) Each marketing association shall 
establish six separate loan pools; one for each of the three 
segregations of additional peanuts and one for each of the three 
segregations for quota peanuts. These pools shall be formed without 
regard to the type of peanuts (Runner, Virginia, Spanish, or Valencia) 
involved. However, the SWPGA shall also establish 12 separate loan pools 
for Valencia peanuts produced in New Mexico, namely, for bright hull 
peanuts and for dark hull peanuts separately, to include for each of 
them separate, by segregation, additional peanuts and quota peanuts 
pools. Each marketing association shall maintain separate, complete and 
accurate records for each loan pool that is established by the marketing 
association.
    (2) Eligibility to participate in New Mexico Pools--(i) In general. 
Except as provided in clause (a)(2)(ii) of this section, in the case of 
the 1996 and subsequent crops, Valencia peanuts not physically produced 
in the State of New Mexico shall not be eligible to participate in the 
pools of the State even if the farm on which the peanuts are produced is 
constituted for administrative purposes within the State of New Mexico.
    (ii) Exception. A producer of Valencia peanuts may enter Valencia 
peanuts that are physically produced in Texas into the pools for New 
Mexico in a quantity not greater than the average annual quantity of the 
peanuts that the producer entered into the New Mexico pools for the 1990 
through 1995 crops; however, to qualify, the peanuts must be produced on 
the same farm on which the peanuts were produced during the base years 
of 1990 through 1995.
    (b) Net gains for quota pools. Net gains from peanuts in each quota 
pool shall consist of the amount by which the proceeds from the sale of 
the peanuts in such pool are in excess of the indebtedness on the 
peanuts in such pool.
    (c) Net gains for additional pool. Net gains for peanuts in each 
additional pool shall consist of:
    (1) The net gains which are in excess of the indebtedness on the 
peanuts placed in such pool; less
    (2) Any amount as provided in paragraph (d) of this section that is 
allocated to offset any loss on the pools for Segregation 1 quota 
peanuts, and any other amount properly offset.
    (d) Recovery of losses in quota area loan pools. (1) If the loan 
indebtedness on the peanuts in a quota area pool exceeds the proceeds 
from the sale of the peanuts in such pool, such excess shall be 
recovered using the following sources in the following order of 
priority:
    (i) Proceeds due any individual producer from any pool, as a result 
of the transfer of peanuts for pricing purposes from an additional loan 
pool to a quota loan pool, pursuant to the provisions in Sec. 1446.307.
    (ii) Gains of any producer in the same pool, by the amount of pool 
gains attributed to the same producer from the sale of additional 
peanuts for domestic and export edible use.
    (iii) Gains or profits resulting from the sale of additional 
peanuts, other than Valencia peanuts produced in New Mexico in separate 
type pools established under paragraph (a) of this section, in the same 
marketing area for domestic edible use, that are owned or controlled by 
CCC. This paragraph shall not apply to gains or profits from the sale of 
peanuts that were produced on farms with 1 acre or less of peanut 
production.
    (iv) Marketing assessments, collected from producers under 
Sec. 729.316 of this title, that the Secretary determines are necessary 
to cover losses in area quota pools.
    (v) Gains or profits from quota pools in other marketing areas, 
other than separate type pools established under paragraph (a) of this 
section for Valencia peanuts produced in New Mexico.
    (vi) Gains or profits resulting from the sale of additional peanuts 
in other marketing areas, other than Valencia

[[Page 477]]

peanuts produced in New Mexico in separate type pools established under 
paragraph (a) of this section, for domestic edible use, that are owned 
or controlled by CCC. This paragraph shall not apply to gains or profits 
from the sale of peanuts that were produced on farms with 1 acre or less 
of peanut production.
    (vii) Marketing assessments, collected from handlers under 
Sec. 729.316 of this title, that the Secretary determines are necessary 
to cover losses in area quota pools.
    (viii) Increased marketing assessments on quota peanuts in the 
production area covered by the pool, which shall be assessed as needed 
and collected from producers under Sec. 729.317 of this title.
    (2) The exceptions provided for Valencia peanuts in paragraph (d)(1) 
of this section shall only apply as to prevent offsets between pools for 
each of the Valencia types (bright-hull and dark-hull) for New Mexico 
and other peanuts.
    (e) Pool distribution. (1) Net gains as determined in accordance 
with this section on peanuts in each area pool shall be distributed to 
each producer who placed peanuts in that pool in proportion to the 
dollar value of peanuts placed in such pool by that producer, except 
that the proceeds available for the amount of distribution shall be 
subject to any other conditions and offsets set forth in this section; 
and
    (2) Distributions shall not be assigned to any other party.
    (f) Loan indebtedness. With respect to determining the gains and 
losses in accordance with this section for loan pools for quota and 
additional peanuts, the term ``indebtedness'' with respect to a pool 
shall include, but is not limited to, the following expenses associated 
with such peanuts:
    (1) Loan advance to producers.
    (2) Inspection fees.
    (3) Storage and handling charges.
    (4) Shelling costs.
    (5) Transportation and related charges.
    (6) Administrative and supervision expenses.
    (7) Interest applicable to any repayable amount.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38329, Aug. 13, 1991; 
61 FR 37624, July 18, 1996]



Sec. 1446.309  Immediate buyback and sale of loan peanuts to the storing handler.

    (a) ``Immediate buyback'' purchase of additional peanuts--(1) 
Producer consent. Except as provided in this section, if the producer of 
a lot of additional peanuts has consented to an ``immediate buyback'' of 
such peanuts by a handler, as indicated by a designation recorded on the 
form ASCS-1002, the handler that acts for the marketing association in 
advancing funds to the producer for a price support loan at the 
additional loan rate on such peanuts may purchase such peanuts from the 
marketing association for domestic edible use in accordance with 
instructions from the marketing association and at a price equal to 100 
percent of the quota loan value of such peanuts plus a handling charge, 
as determined by the marketing association and approved by CCC, to cover 
all costs incurred with respect to such peanuts for inspection, 
warehousing, shrinkage, and other expenses.
    (2) Time for buyback purchase. An ``immediate buyback'' purchase may 
be made only in connection with the marketing association involved in 
the price support loan and only on the date on which the peanuts were 
delivered by the producer as collateral for a price support loan. Such 
sales are for the account of CCC.
    (3) Handler requirements. For each ``immediate buyback,'' the 
handler shall:
    (i) Act for the marketing association by making a price support 
advance to the producer at the additional loan rate and in the same 
manner that would be applicable if an ``immediate buyback'' were not 
involved;
    (ii) If applicable, use such handler's funds to pay to the producer 
any premiums that the parties had agreed upon in order to effect the 
delivery of such peanuts;
    (iii) Pay for the peanuts by a check made payable to CCC. Such check 
must be from the handler's funds and in an

[[Page 478]]

amount equal to the quota loan value of the peanuts plus any handling 
charges; and
    (iv) Transmit the handler's check and the applicable form ASCS-1007 
to the marketing association by midnight of the third workday (excluding 
Saturdays, Sundays, and Federal holidays) following the day the peanuts 
were inspected.
    (4) Domestic edible use. The handler's check and the applicable form 
ASCS-1007 will identify the peanuts as additional peanuts that may be 
used for domestic edible use.
    (5) Loan pool credit. Irrespective of the segregation of such 
peanuts, the receipts from the ``immediate buyback'' sale will be 
credited to the additional loan pool for Segregation 1 peanuts and the 
peanuts will be treated as Segregation 1 peanuts for pool accounting 
purposes.
    (6) Loan pool participation. If Segregation 2 or Segregation 3 
peanuts are purchased by a handler under the ``immediate buyback'' 
provisions, the producer of such peanuts shall participate in the 
Segregation 1 additional loan pool in the same manner as would apply if 
such peanuts had been Segregation 1 peanuts.
    (7) Additional restrictions on ``immediate buyback'' sales. (i) 
Additional peanuts of the type contracted for export or crushing from a 
farm may not be purchased from such farm under the ``immediate buyback'' 
provisions of this section until all of the producer's contracts for 
additional peanuts for the relevant crop year have been satisfied for 
the type to be used for the buyback, as evidenced by a contract balance 
of zero for that type of peanuts on the farm's marketing card;
    (ii) An immediate buyback that otherwise is prohibited by paragraph 
(a)(7)(i) of this section may be permitted by CCC in the case of any 
producer on a farm who does not share in the additional peanuts for 
which there is a contract.
    (iii) An agreement between the handler and producer to void a 
contract that was approved in accordance with this part shall not reduce 
the balance shown on the producer's marketing card for contract 
additional peanuts and until such contract is renewed and satisfied the 
producer's additional peanuts of the same type as were covered by that 
contract shall not be eligible for that crop year for purchase under an 
``immediate buyback.''
    (b) Purchase of quota or additional loan peanuts. Quota loan 
peanuts, or additional loan peanuts that were not purchased by the 
handler under the ``immediate buyback'' provisions, may be bought for 
domestic edible use in accordance with this paragraph on an in-grade and 
in-weight basis.
    (1) In-grade and in-weight purchases. A handler may purchase loan 
peanuts, either quota or additional, on an in-grade and in-weight basis 
for domestic edible use:
    (i) Under terms and conditions established by the marketing 
association and CCC;
    (ii) If such peanuts are eligible for domestic edible use; and
    (iii) If such peanuts are stored in a warehouse that is operated by 
such handler.
    (2) Pricing. Except with respect to ``immediate buybacks,'' as 
provided for in this section, the price for peanuts purchased on an in-
grade and in-weight basis shall be determined by the marketing 
association or CCC, as applicable, for the account of CCC, but shall not 
be less than the applicable carrying charges plus, with respect to each 
lot of peanuts purchased:
    (i) 105 percent of the quota loan value that was or would be 
applicable to the quantity of loan peanuts in such lot, if paid for not 
later than December 31 of the marketing year; or
    (ii) 107 percent of the quota loan value that was or would be 
applicable to the quantity of loan peanuts in such lot, if paid for 
after December 31 of the marketing year.

[56 FR 16230, Apr. 19, 1991, as amended at 57 FR 27145, June 18, 1992]



Sec. 1446.310  Additional peanut support levels.

    (a) The national support rate for additional peanuts for the 1996 
crop is $132 per short ton.
    (b) The national support rate for additional peanuts for the 1997 
crop is $132 per short ton.

[62 FR 62693, Nov. 25, 1997]

[[Page 479]]



Sec. 1446.311  Minimum CCC sales price for certain peanuts.

    (a) The minimum CCC sales price for additional peanuts to be sold 
from the price support loan inventory for export edible use from the 
1996 crop is $400 per short ton.
    (b) The minimum CCC sales price for additional peanuts to be sold 
from the price support loan inventory for export edible use from the 
1997 crop is $400 per short ton.

[62 FR 62693, Nov. 25, 1997]



   Subpart D--Handling Contract Additional Peanuts--General Provisions



Sec. 1446.401  Contracts for additional peanuts for crushing or export.

    An approved handler may contract with a producer to deliver 
additional peanuts for exporting or for crushing. In order to be valid, 
the contract must meet the eligibility requirements in this section and 
must be approved by the county committee that serves the county in which 
the producing farm is located for administrative purposes.
    (a) Contract form and addendum--(1) Contract form. In order to be 
approved by the county committee, the contract must be completed on Form 
CCC-1005, Handler Contract With Producers for Purchase of Additional 
Peanuts for Crushing or Export, or on a form approved by the Executive 
Vice President, CCC, or designee, which follows the organization of the 
CCC-1005 and contains as a minimum all of the requirements provided for 
in paragraph (c)(2) of this section.
    (2) Availability of CCC-1005. The marketing association shall make 
available a form CCC-1005 to each approved handler and to any producer 
upon request.
    (3) Addenda. The handler may use an addendum to a contract form if 
such addendum neither negates nor conflicts with any provision in this 
part. Any existing addendum to the contract which relates to the 
marketing of additional peanuts must accompany the contract at the time 
the contract is filed with the county committee.
    (b) Submitting contracts for approval--(1) Eligible handlers. Only a 
handler who has been approved by the marketing association to handle 
contract additional peanuts may contract with producers to buy 
additional peanuts for crushing or exportation, or both.
    (2) Producer-handlers. A person who has been approved as a producer-
handler under part 1421 of this title may not contract with himself/
herself to purchase contract additional peanuts that he/she may produce.
    (3) Place and time for submitting. In order to be considered for 
approval, any contract between a handler and producer for the purchase 
of additional peanuts shall be completed and submitted:
    (i) Place. To the county FSA office of the county in which the farm 
is administratively located.
    (ii) Time. On or before September 15 of the year in which the crop 
is produced; except that:
    (A) Should September 15 fall on a Saturday or Sunday, or other non-
workday the contract must be submitted for approval no later than the 
last workday immediately preceding the final contracting date.
    (B) If the Executive Vice President, CCC, determines that damaging 
weather such as drought, hail, excessive moisture, freeze, tornado, 
hurricane or excessive wind, or related condition such as insect 
infestations, plant diseases, or other deterioration of the peanut crop, 
including aflatoxin, is expected to have significant national impact on 
peanut production, the Executive Vice President may extend nationally, 
by up to 15 days, the final date for submitting contracts for approval. 
Such announcement shall be made no later than September 5 of the year in 
which the crop is produced.
    (c) Contract approval. (1) A contract between a handler and a 
producer for additional peanuts for crushing or export shall not be 
approved by the county committee, if otherwise eligible, unless the 
county committee has been notified by the State Executive Director that 
the handler has been approved to contract additional peanuts and that 
such handler has submitted the letter of credit that is required in 
accordance with the provisions in this part.

[[Page 480]]

    (2) In order to be approved, the following information must appear 
on the contract:
    (i) The name and address of the operator;
    (ii) The name and address of each producer sharing in the proceeds 
of the contract additional peanuts;
    (iii) The State and County code, and farm number of the farm on 
which the additional peanuts are to be produced;
    (iv) The name, address, and registration number of the handler;
    (v) The pounds of Segregation 1, Segregation 2, and/or Segregation 3 
peanuts that are contracted;
    (vi) The final contract price to be paid by the handler and shown as 
a set percentage of the loan rate for quota peanuts of the type 
indicated on the contract; except that such final contract price shall 
not be less than the additional loan rate for the type of peanut 
indicated on the contract. A contract or an addendum to a contract that 
provides for a conditional supplemental payment to the producer will not 
be considered to negate the final contract price only if the 
supplemental payment to be made is expressed in a manner that a third 
party may determine the amount of the supplemental payment without a 
need for additional negotiations;
    (vii) A disclosure by the producer of any liens or encumbrances on 
the peanuts;
    (viii) The signature of the farm operator;
    (ix) The signature of each person having an interest as a producer 
in the contract additional peanuts that are produced on the farm;
    (x) The signature of the handler or the authorized agent of the 
handler; and
    (xi) A prohibition against changing the price.
    (3) The county committee, or a person designated in writing by the 
county committee, shall approve each form CCC-1005 that conforms with 
the provisions in this section.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38329, Aug. 13, 1991; 
61 FR 37624, July 18, 1996]



Sec. 1446.402  Approval as handler of contract additional peanuts.

    (a) General. By June 15 preceding the beginning of the marketing 
year in which such additional peanuts will be acquired, any handler who 
plans to acquire contract additional peanuts in accordance with this 
part for crushing or for exporting must:
    (1) Application. File an application with each marketing association 
that serves the area in which such handler plans to acquire contract 
additional peanuts. Such application:
    (i) Form. Must be on a form or in a format provided by the marketing 
association.
    (ii) Method of supervision. Must indicate the method of supervision, 
physical or nonphysical, selected by the handler for purposes of 
accounting for the disposition of any contract additional peanuts 
acquired by such handler.
    (2) Evidence of adequate assets and adequate facilities. Provide 
evidence that is acceptable to the marketing association and CCC that 
such handler has:
    (i) Assets. Adequate assets to assure compliance with the provisions 
in this part with respect to such handler's obligation to crush or 
export contract additional peanuts acquired by such handler; and
    (ii) Facilities. Adequate facilities to handle the acquisition and 
disposition of any contract additional peanuts acquired by such handler.
    (3) Letter of credit for prior crop years. Establish an irrevocable 
letter of credit, or increase any existing letter of credit applicable 
for a previous crop year, in an amount necessary to cover any 
outstanding marketing penalties on peanuts produced in such crop year 
which are still under administrative appeal or are unpaid. This 
requirement is in addition to any letter of credit requirement for the 
current year.
    (b) Approval. The marketing association, acting on behalf of CCC, 
shall approve, in accordance with this part, each application that is 
timely filed in accordance with this section, or is filed by such 
extended time as may be approved by the Executive Vice President, CCC, 
provided that in either case, the applicant:

[[Page 481]]

    (1) Has selected a method of supervision;
    (2) Has a U.S. address;
    (3) Has provided evidence of adequate assets and adequate facilities 
to assure compliance with the provisions in this part with respect to 
the disposition of contract additional peanuts; and
    (4) Has complied with the requirements of paragraph (a)(3) of this 
section.
    (c) Rescission of approval. Unless the Executive Vice President, 
CCC, shall otherwise agree in writing, a handler's previous approval to 
contract for the purchase of additional peanuts for exporting or 
crushing and to receive and handle such peanuts shall be considered to 
be rescinded upon such handler's use of facilities, other than those on 
which the approval was based, to receive, store, process, or ship 
contract additional peanuts. However, a rescission will not apply if 
substituted facilities are approved by the association, in accordance 
with instructions issued by CCC, when the handler can show, as 
determined by the association subject to review by the Executive Vice 
President, that the original facilities are no longer available for use 
due to circumstances beyond the handler's control such as, but not 
limited to, fire, flood, wind damage, or mechanical failure. In the 
event of rescission of a handler's approval, any purchases of peanuts 
from producers by such handler subsequent to the rescission will be 
considered as purchases of quota peanuts and will subject the handlers 
and producers to penalties, as prescribed by this part and in 7 CFR part 
729 for marketing excess quota peanuts unless such peanuts are recorded 
on the producer's marketing card as a marketing of quota peanuts.
    (d) Cost of supervision. The handler shall bear the cost of 
supervision irrespective of the method of supervision such handler has 
chosen.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38329, Aug. 13, 1991]



Sec. 1446.403  Letter of credit.

    (a) Certification and financial guarantee (letter of credit)--(1) 
Certification. In order to establish a letter of credit, each handler 
must certify to the applicable marketing association the quantity of 
additional peanuts the handler expects to contract for delivery by 
producers that are served by such marketing association. The certified 
poundage will be the basis for establishing the letter of credit for the 
applicable crop. If the certified poundage is less than the actual 
contracted poundage, the letter of credit required of the handler for 
the next marketing year shall be subject to increase, as provided in 
this section.
    (2) Letter of credit. The handler must present an irrevocable letter 
of credit to each marketing association that serves the area in which a 
handler plans to contract or otherwise acquire contract additional 
peanuts. Such letter of credit shall be issued in a form and by a bank 
which is acceptable to CCC and except as provided in paragraph (d) of 
this section shall be submitted to the appropriate marketing association 
not later than July 31 and before marketing cards will be issued to 
producers for contract additional peanuts. Unless the provisions of 
paragraphs (b) and (c) of this section are applicable, the amount of the 
letter of credit for each area shall be equal to the amount determined 
by multiplying 140 percent of the national average quota price support 
rate by, for a handler selecting nonphysical supervision, 8 percent, or, 
for a handler selecting physical supervision, 5 percent, of the larger 
of:
    (i) Ninety percent of the handler's contracted pounds as recorded on 
contracts approved by the county committee for the preceding marketing 
year and in the marketing area; or
    (ii) The amount of additional peanuts the handler estimates will be 
contracted with producers, as certified to the marketing association, 
for delivery during the current marketing year and in that marketing 
area.
    (b) Increase in letter of credit. (1) The amount of the letter of 
credit required under paragraph (a) of this section shall be increased 
for any handler:
    (i) Who has a poor performance record, as evidenced by previous 
penalty assessments for violations of the provisions of this part; or
    (ii) Who, for purposes of handling peanuts is, as determined by CCC, 
a partnership, merger, joint venture, or

[[Page 482]]

other similar business relationship having officials who were officials 
of an organization having such a record or is composed in whole or in 
part by merger, succession, consolidation, association or assimilation, 
of entities with such a record; or
    (iii) Whose total acquisition of farmers stock peanuts during the 
preceding marketing year from purchases of contract additional peanuts 
exceeded, by more than 3.0 percent, the pounds on which the letter of 
credit for the preceding marketing year was based. Nothing in this part 
shall prohibit CCC from demanding an increase in the letter of credit 
for the current year in the event the handler has significantly 
underestimated the handler's purchases for the current year.
    (2) The increase in the letter of credit shall be determined in 
accordance with the guidelines set forth in paragraph (c) of this 
section.
    (c) Guidelines for increasing letters of credit--(1) Increased 
letter of credit due to history of program violation. If the handler 
and/or related entity was assessed penalties for program violations for 
any of the previous three crop years, the percentage of the pounds of 
contracted peanuts to which the increase specified in paragraph (b) of 
this section shall be applied, shall be increased by 6 percent for each 
year of the three-year period in which such a penalty was assessed, 
except that:
    (i) Such increase for a particular crop year shall be 3 percent 
rather than 6 percent if, for all violations for that crop year:
    (A) The penalties were reduced by the Executive Vice President, CCC, 
and paid; or
    (B) Less than 120 days, or such further period as established by the 
Executive Vice President, have passed since the penalty assessment was 
made by the CCC Contracting Officer.
    (ii) Previous penalty assessments, other than assessments for 
violations that involve the importation of additional peanuts, or the 
failure to properly dispose of additional peanuts, which have been paid 
shall not be considered as part of the violation history for any crop 
year if the total violations for such crop year by the handler, and 
related individuals or entities, involved less than 100,000 pounds of 
peanuts.
    (2) Waiver of increase. Notwithstanding (c)(1) of this section, at 
the discretion of the Executive Vice President, CCC, the increase 
required under this section may be waived upon the presentment of 
adequate security as determined acceptable by the Executive Vice 
President, CCC.
    (3) Inaccurate certification of additional peanuts acquired. In 
addition to the increase required by paragraph (c)(1) of this section, 
if the actual purchase of contract additional peanuts for the previous 
marketing year exceeds, by more than 3.0 percent, the poundage on which 
the previous marketing year's letter of credit was based, the pounds 
determined in accordance with paragraphs (a)(2) (i) and (ii) of this 
section shall be increased by an amount equal to 3 times the amount of 
such excess.
    (4) Basis for determining letter of credit amount. Any letter of 
credit determination under this section shall be based upon the facts as 
they exist on June 1 of the calendar year in which the letter of credit 
is to be supplied.
    (5) Unpaid interest. References to unpaid penalties in this section 
shall include associated unpaid interest and unpaid late payment 
charges.
    (d) Extension of time for filing letter of credit. Notwithstanding 
any other provision of this section, upon a request from a handler, the 
Executive Vice President, CCC, may extend the time for filing of a 
required letter of credit if such an extension is considered necessary 
in order for the handler to have sufficient time to acquire necessary 
financing.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.404  Transfer of contracts prior to delivery.

    An approved contract, by which a handler is to purchase additional 
peanuts from a producer, may not be sold, traded, or assigned except as 
provided in this section.
    (a) Contract transfer and delivery of contracted peanuts to other 
handlers. (1) If a handler is otherwise unable to perform under any 
contract with a producer for the purchase of additional peanuts due to 
conditions beyond the

[[Page 483]]

handler's control, the handler and the producer may agree to the 
delivery of the peanuts to another handler under the terms of the 
original contract or under modified terms except that, the price, 
quantity, type, segregation or farm number as shown on the original 
contract may not be changed. Conditions considered beyond the handler's 
control may include, but are not limited to, insolvency, bankruptcy, 
death, or destruction of warehouse facilities.
    (2) A contract for additional peanuts shall not be transferred to 
another handler without the prior written approval of the Deputy 
Administrator. Such transfer shall be approved by the Deputy 
Administrator only if the Deputy Administrator determines that such 
transfer will not impair the effective operation of the peanut program.
    (3) If the receiving handler:
    (i) Has an existing letter of credit, such handler may increase the 
existing letter of credit to cover the total amount of farmers stock 
peanuts that is to be transferred. However, any increase must be made 
within 14 days after the transfer is approved, otherwise any increased 
letter of credit will not be considered for purposes of determining 
whether an increase will be required in the next year's letter of credit 
because of a deficiency in the letter of credit.
    (ii) Does not have an existing letter of credit, the transfer shall 
not be approved unless such handler secures an acceptable letter of 
credit to cover the amount of farmers stock peanuts that is to be 
transferred.
    (b) Contract transfer and transfer of delivery obligations to other 
producers. If a producer is unable to fully perform the terms of a 
contract with a handler for the purchase of additional peanuts due to 
conditions beyond the producer's control or other conditions as may be 
prescribed by CCC, the handler and the producer or the producer's 
successor-in-interest may agree to a modification of the contract or to 
the substitution of another producer either under the original terms of 
the contract or under modified terms that do not change the original 
contract price and quantity. Conditions considered to be beyond the 
producer's control may include, but are not limited to, farm 
reconstitution in some cases (combinations and divisions), insolvency, 
bankruptcy, or death but do not include failure to produce the 
contracted amount from the planted acreage of peanuts due to natural 
disaster or related conditions or failure to plant sufficient acreage to 
produce the contracted quantity. Such modifications or transfers of 
contract obligations shall not be valid without the prior written 
approval of the Deputy Administrator. A transfer shall be approved only 
if the Deputy Administrator determines that such modifications or such 
transfer will not impair the effective operation of the peanut program.
    (c) County committee approval. Contract modifications other than 
changes in producer, owner or operator, or changes permitted by this 
section, may not be approved by the county committee.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.405  Inspection of contract additional peanuts.

    The type and quality of each lot of contract additional peanuts 
delivered under contract shall be determined by the Federal-State 
Inspection Service when such peanuts are delivered by a producer. To be 
valid, the inspection results shall be recorded on form ASCS-1007 and 
signed by the inspector.



Sec. 1446.406  Commingled storage of contract additional peanuts.

    (a) Commingled storage. A handler may commingle quota loan, quota 
commercial, additional loan, and contract additional peanuts during 
storage. In such case the peanuts must be inspected on a farmers stock 
basis before such peanuts are placed in storage.
    (b) Accounting for commingled peanuts. Contract additional peanuts 
in commingled storage shall be accounted for on a:
    (1) Dollar value basis under physical supervision.
    (2) TKC basis under nonphysical supervision.

[[Page 484]]



Sec. 1446.407  Handler transfer of contract additional peanuts or transfer of disposition credit.

    (a) Liability and credit for export or crushing. Except as permitted 
by this section, a handler shall not:
    (1) Sell, assign or otherwise transfer liability for exporting or 
crushing contract additional peanuts to other handlers, or
    (2) Sell, assign, or otherwise transfer credits for exporting or 
crushing contract additional peanuts to other handlers.
    (b) Transfer of farmers stock contract additional peanuts. (1) A 
one-time transfer of farmers stock contract additional peanuts may be 
made between the entity shown as applicant 1 and the entity shown as 
applicant 2 on the form ASCS-1007 for the peanuts.
    (2) Such transfers shall be made within the same marketing area 
unless approved otherwise by the marketing association or the Deputy 
Administrator, and in accordance with instructions issued by CCC.
    (3) Before the transfer may be approved, the receiving handler's 
letter of credit shall be amended by an amount that will cover the 
amount of peanuts transferred and the transferring handler must submit 
to the marketing association for approval, a form CCC-1006, covering any 
proposed transfer of farmers stock peanuts.
    (4) Such approval must be obtained before any physical movement of 
the peanuts from the buying point.
    (5) The transfer of peanuts as farmers stock peanuts after sale by 
the producer shall not be permitted unless approved in writing by CCC or 
the marketing association.
    (c) Transfer of peanuts for processing into products. (1) Handlers 
may transfer contract additional peanuts and the liability for the 
export of contract additional peanuts to a processor of peanut products 
either as:
    (i) Milled peanuts; or
    (ii) Farmers stock peanuts under the provisions of paragraph (b) of 
this section.
    (2) Such transfer shall be made in accordance with the provisions of 
this part.
    (d) Transfer of export credit for peanuts which have been exported. 
Credit for peanuts that have been exported under the provisions of this 
part will be given to the applicant shown on the form FV-184-9 for the 
lot of peanuts that has been exported. However, if a disclaimer to the 
credit for export is submitted with the applicable form FV-184-9, the 
export credit will be transferred to the person to whom the credit was 
assigned.
    (e) Transfer of credit for crushing. Disposition credit earned for 
peanuts crushed in accordance with the provisions of this part and under 
the supervision of the marketing association may be assigned to another 
person if a disclaimer to the credit for crushing is submitted with the 
applicable form FV-184-9.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.408  Decreasing or drawing upon a letter of credit.

    (a) Decreasing the letter of credit to reflect TKC obligation. Any 
existing irrevocable letter of credit that has been presented by a 
handler may be decreased after January 31 of the calendar year following 
the year in which the peanuts were produced, or such earlier date as may 
be authorized by the Deputy Administrator, State and County Operations, 
if the final TKC obligation determined for such handler, when converted 
to a farmers stock peanuts basis by dividing the TKC pounds by 0.795 for 
runner peanuts; 0.75 for Spanish peanuts; 0.735 for Virginia peanuts; or 
0.77 for Valencia peanuts, is less than the amount that would be 
applicable for such handler and for such amount of farmers stock peanuts 
as determined in accordance with Sec. 1446.403 of this part. The letter 
of credit may be decreased to the amount so determined.
    (b) Adjusting the letter of credit for acceptable proof of 
disposition. The handler shall deliver to the marketing association 
satisfactory evidence as described in this part, to verify that contract 
additional peanuts have been exported or otherwise disposed of in 
accordance with the provisions of this part. On January 31, of the 
calendar year following the year in which the peanuts were produced, and 
monthly thereafter of

[[Page 485]]

such following year, the marketing association shall permit a reduction 
of the letter of credit if the existing letter of credit exceeds 140 
percent of the national average quota price support rate for the 
applicable crop times the farmers stock equivalent of the remaining TKC 
obligation as determined in the same manner as provided in paragraph (a) 
of this section.
    (c) Drawing against the letter of credit. (1) If less than 16 days 
remain before the expiration of a handler's letter of credit, and upon 
authorization by CCC, the marketing association may draw against the 
letter of credit and apply the amount toward any penalty due for failure 
to properly dispose of, or account for, contract additional peanuts in 
accordance with this part if:
    (i) By the final disposition date required in this part, a 
deficiency remained in the handler's obligation to crush or export 
contract additional peanuts;
    (ii) By the date required in this part, the handler did not provide 
satisfactory documentary evidence of the full export of peanuts or 
peanut products; or
    (iii) The handler has committed another violation of this part with 
respect to such peanuts.
    (2) Any draw down against a letter of credit shall not compromise 
any penalty due CCC if the letter of credit is insufficient to cover the 
full amount of the penalty or prevent any re-determination of whether 
there has been a proper disposition of and/or accounting for peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.409  Access to facilities.

    A handler, by entering into contracts to receive contract additional 
peanuts, or any person or firm otherwise receiving contract additional 
peanuts, shall be considered to have agreed that any authorized 
representative of CCC or the marketing association:
    (a) May enter and remain upon any of the premises of the handler 
when such peanuts are being received, shelled, cleaned, bagged, sealed, 
weighed, graded, stored, milled, blanched, crushed, packaged, shipped, 
sized, processed into products, or otherwise handled;
    (b) May inspect such peanuts and the oil, meal, and other products 
thereof; and
    (c) May inspect the premises, facilities, operations, books, and 
records of the handler to the extent necessary to determine that such 
peanuts have been handled in accordance with this part.



Sec. 1446.410  Disposition date.

    (a) Final disposition date. To avoid a penalty as provided in this 
part, a handler shall dispose of all contract additional peanuts, in 
accordance with the provisions in this part, by the final disposition 
date. Except as provided in paragraph (b) of this section, the final 
disposition date shall be October 15 of the year following the calendar 
year in which the crop was grown.
    (b) Extension of final disposition date. The final disposition date 
for an individual handler may be extended by the marketing association 
to November 30 of the year following the calendar year in which the crop 
was grown if, by the final disposition date identified in paragraph (a) 
of this section, the handler files a written request with the marketing 
association that specifies the number of pounds for which an extension 
is requested.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991; 
57 FR 27145, June 18, 1992; 61 FR 37625, July 18, 1996]



Sec. 1446.411  Export provisions.

    (a) Export to a U.S. Government agency. Except for the exportation 
of raw peanuts to the military exchange services of the United States 
for processing outside the United States, the export of peanuts in any 
form by or to a United States Government agency shall not be considered 
as export to an eligible country, but shall instead be considered a 
domestic edible use of such peanuts. However, sales to a foreign 
government which are financed with funds made available by a United 
States agency, such as the Agency for International Development or CCC, 
will not be considered sales to a United States Government agency if the 
peanuts are not purchased by the foreign buyer for transfer to an agency 
of the United States.
    (b) Export to an eligible country. All contract additional peanuts 
which are

[[Page 486]]

not crushed domestically (including approved processing into flakes) and 
which are eligible for export shall be exported in accordance with the 
provisions of this part to an eligible country as peanuts or peanut 
products.



Sec. 1446.412  Evidence of export.

    To receive credit toward an obligation to dispose of contract 
additional peanuts in accordance with this part, the handler must:
    (a) Certified statement. Provide a statement signed by the handler 
specifying the name and address of the consignee and certifying that the 
peanuts have been exported.
    (b) Documentation. Not later than 45 days after the final 
disposition date provided in this part, or a later date established by 
the Director, TPD, for cases where the Director finds that the handler 
has made a good faith effort to furnish documentation in a timely manner 
and that the failure to do so was due to conditions beyond the control 
of the handler, furnish to the marketing association or CCC the 
following documentary evidence of the export of peanuts or peanut 
products:
    (1) Export by water. For peanuts or peanut products and peanut 
products that were exported by water, a nonnegotiable original or 
original duplicate copy (not a machine made copy) of an on-board ocean 
bill of lading. Such bill of lading must have been signed on behalf of 
the carrier and must include:
    (i) The date and place of loading such peanuts on-board the vessel;
    (ii) The weight of the peanuts, peanut meal, or products exported;
    (iii) The name of vessel;
    (iv) The name and address of the U.S. exporter;
    (v) The name and address for the foreign buyer;
    (vi) The country of destination; and
    (vii) For peanut meal which is unsuitable for use as feed because of 
contamination by aflatoxin, the statement required on the bill of lading 
in accordance with this part.
    (2) Export by rail or truck. For peanuts and peanut products that 
were exported by rail or truck:
    (i) A copy of the bill of lading that must include the weight of the 
peanuts or peanut meal or products exported, and for peanut meal that is 
unsuitable for feed use because of contamination by aflatoxin, the 
statement required on the bill of lading in accordance with this part; 
and
    (ii) A copy of the Shipper's Export Declaration or, in the 
alternative, a U.S., Canadian or Mexican Customs' document which shows 
entry into the country; or
    (iii) Other documentation that is acceptable to the marketing 
association.
    (3) Export by air. For peanuts and peanut products that were 
exported by air:
    (i) A copy of the airway bill that must include:
    (A) The weight of the peanuts, peanut meal, or peanut products 
exported;
    (B) The consignee and shipper; and
    (C) For peanut meal that is unsuitable for feed use because of 
contamination by aflatoxin, the statement required on the airway bill in 
accordance with this part: or
    (ii) Other documentation that is acceptable to the marketing 
association.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.413  Disposal of meal contaminated by aflatoxin.

    All meal produced from peanuts which are crushed domestically and 
found to be unsuitable for use as feed because of contamination by 
aflatoxin shall be disposed of for non-feed purposes only. If the meal 
is exported, the export bill of lading shall reflect the analysis of the 
lot by inclusion and appropriate completion thereon the following 
statement showing the range and average aflatoxin content (where 
``______'' represents the determined values for such lot) as parts per 
billion (PPB):

    ``This shipment consists of lots of meal which contain aflatoxin 
ranging from ``______'' to ``______'' PPB and averaging ``______'' 
PPB.''



Sec. 1446.414  Processing additional peanuts into products.

    (a) Type of supervision. A person, who plans to acquire additional 
peanuts from other handlers for processing into products for export, 
must register as a handler and choose a method of supervision in 
accordance with this section.

[[Page 487]]

    (b) Physical supervision. For purposes of this section, if physical 
supervision is chosen:
    (1) Such supervision shall be conducted in accordance with 
provisions of this part; and
    (2) The processor must provide a letter of credit to the marketing 
association as prescribed by this part which shall, to the extent 
practicable, be the same amount as the letter of credit that would be 
required in accordance with this part for an equal quantity of peanuts 
acquired by a handler who has entered into contracts for the purchase of 
additional peanuts and has chosen physical supervision.
    (c) Nonphysical supervision. For purposes of this section, if 
nonphysical supervision is chosen:
    (1) The processor shall:
    (i) Provide a written agreement that is signed by a duly authorized 
person, in which the processor agrees to export additional peanuts to an 
eligible country in such quantities and in accordance with such 
procedures as are specified by this part;
    (ii) Provide a letter of credit to the marketing association which 
shall, to the extent practicable, be the same amount as the letter of 
credit that would be required in accordance with this part for an equal 
quantity of peanuts acquired by a handler who has entered into contracts 
for the purchase of additional peanuts and has chosen nonphysical 
supervision; and
    (iii) Provide to the marketing association a description of the type 
of product that will be processed, the type of containers, size of 
containers, and the standard peanut processing yield for the product.
    (2) The processor shall submit proof of export to the marketing 
association of like kind, as determined by the marketing association, as 
that required by this part for exports of peanuts under nonphysical 
supervision.
    (3) Upon verification of product yield by the marketing association, 
approval of the form CCC-1006, and approval of the letter of credit, a 
product export obligation will be established on marketing association 
ledgers and the processor will be notified of the quantity of product 
export obligation.
    (4) Upon receipt of proof of export that is acceptable to the 
marketing association, the processor, with the concurrence of the 
marketing association, may reduce the letter of credit to the extent 
that such letter of credit exceeds the amount determined by the 
marketing association, in accordance with instructions issued by FSA, to 
be necessary to assure compliance by the processor with the provisions 
in this part.
    (d) Applicability of regulations. By registering as a handler and 
selecting a method of supervision in accordance with this section, a 
processor of peanuts shall be considered to have agreed:
    (1) To perform in accordance with the provisions of this part;
    (2) That the provisions of this part such as access to facilities, 
fraud, liens against peanuts on which penalty is due, and any other 
provisions that apply to a handler of additional peanuts, shall apply to 
the processor; and
    (3) That the processor shall be considered as a handler for purposes 
of applying the penalty provisions of this part.
    (e) Records. A peanut processor shall maintain records that will 
enable the marketing association or other representative of the 
Secretary to determine compliance with the provisions of this section.



Sec. 1446.415  Prohibition on importation or reentry of contract additional peanuts.

    Neither exported contract additional peanuts nor peanut products 
made from additional peanuts shall be imported or reentered in 
commercial quantities by anyone into the United States in any form. If 
contract additional peanuts or peanut products made from such peanuts 
are imported or reentered into the United States, the handler importing 
such peanuts or peanut products shall be liable for a penalty assessed 
in accordance with this part, for reentering contract additional 
peanuts.



Sec. 1446.416  Suspension of restrictions on imported peanuts.

    Notwithstanding any other provision of this part, if the President 
issues a

[[Page 488]]

proclamation under section 22 of the Agricultural Adjustment Act of 
1933, as amended, temporarily suspending restrictions on the importation 
of peanuts, a handler, with the written consent of the producer and CCC, 
may purchase additional peanuts from any producer who, in accordance 
with this part, contracted with the handler to deliver additional 
peanuts to such handler and may use such peanuts for sale for domestic 
edible use without incurring any marketing penalty for failure to crush 
or export such peanuts. However, the maximum quantity of peanuts that 
may be purchased by such handler in accordance with this provision of 
this section is the quantity of contract additional peanuts that remains 
undelivered by such producer under the contract. For purposes of 
application of this section, a proclamation temporarily increasing the 
import quota shall not be considered the same as a temporary suspension 
of restrictions on the importation of peanuts.



Sec. 1446.417  Loss of peanuts.

    Should a handler suffer a loss of peanuts as a result of fire, flood 
or any other condition beyond the control of the handler, the portion of 
such loss that may be attributed to contract additional peanuts, as 
determined by the marketing association shall not be greater than an 
amount determined by dividing the total of the contract additional 
peanuts acquired by the handler during the year by such handler's total 
peanut purchases for the year and multiplying the result by the quantity 
for which acceptable proof of loss has been furnished to the marketing 
association. Such attribution shall take into account any dispositions 
of peanuts that occurred prior to the loss of the peanuts for which the 
attribution is made.



  Subpart E--Handling Contract Additional Peanuts-Physical Supervision



Sec. 1446.501  Accounting for contract additional peanuts acquired under physical supervision.

    (a) Commingled storage--(1) General. For a handler operating under 
physical supervision, contract additional peanuts placed in commingled 
storage must be accounted for on a dollar value basis less a one time 
adjustment for shrinkage for each crop.
    (2) Shrinkage. For peanuts that are graded out and accounted for:
    (i) Before February 1 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 3.5 percent for Virginia-type peanuts; and
    (B) 3.0 percent for all other peanuts.
    (ii) After January 31 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 4.0 percent for Virginia-type peanuts; and
    (B) 3.5 percent for all other peanuts.
    (3) Records. The handler shall maintain a copy of each form ASCS-
1007 that was issued for any peanuts that are placed in commingled 
storage and that is issued for any peanuts removed from storage.
    (b) Supervised identity preserved storage. For a handler operating 
under physical supervision, contract additional peanuts may be stored 
identity preserved and may be accounted for by disposing of the entire 
contents of the peanuts in each identity preserved warehouse in 
accordance with this part and under the supervision of a representative 
of the marketing association. In such case:
    (1) All peanuts that are loaded into each warehouse must be 
inspected as farmers stock peanuts and must be loaded under the 
supervision of the marketing association.
    (2) At the end of each day in which peanuts are placed in or removed 
from the warehouse, the warehouse must be sealed by a representative of 
the marketing association.
    (3) Each warehouse seal may be removed only by a representative of 
the marketing association.
    (4) The marketing association shall be reimbursed by the handler for 
all expenses of providing a representative to supervise the loading and 
unloading of each warehouse.
    (c) Nonsupervised identity preserved storage--(1) Conditions. For a 
handler operating under physical supervision, contract additional 
peanuts may be stored identity preserved without supervision at the time 
of loading the

[[Page 489]]

peanuts into each warehouse, but only if:
    (i) All peanuts that are loaded into a warehouse are inspected prior 
to loading into such warehouse and a form ASCS-1007 prepared for each 
lot that is inspected;
    (ii) The entire contents of each warehouse will be removed and 
disposed of in accordance with this part and under supervision of a 
representative of the marketing association; and
    (iii) The peanuts are accounted for on a dollar value basis except 
that shrinkage, in the amounts provided for in paragraph (c)(2) of this 
section, will be allowed if the dollar value of the peanuts that are 
loaded out of each warehouse is less than the dollar value of the 
peanuts that were loaded into such warehouse.
    (2) Shrinkage. For peanuts that are graded out and accounted for:
    (i) Before February 1 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 3.5 percent for Virginia-type peanuts; and
    (B) 3.0 percent for all other peanuts.
    (ii) After January 31 of the applicable marketing year, the 
adjustment of the dollar value for shrinkage shall be:
    (A) 4.0 percent for Virginia-type peanuts; and
    (B) 3.5 percent for all other peanuts.
    (3) Records. The handler shall maintain a copy of each form ASCS-
1007 that is issued for any peanuts that are placed in nonsupervised 
identity preserved storage and that is issued for any peanuts that are 
removed from such storage.



Sec. 1446.502  Physical supervision of contract additional peanuts.

    (a) Supervision. A handler who has chosen to operate under physical 
supervision shall make arrangements that are satisfactory to the 
marketing association for representatives of the marketing association 
to conduct onsite supervision of domestic handling of contract 
additional peanuts including storing, shelling, crushing, cleaning, 
milling, blanching, weighing, and shipping.
    (b) Final dates for scheduling supervision. Contract additional 
farmers stock peanuts shall be scheduled for supervision by the 
marketing association during the normal marketing period but not later 
than August 15 of the calendar year following the year in which the crop 
was grown, unless prior approval of a later date has been made by the 
marketing association.
    (c) Notifying the marketing association. Before moving or processing 
any contract additional peanuts, the handler or an agent of the handler 
shall notify the marketing association of the time such operation will 
begin and the approximate period of time required to complete the 
operation. When a plant is not currently under supervision, the handler 
shall give at least five working days of advance notice to the marketing 
association so that supervision can be arranged.
    (d) Processing. The identical peanuts identified at time of load-out 
as contract additional peanuts shall be shelled or otherwise milled, 
crushed, or shelled and crushed under supervision of the marketing 
association as a continuous operation separate from other peanuts. 
Shelled peanuts shall be identified with positive lot identity tags 
before being stored and moved for crushing, exportation, or processing 
into peanut products to be exported. Except as otherwise authorized by 
the marketing association, such peanuts will be considered as having 
been crushed or exported only if positive lot identity has been 
maintained in the following manner:
    (1) Transportation. The peanuts shall be transported from storage 
locations in a covered vehicle such as a truck or railroad car. The 
vehicle shall be sealed unless the marketing association determines that 
identity of the peanuts can be maintained without sealing.
    (2) Storage. Farmers stock peanuts shall be stored in a separate 
building(s) or bin(s) which can be sealed or which the marketing 
association otherwise determines will satisfactorily maintain lot 
identity. Milled peanuts shall be stored in such a manner that the 
marketing association, under procedures issued by CCC, may make periodic 
inventory verification of the contract additional lots that are shown on 
marketing association records as being in the storage facility. The 
handler shall

[[Page 490]]

furnish to the marketing association the name and location of the 
storage facilities in which the contract additional peanuts are located.



Sec. 1446.503  Disposition requirements under physical supervision.

    (a) Methods of disposition. Except under the provisions of 
Sec. 1446.504 of this part applicable to substitution, the identical 
contract additional farmers stock peanuts and milled peanuts that are 
shelled under supervision of the marketing association and formed into 
lots shall be disposed of, in accordance with the provisions of this 
part that are applicable to contract additional peanuts and to physical 
supervision, by domestic crushing or by export to an eligible country as 
follows:
    (1) All kernels may be crushed domestically under supervision of the 
marketing association representative; or
    (2) All kernels may be exported for crushing, if fragmented; or
    (3) All kernels that meet the standards established for the domestic 
market under the Marketing Agreement No.146 may be exported and the 
remaining kernels crushed domestically under supervision of the 
marketing association representative; or
    (4) All of the peanuts may be exported as farmers stock peanuts, 
provided that such peanuts meet the standards established for the 
domestic market under the Marketing Agreement No. 146 and are positive 
lot identified; or
    (5) The peanuts may be exported to an eligible country as peanut 
products if such products are produced domestically; or
    (6) The peanuts may be exported as milled or in-shell peanuts if 
they meet the edible export standards established for the domestic 
market under the Marketing Agreement No. 146; or
    (7) The peanuts may be considered exported or crushed if it is 
determined by CCC that such peanuts have been destroyed or otherwise 
made unsuitable for any commercial purpose.
    (b) Peanuts diverted. Contract additional peanuts, or peanut 
products made from contract additional peanuts, that are diverted to any 
country other than an eligible country shall not be credited in the 
handler's favor against the handler's obligation to crush or export such 
peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.504  Substitution of quota and additional peanuts.

    (a) Substitution of quota peanuts which have been exported--(1) 
Farmers stock peanuts. With prior notification to and approval of the 
marketing association, farmers stock quota peanuts that have been 
exported from the same crop, type, quality, and area may be substituted 
for additional peanuts that otherwise would have to be exported in 
accordance with this part to avoid a penalty.
    (2) Milled peanuts. With prior notification to and approval by the 
marketing association, peanuts that are milled under supervision of the 
marketing association may be used to replace, in domestic edible use, 
quota peanuts that have been exported to an eligible country from the 
same crop, type, area, and of the same grade as recognized by the Peanut 
Administrative Committee (PAC) for edible quality grades. Such grades 
shall be established at the time the peanuts are milled and the lot is 
formed unless CCC directs otherwise in writing. The quota peanuts that 
are exported, for which substitution is requested, must have been 
positive lot identified and otherwise handled as additional peanuts 
under the supervision of the marketing association.
    (b) Use of additional peanuts for domestic edible uses prior to 
substitution--(1) General requirements. Additional peanuts may be used 
for domestic edible use with prior notification and approval of the 
marketing association and upon presentation to the marketing association 
of an irrevocable letter of credit in an amount that is determined in 
the same manner as such handler's initial letter of credit for the 
quantity of peanuts that will be substituted. Such letter of credit is 
in addition to the letter of credit required in accordance this part as 
a condition for approval of contracts for additional peanuts. Such 
additional letter of credit for substitution shall be issued in a

[[Page 491]]

form and by a bank which is acceptable to CCC.
    (2) Submitting evidence of export. The handler subsequently shall 
dispose of a like amount of quota peanuts in the manner prescribed in 
this part for contract additional peanuts. If the quota peanuts are 
exported, the handler shall subsequently deliver to the marketing 
association satisfactory evidence that a like amount of quota peanuts of 
the same type and of a similar grade has been exported. Such evidence 
must be submitted no later than the earlier of:
    (i) 30 days after the final date for export as established in 
accordance with this part; or
    (ii) 15 days prior to the expiration of the letter of credit.
    (3) Failure to timely submit evidence of export. If satisfactory 
evidence is not presented by such date determined in (b)(2) of this 
section, CCC may authorize the marketing association to draw against the 
letter of credit for the full amount of the penalty which would 
otherwise be due for failure to dispose of contract additional peanuts 
in accordance with this part.



Subpart F--Handling Contract Additional Peanuts--Nonphysical Supervision



Sec. 1446.601  Disposition requirements under nonphysical supervision.

    (a) Disposition requirement. With respect to any marketing year, a 
handler who has selected nonphysical supervision shall account for the 
disposition of any contract additional peanuts acquired by such handler 
by providing evidence that is satisfactory to the marketing association 
of the quantity of peanuts by peanut type that are crushed or exported 
by such handler in each of the following kernel categories:
    (1) SS kernels;
    (2) SMK's; and
    (3) AO kernels.
    (b) SS kernels. (1) For each lot of contract additional peanuts 
acquired by such handler for which a deduction would have been 
applicable for SS kernels under the applicable price support loan 
schedule, deduct, from the percentage of SS kernels in such lot of 
peanuts, a number of percentage points equal to the maximum percentage 
of SS kernels that a lot of peanuts could contain without having a 
deduction for SS kernels under the applicable price support loan 
schedule and multiply the result by the total weight of the TKC content 
of the lot, excluding the weight of the LSK's in such lot.
    (2) Determine separately, for each type of peanuts acquired by such 
handler, the total of the results obtained in paragraph (b)(1) of this 
section for all lots of contract additional peanuts acquired by such 
handler.
    (3) For each type of peanuts acquired by such handler, multiply the 
result determined in paragraph (b)(2) of this section by 0.955 in order 
to provide an allowance for shrinkage. The result is the minimum 
quantity of SS kernels of peanuts of the respective type that shall be 
crushed or exported by such handler.
    (c) SMK and SS kernels. (1) Determine, by type, the total of the 
quantity of SMK and SS kernels in the lots of contract additional 
peanuts acquired during the marketing year by such handler.
    (2) From the total determined in paragraph (c)(1) of this section, 
deduct the amount determined in paragraph (b)(2) of this section.
    (3) For each type of peanuts acquired by such handler, multiply the 
results obtained in (c)(2) of this section by 0.955. The result is the 
minimum combined quantity of SMK's and SS kernels (excluding the 
quantity of SS kernels required to be crushed or exported as determined 
in paragraph (b)(3) of this section) of the respective type that shall 
be exported or crushed by such handler.
    (d) AO kernels. (1) Determine, by type, the total quantity of TKC in 
the lots of contract additional peanuts acquired during the marketing 
year by such handler.
    (2) From the total determined in paragraph (d)(1) of this section, 
deduct:
    (i) The amount of SS kernels determining in paragraph (b)(2) of this 
section; and
    (ii) The combined SMK's and SS kernels determined in paragraph 
(c)(2) of this section.
    (3) Multiply the result determined in paragraph (d)(2) of this 
section by 0.955.

[[Page 492]]

The result is the total of the AO kernels of the respective type that 
shall be exported or crushed by such handler.
    (e) Substitution prohibited. Disposition credit shall not be 
granted:
    (1) To the obligation to export or crush SS kernels and SMK for any 
amount of AO kernels that may have been exported or crushed in excess of 
the quantity required in accordance with paragraph (d)(3) of this 
section.
    (2) To the obligation to export or crush AO kernels for any amount 
of SS kernels and SMK's that may have been exported or crushed in excess 
of the quantity required in accordance with paragraph (c)(3) of this 
section.
    (3) To the obligation to export or crush peanuts of a type, for a 
surplus amount of contract additional peanuts exported or crushed from 
another type.
    (f) Peanuts diverted. Contract additional peanuts or peanut products 
made from contract additional peanuts diverted to any country other than 
eligible country shall not be credited in the handler's favor against 
the handler's obligation to crush or export such peanuts.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.602  Disposition credit for peanuts under nonphysical supervision.

    (a) Disposition credits. Contract additional peanuts of the same 
crop year and of like type shall be disposed of in accordance with the 
provisions of this part. Disposition shall be by domestic crushing or by 
export to an eligible country. Disposition credit shall, subject to the 
provisions of this part, be granted for:
    (1) Kernels that are crushed domestically under physical supervision 
of the marketing association representative; or
    (2) Kernels that are exported for crushing, if fragmented before 
being exported; or
    (3) Exported kernels that meet PAC outgoing quality standards for 
domestic edible use; or
    (4) Peanuts that are exported as farmers stock peanuts, provided 
that such peanuts meet PAC incoming quality standards for Segregation 1 
peanuts and are positive lot identified; or
    (5) Peanuts that are exported to an eligible country as peanut 
products if such products are produced domestically in accordance with 
provisions of this part; or
    (6) Peanuts that are exported as milled or in-shell peanuts if they 
meet PAC outgoing quality standards for domestic edible peanuts; or
    (7) Peanuts that are exported as blanched peanuts; or
    (8) Peanuts that are determined by the marketing association as 
having been destroyed or otherwise made unsuitable for any commercial 
purpose. In such case the peanuts shall be considered as crushed.
    (b) Requesting physical supervision of crushing for disposition 
credit. Prior to the disposition date for contract additional peanuts, 
as provided in this part, a handler operating under the provisions of 
this part with respect to nonphysical supervision may request and 
arrange for the marketing association to supervise the crushing of SMK, 
SS and AO peanuts for disposition credit for the applicable kernel type 
by obtaining physical supervision of the peanuts under the following 
conditions:
    (1) Milled peanuts. A request to change to physical supervision for 
crushing milled peanuts for SMK, SS or AO credit may be made at any time 
prior to the final disposition date for additional peanuts for the 
relevant crop year. Physical supervision of milled peanuts shall be 
provided under the provisions of this part applicable to physical 
supervision of milled peanuts. The marketing association may require 
that positive identified lots be regraded before crushing.
    (2) Farmers stock peanuts. A request to change to physical 
supervision for crushing farmers stock peanuts must be made and approved 
prior to the peanuts being graded out of commingled storage. In order to 
determine the categories, by peanut type, for the kernels that are 
crushed, namely SS, SMK and AO kernels, physical supervision must begin 
at the gradeout from commingled storage and continue through the 
crushing of the peanuts as required in accordance with this part for a 
handler who chooses physical supervision for disposition of contract 
additional farmers stock peanuts.

[[Page 493]]

    (c) Determining disposition credit. Disposition credit for SMK, SS 
and AO kernels crushed under physical supervision shall be determined 
for farmers stock peanuts from the applicable form ASCS-1007, and for 
milled peanuts from the applicable form FV-184-9.
    (d) Application of crushing credits to disposition obligation--(1) 
Milled peanuts. Milled peanuts that are crushed under physical 
supervision for disposition credit may receive credit as follows:
    (i) If such peanuts meet PAC outgoing quality standards for domestic 
edible peanuts, disposition credit may apply pound-for-pound toward 
meeting the respective SMK, SS, or AO kernel obligations for the 
respective like peanut type and for like kernel type.
    (ii) If such peanuts fail to meet PAC outgoing quality standards for 
domestic edible use due to aflatoxin contamination, disposition credit 
may apply to the SMK, SS or AO kernel obligations for the respective 
like peanut type and for like kernel type; except that, the percentage 
of such peanuts to which such credit will be allowed for each peanut 
type and kernel type shall not exceed the percentage of the total 
quantity of the respective type of peanuts that was purchased by the 
handler for the marketing year as contract additional peanuts.
    (iii) If such peanuts fail to meet PAC outgoing quality standards 
for reasons other than aflatoxin contamination, disposition credit must 
be applied exclusively as AO kernels.
    (2) Farmers stock peanuts. Farmers stock peanuts that are crushed 
under physical supervision for disposition credit may receive credit as 
follows:
    (i) If such peanuts meet PAC incoming quality standards for 
Segregation 1 peanuts, disposition credit may apply pound-for-pound 
toward meeting the respective SMK, SS, or AO kernel obligations for the 
respective like peanut type and for like kernel type.
    (ii) If such peanuts fail to meet PAC incoming quality standards for 
Segregation 1 peanuts, disposition credit may apply to the SMK, SS or AO 
kernel obligations for the respective like peanut type and for like 
kernel type; except that, the percentage of such peanuts to which such 
credit will be allowed for each peanut type and kernel type shall not 
exceed the percentage of the total quantity of the respective type of 
peanuts that was purchased by the handler for the marketing year as 
contract additional peanuts.
    (iii) If such peanuts do not meet PAC incoming quality standards for 
Segregation 1 peanuts for any reason other than the presence of A. 
flavus mold, disposition credit must be applied exclusively as AO 
kernels.
    (3) Adjusting export credit for average dollar value of farmers 
stock peanuts. If CCC determines that the average dollar value of edible 
farmers stock peanuts graded out of commingled storage and crushed for 
export credit under the provisions of this section is less than the 
average dollar value of all like type peanuts purchased by the handler 
as contract additional peanuts, the amount of export credit for each 
kernel type determined under paragraph (b)(2) of this section shall be 
adjusted by multiplying each quantity for each kernel type by a factor 
to be determined by dividing:
    (i) The average dollar value per ton of peanuts graded out of the 
handler's commingled storage, accounted for as set forth in this part, 
and crushed for export credit under the provisions of this section; by
    (ii) The average dollar value per ton of all peanuts purchased by 
the handler as contract additional peanuts.
    (e) Blanching exception. Notwithstanding any other provision of this 
part, a handler may receive credit for the pre-blanching weight of SS 
and SMK peanuts that are blanched for export if both the blanching and 
the crushing of the residue are conducted under supervision of agents of 
CCC or the marketing association. The maximum credit that may be 
received shall be:
    (1) The quantity of SMK and SS kernels as shown on the FV-184-9 that 
is submitted for proof of export for such blanched peanuts;
    (2) The quantity of the residue that is crushed under physical 
supervision; and
    (3) The pre-blanched or ``redskin'' weight less the quantities in 
paragraphs (e)(1) and (2) of this section, to the extent of such amount 
that the marketing association determines is

[[Page 494]]

reasonable and comparable with standard industry practices.
    (f) Export credits. In order to receive export credit toward meeting 
a handler's obligation to crush or export additional peanuts such 
exported peanuts must meet the outgoing quality standard established for 
the domestic market under the Marketing Agreement No. 146. Export credit 
will be granted in accordance with this paragraph for any exported 
peanuts that meet such quality standards.
    (1) Credit for exporting SMK peanuts. Credit for exporting SMK's of 
the same crop year, of like type, may be earned for:
    (i) The total pounds in a lot of exported peanuts which meet or 
exceed U.S. Standard grade for U.S. No. 1; or
    (ii) The total pounds, excluding splits as determined in paragraph 
(f)(2)(ii) of this section, in a lot of peanuts which meet PAC standards 
for:
    (A) Whole kernel peanuts with splits, or
    (B) No. 2 Virginia peanuts; or
    (iii) The total pounds determined to be SMK's in a lot of exported 
in-shell peanuts which meet U.S. Standard grade for cleaned Virginia 
type peanuts in the shell.
    (2) Credit for exporting SS kernels. Credits for SS kernels of the 
same crop year, of like type, may be earned for:
    (i) The total pounds in a lot of exported peanuts which meet the 
U.S. Standard grade for splits; or
    (ii) The total pounds, excluding SMK's as determined in paragraph 
(f)(1)(ii) of this section, in a lot of peanuts which meets PAC 
standards for:
    (A) Whole kernel with splits, or
    (B) No. 2 Virginia; or
    (iii) The total pounds determined to be SS kernels in a lot of 
exported in-shell peanuts which meet U.S. Standard grade for cleaned 
Virginia type peanuts in the shell.
    (3) Export credits for contract additional peanuts processed into 
products for export. To receive disposition credit for contract 
additional peanuts used in products for export, the shelled peanuts must 
be identified with positive lot identity tags before being moved for 
processing in accordance with provisions of this part. The peanuts shall 
be processed under supervision of the marketing association unless the 
processing handler selects to process such peanuts under nonphysical 
supervision.
    (4) Export credits for in-shell peanuts. With respect to peanuts 
exported in-shell, in accordance with instructions issued by CCC, 
credits may be earned for SMK, SS or AO kernels on the respective 
portions of the TKC of the lot that are SMK, SS or AO kernels.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38330, Aug. 13, 1991]



Sec. 1446.603  Disposition credit for peanuts in exported products made from quota peanuts.

    A handler who has selected nonphysical supervision and who 
manufacturers peanut products from quota peanuts may export such 
products to an eligible country and receive disposition credit to apply 
to such handler's obligation to dispose of contract additional peanuts 
by crushing or by exporting.
    (a) Eligible peanuts. In order to receive such credit, the quota 
peanuts used in such products shall be:
    (1) Of the same crop year as the crop year of the contract 
additional peanuts for which the obligation, to crush or export, was 
established.
    (2) Of the same type as the contract additional peanuts to which 
such credit shall be applied.
    (b) Handler requirements (1) The handler, with respect to each 
marketing year and each area in which such handler will apply for export 
credit for manufactured products, shall submit a certification to the 
applicable marketing association:
    (i) With respect to any marketing year in which such handler intends 
to request disposition credit for exported products made from quota 
peanuts, prior to requesting such disposition credit;
    (ii) On a product-by-product basis; and
    (iii) Of the peanut product content of peanut products manufactured 
by such handler for which disposition credit will be requested.
    (2) Such certification of peanut product content, as required in 
accordance with paragraph (b)(1) of this section, must indicate by type 
of peanuts, with respect to each individual product, the

[[Page 495]]

respective portion of such peanut kernels that are:
    (i) SS kernels;
    (ii) SMK's;
    (iii) AO kernels.
    (3) If any change is made in any peanut product formula, as 
certified in accordance with this section, the handler shall notify the 
applicable area marketing association of such change within 90 days 
after such change is implemented.
    (c) Disposition credit. (1) To the extent that a handler provides 
satisfactory proof, to the applicable marketing association, of the 
export of peanut products made from quota peanuts, such handler who has 
complied with the provisions of paragraph (b) of this section may 
receive disposition credit for eligible peanuts in peanut products 
exported to an eligible country.
    (2) Disposition credit received in accordance with paragraph (c)(1) 
of this section shall be prorated by type to SS kernels, SMK's and AO 
kernels in the same proportion as the handler certified with respect to 
the peanut product content in accordance with paragraph (b)(2) of this 
section.
    (d) Records. Any handler who receives disposition credit under 
paragraph (c) of this section shall maintain records, as required in 
this part, to support:
    (1) The accuracy of such handler's certification made in accordance 
with this section; and
    (2) Any disposition credit that is requested by such handler in 
accordance with this section.
    (e) Annual review. The marketing association or employees of TPD 
shall conduct an annual review of the certifications made by handlers in 
accordance with this section.
    (f) Inaccurate certification. In the case of an inaccurate 
certification, the disposition credit shall be adjusted accordingly. 
Such action shall be in addition to any other remedy, including, but not 
limited to, any civil or criminal remedy for fraud, as may apply.



               Subpart G--Penalties and Liquidated Damages



Sec. 1446.701  Excess marketing of quota peanuts.

    A handler will be subject to a penalty for noncompliance with this 
part, if, as determined under this part, from any crop of peanuts, such 
handler markets, for domestic edible use, a larger quantity, or higher 
grade or quality of peanuts, than could reasonably be produced from the 
quantity of peanuts having the grade, kernel content, and quality of 
farmers stock peanuts purchased by the handler during the applicable 
marketing year as quota peanuts, including those peanuts purchased in 
accordance with the ``immediate buyback'' provisions of this part. In 
such case, the penalty will be an amount equal to 140 percent of the 
national average quota support rate for the applicable crop, times that 
quantity of farmers stock peanuts which are determined by CCC to be 
necessary to produce the excess quantity or grade or quality of peanuts 
marketed.



Sec. 1446.702  Peanuts ineligible for quota loan.

    Any person who causes or permits peanuts that are not eligible 
peanuts to be pledged as collateral for a loan at the quota loan rate 
shall be considered to have agreed that:
    (a) CCC may incur serious and substantial damage to its program to 
support the price of quota peanuts because such peanuts were pledged as 
collateral for a quota loan;
    (b) The amount of such damages will be difficult, if not impossible, 
to ascertain exactly; and
    (c) Such person shall, with respect to any ineligible peanuts placed 
under quota loan, pay to CCC, as liquidated damages and in addition to 
any penalty that is due, the difference between the quota loan rate for 
such peanuts and the additional loan rate that would apply to peanuts of 
the same type and quality, times the amount of such peanuts that were 
placed under loan. It is agreed that such liquidated damages

[[Page 496]]

are a reasonable estimate of the probable actual damages which CCC would 
suffer. Such person shall pay the damages to CCC promptly upon demand in 
addition to penalties as may be due or assessed. Liquidated damages 
under this section may be reduced by CCC based upon consideration of the 
following factors:
    (1) Whether the person causing or permitting ineligible peanuts to 
be placed in the loan program made a good faith effort to ensure that 
ineligible peanuts were not pledged as loan collateral;
    (2) The degree of damage or potential damage to the price support 
program caused by the violation;
    (3) The nature and circumstances of the violation;
    (4) The extent of the violation; and
    (5) Any other pertinent information.



Sec. 1446.703  Assessment of penalties against handlers.

    (a) Penalty liability. A handler shall be subject to the penalty for 
a violation of any provision of this part including, but not limited to, 
any or all of the following violations:
    (1) Failure to register as a handler of peanuts;
    (2) Failure to examine and make entries on marketing card;
    (3) Failure to keep or make available records as required by this 
part;
    (4) Marketing excess quota peanuts, as set forth in this part, 
including any marketing of reentered contract additional peanuts or 
peanut products made from contract additional peanuts or any marketing 
of imported peanut products made from additional peanuts purchased from 
the inventory of CCC loan collateral peanuts;
    (5) Failure to store and account for contract additional peanuts in 
accordance with the requirements of this part;
    (6) Failure to export or dispose of contract additional peanuts in 
accordance with the requirements of this part or failure to export or 
crush such peanuts by the final disposition date as established in this 
part;
    (7) Failure to obtain supervision of, or to handle properly, 
contract additional peanuts in the manner required by this part;
    (8) Reentering or importing contract additional peanuts or products 
made from such peanuts as prohibited by this part; or
    (9) Failure to comply with any other provision of this part.
    (b) Amount of penalty. Except when reduced in accordance with this 
part, the penalty amount for any violation of this part shall be equal 
to 140 percent of the national average quota support rate for the 
applicable crop year times the quantity of peanuts:
    (1) Handled by an unregistered handler;
    (2) Not properly entered on the marketing card;
    (3) For which records have not been properly kept or made available;
    (4) Marketed as excess quota peanuts;
    (5) Not properly stored;
    (6) Not properly disposed of;
    (7) Not properly supervised or handled in accordance with the 
regulations of this part;
    (8) Imported as contract additional peanuts;
    (9) Determined by CCC to have been necessary to produce the quantity 
of peanut products which have been determined to have been made from 
contract additional peanuts, and imported and sold in the United States; 
or
    (10) Otherwise involved in such other violation of this part as may 
occur.
    (c) Notice of assessment. A handler shall be notified in writing of 
the assessment of a penalty by a CCC contracting officer. Such notice 
shall state the basis for the assessment of the penalty, and shall 
advise the handler of the handler's appeal rights under this part.
    (d) Interest liability. The person liable for payment or collection 
of any penalty provided for in these regulations shall be liable also 
for interest thereon at a rate per annum equal to the rate of interest 
which was charged CCC by the Treasury of the United States on the date 
such penalty became due. The date on which the penalty became due shall 
be the date on which the penalty was first assessed.
    (e) Applicability. The provisions of this section are in addition to 
other

[[Page 497]]

remedies provided for by this part or other provisions of law.

[56 FR 16230, Apr. 19, 1991, as amended at 56 FR 38331, Aug. 13, 1991; 
57 FR 27145, June 18, 1992]



Sec. 1446.704  Reductions of penalties, reconsideration and appeals.

    (a) Reduction of penalties--(1) By CCC Contracting Officer. To the 
extent permitted by the provisions of paragraph (a)(4) of this section, 
the CCC Contracting Officer may reduce the amount of penalty that is 
otherwise determined or assessed in accordance with this part. Such 
reduction may be made before the penalty is assessed or may be made upon 
a request for reconsideration by the handler to whom the penalty is 
assessed.
    (2) By Director, National Appeals Division or by the Executive Vice 
President, CCC. To the extent permitted by the provisions of paragraph 
(a)(4) of this section, the Director, National Appeals Division, upon an 
appeal by the handler to whom the penalty is assessed, or the Executive 
Vice President, CCC, or the Executive Vice President's designee, may 
reduce the amount of penalty that has been assessed in accordance with 
this part.
    (3) Reduction criteria. A penalty that is determined or assessed in 
accordance with this part may be reduced by the CCC Contracting Officer 
or by the Director, National Appeals Division, or the Executive Vice 
President, CCC, or the Executive Vice President's designee, if such 
person determines that:
    (i) The violation for which the penalty was assessed was minor or 
inadvertent;
    (ii) A reduction in the amount of the penalty would not impair the 
effective operation of the peanut program; and
    (iii) The assessment of penalty was not made for failure to export 
contract additional peanuts.
    (4) Reduction limits. (i) If the reduction criteria in paragraph 
(a)(3) of this section has been met, the CCC Contracting Officer or the 
Director, National Appeals Division, or the Executive Vice President, 
CCC, or the Executive Vice President's designee, as applicable, may 
reduce the penalty by such amount as such person considers appropriate 
(including a full reduction of the entire penalty) after taking into 
account the severity of the violation and the violation history of the 
handler.
    (ii) If one of the criteria in paragraphs (a)(3)(i) and (ii) of this 
section has not been satisfied and the remaining criteria has been 
satisfied, the penalty shall not be reduced to less than an amount which 
is equal to 40 percent of the national average quota support rate for 
the applicable crop year times the quantity of peanuts involved in the 
violation.
    (iii) There shall not be a limit on the amount by which an 
assessment of liquidated damages may be reduced by the CCC Contracting 
Officer or the Director, National Appeals Division or the Executive Vice 
President, CCC, or the Executive Vice President's designee.
    (b) Request for reconsideration. A handler who is dissatisfied with 
a penalty that has been assessed against such handler by the CCC 
Contracting Officer pursuant to this part may file a written request for 
reconsideration or reduction of the penalty that has been assessed. Such 
request for reconsideration or reduction must be made within 15 days 
after the date of the notice of assessment.
    (c) Appeal. If handler is dissatisfied with the determination of the 
CCC Contracting Officer with respect to a request for reconsideration or 
reduction of a penalty that has been assessed against such handler, the 
handler may appeal such determination to the Director, National Appeals 
Division. Any appeal of such determination of the CCC Contracting 
Officer must be submitted in writing to the Director, National Appeals 
Division, within 15 days after the date of notice of such determination 
by the CCC Contracting Officer. The appeal may be to contest liability 
for the penalty, to request that the penalty be reduced, or both. An 
appeal shall be conducted in accordance with the regulations set forth 
in part 780 of this title.

[57 FR 27145, June 18, 1992]



Sec. 1446.705  Statutory liens against peanuts.

    (a) Lien on peanuts. Until the amount of any penalty which is 
imposed upon a handler or other person in accordance

[[Page 498]]

with this part is paid, a lien shall exist in favor of the United States 
for the amount of the penalty. Such lien shall apply on the peanuts with 
respect to which such penalty is incurred and on any other peanuts 
purchased or otherwise acquired in the same or subsequent marketing year 
in which the person liable for payment of such penalty has an interest.
    (b) Debt record. The lien specified in paragraph (a) of this section 
shall be considered to attach at the time the penalty is entered on the 
debt records which shall be maintained for this purpose by the marketing 
associations, unless an earlier time is prescribed by law.
    (c) List of peanut marketing penalty debts. Each marketing 
association shall maintain a debt record for all handlers indicating the 
amounts due from each handler. This list will be available for 
examination upon written request to the marketing association by any 
interested party.



Sec. 1446.706  Schemes and devices.

    If CCC or the marketing association, with approval of the CCC, 
determines that a handler has knowingly adopted any scheme or device 
which tends to defeat the purpose of the regulations of this part or has 
made any fraudulent representation, or has misrepresented any fact 
affecting a program determination, such handler will be subject to a 
penalty which shall be assessed in such manner as is determined will 
correct for such scheme, device, fraud, or misrepresentation.



       Subpart H--Recordkeeping, Reporting and Paperwork Reduction



Sec. 1446.801  Recordkeeping and reporting requirements.

    (a) Persons required to keep records. Any person involved in the 
peanut industry in any of the following capacities shall keep records 
for each such business:
    (1) A person who dries farmers stock peanuts by artificial means for 
a producer;
    (2) A handler;
    (3) A warehouse operator;
    (4) A common carrier of peanuts;
    (5) A broker or dealer in peanuts;
    (6) A processor of peanuts;
    (7) A farmer engaged in the production of peanuts;
    (8) An agent marketing peanuts for a producer or acquiring peanuts 
for a handler or marketing association; or
    (9) A person engaged in the business of cleaning, shelling, 
crushing, or salting peanuts or manufacturing peanuts products.
    (b) Handler records and reports of peanuts acquired. As required by 
this section and in accordance with instructions issued by CCC, each 
handler shall keep records and make reports, with respect to each lot of 
farmers stock peanuts such handler acquires, as follows:
    (1) Inspected peanuts. (i) If the Federal-State Inspection Service 
inspects a lot of peanuts, the handler shall complete a form ASCS-1007 
or such other form approved by CCC or FSA and on which the following 
information must be entered:
    (A) The name and address of the farm operator, and the State and 
county codes and farm number of the farm on which the peanuts were 
produced, if the peanuts are marketed by the producer;
    (B) The handler number if the peanuts are marketed by a handler;
    (C) The buying point number assigned to identify the physical 
location of the buying point where the peanuts were marketed;
    (D) Either the name, address and handler number of the handler, or 
if the peanuts are accepted for loan through the marketing association, 
the marketing association name, number and address;
    (E) The net weight of the peanuts;
    (F) The quantity of peanuts marketed as either loan quota, loan 
additional, commercial quota, or contract additional;
    (G) The date of purchase; and
    (H) The amount of any penalty, assessment or claim collected.
    (ii) Handlers described in paragraph (c) of this section shall cause 
electronic records of the data recorded on form ASCS-1007 to be 
generated and transmitted to FSA. The data shall be transmitted in the 
manner and by the time prescribed by the Director, TPD.

[[Page 499]]

    (2) Noninspected peanuts. A handler who acquires farmers stock 
peanuts which have not been inspected by the Federal-State Inspection 
Service shall complete a form ASCS-1030 or such other form approved by 
CCC or FSA for general use, for each lot of farmers stock peanuts 
acquired. The handler shall use ASCS-1030-P, Handler's Report of 
Purchases of Noninspected Peanuts, or such other form approved by CCC or 
FSA for general use, to transmit the form ASCS-1030 or other approved 
form to the State ASC committee in the State in which the handler's 
business is located or such other location or entity approved by CCC or 
FSA. The handler shall complete the form ASCS-1030 or other approved 
form to show the following:
    (i) Name and address of the seller;
    (ii) Name and address of the farm operator and the State and county 
codes and farm number of the farm on which the peanuts were produced, if 
the peanuts are marketed by the producer;
    (iii) The handler's name, address and registration number when the 
peanuts are purchased from another handler;
    (iv) Type of peanuts purchased;
    (v) Date of purchase;
    (vi) Quantity purchased;
    (vii) Method of determining the weight; and
    (viii) Signature of the seller and the date the seller signed the 
form ASCS-1030 or other approved form.
    (c) Handler certification of computer software. Each handler who is 
required to coordinate records with USDA electronic records system for 
peanuts shall prepare and use computer software that will generate 
records, files, reports or other electronic information as required in 
accordance with paragraph (b)(1) of this section, and will transmit such 
records, files, reports or other electronic information in the form or 
format and in a timely manner as may be required by FSA or CCC. Such 
handler shall certify by the final date prescribed by the Director, TPD, 
that the handler's software meets the requirements prescribed for such 
software.
    (d) Handler records of resales of farmers stock peanuts. Each 
handler who resells farmers stock peanuts shall keep records of:
    (1) Name and address of the buyer, and if the peanuts are sold to a 
handler, the buyer's handler number;
    (2) Date of the sale;
    (3) Type of peanuts sold; and
    (4) Pounds (net weight) of peanuts sold.
    (e) Handler records of peanuts shelled or milled for a producer. The 
handler shall maintain records of peanuts shelled for a producer 
including the following information:
    (1) Date of shelling or milling;
    (2) Name and address of the producer;
    (3) State and county codes and the farm number of the farm where the 
peanuts were produced;
    (4) Quantity of peanuts (farmers stock basis) shelled or milled;
    (5) Quantity of shelled or milled peanuts retained by the sheller; 
and
    (6) Quantity returned to the producer.
    (f) Handler records of peanuts dried for a producer. The handler 
shall maintain records of peanuts dried for a producer including the 
following information:
    (1) State and county codes and the farm number of the farm where the 
peanuts were produced;
    (2) Name and address of the producer; and
    (3) Quantity dried as determined by the farmers stock basis weight 
after drying, and the date the drying was completed.
    (g) Handler records of peanuts from which LSK's or pods are removed 
for a producer. The handler shall maintain records of the peanuts from 
which the LSK's or pods were removed for a producer if such LSK's or 
pods are removed in commercial quantities or, when removed with foreign 
material, are recoverable in commercial quantities. The records must 
contain the:
    (1) Date of removal;
    (2) Name and address of the producer;
    (3) State and county codes and the farm number of the farm where the 
peanuts were produced;
    (4) Gross weight of:
    (i) Peanuts prior to removal of LSK's or pods;
    (ii) Peanuts removed as LSK's;
    (iii) Peanuts removed as pods;
    (iv) Foreign material removed; and
    (v) Peanuts remaining after removal of foreign material and LSK's or 
pods;

[[Page 500]]

    (5) Quantity of peanuts which the person performing the service 
retains in the form of pods and LSK's; and
    (6) Quantity of peanuts returned to the producer as:
    (i) Pods;
    (ii) LSK's; and
    (iii) LSK's and pods.
    (h) Handler records of sales and disposal of peanuts. Each handler 
shall maintain records of all sales or other disposal of peanuts. Such 
records shall show:
    (1) The date of sale or disposal of such peanuts;
    (2) The quantity of peanuts sold;
    (3) The type of peanuts sold;
    (4) The name of the purchaser;
    (5) That the peanuts were sold either as:
    (i) Farmers stock peanuts; or
    (ii) Milled peanuts;
    (6) That the peanuts were sold either as:
    (i) Edible peanuts; or
    (ii) Peanuts for crushing; and
    (7) Any other information which may be required by this part.
    (i) Method of keeping records. Each handler shall maintain the 
records required by this part in a manner which will enable the 
marketing association, CCC, FSA, and other representative of the 
Secretary to readily reconcile the quantities, grades and qualities of 
all peanuts acquired and disposed of by such a handler. Records 
concerning the acquisition and disposal of contract additional peanuts 
must also be kept in a manner that allows the marketing association, 
CCC, FSA, or any other representative of the Secretary to readily 
determine whether there has been compliance with the provisions of this 
part.



Sec. 1446.802  Examination of records and reports.

    The Executive Vice President, CCC, the Deputy Administrator, FSA, 
the Director, TPD, the State Executive Director and any person 
authorized by any one of such persons, and any auditor or agent of the 
Office of Inspector General is authorized to examine any records that 
such person has reason to believe are relevant to any matter pertinent 
to the peanut poundage quota program operated pursuant to the provisions 
of part 729 of this title and provisions of this part. Upon request, any 
person required by this part to keep records shall make available for 
examination such books, papers, records, accounts, correspondence, 
contracts, documents, and memoranda as are under such person's control.



Sec. 1446.803  Retention of records.

    Persons required to maintain records under this part shall maintain 
all records for a period of three years following the end of the 
marketing year in which the peanuts were produced. Notwithstanding the 
preceding sentence, records relating to contract additional peanuts for 
which penalties or liquidated damages have been assessed, shall be 
retained for 6 years following the date the assessment was made or until 
the conclusion of the assessment action, whichever is later and records 
shall be kept for such longer periods of time as may be requested in 
writing by CCC.



Sec. 1446.804  Information confidential.

    All data requested and obtained by the Secretary in accordance with 
the provisions of this part shall be kept confidential by all employees 
of USDA and of the marketing association. Such data shall be released 
only at the discretion of the Executive Vice President, CCC, and then 
only to the extent that such release is not prohibited by law.



Sec. 1446.805  Penalty for failure to keep records and make reports.

    Any person, who fails to make any report or keep any record as 
required under this part or who falsifies any information on any such 
report or record shall be subject to a penalty in accordance with 
Sec. 1446.703 of this part.



Sec. 1446.806  Fraud by handler.

    Any misrepresentation made or effectively made by a handler within 
or without the records or reports maintained in connection with this 
part shall be subject to a penalty under this part and such penalty 
shall be in addition to any other remedies available by law for such 
misrepresentation (including, but not limited to, criminal prosecution). 
In addition, the handler and any individual or other person involved

[[Page 501]]

with such misrepresentation, including employees of the handler, shall 
be liable to CCC for all costs which CCC incurs as a result of such 
misrepresentation, together with interest at the per annum rate which 
the Treasurer of the United States charged CCC on the date the 
misrepresentation was made.



Sec. 1446.807  Paperwork Reduction Act assigned numbers.

    The information collection requirements contained in these 
regulations (7 CFR part 1446) have been approved by the Office of 
Management and Budget (OMB) in accordance with 44 U.S.C. Chapter 35 and 
have been assigned OMB control numbers 0560-0006, 0560-0014 and 0560-
0133.

[56 FR 38331, Aug. 13, 1991]



PART 1464--TOBACCO--Table of Contents




                     Subpart A--Tobacco Loan Program

Sec.
1464.1  Administration.
1464.2  Availability of price support.
1464.3  Level of price support.
1464.4  Deductions from advances.
1464.5  Interest rate and general provisions.
1464.6  Maturity date.
1464.7  Eligible producer.
1464.8  Eligible tobacco.
1464.9  Refund of price support advance.
1464.10  No net cost tobacco fund or account.
1464.11  Nonrefundable marketing assessment.
1464.12  Flue-cured (types 11-14) tobacco.
1464.13  Fire-cured (type 21) tobacco.
1464.14  Fire-cured (types 22-23) tobacco.
1464.15  Dark air-cured (types 22-23) tobacco.
1464.16  Virginia sun-cured (type 37) tobacco.
1464.17  Cigar-filler and binder (types 42-44 and 53-55) tobacco.
1464.18  Cigar-filler (type 46) tobacco.
1464.19  Burley (type 31) tobacco.
1464.20-1464.23  [Reserved]
1464.24  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

                     Subpart B--Importer Assessments

1464.101  Definitions.
1464.102  Budget deficit marketing assessment.
1464.103  Importer no-net-cost assessments.
1464.104  Remittance of importer assessments.
1464.105  Refund of assessments.
1464.106  Marketing penalties.
1464.107  Recordkeeping.
1464.108  Reconsideration and appeal.

Appendix A to Part 1464--Importer Entry and Assessment Worksheet

    Authority:  7 U.S.C. 1421, 1423, 1441, 1445, 1445-1 and 1445-2; 15 
U.S.C 714b, 714c.



                     Subpart A--Tobacco Loan Program

    Source: 45 FR 9253, Feb. 12, 1980, unless otherwise noted.



Sec. 1464.1  Administration.

    (a) This program will be administered by the Tobacco and Peanuts 
Division, FSA, under the general direction and supervision of the 
Executive Vice President, CCC. The program will be carried out by 
cooperative marketing associations (hereinafter referred to as 
``associations'') acting on behalf of their producer members. To obtain 
a price support loan, an association must enter into a loan agreement 
with CCC. The loan agreement will set forth terms and conditions for 
making price support available to producers. To the extent provided in 
the loan agreement, an association shall meet the eligibility 
requirements for price support prescribed in the Cooperative Marketing 
Associations Eligibility Requirements for Price Support (part 1425 of 
this chapter), as amended. CCC reserves the right to restrict the number 
of associations with which it will contract. In so doing, CCC will 
select such associations as it deems necessary or desirable to 
effectuate the purposes of the program with a maximum of efficiency and 
economy of operations. The names of such associations may be obtained 
from the Tobacco and Peanuts Division, FSA, U.S. Department of 
Agriculture, P.O. Box 2415, Washington, DC 20013.
    (b) Each year CCC will make loans to associations. The associations 
in turn will make price support advances available to eligible producers 
either directly or through auction warehouses. The tobacco on which 
producers receive price support advances will serve as security for the 
loans. Loans made to associations will include not only the initial loan 
value of the tobacco, but also amounts to cover costs of receiving, 
processing, storing, and selling the loan tobacco, including that part 
of overhead costs not borne by the

[[Page 502]]

association pursuant to Sec. 1464.4. Associations will be authorized to 
enter into contracts for these services through the usual trade 
channels. Loans also may include amounts to cover any Federal and State 
income taxes which the associations are required by the Internal Revenue 
Service or State governmental body to pay on income received from the 
sale of loan tobacco.

[45 FR 9253, Feb. 12, 1980, as amended at 47 FR 51555, Nov. 16, 1982; 48 
FR 21110, May 11, 1983]



Sec. 1464.2  Availability of price support.

    (a) Kind of tobacco. Price support will be available to eligible 
producers on the following kinds of eligible tobacco subject to 
conditions listed in Secs. 1464.7 and 1464.8 respectively.

Flue-cured tobacco, types 11, 12, 13, and 14.
Kentucky-Tennessee Fire-cured tobacco, types 22 and 23.
Virginia Fire-cured tobacco, type 21.
Virginia Sun-cured tobacco, type 37.
Dark Air-Cured tobacco, types 35 and 36.
Burley tobacco, type 31.
Cigar filler and binder tobacco, types 42, 43, 44, 53, 54, and 55.

    (b) Method of providing price support--(1) Through auction 
warehouses. (i) Price support will be available for each lot of eligible 
tobacco offered for sale at auction warehouses which have contracted 
with an association, on a form of agreement approved by CCC, to make 
price support advances to producers on behalf of the association. 
Producers will deliver their tobacco to auction warehouses which will 
display the tobacco and offer it for sale at auction. Each contract 
between an association and an auction warehouse will require the auction 
warehouse to see that producers are informed that price support advances 
are available for each lot of eligible tobacco offered for sale at 
auction when the final bid is less than the price support rate available 
for the grade of eligible tobacco comprising such lot. For Flue-cured 
and Burley tobacco, the associations' contracts with auction warehouses 
will also require the auction warehouses to mark any tobacco sale bill 
``No Price Support'' if the marketing of the pounds of tobacco covered 
by such bill will result in the producer marketing in excess of 103 
percent of the producer's effective farm marketing quota. Producers will 
receive price support advances from the warehouse operator for any 
tobacco to be consigned by the warehouse operator to the association. 
Price support advances will be paid to the producer at the time the 
warehouse operator settles with the producer for the entire quantity of 
the producer's tobacco that has been displayed for inspection and 
offered for sale on any one day's auction market. The warehouse operator 
will be reimbursed by the association with funds borrowed from CCC.
    (ii) Price support will be available only at warehouses where 
tobacco inspection service is provided by the Agricultural Marketing 
Service, USDA. Inspection and price support services may be extended to 
new markets or to additional sales on established markets in accordance 
with this part and Subpart A of part 29 of this title which provides for 
formal public hearings prior to extending of additional services.
    (iii) CCC reserves the right to direct the association to withhold a 
contract under the price support program from any auction warehouse for 
one or more years if, based on previous performance of similar 
contracts, or other evidence, there is substantial reason to believe 
that such warehouse will not fulfill its contract obligations.
    (2) Special requirements for flue-cured tobacco. Price support will 
be available only on flue-cured tobacco which has been designated for 
sale at specific warehouses by the producer under the following 
conditions:
    (i) Definition. Producer as used in this paragraph means the person 
who was issued the tobacco marketing card pursuant to part 723 of this 
title.
    (ii) Producer designation of warehouses. Producers will be required, 
as a condition of price support, to designate the warehouses at which 
they will market their tobacco. Such designations may be at any 
warehouse or warehouses in any market within a radius of 100 miles from 
the county seat of the county in which the farm is located, or if such 
farm is physically within two counties, then from the county seat of the 
county in which the county FSA office administering that farm is 
located. To the extent there are less than

[[Page 503]]

eight markets within such radius, any warehouse or warehouses in any of 
the eight markets nearest to the county seat may be designated. A 
producer may obtain price support only in a warehouse which the producer 
has designated, and at each such warehouse only with respect to the 
quantity of tobacco designated for sale at such warehouse.
    (iii) When producer designations shall be made. Producers must 
designate the warehouse(s) at which they will market their tobacco 
during a period which shall be announced beforehand by the local county 
FSA office. The period for making designations shall be before May 31 
each year. Producers who lease quota or whose farm is reconstituted (the 
combining or dividing of a farm due to a change in operation) after such 
period may designate the warehouse(s) at which their tobacco will be 
marketed according to procedures to be established by the Deputy 
Administrator, State and County Operations, FSA. Producers who have 
designated warehouses which cease to operate or cease to have tobacco 
inspection or price support available may change their designations at 
any time after such occurrences. Producers who have designated 
warehouses whose inspection services have been temporarily suspended for 
any reason for the equivalent of at least one sales day may change their 
designation at any time after such occurrences. Redesignation (changes 
in warehouse(s) designated or in pounds designated to a warehouse) or 
designations for farms which have not previously designated tobacco may 
be made by producers during the five business days ending on the first 
Friday of each month during the flue-cured tobacco marketing season. 
Such redesignation or initial designation shall be made on any one day 
of each redesignation period. Such redesignation or initial designation 
shall be effective on the second Monday following the Friday on which 
the redesignation period ends.
    (iv) Form and content of designations. A designation shall be made 
for each warehouse at which a producer desires to market tobacco by 
executing a form provided by the county FSA office. The producer will be 
required to indicate on such form the name of the warehouse or 
warehouses designated by the producer and the pounds of flue-cured 
tobacco the producer desires to sell at such warehouse as well as any 
other information required to be stated on such form.
    (v) Entering warehouse designation information. The warehouse code 
number of the warehouse the producer has designated will be indicated on 
the farm marketing card. If an effective date is determined in 
accordance with paragraph (b)(2)(iii) of this section, such effective 
date will be shown on the farm marketing card. If the producer has not 
designated a warehouse, a warehouse code will not be shown on the 
marketing card. Changes in designation by the producer shall be 
accomplished by the producer returning the marketing card to the county 
FSA office and requesting the transfer of any unmarketed pounds of flue-
cured tobacco shown on any marketing card to another eligible warehouse 
or warehouses.
    (vi) Use of warehouse designation information. (A) A separate sale 
bill marked ``no price support'' shall be prepared for that quantity of 
tobacco weighted in that is in excess of the balance of the pounds 
designated as shown on the marketing card:
    (B) The warehouse shall mark ``no price support'' on a sale bill for 
any tobacco which is presented for sale and which is accompanied by a 
marketing card which does not show a warehouse code, which shows a code 
of another warehouse, or which shows an effective date which is later 
than the date on which the tobacco is presented for sale.
    (vii) Availability of designation information. Each county FSA 
office shall send all designations received to the Flue-Cured Tobacco 
Cooperative Stabilization Corporation, Raleigh, North Carolina, 
following each designation period and each period for changing 
designations. That association shall inform the Flue-Cured Tobacco 
Advisory Committee of the pounds designated to each warehouse and the 
pounds of any undesignated tobacco which, for the purpose of 
recommending opening dates and selling schedules in accordance with part 
29 of this title, is available for apportioning for sale at each 
warehouse. That association also shall

[[Page 504]]

furnish each warehouse the name and address of the producers who 
designated the warehouse, the pounds each designated and the pounds 
which represented 103 percent of the marketing quota of each such 
producer.
    (viii) Failure to comply with opening date and selling schedule by 
warehouses. Warehousemen shall comply with opening date and selling 
schedule requirements as provided in 7 CFR 29.9406.
    (3) Upon direct delivery to the Association. Eligible producers in 
nonauction market areas may deliver eligible tobacco to central 
receiving points designated by the appropriate association.
    (4) Period of price support. Price support will be available to 
eligible producers on eligible tobacco only during each year's normal 
marketing season for each kind of tobacco for which support is provided.
    (5) Beginning with the 1981 crop, eligible producers may obtain 
price support on untied burley tobacco packed in bales subject to the 
following conditions:
    (i) The quality and condition of the tobacco contained in each bale 
delivered for price support as a single lot will be representative of 
the quality and condition of the tobacco contained in all other such 
bales of the same lot.
    (ii) The tobacco in each bale will be stalk-cured.
    (iii) The bales will not contain foreign matter or conceal inferior 
tobacco.
    (iv) Specification of bales:
    (A) Bales must be approximately 1 x 2 x 3 feet in size.
    (B) The leaves in bales must be untied and oriented.
    (C) The basket ticket shall show the number of bales in the lot. 
Each bale in the lot shall be identified by a uniform identification tag 
1\5/8\ inches wide by 3\1/4\ inches long which shall be attached 
securely to the bale and shall show at least the following information: 
(1) Warehouse registration number, (2) basket ticket identification 
number, and (3) bale number.

[45 FR 9253, Feb. 12, 1980; 45 FR 26687, Apr. 21, 1980, as amended at 45 
FR 68914, Oct. 17 1980; 46 FR 48901, Oct. 5, 1981; 47 FR 28607, July 1, 
1982; 47 FR 44542, Oct. 8, 1982; 48 FR 28425, June 22, 1983; 51 FR 
32426, Sept. 12, 1986; 56 FR 21259, May 8, 1991; 62 FR 3198, Jan. 22, 
1997]



Sec. 1464.3  Level of price support.

    (a) The level of price support for eligible tobacco shall be 
determined in accordance with section 106 of the Agricultural Act of 
1949, as amended.
    (b) Flue-Cured tobacco of varieties Coker 139, Coker 140, Coker 316, 
Reams 64, Reams 266, and Dixie Bright 244, or a mixture or strain of 
such seed varieties or any breeding line of Flue-Cured tobacco seed 
varieties, including, but not limited to, 187 Golden Wilt (also 
designated by such names as No-Name, XYZ), having the quality and 
chemical characteristics of the seed varieties designated as Coker 139, 
Coker 140, Coker 316, Reams 64, Reams 266, or Dixie Bright 244 will be 
supported at one-half the support rate, plus 50 cents per hundred 
pounds, for comparable grades of acceptable varieties.

[51 FR 32426, Sept. 12, 1986]



Sec. 1464.4  Deductions from advances.

    (a) There may be deducted from price support advances paid to 
tobacco producers amounts to help defray administrative overhead costs 
incurred by producers associations through which price support is made 
available to tobacco producers.
    (b) If any producer on a farm is indebted to the United States and 
such indebtedness is listed on the Claim Control Record, Form ASCS-604, 
the Government will effect collection of the amount of the indebtedness 
by setoff from the amount of price support advance due the producer in 
the following manner: Any marketing card covering tobacco eligible for 
price support issued for such farm in accordance with the applicable 
regulations issued by the Secretary of Agriculture with respect to 
marketing quotas (parts 723 of this title) will bear a notation showing 
the indebtedness, the name of the debtor and the amount of the 
indebtedness. The acceptance and use of a marketing card bearing a 
notation of indebtedness to the United States by a producer named as 
debtor on such card will constitute an authorization by such producer to 
any tobacco warehouse operator or association to pay the United States 
the price support advance due the producer to the extent of their 
indebtedness set forth on such card but

[[Page 505]]

not to exceed that portion of the price support advance remaining after 
deduction of usual warehouse and authorized price support charges and 
amounts due prior lienholders. The acceptance and use of a marketing 
card bearing a notation and information of indebtedness to the United 
States will not constitute a waiver of any right of the producer to 
contest the validity of such indebtedness by appropriate administrative 
appeal or legal action.

[45 FR 9253, Feb. 12, 1980, as amended at 47 FR 28608, July 1, 1982; 56 
FR 21259, May 8, 1991]



Sec. 1464.5  Interest rate and general provisions.

    The loans made to the associations will bear interest at the rate 
announced by CCC and will be nonrecourse both as to principal and 
interest except in the case of misrepresentation, fraud or failure to 
carry out the loan agreement. Tobacco loses its identity as to original 
ownership through commingling in the packing process, and individual 
producers may not redeem their tobacco once it has been pledged as 
security for the loan. Associations will sell the loan tobacco as 
provided in the loan agreements for each crop, and the net proceeds of 
sales of the loan collateral of each crop will be applied to the loan 
account for such crop until the loan is repaid in full. With respect to 
the 1981 and prior crops, if the proceeds from the sale of loan 
collateral of the 1981 or any prior crop exceed (a) the amount of the 
loan plus all fees, handling charges, operating costs and interest; and 
(b) any amount due CCC under a barter transfer agreement entered into 
between CCC and the association, such excess shall constitute ``net 
gains'' and shall be distributed in cash by the association to the 
producers who placed the tobacco under loan unless other disposition is 
approved by CCC.

[45 FR 9253, Feb. 12, 1980, as amended at 50 FR 7574, Feb. 25, 1985; 51 
FR 32426, Sept. 12, 1986; 56 FR 21259, May 8, 1991]



Sec. 1464.6  Maturity date.

    Loans made under the program will mature on demand.



Sec. 1464.7  Eligible producer.

    To qualify as an eligible producer for purposes of receiving price 
support during the current marketing year a person must have eligible 
tobacco, as provided in Sec. 1464.8, for marketing and such person:
    (a) Must have agreed to make contributions to a No Net Cost Fund or 
pay assessments to a No Net Cost Account, as applicable, in accordance 
with Sec. 1464.10.
    (b) Must not have been found, after notice and opportunity for an 
administrative hearing in accordance with part 780 of this title, to 
have:
    (1) Knowingly delivered nested tobacco for the purpose of receiving 
price support.
    (2) Filed a false report with respect to the use of pesticides on 
tobacco produced for marketing during the current marketing year.
    (3) Erroneously represented any fact affecting a tobacco program 
determination.
    (4) Adopted any scheme or device which tends to defeat the purpose 
of the tobacco program.
    (5) Made any fraudulent representations with respect to the tobacco 
program.
    (c) Must be in compliance with the provisions of part 12 of this 
title.
    (d) Must not be ineligible, in accordance with part 1498 of this 
title, to receive price support payments, loans, and benefits.
    (e) With respect to any tobacco which is presented for price 
support, must have retained beneficial interest in the tobacco prior to 
presenting the tobacco for such loan.
    (1) For purposes of this section, the producer will be considered to 
have retained beneficial interest in the tobacco only if such producer 
has complete control of and title to such tobacco, including the right 
to tender such tobacco to CCC for a price support loan on the date such 
tobacco is tendered to CCC for a price support loan, and has maintained 
this right and that interest in the tobacco at all times prior to 
presenting the tobacco for the loan.
    (2) If a producer receives a monetary advance or other consideration 
in connection with or for such tobacco, the

[[Page 506]]

producer will be deemed for purposes of this section to have lost 
beneficial interest in such tobacco unless the producer has a written 
agreement with the person who provides the advance payment or 
consideration and such agreement accurately and fully:
    (i) Sets forth the amount, nature and date of the advance or 
consideration;
    (ii) Sets forth the poundage on which the advance or consideration 
was made;
    (iii) Provides that the tobacco will be sold at a producer auction 
through an auction warehouse at which price support is provided, or will 
be presented for a price support loan;
    (iv) Provides that as a full and final settlement on the tobacco, 
the full sales price at the producer auction or the full loan proceeds 
will be paid to the producer minus only the following:
    (A) Any advance set out in the agreement; and
    (B) Standard published assessments or charges for services rendered 
at standard published rates that apply to all tobacco of all producers, 
including tobacco for which no advance has been paid;
    (v) Sets forth the date of final settlement to be made on the 
tobacco which date can be no later than the date applicable to tobacco 
on which no advance has been made.
    (vi) States that the full profit and beneficial interest in the 
tobacco, and full control of the tobacco, remains with the producer and 
provides that the full profit and beneficial interest will remain with 
the producer at all times prior to any disposition of the tobacco as 
producer tobacco, or at a producer auction, or presenting for a price 
support loan.
    (3) A producer will be considered to have lost beneficial interest 
in tobacco and thereby not be an ``eligible producer'' for such tobacco 
as of the date any advance or other preauction arrangement was made if 
CCC determines for that tobacco that:
    (i) The advance per pound equalled or exceeded the producer's final 
net proceeds per pound on all tobacco marketed from the farm for that 
marketing year at producer auctions, including any tobacco on which an 
advance is made or the pledging of tobacco for price support loans;
    (ii) A written agreement was required by paragraph (e)(2) of this 
section, but none has been executed; or
    (iii) A written agreement was executed but did not meet the 
requirements of paragraph (e)(2) of this section.
    (4) If tobacco is pledged for a price support loan and the producer 
is not then or thereafter deemed to be or to have been an eligible 
producer for that tobacco for purposes of placing the tobacco under such 
loan, then the tobacco shall be considered to have a loan value of zero. 
The producer and the person that took possession of the tobacco from the 
producer, or paid an advance, or marketed the tobacco, or disposed of 
the tobacco as producer tobacco, shall be jointly and severally liable 
with the producer for returning any loan proceeds previously paid in the 
name of, or for the account of, the producer. Further, the disposition 
of any tobacco as producer tobacco where the producer is not then or 
thereafter considered to have been an eligible producer with respect to 
such tobacco may be the subject of penalties on the grounds of false 
identification, excess marketings, or otherwise as provided in part 723 
of this title. These remedies are in addition to any others as may 
apply.
    (f) Must be in compliance with the provisions of parts 400 and 402 
of this title by purchasing an amount of catastrophic insurance coverage 
which equals or exceeds the minimal required under those parts.

[51 FR 32426, Sept. 12, 1986, as amended at 53 FR 43675, Oct. 28, 1988; 
56 FR 21259, May 8, 1991; 57 FR 43583, Sept. 21, 1992; 60 FR 21037, May 
1, 1995]



Sec. 1464.8  Eligible tobacco.

    Eligible tobacco for the purpose of pledging such tobacco as 
collateral for a price support loan is any tobacco of a kind for which 
price support is available, as provided in Sec. 1464.2, that is in sound 
and merchantable condition, is not nested as defined in 7 CFR part 29, 
and:
    (a) Is not a kind of tobacco for which marketing quotas are not in 
effect for the marketing year because marketing

[[Page 507]]

quotas have been disapproved in a referendum of producers;
    (b) Is offered for marketing by the person who was the producer of 
the tobacco, or in the case of a deceased producer, by the duly 
authorized successor(s) in interest;
    (c) Is offered for marketing in accordance with Sec. 1464.2(b);
    (d) If marketing quotas are in effect for the kind of tobacco:
    (1) Except for burley tobacco, the farm operator has filed a report 
of the acreage planted to tobacco on the farm in the applicable year in 
accordance with part 718 of this title.
    (2) The tobacco was produced on a farm on which neither the reported 
nor determined acreage of the kind of tobacco exceeds any acreage 
allotment established for the farm in accordance with the applicable 
part 723 of this title for the kind of tobacco for the applicable year.
    (3) Is identified when delivered to the association either directly 
or through an auction warehouse with a single marketing card for each 
lot of tobacco.
    (e) If marketing quotas are in effect for the kind of tobacco or if 
marketing quotas are not in effect but would have been in effect for the 
kind of tobacco had such marketing quotas not been terminated by the 
Secretary, the operator of the farm on which the tobacco was produced:
    (1) Has certified that all tobacco delivered from such farm for 
price support will not have not been nested as defined in part 29 of 
this title.
    (2) Has certified to the county ASC committee on a form approved by 
the Deputy Administrator that all pesticides (including plant 
regulators, defoliants, and desiccants), as defined in 40 CFR 162.3, 
which were used in connection with the production of the tobacco have 
been approved by the Environmental Protection Agency for use on tobacco 
and any such pesticides that were used were applied in accordance with 
label directions.
    (3) Has not refused to permit the sampling of such tobacco, either 
on the farm or where stored, for chemical analysis for the purpose of 
verifying the accuracy of any pesticide certification.
    (f) With respect to burley and flue-cured tobacco only, is a 
quantity of tobacco which when added to the pounds of the respective 
kind of tobacco previously marketed from the farm during the marketing 
year does not exceed 103 percent of the effective farm marketing quota 
established for the respective kind of tobacco for that year.
    (g) With respect to flue-cured tobacco only, is a quantity of 
tobacco which was delivered to the association through an auction 
warehouse and is a quantity which when added to the pounds of flue-cured 
tobacco previously marketed from the farm at that warehouse does not 
exceed the quantity of flue-cured tobacco designated by the farm 
operator for marketing at that warehouse.
    (h) Any tobacco with respect to which the producer is not an 
eligible producer under the provisions of Sec. 1464.7 shall not be 
eligible for a price support loan and in any case in which the producer 
is deemed to have ceased to have retained the status of an eligible 
producer due to an advance or other preauction arrangement, the 
producer's marketing card shall not be used to market such tobacco 
except to reflect a nonauction marketing to the person who paid an 
advance to the producer or took possession of the tobacco from the 
producer.

[51 FR 32426, Sept. 12, 1986, as amended at 56 FR 21259, May 8, 1991; 57 
FR 43584, Sept. 21, 1992; 61 FR 33304, June 27, 1996; 62 FR 3198, Jan. 
22, 1997]



Sec. 1464.9  Refund of price support advance.

    In any case in which a producer has received price support on a lot 
of tobacco such producer shall refund to CCC any price support advance 
received with respect to such lot of tobacco if it is determined, after 
notice and opportunity for an administrative hearing in accordance with 
part 780 of this title, that such producer:
    (a) Received a price support advance on tobacco that was nested, as 
defined in part 29 of this title or otherwise not eligible for price 
support. The county committee, with concurrence of a State Committee 
Representative, may reduce the refund with respect to tobacco otherwise 
required in this part,

[[Page 508]]

in accordance with guidelines issued by the Deputy Administrator.
    (b) Filed a false report with respect to the use of pesticides on 
tobacco produced on the farm from which such lot of tobacco was 
identified, at the time of marketing, as having been produced.
    (c) Misrepresented any fact affecting a tobacco program 
determination, adopted any scheme or device which tends to defeat the 
purpose of the tobacco program, or made any fraudulent representation 
which tends to defeat the purpose of the tobacco program. The refund of 
CCC price support advance shall apply to all payments on all farms 
received by such producer.

[51 FR 32427, Sept. 12, 1986, as amended at 56 FR 21259, May 8, 1991; 61 
FR 33304, June 27, 1996]



Sec. 1464.10  No net cost tobacco fund or account.

    (a) Definitions. As used in this part and in all instructions, 
forms, and documents in connection therewith, the following terms shall 
have the meanings herein assigned to them.
    (1) Account means an account established within the CCC for an 
association, which account shall be known as the ``No Net Cost Tobacco 
Account.''
    (2) Area when used in connection with an association, means the 
general geographical area in which farms of the producer-members of such 
association are located, as determined by the Secretary.
    (3) Association means a producer-owned cooperative marketing 
association which has entered into a loan agreement with CCC to make 
price support available to producers of tobacco.
    (4) CCC means the Commodity Credit Corporation.
    (5) Fund means the capital account to be established within each 
association, which account shall be known as the ``No Net Cost Tobacco 
Fund''.
    (6) Net gains means the amount by which total proceeds obtained from 
the sale by an association of a crop of quota tobacco pledged to CCC for 
a price support loan exceeds the principal amount of the price support 
loan made by CCC to the association on such crop, plus interest and 
charges.
    (7) Quota tobacco means any kind of tobacco for which marketing 
quotas are in effect or for which marketing quotas are not disapproved 
by producers.
    (8) To market means to dispose of quota tobacco by voluntary or 
involuntary sale, barter, exchange, gift between living persons, or 
consigning the tobacco to an association for a price support advance.
    (9) Purchaser means any person who purchases in the United States, 
either directly or indirectly for the account of such person or another 
person, burley or flue-cured tobacco from the producer, or, with respect 
to the 1986 and subsequent crops of such tobacco, from an association.
    (b) Establishing a No Net Cost Tobacco Fund. Except as provided in 
paragraph (c) of this section, each association shall establish and 
maintain a Fund in accordance with the requirements of section 106A of 
the Agricultural Act of 1949, as amended.
    (c) Establishing a No Net Cost Tobacco Account. Upon request of any 
association, an Account shall be establish and maintained for such 
association in lieu of a Fund. Also, after consultation with an 
association, the Secretary may established and maintain an Account for 
such association in lieu of a Fund if the Secretary determines that the 
accumulation of the Fund for such association is, and is likely to 
remain, inadequate to reimburse CCC for net losses which CCC may sustain 
under its loan agreement with such association. The requirements of 
section 106B of the Agricultural Act of 1949, as amended, shall be 
applicable with respect to an Account.
    (d) Producer contributions or assessments. As a condition of 
eligibility for price support during the applicable marketing year a 
producer of quota tobacco shall agree to make contributions to the Fund 
established for the association serving the area for the kind of tobacco 
to be marketed by such producer during such marketing year, or, if a 
Fund has not been established for such association, pay assessments to 
the Account established for such association. The amount of any 
contribution or assessment shall be determined in accordance with 
sections 106A and 106B of the Agricultural Act of 1949, as amended.

[[Page 509]]

    (e) Filing of agreement. Any agreement to make contributions to a 
Fund or pay assessments to an Account shall be on a form approved by the 
Deputy Administrator and shall be filed with the local county ASC 
committee prior to the issuance of a marketing card for use in 
identifying tobacco to be marketed from the farm of the kind of tobacco 
for which such agreement is applicable.
    (f) Responsibility of farm operator. The farm operator shall 
determine whether all producers on the farm agree to make contributions 
to the Fund or pay assessments to the Account, as applicable, that has 
been established for the association serving the area and may sign on 
their behalf an agreement which acknowledges that such persons will make 
such contibutions or pay such assessments.
    (g) [Reserved]
    (h) Purchaser assessments. Each purchaser of burley and flue-cured 
quota tobacco shall pay an assessment with respect to purchases of all 
such kind of tobacco marketed by a producer from a farm, including 
purchases from the association of such tobacco from the 1986 and 
subsequent crops. Such assessment shall be determined in accordance with 
section 106A or 106B, as applicable, of the Agricultural Act of 1949, as 
amended, and shall be paid into the applicable association's Fund or 
Account.
    (i) Collection and remission of contributions or assessments. (1) 
Any producer contribution or assessment due under this section shall be 
collected at the time of marketing:
    (i) From any dealer or warehouse operator who acquired the tobacco 
involved from the producer; or
    (ii) If the tobacco involved is marketed by a producer directly to 
any person outside the United States, from the producer; or
    (iii) If the tobacco involved is delivered directly to an 
association, by such association.
    (2) A dealer or warehouse operator may deduct the amount of any 
producer contribution or assessment from the price paid to the producer 
for such tobacco.
    (3) Any purchaser assessment due under this section shall be 
collected at the time of marketing:
    (i) From the dealer or warehouse operator who acquired the tobacco 
involved from the producer; or
    (ii) If the tobacco involved is marketed by a producer directly to 
any person outside the United States, from the producer who may add an 
amount equal to the purchaser assessment to the price paid by the 
purchaser for such tobacco.
    (4) If tobacco involved is marketed at a warehouse auction, the 
warehouse operator may add an amount equal to the purchaser assessment 
to the price paid by the purchaser of such tobacco.
    (5) All persons who are responsible for collecting any contribution 
or assessment required by this section shall remit such collections to 
the applicable association within 15 days of the date on which the 
tobacco was marketed except as provided in paragraphs (i)(5) (i) and 
(ii).
    (i) Warehouse operators who are responsible for collecting any 
contribution or assessment required by this section shall remit such 
collections to the applicable association in accordance with the 
provisions of the loan contact between the association and the warehouse 
operator.
    (ii) Dealers who are responsible for collecting any contribution or 
assessment as required by this section shall remit such collections to 
the State FSA office in accordance with part 723 of this title.
    (6) Any person who fails to collect and timely remit any collections 
required by this section shall be subject to a late payment charge. Such 
late payment shall be calculated and assessed in accordance with part 
1403 of this title.
    (j) Penalty for failure to collect and remit contributions or 
assessments. (1) If any person fails to collect and remit any 
contributions or assessments according to the provisions of this section 
such person shall be liable, in addition to any amount of contributions 
or assessments and any late payment charges, to a marketing penalty at a 
rate equal to 75 percent of the average market price (calculated to the 
nearest whole cent) for the kind of tobacco for the immediately 
preceding year on the quantity of tobacco as to which failure

[[Page 510]]

occurs. Such a penalty only shall be assessed after the person has been 
notified of the pending assessment of the penalty and the person has 
been afforded an opportunity for a hearing with respect to the 
assessment of the penalty. However, such marketing penalty shall not be 
assessed if such contributions or assessment are collected and remitted 
not later than 15 days after the date required by this part.
    (2) If a warehouse operator fails to collect and remit any 
contribution or assessment to an association within 15 days after the 
date provided in the loan contract between the warehouse operator and 
such association, the association shall provide to the State ASC 
committee for the state in which the warehouse operator's business is 
located a statement of the reason for the failure of the person to 
timely remit such collection, including the name and address of the 
warehouse involved, the pounds of tobacco purchased, the date of 
purchase, and the date the collection was required to be remitted. The 
association shall submit such facts within 25 days after the applicable 
due date regardless of whether such assessment or contribution has been 
remitted to the association.
    (3) The State ASC committee shall be responsible for assessing any 
marketing penalty determined in accordance with paragraph (j)(1) of this 
section.
    (4) The Deputy Administrator or the Deputy Administrator's designee 
may reduce the amount of any marketing penalty for which a person 
otherwise would be liable in accordance with the provisions of this 
section.
    (5) The marketing penalty provided in this section is in addition 
to, and not exclusive of, any other remedies that may be available with 
respect to collection and remission of any contributions or assessments 
made in accordance with this section.

[47 FR 51556, Nov. 16, 1982, and 48 FR 21110, May 11, 1983, as amended 
at 49 FR 24374, June 13, 1984; 51 FR 32427, Sept. 12, 1986; 53 FR 43675, 
Oct. 28, 1988; 56 FR 21259, May 8, 1991; 57 FR 43584, Sept. 21, 1992]



Sec. 1464.11  Nonrefundable marketing assessment.

    Effective only for each of the 1991 through 1998 crops of tobacco 
for which price support is made available according to Sec. 1464.2 of 
this part, both the producer and purchaser of such tobacco shall each 
remit to the CCC a nonrefundable marketing assessment in an amount equal 
to .5 percent of the national price support level for each such kind and 
crop on each pound of tobacco marketed. The nonrefundable marketing 
assessment will be:
    (a) Determined and announced by CCC at the time of announcing the 
national price support level for applicable kinds of tobacco or as soon 
thereafter as possible.
    (b) Collected and remitted to CCC in accordance with Sec. 1464.10(i) 
of this part from producers and purchasers at the time of marketing.
    (c) Collected by loan associations and remitted to CCC on all such 
tobacco pledged as loan collateral at the time such 1991 through 1998 
crops of tobacco are sold from loan inventories.
    (d) Subject to the same penalty for failure to be collected and 
remitted as provided for in Sec. 1464.10(j) of this part.
    (e) Enforceable in the courts of the United States by the Secretary.

[56 FR 21259, May 8, 1991, as amended at 60 FR 19667, Apr. 20, 1995; 62 
FR 3198, Jan. 22, 1997]



Sec. 1464.12  Flue-cured (types 11-14) tobacco.

    (a) The 1993-crop national price support level is 157.7 cents per 
pound.
    (b) The 1994-crop national price support level is 158.3 cents per 
pound.
    (c) The 1995-crop national price support level is 159.7 cents per 
pound.
    (d) The 1996-crop national price support level is 160.1 cents per 
pound.
    (e) The 1997-crop national price support level is 162.1 cents per 
pound.
    (f) The 1998-crop national price support level is 162.8 cents per 
pound.

[58 FR 11962, Mar. 2, 1993, as amended at 59 FR 6867, Feb. 14, 1994; 60 
FR 22460, May 8, 1995; 61 FR 37673, July 19, 1996; 62 FR 24800, May 7, 
1997; 63 FR 55938, Oct. 20, 1998]



Sec. 1464.13  Fire-cured (type 21) tobacco.

    (a) The 1993-crop national price support level is 139.5 cents per 
pound.
    (b) The 1994-crop national price support level is 140.7 cents per 
pound.
    (c) The 1995-crop national price support level is 143.0 cents per 
pound.

[[Page 511]]

    (d) The 1996-crop national price support level is 145.5 cents per 
pound.
    (e) The 1997-crop national price support level is 149.8 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997]



Sec. 1464.14  Fire-cured (types 22-23) tobacco.

    (a) The 1993-crop national price support level is 146.4 cents per 
pound.
    (b) The 1994-crop national price support level is 148.3 cents per 
pound.
    (c) The 1995-crop national price support level is 151.8 cents per 
pound.
    (d) The 1996-crop national price support level is 155.7 cents per 
pound.
    (e) The 1997-crop national price support level is 162.3 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997]



Sec. 1464.15  Dark air-cured (types 22-23) tobacco.

    (a) The 1993-crop national price support level is 125.5 cents per 
pound.
    (b) The 1994-crop national price support level is 127.3 cents per 
pound.
    (c) The 1995-crop national price support level is 130.4 cents per 
pound.
    (d) The 1996-crop national price support level is 133.9 cents per 
pound.
    (e) The 1997-crop national price support level is 139.8 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997]



Sec. 1464.16  Virginia sun-cured (type 37) tobacco.

    (a) The 1993-crop national price support level is 123.3 cents per 
pound.
    (b) The 1994-crop national price support is 124.5 cents per pound.
    (c) The 1995-crop national price support is 126.5 cents per pound.
    (d) The 1996-crop national price support is 128.8 cents per pound.
    (e) The 1997-crop national price support level is 132.6 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27221, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997]



Sec. 1464.17  Cigar-filler and binder (types 42-44 and 53-55) tobacco.

    (a) The 1993-crop national price support level is 107.4 cents per 
pound.
    (b) The 1994-crop national price support level is 108.4 cents per 
pound.
    (c) The 1995-crop national price support level is 110.1 cents per 
pound.
    (d) The 1996-crop national price support level is 112.0 cents per 
pound.
    (e) The 1997-crop national price support level is 116.9 cents per 
pound.

[58 FR 36863, July 9, 1993, as amended at 59 FR 27221, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996; 62 FR 43922, Aug. 
18, 1997]



Sec. 1464.18  Cigar-filler (type 46) tobacco.

    (a) The 1993-crop national price support level is 83.4 cents per 
pound.
    (b) The 1994-crop national price support level is 84.4 cents per 
pound.
    (c) The 1995-crop national price support level is 86.1 cents per 
pound.
    (d) Price support shall not be made available for the 1996 and 
subsequent crops of this type (46).

[58 FR 36863, July 9, 1993, as amended at 59 FR 27221, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996]



Sec. 1464.19  Burley (type 31) tobacco.

    (a) The 1993-crop national price support level is 168.3 cents per 
pound.
    (b) The 1994-crop national price support level is 171.4 cents per 
pound.
    (c) The 1995-crop national price support level is 172.5 cents per 
pound.
    (d) The 1996-crop national price support level is 173.7 cents per 
pound.
    (e) The 1997-crop national price support level is 176.0 cents per 
pound.
    (f) The 1998-crop national price support level is 177.8 cents per 
pound.

[58 FR 36859, July 9, 1993, as amended at 59 FR 22725, May 3, 1994; 60 
FR 27868, May 26, 1995; 61 FR 50425, Sept. 26, 1996; 62 FR 30230, June 
3, 1997; 63 FR 55940, Oct. 20, 1998]



Secs. 1464.20-1464.23  [Reserved]



Sec. 1464.24  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements contained in this 
regulations (7 CFR part 1464) have been approved by the Office of 
Management and Budget (OMB) under the provisions of 44 U.S.C.

[[Page 512]]

Chapter 35 and have been assigned OMB control number 0560-0047 and 0560-
0076.

[49 FR 2466, Jan. 20, 1984 and 49 FR 23334, June 6, 1984, as amended at 
49 FR 27135, July 2, 1984; 50 FR 4493, Jan. 31, 1985. Redesignated at 56 
FR 21259, May 8, 1991; Redesignated at 58 FR 11962, Mar. 2, 1993 ]



                     Subpart B--Importer Assessments

    Source: 59 FR 10944, Mar. 9, 1994, unless otherwise noted.



Sec. 1464.101  Definitions.

    (a) Applicability. The definitions set forth in this section shall 
be applicable for purposes of administering the provisions of this 
subpart.
    (b) Terms. For purposes of this subpart, the following terms shall 
have the following meanings unless otherwise indicated.
    Customs Service. The United States Customs Service of the United 
States Department of the Treasury.
    De minimis special entries. Imports of unmanufactured tobacco when 
the total importation at any time or on any date is 5 kilograms or less 
and such tobacco is imported segregated from other tobacco for use as 
samples, for research, or other use approved by the Director.
    Director. The Director, or Acting Director, Tobacco and Peanuts 
Division, Farm Service Agency, U.S. Department of Agriculture.
    Entered. Tobacco shall be considered to have entered the United 
States when the tobacco has been released by the Customs Service for 
entry (direct entry or bonded warehouse withdrawal) for consumption into 
the commerce of the United States, unless the tobacco is brought into 
the country outside the control of the Customs Service, in which case 
the tobacco will be considered to have entered the United States when 
such tobacco physically enters the territory of the United States.
    Entry date. The date on which the tobacco was released by Customs 
Service for consumption into the commerce of the United States, unless 
the tobacco enters commerce in the United States without such a release, 
in which case the entry date shall be the date such tobacco physically 
entered the territory of the United States.
    Imported tobacco. Effective January 1, 1994, any unmanufactured 
tobacco, including Oriental and Turkish tobacco, that was not produced 
in the United States but has entered the United States.
    Importer. A person who owns or controls such tobacco at the time at 
which the tobacco entered the United States.
    Person. An individual, partnership, association, corporation, 
cooperative, estate, trust, joint venture, joint operation, or other 
business enterprise or other legal entity, and, when applicable, a 
State, a political subdivision of a State, or any agency thereof.
    United States. The 50 States of the United States, the District of 
Columbia, Puerto Rico, or any Territory or Possession of the United 
States.
    Unmanufactured tobacco. Any tobacco that is not processed and 
packaged as a consumer tobacco product, including, but not limited to, 
any tobacco classifiable under the Harmonized Tariff Schedule of the 
United States (HTS) in existence as of January 1, 1994, under Chapter 
2401 of the HTS or under classifications 2403912000, 2403914050, 
2403914070, 2403990050, 2403990065, and 2403990070 of Chapter 2403 of 
the HTS.



Sec. 1464.102  Budget deficit marketing assessment.

    (a) General. Subject to the limits set out below, a budget deficit 
marketing assessment (BDMA) shall be remitted by all importers of 
tobacco for tobacco entered into the commerce of the United States.
    (b) Period of coverage. Except as provided for in (h), this section 
shall only apply to tobacco imported after September 13, 1995, and 
through the 1998 calendar year.
    (c) Tobacco covered. Except as provided in (g) and (h), this section 
shall only apply to unmanufactured tobacco entered for consumption into 
the commerce of the United States that is, as determined by the 
Director, the same kind or a like kind of tobacco for which a domestic 
price support program is in effect; provided further that, except as 
provided in (g) and (h), this section shall not apply to cigar kinds of 
tobacco.

[[Page 513]]

    (d) Rate. Except as provided in (h) and subject to provisions in 
this section dealing with mixed lots, the BDMA rate shall be the rate 
for the corresponding domestic tobacco for the marketing year for the 
domestic tobacco which is in progress when the imported tobacco becomes 
subject to the assessment. The BDMA rate shall be applied on a per 
kilogram basis to all quantities of such tobacco imported for 
consumption, except for de minimis special entries approved by the 
Director.
    (e) Mixed entries. For entries of mixed kinds of tobacco, the 
importer shall certify the composition of the mixed lot and remit the 
amount of assessment due for the respective quantity of each applicable 
kind of tobacco in the mixture. If the importer is unable or unwilling 
to determine and certify the composition of the mixed lot, the entire 
lot shall be subject to the BDMA rate for the kind of tobacco with the 
highest rate.
    (f) Remittance of BDMA. The BDMA amount due shall be remitted in 
accordance with Sec. 1464.104 of this part. Failure to remit or timely 
remit BDMAs shall subject the importer to a marketing penalty on the 
quantity for which such failure occurred. The penalty will be assessed 
in accordance with Sec. 1464.106 of this part.
    (g) Records and disputes. It shall be the responsibility of all 
importers of tobacco to establish that their tobacco is not subject to 
any BDMA or is not subject to a higher BDMA than that claimed to be due 
by such importer. All importers of tobacco must, accordingly, maintain 
sufficient records to demonstrate that they are not liable for a higher 
BDMA amount. Disputes involving the application of the BDMA shall be 
resolved by the Director.
    (h) Tobacco entered prior to September 13, 1995. Notwithstanding 
other provisions of this section, all imported tobacco which was entered 
for consumption into the United States from January 1, 1994, through 
September 13, 1995, shall be subject to a BDMA to the extent provided 
for under those rules which were in effect under this part during that 
period. BDMA's payable for that period shall be paid by the importer and 
shall be at the rate specified in those rules and subject to the terms 
of those rules.

[62 FR 3198, Jan. 22, 1997]



Sec. 1464.103  Importer no-net-cost assessments.

    (a) General. The importer of any unmanufactured imported burley or 
flue-cured tobacco shall pay a no-net-cost assessment on each kilogram 
of such tobacco that is imported after December 31, 1993, regardless of 
the form in which it is imported and regardless of whether it is mixed 
or blended with other tobacco, except for de minimis special entries.
    (b) Amount of assessment. The amount of the no-net-cost assessment 
which shall apply under this section shall be the amount determined by 
multiplying:
    (1) For imported burley tobacco, the number of kilograms of such 
tobacco by the sum, converted to per kilogram basis, of the no-net-cost 
producer and purchaser contributions or assessments as implemented 
pursuant to subpart A for domestic burley tobacco that is marketed 
during the domestic marketing year during which the tobacco was 
imported.
    (2) For imported flue-cured tobacco, the number of kilograms of such 
tobacco by the sum, converted to a per kilogram basis, of the no-net-
cost producer and purchaser contribution or assessments as implemented 
pursuant to subpart A for domestic flue-cured tobacco that is marketed 
during the domestic marketing year during which the tobacco was 
imported.



Sec. 1464.104  Remittance of importer assessments.

    (a) Where to remit. A person making a remittance shall follow 
instructions on the reverse side of form CCC-100.
    (b) When to remit. Importer assessments shall be remitted within 10 
business days after the date on which the imported tobacco is entered. 
For remittances that are mailed, the date of the remittance will be 
considered the date on which the official U.S. Postal Service postmark 
was affixed.
    (c) Instructions. Remittances must be made in accordance with 
instructions on form CCC-100.

[[Page 514]]

    (d) Documentation. Unless the Director shall direct otherwise, in 
writing, each remittance of an importer assessment shall be accompanied 
by form CCC-100, Importer Entry and Assessment Worksheet, and as 
applicable, Customs Service Form CF7501 or CF7505, or other Customs 
Service documentation that, based on the documentation and codes 
normally required or used by the Customs Service, includes the following 
with respect to each entry of imported tobacco:
    (1) Entry filer code/entry number,
    (2) Importer of record number,
    (3) Importer of record name and address,
    (4) Ultimate consignee number,
    (5) Entry date,
    (6) District/port of entry,
    (7) Harmonized Tariff Schedule Number,
    (8) Quantity entered (net weight in kilograms),
    (9) Entry type (formal or informal), and
    (10) Amount remitted.
    (e) Late payment charge. Any importer who fails to timely remit any 
assessment required by this subpart shall be subject to a late payment 
charge. Such late payment charge shall be calculated and assessed in 
accordance with part 1403 of this chapter, or successor regulations, and 
shall be in addition to any penalty due or other charge due.

[59 FR 10944, Mar. 9, 1994, as amended at 62 FR 3198, Jan. 22, 1997]



Sec. 1464.105  Refund of assessments.

    Assessments paid on imported tobacco may be refunded if the person 
importing such tobacco establishes, to the satisfaction of the Director, 
that the tobacco on which the assessment was paid has been reexported as 
unmanufactured tobacco or destroyed in an unmanufactured state. 
Assessment refunds will be based on entry weight as identified on 
Customs Service Form CF7501 or CF7505, or other documentation or data as 
required by the Director or found by the Director to be appropriate. 
Additional refund documentation, including proof of export, will be 
required consistent with the ``duty drawback'' provisions administered 
by the Customs Service pursuant to section 313(a) of the Tariff Act of 
1930, as amended. Persons seeking a refund shall submit their request 
and documentation to the Director, Tobacco and Peanuts Division, Farm 
Service Agency (FSA), United States Department of Agriculture (USDA), 
P.O. Box 2415, Washington, DC 20013-2415. Where deemed appropriate, the 
Director may, in writing, allow the use of substitute documentation and 
permit payments to successors in interest where the reexporter and 
importer are not the same. Where exporter and importer are not the same, 
refunds shall be to the importer unless the importer, in writing, 
notifies the Director that the payment should be made to the exporter.



Sec. 1464.106  Marketing penalties.

    (a) Failure to remit assessments. An importer who fails to timely 
remit an assessment in accordance with this subpart shall be subject to 
a marketing penalty.
    (1) Budget deficit marketing assessment. With respect to the 
assessment referred to in Sec. 1464.102, if an importer fails to pay or 
to timely remit the BDMA, such importer shall be subject to a marketing 
penalty at a per kilogram rate equal to 75 percent of the average market 
price (calculated to the nearest whole cent) for the respective like 
kind domestic tobacco being imported for the domestic marketing year 
which immediately preceded the domestic marketing year in which the 
imported tobacco became subject to the BDMA. Such marketing penalty rate 
shall apply to the quantity of tobacco on which the failure occurred. 
Amounts due for the penalty shall be in addition to any other amount as 
may be due, including, but not limited to, the amount due for the BDMA 
itself, or any applicable late fees, charges, or interest.
    (2) Importer no-net-cost assessment. With respect to assessments 
referred to in Sec. 1464.103, if an importer of burley or flue-cured 
tobacco fails to timely remit a no-net-cost assessment in accordance 
with the provisions in this subpart, such importer shall be liable, in 
addition to any no-net-cost assessment or other sum due and any late 
payment charges, to a marketing penalty at a per kilogram rate equal to 
75 percent of the average market price (calculated

[[Page 515]]

to the nearest whole cent) for the respective kind of domestic tobacco 
(burley or flue-cured) for the respective domestic tobacco marketing 
year in which such imported tobacco was imported, on the quantity of 
tobacco as to which the failure occurs.
    (b) Exception to marketing penalty. A marketing penalty otherwise 
required by this paragraph may be forgiven if the assessment for which 
nonpayment of the penalty could be assessed is remitted not later than 
15 calendar days after the date otherwise required for the remittance by 
this subpart.
    (c) Notification of marketing penalty. Before a marketing penalty is 
assessed, the importer shall be notified of the pending assessment and 
shall be afforded an opportunity for a hearing with respect to the 
assessment of the penalty. Such notification will be by, and such 
hearing will be before, the Director or designee.
    (d) Marketing penalty reduction. The Executive Vice President, CCC, 
or designee, may reduce the amount of any marketing penalty for which a 
person otherwise would be liable under the provisions of this section 
upon finding that failure to comply was unintentional or without 
knowledge on the part of such person and that such reduction would not 
damage the tobacco program or the administration of this part.
    (e) Prohibition of use, processing or marketing of tobacco for which 
the assessments have not been paid; other remedies. The knowing use, 
processing, or marketing of tobacco in the commerce of the United States 
of any tobacco for which an assessment or related charge required or 
provided for by this subpart is past due, is prohibited. The penalties 
and other remedies provided in this section shall be in addition to, and 
not exclusive of, other remedies that may be available.

[59 FR 10944, Mar. 9, 1994, as amended at 62 FR 3198, Jan. 22, 1997]



Sec. 1464.107  Recordkeeping.

    (a) Retention of records. Each importer of tobacco shall maintain 
all records that are relevant to any imported tobacco that is subject to 
an assessment in accordance with this subpart. Such records shall be 
retained for a period of three years following the date of entry of such 
tobacco. The burden of establishing compliance with this part shall be 
on the importer of the tobacco.
    (b) Examination of records and reports. The Executive Vice 
President, CCC, the Director, or any person authorized by one of such 
persons, or any auditor or agent of the Office of the Inspector General, 
is authorized to examine any records that such person has reason to 
believe are relevant to any matter pertinent to the payment of importer 
assessments under this subpart. Upon request of an authorized person, 
each importer shall make available for examination such records as are 
under such importer's control that may be relevant to imported tobacco 
that is subject to an assessment in accordance with this subpart or 
otherwise relevant to the administration of this subpart. Upon a failure 
to provide access or records, the Director may presume that such an 
inquiry would have produced information unfavorable to the party to the 
inquiry and shall make further determinations in the matter accordingly.



Sec. 1464.108  Reconsideration and appeal.

    An importer may request the Director to reconsider any determination 
of the amount of any assessment due, any marketing penalty assessed, or 
other adverse determination rendered in accordance with this subpart. 
Any request for reconsideration shall be made within 30 calendar days of 
the date of the notification of such assessment, marketing penalty, or 
adverse determination. If the importer is dissatisfied with a 
determination rendered by the Director with respect to a request for 
reconsideration, such importer may appeal the determination to the 
Director, National Appeals Division, FSA. Any such appeal shall be 
handled in accordance with the provisions of 7 CFR part 780.

[59 FR 10944, Mar. 9, 1994, as amended at 62 FR 3199, Jan. 22, 1997]

[[Page 516]]

         Appendix A to Part 1464--Importer Entry and Assessment 
                               Worksheet
    [GRAPHIC] [TIFF OMITTED] TC04SE91.001
    

[[Page 517]]





PART 1466--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM--Table of Contents




                      Subpart A--General Provisions

Sec.
1466.1  Applicability.
1466.2  Administration.
1466.3  Definitions.
1466.4  Program requirements.
1466.5  Priority areas and significant statewide natural resource 
          concerns.
1466.6  Conservation plan.
1466.7  Conservation practices.
1466.8  Technical and other assistance provided by qualified personnel 
          not affiliated with USDA.

                          Subpart B--Contracts

1466.20  Application for contracts and selecting offers from producers.
1466.21  Contract requirements.
1466.22  Conservation practice operation and maintenance.
1466.23  Cost-share and incentive payments.
1466.24  Contract modifications and transfers of land.
1466.25  Contract violations and termination.

                    Subpart C--General Administration

1466.30  Appeals.
1466.31  Compliance with regulatory measures.
1466.32  Access to operating unit.
1466.33  Performance based upon advice or action of representatives of 
          CCC.
1466.34  Offsets and assignments.
1466.35  Misrepresentation and scheme or device.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3839aa-3839aa-8.

    Source: 62 FR 28284, May 22, 1997, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1466.1  Applicability.

    Through the Environmental Quality Incentives Program (EQIP), the 
Commodity Credit Corporation (CCC) provides technical, educational, and 
financial assistance to eligible farmers and ranchers to address soil, 
water, and related natural resources concerns, and to encourage 
environmental enhancements, on their lands in an environmentally 
beneficial and cost-effective manner. The purposes of the program are 
achieved through the implementation of structural, vegetative, and land 
management practices on eligible land.



Sec. 1466.2  Administration.

    (a) Administration of EQIP is shared by the Natural Resources 
Conservation Service (NRCS) and the Farm Service Agency (FSA) as set 
forth below.
    (b) NRCS shall:
    (1) Provide overall program management and implementation leadership 
for EQIP;
    (2) Establish policies, procedures, priorities, and guidance for 
program implementation, including determination of priority areas;
    (3) Establish cost-share and incentive payment limits;
    (4) Determine eligibility of practices;
    (5) Provide technical leadership for conservation planning and 
implementation, quality assurance, and evaluation of program 
performance; and
    (6) Make funding decisions and determine allocations of program 
funds.
    (c) FSA shall:
    (1) Be responsible for the administrative processes and procedures 
for applications, contracting, and financial matters, including 
allocation and program accounting; and
    (2) Provide leadership for establishing, implementing, and 
overseeing administrative processes for applications, contracts, payment 
processes, and administrative and financial performance reporting.
    (d) NRCS and FSA shall concur in establishing policies, priorities, 
and guidelines related to the implementation of this part.
    (e) No delegation herein to lower organizational levels shall 
preclude the Chief of NRCS, or the Administrator of FSA, or a designee, 
from determining any question arising under this part or from reversing 
or modifying any determination made under this part that is the 
responsibility of their respective agencies.
    (f) CCC may enter into cooperative agreements with other Federal or 
State agencies, Indian tribes, conservation districts, units of local 
government, and public and private not for profit organizations to 
assist CCC with implementation of this part.



Sec. 1466.3  Definitions.

    The following definitions shall apply to this part and all documents 
issued

[[Page 518]]

in accordance with this part, unless specified otherwise:
    Administrator means the Administrator of the FSA, United States 
Department of Agriculture (USDA), or designee.
    Agricultural land means cropland, rangeland, pasture, forest land, 
and other land on which crops or livestock are produced.
    Animal unit means 1,000 pounds of live weight of any given livestock 
species or any combination of livestock species.
    Animal waste management facility means a structural practice used 
for the storage or treatment of animal waste.
    Applicant means a producer who has requested in writing to 
participate in EQIP. Producers who are members of a joint operation 
shall be considered one applicant.
    Chief means the Chief of NRCS, USDA, or designee.
    Confined livestock operation means a livestock facility that 
stables, confines, feeds, or maintains animals for a total of 45 days or 
more in any 12-month period and does not sustain crops, vegetation, 
forage growth, or post-harvest residues within the confined area in the 
normal growing season over any portion of the confinement facility.
    Conservation district means a political subdivision of a State, 
Indian 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 management system (CMS) means any combination of 
conservation practices and management practices that, if applied, will 
protect or improve the soil, water, or related natural resources. A CMS 
may treat one or all of the natural resources to the sustainable level, 
or to a greater or lesser extent than the sustainable level.
    Conservation plan means a record of a participant's decisions, and 
supporting information, for treatment of a unit of land or water, and 
includes the schedule of operations, activities, and estimated 
expenditures needed to solve identified natural resource problems.
    Conservation practice means a specified treatment, such as a 
structural or vegetative practice or a land management practice, which 
is planned and applied according to NRCS standards and specifications as 
a part of a CMS.
    Contract means a legal document that specifies the rights and 
obligations of any person who has been accepted for participation in the 
program.
    Cost-share payment means the monetary or financial assistance from 
CCC to the participant to share the cost of installing a structural or 
vegetative practice.
    County executive director means the FSA employee responsible for 
directing and managing program and administrative operations in one or 
more FSA county offices.
    Designated conservationist means a NRCS employee whom the State 
conservationist has designated as responsible for administration of 
EQIP. In the case of a priority area or other area that crosses State 
borders, the Chief or the Chief's designee will designate the NRCS 
official responsible for administration of EQIP in the priority area.
    Farm Service Agency county committee means a committee elected by 
the agricultural producers in the county or area, in accordance with 
Section 8(b) of the Soil Conservation and Domestic Allotment Act, as 
amended, or designee.
    Farm Service Agency State committee means a committee in a State or 
the Caribbean Area (Puerto Rico and the Virgin Islands) appointed by the 
Secretary in accordance with Section 8(b) of the Soil Conservation and 
Domestic Allotment Act, as amended.
    Field office technical guide 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.
    Incentive payment means the monetary or financial assistance from 
CCC to the participant in an amount and at

[[Page 519]]

a rate determined appropriate to encourage the participant to perform a 
land management practice that would not otherwise be initiated without 
program assistance.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) which 
is recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.
    Indian trust lands means real property in which:
    (1) The United States holds title as trustee for a Indian or tribal 
beneficiary, or
    (2) A Indian or tribal beneficiary holds title and the United States 
maintains a trust relationship.
    Land management practice means conservation practices that primarily 
require site-specific management techniques and methods to conserve, 
protect from degradation, or improve soil, water, or related natural 
resources in the most cost-effective manner. Land management practices 
include, but are not limited to, nutrient management, manure management, 
integrated pest management, integrated crop management, irrigation water 
management, tillage or residue management, stripcropping, contour 
farming, grazing management, and wildlife habitat management.
    Life span means the period of time specified in the contract or 
conservation plan during which the conservation management systems or 
component conservation practices are to be maintained and used for the 
intended purpose.
    Liquidated damages means a sum of money stipulated in the contract 
which the participant agrees to pay if the participant breaches the 
contract. The sum represents an estimate of the anticipated or actual 
harm caused by the breach, and reflects the difficulties of proof of 
loss and the inconvenience or nonfeasibility of otherwise obtaining an 
adequate remedy.
    Livestock means animals produced for food or fiber such as dairy 
cattle, beef cattle, poultry, turkeys, swine, sheep, horses, fish and 
other animals raised by aquaculture, or animals the State 
conservationist identifies in consultation with the State technical 
committee.
    Livestock production means farm and ranch operations involving the 
production, growing, raising, breeding, and reproduction of livestock or 
livestock product.
    Livestock-related natural resource concern means any environmental 
condition, either on-site or off-site, that is directly related to 
livestock activity or to livestock manure or waste.
    Local work group means representatives of FSA, the Cooperative State 
Research, Education, and Extension Service (CSREES), the conservation 
district, and other Federal, State, and local government agencies, 
including Tribes and Resource Conservation and Development councils, 
with expertise in natural resources who consult with NRCS on decisions 
related to EQIP implementation.
    National conservation priority area means a watershed, multi-state 
area, or region of specific environmental sensitivity designated by the 
Chief.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during its life span. Operation includes the administration, 
management, and performance of non-maintenance actions needed to keep 
the completed practice safe and functioning as intended. Maintenance 
includes work to prevent deterioration of the practice, repairing 
damage, or replacement of the practice to its original condition if one 
or more components fail.
    Participant means an applicant who is a party to an EQIP contract.
    Priority area means a watershed, area, or region that is designated 
under this part because of specific environmental sensitivities or 
significant soil, water, or related natural resource concerns.
    Private agribusiness sector means agricultural producers, certified 
crop advisors, professional crop consultants that are certified or 
certified and independent, agricultural cooperatives, integrated pest 
management coordinators and scouts, agricultural input retail

[[Page 520]]

dealers, and other technical consultants.
    Producer means a person who is engaged in livestock or agricultural 
production.
    Regional conservationist means the NRCS employee authorized to 
direct and supervise NRCS activities in a NRCS region.
    Related natural resources means those natural resources that are 
associated with soil and water, including air, plants, and animals, and 
the land or water on which they may occur, including grazing land, 
wetland, forest land, and wildlife habitat.
    Resource management system means a conservation management system 
that, when implemented, achieves sustainable use of the soil, water, and 
related natural resources.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    State conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area, or the 
Pacific Basin Area.
    State executive director means the FSA employee authorized to direct 
and supervise FSA activities in a State or the Caribbean Area (Puerto 
Rico and the Virgin Islands).
    State technical committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Structural practice means a conservation practice which primarily 
involves the establishment, construction, or installation of a site-
specific measure to conserve, protect from degradation, or improve soil, 
water, or related natural resources in the most cost-effective manner. 
Examples include, but are not limited to, animal waste management 
facilities, terraces, grassed waterways, tailwater pits, livestock water 
developments, and capping of abandoned wells.
    Technical assistance means the personnel and support resources 
needed to conduct conservation planning; conservation practice survey, 
layout, design, installation, and certification; training, 
certification, and provide quality assurance for professional 
conservationists; and evaluation and assessment of the program.
    Unit of concern means a parcel of agricultural land that has natural 
resource conditions that are of concern to the participant.
    Vegetative practice means a conservation practice which primarily 
involves the establishment or planting of a site-specific vegetative 
measure to conserve, protect from degradation, or improve soil, water, 
or related natural resources in the most cost-effective manner. Examples 
include, but are not limited to, contour grass strips, filterstrips, 
critical area plantings, tree planting, and permanent wildlife habitat.



Sec. 1466.4  Program requirements.

    (a) Program participation is voluntary. The participant, in 
cooperation with the local conservation district, develops a 
conservation plan for the farm or ranching unit of concern. The 
participant's conservation plan serves as the basis for the EQIP 
contract. CCC provides cost-share or incentive payments to apply needed 
conservation practices and land use adjustments within a time schedule 
specified by the conservation plan.
    (b) The Chief determines the funds available to NRCS for technical 
assistance according to the purpose and projected cost for which the 
technical assistance is provided by NRCS or designee in a fiscal year. 
The Chief allocates an amount according to the type of expertise 
required, the quantity of time involved, the timeliness required, the 
technology needed, and other factors as determined appropriate by the 
Chief. Funding shall not exceed the projected cost to NRCS of the 
technical assistance provided in a fiscal year.
    (c) To be eligible to participate in EQIP, an applicant must:
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found at part 12 of this title;
    (2) Have control of the land for the life of the proposed contract 
period.
    (i) An exception may be made by the Chief in the case of land 
allotted by the Bureau of Indian Affairs (BIA), tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control;

[[Page 521]]

    (ii) If the applicant is a tenant of the land involved in 
agricultural production the applicant shall provide CCC with the written 
concurrence of the landowner in order to apply a structural or 
vegetative practice.
    (3) Submit a conservation plan that is acceptable to NRCS, is 
approved by the conservation district, and is in compliance with the 
terms and conditions of the program;
    (4) Comply with the provisions at Sec. 1412.304 of this chapter for 
protecting the interests of tenants and sharecroppers, including 
provisions for sharing, on a fair and equitable basis, payments made 
available under this part, as may be applicable; and
    (5) Supply information as required by CCC to determine eligibility 
for the program.
    (d) Land used as cropland, rangeland, pasture, forest land, and 
other land on which crops or livestock are produced, including 
agricultural land that NRCS determines poses a serious threat to soil, 
water, or related natural resources by reason of the soil types; 
terrain; climate; soil, topographic, flood, or saline characteristics; 
or other factors or natural hazards, including the existing agricultural 
management practices of the applicant, may be eligible for enrollment in 
EQIP. Additionally, land may only be considered for enrollment in EQIP 
if NRCS determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is under private control for the contract period and is 
included in the participant's operating unit;
    (ii) Conservation practices will contribute to an improvement in the 
identified natural resource concern; and
    (iii) The participant has provided CCC with written authorization 
from the government landowner to apply the conservation practices; or
    (3) Tribal, allotted, or Indian trust land.
    (e) Fifty percent of available EQIP funds will be targeted to 
livestock-related natural resource concerns, including concerns on 
grazing lands and other lands directly attributable to livestock, 
measured at the national level.



Sec. 1466.5  Priority areas and significant statewide natural resource concerns.

    (a)(1) Consistent with maximizing the overall environmental benefits 
per dollar expended by the program, NRCS may:
    (i) Designate a watershed, an area, or a region of special 
environmental sensitivity or having significant soil, water, or related 
natural resource concern as a priority area and give special 
consideration to applicants who have conservation plans that address the 
natural resource concern(s) for which the priority area was designated;
    (ii) Designate national conservation priority areas where the nature 
or scope of a natural resource concern necessitates greater coordination 
of efforts across boundaries; and
    (iii) Identify significant statewide natural resource concerns 
outside a priority area.
    (2) In addition to other factors identified in this section, 
priority areas, national conservation priority areas, and significant 
statewide natural resource concerns shall emphasize off-site benefits to 
the environment and coordination with other Federal and non-Federal 
conservation programs, including the Conservation Reserve Program and 
the Wetlands Reserve Program.
    (b) CCC may approve technical, educational, and financial assistance 
under this part to participants with significant statewide natural 
resource concerns outside a priority area.
    (c) To be considered for approval of a priority area, a Federal, 
State, or local government agency, Indian tribe, or a private group or 
entity shall work cooperatively with a respective local work group and 
State technical committee in identifying potential priority areas. The 
local work group shall obtain input from private individuals, groups, 
and organizations when considering and identifying potential priority 
areas. Proposals developed at the local level shall be reviewed by the 
State technical committee which makes a recommendation to the NRCS State 
conservationist. The priority area proposal shall include:
    (1) A description, quantified when and where possible, of the nature 
and

[[Page 522]]

extent of natural resource concerns in the proposed area;
    (2) A description, quantified when and where possible, of how the 
proposed goals, objectives, and solutions for the natural resource 
problems would maximize the environmental benefits that would be 
delivered with the requested Federal dollars, both within the priority 
area and as part of the overall program provided under this part;
    (3) Background information such as science-based data on 
environmental status and needs, soils information, demographic 
information, and other available technical data that illustrate the 
nature and extent of natural resource concerns in the priority area or 
the appropriateness of the proposed solution to those natural resource 
concerns.
    (4) The existing human resources, incentive programs, education 
programs, and on-farm research programs available at the Federal, State, 
Indian tribe, and local levels, both public and private, to assist with 
the areawide activities;
    (5) The technical, educational, and financial assistance needed from 
EQIP to help meet the areawide goals and objectives;
    (6) Ways and means to measure performance and success, quantified 
when and where possible, and plans to use existing or obtain additional 
science-based information; and
    (7) An explanation, quantified when and where possible, of the 
degree of difficulty producers face in complying with environmental 
laws.
    (d) The NRCS State conservationist, in consultation with the State 
technical committee and based on recommendations of local work groups, 
will approve the designation of a priority areas and make funding 
recommendations to the Chief. NRCS will evaluate proposals for priority 
area designations according to natural resource and environmental 
factors as identified in paragraph (d)(1) of this section, the economic 
significance of the factors, the incorporation of conservation practices 
that best address the factors, and the ability to obtain multiple 
conservation benefits relative to the significance of these natural 
resource factors.
    (1) NRCS shall consider the following factors in determining the 
significance of the natural resource concern(s) identified in the 
proposal:
    (i) Soil types and characteristics;
    (ii) Terrain and topographic features;
    (iii) Climatic conditions;
    (iv) Flood hazards;
    (v) Saline characteristics of land or water;
    (vi) Environmental sensitivity of the land, such as wetlands and 
riparian areas;
    (vii) Quality and intended use of the land;
    (viii) Quality and intended use of the receiving waters, including 
fishery habitat and source of drinking water supply;
    (ix) Wildlife and wildlife habitat quality and quantity;
    (x) Quality of the air; or
    (xi) Other natural hazards or other factors, including the existing 
agricultural management practices of the producers in the area or pest 
problems which may threaten natural resources.
    (2) NRCS will consider the following factors in its allocation of 
funds:
    (i) Condition of the natural resources;
    (ii) Significance of the natural resource concern;
    (iii) Improvements that NRCS expects will result from implementation 
of the conservation plan;
    (iv) Expected number of producers who will participate and the time 
and financial commitment that the producers will provide;
    (v) Estimated program cost to provide technical, educational, and 
financial assistance;
    (vi) Level of coordination with and support from existing Federal, 
State, tribal, and local programs, including private sources, and both 
direct and in-kind contributions;
    (vii) Ways the program can best assist producers in complying with 
Federal, State, and tribal environmental laws, quantified where 
possible; and
    (viii) Other factors the NRCS determines will result in maximization 
of environmental benefits per dollar expended.

[[Page 523]]

    (e) A NRCS State conservationist, in consultation with a State 
technical committee and based on recommendations of a local work group, 
may approve program assistance to participants with significant 
statewide natural resource concerns outside a funded priority area.
    (f)(1) The Chief may designate national conservation priority areas 
using the identified national program objectives and criteria. The Chief 
may receive nominations from Federal, State, or local government 
agencies, Indian tribes, or private groups or entities, and may consult 
with other Federal agencies in selecting national conservation priority 
areas. Consistent with maximizing the overall environmental benefits per 
dollar expended by the program, the Chief may designate national 
conservation priority areas under this part to provide technical 
assistance, cost-share payments, incentive payments, and education for 
producers to comply with nonpoint source pollution requirements, other 
Federal, State, tribal or local environmental laws, or to meet other 
conservation needs.
    (2) NRCS will consider the following factors in deciding whether to 
designate a national conservation priority area in which program 
assistance will be provided:
    (i) Condition of the natural resources;
    (ii) Significance of the natural resource concern;
    (iii) Improvements that NRCS expects will result from implementation 
of the conservation plan;
    (iv) Expected number of producers who will participate and the time 
and financial commitment that the producers will provide;
    (v) Estimated program cost to provide technical, educational, and 
financial assistance;
    (vi) Level of coordination with and support from existing State and 
local programs, including private sources, and both direct and in-kind 
contributions;
    (vii) Ways the program can best assist producers in complying with 
Federal, State, and tribal environmental laws, quantified where 
possible; and
    (viii) Other factors that will assist CCC in maximizing the overall 
environmental benefit per dollar expended under this part.
    (g) NRCS will establish program outreach activities at the national, 
State, and local levels in order to ensure that producers whose land has 
environmental problems and natural resource concerns are aware, 
informed, and know that they may be eligible to apply for program 
assistance. Special outreach will be made to eligible producers with 
historically low participation rates, including but not restricted to 
limited resource producers, small-scale producers, Indian tribes, Alaska 
natives, and Pacific Islanders.
    (h) NRCS State conservationists shall develop an education plan that 
describes the educational assistance that will be provided to enhance 
program participant's knowledge about conservation opportunities, will 
aid in implementing their conservation plan, and enhance environmental 
benefits that will be realized through implementation of the program. In 
the development of the education plan, NRCS will design a coordinated 
approach, including national, State, and local components depending on 
the similar or unique education needs identified. NRCS will encourage 
cooperation among education providers, such as the Extension system, 
conservation districts, State agencies, and other public and private 
education providers, as well as the use of existing educational 
resources, material, or programs that deal with natural resource related 
issues.
    (i) The Chief, with FSA concurrence, will make funding decisions for 
national conservation priority areas, State-approved priority areas, and 
significant statewide natural resource concerns outside a funded 
priority area.
    (1) After review of funding requests, the Chief may base funding 
decisions on an allocation process which considers:
    (i) The significance of the environmental and natural resources 
conditions;
    (ii) Factors used and considered in accordance with paragraphs (d) 
and (f) of this section;

[[Page 524]]

    (iii) The need to maximize environmental benefits per dollar 
expended;
    (iv) The capability of the partners involved in the proposal to 
provide flexible technical, educational, and financial assistance;
    (v) The conservation needs of farmers and ranchers in complying with 
the highly erodible land and wetland conservation provisions of part 12 
of this title and Federal, State, and tribal environmental laws;
    (vi) The opportunity for encouraging environmental enhancement;
    (vii) The anticipated or proven performance of the partners involved 
in the proposal in delivering the program; and
    (viii) Other relevant information to meet the purposes of the 
program as found in this part.
    (2) In evaluating the considerations described in paragraph (i)(1) 
of this section, the Chief may consult other Federal agencies with the 
appropriate expertise and information.
    (3) The approval of a priority area at the State level does not 
necessarily mean that funds will be allocated to that area. Funding may 
be allocated to a priority area for one or more years. Proposals that 
are not funded may be resubmitted to the Chief for subsequent review and 
consideration to determine if the resubmitted proposal meets Federal 
priorities for funding.



Sec. 1466.6  Conservation plan.

    (a) The participant shall develop and submit a conservation plan for 
the farm or ranch unit of concern that, when implemented, protects the 
soil, water, or related natural resources in a manner that meets the 
purpose of the program, is acceptable to NRCS, and is approved by the 
conservation district. This plan forms the basis for an EQIP contract.
    (1) When considering the acceptability of the plan, NRCS will 
consider whether the participant will use the most cost-effective 
conservation practices to solve the natural resource concerns and 
maximize environmental benefits per dollar expended.
    (2) As determined by NRCS, the conservation plan must allow the 
participant to achieve a cost-effective resource management system, or 
some appropriate portion of that system, identified in the applicable 
NRCS field office technical guide, for the priority natural resource 
condition of concern in the priority area or the significant statewide 
natural resource concern outside a funded priority area.
    (b) Upon a participant's request, the NRCS may provide technical 
assistance to a participant. NRCS may utilize the services of qualified 
personnel of cooperating Federal, State, or local agencies, Indian 
tribes, or private agribusiness sector or organizations, in performing 
its responsibilities for technical assistance. Participants may use the 
services of qualified non-NRCS professionals to provide technical 
assistance. NRCS retains approval authority over the technical adequacy 
of work done by non-NRCS personnel for the purpose of determining EQIP 
contract compliance.
    (c) Participants are responsible for implementing the conservation 
plan. A participant may seek additional assistance from other public or 
private organizations or private agribusiness sector as long as the 
activities funded are in compliance with this part.
    (d) All conservation practices scheduled in the conservation plan 
are to be carried out in accordance with the applicable NRCS field 
office technical guide.
    (e) The conservation plan, or supporting documentation, for the farm 
or ranch unit of concern shall include:
    (1) A description of the prevailing farm or ranch enterprises and 
operations that may be relevant to conserving and enhancing soil, water, 
or related natural resources;
    (2) A description of relevant natural resources, including soil 
types and characteristics, rangeland types and conditions, proximity to 
water bodies, wildlife habitat, or other relevant characteristics 
related to the conservation and environmental objectives of the plan;
    (3) A description of the participant's specific conservation and 
environmental objectives to be achieved;
    (4) To the extent practicable, the quantitative or qualitative goals 
for achieving the participant's conservation and environmental 
objectives;

[[Page 525]]

    (5) A description of one or more conservation practices in the 
conservation management system to be implemented to achieve the 
conservation and environmental objectives;
    (6) A description of the schedule for implementing the conservation 
practices, including timing and sequence; and
    (7) Information that will enable evaluation of the effectiveness of 
the plan in achieving the conservation and environmental objectives.
    (f) To simplify the conservation planning process for the 
participant, the conservation plan may be developed, at the request of 
the participant, as a single plan that incorporates, to the extent 
possible, any or all other Federal, State, tribal, or local government 
program or regulatory requirements. Participants do not need to replace 
existing plans developed by natural resource professionals if such plans 
meet the resource management objectives under this part. NRCS may accept 
an existing conservation plan developed and required for participation 
in any other USDA program if the conservation plan otherwise meets the 
requirements of this part. When a participant develops a single 
conservation plan for more than one program, the participant shall 
clearly identify the portions of the plan that are applicable to the 
EQIP contract. It is the responsibility of the participant to ascertain 
and comply with any and all applicable program or regulatory 
requirements, and the NRCS development or approval of a conservation 
plan shall not be deemed to constitute compliance with program or 
regulatory requirements administered or enforced by another agency.



Sec. 1466.7  Conservation practices.

    (a)(1) The NRCS, with FSA consultation, shall provide guidance for 
determining structural, vegetative, and land management practices 
eligible for program payments. To be considered as an eligible 
conservation practice, the practices must provide beneficial, cost-
effective approaches for participants to change or adapt operations to 
conserve or improve soil, water, or related natural resources or to 
provide for environmental enhancement.
    (2) The designated conservationist, in consultation with the State 
technical committee or local work group, shall determine the 
conservation practices eligible for program payments for the priority 
area or for significant statewide natural resource concerns outside a 
priority area.
    (3) Where new technologies or conservation practices that provide a 
high potential for maximizing the environmental benefits per dollar 
expended have been developed, NRCS may approve interim conservation 
practice standards and financial assistance for pilot work to evaluate 
and assess the performance, efficacy, and effectiveness of the 
technology or conservation practices at maximizing environmental 
benefits per dollars expended. NRCS may involve other entities in the 
pilot testing, including conservation districts, extension and research 
agencies and institutions, private agribusiness sector, and others.
    (b)(1) CCC cannot provide cost-share assistance to construct an 
animal waste management facility on a large confined livestock 
operation. CCC may fund other structural, vegetative, or land management 
practices needed in the conservation management system to address the 
livestock-related natural resource concerns on a large confined 
livestock operation. Except as provided by paragraph (b)(2) of this 
section, CCC will consider a producer with confined livestock operations 
of more than 1,000 animal unit equivalents to be a large confined 
livestock operation and ineligible for financial assistance for 
construction of an animal waste management facility. When determining 
the number of livestock in the participant's operation for eligibility 
purposes, the total number of animals confined at all locations of the 
participant's livestock operation will be used.
    (2) The NRCS State conservationist may develop a definition for a 
large confined livestock operation as it applies to that particular 
State using criteria recommended by the State technical committee. The 
criteria will consider but not be limited to such factors as:

[[Page 526]]

    (i) The cost-effectiveness of the facility and its potential to 
maximize environmental benefits per dollar expended;
    (ii) The ability of the producer to pay for the cost of animal waste 
management facilities;
    (iii) The significance of the natural resource concern resulting 
from the operation;
    (iv) The prevailing State, Tribe, or local implementation of various 
Federal, Tribal, and State environmental laws and regulations, including 
regulations promulgated pursuant to the Clean Water Act (33 U.S.C. 1251 
et seq.) and guidance developed under Sec. 6217 of the Coastal Zone Act 
Reauthorization Amendments of 1990 (16 U.S.C. 1455b);
    (v) The particular characteristics of modern livestock operations; 
and
    (vi) The size of the operation in relation to other confined 
livestock operations in the State or region.
    (3) The NRCS State conservationist, in consultation with the State 
technical committee, shall place emphasis on the considerations 
contained in paragraphs (b)(2)(i) and (b)(2)(ii) of this section when 
developing the criteria to define a large confined livestock operation.
    (4) The definitions developed by NRCS State conservationists must be 
approved by the Chief, who will also provide oversight on their 
implementation. In approving the definitions the Chief will consider:
    (i) The justification for the definition; and
    (ii) The need for consistency in the definitions used between and 
among States, to the greatest extent possible.
    (5) The Chief will report semiannually to the Secretary during the 
first two years of the program on the implementation of paragraph (b) of 
this section, including the impact that may have occurred to the 
environment and to the structure of livestock agriculture.



Sec. 1466.8  Technical and other assistance provided by qualified personnel not affiliated with USDA.

    (a) A NRCS State conservationist may utilize technical and other 
assistance from qualified personnel of other Federal, State, and local 
agencies, or Indian tribes, and will encourage producers to use the most 
cost-effective technical assistance available, including if appropriate, 
using the services of the private agribusiness sector to carry out the 
assigned responsibilities of the program.
    (b) Technical and other assistance provided by qualified personnel 
not affiliated with USDA may include, but is not limited to: 
conservation planning; conservation practice survey, layout, design, 
installation, and certification; information, education, and training 
for producers; and training, certification, and quality assurance for 
professional conservationists.
    (c) NRCS shall provide technical coordination and leadership for the 
program, regardless of who provides technical and other assistance, and 
shall assure that the quality of the assistance obtained from other 
Federal, State, and local agencies, Indian tribes, and the private 
agribusiness sector is acceptable for purposes of this part. Non-NRCS 
assistance shall not be deemed to satisfy an EQIP contract entered into 
under subpart B of this part until the assistance has been approved by 
NRCS.



                          Subpart B--Contracts



Sec. 1466.20  Application for contracts and selecting offers from producers.

    (a) Any producer who has eligible land may submit an application for 
participation in the EQIP to a USDA service center. Producers who are 
members of a joint operation shall file a single application for the 
joint operation.
    (b) CCC will accept applications throughout the year. NRCS shall 
rank and select the offers of applicants periodically, as determined 
appropriate by NRCS after consultation with the State technical 
committee and on the recommendation of the local work groups.
    (c) The designated conservationist, in consultation with the local 
work group, will develop ranking criteria to prioritize applications 
within a priority area. NRCS shall prioritize applications from the same 
EQIP-funded priority area using the criteria specific to the area. The 
FSA county committee,

[[Page 527]]

with the assistance of the designated conservationist and the FSA county 
executive director, shall approve for funding the applications in a 
priority area based on eligibility factors of the applicant and the NRCS 
ranking.
    (d) The NRCS State conservationist, in consultation with the State 
technical committee, and using quality criteria in the NRCS field office 
technical guide, will develop criteria to prioritize applications from 
applicants with significant statewide natural resource concerns outside 
a priority area. The FSA county committee, with assistance of the 
designated conservationist and FSA county executive director, shall 
approve for funding these applications based on the eligibility factors 
of the applicant and the NRCS ranking.
    (e) The designated conservationist will work with the applicant to 
collect the information necessary to evaluate the application using the 
ranking criteria. A participant has the option of offering and accepting 
less than the maximum program payments allowed.
    (f) NRCS will rank all applications using criteria that will 
consider:
    (1) The environmental benefits per dollar expended;
    (2) A reasonable estimate of the cost of the conservation practices, 
the program payments that will be paid to the applicant, and other 
factors for determining which applications will present the least cost 
to the program;
    (3) The environmental benefits that will be derived by applying the 
conservation practices in the conservation plan which will meet the 
purposes of the program;
    (4) The extent to which the contract will assist the applicant in 
complying with Federal, State, tribal, or local environmental laws;
    (5) Whether the land in the application is located in a priority 
area and the extent to which the contract will assist the priority area 
goals and objectives.
    (g) If two or more applications have an equal rank, the application 
that will result in the least cost to the program will be given greater 
consideration.



Sec. 1466.21  Contract requirements.

    (a) In order for a participant to receive cost-share or incentive 
payments, the participant shall enter into a contract agreeing to 
implement a conservation plan or portions thereof. FSA shall determine 
the eligibility of participants. The FSA county committee, with NRCS 
concurrence, shall use the NRCS ranking consistent with the provisions 
of Sec. 1466.20 and grant final approval of a contract.
    (b) An EQIP contract shall:
    (1) Incorporate by reference all portions of a conservation plan 
applicable to EQIP;
    (2) Be for a duration of not less than 5 years nor more than 10 
years;
    (3) Incorporate all provisions as required by law or statute, 
including participant requirements to:
    (i) Not conduct any practices on the farm or ranch unit of concern 
that would tend to defeat the purposes of the contract;
    (ii) Refund any program payments received with interest, and forfeit 
any future payments under the program, on the violation of a term or 
condition of the contract, consistent with the provisions of 
Sec. 1466.25;
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations of the contract, consistent with the provisions of 
Sec. 1466.24; and
    (iv) Supply information as required by CCC to determine compliance 
with the contract and requirements of the program.
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec. 1466.22; and
    (5) Any other provision determined necessary or appropriate by CCC.
    (c) The participant must apply a financially assisted practice 
within the first 12 months of signing a contract.
    (d) There is a limit of one EQIP contract at any one time for each 
tract of agricultural land, as identified with a FSA tract number, 
determined at the time of the application for EQIP assistance. Subject 
to the payment limitation set out elsewhere in this part, a participant 
may have subsequent EQIP contracts for different natural resource

[[Page 528]]

needs or concerns following completion of a previous EQIP contract on 
the same tract.



Sec. 1466.22  Conservation practice operation and maintenance.

    The contract shall incorporate the operation and maintenance of 
conservation practices applied under the contract. The participant shall 
operate and maintain the conservation practice for its intended purpose 
for the life span of the conservation practice, as identified in the 
contract or conservation plan, as determined by CCC. Conservation 
practices installed before the execution of a contract, but needed in 
the contract to obtain the environmental benefits agreed upon, are to be 
operated and maintained as specified in the contract. NRCS may 
periodically inspect the conservation practice during the life span of 
the practice as specified in the contract to ensure that operation and 
maintenance is occurring.



Sec. 1466.23  Cost-share and incentive payments.

    (a)(1) The maximum direct Federal share of cost-share payments to a 
participant shall not be more than 75 percent of the projected cost of a 
structural or vegetative practice. The direct Federal share of cost-
share payments to a participant shall be reduced proportionately below 
75 percent, or the cost-share limit as set in paragraph (a)(3) of this 
section, to the extent that total financial contributions for a 
structural or vegetative practice from all public and private entity 
sources exceed 100 percent of the projected cost of the practice.
    (2) CCC shall provide incentive payments to participants for a land 
management practice in an amount and at a rate necessary to encourage a 
participant to perform the land management practice that would not 
otherwise be initiated without government assistance.
    (3) CCC shall set the cost-share and incentive payment limits, as 
determined by:
    (i) The designated conservationist, in consultation with the local 
work group and State technical committee, for a priority area; or
    (ii) The NRCS State conservationist, in consultation with the State 
technical committee, for participants subject to environmental 
requirements or with significant statewide natural resource concerns 
outside a funded priority area.
    (4) Cost-share payments and incentive payments may both be included 
in a contract.
    (5) Cost-share and incentive payments will not be made to a 
participant who has applied or initiated the application of a 
conservation practice prior to approval of the contract.
    (b) Except as provided in paragraph (c) of this section, the total 
amount of cost-share and incentive payments paid to a person under this 
part may not exceed:
    (1) $10,000 for any fiscal year; and
    (2) $50,000 for any multi-year contract.
    (c) To determine eligibility for payments, CCC shall use the 
provisions in 7 CFR part 1400 related to the definition of person and 
the limitation of payments, except that:
    (1) States, political subdivisions, and entities thereof will not be 
persons eligible for payment.
    (2) For purposes of applying the payment limitations provided for in 
this section, the provisions in part 1400, subpart C for determining 
whether persons are actively engaged in farming, subpart E for limiting 
payments to certain cash rent tenants, and subpart F as the provisions 
apply to determining whether foreign persons are eligible for payment, 
will not apply.
    (3)(i) The NRCS State conservationist may authorize, on a case-by-
case basis, payments in excess of $10,000 in any fiscal year, up to the 
$50,000 limitation in paragraph (b) of this section. However, such 
increase in payments for a certain year shall be offset by reductions in 
the payments in subsequent years. A decision to approve payments in 
excess of the annual limit will consider whether:
    (A) The practices in the system need to be applied at once so that 
the system is fully functioning to resolve the natural resource problem;
    (B) The natural resource problem is so severe that resolving the 
problem immediately is needed;

[[Page 529]]

    (C) The producer needs to complete the practices in one year so that 
the farming operation is not interrupted or disturbed by the practice 
installation over a 5-10 year period; or
    (D) The producer can install the practices at a lower total cost 
when installed in one year, thereby reducing the program payments.
    (ii) With respect to land under EQIP contract which is inherited in 
the second or subsequent years of the contract, the $10,000 fiscal year 
limitation shall not apply to the extent that the payments from any 
contracts on the inherited land cause an heir, who was party to an EQIP 
contract on other lands prior to the inheritance, to exceed the annual 
limit.
    (iii) With regard to contracts on tribal land, Indian trust land, or 
BIA allotted land, payments exceeding one limitation may be made to the 
tribal venture if an official of the BIA or tribal official certifies in 
writing that no one person directly or indirectly will receive more than 
the limitation.
    (4) Any cooperative association of producers that markets 
commodities for producers shall not be considered to be a person 
eligible for payment.
    (5) The status of an individual or entity on the date of application 
shall be the basis on which the determination of the number of persons 
involved in the farming operation is made.
    (6) A participant shall not be eligible for cost-share or incentive 
payments for conservation practices on eligible land if the participant 
receives cost-share payments or other benefits for the same land under 
the Conservation Reserve Program (16 U.S.C. 3831-3836) or the Wetlands 
Reserve Program (16 U.S.C. 3837 et seq.).
    (d) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before the CCC 
will approve the payment of any cost-share or incentive payments.
    (e) CCC expenditures under a contract entered into during a fiscal 
year shall not be made until the subsequent fiscal year.



Sec. 1466.24  Contract modifications and transfers of land.

    (a) The participant and CCC may modify a contract if the participant 
and CCC agree to the contract modification and the conservation plan is 
revised in accordance with NRCS requirements and is approved by the 
conservation district.
    (b) The parties may agree to transfer a contract with the agreement 
of all parties to the contract. The transferee must be determined by CCC 
to be eligible and shall assume full responsibility under the contract, 
including operation and maintenance of those conservation practices 
already installed and to be installed as a condition of the contract.
    (c) CCC may require a participant to refund all or a portion of any 
assistance earned under EQIP if the participant sells or loses control 
of the land under an EQIP contract and the new owner or controller is 
not eligible to participate in the program or refuses to assume 
responsibility under the contract.



Sec. 1466.25  Contract violations and termination.

    (a)(1) If CCC determines that a participant is in violation of the 
terms of a contract or documents incorporated by reference into the 
contract, CCC shall give the participant a reasonable time, as 
determined by the FSA county committee, in consultation with NRCS, to 
correct the violation and comply with the terms of the contract and 
attachments thereto. If a participant continues in violation, the FSA 
county committee may, in consultation with NRCS, terminate the EQIP 
contract.
    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, a contract termination shall be effective immediately upon a 
determination by the FSA county committee, in consultation with NRCS, 
that the participant has submitted false information or filed a false 
claim, or engaged in any act for which a finding of ineligibility for 
payments is permitted under the provisions of Sec. 1466.35, or in a case 
in which the actions of the party involved are deemed to be sufficiently 
purposeful or negligent to warrant a termination without delay.

[[Page 530]]

    (b)(1) If CCC terminates a contract, the participant shall forfeit 
all rights for future payments under the contract and shall refund all 
or part of the payments received, plus interest determined in accordance 
with part 1403 of this chapter. The FSA county committee, in 
consultation with NRCS, has the option of requiring only partial refund 
of the payments received if a previously installed conservation practice 
can function independently, are not affected by the violation or other 
conservation practices that would have been installed under the 
contract, and the participant agrees to operate and maintain the 
installed conservation practice for the life span of the practice.
    (2) If CCC terminates a contract due to breach of contract or the 
participant voluntarily terminates the contract before any contractual 
payments have been made, the participant shall forfeit all rights for 
further payments under the contract and shall pay such liquidated 
damages as are prescribed in the contract. The FSA county committee, in 
consultation with NRCS, will have the option to waive the liquidated 
damages depending upon the circumstances of the case.
    (3) When making all contract termination decisions, CCC may reduce 
the amount of money owed by the participant by a proportion which 
reflects the good faith effort of the participant to comply with the 
contract, or the hardships beyond the participant's control that have 
prevented compliance with the contract.
    (4) The participant may voluntarily terminate a contract if CCC 
agrees based on CCC's determination that termination is in the public 
interest.
    (5) In carrying out its role in this section, NRCS may consult with 
the local conservation district.



                    Subpart C--General Administration



Sec. 1466.30  Appeals.

    (a) A participant may obtain administrative review of an adverse 
decision under EQIP in accordance with parts 11 and 614 of this title, 
except as provided in paragraph (b) of this section.
    (b) The following decisions are not appealable:
    (1) Payment rates, payment limits, and cost-share percentages;
    (2) The designation of State-approved priority areas, national 
conservation priority areas, or significant statewide natural resource 
concerns;
    (3) NRCS funding allocations to States or priority areas;
    (4) Eligible conservation practices; and
    (5) Other matters of general applicability.



Sec. 1466.31  Compliance with regulatory measures.

    Participants who carry out conservation practices shall be 
responsible for obtaining the authorities, rights, easements, or other 
approvals necessary for the implementation, operation, and maintenance 
of the conservation practices in keeping with applicable laws and 
regulations. Participants shall be responsible for compliance with all 
laws and for all effects or actions resulting from the participant's 
performance under the contract.



Sec. 1466.32  Access to operating unit.

    Any authorized CCC representative shall have the right to enter an 
operating unit or tract for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, as to the performance of the terms and conditions of the 
contract. Access shall include the right to provide technical assistance 
and inspect any work undertaken under the contract. The CCC 
representative shall make a reasonable effort to contact the participant 
prior to the exercise of this provision.



Sec. 1466.33  Performance based upon advice or action of representatives of CCC.

    If a participant relied upon the advice or action of any authorized 
representative of CCC, and did not know or have reason to know that the 
action or advice was improper or erroneous, the FSA county committee, in 
consultation with NRCS, may accept the advice or action as meeting the 
requirements of the program and may grant relief, to the extent it is 
deemed

[[Page 531]]

desirable by CCC, to provide a fair and equitable treatment because of 
the good-faith reliance on the part of the participant.



Sec. 1466.34  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. 1466.35  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 to CCC 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.



PART 1467--WETLANDS RESERVE PROGRAM--Table of Contents




Sec.
1467.1  Applicability.
1467.2  Administration.
1467.3  Definitions.
1467.4  Program requirements.
1467.5  Application procedures.
1467.6  Establishing priority for enrollment of properties in WRP.
1467.7  Enrollment of easements.
1467.8  Compensation for easements.
1467.9  Cost-share payments.
1467.10  Easement participation requirements.
1467.11  The WRPO development.
1467.12  Modifications.
1467.13  Transfer of land.
1467.14  Violations and remedies.
1467.15  Payments not subject to claims.
1467.16  Assignments.
1467.17  Appeals.
1467.18  Scheme and device.

    Authority: 16 U.S.C. 590a et seq., 3837 et seq.

    Source: 60 FR 28514, June 1, 1995, unless otherwise noted. 
Redesignated at 61 FR 42141, Aug. 14, 1996.



Sec. 1467.1  Applicability.

    (a) The regulations in this part set forth the policies, procedures, 
and requirements for the Wetlands Reserve Program (WRP) as administered 
by the Natural Resources Conservation Service (Department) for program 
implementation and processing outstanding and new applications for 
enrollment during calendar year 1995 and thereafter.
    (b) The Chief, Department, may implement WRP in any of the 50 
States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, 
the Virgin Islands of the United States, American Samoa, the 
Commonwealth of the Northern Mariana Islands, and the Trust Territories 
of the Pacific Islands.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42143, Aug. 14, 1996]



Sec. 1467.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief.
    (b) The Chief is authorized to modify or waive a provision of this 
part if the Chief deems the application of that provision to a 
particular limited situation to be inappropriate and inconsistent with 
the environmental and cost-efficiency goals of the WRP. This authority 
cannot be further delegated. The Chief may not modify or waive any 
provision of this part which is required by applicable law.
    (c) As determined by the Chief and the Administrator of the Farm 
Service

[[Page 532]]

Agency, the Department and the Farm Service Agency will seek agreement 
in establishing policies, priorities, and guidelines related to the 
implementation of this part.
    (d) The State Conservationist will consult with the State Technical 
Committee on the development of the rates of compensation for an 
easement, a priority ranking process, and related policy matters.
    (e) The Department may delegate at any time easement management, 
monitoring, and enforcement responsibilities to other Federal or State 
agencies.
    (f) The Department may enter into cooperative agreements with 
Federal or State agencies, conservation districts, and private 
conservation organizations to assist the Department with educational 
efforts, easement management and monitoring, outreach efforts, and 
program implementation assistance.
    (g) The Department shall consult with the U.S. Fish and Wildlife 
Service in the implementation of the program and in establishing program 
policies. The Department may consult with the Forest Service, other 
Federal or State agencies, conservation districts or other organizations 
in program administration. No determination by the U.S. Fish and 
Wildlife Service, the Forest Service, Federal or State agency, 
conservation district, or other organization shall compel the Department 
to take any action with the Department determines will not serve the 
purposes of the program established by this part.
    (h) The Chief may allocate funds for such purposes related to: 
special pilot programs for wetland management and monitoring; 
acquisition of wetland easements with emergency funding; cooperative 
agreements with other Federal or State agencies for program 
implementation; coordination of easement enrollment across State 
boundaries; coordination of the development of conservation plans; or, 
for other goals of the WRP found in this part. The Department may 
designate areas as conservation priority areas where environmental 
concerns are especially pronounced and to assist landowners in meeting 
nonpoint source pollution requirements and other conservation needs.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
Aug. 14, 1996]



Sec. 1467.3  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 
alfalfa and other multi-year grasses and legumes in rotation as approved 
by the Secretary. Land shall be considered planted to an agricultural 
commodity during a crop year if, as determined by the Department, an 
action of the Secretary prevented land from being planted to the 
commodity during the crop year.
    Chief means the Chief of the Natural Resources Conservation Service 
or the person delegated authority to act for the Chief.
    Commenced conversion wetland means a wetland or converted wetland 
for which the Farm Service Agency has determined that the wetland 
manipulation was contracted for, started, or for which financial 
obligation was incurred before December 23, 1985.
    Conservation District is a subdivision of a State government 
organized pursuant to applicable State law to promote and undertake 
actions for the conservation of soil, water, and other natural 
resources.
    Conservation Reserve Program (CRP) means the program administered by 
the Commodity Credit Corporation pursuant to 16 U.S.C. 3831-3836.
    Contract means the document that specifies the obligations and 
rights of any person who has been accepted for participation in the 
program.
    Converted wetland means a wetland that has been drained, dredged, 
filled, leveled, or otherwise manipulated (including the removal of 
woody vegetation, or any activity that results in impairing or reducing 
the flow, circulation, or reach of water) for the purpose, or that has 
the effect, of making the production of an agricultural commodity 
possible if such production would not have been possible but for such 
action.
    Cost-share payment means the payment made by the Department to

[[Page 533]]

achieve the restoration of the wetland functions and values of the 
easement area in accordance with the WRPO.
    Department means the United States Department of Agriculture (USDA) 
and includes the Commodity Credit Corporation or any USDA agency or 
instrumentality delegated program responsibility by the Secretary of 
Agriculture.
    Easement means a reserved interest easement which is an interest in 
land defined and delineated in a deed whereby the landowner conveys all 
rights, title, and interests in a property to the grantee, but the 
landowner retains those rights, title, and interests in the property 
which are specifically reserved to the landowner in the easement deed.
    Easement area means the land encumbered by an easement.
    Easement payment means the consideration paid to a landowner for an 
easement conveyed to the United States under the WRP.
    Farm Service Agency (FSA) is an agency of the United States 
Department of Agriculture.
    Forest Service is an agency of the United States Department of 
Agriculture.
    Landowner means a person or persons having legal ownership of 
farmland, including those who may be buying farmland under a purchase 
agreement. Landowner may include all forms of collective ownership 
including joint tenants, tenants in common, and life tenants and 
remaindermen in a farm property.
    Lands substantially altered by flooding means areas where flooding 
has created wetland hydrologic conditions which, with a high degree of 
certainty, will develop wetland soil and vegetation characteristics over 
time.
    Natural Resources Conservation Service (Department) is an agency of 
the United States Department of Agriculture, formerly called the Soil 
Conservation Service.
    Permanent easement means an easement that lasts in perpetuity.
    Person means an individual, partnership, association, corporation, 
estate or trust, or other business enterprise or other legal entity and, 
whenever applicable, a State, a political subdivision of a State, or any 
agency thereof.
    Practice means a restoration measure necessary or desirable to 
accomplish the desired program objectives.
    Riparian areas means areas of land that occur along streams, 
channels, rivers, and other water bodies. These areas are normally 
distinctly different from the surrounding lands because of unique soil 
and vegetation characteristics, may be identified by distinctive 
vegatative communities which are reflective of soil conditions normally 
wetter than adjacent soils, and generally provide a corridor for the 
movement of wildlife.
    State Technical Committee means a committee established by the 
Secretary of the U.S. Department of Agriculture in a State pursuant to 
16 U.S.C. 3861. For the purposes of the WRP, the State Conservationist 
will be the chairperson of the State Technical Committee.
    U.S. Fish and Wildlife Service is an agency of the United States 
Department of the Interior.
    Wetland means land that:
    (1) Has a predominance of hydric soils;
    (2) Is inundated or saturated by surface or groundwater at a 
frequency and duration sufficient to support a prevalence of hydrophytic 
vegetation typically adapted for life in saturated soil conditions; and
    (3) Does support a prevalence of such vegetation under normal 
circumstances. For purposes of WRP, wetland shall also refer to adjacent 
lands that contribute to wetland functions and values.
    Wetland functions and values means the hydrological and biological 
characteristics of wetlands and the socioeconomic value placed upon 
these characteristics, including:
    (1) Habitat for migratory birds and other wildlife, in particular at 
risk species;
    (2) Protection and improvement of water quality;
    (3) Attenuation of water flows due to flood;
    (4) The recharge of ground water;
    (5) Protection and enhancement of open space and aesthetic quality;

[[Page 534]]

    (6) Protection of flora and fauna which contributes to the Nation's 
natural heritage; and
    (7) Contribution to educational and scientific scholarship.
    Wetland restoration means the rehabilitation of degraded or lost 
habitat in a manner such that:
    (1) The original vegetation community and hydrology are, to the 
extent practical, re-established; or
    (2) A community different from what likely existed prior to 
degradation of the site is established. The hydrology and native self-
sustaining vegetation being established will substantially replace 
original habitat functions and values but does not involve more than 30 
percent of the wetland restoration area.
    WRP means the Wetlands Reserve Program.
    WRPO means the Wetlands Reserve Plan of Operations.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, Aug. 14, 1996]



Sec. 1467.4  Program requirements.

    (a) General. Under the WRP, the Department may purchase conservation 
easements from, or enter into restoration cost-share agreements with, 
eligible landowners who voluntarily cooperate in the restoration and 
protection of wetlands and associated lands. To participate in WRP, a 
landowner will agree to the implementation of a Wetlands Reserve Plan of 
Operations (WRPO), the effect of which is to restore, protect, enhance, 
maintain, and manage the hydrologic conditions of inundation or 
saturation of the soil, native vegetation, and natural topography of 
eligible lands. The Department may provide cost-share assistance for the 
activities that promote the restoration, protection, enhancement, 
maintenance, and management of wetland functions and values. Specific 
restoration, protection, enhancement, maintenance, and management 
actions may be undertaken by the landowner or other Department designee.
    (b) Acreage limitations. (1) Except for areas devoted to windbreaks 
or shelterbelts after November 28, 1990, no more than 25 percent of the 
total cropland in any county, as determined by the Farm Service Agency, 
may be enrolled in the CRP and the WRP, and no more than 10 percent of 
the total cropland in the county may be subject to an easement acquired 
under the CRP and the WRP.
    (2) The Department and the Farm Service Agency shall concur before a 
waiver of either the 25 percent limit or the 10 percent limit of this 
subsection can be approved for an easement proposed for enrollment in 
the WRP. Such a waiver will only be approved if it will not adversely 
affect the local economy, and operators in the county are having 
difficulties complying with the conservation plans implemented under 16 
U.S.C. 3812.
    (c) Landowner eligibility. The Department may determine that a 
person is not eligible to participate in the WRP or receive any WRP 
payment because the person did not comply with the provisions of 7 CFR 
part 12. To be eligible to enroll an easement in the WRP, a person must:
    (1) Be the landowner of eligible land for which enrollment is 
sought;
    (2) Have been the landowner of such land for the 12 months prior to 
the time the intention to participate is declared unless it is 
determined by the State Conservationist that the land was acquired by 
will or succession as a result of the death of the previous landowner, 
or that adequate assurances have been presented to the State 
Conservationist that the new landowner of such land did not acquire such 
land for the purpose of placing it in the WRP; and
    (3) Agree to provide such information to the Department as the 
agency deems necessary or desirable to assist in its determination of 
eligibility for program benefits and for other program implementation 
purposes.
    (d) Eligible land. (1) The Department shall determine whether land 
is eligible for enrollment and whether, once found eligible, the lands 
may be included in the program based on the likelihood of successful 
restoration of wetland functions and values when considering the cost of 
acquiring the easement and restoration, protection, enhancement, 
maintenance, and management costs.

[[Page 535]]

    (2) Land shall only be considered eligible for enrollment in the WRP 
if the Department determines, in consultation with the U.S. Fish and 
Wildlife Service, that:
    (i) Such land maximizes wildlife benefits and wetland values and 
functions;
    (ii) The likelihood of the successful restoration of such land and 
the resultant wetland values merit inclusion of such land in the 
program, taking into consideration the cost of such restoration; and
    (iii) Such land meets the criteria of paragraph (d)(3) of this 
section.
    (3) The following land may be eligible for enrollment in the WRP, 
which land may be identified by the Department pursuant to regulations 
and implementing policies pertaining to wetland conservation found at 7 
CFR part 12, as:
    (i) Wetlands farmed under natural conditions, farmed wetlands, prior 
converted cropland, commenced conversion wetlands, farmed wetland 
pastures, and lands substantially altered by flooding so as to develop 
wetland functions and values;
    (ii) Former or degraded wetlands that occur on lands that have been 
used or are currently being used for the production of food and fiber, 
including rangeland and forest production lands, where the hydrology has 
been significantly degraded or modified and will be substantially 
restored;
    (iii) Riparian areas along streams or other waterways that link or, 
after restoring the riparian area, will link wetlands which are 
protected by an easement or other device or circumstance that achieves 
the same objectives as an easement:
    (iv) Land adjacent to the restored wetland which would contribute 
significantly to wetland functions and values including buffer areas, 
wetland creations, and non-cropped natural wetlands, but not more than 
the State Conservationist, in consultation with the State Technical 
Committee, determines is necessary for such contribution;
    (v) Other wetlands that would not otherwise be eligible but would 
significantly add to the wetland functions and values; and
    (vi) Wetlands that have been restored under a private, State, or 
Federal restoration program with an easement or deed restriction with a 
duration of less than 30 years.
    (4) To be enrolled in the program, eligible land must be configured 
in a size and with boundaries that allow for the efficient management of 
the area for easement purposes and otherwise promote and enhance program 
objectives.
    (e) Ineligible land. The following land is not eligible for 
enrollment in the WRP:
    (1) Converted wetlands if the conversion was commended after 
December 23, 1985;
    (2) Land that contains timber stands established under a CRP 
contract or pasture land established to trees under a CRP contract.
    (3) Lands owned by an agency of the United States;
    (4) Land subject to an easement or deed restriction with a duration 
of 30 years or more prohibiting the production of agricultural 
commodities; and,
    (5) Lands where implementation of restoration practices would be 
futile due to on-site or off-site conditions.
    (f) Enrollment of CRP lands. Land subject to an existing CRP 
contract may be enrolled into the WRP only if the land and landowner 
meet the requirements of this part, and the enrollment is requested by 
the landowner and agreed to by the Department. To enroll in WRP, the CRP 
contract for the property shall be terminated or otherwise modified 
subject to such terms and conditions as are mutually agreed upon by the 
Farm Service Agency and the landowner.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, Aug. 14, 1996]



Sec. 1467.5  Application procedures.

    (a) Application for participation. To apply for enrollment, a 
landowner must submit an Application for Participation in the WRP. The 
application must be submitted during an announced period for such 
submissions.
    (b) Preliminary agency actions. By filing an Application for 
Participation, the landowner consents to a Department representative 
entering upon the

[[Page 536]]

land for purposes of assessing the wetland functions and values, and for 
other activities such as the development of the preliminary WRPO that 
are necessary or desirable for the Department to make offers of 
enrollment. The landowner is entitled to accompany a Department 
representative on any site visits.
    (c) Voluntary reduction in compensation. In order to enhance the 
probability of enrollment in WRP, a landowner may voluntarily offer to 
accept a lesser payment than is being offered by the Department.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42143, Aug. 14, 1996]



Sec. 1467.6  Establishing priority for enrollment of properties in WRP.

    (a) The Department shall place priority on the enrollment of those 
lands that will maximize wildlife values (especially related to 
enhancing habitat for migratory birds and other wildlife); have the 
least likelihood of re-conversion and loss of these wildlife values at 
the end of the WRP enrollment period; and that involve State, local, or 
other partnership matching funds and participation.
    (b) Ranking considerations. Based on applications for participation, 
the State Conservationist, in consultation with the U.S. Fish and 
Wildlife Service and the State Technical Committee, will rank properties 
based on: estimated costs of restoration and easement acquisition, 
availability of matching funds, significance of wetland functions and 
values, estimated success of restoration measures, and the duration of a 
proposed easement with permanent easements being given priority over 
non-permanent easements.
    (c) The Department may place higher priority on certain geographic 
regions of the State where restoration of wetlands may better achieve 
Department State and regional goals and objectives.
    (d) Notwithstanding any limitation of this part, the State 
Conservationist may enroll eligible lands at any time in order to 
encompass total wetland areas subject to multiple ownership or otherwise 
to achieve program objectives. Similarly, the State Conservationist may, 
at any time, exclude otherwise eligible lands if the participation of 
the adjacent landowners is essential to the successful restoration of 
the wetlands and those adjacent landowners are unwilling to participate.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.7  Enrollment of easements.

    (a) Offers of enrollment. Based on the priority ranking, the 
Department will notify an affected landowner of tentative acceptance 
into the program for which the landowner has 15 calendar days to sign a 
letter of intent to continue. Department will select lands to maximize 
environmental benefits per expenditure of Federal funds.
    (b) Effect of letter of intent to continue (enrollment). An offer of 
tentative acceptance into the program does not bind the Department or 
the United States to acquire an easement, nor does it bind the landowner 
to convey an easement or agree to WRPO activities. However, receipt of 
an executed letter of intent to continue will authorize the Department 
to proceed.
    (c) Acceptance of offer of enrollment. A contract will be presented 
by the Department to the landowner, which will describe the easement 
area; the easement terms and conditions; and other terms and conditions 
for participation that may be required by the Department. A landowner 
accepts enrollment in the WRP by signing contract.
    (d) Effect of the acceptance of the offer. After the contract is 
executed by Department and the landowner, the Department will proceed 
with various easement acquisition activities, which may include 
conducting a survey of the easement area, securing necessary 
subordination agreements, procuring title insurance, and conducting 
other activities necessary to record the easement or implement the WRPO.
    (e) Withdrawal of offers. Prior to execution by the United States 
and the landowner of the contract, the Department may withdraw its offer 
anytime due to availability of funds, inability to clear title, or other 
reasons. The offer to the landowner shall be void if not executed by the 
landowner within the time specified. The date of the offer

[[Page 537]]

shall be the date of notification to the landowner of tentative 
acceptance.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.8  Compensation for easements.

    (a) Establishment of rates. (1) The State Conservationist, in 
consultation with the State Technical Committee, shall determine 
easement payment rates to be applied to specific geographic areas within 
the State or to individual easement areas.
    (2) In order to provide for better uniformity among States, the 
Regional Conservationist and Chief may review and adjust, as 
appropriate, State or other geographically based easement payment rates.
    (b) Determination of easement payment rates. (1) Easement payment 
rates will be based upon analyses of the values of the lands when used 
for agricultural purposes. The landowner will receive the lesser of the 
following:
    (i) the geographic area rate;
    (ii) the value based on a market appraisal analysis/assessment; or
    (iii) the landowner offer.
    (2) Each State Conservationist will determine the easement payment 
rates using the best information which is readily available in that 
State for assessing the values of land for agricultural purposes. Such 
information may include: soil types, type(s) of crops capable of being 
grown, production history, location, real estate market values, 
appraisals and market analyses, and tax rates and assessments. The State 
Conservationist may consult with other Federal agencies, real estate 
market experts, appraisers, local tax authorities, and other entities or 
persons which may provide information on productivity and market 
conditions.
    (3) Easement payments for non-permanent easements will be less than 
those for permanent easements because the quality and duration of the 
ecological benefits derived from a non-permanent easement are 
significantly less than those derived from a permanent easement on the 
same land. Additionally, the economic value of the easement interests 
being acquired is less for a non-permanent easement than that associated 
with a permanent easement. An easement payment for the short-term 30-
year easement shall not be less than 50 percent nor more than 75 percent 
of that which would have been paid for a permanent easement.
    (c) Maximum payments. In order to ensure that limited program funds 
are expended to maximize program benefits, the State Conservationist, in 
consultation with the State Technical Committee, may establish a maximum 
easement payment for any one easement within a State or for geographic 
areas within a State.
    (d) Preliminary estimates of easement payments. Upon request of the 
landowner prior to filing an application for enrollment, a landowner may 
be appraised of the maximum easement payment rates.
    (e) Acceptance of offered easement compensation. (1) The Department 
will not acquire any easement unless the landowner accepts the amount of 
the easement payment which is offered by the Department. The easement 
payment may or may not equal the fair market value of the interests and 
rights to be conveyed by the landowner under the easement. By 
voluntarily participating in the program, a landowner waives any claim 
to additional compensation based on fair market value.
    (2) Annual easement payments may be made in no less than 5 annual 
payments and no more than 30 annual payments of equal or unequal size.
    (f) Reimbursement of a landowner's expenses. For completed easement 
conveyances, the Department will reimburse landowners for their fair and 
reasonable expenses, if any, incurred for surveying and related costs, 
as determined by the Department. The State Conservationist, in 
consultation with the State Technical Committee, may establish maximum 
payments to reimburse landowners for reasonable expenses.
    (g) Tax implications of easement conveyances. Subject to applicable 
regulations of the Internal Revenue Service, a landowner may be eligible 
for a bargain sale tax deduction which is the difference between the 
fair market value of the easement conveyed to the United States and the 
easement payment made to the landowner. The Department disclaims any 
representations concerning the tax implications

[[Page 538]]

of any easement or cost-share transaction.
    (h) Payment limitation on non-permanent easements. With respect to 
non-permanent easements, the annual amount of easement payments to any 
person may not exceed $50,000 except for:
    (1) Payments made pursuant to projects involving partnership funding 
or participation; or
    (2) Payment received by a State, political subdivision, or agency 
thereof in connection with agreements entered into under a special 
wetland and environmental enhancement program carried out by that entity 
that has been approved by Department.
    (i) If easement payments are calculated on a per acre basis, 
adjustment to stated easement payment will be made based on final 
determination of acreage.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.9  Cost-share payments.

    (a) The Department may share the cost with landowners of restoring 
the enrolled land as provided in the WRPO. The amount and terms and 
conditions of the cost-share assistance shall be subject to the 
following restrictions on the costs of establishing or installing 
practices specified in the WRPO:
    (1) On enrolled land subject to a permanent easement, the Department 
shall offer to pay not less than 75 percent nor more than 100 percent of 
such costs; and
    (2) On enrolled land subject to a non-permanent easement or 
restoration cost-share agreement, the Department shall offer to pay not 
less than 50 percent nor more than 75 percent of such costs. Restoration 
cost-share payments offered by Department for the short-term, 30-year 
easements shall be 50 to 75 percent.
    (b) Cost-share payments may be made only upon a determination by the 
Department that an eligible practice or an identifiable unit of the 
practice has been established in compliance with appropriate standards 
and specifications. Identified practices may be implemented by the 
landowner or other designee.
    (c) Cost-share payments may be made for the establishment and 
installation of additional eligible practices, or the maintenance or 
replacement of an eligible practice, but only if Department determines 
the practice is needed to meet the objectives of the easement, and the 
failure of the original practices was due to reasons beyond the control 
of the landowner.
    (d) A landowner may seek additional cost-share assistance from other 
public or private organizations as long as the activities funded are in 
compliance with this part. In no event shall the landowner receive an 
amount which exceeds 100 percent of the total actual cost of the 
restoration.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.10  Easement participation requirements.

    (a) To enroll land in WRP, a landowner shall grant an easement to 
the United States. The easement shall require that the easement area be 
maintained in accordance with WRP goals and objectives for the duration 
of the term of the easement, including the restoration, protection, 
enhancement, maintenance, and management of wetland and other land 
functions and values.
    (b) For the duration of its term, the easement shall require, at a 
minimum, that the landowner, and the landowner's heirs, successors and 
assigns, shall cooperate in the restoration, protection, enhancement, 
maintenance, and management of the land in accordance with the easement 
and with the terms of the WRPO. In addition, the easement shall grant to 
the United States, through the Department:
    (1) A right of access to the easement area;
    (2) The right to permit compatible uses of the easement area, 
including such activities as hunting and fishing, managed timber 
harvest, or periodic haying or grazing, if such use is consistent with 
the long-term protection and enhancement of the wetland resources for 
which the easement was established;
    (3) All rights, title and interest in the easement area subject to 
compatible uses reserved to the landowner; and,

[[Page 539]]

    (4) The right to perform restoration, protection, enhancement, 
maintenance, and management activities on the easement area.
    (c) The landowner shall convey title to the easement which is 
acceptable to the Department. The landowner shall warrant that the 
easement granted to the United States is superior to the rights of all 
others, except for exceptions to the title which are deemed acceptable 
by the Department.
    (d) The landowner shall:
    (1) Comply with the terms of the easement;
    (2) Comply with all terms and conditions of any associated contract;
    (3) Agree to the permanent retirement of any existing cropland base 
and allotment history for the easement area under any program 
administered by the Secretary, as determined by the Farm Service Agency;
    (4) Agree to the long-term restoration, protection, enhancement, 
maintenance, and management of the easement in accordance with the terms 
of the easement and related agreements;
    (5) Have the option to enter into an agreement with governmental or 
private organizations to assist in carrying out any landowner 
responsibilities on the easement area;
    (6) Agree that each person who is subject to the easement shall be 
jointly and severally responsible for compliance with the easement and 
the provisions of this part and for any refunds or payment adjustment 
which may be required for violation of any terms or conditions of the 
easement or the provisions of this part.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.11  The WRPO development.

    (a) The development of the WRPO shall be made through the local 
Department representative, in consultation with the State Technical 
Committee, and with consideration of site specific technical input from 
the U.S. Fish and Wildlife Service and the Conservation District.
    (b) The WRPO shall specify the manner in which the enrolled land 
shall be restored, protected, enhanced, maintained, and managed to 
accomplish the goals of the program. The WRPO shall be developed to 
ensure that cost-effective restoration and maximization of wildlife 
benefits and wetland functions and values will result.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.12  Modifications.

    (a) Easements. (1) After an easement has been recorded, no 
modification will be made in the easement except by mutual agreement 
with the Chief and the landowner. The Chief will consult with the U.S. 
Fish and Wildlife Service and the Conservation District prior to making 
any modifications to easements.
    (2) Approved modifications will be made only in an amended easement 
which is duly prepared and recorded in conformity with standard real 
estate practices, including requirements for title approval, 
subordination of liens, and recordation.
    (3) The Chief may approve modifications to facilitate the practical 
administration and management of the easement area or the program so 
long as the modification will not adversely affect the wetland functions 
and values for which the easement was acquired.
    (4) Modifications must result in equal or greater environmental and 
economic values to the United States.
    (b) WRPO. Insofar as is consistent with the easement and applicable 
law, the State Conservationist may approve modifications to the WRPO 
that do not affect provisions of the easement in consultation with the 
landowner and the State Technical Committee and following consideration 
of site specific technical input from the U.S. Fish and Wildlife Service 
and the Conservation District. Any WRPO modification must meet WRP 
program objectives, and must result in equal or greater wildlife 
benefits, wetland functions and values, ecological and economic values 
to the United States. Modifications to the WRPO which are substantial 
and affect provisions of the easement will require agreement from the 
landowner and require execution of an amended easement.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, 42142, Aug. 14, 1996]

[[Page 540]]



Sec. 1467.13  Transfer of land.

    (a) Offers voided. Any transfer of the property prior to the 
landowner acceptance into the program shall void the offer of 
enrollment. At the option of the State Conservationist, an offer can be 
extended to the new landowner if the new landowner agrees to the same or 
more restrictive easement and contract terms and conditions.
    (b) Payments to landowners. (1) For easements with multiple annual 
payments, any remaining easement payments will be made to the original 
landowner unless the Department receives an assignment of proceeds.
    (2) The new landowner or purchaser shall be held responsible for 
assuring completion of all measures and practices required by the 
contract. Eligible cost-share payments shall be made to the new 
landowner upon presentation of an assignment of rights or other evidence 
that title had passed.
    (c) Claims to payments. With respect to any and all payments owed to 
landowners, the United States shall bear no responsibility for any full 
payments or partial distributions of funds between the original 
landowner and the landowner's successor. In the event of a dispute or 
claim on the distribution of cost-share payments, the Department may 
withhold payments without the accrual of interest pending an agreement 
or adjudication on the rights to the funds.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42142, Aug. 14, 1996]



Sec. 1467.14  Violations and remedies.

    (a) In the event of a violation of the easement or any contract 
directly involving the landowner, the landowner shall be given 
reasonable notice and an opportunity to voluntarily correct the 
violation within 30 days of the date of the notice, or such additional 
time as the State Conservationist may allow.
    (b) Notwithstanding paragraph (a) of this section, the Department 
reserves the right to enter upon the easement area at any time to remedy 
deficiencies or easement violations. Such entry may be made at the 
discretion of the Department when such actions are deemed necessary to 
protect important wetland functions and values or others rights of the 
United States under the easement. The landowner shall be liable for any 
costs incurred by the United States as a result of the landowner's 
negligence or failure to comply with easement or contractual 
obligations.
    (c) In addition to any and all legal and equitable remedies as may 
be available to the United States under applicable law, the Department 
may withhold any easement and cost-share payments owing to landowners at 
any time there is a material breach of the easement covenants or any 
contract. Such withheld funds may be used to offset costs incurred by 
the United States in any remedial actions or retained as damages 
pursuant to court order or settlement agreement.
    (d) The United States shall be entitled to recover any and all 
administrative and legal costs, including attorney's fees or expenses, 
associated with any enforcement or remedial action.

[60 FR 28514, June 1, 1995; 60 FR 33034, June 26, 1995. Redesignated and 
amended at 61 FR 42141, 42143, Aug. 14, 1996]



Sec. 1467.15  Payments not subject to claims.

    Any cost-share or easement payment or portion thereof due any person 
under this part shall be allowed without regard to any claim or lien in 
favor of any creditor, except agencies of the United States Government.



Sec. 1467.16  Assignments.

    Any person entitled to any cash payment under this program may 
assign the right to receive such cash payments, in whole or in part.



Sec. 1467.17  Appeals.

    (a) A person participating in the WRP may obtain a review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal regulations provided in 7 CFR part 
614.
    (b) Before a person may seek judicial review of any action taken 
under this part, the person must exhaust all administrative appeal 
procedures set forth in paragraph (a) of this section, and for purposes 
of judicial review, no decision shall be a final agency action

[[Page 541]]

except a decision of the Chief of Department under these procedures.
    (c) Any appraisals, market analysis, or supporting documentation 
that may be used by the Department in determining property value are 
considered confidential information, and shall only be disclosed as 
determined at the sole discretion of the Department in accordance with 
applicable law.

[60 FR 28514, June 1, 1995, as amended at 60 FR 67316, Dec. 29, 1995. 
Redesignated and amended at 61 FR 42141, 42143, Aug. 14, 1996]



Sec. 1467.18  Scheme and device.

    (a) If it is determined by the Department that a landowner has 
employed a scheme or device to defeat the purposes of this part, any 
part of any program payment otherwise due or paid such landowner during 
the applicable period may be withheld or be required to be refunded with 
interest thereon, as determined appropriate by the Department.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person of payments for 
cost-share practices or easements for the purpose of obtaining a payment 
to which a person would otherwise not be entitled.
    (c) A landowner who succeeds to the responsibilities under this part 
shall report in writing to the Department any interest of any kind in 
enrolled land that is held by a predecessor or any lender. A failure of 
full disclosure will be considered a scheme or device under this 
section.

[60 FR 28514, June 1, 1995. Redesignated and amended at 61 FR 42141, 
42143, Aug. 14, 1996]



PART 1468--CONSERVATION FARM OPTION--Table of Contents




                      Subpart A--General Provisions

Sec.
1468.1  Purpose.
1468.2  Administration.
1468.3  Definitions.
1468.4  Establishing Conservation Farm Option (CFO) pilot project areas.
1468.5  General provisions.
1468.6  Practice eligibility provisions.
1468.7  Participant eligibility provisions.
1468.8  Land eligibility provisions
1468.9  Conservation farm plan.

                          Subpart B--Contracts

1468.20  Application for CFO program participation.
1468.21  Contract requirements.
1468.22  Conservation practice operation and maintenance.
1468.23  Annual payments.
1468.24  Contract modifications and transfers of land.
1468.25  Contract violations and termination.

                    Subpart C--General Administration

1468.30  Appeals.
1468.31  Compliance with regulatory measures.
1468.32  Access to operating unit.
1468.33  Performance based upon advice or action of representatives of 
          CCC.
1468.34  Offsets and assignments.
1468.35  Misrepresentation and scheme or device.

    Authority: 16 U.S.C. 3839bb.

    Source: 63 FR 51786, Sept. 29, 1998, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1468.1  Purpose.

    (a) Through the Conservation Farm Option (CFO), the Commodity Credit 
Corporation (CCC) provides financial assistance to eligible farmers and 
ranchers to address soil, water, and related natural resource concerns, 
water quality protection or improvement; wetland restoration and 
protection; wildlife habitat development and protection; and other 
similar conservation purposes on their lands in an environmentally 
beneficial and cost-effective manner. The Natural Resources Conservation 
Service (NRCS) may provide technical assistance, upon request by the 
producer or landowner.
    (b) The CCC provides a single contract and annual payments for 
implementation of innovative and environmentally-sound methods for 
addressing natural resource concerns for producers of wheat, feed 
grains, cotton, and rice, resulting in consolidation of payments that 
would have been available under the Conservation Reserve Program (CRP), 
the Wetlands Reserve Program cost-share agreements (WRP), and the 
Environmental Quality Incentives Program (EQIP). CFO participation is 
determined through two step

[[Page 542]]

process: first, the Chief, with FSA concurrence, selects CFO pilot 
project areas based on proposals submitted by the public; then CCC 
accepts applications from eligible producers or owners within the 
selected pilot project area.



Sec. 1468.2  Administration.

    (a) CFO is carried out using Commodity Credit Corporation funds and 
will be administered on behalf of CCC by the Natural Resources 
Conservation Service (NRCS) and the Farm Service Agency (FSA) as set 
forth below.
    (b) NRCS will:
    (1) Provide overall program management and implementation for CFO;
    (2) Establish policies, procedures, priorities, and guidance for 
program implementation, including determination of pilot project areas;
    (3) Establish annual payment rates consistent with EQIP, CRP, and 
WRP payment rates;
    (4) Make funding decisions and determine allocations of program 
funds, with FSA concurrence;
    (5) Determine eligibility of practices;
    (6) Provide technical leadership for conservation planning and 
implementation, quality assurance, and evaluation of program 
performance.
    (c) FSA will:
    (1) Be responsible for the administrative processes and procedures 
including applications, contracting, and financial matters, such as 
payments to participants, assistance in determining participant 
eligibility, and program accounting; and
    (2) Provide leadership for establishing, implementing, and 
overseeing administrative processes for applications, contracts, payment 
processes, and administrative and financial performance reporting.
    (d) NRCS and FSA will cooperate in establishing program policies, 
priorities, and guidelines related to the implementation of this part.
    (e) No delegation herein to lower organizational levels shall 
preclude the Chief of NRCS, or the Administrator of FSA, or a designee, 
from determining any question arising under this part or from reversing 
or modifying any determination made under this part that is the 
responsibility of their respective agencies.



Sec. 1468.3  Definitions.

    The following definitions apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Applicant means a producer or owner in an approved pilot project 
area who has requested in writing to participate in CFO.
    Chief means the Chief of NRCS, or designee.
    Conservation district means a political subdivision of a State, 
Indian 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 farm plan means a record of a participant's decisions, 
and supporting information for treatment of a unit of land or water as a 
result of the planning process, that meets the local NRCS Field Office 
Technical Guide (FOTG) criteria for each natural resource and takes into 
account economic and social considerations. The plan describes the 
schedule of operations and activities needed to solve identified natural 
resource problems, and take advantage of opportunities, at a 
conservation management system level. In the conservation farm plan, the 
needs of the client, the resources, and Federal, state, Tribal, and 
local requirements will be met.
    Conservation practice means a specified treatment, such as 
structural, vegetative, or a land management practice, which is planned 
and applied according to NRCS standards and specifications.
    Contract means a legal document that specifies the rights and 
obligations of any person who has been accepted for participation in the 
program.
    County executive director means the FSA employee responsible for 
directing and managing program and administrative operations in one or 
more FSA county offices.
    Farm Service Agency county committee means a committee elected by 
the agricultural producers in the county or area, in accordance with 
Sec. 8(b) of

[[Page 543]]

the Soil Conservation and Domestic Allotment Act, as amended, or 
designee.
    Field office technical guide means the official NRCS guidelines, 
criteria, and standards for planning and applying conservation 
treatments and conservation management systems. The guide contains 
detailed information on the conservation of soil, water, air, plant, and 
animal resources applicable to the local area for which it is prepared. 
A copy of the guide for that area is available at the appropriate NRCS 
field office.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) which 
is recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians.
    Innovative technology means the use of new management techniques, 
specific treatments, or procedures such as structural or vegetative 
measures used in field trials or as interim conservation practice 
standards that have the purpose of solving or reducing the severity of 
natural resource use problems or that take advantage of resource 
opportunities. Innovative technologies used by program participants must 
be able to achieve the required level of resource protection.
    Land management practice means conservation practices that primarily 
require site-specific management techniques and methods to conserve, 
protect from degradation, or improve soil, water, or related natural 
resources in the most cost-effective manner. Land management practices 
include, but are not limited to nutrient management, manure management, 
integrated pest management, integrated crop management, irrigation water 
management, tillage or residue management, stripcropping, contour 
farming, grazing management, wildlife management, resource conserving 
crop rotations, cover crop management, and organic matter and carbon 
sink management.
    Liquidated damages means a sum of money stipulated in the contract 
which the participant agrees to pay, in addition to refunds and other 
charges, if the participant breaches the contract, and represents an 
estimate of the anticipated or actual harm caused by the breach, and 
reflects the difficulties of proof of loss and the inconvenience or 
nonfeasibility of otherwise obtaining an adequate remedy.
    Local work group means representatives of FSA, the Cooperative State 
Research, Education, and Extension Service (CSREES), the conservation 
district, and other Federal, State, and local government agencies, 
including Tribes and Resource Conservation and Development councils, 
with expertise in natural resources who consult with NRCS on decisions 
related to CFO implementation.
    Operation and maintenance means work performed by the participant to 
keep the applied conservation practice functioning for the intended 
purpose during its life span. Operation includes the administration, 
management, and performance of non-maintenance actions needed to keep 
the completed practice safe and functioning as intended. Maintenance 
includes work to prevent deterioration of the practice, repairing 
damage, or replacement of the practice to its original condition if one 
or more components fail.
    Participant means an applicant who is a party to a CFO contract.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    State conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area, or the 
Pacific Basin Area.
    State technical committee means a committee established by the 
Secretary in a state pursuant to 16 U.S.C. 3861.
    Technical assistance means the personnel and support resources 
needed to conduct conservation planning; conservation practice survey, 
layout, design, installation, and certification; training, 
certification, and quality assurance for professional conservationists; 
and evaluation and assessment of the program.

[[Page 544]]

    Unit of concern means a parcel of agricultural land that has natural 
resource conditions that are of concern to the participant.



Sec. 1468.4  Establishing Conservation Farm Option (CFO) pilot project areas.

    (a) CCC may periodically solicit proposals from the public to 
establish pilot project areas in the Federal Register.
    (b) Pilot projects may involve one or more participants. Each owner 
or producer within an approved pilot project area must submit an 
application in order to be considered for enrollment in the CFO. This 
pilot project area may be a watershed, a subwatershed, an area, or an 
individual farm that can be geographically described and has specific 
environmental sensitivities or significant soil, water, and related 
natural resource concerns. The pilot project area must have acreage 
enrolled in a production flexibility contract, which is authorized by 
the Agricultural Marketing and Transition Act of 1996. After these pilot 
project area proposals are received, the Chief, with FSA concurrence, 
will select proposals for funding.
    (c) CCC will select pilot project areas based on the extent the 
individual proposal:
    (1) Demonstrates innovative approaches to conservation program 
delivery and administration;
    (2) Proposes innovative conservation technologies and system;
    (3) Provides assurances that the greatest amount of environmental 
benefits will be delivered in a cost effective manner;
    (4) Ensures effective monitoring and evaluation of the pilot effort;
    (5) Considers multiple stakeholder participation (partnerships) 
within the pilot area;
    (6) Provides additional non-Federal funding; and
    (7) Addresses the following:
    (i) Conservation of soil, water, and related natural resources,
    (ii) Water quality protection or improvement,
    (iii) Wetland restoration and protection, and
    (iv) Wildlife habitat development and protection,
    (v) Or other similar conservation purposes.



Sec. 1468.5  General provisions.

    (a) Program participation is voluntary.
    (b) Participation in the CFO is limited to producers of wheat, feed 
grains, cotton, or rice who have a production flexibility contract, in 
accordance with part 1412 of this chapter, on the farm enrolling in CFO 
and who are eligible for either CRP (7 CFR part 1410), EQIP (7 CFR part 
1466), or WRP (7 CFR part 1467).
    (c) The participant is responsible for the development of a 
conservation farm plan for the farm or ranch and may request assistance 
from NRCS or a third party in writing both the conservation farm plan 
and installing the practices outlined within the plan. Conservation 
practices in the conservation farm plan that would have been eligible 
for payment under CRP, EQIP, or cost-share agreements under WRP are 
eligible for CFO payment. The provisions for determining eligibility for 
payment and the calculation of payment under CFO will be similar to 
those specified for the eligible conservation practices under CRP, EQIP, 
or cost-share agreements under WRP. For land retirement payments, the 
CRP payment schedule in effect for the applicable soils at the time the 
CFO contract is signed will be utilized. CCC will provide annual 
payments to a participant for such conservation practices as specified 
in the time schedule set forth in the conservation farm plan.



Sec. 1468.6  Practice eligibility provisions.

    (a) Practices may be eligible for payment under CFO if the 
conservation practice specified in the conservation farm plan is 
determined to be an eligible practice, as determined by the Chief, in 
accordance with:
    (1) 7 CFR part 1410 for land retirement rental payments and 
practices that are eligible under CRP;
    (2) 7 CFR part 1467 for wetland restoration or protection practices 
that are eligible under WRP; or
    (3) 7 CFR part 1466 for conservation practices that are eligible 
under EQIP.

[[Page 545]]

    (b) For practices that are installed on retired land, the CRP cost-
share rate for practices must be utilized.



Sec. 1468.7  Participant eligibility provisions.

    Participants in the CFO must at the time of enrollment:
    (a) Have a production flexibility contract in accordance with part 
1412 of this chapter on the farm enrolling in CFO.
    (b) Agree to forgo earning future payments under the Conservation 
Reserve Program authorized by part 1410 of this chapter, the Wetlands 
Reserve Program cost-share payments authorized by part 1467 of this 
chapter, and Environmental Quality Incentives Program authorized by part 
1466 of this chapter, on the farm enrolled in the CFO for the term of 
the CFO contract.
    (c) Be in compliance with the highly erodible land and wetland 
conservation provisions found at part 12 of this title;
    (d) Have control of the land for the term of the proposed contract 
period;
    (1) An exception may be made by the Chief in the case of land 
allotted by the Bureau of Indian Affairs (BIA), tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control.
    (2) If the applicant is a tenant of the land involved in 
agricultural production the applicant shall provide CCC with the written 
authorization by the landowner to apply the structural or vegetative 
practice.
    (3) If the applicant is a landowner, the landowner is presumed to 
have control.
    (e) Submit a proposed conservation farm plan to CCC that is in 
compliance with the terms and conditions of the program. To receive 
payment under the CFO, the participant must also meet the eligibility 
requirements, as determined by the Chief, in:
    (1) 7 CFR part 1410 if the land retirement rental payment and 
practice determined eligible in accordance with Sec. 1468.6(a);
    (2) 7 CFR part 1467 if the wetland restoration or protection 
practice was determined eligible in accordance with Sec. 1468.6(b), or
    (3) 7 CFR part 1466, if the conservation practice was determined 
eligible in accordance with Sec. 1468.6(c).
    (4) Comply with the provisions at Sec. 1412.304 of this chapter for 
protecting the interests of tenants and sharecroppers, including 
provisions for sharing, on a fair and equitable basis, payments made 
available under this part, as may be applicable.
    (5) Supply information as required by CCC to determine eligibility 
for the program.
    (6) Comply with all the provisions of the CFO contract which 
includes the conservation farm plan approved by the local conservation 
district.



Sec. 1468.8  Land eligibility provisions.

    Land may be eligible for enrollment in CFO, if CCC determines that 
the farm or ranch is enrolled in a production flexibility contract, 
authorized by the Agricultural Marketing Transition Act of 1996 and if 
the land upon which the CFO conservation practice, will be applied is 
determined to be eligible land as determined by the Chief, in accordance 
with:
    (a) 7 CFR part 1410, if the practice was determined an eligible land 
retirement rental payment and cost-share practice similar to CRP in 
accordance with Sec. 1468.6(a);
    (b) 7 CFR part 1467, if the practice was determined an eligible 
wetland restoration or protection practice similar to WRP in accordance 
with Sec. 1468.6(b); or
    (c) 7 CFR part 1466, if the practice was determined an eligible 
conservation practice similar to EQIP in accordance with Sec. 1468.6(c).



Sec. 1468.9  Conservation farm plan.

    (a) The conservation farm plan forms the basis of the CFO contract. 
Prior to contract approval, a conservation farm plan must be written and 
approved. In deciding whether to approve a conservation farm plan, CCC 
may consider whether:
    (1) The participant will use conservation practices to solve the 
natural resource concerns that will maximize environmental benefits per 
dollar expended, and
    (2) The conservation practice would have been eligible for 
enrollment in the

[[Page 546]]

CRP, EQIP, or under the WRP cost-share agreements.
    (b) The conservation farm plan for the farm or ranch unit of concern 
shall:
    (1) Describe any resource conserving crop rotation, and all other 
conservation practices, to be implemented and maintained on the acreage 
that is subject to contract during the contact period;
    (2) Address the resource concerns identified in the CFO pilot 
project area proposal;
    (3) Contain a schedule for the implementation and maintenance of the 
practices described in the conservation farm plan;
    (4) Ensure that net environmental benefits under a CRP contract are 
maintained or exceeded for the whole farm, as constituted by FSA, when 
terminating a CRP contract and enrolling in a CFO contract; and
    (5) Meet the objectives of the pilot project area.
    (c) The conservation farm plan is part of the CFO contract.
    (d) The conservation farm plan must allow the participant to achieve 
a cost-effective resource management system, or some appropriate portion 
of that system, identified in the applicable NRCS field office technical 
guide or as approved by the State Conservationist.
    (e) Participants are responsible for implementing the conservation 
farm plan in compliance with this part.
    (f) Upon a participant's request, the NRCS may provide technical 
assistance to a participant.
    (1) Participants may, at their own cost, use qualified 
professionals, other than NRCS personnel, to provide technical 
assistance. NRCS retains approval authority over the technical adequacy 
of work done by non-NRCS personnel for the purpose of determining CFO 
contract compliance.
    (2) Technical and other assistance provided by qualified personnel 
not affiliated with NRCS may include, but not limited to: conservation 
planning; conservation practice survey, layout, design, and 
installation; information, education, and training for producers; and 
training and quality assurance for professional conservationists.
    (g) All conservation practices scheduled in the conservation farm 
plan are to be carried out in accordance with the applicable NRCS Field 
Office Technical Guide. The State Conservationist may approve use of 
innovative conservation measures that are not contained in the NRCS 
Field Office Technical Guide.
    (h)(1) To simplify the conservation planning process for the 
participant, the conservation farm plan may be developed, at the request 
of the participant, as a single plan that incorporates, other Federal, 
state, Tribal, or local government program or regulatory requirements. 
CCC development or approval of a conservation farm plan shall not 
constitute compliance with program, statutory and regulatory 
requirements administered or enforced by a non-USDA agency, except as 
agreed to by the participant and the relevant Federal, state, local or 
tribal entities.
    (2) CCC may accept an existing conservation plan developed and 
required for participation in any other CCC or USDA program if the 
conservation plan otherwise meets the requirements of this part. When a 
participant develops a single conservation farm plan for more than one 
program, the participant shall clearly identify the portions of the plan 
that are applicable to the CFO contract. It is the responsibility of the 
participant to ascertain and comply with all applicable statutory and 
regulatory requirements.



                          Subpart B--Contracts



Sec. 1468.20  Application for CFO program participation.

    (a) Any eligible owner or producer within an approved pilot project 
area may submit an application for participation in the CFO to a service 
center or other USDA county or field office(s) of FSA or NRCS, where the 
pilot project area is located.
    (b) CCC will accept applications throughout the fiscal year. CCC 
will rank and select the offers of applicants periodically, as 
determined appropriate by the State Conservationist. The application 
period will begin after a pilot project area has been approved.
    (c) The designated conservationist, in consultation with the local 
work group, will develop ranking criteria to

[[Page 547]]

prioritize applications within a pilot project area which consists of 
more than one owner or producer. NRCS will prioritize applications from 
the same pilot project area using the criteria specific to the area. The 
FSA county committee, with the assistance of the designated 
conservationist and designated FSA official, will approve for funding 
the application in a pilot project area based on eligibility factors of 
the applicant and the NRCS ranking.
    (d) The designated conservationist will work with the applicant to 
collect the information necessary to evaluate the application using the 
ranking criteria. An applicant has the option of offering and accepting 
less than the maximum program payments allowed, offering to apply more 
conservation practices to the land in order to increase the likelihood 
of being enrolled. In evaluating the applications, the designated 
conservationist will take into consideration the following factors:
    (1) Soil erosion;
    (2) Water quality;
    (3) Wildlife benefits;
    (4) Soil productivity;
    (5) Conservation compliance considerations;
    (6) Likelihood to remain in conserving uses beyond the contract 
period, including tree planting and permanent wildlife habitat;
    (7) State water quality priority areas;
    (8) The environmental benefits per dollar expended; and
    (9) The degree to which application is consistent with the pilot 
project proposal.
    (e) If two or more applications have an equal rank, the application 
that will result in the least cost to the program will be given greater 
consideration.



Sec. 1468.21  Contract requirements.

    (a) In order for an applicant to receive annual payments, the 
applicant must enter into a contract agreeing to implement a 
conservation farm plan. The FSA county committee, with NRCS concurrence, 
will use the NRCS ranking consistent with the provisions of Sec. 1468.20 
and grant final approval of the contract.
    (b) A CFO contract will:
    (1) Incorporate by reference all portions of a conservation farm 
plan applicable to CFO;
    (2) Be for a duration of 10 years, and may be renewed, subject to 
the availability of funds, for a period not to exceed 5 years upon 
mutual agreement of CCC and the participant;
    (3) Provide that the participant will:
    (i) Not conduct any practices on the farm or ranch unit of concern 
consistent with the goals of the contract that would tend to defeat the 
purposes of the contract, or reduce net environmental and societal 
benefits;
    (ii) Refund with interest any program payments received and forfeit 
any future payments under the program, on the violation of a term or 
condition of the contract, in accordance with the provisions of 
Sec. 1468.25 of this part;
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations of the contract, in accordance with the provisions of 
Sec. 1468.24 of this part;
    (iv) Agree to forego participation in CRP, EQIP, and the cost-share 
agreements under WRP, along with future payments associated with these 
programs, with regard to the land under the CFO contract;
    (v) Supply information as required by CCC to determine compliance 
with the contract and requirements of the program;
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices in accordance with the 
provisions of Sec. 1468.22 of this part, and
    (5) Include any other provision determined necessary or appropriate 
by CCC.
    (c) There is a limit of one CFO contract at any one time for each 
farm, as constituted by FSA.
    (d) The contract will incorporate the operation and maintenance of 
conservation practices applied under the contract, including those 
practices transferred from terminated CRP and EQIP contracts and WRP 
cost-share agreements. For persons wishing to transfer from CRP, EQIP, 
or WRP to CFO, practices included in CRP or

[[Page 548]]

EQIP contracts or WRP cost-share agreements must be included in a CFO 
contract if an owner or producer wishes to participate, unless otherwise 
stated in the conservation farm plan.
    (e) Acreage that is subject to a WRP easement will not be included 
in the CFO contract.
    (f) Upon completion, the participant must certify that a 
conservation practice is completed in accordance with the conservation 
farm plan to establish compliance with the contract.



Sec. 1468.22  Conservation practice operation and maintenance.

    (a) The participant will operate and maintain the conservation 
practice for its intended purpose for the life span of the conservation 
practice, as identified in the conservation farm plan. Conservation 
practices installed before the execution of a CFO contract, but needed 
in the contract to obtain the environmental benefits agreed upon, are to 
be operated and maintained as specified in the contract. NRCS may 
periodically inspect the conservation practice during the lifespan of 
the practice as specified in the contract to ensure that the operation 
and maintenance is occurring.
    (b) For those persons who are signatories to existing CRP or EQIP 
contracts, or WRP cost-share agreements, practices will be transferred 
from EQIP and CRP contracts or WRP cost-share agreements, as agreed upon 
in the CFO conservation farm plan and CFO contract. Remaining rights and 
obligations under CRP, EQIP, or WRP will be incorporated into the new 
CFO contract. Practices included in CRP, EQIP, or WRP will be 
incorporated into the new CFO contract. Practices included in CRP or 
EQIP contracts or WRP cost-share agreements must be included in a CFO 
contract if an owner or producer wishes to participate. Participants in 
CFO with CRP, EQIP, or WRP practices incorporated into CFO contracts are 
responsible for operating and maintaining these practices for the 
balance of the period specified in the original program contract, unless 
otherwise stated in the conservation farm plan and CFO contract.



Sec. 1468.23  Annual payments.

    (a) CCC will determine annual payments, subject to the availability 
of funds, based on the value of the expected payments that would have 
been paid to the participant for that practice as specified in:
    (1) Part 1410 of this chapter, if the practice is a land retirement 
rental payment or cost-share practice which would have qualified for 
payment under CRP in accordance with Sec. 1468.6(a);
    (2) Part 1467 of this chapter, if the practice is a wetland 
restoration or protection practice which would have qualified for 
payment under WRP which was determined eligible in accordance with 
Sec. 1468.6(b);
    (3) Part 1466 of this chapter, if the practice was a conservation 
practice which would have qualified for payment under EQIP which was 
determined eligible in accordance with Sec. 1468.6(c);
    (b) The maximum amount of annual payments which a person may receive 
under the CFO for any fiscal year shall not exceed the total of the 
amounts calculated in accordance with paragraph (a) of this section 
after being limited as follows:
    (1) The payment calculated in accordance with paragraph (a)(1) of 
this section is limited in accordance with CRP payment limitation 
provisions set forth in part 1410 of this chapter.
    (2) The payment calculated in accordance with Sec. 1467.9(a)(2) of 
this chapter is not limited.
    (3) The payment calculated in accordance with Sec. 1466.23(a)(3) of 
this chapter is limited in accordance with EQIP payment limitation 
provisions in Sec. 1466.23(b) of this chapter.
    (c) The regulations set forth at part 1400 of this chapter will be 
applicable in making payment eligibility determinations for CFO and in 
making person determination as they apply to the limitation of payments 
determined in accordance with paragraph (b) of this section.
    (d) The CCC cost-share payments to a participant shall be reduced so 
that total financial contributions for a structural or vegetative 
practice from all public and private entity sources do not exceed the 
cost of the practice.

[[Page 549]]

    (e) A landowner or producer that enrolls in CFO and terminates a CRP 
or EQIP contract or WRP cost-share agreement will be eligible to receive 
payments for practices which have been determined, established, or 
completed by the technical agency under those contracts or agreements. 
Once the CFO contract is effective, all payments for practices, 
including any practice transferred from the terminated contract 
agreement will be made under the CFO contract, except for payments 
already earned under prior contracts or cost-share agreements.
    (f) Payments will not be made to a participant who has applied or 
initiated the application of a conservation practice for the purposes of 
CFO prior to approval of the CFO contract.
    (g) When requested by the State Conservationist on a case-by-case 
basis, the Chief may approve, based upon availability of funding, cost 
share on the reapplication of a practice to replace or repair practice 
destroyed by unusual circumstances beyond the control of the landowner.
    (h) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the conservation farm plan to 
establish compliance with the contract before the CCC will approve the 
payment of any cost-share, incentive, or land retirement payment.



Sec. 1468.24  Contract modifications and transfers of land.

    (a) The participant and CCC may modify a contract if the participant 
and CCC agree to the contract modification and the conservation farm 
plan is revised in accordance with CCC requirements and is approved by 
the conservation district.
    (b) The participant may agree to transfer a contract to another 
eligible owner or operator with the agreement of CCC. The transferee 
shall assume full responsibility under the contract, including operation 
and maintenance of those conservation practices already installed and to 
be installed as a condition of the contract. By agreeing to participate 
in CFO, CCC may require operation and maintenance of those conservation 
practices installed under CRP, EQIP, or WRP.
    (c) CCC may require a participant to refund all or a portion of any 
assistance earned under a CRP or EQIP contract, or WRP cost-share 
agreement that was terminated as a condition of participation in CFO, if 
the participant sells or loses control of the land under a CFO contract 
and the new owner or controller does not assume responsibility under the 
contract.



Sec. 1468.25  Contract violations and termination.

    (a)(1) If it is determined that a participant is in violation of the 
provisions of this part, or the terms of the contract including portions 
of the contract that incorporate transferred obligations from CRP or 
EQIP contracts, or WRP cost-share agreements, CCC will give the 
participant written notice of a reasonable time to correct the violation 
and comply with the terms of the contract and attachments thereto, as 
determined by the FSA county committee, in consultation with NRCS. If a 
participant continues in violation after the time to comply has elapsed, 
the FSA county committee may, in consultation with NRCS, terminate the 
CFO contract.
    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, a contract termination shall be effective immediately upon a 
determination by the FSA county committee, in consultation with NRCS, 
that the participant has submitted false information, filed a false 
claim, or engaged in any act for which a finding of ineligibility for 
payments is permitted under the provisions of Sec. 1468.35 of this part, 
or in a case in which the actions of the party involved are deemed to be 
sufficiently purposeful or negligent to warrant a termination without 
delay.
    (b)(1) If CCC terminates a contract, the participant shall forfeit 
all rights for future payments under the contract and shall refund all 
or part of the payments received, plus interest, determined in 
accordance with part 1403 of this chapter. CCC has the option of 
requiring only partial refund of the payments received if a previously 
installed conservation practice can function independently, is not 
affected by the violation or other conservation practices that would 
have been installed

[[Page 550]]

under the contract, and the participant agrees to operate and maintain 
the installed conservation practice for the life span of the practice.
    (2) If CCC terminates a contract for any reason stated above, before 
any contractual payments have been made, the participant shall forfeit 
all rights for further payments under the contract and shall pay such 
liquidated damages as are prescribed in the contract.
    (3) When making all contract termination decisions, CCC may reduce 
the amount of money owed by the participant by a proportion which 
reflects the good-faith effort of the participant to comply with the 
contract, or the hardships beyond the participant's control that have 
prevented compliance with the contract.
    (4) The participant may voluntarily terminate a contract without 
penalty, if CCC determines that such termination would be in the public 
interest.



                    Subpart C--General Administration



Sec. 1468.30  Appeals.

    (a) An applicant or participant may obtain administrative review of 
an adverse decision made with respect to this part and the CFO contract 
in accordance with parts 11 and 614 of this title, except as provided in 
paragraph (b) of this section.
    (b) The following decisions are not appealable:
    (1) CCC funding allocations;
    (2) Eligible conservation practices;
    (3) Payment rates, and cost-share percentages;
    (4) Science-based formulas and factor values;
    (5) Soils mapping and information; and
    (6) Other matters of general applicability.



Sec. 1468.31  Compliance with regulatory measures.

    Participants who carry out conservation practices shall be 
responsible for obtaining the authorities, rights, easements, permits, 
or other approvals necessary for the implementation, operation, and 
maintenance of the conservation practices in keeping with applicable 
laws and regulations. Participants shall be responsible for compliance 
with all laws and for all effects or actions resulting from the 
participant's performance under the contract.



Sec. 1468.32  Access to operating unit.

    Any authorized CCC representative shall have the right to enter an 
operating unit or tract for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, or as to the performance of the terms and conditions of the 
contract. Access shall include the right to provide technical assistance 
and inspect any work undertaken under the contract. The CCC 
representative shall make a reasonable effort to contact the participant 
prior to the exercise of this right to access.



Sec. 1468.33  Performance based upon advice or action of representatives of CCC.

    If a participant relied upon the advice or action of any authorized 
representative of CCC, and did not know or have reason to know that the 
action or advice was improper or erroneous, the FSA county committee, in 
consultation with NRCS, may accept the advice or action as meeting the 
requirements of the program and may grant relief, to the extent it is 
deemed desirable, to provide a fair and equitable treatment because of 
the good-faith reliance on the part of the participant.



Sec. 1468.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any payment 
or portion thereof to any participant 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 United States. The regulations 
governing offsets and withholdings found at part 1403 of this chapter 
shall apply to contract payments.
    (b) Any participant entitled to any payment may assign any payments 
in accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.

[[Page 551]]



Sec. 1468.35  Misrepresentation and scheme or device.

    (a) A participant 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 to CCC 
all payments, plus interest determined in accordance with part 1403 of 
this chapter.
    (b) An applicant or participant who is determined to have knowingly 
adopted any scheme or device that tends to defeat the purpose of the 
program; made any fraudulent representation; or 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 applicant or participant with respect to CFO contracts.

[[Page 552]]



                      SUBCHAPTER C--EXPORT PROGRAMS





PART 1485--COOPERATIVE AGREEMENTS FOR THE DEVELOPMENT OF FOREIGN MARKETS FOR AGRICULTURAL COMMODITIES--Table of Contents




                          Subpart A  [Reserved]

                    Subpart B--Market Access Program

Sec.
1485.10  General purpose and scope.
1485.11  Definitions.
1485.12  Participation eligibility.
1485.13  Application process and strategic plan.
1485.14  Application approval and formation of agreements.
1485.15  Activity plan.
1485.16  Reimbursement rules.
1485.17  Reimbursement procedures.
1485.18  Advances.
1485.19  Employment practices.
1485.20  Financial management, reports, evaluations and appeals.
1485.21  Failure to make required contribution.
1485.22  Submissions.
1485.23  Miscellaneous provisions.
1485.24  Applicability date.
1485.25  Paperwork reduction requirement.

    Authority: 7 U.S.C. 5623, 5662-5664 and sec. 1302, Pub. L. 103-66, 
107 Stat. 330.

    Source:  60 FR 6363, Feb. 1, 1995, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 1485 appear at 61 FR 
58780, Nov. 19, 1996.



                          Subpart A  [Reserved]



                    Subpart B--Market Access Program



Sec. 1485.10  General purpose and scope.

    (a) This subpart sets forth the policies underlying the Commodity 
Credit Corporation's (CCC) operation of the Market Access Program (MAP), 
and a subcomponent of that program, the Export Incentive Program/Market 
Access Program (EIP/MAP). It also establishes the general terms and 
conditions applicable to MAP and EIP/MAP agreements.
    (b) Under the MAP, CCC enters into agreements with nonprofit trade 
organizations to share the costs of certain overseas marketing and 
promotion activities that are intended to develop, maintain or expand 
commercial export markets for U.S. agricultural commodities and 
products. MAP participants may receive assistance for either generic or 
brand promotion activities. EIP/MAP participants are U.S. commercial 
entities that receive assistance for brand promotion activities.
    (c) The MAP and EIP/MAP generally operate on a reimbursement basis, 
and CCC may, at its option, provide such reimbursement either in cash or 
in CCC commodity certificates.
    (d) CCC's policy is to ensure that benefits generated by MAP and 
EIP/MAP agreements are broadly available throughout the relevant 
agricultural sector and no one entity gains an undue advantage. The MAP 
and EIP/MAP are administered by personnel of the Foreign Agricultural 
Service.



Sec. 1485.11  Definitions.

    For purposes of this subpart the following definitions apply:
    Activity--a specific market development effort undertaken by a 
participant.
    Activity plan--a document which details a participant's proposed 
activities and budget. (Activity plan is used in lieu of the term 
Marketing plan to avoid administrative confusion with plans submitted 
under the Cooperator Foreign Market Development Program.)
    Administrator--the Administrator, FAS, USDA, or designee.
    Agricultural commodity--an agricultural commodity, food, feed, 
fiber, wood, livestock or insect, and any product thereof; and fish 
harvested from a U.S. aquaculture farm, or harvested by a vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    APAR--activity plan amendment request.
    Attache/Counselor--the FAS employee representing USDA interests in 
the foreign country in which promotional activities are conducted.
    Brand promotion--an activity that involves the exclusive or 
predominant use of a single company name or

[[Page 553]]

logo(s) or brand name(s) of a single company.
    CCC--the Commodity Credit Corporation.
    Contribution--the cost-share expenditure made by a participant in 
support of an approved activity.
    Credit memo--a notice that a vendor has decreased an amount owed for 
promotional expenditures at the time the notice is issued.
    Demonstration projects--activities involving the erection or 
construction of a structure or facility or the installation of 
equipment.
    Deputy Administrator--the Deputy Administrator, Commodity and 
Marketing Programs, FAS, USDA, or designee.
    Division Director--the director of a commodity division, Commodity 
and Marketing Programs, FAS, USDA.
    EIP/MAP--the Export Incentive Program/Market Access Program.
    EIP/MAP participant--a U.S. commercial entity which has entered into 
an EIP/MAP agreement with CCC.
    Eligible commodity--the agricultural commodity that is represented 
by an applicant.
    Expenditure--either the transfer of funds, or payment via a credit 
memo in lieu of a transfer of funds.
    Exported commodity--an agricultural commodity that is sold to buyers 
in, or is donated to, a foreign country.
    FAS--Foreign Agricultural Service, USDA.
    Foreign third party--a foreign entity that assists, in accordance 
with an approved activity plan, in promoting the export of a U.S. 
agricultural commodity.
    Generic promotion--a promotion that is not a brand promotion.
    Market--a country in which an activity is conducted.
    MAP--the Market Access Program.
    MAP participant--an entity which has entered into an MAP agreement 
with CCC.
    Participant--a entity which has entered into an agreement with CCC.
    Promoted commodity--an agricultural commodity whose sale is the 
intended result of a promotion activity.
    Sales team--a group of individuals engaged in an approved activity 
intended to result in specific sales.
    Small-sized entity--a U.S. commercial entity which meets the small 
business size standards published at 13 CFR part 121, Small Business 
Size Regulations.
    SRTG--an association of State Departments of Agriculture referred to 
as State Regional Trade Group(s).
    STRE--sales and trade relations expenditures.
    Supergrade--a salary level designation that is applicable to certain 
non-U.S. employees who direct participants' overseas offices.
    Trade team--a group of individuals engaged in an approved activity 
intended to promote the interests of an entire agricultural sector 
rather than to result in specific sales by any of its members.
    Unfair trade practice--an act, policy, or practice of a foreign 
government that:
    (1) Violates, is inconsistent with, or otherwise denies benefits to 
the United States under, any trade agreement to which the United States 
is a party; or
    (2) Is unjustifiable, unreasonable, or discriminatory and burdens or 
restricts United States commerce.
    U.S. commercial entity--an agricultural cooperative, producer 
association authorized by 7 U.S.C. 291, or for-profit firm located and 
doing business in the United States, and engaged in the export or sale 
of an agricultural commodity.
    U.S. industry contribution--the expenditure made by the U.S industry 
in support of an approved activity.
    USDA--the United States Department of Agriculture.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 61 
FR 58780, Nov. 19, 1996; 63 FR 29940, June 2, 1998; 63 FR 32041, June 
11, 1998]



Sec. 1485.12  Participation eligibility.

    (a) To participate in the MAP, an entity:
    (1) Shall be:
    (i) A nonprofit U.S agricultural trade organization;
    (ii) A nonprofit state regional trade group;
    (iii) A U.S. agricultural cooperative; or
    (iv) A State agency; and
    (2) Shall contribute:

[[Page 554]]

    (i) In the case of generic promotion, at least 10 percent of the 
value of resources provided by CCC for such generic promotion; or
    (ii) In the case of brand promotion, at least 50 percent of the 
total cost of such brand promotions.
    (b) To participate in the EIP/MAP, an entity:
    (1) Shall be a U.S. commercial entity that either owns the brand(s) 
of the agricultural commodity to be promoted or has the exclusive rights 
to use such brand(s);
    (2) Shall contribute at least 50 percent of the total cost of the 
brand promotion; and
    (3) That is a for-profit firm, other than a cooperative or producer 
association authorized by 7 U.S.C. 291, shall be a small sized entity.
    (c) CCC may require a contribution level greater than that specified 
in paragraphs (a) and (b) of this section. In requiring a higher 
contribution level, CCC will take into account such factors as past 
participant contributions, previous MAP funding levels, the length of 
time an entity participates in the program and the entity's ability to 
increase its contribution.
    (d) CCC may require an EIP/MAP applicant to participate through an 
MAP participant.
    (e) CCC will enter into MAP or EIP/MAP agreements only where the 
eligible agricultural commodity is comprised of at least 50 percent U.S. 
origin content by weight, exclusive of added water.
    (f) CCC will not enter into an MAP or EIP/MAP agreement for the 
promotion of tobacco or tobacco products.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 58780, Nov. 19, 1996]



Sec. 1485.13  Application process and strategic plan.

    (a) General application requirements. CCC will periodically publish 
a Notice in the Federal Register that it is accepting applications for 
participation in MAP and EIP/MAP. Applications shall be submitted in 
accordance with the terms and requirements specified in the Notice. An 
application shall contain basic information about the applicant and the 
proposed program, a program justification and a strategic plan.
    (1) Basic applicant and program information. (i) All MAP and EIP/MAP 
applications shall contain:
    (A) The name and address of the applicant;
    (B) The name of the Chief Executive Officer;
    (C) The name and telephone number of the applicant's primary contact 
person;
    (D) The name(s) of the person(s) responsible for managing the 
program;
    (E) Type of organization--see Sec. 1485.12(a)(1);
    (F) Tax exempt identification number, if applicable;
    (G) Activity plan year (mm/dd/yy-mm/dd/yy);
    (H) Dollar amount of CCC resources requested for generic activities;
    (I) Dollar amount of CCC resources requested for brand activities;
    (J) Percentage of CCC resources requested for brand activities that 
will be made available to small-sized entities;
    (K) Total dollar amount of CCC resources requested;
    (L) Percentage of CCC resources requested for general administrative 
costs and overhead; and
    (M) Estimated cumulative carryover--i.e., the estimated amount of 
unexpended funds allocated to the applicant in any prior year;
    (ii) Applications submitted by nonprofit entities shall also 
contain:
    (A) A description of the organization;
    (B) A description of the organization's membership and membership 
criteria;
    (C) A list of affiliated organizations;
    (D) A description of management and administrative capability;
    (E) A description of prior export promotion experience;
    (F) Value, in dollars, that the applicant will contribute;
    (G) Applicant's contribution stated as a percent of 1(i)(K) above;
    (H) Value, in dollar, of contributions from other sources;
    (2) Program justification. (i) All MAP and EIP/MAP applications 
shall contain:
    (A) A description of the eligible agricultural commodity(s), its 
harmonized system code, the commodity aggregate code and the percentage 
of U.S. origin

[[Page 555]]

content by weight, exclusive of added water;
    (B) A description of the exported agricultural commodity(s), its 
harmonized system code, the commodity aggregate code and the percentage 
of U.S. origin content by weight, exclusive of added water;
    (C) A description of the promoted agricultural commodity(s), its 
harmonized system code, the commodity aggregate code and the percentage 
of U.S. origin content by weight, exclusive of added water;
    (D) A description of the anticipated supply and demand situation for 
the exported agricultural commodity(s);
    (E) The volume and value of the exported agricultural commodity(s) 
for the most recent 3-year period;
    (F) If the proposal is for two or more years, an explanation why the 
proposal should be funded on a multiyear basis; and
    (G) A certification and, if requested by the Deputy Administrator, a 
written explanation supporting the certification, that any funds 
received will supplement, but not supplant, any private or third party 
funds or other contributions to program activities. The justification 
shall indicate why the participant is unlikely to carry out the 
activities without Federal financial assistance. In determining whether 
federal funds received supplemented or supplanted private or third party 
funds or contributions, CCC will consider the participant's overall 
marketing budget from year to year, variations in promotional strategies 
within a country and new markets.
    (ii) Applications submitted by a small-sized entity seeking funds 
under an EIP/MAP agreement shall contain a certification that it is a 
small business within the standards established by 13 CFR part 121. For 
purposes of determining size, a cooperative will be considered a single 
entity.
    (iii) Applicants seeking funds for brand promotion shall contain the 
information required by Sec. 1485.16(g)(1) and (2) in order to justify a 
rate of reimbursement higher than specified therein.
    (3) Strategic plan. (i) All MAP and EIP/MAP applications shall 
contain:
    (A) A summary of proposed budgets by country and commodity aggregate 
code;
    (B) A description of the world market situation for the exported 
agricultural commodity;
    (C) A description of competition from other exporters, including 
U.S. firms, where applicable;
    (D) A statement of goals and the applicant's plans for monitoring 
and evaluating performance towards achieving these goals.
    (E) For each country, if applicable, five years of:
    (1) historical U.S. export data;
    (2) U.S. market share; and
    (3) MAP funds received;
    (F) For each country, three years of projected U.S. export data and 
U.S. market share;
    (G) Country strategy, including constraint(s) impeding U.S. exports, 
strategy to overcome constraints, previous activities in the country, 
the projected impact of the proposed program on U.S. exports;
    (H) A justification for any new overseas office;
    (I) A description of any demonstration projects, if applicable (see 
Sec. 1485.13(d)(1) through (4));
    (J) Data summarizing historical and projected exports, market share 
and MAP budgets for the world; and
    (K) A description of overall program goals for the ensuing 3-5 
years;
    (ii) MAP applications for brand promotion assistance shall also 
contain:
    (A) A description of how the brand promotion program will be 
publicized to U.S. and foreign commercial entities;
    (B) The criteria that will be used to allocate funds to U.S. and 
foreign commercial entities; and
    (C) A justification for conducting a brand promotion program with 
foreign commercial entities, if applicable.
    (b) CCC may request any additional information which it deems 
necessary to evaluate an MAP or EIP/MAP application. In particular, CCC 
may require additional performance measurement, as required by the 
Government Performance and Results Act of 1993.
    (c) Eligible contributions. (1) In calculating the amount of 
contributions

[[Page 556]]

that it will make, and the contributions it will receive from a U.S. 
industry, a foreign third party or a State agency, the MAP applicant may 
include the costs (or such prorated costs) listed under paragraph (c)(2) 
of this section if:
    (i) Expenditures will be made in furtherance of an approved 
activity, and
    (ii) The contributor has not been or will not be reimbursed by any 
other source for such costs.
    (2) Subject to paragraph (c)(1) of this section, eligible 
contributions are:
    (i) Cash;
    (ii) Compensation paid to personnel;
    (iii) The cost of acquiring materials, supplies or services;
    (iv) The cost of office space;
    (v) A reasonable and justifiable proportion of general 
administrative costs and overhead;
    (vi) Payments for indemnity and fidelity bond expenses;
    (vii) The cost of business cards;
    (viii) The cost of seasonal greeting cards;
    (ix) Fees for office parking;
    (x) The cost of subscriptions to publications;
    (xi) The cost of activities conducted overseas;
    (xii) Credit card fees;
    (xiii) The cost of any independent evaluation or audit that is not 
required by CCC to ensure compliance with program requirements;
    (xiv) The cost of giveaways, awards, prizes and gifts;
    (xv) The cost of product samples;
    (xvi) Fees for participating in U.S. government activities;
    (xvii) The cost of air and local travel in the United States;
    (xviii) Payment of employee's or contractor's share of personal 
taxes; and
    (xix) The cost associated with trade shows, seminars, entertainment 
and STRE conducted in the United States.
    (3) The following are not eligible contributions:
    (i) Any portion of salary or compensation of an individual who is 
the target of an approved promotional activity;
    (ii) Any expenditure, including that portion of salary and time 
spent in promoting membership in the participant organization or in 
promoting the MAP among its members (sometimes referred to in the 
industry as ``backsell'');
    (iii) Any land costs other than allowable costs for office space;
    (iv) Depreciation;
    (v) The cost of refreshments and related equipment provided to 
office staff;
    (vi) The cost of insuring articles owned by private individuals;
    (vii) The cost of any arrangement which has the effect of reducing 
the selling price of an agricultural commodity;
    (viii) The cost of product development, product modifications, or 
product research;
    (ix) Slotting fees or similar sales expenditures;
    (x) Membership fees in clubs and social organizations; and
    (xi) Any expenditure for an activity prior to CCC's approval of that 
activity or amendment.
    (4) The Deputy Administrator shall determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section may be included by the participant as an eligible 
contribution.
    (d) Special rules governing demonstration projects funded with CCC 
resources. CCC will consider proposals for demonstration projects 
provided:
    (1) No more than one such demonstration project per constraint is 
undertaken within a market;
    (2) The constraint to be addressed in the market is a lack of 
technical knowledge or expertise;
    (3) The demonstration project is a practical and cost effective 
method of overcoming the constraint;
    (4) A third party participates in such project through a written 
agreement which provides that title to the structure, facility or 
equipment may transfer to the third party and that the MAP participant 
may use the structure, facility or equipment for a period specified in 
the agreement for the purpose of removing the constraint.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 63 
FR 29940, June 2, 1998]

[[Page 557]]



Sec. 1485.14  Application approval and formation of agreements.

    (a) General. CCC will, consistent with available resources, approve 
those applications which it considers to present the best opportunity 
for developing, maintaining or expanding export markets for U.S. 
agricultural commodities. The selection process, by its nature, involves 
the exercise of judgment. CCC's choice of participants and proposed 
promotion projects requires that it consider and weigh a number of 
factors that cannot be mathematically measured--i.e., market 
opportunity, market strategy and management capability.
    (b) Approval criteria. In assessing the applications it receives and 
determining which it will approve, CCC considers the following criteria:
    (1) The effectiveness of program management;
    (2) Soundness of accounting procedures;
    (3) The nature of the applicant organization, with greater weight 
given to those organizations with the broadest base of producer 
representation;
    (4) Prior export promotion or direct export experience;
    (5) Previous MAP funding;
    (6) Adequacy of the applicant's strategic plan in the following 
categories:
    (i) Description of market conditions;
    (ii) Description of, and plan for addressing, market constraints;
    (iii) Reasonable likelihood of plan success;
    (iv) Export volume and value and market share goals in each country;
    (v) Description of evaluation plan and suitability of the plan for 
performance measurement; and
    (vi) Past program results and evaluations, if applicable.
    (c) Allocation factors. After determining which applications to 
approve, CCC determines how it will allocate resources among 
participants based on the following factors, in addition to those in 
paragraph (b) of this section:
    (1) Size of the budget request in relation to projected value of 
exports;
    (2) Where applicable, size of the budget request in relation to 
actual value of exports in prior years;
    (3) Where applicable, participant's past projections of exports 
compared with actual exports;
    (4) Level of participant's, State's, and industry's contributions;
    (5) Market share goals in target country(ies);
    (6) The degree to which the product to be exported consists of U.S. 
grown agricultural commodities;
    (7) The degree of value-added processing in the U.S.; and
    (8) General administrative and overhead costs compared to direct 
promotional costs.
    (9) In the case of a brand promotion program, the percentage of the 
budget that will be made available to small-sized entities as a means of 
providing priority assistance to such entities.
    (d) Approval decision. (1) CCC will approve those applications which 
it determines best satisfy the criteria and factors specified above. In 
addition, CCC will only approve applications for EIP/MAP when there is 
sufficient U.S. industry need for a brand promotion and there is no 
eligible MAP participant interested in or capable of undertaking the 
brand promotion.
    (2) CCC will not provide assistance to a single company for brand 
promotion in a single country for more than five years. This five year 
period shall not begin prior to the 1994 program or the participant's 
first activity plan year, whichever is later. In limited circumstances, 
the five year limitation may be waived if the Deputy Administrator 
determines that further assistance is necessary in order to meet the 
objectives of the program.
    (e) Formation of agreements. CCC will notify each applicant in 
writing of the final disposition of its application. CCC will send a 
program agreement, allocation approval letter and a signature card to 
each approved applicant. The allocation approval letter will specify any 
special terms and conditions applicable to a participant's program, 
including the required level of participant contribution. An applicant 
that decides to accept the terms and conditions contained in the program 
agreement and allocation approval letter should so indicate by having 
its Chief Executive Officer sign the program agreement and by submitting 
the signed agreement to the Director, Marketing Operations Staff, FAS, 
USDA. Final agreement shall occur when the

[[Page 558]]

Administrator signs the agreement on behalf of CCC. The application, the 
program agreement, the allocation approval letter and these regulations 
shall establish the terms and conditions of an MAP or EIP/MAP agreement 
between CCC and the approved applicant.
    (f) Signature cards. The participant shall designate at least two 
individuals in its organization to sign program agreements, 
reimbursement claims and advance requests. The participant shall submit 
the signature card signed by those designated individuals and by the 
participant's Chief Executive Officer to the Director, Marketing 
Operations Staff, FAS, USDA, and shall immediately notify the Director 
of any changes in signatories and shall submit a revised signature card 
accordingly.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 63 
FR 29940, June 2, 1998]



Sec. 1485.15  Activity plan.

    (a) General. A participant shall develop a specific activity plan(s) 
based on its strategic plan and the allocation approval letter and shall 
submit an activity plan for each year in which it engages in program 
activities. An activity plan handbook, available from the Division 
Director, provides suggested formats and codes for activity plans and 
amendments.
    (b) An activity plan shall contain:
    (1) A written presentation of all proposed activities including:
    (i) A short description of the relevant constraint;
    (ii) A description of any changes in strategy from the strategic 
plan;
    (iii) A budget for each proposed activity, identifying the source of 
funds;
    (iv) Specific goals and benchmarks to be used to measure the 
effectiveness of each activity. This will assist CCC in carrying out its 
responsibilities under the Government Performance and Results Act of 
1993 that requires performance measurement of Federal programs, 
including the MAP. Evaluation of MAP's effectiveness will depend on a 
clear statement by participants of goals, method of achievement, and 
results of activities at regular intervals. The overall goal of the MAP 
and of individual participants' activities is to achieve additional 
exports of U.S. agricultural products, that is, sales that would not 
have occurred in the absence of MAP funding.
    (2) A staffing plan for any overseas office, including a listing of 
job titles, position descriptions, salary ranges and any request for 
approval of supergrade salaries; and
    (3) An itemized administrative budget for any overseas office.
    (c) Activity plans for small-sized entities operating through an 
SRTG shall contain a certification that it is a small-sized entity 
within the standards established by 13 CFR part 121.
    (d) Requests for approval of ``supergrades''. (1) Ordinarily, CCC 
will not reimburse any portion of a non-U.S. citizen employees 
compensation that exceeds the highest salary level in the Foreign 
Service National (FSN) salary plan applicable to the country in which 
the employee works. However, a participant may seek a higher level of 
reimbursement for a non-U.S. citizen who will be employed as a country 
director or regional director by requesting that CCC approve that 
employee as a ``supergrade''.
    (2) To request approval of a ``supergrade'', the participant shall 
include in its activity plan a detailed description of both the duties 
and responsibilities of the position, and of the qualifications and 
background of the employee concerned. The participant shall also justify 
why the highest FSN salary level is insufficient.
    (3) Where a non-U.S. citizen will be employed as a country director, 
the MAP participant may request approval for a ``Supergrade I'' salary 
level, equivalent to a grade increase over the existing top grade of the 
FSN salary plan. The ``supergrade'' and its step increases are 
calculated as the percentage difference between the second highest and 
the highest grade in the FSN salary plan with that percentage applied to 
each of the steps in the top grade. Where the non-U.S. citizen will be 
employed as a regional director, with responsibility for activities and/
or offices in more than one country, the MAP participant may request 
approval for a ``Supergrade II'' salary level which is calculated 
relative to a ``Supergrade I'' in the same way the

[[Page 559]]

latter is calculated relative to the highest grade in the FSN salary 
plan.
    (e) Submission of the activity plan. A participant shall submit 
three copies of an activity plan to the Division Director and a copy of 
the relevant country section(s) to the Attache/Counselor(s) concerned.
    (f) Activity plan approval. CCC shall indicate in an activity plan 
approval letter which activities and budgets are approved or 
disapproved, and shall indicate any special terms and conditions that 
apply to the participant including any requirements with respect to 
contributions and program evaluations. A participant may undertake 
promotional activities directly or through a foreign third party; 
however, the participant shall be responsible and accountable to CCC for 
all such promotional activities and related expenditures.
    (g) Activity plan changes. (1) A participant may request changes to 
an activity plan by submitting one copy of an APAR to each of the 
Division Director and the Attache/Counselor(s) concerned.
    (2) An APAR for a new activity shall contain the information 
required in paragraph (b) of this section. All other APAR's shall 
contain the activity description, the proposed budget and a 
justification for transfer of funds, if applicable.



Sec. 1485.16  Reimbursement rules.

    (a) A participant may seek reimbursement for an expenditure if:
    (1) The expenditure was made in furtherance of an approved activity; 
and
    (2) The participant has not been or will not be reimbursed for such 
expenditure by any other source.
    (b) Subject to paragraph (a) of this section, CCC will reimburse, in 
whole or in part, the cost of:
    (1) Production and placement of advertising in print or electronic 
media or on billboards or posters;
    (2) Production and distribution of banners, recipe cards, table 
tents, shelf talkers and other similar point of sale materials;
    (3) Direct mail advertising;
    (4) In-store and food service promotions, product demonstrations to 
the trade and to consumers, and distribution of promotional samples;
    (5) Temporary displays and rental of space for temporary displays;
    (6) Expenditures, other than travel expenditures, associated with 
retail, trade, and consumer exhibits and shows; seminars; and 
educational training; including participation fees, booth construction, 
transportation of related materials, rental of space and equipment, and 
duplication of related printed materials;
    (7) International air travel, not to exceed the full fare economy 
rate, or other means of international transportation, and per diem, as 
allowed under the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304) for no more than two representatives of a single brand 
participant to exhibit their company's products at a foreign trade show.
    (8) Publications;
    (9) Part-time contractors such as demonstrators, interpreters, 
translators and receptionists to help with the implementation of 
promotional activities such as trade shows, in-store promotions, food 
service promotions, and trade seminars;
    (10) Giveaways, awards, prizes, gifts and other similar promotional 
materials subject to the limitation that CCC will not reimburse more 
than $1.00 per item;
    (11) The design and production of packaging, labeling or origin 
identification, to be used during the activity plan year in which the 
expenditure is made, if such packaging, labeling or origin 
identification are necessary to meet the importing requirements in a 
foreign country.
    (c) Subject to paragraph (a) of this section, but for generic 
promotion activities only, CCC will also reimburse, in whole or in part, 
the cost of:
    (1) Compensation and allowances for housing, educational tuition, 
and cost of living adjustments paid to a U.S. citizen employee or a U.S. 
citizen contractor stationed overseas subject to the limitation that CCC 
shall not reimburse that portion of:
    (i) The total of compensation and allowances that exceed 125 percent 
of the level of a GS-15 Step 10 salary for U.S. Government employees, 
and

[[Page 560]]

    (ii) Allowances that exceed the rate authorized for U.S. Embassy 
personnel;
    (2) Approved ``supergrade'' salaries for non-U.S. citizens and non-
U.S. contractors;
    (3) Compensation of a non-U.S. citizen staff employee or non-U.S. 
contractor subject to the following limitations:
    (i) Where there is a local U.S. Embassy Foreign Service National 
(FSN) salary plan, CCC shall not reimburse any portion of such 
compensation that exceeds the compensation prescribed for the most 
comparable position in the FSN salary plan, or
    (ii) Where an FSN salary plan does not exist, CCC will not reimburse 
any portion of such compensation that exceeds locally prevailing levels 
which the MAP participant shall document by a salary survey or other 
means.
    (4) A retroactive salary adjustment that conforms to a change in FSN 
salary plans, effective as of the date of such change;
    (5) Accrued annual leave at such time when employment is terminated 
or when required by local law;
    (6) Overtime paid to clerical staff;
    (7) Daily contractor fees subject to the limitation that CCC will 
not reimburse any portion of such fee that exceeds the daily gross 
salary of a GS-15, Step 10 for U.S. Government employees in effect on 
the date the fee is earned;
    (8) International travel expenses plus passports, visas and 
inoculations subject to the limitation that CCC will not reimburse any 
portion of air travel in excess of the full fare economy rate or when 
the participant fails to notify the Attache/Counselor in the destination 
country in advance of the travel unless the Deputy Administrator 
determines it was impractical to provide such notification;
    (9) Per diem subject to the limitation that CCC will not reimburse 
per diem in excess of the rates allowed under the U.S. Federal Travel 
Regulations (41 CFR parts 301 through 304);
    (10) Automobile mileage at the local U.S. Embassy rate or rental 
cars while in travel status;
    (11) Other allowable expenditures while in travel status as 
authorized by the U.S. Federal Travel Regulations (41 CFR parts 301 
through 304);
    (12) An overseas office, including rent, utilities, communications 
originating overseas, office supplies, accident liability insurance 
premiums and legal and accounting services;
    (13) The purchase, lease, or repair of, or insurance premiums for, 
capital goods that have an expected useful life of at least one year 
such as furniture, equipment, machinery, removable fixtures, draperies, 
blinds, floor coverings, computer hardware and software;
    (14) Premiums for health or accident insurance or other benefits for 
foreign national employees that the employer is required by law to pay;
    (15) Accident liability insurance premiums for facilities used 
jointly with third party participants for MAP activities or for travel 
of non-MAP participant personnel;
    (16) Market research;
    (17) Evaluations, if not required by CCC to ensure compliance with 
program requirements;
    (18) Legal fees to obtain advice on the host country's labor laws;
    (19) Employment agency fees;
    (20) STRE including breakfast, lunch, dinner, receptions and 
refreshments at approved activities; miscellaneous courtesies such as 
checkroom fees, taxi fares and tips; and decorations for a special 
promotional occasion;
    (21) Educational travel of dependent children, visitation travel, 
rest and recuperation travel, home leave travel, emergency visitation 
travel for U.S. overseas employees allowed under the Foreign Affairs 
Manual, Foreign Affairs Manual, OIS/RA/PSG, Room B-264 Main State, 
Washington, D.C. 20520, Telephone: 202-736-4881, FAX: 202-736-7214.
    (22) Evacuation payments (safe haven), shipment and storage of 
household goods and motor vehicles;
    (23) Domestic administrative support expenses for the National 
Association of State Departments of Agriculture and the SRTGs;
    (24) Generic commodity promotions (see Sec. 1486.16(f));
    (25) Travel expenditures associated with trade shows, seminars, and 
educational training conducted in the United States; and
    (26) Demonstration projects.

[[Page 561]]

    (d) CCC will not reimburse any cost of:
    (1) Forward year financial obligations, such as severance pay, 
attributable to employment of foreign nationals;
    (2) Expenses, fines, settlements or claims resulting from suits, 
challenges or disputes emanating from employment terms, conditions, 
contract provisions and related formalities;
    (3) The design and production of packaging, labeling or origin 
identification, except as described in paragraph (b)(11) of this 
section.
    (4) Product development, product modification or product research;
    (5) Product samples;
    (6) Slotting fees or similar sales expenditures;
    (7) The purchase, construction or lease of space for permanent 
displays, i.e., displays lasting beyond one activity plan year;
    (8) Rental, lease or purchase of warehouse space;
    (9) Coupon redemption or price discounts;
    (10) Refundable deposits or advances;
    (11) Giveaways, awards, prizes, gifts and other similar promotional 
materials in excess of $1.00 per item;
    (12) Alcoholic beverages that are not an integral part of an 
approved promotional activity;
    (13) The purchase, lease (except for use in authorized travel 
status) or repair of motor vehicles;
    (14) Travel of applicants for employment interviews;
    (15) Unused non-refundable airline tickets or associated penalty 
fees except where travel is restricted by U.S. government action or 
advisory;
    (16) Independent evaluation or audit, including activities of the 
subcontractor if CCC determines that such a review is needed in order to 
ensure program compliance;
    (17) Any arrangement which has the effect of reducing the selling 
price of an agricultural commodity;
    (18) Goods and services and salaries of personnel provided by U.S. 
industry or foreign third party;
    (19) Membership fees in clubs and social organizations;
    (20) Indemnity and fidelity bonds;
    (21) Fees for participating in U.S. Government sponsored activities, 
other than trade fairs and exhibits;
    (22) Business cards;
    (23) Seasonal greeting cards;
    (24) Office parking fees;
    (25) Subscriptions to publications;
    (26) Home office domestic administrative expenses, including 
communication costs;
    (27)  [Reserved]
    (28) Payment of U.S. and foreign employees or contractors share of 
personal taxes, except as legally required in a foreign country, and;
    (29) Any expenditure made for an activity prior to CCC's approval of 
that activity or amendment.
    (e) The Deputy Administrator may determine, at the Deputy 
Administrator's discretion, whether any cost not expressly listed in 
this section will be reimbursed.
    (f) For a generic promotion activity involving the use of company 
names, logos or brand names, the MAP participant must ensure that all 
companies seeking to promote U.S. agricultural commodities have an equal 
opportunity to participate in the activity.
    (g) For a brand promotion activity, CCC will reimburse at a rate 
equal to the percentage of U.S. origin content of the promoted 
agricultural commodity or at a rate of 50 percent, whichever is the 
lesser, except that CCC may reimburse for a higher rate if:
    (1) There has been an affirmative action by the U.S. Trade 
Representative under Section 301 of the Trade Act of 1974 with respect 
to the unfair trade practice cited and there has been no final 
resolution of the case; and
    (2) The participant shows, in comparison to the year such Section 
301 case was initiated, that U.S. market share of the agricultural 
commodity concerned has decreased; and
    (3) In such case, CCC shall determine the appropriate rate of 
reimbursement.
    (h) CCC will reimburse for expenditures made after the conclusion of 
participant's activity plan year provided:
    (1) The activity was approved prior to the end of the activity plan 
year;
    (2) The activity was completed within 30 calendar days following the 
end of the activity plan year; and

[[Page 562]]

    (3) All expenditures were made for the activity within 6 months 
following the end of the activity plan year.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 3548, Feb. 1, 1996; 61 FR 
24206, May 14, 1996; 61 FR 32644, June 25, 1996; 63 FR 29940, June 2, 
1998; 63 FR 32041, June 11, 1998]



Sec. 1485.17  Reimbursement procedures.

    (a) A format for reimbursement claims is available from the Division 
Director. Claims for reimbursement shall contain the following 
information:
    (1) Activity type--brand or generic;
    (2) Activity number;
    (3) Commodity aggregate code;
    (4) Country code;
    (5) Cost category;
    (6) Amount to be reimbursed;
    (7) If applicable, any reduction in the amount of reimbursement 
claimed to offset CCC demand for refund of amounts previously 
reimbursed, and reference to the relevant Compliance Report; and
    (8) If applicable, any amount previously claimed that has not been 
reimbursed.
    (b) All claims for reimbursement shall be submitted by the 
participant's U.S. office to the Director, Marketing Operations Staff, 
FAS, USDA.
    (c) In general, CCC will not reimburse a claim for less than $10,000 
except that CCC will reimburse a final claim for a participant's 
activity plan year for a lesser amount.
    (d) CCC will not reimburse claims submitted later than 6 months 
after the end of a participant's activity plan year.
    (e) If CCC reimburses a claim with commodity certificates, CCC will 
issue commodity certificates with a face value equivalent to the amount 
of the claim which shall be in full accord and satisfaction of such 
claim.
    (f) If CCC overpays a reimbursement claim, the participant shall 
repay CCC within 30 days the amount of the overpayment either by 
submitting a check payable to CCC or by offsetting its next 
reimbursement claim.
    (g) If a participant receives a reimbursement or offsets an advanced 
payment which is later disallowed, the participant shall within 30 days 
of such disallowance repay CCC the amount owed either by submitting a 
check payable to CCC or by offsetting its next reimbursement claim.
    (h) The participant shall report any actions having a bearing on the 
propriety of any claims for reimbursement to the Attache/Counselor and 
its U.S. office shall report such actions in writing to the Division 
Director(s).



Sec. 1485.18  Advances.

    (a) Policy. In general, CCC operates MAP and EIP/MAP on a 
reimbursable basis. CCC will not advance funds to an EIP/MAP participant 
or to an MAP participant for brand promotion activities.
    (b) Exception. Upon request, CCC may advance payments to an MAP 
participant for generic promotion activities. Prior to making an 
advance, CCC may require the participant to submit security in a form 
and amount acceptable to CCC to protect CCC's financial interests. Total 
payments advanced shall not exceed 40 percent of a participant's 
approved annual generic activity budget. However, CCC will not make any 
advance to an MAP participant where an advance is outstanding from a 
prior activity plan year.
    (c) Refunds due CCC. A participant shall expend the advance on 
approved generic promotion activities within 90 calendar days after the 
date of disbursement by CCC. A participant shall return any unexpended 
portion of the advance, plus a prorated share of all proceeds generated 
(i.e., premiums generated from certificate sales and interest earned), 
either by submitting a check payable to CCC or by offsetting its next 
reimbursement claim. All checks shall be mailed to the Director, 
Marketing Operations Staff, FAS, USDA.



Sec. 1485.19  Employment practices.

    (a) An MAP participant shall enter into written contracts with all 
employees and shall ensure that all terms, conditions, and related 
formalities of such contracts conform to governing local law.
    (b) An MAP participant shall, in its overseas office, conform its 
office hours, work week and holidays to local

[[Page 563]]

law and to the custom generally observed by U.S. commercial entities in 
the local business community.
    (c) An MAP participant may pay salaries or fees in any currency 
(U.S. or foreign) if approved by the Attache/Counselor. However, 
participants are cautioned to consult local laws regarding currency 
restrictions.



1485.20  Financial management, reports, evaluations and appeals.

    (a) Financial management. (1) An MAP participant shall implement and 
maintain a financial management system that conforms to generally 
accepted accounting principles.
    (2) An MAP participant shall institute internal controls and provide 
written guidance to commercial entities participating in its activities 
to ensure their compliance with these provisions. Each participant shall 
maintain all original records and documents relating to program 
activities for five calendar years following the end of the applicable 
activity plan year and shall make such records and documents available 
upon request to authorized officials of the U.S. Government. An MAP 
participant shall also maintain all documents related to employment such 
as employment applications, contracts, position descriptions, leave 
records and salary changes, and all records pertaining to contractors.
    (3) A participant shall maintain its records of expenditures and 
contributions in a manner that allows it to provide information by 
activity plan, country, activity number and cost category. Such records 
shall include:
    (i) Receipts for all STRE (actual vendor invoices or restaurant 
checks, rather than credit card receipts);
    (ii) Original receipts for any other program related expenditure in 
excess of $25.00;
    (iii) The exchange rate used to calculate the dollar equivalent of 
expenditures made in a foreign currency and the basis for such 
calculation;
    (iv) Copies of reimbursement claims;
    (v) An itemized list of claims charged to each of the participant's 
CCC resources accounts;
    (vi) Documentation with accompanying English translation supporting 
each reimbursement claim, including original evidence to support the 
financial transactions such as canceled checks, receipted paid bills, 
contracts or purchase orders, per diem calculations, travel vouchers, 
and credit memos; and
    (vii) Documentation supporting contributions must include: the 
dates, purpose and location of the activity for which the cash or in-
kind items were claimed as a contribution; who conducted the activity; 
the participating groups or individuals; and, the method of computing 
the claimed contributions. MAP participants must retain and make 
available for audit documentation related to claimed contributions.
    (4) Upon request, a participant shall provide to CCC originals of 
documents supporting reimbursement claims.
    (b) Reports. (1) End-of-Year Contribution Report. Not later than 6 
months after the end of its activity plan year, a participant shall 
submit two copies of a report which identifies, by activity and cost 
category and in U.S. dollar equivalent, contributions made by the 
participant, the U.S. industry and foreign third parties during that 
activity plan year. A suggested format of a contribution report is 
available from the Division Director.
    (2) Trip reports. Not later than 45 days after completion of travel 
(other than local travel), an MAP participant shall submit a trip 
report. The report must include the name(s) of the traveler(s), purpose 
of travel, itinerary, names and affiliations of contacts, and a brief 
summary of findings, conclusions, recommendations or specific 
accomplishments.
    (3) Research reports. Not later than 6 months after the end of its 
activity plan year, an MAP participant shall submit a report on any 
research conducted in accordance with the activity plan.
    (4) A participant shall submit the reports required by this 
subsection to the appropriate Division Director. Trip reports and 
research reports shall also be submitted to the Attache/Counselor 
concerned. All reports shall be in English and include the participant's 
agreement number, the countries covered, date of the report and the 
period covered in the report.

[[Page 564]]

    (5) CCC may require the submission of additional reports.
    (6) A participant shall provide to the FAS Compliance Review Staff 
upon request any audit reports by independent public accountants.
    (c) Evaluation--(1) Policy. (i) The Government Performance and 
Results Act (GPRA) of 1993 (5 U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 
3515, 9703-9704) requires performance measurement of Federal programs, 
including MAP. Evaluation of MAP's effectiveness will depend on a clear 
statement by participants of goals to be met within a specified time, 
schedule of measurable milestones for gauging success, plan for 
achievement, and results of activities at regular intervals. The overall 
goal of the MAP and of individual participants' activities is to achieve 
additional exports of U.S. agricultural products, that is, sales that 
would not have occurred in the absence of MAP funding. A participant 
that can demonstrate additional sales compared to a representative base 
period, taking into account extenuating factors beyond the participant's 
control, will have met the overall objective of the GPRA and the need 
for evaluation.
    (ii) Evaluation is an integral element of program planning and 
implementation, providing the basis for the strategic plan and activity 
plan. The evaluation results guide the development and scope of a 
participant's program, contributing to program accountability and 
providing evidence of program effectiveness.
    (iii) An MAP participant shall conduct periodic evaluations of its 
program and activities and may contract with an independent evaluator to 
satisfy this requirement. CCC reserves the right to have direct input 
and control over design, scope and methodology of any such evaluation, 
including direct contact with and provision of guidance to the 
independent evaluator.
    (2) Types of evaluation. (i) An activity evaluation is a review of 
an activity to determine whether such activity achieved the goals 
specified in the activity plan. Unless specifically exempted in the 
activity plan, all activity evaluations shall be completed within 90 
days following the end of the MAP participant's activity plan year.
    (ii) A brand promotion evaluation is a review of the U.S. and 
foreign commercial entities' export sales to determine whether the 
activity achieved the goals specified in the activity plan. These 
evaluations shall be completed within 90 days following the end of the 
participant's activity plan year.
    (iii) A program evaluation is a review of the MAP participant's 
entire program or any appropriate portion of the program to determine 
the effectiveness of the participant's strategy in meeting specified 
goals. An MAP participant shall complete at least one program evaluation 
each year. Actual scope and timing of the program evaluation shall be 
determined by the MAP participant and the Division Director and 
specified in the MAP participant's activity plan approval letter.
    (3) Contents of program evaluation. A program evaluation shall 
contain:
    (i) The name of the party conducting the evaluation;
    (ii) The activities covered by the evaluation (including the 
activity numbers);
    (iii) A concise statement of the constraint(s) and the goals 
specified in the activity plan;
    (iv) A description of the evaluation methodology;
    (v) A description of additional export sales achieved, including the 
ratio of additional export sales in relation to MAP funding received;
    (vi) A summary of the findings, including an analysis of the 
strengths and weaknesses of the program(s); and
    (vii) Recommendations for future programs.
    (4) An MAP participant shall submit via a cover letter to the 
Division Director, an executive summary which provides assessment of the 
program evaluation's findings and recommendations and proposed changes 
in program strategy or design as a result of the evaluation.
    (5) If as a result of an evaluation or audit of activities of a 
participant under the program, CCC determines that further review is 
needed in order to ensure compliance with the requirements of the 
program, CCC may require the participant to contract for an independent 
audit of the program activities,

[[Page 565]]

    (d) Appeals. (1) The Director, Compliance Review Staff (Director, 
CRS) will notify a participant through a compliance report when it 
appears that CCC may be entitled to recover funds from that participant. 
The compliance report will state the basis for this action.
    (2) A participant may, within 60 days of the date of the compliance 
report, submit a response to the Director, CRS. The Director, CRS, at 
the Director's discretion, may extend the period for response up to an 
additional 30 days. If the participant does not respond to the 
compliance report within the required time period or, if after review of 
the participant's response, the Director, CRS, determines that CCC may 
be entitled to recover funds from the participant, the Director, CRS, 
will refer the compliance report to the Deputy Administrator.
    (3) If after review of the compliance report and response, the 
Deputy Administrator determines that the participant owes any money to 
CCC he will so inform the participant and provide the basis for the 
decision. The Deputy Administrator may initiate action to collect such 
amount pursuant to 7 C.F.R. Part 1403, Debt Settlement Policies and 
Procedures. Determinations of the Deputy Administrator will be in 
writing and in sufficient detail to inform the participant of the basis 
for the determination. The participant may request reconsideration 
within 30 days of the date of the Deputy Administrator's initial 
determination.
    (4) The Participant may appeal determinations of the Deputy 
Administrator to the Administrator. An appeal must be in writing and be 
submitted to the office of the Deputy Administrator within 30 days 
following the date of the initial determination by the Deputy 
Administrator or the determination on reconsideration. The participant 
may request a hearing.
    (5) If the participant submits its appeal and requests a hearing, 
the Administrator, or the Administrator's designee, will set a date and 
time, generally within 60 days. The hearing will be an informal 
proceeding. A transcript will not ordinarily be prepared unless the 
participant bears the cost of a transcript; however, the Administrator 
may have a transcript prepared at CCC's expense.
    (6) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after submission of the appeal, 
hearing or receipt of any transcript, whichever is later. The 
determination of the Administrator will be the final determination of 
CCC. The participant must exhaust all administrative remedies contained 
in this subsection before pursuing judicial review of a determination by 
the Administrator.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 32644, June 25, 1996; 63 
FR 29941, June 2, 1998]



Sec. 1485.21  Failure to make required contribution.

    An MAP participant's contribution requirement will be specified in 
the MAP allocation letter and the activity plan approval letter. The 
amount specified will be the amount of contribution to be furnished by 
the applicant and other sources as indicated in the participant's 
application. The MAP participant shall pay to CCC in dollars the 
difference between the amount actually contributed and the amount 
specified in the allocation approval letter. An MAP participant shall 
remit such payment within 90 days after the end of its activity plan 
year.

[63 FR 29941, June 2, 1998; 63 FR 32041, June 11, 1998]



Sec. 1485.22  Submissions.

    The participant may make any submissions required by this regulation 
either by hand delivery to the Director, Marketing Operations Staff, 
FAS, USDA or by commercial service delivery or U.S. mail. If delivery 
occurs by commercial ``next-day'' mail service or U.S. regular mail, 
first class prepaid, the material shall be deemed submitted as of the 
date of the commercial service or U.S. registered mail receipt. For all 
other permissible methods of delivery, the material shall be deemed 
submitted as of the date received by the Director, Marketing Operations 
Staff, FAS, USDA.

[[Page 566]]



Sec. 1485.23  Miscellaneous provisions.

    (a) Disclosure of program information. (1) Documents submitted to 
CCC by participants are subject to the provisions of the Freedom of 
Information Act (FOIA), 5 U.S.C. 552, 7 CFR part 1, Subpart A--Official 
Records, and specifically 7 C.F.R. 1.11, Handling Information from a 
Private Business.
    (2) If requested by a person located in the United States, a 
participant shall provide a copy of any document in its possession or 
control containing market information developed and produced under the 
terms of its agreement. The participant may charge a fee not to exceed 
the costs for assembling, duplicating and distributing the materials.
    (3) The results of any research conducted by a participant under an 
agreement, shall be the property of the U.S. Government.
    (b) Ethical conduct. (1) A participant shall conduct its business in 
accordance with the laws and regulations of the country in which an 
activity is carried out.
    (2) Neither an MAP participant nor its affiliates shall make export 
sales of agricultural commodities and products covered under the terms 
of the agreement. Neither an MAP participant nor its affiliates shall 
charge a fee for facilitating an export sale. A participant may, 
however, collect check-off funds and membership fees that are required 
for membership in the participating organization. For the purposes of 
this paragraph, ``affiliate'' means any partnership, association, 
company, corporation, trust, or any other such party in which the 
participant has an investment other than in a mutual fund.
    (3) An MAP participant shall not limit participation to members of 
its organization. The MAP participant shall publicize its program and 
make participation possible for commercial entities throughout the 
participant's industry or, in the case of SRTGs, throughout the 
corresponding region.
    (4) A participant shall select U.S. agricultural industry 
representatives to participate in activities such as trade teams, sales 
teams, and trade fairs based on criteria that ensure participation on an 
equitable basis by a broad cross section of the U.S. industry. If 
requested, a participant shall submit such selection criteria to CCC for 
approval.
    (5) All participants should endeavor to ensure fair and accurate 
fact-based advertising. Deceptive or misleading promotions may result in 
cancellation or termination of an agreement.
    (6) The participant must report any actions or circumstances that 
have a bearing on the propriety of the program to the Attache/Counselor 
and its U.S. office shall report such actions in writing to the Division 
Director.
    (c) Contracting procedures. (1) Neither the Commodity Credit 
Corporation (CCC) nor any other agency of the United States Government 
or any official or employee of the CCC or the United States Government 
has any obligation or responsibility with respect to participant 
contracts with third parties.
    (2) A participant shall:
    (i) Ensure that all expenditures for goods and services reimbursed, 
in excess of $25.00, by CCC are documented by a purchase order, invoice, 
or contract and that such documentation demonstrates competition in 
acquiring the goods or services;
    (ii) Ensure that no employee or officer participates in the 
selection or award of a contract in which such employee or official, or 
the employee's or officer's family or partners has a financial interest;
    (iii) Conduct all contracting in an openly competitive manner. 
Individuals who develop or draft specifications, requirements, 
statements of work, invitations for bids and requests for proposals for 
procurement of any goods or services shall be excluded from competition 
for such procurement;
    (iv) Base solicitations for professional and technical services on a 
clear and accurate description of the requirements for the services to 
be procured;
    (v) Perform some form of price or cost analysis such as a comparison 
of price quotations to market prices or other price indicia, to 
determine the reasonableness of the offered prices.
    (d) Disposable capital goods. (1) Capital goods purchased by the MAP 
participant and reimbursed by CCC that are

[[Page 567]]

unusable, unserviceable, or no longer needed for project purposes shall 
be disposed of in one of the following ways:
    (i) The participant may exchange or sell the goods provided that it 
applies any exchange allowance, insurance proceeds or sales proceeds 
toward the purchase of other property needed in the project;
    (ii) The participant may, with CCC approval, transfer the goods to 
other MAP participants and activities, or to a foreign third party; or
    (iii) The participant may, upon Attache/Counselor approval, donate 
the goods to a local charity, or convey the goods to the Attache/
Counselor, along with an itemized inventory list and any documents of 
title.
    (2) A participant shall maintain an inventory of all capital goods 
with a value of $100 acquired in furtherance of program activities. The 
inventory shall list and number each item and include the date of 
purchase or acquisition, cost of purchase, replacement value, serial 
number, make, model, and electrical requirements.
    (3) The participant shall insure all capital goods acquired in 
furtherance of program activities and safeguard such goods against 
theft, damage and unauthorized use. The participant shall promptly 
report any loss, theft, or damage of property to the insurance company.
    (e) Contracts between MAP participants and brand participants. Where 
CCC approves an application for brand promotion, the MAP participant 
shall enter into an agreement with each approved brand participant which 
shall:
    (1) Specify a time period for such brand promotion, and require that 
all brand promotion expenditures be made within the MAP participant's 
approved activity plan period;
    (2) Make no allowance for extension or renewal;
    (3) Limit reimbursable expenditures to those made in countries and 
for activities approved in the activity plan;
    (4) Specify the percentage of promotion expenditures that will be 
reimbursed, reimbursement procedures and documentation requirements;
    (5) Include a written certification that the brand participant 
either owns the brand of the product it will promote or has exclusive 
rights to promote the brand in each of the countries in which promotion 
activities will occur;
    (6) Require that all product labels, promotional material and 
advertising will identify the origin of the agricultural commodity as 
``Product of the U.S.'', ``Product of the U.S.A.'', ``Grown in the 
U.S.'', ``Grown in the U.S.A.'', ``Made in America'' or other U.S. 
regional designation if approved in advance by CCC; that such origin 
identification will be conspicuously displayed, in a manner that is 
easily observed; and that such origin identification will conform, to 
the extent possible, to the U.S. standard of 1/6" (.42 centimeters) in 
height based on the lower case letter ``o''. A participant may request 
an exemption from this requirement. All such requests shall be in 
writing and include justification satisfactory to the Deputy 
Administrator that this labelling requirement would hinder a 
participant's promotional efforts. The Deputy Administrator will 
determine, on a case by case basis, whether sufficient justification 
exists to grant an exemption from the labelling requirement;
    (7) Specify documentation requirements for a U.S. brand applicant 
seeking priority consideration for assistance based on eligibility as a 
small-sized entity;
    (8) Require that the U.S. brand participant submit to the MAP 
participant a statement certifying that any Federal funds received will 
supplement, but not supplant, any private or third party funds or other 
contributions to program activities; and
    (9) The participant shall require the brand participant to maintain 
all original records and documents relating to program activities for 
five calendar years following the end of the applicable activity plan 
year and shall make such records and documents available upon request to 
authorized officials of the U.S. Government.
    (f) EIP/MAP participants shall ensure that all product labels, 
promotional material and advertising will identify the origin of the 
agricultural commodity as ``Product of the U.S.'', ``Product of the 
U.S.A.'', ``Grown in the U.S.'',

[[Page 568]]

``Grown in the U.S.A.'', ``Made in America'' or other U.S. regional 
designation if approved in advance by CCC; such origin identification is 
conspicuously displayed in a manner that is easily observed, and that, 
to the fullest extent possible, the origin identification conforms to 
the U.S. standard of 1/6" (.42 centimeters) in height based on the lower 
case letter ``o''. An EIP/ MAP participant may request an exemption from 
this requirement. All such requests shall be in writing and include 
justification satisfactory to the Deputy Administrator that this 
labelling requirement would hinder a participant's promotional efforts. 
The Deputy Administrator will determine, on a case by case basis, 
whether sufficient justification exists to grant an exemption from the 
labelling requirement;
    (g) Travel shall conform to U.S. Federal Travel Regulations (41 CFR 
parts 301 through 304) and air travel shall conform to the requirements 
of the ``Fly America Act (49 U.S.C. 1517).'' The MAP participant shall 
notify the Attache/Counselor in the destination countries in writing in 
advance of any proposed travel.
    (h) Proceeds. Any income or refunds generated from an activity, 
i.e., participation fees, proceeds of sales, refunds of value added 
taxes (VAT), the expenditures for which have been wholly or partially 
reimbursed, shall be repaid by submitting a check payable to CCC or 
offsetting the participant's next reimbursement claim. However, where 
CCC reimburses a participant with CCC commodity certificates, such 
participant may retain any income generated by the sale of such 
certificates.

[60 FR 6363, Feb. 1, 1995, as amended at 61 FR 3548, Feb. 1, 1996; 61 FR 
32644, June 25, 1996]



Sec. 1485.24  Applicability date.

    This Subpart applies to activities that are approved in accordance 
with the participant's 1995 program and corresponding activity plan 
year.



Sec. 1485.25  Paperwork reduction requirements.

    The paperwork and record keeping requirements imposed by this final 
rule have been submitted to the Office of Management and Budget (OMB) 
for review under the Paperwork Reduction Act of 1980. OMB has assigned 
control number 05510027 for this information collection.

                          PART 1487  [RESERVED]



PART 1488--FINANCING OF SALES OF AGRICULTURAL COMMODITIES--Table of Contents




 Subpart A--Financing of Export Sales of Agricultural Commodities from 
      Private Stocks Under CCC Export Credit Sales Program (GSM-5)

                                 General

Sec.
1488.1  General statement.
1488.2  Definition of terms.

                         Financing Export Sales

1488.3  General.
1488.4  Submission of requests for sale registrations.
1488.5  Acceptance of sale registrations.
1488.6  Amendments to financing agreement.
1488.7  Expiration of period(s) for delivery and/or export.

                    Documents Required for Financing

1488.8  Documents required after delivery.
1488.9  Evidence of export.
1488.9a  Evidence of export for commodities delivered before export.

                   Documents Required After Financing

1488.10  Evidence of entry into country of destination.

                          Delivery Requirements

1488.11  Liquidated damages.

                     Bank Obligations and Repayment

1488.12  Coverage of bank obligations.
1488.13  CCC drafts.
1488.14  Interest charges.
1488.15  Advance payment.
1488.16  Liability for payment.

                        Miscellaneous Provisions

1488.17  Assignment.
1488.18  Covenant against contingent fees.
1488.19  [Reserved]
1488.20  Officials not to benefit.
1488.21  Exporter's records and accounts.
1488.22  Communications.
1488.23  OMB Control Numbers assigned pursuant to the Paperwork 
          Reduction Act.

    Authority: Sec. 5(f), 62 Stat. 1072 (15 U.S.C. 714c) and sec. 4(a), 
80 Stat. 1538, as amended by sec. 101, 92 Stat. 1685 (7 U.S.C. 
1707a(a)).

[[Page 569]]



 Subpart A--Financing of Export Sales of Agricultural Commodities From 
      Private Stocks Under CCC Export Credit Sales Program (GSM-5)

    Source: 42 FR 10999, Feb. 25, 1977, unless otherwise noted.

                                 General



Sec. 1488.1  General statement.

    (a) Except as otherwise provided in this paragraph (a), the 
regulations and the supplements thereto contained in this subpart A 
supersede the regulations and supplements revised April 1975, and set 
forth the terms and conditions governing the CCC Export Credit Sales 
Program (GSM-5). The maximum financing period shall be three years. The 
regulations and supplements as revised in April 1971 and April 1975, 
shall remain in effect for all transactions under financing approvals 
issued thereunder.
    (b) Subject to the terms and conditions set forth in this subpart A, 
CCC will purchase for cash, after delivery, the exporter's account 
receivable arising from the export sale.
    (c) The provisions of Pub. L. 83-664 are not applicable to shipments 
under this program.
    (d) The regulations contained in this subpart A may be supplemented 
by such additional terms and conditions, applicable to specified 
agricultural commodities, and, to the extent that they may be in 
conflict or inconsistent with any other provisions of this subpart A, 
such additional terms and conditions shall prevail.



Sec. 1488.2  Definition of terms.

    As used in this subpart A and in the forms and documents related 
thereto, the following terms shall have the meanings assigned to them in 
this section:
    (a) Account receivable means the contractual obligation of the 
foreign importer to the exporter for the port value of the commodity 
delivered for which the exporter is extending credit to the importer. 
The account receivable shall be evidenced by documents, in form and 
substance satisfactory to CCC, establishing the contractual obligation 
between the U.S. exporter and the foreign importer. The account 
receivable shall provide for (1) payment of principal and interest in 
U.S. dollars in the United States, (2) interest in accordance with 
Sec. 1488.14, and (3) acceleration of payment thereunder in accordance 
with these regulations.
    (b) Agency or branch bank means an agency or branch of a foreign 
bank, supervised by New York State banking authorities or the banking 
authorities of any other State providing similar supervision, and 
approved by the Controller, CCC.
    (c) Assistant Sales Manager means the Assistant Sales Manager, 
Commercial Export Programs, Office of the General Sales Manager.
    (d) Bank obligation means an obligation, acceptable to CCC, of a 
U.S. bank, a foreign bank, an agency or branch bank, to pay to CCC in 
U.S. dollars the amount of the account receivable, plus interest in 
accordance with Sec. 1488.14. The bank obligation shall be in the form 
of an irrevocable letter of credit issued by a U.S. bank or a branch 
bank, or confirmed or advised by a U.S. bank or any agency or branch 
bank in accordance with Sec. 1488.12. The bank obligation shall provide 
for payment under the terms and conditions of the financing agreement 
and shall be payable not later than the date of expiration of the 
financing period or of the bank obligation, whichever occurs first, if 
payment is not received from other sources.
    (e) CCC means the Commodity Credit Corporation, U.S. Department of 
Agriculture.
    (f) Carrying charges means storage, insurance, and interest charges 
involved in the cost of storing the commodity before delivery as 
provided for in the sales contract, and other incidental costs as may be 
approved by the Assistant Sales Manager.
    (g) Commercial risk means risk of loss due to any cause other than 
specified as noncommercial risk in paragraph (u) of this section.
    (h) Date of delivery means the on-board date of the ocean bill of 
lading, or the date of an airway bill, or, if exported by rail or truck, 
the date of entry shown on an authenticated landing certificate or 
similar document

[[Page 570]]

issued by an official of the government of the importing country. If 
delivery is before export, the date of delivery means (1) the date(s) of 
the warehouse receipt(s), or other evidence acceptable to CCC, covering 
the commodity in a warehouse acceptable to CCC, or (2) the onboard 
carrier (truck, rail car or lash or seabee barge) date of a through bill 
of lading covering commodities in a container or a lash or seabee barge 
at a U.S. inland or coastal point.
    (i) Date of sale means the earliest date the exporter has knowledge 
that a contractual obligation exists with the foreign buyer under which 
a firm dollar and cent price has been established or a mechanism to 
establish the price has been agreed upon.
    (j) Delivery means the delivery required by the export sale contract 
to transfer to the importer full or conditional title to the 
agricultural commodity. Delivery before export may be (1) in a warehouse 
in the United States acceptable to CCC by issuance or transfer of the 
warehouse receipt to the importer, or (2) f.a.s. or f.o.b. U.S. inland 
or coastal loading point, if the commodity is loaded in a container on a 
truck or rail car, or in a lash or seabee barge for shipment to a point 
of export under a through bill of lading. Delivery at point of export 
shall be f.a.s. or f.o.b. export carrier at U.S. ports, at U.S. 
airports, at U.S. border points of exit or, if transshipped through 
Canada, at ports on the Great Lakes or the St. Lawrence River.
    (k) Eligible commodities means agricultural commodities, including 
eligible cotton, produced in the United States and designated as 
eligible for export under CCC's Export Credit Sales Program in a USDA 
announcement. Commodities which have been purchased from CCC are 
eligible for export as private stocks. Exports of commodities pursuant 
to any CCC barter contract, Pub. L. 480 or AID agreement, or direct loan 
by the Export-Import Bank are not eligible for financing under this 
program. Commodities delivered prior to CCC receiving the sale 
registration request in accordance with Sec. 1488.4 are not eligible for 
financing under this program unless such financing is determined by the 
Vice President, CCC, or the Assistant Sales Manager, to be in the 
interest of CCC.
    (l) Eligible cotton means Upland and Extra Long staple cotton grown 
in the United States: Provided, however, That reginned or repacked 
cotton, as defined in regulations of the U.S. Department of Agriculture 
under the U.S. Cotton Standards Act (7 CFR 28.40), by-products of cotton 
such as cotton mill waste, motes, and linters, and any cotton that 
contains any by-products of cotton are not eligible for export financing 
hereunder. CCC's determination as to the eligibility of cotton shall be 
final.
    (m) Eligible destination means the country which is named in the 
financing agreement and which meets the licensing requirements of the 
U.S. Department of Commerce.
    (n) Eligible exporter or exporter means a person (1) who is engaged 
in the business of buying or selling commodities and for this purpose 
maintains a bona fide business office in the United States, its 
territories or possessions, and has someone on whom service of judicial 
process may be had within the United States, (2) who is financially 
responsible, and (3) who is not suspended or debarred from contracting 
with or participating in any program financed by CCC on the date of 
issuance of the financing approval.
    (o) OGSM means the Office of the General Sales Manager, U.S. 
Department of Agriculture.
    (p) Financing agreement means the exporter's request for a sale 
registration as approved by the Assistant Sales Manager, including the 
terms and conditions of the regulations in effect on the date of 
approval.
    (q) Financing period means the number of months over which repayment 
is to be made. Such period shall start on the date of delivery or the 
weighted average delivery date of the commodities to be exported under 
the financing agreement, and shall expire on the expiration of the bank 
obligation or the specified period over which repayment is to be made, 
whichever occurs first.
    (r) Foreign bank means a bank which is not a U.S. bank or an agency 
or branch bank, and includes a foreign branch of a U.S. bank.

[[Page 571]]

    (s) Foreign importer or importer means the foreign buyer who 
purchases the commodities to be exported under a financing agreement and 
executes the documents evidencing the account receivable assigned to 
CCC.
    (t) GSM-5 means the regulations contained in this subpart A, and 
supplements thereto, setting forth the terms and conditions governing 
the CCC Export Credit Sales Program.
    (u) Noncommercial risk means risk of loss due to (1) inability of 
the foreign bank through no fault of its own to convert foreign currency 
to dollars, or (2) non-delivery into the eligible destination of the 
commodity covered by a financing agreement through no fault of the 
foreign bank or importer or exporter because of the cancellation by the 
government of the eligible destination of previously issued valid 
authority to import such shipment into the eligible destination or 
because of the imposition of any law or of any order, decree, or 
regulation having the force of law, which prevents the import of such 
shipment into the eligible destination, or (3) inability of the foreign 
bank to make payment due to war, hostilities, civil war, rebellion, 
revolution, insurrection, civil commotion, or other like disturbance 
occurring in the eligible destination, expropriation, or confiscation, 
or other like action by the government of the eligible destination 
country, or (4) failure of the foreign bank to make payment for any 
reason if it is an instrumentality of or is wholly owned by the foreign 
government.
    (v) Port value means the net amount of the exporter's sales price of 
the commodity to be exported under the financing agreement, (1) basis 
f.a.s. or f.o.b. export carrier at U.S. ports, at U.S. border points of 
exit, at U.S. airports if shipped by air, or, if transshipped through 
Canada at ports on the Great Lakes, or on the St. Lawrence River, or (2) 
basis U.S. warehouse for commodities delivered to such warehouse before 
export, or (3) basis f.a.s. or f.o.b. U.S. inland or coastal loading 
point for commodities delivered before export under through bill of 
lading. The port value shall not include ocean freight for a c. & f. 
sale or ocean freight and marine and war risk insurance for a c.i.f. 
sale but may include carrying charges as provided for in the sales 
contract. The net amount of the exporter's sales price means the 
exporter's contract price for the commodities, on the basis stated 
above, less any payments made to the exporter and less any discounts, 
credits, or allowances by the exporter.
    (w) Sale means a contract to sell on credit U.S. agricultural 
commodities to be financed under GSM-5.
    (x) United States means the 50 States, the District of Columbia, and 
Puerto Rico.
    (y) U.S. bank means a bank organized under the laws of the United 
States, a State, or the District of Columbia.
    (z) USDA announcement means an announcement published monthly by the 
U.S. Department of Agriculture (USDA), and which includes the list of 
eligible commodities and interest rates under GSM-5.
    (aa) Vice President, CCC means the Vice President who is the General 
Sales Manager, Office of the General Sales Manager.

[42 FR 10999. Feb. 25, 1977, as amended at 42 FR 30833, June 17, 1977; 
Amdt. 5, 43 FR 25992, June 16, 1978]

                         Financing Export Sales



Sec. 1488.3  General.

    When considering the extension of CCC credit for the purpose of 
financing agricultural commodities, CCC will take into account the 
extent to which CCC credit financing will:
    (a) Permit U.S. exporters to meet competition from other countries.
    (b) Prevent a decline in U.S. commercial export sales.
    (c) Substitute commercial dollar sales for sales made pursuant to 
Pub. L. 480 or other concessional programs.
    (d) Result in a new use of the agricultural commodity in the 
importing country.
    (e) Permit expanded consumption of agricultural commodities in the 
importing country and thereby increase total commercial sales of 
agricultural commodities to the importing country.

[[Page 572]]



Sec. 1488.4  Submission of requests for sale registrations.

    (a) An eligible exporter shall submit a request for a sale 
registration for financing to the office specified in Sec. 1488.22.
    (b) Requests for sale registrations shall be in writing. If such a 
request is made by telephone, it must be confirmed by letter or wire.
    (c) The total amount requested to be registered under a sale shall 
not exceed the sale contract value, including the upward tolerance, if 
any.
    (d) Requests for sale registration shall incorporate by reference 
all terms and conditions of GSM-5. The following information shall also 
be included in the exporter's request for a sale registration:
    (1) The name, class, grade, or quality, as applicable, and quantity 
of the commodity to be exported.
    (2) The country of destination.
    (3) The port value of the commodity to be exported and the sale 
contract tolerance, if applicable.
    (4) The date of sale and exporter's sale number.
    (5) The date of delivery or the period for delivery and the month in 
which application for payment will be submitted.
    (6) The financing period.
    (7) Whether the bank obligation assuring payment of the account 
receivable will be issued by a U.S. bank, branch bank, or foreign bank. 
If it will be issued by a foreign bank, its name and address, and the 
name of the confirming U.S. bank, branch bank, or agency bank (if 
approved as provided in Sec. 1488.12b), and the percentage of 
confirmation.
    (8) The name and address of the foreign importer.
    (9) If delivery of the commodity to be exported is before export in 
a warehouse, the name and address of the warehouse to which delivery is 
to be made.
    (10) If the commodity will be sold through an intervening purchaser, 
the name and address of the intervening purchaser, and a statement that 
the sale of the commodity is or will be conditioned on its resale by the 
intervening purchaser and that the commodity will be shipped directly to 
the foreign importer in the destination country specified in paragraph 
(d)(2) of this section pursuant to a contract in which the foreign 
importer agrees to pay the U.S. exporter the amount to be financed in 
accordance with the terms of GSM-5 financing agreement.
    (11) Any additional information as determined by CCC.

[42 FR 10999, Feb. 25, 1977, as amended by Amdt. 5, 43 FR 25992, June 
16, 1978]



Sec. 1488.5  Acceptance of sale registrations.

    (a) Upon receiving a request for a sale registration complying with 
the applicable provisions of this subpart, the Assistant Sales Manager 
may approve the registration of the sale. If approved, the exporter will 
be notified in writing of the financing agreement number which will 
constitute notice that the sale is registered and eligible for 
financing.
    (b) [Reserved]
    (c) CCC reserves the right to reject any and all requests for sale 
registration.
    (d) The registration of a sale shall create a financing agreement 
between the exporter and CCC which shall consist of the exporter's 
request for a sale registration, CCC's acceptance of the sale 
registration, the applicable terms and conditions of this subpart, 
including amendments and supplemental announcements hereunder which are 
in effect on the date of approval.
    (e) The financing agreement may contain such terms and conditions, 
not inconsistent with GSM-5, as are deemed necessary in the interest of 
CCC.
    (f) An exporter shall promptly notify the Assistant Sales Manager 
when he is unable to fulfill his obligations under any sale registered 
with CCC.

[42 FR 10999, Feb. 25, 1977, as amended by Amdt. 6, 43 FR 29933, July 
12, 1978]



Sec. 1488.6  Amendments to financing agreement.

    The financing agreement may be amended provided such amendment is in 
conformity with GSM-5 at the time of amendment and is determined to be 
in the interest of CCC. Amendments may include extension of the period 
for delivery or the period for export, and

[[Page 573]]

change in the interest rate. After the commodity has been delivered, CCC 
will consider requests to increase the amount of the sale registration 
value for any quantity within the tolerance in the sales contract and 
for carrying charges provided such requests relate to the same sale as 
originally registered with CCC.



Sec. 1488.7  Expiration of period(s) for delivery and/or export.

    (a) Unless delivery by the exporter to the importer is made within 
such period as may be provided in the financing agreement or any 
amendment thereof, or under paragraph (b) of this section, the financing 
agreement will no longer be valid.
    (b) If the Assistant Sales Manager determines that delay in delivery 
was due solely to causes without the fault or negligence of the 
exporter, the period for delivery may be extended by CCC by the period 
of such delay.
    (c) If delivery is made before export under the terms of the 
financing agreement, failure to export within the period specified 
therefor in the financing agreement shall constitute a breach of the 
financing agreement. In such case, if full payment under the bank 
obligation or account receivable has not been received, the account 
receivable and the bank obligation shall, at the option of the Assistant 
Sales Manager, become immediately due and payable, and liquidated 
damages shall be payable in accordance with Sec. 1488.11.

                    Documents Required for Financing



Sec. 1488.8  Documents required after delivery.

    (a) CCC will purchase an exporter's account receivable only if the 
Treasurer, Commodity Credit Corporation, United States Department of 
Agriculture, Washington, DC 20250, receives the documents specified in 
paragraphs (b) through (e) of this section and any documentation and 
certifications required by any supplements to these regulations within 
forty-five days, or any extension thereof by the Treasurer or Assistant 
Treasurer, CCC, after date of delivery of commodities exported or to be 
exported under the financing agreement.
    (b) The exporter shall submit a ``Combined Application for 
Disbursement, Assignment of Account Receivable and Certification'' which 
shall include:
    (1) A written application for disbursement, showing the financing 
agreement number and the port value of the commodity delivered.
    (2) An assignment of the account receivable arising from the export 
sale, in form and substance acceptable to CCC.
    (3) The exporter's certification (i) that he has entered into a 
contract to sell an eligible commodity; (ii) of the date of sale, the 
grade, quality, quantity, agreed upon price for the commodity and 
payment terms and interest in accordance with the financing agreement; 
(iii) that he has in his files documents evidencing the export sale 
contract and the obligation of the importer to him for the financed 
portion of the export sale and will retain and furnish them to CCC on 
demand until 3 years after the end of the financing period; (iv) that 
agricultural commodities of the grade, quality, and quantity called for 
in the exporter's sale as registered with CCC have been delivered to the 
foreign importer; and (v) that he knows of no defenses to the account 
receivable assigned to CCC.
    (c) A copy of the sales invoice to the foreign importer, or, if the 
commodity has been sold through an intervening purchaser, a copy of the 
exporter's sales invoice to the intervening purchaser and of the 
intervening purchaser's sales invoice to the foreign importer.
    (d) A copy of the document evidencing export provided for in 
Sec. 1488.9 and, if the consignee is other than the foreign importer 
named in the financing agreement, such additional information as CCC may 
request to show that export was made in accordance with the instructions 
of, or the export sale contract with, the foreign importer. If delivery 
is before export in a warehouse acceptable to CCC, the warehouse receipt 
or other documents acceptable to CCC evidencing delivery of the 
commodity to the importer or his agent. If delivery is before export in 
a container

[[Page 574]]

or a lash or seabee barge at a U.S. inland or coastal point, for export 
shipment under a through bill of lading, one copy of the through bill of 
lading with an onboard (truck, rail car, or lash or seabee barge) 
endorsement, dated and signed or initialed on behalf of the export 
carrier. The through bill of lading must be certified by the exporter as 
being a true copy and must show the quantity, the date, and place of 
loading the commodity on a truck, or rail car, or lash or seabee barge, 
the name of the originating carrier, the destination of the commodity, 
and the name of both the exporter and the importer.
    (e) A bank obligation or obligations in accordance with 
Sec. 1488.7(c), Sec. 1488.10, Sec. 1488.12 and paragraph (i) of this 
section, naming CCC as beneficiary, in form and substance acceptable to 
CCC, covering the amount of the application for disbursement, citing the 
financing agreement number; and providing for the payment of interest in 
accordance with Sec. 1488.14.
    (f) On receipt of the documents described in paragraphs (b) through 
(e) of this section and any documentation and certifications required by 
any supplements to these regulations, the Treasurer, CCC will pay 
promptly to the exporter the amount of the account receivable or the 
dollar amount of sales registered in accordance with Sec. 1488.5, 
whichever is the lesser.
    (g) If an acceptable application for disbursement and the supporting 
documents described in paragraphs (b) through (e) of this section have 
not been received by CCC within 45 days from the date of the delivery, 
or any extension thereof by the Treasurer or Assistant Treasurer, CCC, 
the financing agreement shall be void.
    (h) [Reserved]
    (i) If for any reason a draft drawn under a foreign bank obligation 
is dishonored or if the issuing bank is insolvent, in bankruptcy, in 
receivership, or in liquidation, or has made an assignment for the 
benefit of creditors, or for any other reason discontinues or suspends 
payments to depositors or creditors, or otherwise ceases to operate on 
an unrestricted basis, any balance due on the account receivable assured 
by the obligation issued by such bank shall, at the option of CCC, 
become immediately due and payable. CCC may permit the substitution of 
another acceptable foreign bank obligation covering such balance due if 
confirmed in accordance with Sec. 1488.12.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977; 
Amdt. 5, 43 FR 25992, June 16, 1978]



Sec. 1488.9  Evidence of export.

    (a) If the commodity is exported by rail or truck, the exporter 
shall furnish to the Treasurer, CCC, one copy of the bill of lading 
covering the commodity exported, certified by the exporter as being a 
true copy, and an authenticated landing certificate or similar document 
issued by an official of the government of the country to which the 
commodity is exported, showing the quantity, the gross landed weight of 
the commodity, the place and date of entry, and the name and address of 
both the exporter and the importer.
    (b) If the commodity is exported by ocean carrier, the exporter 
shall furnish to the Treasurer, CCC, one non-negotiable copy or photo 
copy or other type of copy of either (1) an on-board ocean bill of 
lading or (2) an ocean bill of lading with an onboard endorsement, dated 
and signed or initialed on behalf of the carrier. The bill of lading 
must be certified by the exporter as being a true copy and must show the 
quantity, the date and place of loading the commodity, the name of the 
vessel, the destination of the commodity and the name and address of 
both the exporter and the importer.
    (c) If the commodity is exported by aircraft, the exporter shall 
furnish to the Treasurer, CCC, one non-negotiable copy of an airway 
bill, dated and signed or initialed on behalf of the carrier. The airway 
bill must be certified by the exporter as being a true copy and must 
show the date and place of loading the commodity, the name of the 
airline, the destination of the commodity, and the name and address of 
both the exporter and the importer.
    (d) If the exporter is unable to supply documentary evidence of 
export as specified in this section, he shall submit such other 
documentary evidence as may be acceptable to CCC.

[[Page 575]]

    (e) For commodities transshipped through Canada via the Great Lakes 
or the St. Lawrence River, the exporter shall certify that the commodity 
transshipped was produced in the United States.



Sec. 1488.9a  Evidence of export for commodities delivered before export.

    For commodities delivered before export under a financing agreement 
for which the financial period is 12 months or less, the exporter shall 
furnish a certification to the Treasurer, CCC, within 60 days from the 
date of delivery or such extension of time as may be granted by the 
Treasurer or Assistant Treasurer, CCC, certifying that the commodities 
have been exported. The certification must include the name of the ocean 
carrier, the date the commodities were loaded aboard the ocean carrier 
and the financing agreement number.

[Amdt. 5, 43 FR 25992, June 16, 1978]

                   Documents Required After Financing



Sec. 1488.10  Evidence of entry into country of destination.

    (a) Commodities exported under a financing agreement must enter the 
destination country specified in the financing agreement.
    (b) For a financing agreement under which the financing period is in 
excess of 12 months, within 90 days, or such extension of time as may be 
granted in writing by the Assistant Sales Manager, following shipment 
from the United States of any agricultural commodity exported under the 
financing agreement, the exporter shall furnish to the office specified 
in Sec. 1488.22, documentary evidence verifying entry of the commodity 
into the country of destination specified in the financing agreement. 
The documentary evidence must:
    (1) Identify the agricultural commodity (or permit identification 
through supplementary documents also furnished) as that exported under 
the financing agreement,
    (2) State the quantity and date of entry of the commodity into the 
destination country, and
    (3) Be signed by (i) a customs official of the destination country, 
or (ii) the importer, or (iii) a representative of an independent 
superintending or controlling firm.
    (c) When the commodity enters the country of destination in bond, a 
statement by the importer will be acceptable which:
    (1) Identifies the commodity as that exported under the financing 
agreement,
    (2) States the quantity of the commodity entered under bond and date 
of entry into the destination country, and
    (3) Certifies that the commodity will be withdrawn from bonded 
storage at a later date for consumption in the destination country.
    (d) If the evidence of entry is in other than the English language, 
the exporter shall also provide an English translation thereof.
    (e) Failure to furnish, within the time specified, evidence of entry 
of the commodity into the country of destination shall constitute prima 
facie evidence of failure to enter or to cause the entry of the 
commodity into such country as required. In such case, the financing 
agreement may be terminated by the Assistant Sales Manager, and if full 
payment under the bank obligation or account receivable has not yet been 
received, the bank obligation and the account receivable shall at the 
option of CCC, become due and payable and liquidated damages shall be 
payable in accordance with Sec. 1488.11. The remedy herein provided 
shall not be exclusive of other rights available to the Federal 
government if the commodity enters a country other than that specified 
in the financing agreement.

                          Delivery Requirements



Sec. 1488.11  Liquidated damages.

    Failure of the exporter to export or cause to be exported, within 
the period provided therefor, any agricultural commodity financed, when 
delivery is made before export under the terms of the financing 
agreement, or failure of the exporter to enter or cause the entry of, 
such commodity into the country of destination, shall constitute a 
breach of the financing agreement which will result in serious and 
substantial damage to CCC and to its program. Since it will be 
difficult, if not

[[Page 576]]

impossible, to prove the exact amount of such damage, the exporter shall 
pay to CCC promptly on demand, as reasonable compensation and not as a 
penalty, liquidated damages in lieu of probable actual damages, as 
follows:
    (a) For each day of delay in exportation after the final date for 
exportation, when delivery is made before export under the terms of the 
financing agreement, .15 percent of the amount financed under the 
financing agreement for the commodity not exported; (b) for failure to 
export or cause exportation, when delivery is made before export under 
the terms of the financing agreement, 5 percent of the amount financed 
under the financing agreement for the commodity not exported; (c) for 
failure, after exportation, to enter or cause the entry of the commodity 
into the country of destination, at the rate of 5 percent a year of the 
amount financed under the financing agreement for such commodity from 
the start of the financing period until payment to CCC of the amount 
financed; Provided however, That the aggregate of all amounts assessed 
under this Sec. 1488.11 with respect to the same commodity shall not 
exceed 5 percent of the amount financed for such commodity. Liquidated 
damages shall not be assessed: Under paragraph (a) of this section if 
the Assistant Sales manager determines that the delay was due to such 
causes as acts of God or government or public enemy, fires, floods, 
epidemics, quarantine restrictions, strikes, freight embargoes, or 
unusually severe weather; under paragraph (b) of this section if the 
Assistant Sales Manager determines that failure to export was due to 
loss, damage, destruction or deterioration of the commodity or act of 
God or government or public enemy; and under paragraph (c) of this 
section if the Assistant Sales Manager determines that failure to enter 
or cause the entry of the commodity into the country of destination was 
due to loss, damage, destruction or deterioration of the commodity or 
act of God or government or public enemy.

                     Bank Obligations and Repayment



Sec. 1488.12  Coverage of bank obligations.

    (a) U.S. banks and branch banks shall be liable without regard to 
risk (1) for payment of bank obligations issued by them or (2) for 
payment of bank obligations confirmed by them without regard to risk if 
a requirement for such confirmation is included in the financing 
agreement or (3) as provided in paragraphs (c) and (d) of this section.
    (b) An obligation issued by a foreign bank must be confirmed and 
advised, as provided in paragraphs (a), (c), (d), (e), and (f) of this 
section, by a U.S. bank or a branch bank, or may be confirmed by an 
agency bank when determined by the President or Vice President, CCC 
after consultation with the Controller, CCC, to be in the interest of 
CCC.
    (c) A U.S. bank must confirm the full amount of an obligation issued 
by its foreign branch. CCC will hold the U.S. bank liable for payment 
without regard to risks.
    (d) If a branch bank confirms an obligation issued by its home 
office, or by another branch of its home office, it must confirm the 
full amount thereof. CCC will hold the branch bank liable for payment 
without regard to risks.
    (e) If CCC accepts an agency bank confirmation of a foreign bank 
obligation, it must be for the full amount thereof without regard to 
risks and will be subject to such terms and conditions as may be 
contained in the financing agreement. CCC will not accept an agency bank 
confirmation of an obligation issued by its home office, or by a branch 
of its home office.
    (f) Except as provided in paragraphs (a), (c), and (d) of this 
section, if a U.S. bank or a branch bank confirms an obligation issued 
by a foreign bank, it must confirm at least 10 percent pro rata and must 
advise the remainder of the foreign bank obligation. The percentage of 
confirmation shall be the same for both the account receivable and the 
interest portions of the obligation. For the confirmed amount, except as 
provided in paragraph (a)(2) of this section, CCC will hold the U.S. 
bank or

[[Page 577]]

branch bank liable for commercial risks but not for non-commercial 
risks. For the advised amount, CCC will not hold the U.S. bank or branch 
bank liable for commercial or non-commercial risks. CCC will hold the 
foreign bank liable without regard to risks for all amounts not 
recovered from the U.S. or branch bank.
    (g) Under special circumstances, on application in writing, the Vice 
President, CCC, may reduce or waive requirements for 10 percent 
confirmation by a U.S. or branch bank, but a bank will not be relieved 
of any obligation it undertakes.
    (h) Any bank obligation which provides for a bank acceptance of a 
time draft by CCC (banker's acceptance) shall not be acceptable to CCC.
    (i) CCC will consent to cancellation or reduction of a bank 
obligation to the extent of any payment it receives from other sources 
or amounts otherwise payable under such bank obligation.
    (j) Collection of accounts receivable purchased under GSM-5 will be 
effected through the issuance by CCC of sight drafts against the bank 
obligations, but this method of collection shall not be exclusive of any 
other collection procedures or rights available to CCC.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977; 42 
FR 30833, June 17, 1977; 43 FR 45551, Oct. 3, 1978; 44 FR 51187, Aug. 
31, 1979]



Sec. 1488.13  CCC drafts.

    CCC will draw one draft for each payment due under bank obligations. 
If any portion of a CCC draft is dishonored, the U.S. bank or branch 
bank shall return the dishonored draft together with its statement of 
the reason for nonpayment. If a draft which is drawn under a partially 
confirmed bank obligation is dishonored, CCC will replace the draft with 
separate drafts for the confirmed and unconfirmed portions at the 
request of the confirming bank. Such replacement shall not alter the 
confirming bank's obligation for timely payment to CCC of the confirmed 
portion of the credit. For confirmed amounts, except as provided in 
Sec. 1488.12(a), (c) and (d), a U.S. or branch bank may request refund 
from CCC of the amount paid if it certifies to CCC that it is unable to 
recover funds from the foreign bank due to a stipulated non-commercial 
risk which existed on the date payment was made to CCC under the draft. 
If CCC finds that inability to recover funds was due to such a non-
commercial risk, the refund shall be promptly made together with 
interest at the Federal Reserve Bank of New York discount rate from and 
including the date payment was originally made to CCC but not include 
the date of refund by CCC. For unconfirmed amounts, remittance to CCC 
shall be considered final, and the U.S. bank or branch bank shall not 
thereafter have recourse to CCC.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 21, 1977; 42 
FR 30833, June 17, 1977]



Sec. 1488.14  Interest charges.

    The account receivable assigned to CCC and the related bank 
obligation(s) shall bear interest as specified in this section. Rates of 
interest applicable to financing agreements shall be published in USDA 
announcement. The interest rate applicable to that portion of an account 
receivable for which payment is assured by a bank obligation issued or 
confirmed for all risks according to Sec. 1488.12(a)(ii) or pro rata 
confirmed by a U.S. bank shall be lower than the interest rate 
applicable for the remainder of the account receivable. The interest 
rate applicable to that portion of an account receivable the payment of 
which is assured by a bank obligation issued or pro rata confirmed by a 
branch bank shall, when determined by the President or Vice President, 
CCC after consultation with the Controller, CCC, to be in the interest 
of CCC, be lower than the interest rate applicable for the remainder of 
the account receivable. The interest rates applicable to accounts 
receivable the payment of which is assured by an agency bank 
confirmation may, when determined by the President or Vice President, 
CCC, after consultation with the Controller, CCC, to be in the interest 
of CCC, be lower than the interest rate applicable for the remainder of 
the account receivable. The interest rate applicable will be the rate in 
effect on the date CCC receives the sale registration request under 
Sec. 1488.4.

[[Page 578]]

Interest shall accrue on the account receivable from the date of 
delivery or the weighted average delivery date of the agricultural 
commodities delivered under the financing agreement to the date of 
payment, or to the date of expiration of the financing period, or to the 
date of expiration of the bank obligation, whichever occurs first, and 
shall be payable as specified in the financing agreement. Thereafter, 
interest shall accrue on any unpaid part of both the principal and 
interest due as of such expiration date.

[42 FR 10999, Feb. 25, 1977, as amended at 42 FR 27569, May 31, 1977]



Sec. 1488.15  Advance payment.

    If, before expiration of the financing period, the exporter or the 
U.S. bank or the agency or branch bank accepts payment from or on behalf 
of the foreign importer of any part of the account receivable, it shall 
be remitted promptly to CCC. Such prepayment shall be applied first to 
interest on the unpaid balance of the account receivable to the date CCC 
receives such prepayment and then to the principal.



Sec. 1488.16  Liability for payment.

    If delivery is made within the coverage of the bank obligation(s) 
submitted in accordance with Sec. 1488.8, CCC will look to the 
obligating bank or banks and the foreign importer, rather than to the 
exporter or intervening purchaser, for payment of all amounts due at 
maturity of the account receivable and of the bank obligation(s), but 
the exporter and the intervening purchaser shall remain liable for any 
loss arising from breach of any contractual obligation, certification or 
warranty made by them pursuant to the financing agreement, and the 
exporter shall remain liable for any amounts not covered by the bank 
obligation which are owing to CCC, and any remittance or refund required 
by Sec. 1488.15 and Sec. 1488.18, together with interest thereon at the 
rate specified in the documents evidencing the account receivable, as 
well as for any liquidated damages provided for in Sec. 1488.11. The 
liability of the bank and the importer under their respective 
obligations shall be several.

                        Miscellaneous Provisions



Sec. 1488.17  Assignment.

    The exporter shall not assign any claim or rights or any amounts 
payable under the financing agreement, in whole or in part, without 
written approval of the Vice President, CCC, or the Controller, CCC.



Sec. 1488.18  Covenant against contingent fees.

    The exporter warrants that no person or selling agency has been 
employed or retained to solicit or secure the financing agreement on an 
agreement or understanding for a commission, percentage, brokerage, or 
contingent fee, except bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business. For breach or violation of this warranty, 
CCC shall have the right, without limitation on any other rights it may 
have, to annul the financing agreement without liability to CCC. Should 
the financing agreement be annulled, CCC will promptly consent to the 
reduction or cancellation or related bank obligations except for amounts 
outstanding under a financing agreement. Such amounts shall, on demand, 
be refunded to CCC by the exporter.



Sec. 1488.19  [Reserved]



Sec. 1488.20  Officials not to benefit.

    No member of or delegate to Congress, or Resident Commissioner, 
shall be admitted to any share or part of the financing agreement or to 
any benefit that may arise therefrom, but this provision shall not be 
construed to extend to the financing agreement if made with a 
corporation for its general benefit.



Sec. 1488.21  Exporter's records and accounts.

    CCC shall have access to and the right to examine any directly 
pertinent books, documents, papers and records of the exporter involving 
transactions related to the financed export credit sale until the 
expiration of three years after the end of the financing period.

[[Page 579]]



Sec. 1488.22  Communications.

    (a) Unless otherwise provided, written requests, notifications, or 
communications by the applicant pertaining to the financing agreement 
shall be addressed to the Assistant Sales Manager, Commercial Export 
Programs, Office of the General Sales Manager, U.S. Department of 
Agriculture, Washington, DC 20250.
    (b) [Reserved]



Sec. 1488.23  OMB Control Numbers assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR part 1488) have been approved by the Office of 
Management and Budget (OMB) in accordance with the provisions of 44 
U.S.C. Chapter 35 and have been assigned OMB Control Number 0551-0021.

[Amdt. 8, 50 FR 13967, Apr. 9, 1985]

                       PARTS 1491-1492 [RESERVED]



PART 1493--CCC EXPORT CREDIT GUARANTEE PROGRAMS--Table of Contents




    Subpart A--Restrictions and Criteria for Export Credit Guarantee 
                                Programs

Sec.
1493.1  General statement.
1493.2  Purposes of programs.
1493.3  Restrictions on programs and cargo preference statement.
1493.4  Criteria for country allocations.
1493.5  Criteria for agricultural commodity allocations.
1493.6  Additional required determinations for GSM-103.

    Subpart B--CCC Export Credit Guarantee Program (GSM-102) and CCC 
    Intermediate Export Credit Guarantee Program (GSM-103) Operations

1493.10  General statement.
1493.20  Definition of terms.
1493.30  Information required for program participation.
1493.40  Application for a payment guarantee.
1493.50  Certification requirements for obtaining payment guarantee.
1493.60  Payment guarantee.
1493.70  Guarantee rates and fees.
1493.80  Evidence of export.
1493.90  Certification requirements for the evidence of export.
1493.100  Proof of entry.
1493.110  Notice of default and claims for loss.
1493.120  Payment for loss.
1493.130  Recovery of losses.
1493.140  Miscellaneous provisions.

       Subpart C--CCC Facility Guarantee Program (FGP) Operations

1493.200  General statement.
1493.210  Definition of terms.
1493.220  Exporter eligibility.
1493.230  Eligible transactions.
1493.240  Initial application and letter of preliminary commitment.
1493.250  Final application and issuance of a facility payment guarantee
1493.260  Facility payment guarantee.
1493.270  Certifications.
1493.280  Evidence of export report.
1493.290  Proof of entry.
1493.300  Notice of default and claims for loss.
1493.310  Payment for loss.
1493.320  Recovery of losses.
1493.330  Miscellaneous provisions.

       Subpart D--CCC Supplier Credit Guarantee Program Operations

1493.400  General statement.
1493.410  Definition of terms.
1493.420  Information required for program participation.
1493.430  Application for a payment guarantee.
1493.440  Certification requirements for payment guarantee.
1493.450  Payment guarantee.
1493.460  Guarantee rates and fees.
1493.470  Evidence of export.
1493.480  Certification requirements for the evidence of export.
1493.490  Proof of entry.
1493.500  Notice of default and claims for loss.
1493.510  Payment for loss.
1493.520  Recovery of losses.
1493.530  Miscellaneous provisions.

    Authority: 7 U.S.C. 5602, 5622, 5661, 5662, 5663, 5664, 5676; 15 
U.S.C. 714b(d), 714c(f).

    Source: 59 FR 52876, Oct. 19, 1994, unless otherwise noted.



    Subpart A--Restrictions and Criteria for Export Credit Guarantee 
                                Programs



Sec. 1493.1  General statement.

    This subpart sets forth the restrictions which apply to the use of 
credit

[[Page 580]]

guarantees under the Commodity Credit Corporation (CCC) Export Credit 
Guarantee Program (GSM-102) and the Intermediate Credit Guarantee 
Program (GSM-103) and the criteria considered by CCC in determining the 
annual allocations of credit guarantees to be made available with 
respect to each participating country. This subpart also sets forth the 
criteria considered by CCC in the review and approval of proposed 
allocation levels for GSM-102 and/or GSM-103 credit guarantees which may 
be made available in connection with export sales of specific U.S. 
agricultural commodities to these countries. These restrictions and 
criteria are interrelated and will be applied and considered together in 
the process of determining which sales opportunities under GSM-102 or 
GSM-103 will best meet the purposes of the programs.



Sec. 1493.2  Purposes of programs.

    CCC may use export credit guarantees:
    (a) To increase exports of U.S. agricultural commodities;
    (b) To compete against foreign agricultural exports;
    (c) To assist countries, particularly developing countries, in 
meeting their food and fiber needs; and
    (d) For such other purposes as the Secretary of Agriculture 
determines appropriate, consistent with the provisions of Sec. 1493.6.



Sec. 1493.3  Restrictions on programs and cargo preference statement.

    (a) Restrictions on use of credit guarantees. (1) Export credit 
guarantees authorized under these regulations shall not be used for 
foreign aid, foreign policy, or debt rescheduling purposes.
    (2) CCC shall not make credit guarantees available in connection 
with sales of agricultural commodities to any country that the Secretary 
determines cannot adequately service the debt associated with such 
sales.
    (b) Cargo preference laws. The provisions of the cargo preference 
laws shall not apply to export sales with respect to which credit is 
guaranteed under these programs.



Sec. 1493.4  Criteria for country allocations.

    The criteria considered by CCC in reviewing proposals for country 
allocations under the GSM-102 or GSM-103 programs, will include, but not 
be limited to, the following:
    (a) Potential benefits that the extension of export credit 
guarantees would provide for the development, expansion or maintenance 
of the market for particular U.S. agricultural commodities in the 
importing country;
    (b) Financial and economic ability of the importing country to 
adequately service CCC guaranteed debt;
    (c) Financial status of participating banks in the importing country 
as it would affect their ability to adequately service CCC guaranteed 
debt;
    (d) Political stability of the importing country as it would affect 
its ability to adequately service CCC guaranteed debt; and
    (e) Current status of debt either owed by the importing country to 
CCC or to lenders protected by CCC's guarantees.



Sec. 1493.5  Criteria for agricultural commodity allocations.

    The criteria considered by CCC in reviewing proposals for specific 
U.S. commodity allocations within a specific country allocation will 
include, but not be limited to, the following:
    (a) Potential benefits that the extension of export credit 
guarantees would provide for the development, expansion or maintenance 
of the market in the importing country for the particular U.S. 
agricultural commodity under consideration;
    (b) The best use to be made of the export credit guarantees in 
assisting the importing country in meeting its particular needs for food 
and fiber, as may be determined through consultations with private 
buyers and/or representatives of the government of the importing 
country;
    (c) Evaluation, in terms of program purposes, of the relative 
benefits of providing payment guarantee coverage for sales of the U.S. 
agricultural commodity under consideration compared to providing 
coverage for sales of other U.S. agricultural commodities; and
    (d) Evaluation of the near and long term potential for sales on a 
cash basis

[[Page 581]]

of the U.S. commodity under consideration.



Sec. 1493.6  Additional required determinations for GSM-103.

    Notwithstanding any other provision under this part, CCC shall not 
guarantee under the GSM-103 program the repayment of credit made 
available to finance an export sale unless the Secretary of Agriculture 
determines that such sale will:
    (a) Develop, expand or maintain the importing country as a foreign 
market, on a long-term basis, for the commercial sale and export of U.S. 
agricultural commodities, without displacing normal commercial sales;
    (b) Improve the capability of the importing country to purchase or 
use, on a long-term basis, U.S. agricultural commodities; or
    (c) Otherwise promote the export of U.S. agricultural commodities.



    Subpart B--CCC Export Credit Guarantee Program (GSM-102) and CCC 
    Intermediate Export Credit Guarantee Program (GSM-103) Operations



Sec. 1493.10  General statement.

    (a) Overview. (1) This subpart contains the regulations governing 
the operations of the Export Credit Guarantee Program (GSM-102) and the 
Intermediate Credit Guarantee Program (GSM-103). The GSM-102 and GSM-103 
programs of the Commodity Credit Corporation (CCC) were developed to 
expand U.S. agricultural exports by making available export credit 
guarantees to encourage U.S. private sector financing of foreign 
purchases of U.S. agricultural commodities on credit terms. Under GSM-
102, credit guarantees are issued for terms of up to three years. Under 
GSM-103, credit guarantees are issued for terms of from three to ten 
years.
    (2) The programs operate in cases where credit is necessary to 
increase or maintain U.S. exports to a foreign market and where private 
U.S. financial institutions would be unwilling to provide financing 
without CCC's guarantee. The programs are operated in a manner intended 
not to interfere with markets for cash sales. The programs are targeted 
toward those countries where the guarantees are necessary to secure 
financing of the exports but which have sufficient financial strength so 
that foreign exchange will be available for scheduled payments. In 
providing this credit guarantee facility, CCC seeks to expand market 
opportunities for U.S. agricultural exporters and assist long-term 
market development for U.S. agricultural commodities.
    (3) The credit facility created by these programs is the CCC payment 
guarantee. The payment guarantee is an agreement by CCC to pay the 
exporter, or the U.S. financial institution that may take assignment of 
the exporter's right to proceeds, specified amounts of principal and 
interest due from, but not paid by, the foreign bank issuing an 
irrevocable letter of credit in connection with the export sale to which 
CCC's guarantee coverage pertains. By approving an exporter's 
application for a payment guarantee, CCC encourages private sector, 
rather than governmental, financing and incurs a substantial portion of 
the risk of default by the foreign bank. CCC assumes this risk, in order 
to be able to operate the programs for the purposes specified in 
Sec. 1493.2.
    (b) Credit facility mechanism. Typically, in export sales of U.S. 
agricultural commodities, payment by the importer is made under an 
irrevocable letter of credit. For the purpose of the GSM-102 and GSM-103 
programs, CCC will consider applications for payment guarantees only in 
connection with export sales of U.S. agricultural commodities where the 
payment for the agricultural commodities will be made in one of the two 
following ways:
    (1) An irrevocable foreign bank letter of credit, issued in favor of 
the exporter, specifically stating the deferred payment terms under 
which the foreign bank is obligated to make payments in U.S. dollars as 
such payments become due; or
    (2) An irrevocable foreign bank letter of credit, issued in favor of 
the exporter, that is supported by a related obligation specifically 
stating the deferred payment terms under which the

[[Page 582]]

foreign bank is obligated to make payment to the exporter, or the 
exporter's assignee, in U.S. dollars as such payments become due. The 
exporter may assign the right to proceeds under the letter of credit or 
related obligation to a U.S. bank or other financial institution so that 
the exporter may realize the proceeds of the sale prior to the deferred 
payment date(s) as set forth in the irrevocable foreign bank letter of 
credit or its related obligation. The GSM-102 and GSM-103 programs are 
designed to protect the exporter or the exporter's assignee against 
those losses specified in the payment guarantee resulting from defaults, 
whether for commercial or noncommercial reasons, by the foreign bank 
obligated under the letter of credit or related obligation.
    (c) Program administration. The GSM-102 and GSM-103 programs will be 
administered pursuant to this part and any Program Announcements and 
Notices to Participants issued by CCC pursuant to, and not inconsistent 
with, this part. These programs are under the general administrative 
responsibility of the General Sales Manager (GSM), Foreign Agricultural 
Service (FAS/USDA). The review and payment of claims for loss will be 
administered by the Office of the Controller, CCC. Information regarding 
specific points of contact for the public, including names, addresses, 
and telephone and facsimile numbers of particular USDA or CCC offices, 
will be announced by a public press release (see Sec. 1493.20(c), 
``Contacts P/R'').
    (d) Country allocations and program announcements. From time to 
time, CCC will issue a Program Announcement to announce a GSM-102 and/or 
GSM-103 program allocation for a specific country. The Program 
Announcement for a country allocation will designate specific 
allocations for U.S. agricultural commodities or products thereof. 
Exporters may negotiate export sales to buyers in that country for one 
of the commodities specified in the Program Announcement and seek 
payment guarantee coverage within the dollar amounts of specified 
coverage for that commodity. The Program Announcement will contain a 
requirement that the exporter's sales contract contain a shipping 
deadline within the applicable program year. The final date for a 
contractual shipping deadline will be stated in the Program 
Announcement. Program Announcements may also contain a specified 
``undesignated'' or ``unallocated'' dollar amount for the purpose that 
if dollar amounts specified for a specific commodity for a country 
become fully used, an additional allocation from the ``unallocated'' or 
``undesignated'' portion of the total country allocation may then be 
designated for a specific commodity. Program Announcements that include 
an ``allocated'' or ``undesignated'' dollar amount will contain further 
information on the ``unallocated'' or ``undesignated'' portion of the 
country allocation.



Sec. 1493.20  Definition of terms.

    Terms set forth in this part, in CCC Program Announcements and 
Notices to Participants, and in any CCC-originated documents pertaining 
to the GSM-102 and GSM-103 programs will have the following meanings:
    (a) Assignee. A financial institution in the United States which, 
for adequate consideration given, has obtained the legal rights to 
receive the payment of proceeds under the payment guarantee.
    (b) CCC. The Commodity Credit Corporation, an agency and 
instrumentality of the United States within the Department of 
Agriculture, authorized pursuant to the Commodity Credit Corporation 
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general 
supervision and direction of the Secretary of Agriculture.
    (c) Contacts P/R. A notice issued by FAS/USDA by public press 
release which contains specific names, addresses, and telephone and 
facsimile numbers of contacts within FAS/USDA and CCC for use by persons 
interested in obtaining information concerning the operations of the 
GSM-102 or GSM-103 program. The Contacts P/R also contains details about 
where to submit information required to qualify for program 
participation, to apply for payment guarantees, to request amendments of 
payment guarantees, to submit evidence of export reports, and to give 
notices of default and file claims for loss.

[[Page 583]]

    (d) Date of export. One of the following dates, depending upon the 
method of shipment: the on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the Government of the importing country.
    (e) Date of sale. The earliest date on which a contractual 
obligation exists between the exporter, or an intervening purchaser, if 
applicable, and the importer under which a firm dollar-and-cent price 
for the sale of agricultural commodities to the importer has been 
established or a mechanism to establish such price has been agreed upon.
    (f) Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the exporter or an intervening purchaser, 
to the importer in connection with a sale of an agricultural commodity, 
above and beyond the commodity's value, stated on the appropriate FOB, 
FAS, CFR or CIF basis. Discounts and allowances include, but are not 
limited to, the provision of additional goods, services or benefits; the 
promise to provide additional goods, services or benefits in the future; 
financial rebates; the assumption of any financial or contractual 
obligations; the whole or partial release of the importer from any 
financial or contractual obligations; or settlements made in favor of 
the importer for quality or weight.
    (g) Eligible interest. The maximum amount of interest, based on the 
interest rate indicated in CCC's payment guarantee or any amendments to 
such payment guarantee, which CCC agrees to pay the exporter or the 
exporter's assignee in the event that CCC pays a claim for loss. The 
maximum interest rate stated in the payment guarantee, when determined 
or adjusted by CCC, will not exceed the average investment rate of the 
most recent Treasury 52-week bill auction in effect at that time.
    (h) Exported value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, the value, 
FAS or FOB basis, U.S. point of export, of the export sale, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, is 
measured by the CFR or CIF value of the agricultural commodity less the 
cost of ocean freight, as determined at the time of application and, in 
the case of CIF sales, less the cost of marine and war risk insurance, 
as determined at the time of application, reduced by the value of any 
discounts or allowances granted to the importer in connection with the 
sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis, and where 
the commodity is sold on a CFR or CIF basis, point of entry, the total 
value of the export sale, CFR or CIF basis, point of entry, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo) which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the exported 
value.
    (i) Exporter. A seller of U.S. agricultural commodities or products 
thereof that has qualified in accordance with the provisions of 
Sec. 1493.30.
    (j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (k) Foreign bank letter of credit. An irrevocable commercial letter 
of credit, subject to the current revision of the Uniform Customs and 
Practices for Documentary Credits (International Chamber of Commerce 
Publication No. 500, or latest revision), providing for payment in U.S. 
dollars against stipulated documents and issued in favor of

[[Page 584]]

the exporter by a CCC-approved foreign banking institution.
    (l) GSM. The General Sales Manager, FAS/USDA, acting in his capacity 
as Vice President, CCC, or his designee.
    (m) GSM-102. A CCC program, also referred to as the ``Export Credit 
Guarantee Program,'' under which payment guarantees are approved for a 
credit period not exceeding 3 years from the date(s) of export or from 
the date interest begins to accrue, whichever is earlier.
    (n) GSM-103. A CCC program, also referred to as the ``Intermediate 
Export Credit Guarantee Program,'' under which payment guarantees are 
approved for a credit period no less than 3 years but not exceeding 10 
years from the date(s) of export or from the date interest begins to 
accrue, whichever is earlier.
    (o) Guaranteed value. The maximum amount, exclusive of interest, 
that CCC agrees to pay the exporter or assignee under CCC's payment 
guarantee, as indicated on the face of the payment guarantee.
    (p) Importer. A foreign buyer that enters into a contract with an 
exporter, or with an intervening purchaser, for an export sale of 
agricultural commodities to be shipped from the U.S. to the foreign 
buyer.
    (q) Incoterms. The following customary terms, as defined by the 
International Chamber of Commerce, Incoterms (current revision):
    (1) Free Alongside Ship (FAS),
    (2) Free on Board (FOB),
    (3) Cost and Freight (CFR, or alternatively, C&F, C and F, or CNF), 
and
    (4) Cost Insurance and Freight (CIF).
    (r) Intervening purchaser. A party that agrees to purchase U.S. 
agricultural commodities from an exporter and sell the same agricultural 
commodities to an importer.
    (s) Late interest. Interest, in addition to the interest due under 
the payment guarantee, which CCC agrees to pay in connection with a 
claim for loss, accruing during the period beginning on the first day 
after receipt of a claim which CCC has determined to be in good order 
and ending on the day on which payment is made on such claim for loss.
    (t) Payment guarantee. An agreement under which CCC, in 
consideration of a fee paid, and in reliance upon the statements and 
declarations of the exporter, subject to the terms set forth in the 
written guarantee, this subpart, and any applicable Program 
Announcements or Notices to Participants, agrees to pay the exporter or 
the exporter's assignee in the event of a default by a foreign bank on 
its payment obligation under the foreign bank letter of credit issued in 
connection with a guaranteed sale or under the foreign bank's related 
obligation.
    (u) Notice to participants. A notice issued by CCC by public press 
release which serves one or more of the following functions: to remind 
participants of the requirements of the program; to clarify the program 
requirements contained in these regulations in a manner which is not 
inconsistent with the regulations; to instruct exporters to provide 
additional information in applications for payment guarantees under 
specific country and/or commodity allocations; and to supplement the 
provisions of a payment guarantee, in a manner not inconsistent with 
these regulations, before the exporter's application for such payment 
guarantee is approved.
    (v) Port value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, U.S. point of 
export, the value, FAS or FOB basis, U.S. point of export, of the export 
sale, including the upward tolerance, if any, as provided by the export 
sales contract, reduced by the value of any discounts or allowances 
granted to the importer in connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, 
including the upward tolerance, if any, as provided by the export sales 
contract, is measured by the CFR or CIF value of the agricultural 
commodity less the value of ocean freight and, in the case of CIF sales, 
less the value of marine and war risk insurance, reduced by the value of 
any discounts or allowances granted to the importer in connection with 
the sale of the commodity; or

[[Page 585]]

    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
commodity was sold on CFR or CIF basis, point of entry, the total value 
of the export sale, CFR or CIF basis, point of entry, including the 
upward tolerance, if any, as provided by the export sales contract, 
reduced by the value of any discounts or allowances granted to the 
importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo), which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the port value.
    (w) Program announcement. An announcement issued by CCC which 
provides information on specific country and commodity allocations and 
may identify eligible agricultural commodities and countries, length of 
credit periods which may be covered, specify dollar limitations for CCC 
exposure in particular countries, and include other information and 
requirements.
    (x) Related obligation. A contractual commitment by the foreign bank 
issuing the letter of credit in connection with an export sale to make 
payment(s) on principal amount(s), plus any contractual interest, in 
U.S. dollars, to a financial institution in the United States on 
deferred payment terms consistent with those permitted under CCC's 
credit guarantee programs. The U.S. financial institution is entitled to 
such payments because it has financed the obligation arising under such 
letter of credit.
    (y) United States or U.S. All of the 50 states, the District of 
Columbia, and the territories and possessions of the United States.
    (z) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    (aa) USDA. United States Department of Agriculture.

[59 FR 52876, Oct. 19, 1994, as amended at 62 FR 24561, May 6, 1997]



Sec. 1493.30  Information required for program participation.

    Before CCC will accept an application for a payment guarantee under 
either the GSM-102 program or the GSM-103 program, the applicant must 
qualify for participation in these programs. Based upon the information 
submitted by the applicant and other publicly available sources, CCC 
will determine whether the applicant is eligible for participation in 
the programs.
    (a) Submission of documentation. In order to qualify for 
participation in the GSM-102 and GSM-103 programs, an applicant must 
submit to CCC, at the address specified in the Contacts P/R, the 
following information:
    (1) The address of the applicant's headquarters office and the name 
and address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the applicant, e.g., sole 
proprietorship, partnership, corporation, etc.
    (3) The place of incorporation of the applicant, if the applicant is 
a corporation;
    (4) The name and U.S. address of the office(s) of the applicant, and 
statement indicating whether the applicant is a U.S. domestic 
corporation, a foreign corporation or another foreign entity. If the 
applicant has multiple offices, the address included in the information 
should be that which is pertinent to the particular GSM-102 or GSM-103 
export sale contemplated by the applicant;
    (5) A certified statement describing the applicant's participation, 
if any, during the past three years in U.S.

[[Page 586]]

Government programs, contracts or agreements; and
    (6) A certification that: ``I certify, to the best of my knowledge 
and belief, that neither [name of applicant] nor any of its principals 
has been debarred, suspended, or proposed for debarment from contracting 
with or participating in programs administered by any U.S. Government 
agency. [``Principals,'' for the purpose of this certification, means 
officers; directors; owners of five percent or more of stock; partners; 
and persons having primary management or supervisory responsibility 
within a business entity (e.g., general manager, plant manager, head of 
a subsidiary division, or business segment, and similar positions).] I 
further agree that, should any such debarment, suspension, or notice of 
proposed debarment occur in the future, [name of applicant] will 
immediately notify CCC.''
    (b) Previous qualification. Any exporter that has previously 
qualified under this section may submit applications for GSM-102 or GSM-
103 payment guarantees. Each application must include the statement 
required by Sec. 1493.40(a)(18) incorporating the certifications of 
Sec. 1493.50, including the certification in Sec. 1493.50(e) that the 
information previously provided pursuant to paragraph (a) of this 
section has not changed. If the exporter is unable to provide such 
certification, such exporter must update the information required by 
paragraph (a) of this section which has changed and certify that the 
remainder of the information previously provided has not changed.
    (c) Additional submissions. CCC will promptly notify applicants that 
have submitted information required by this section whether they have 
qualified to participate in the program. Any applicant failing to 
qualify will be given an opportunity to provide additional information 
for consideration by CCC.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the GSM-102 or GSM-103 programs if:
    (1) Such applicant is currently debarred, suspended, or proposed for 
debarment from contracting with or participating in any program 
administered by a U.S. Government agency; or
    (2) Such applicant is controlled or can be controlled, in whole or 
in part, by any individuals or entities currently debarred, suspended or 
proposed for debarment from contracting with or participating in 
programs administered by any U.S. Government agency.



Sec. 1493.40  Application for payment guarantee.

    (a) A firm export sale must exist before an exporter may submit an 
application for a payment guarantee. An application for a payment 
guarantee may be submitted in writing or may be made by telephone, but, 
if made by telephone, it must be confirmed in writing to the office 
specified in the Contacts P/R. An application must identify the name and 
address of the exporter and include the following information:
    (1) Name of the destination country.
    (2) Name and address of the importer.
    (3) Name and address of the intervening purchaser, if any, and a 
statement that the commodity will be shipped directly to the importer in 
the destination country.
    (4) Date of sale.
    (5) Exporter's sale number.
    (6) Delivery period as agreed between the exporter and the importer.
    (7) A full description of the commodity (including packaging, if 
any).
    (8) Mean quantity, contract loading tolerance and, if necessary, a 
request for CCC to reserve coverage up to the maximum quantity permitted 
by the contract loading tolerance.
    (9) Unit sales price of the commodity, or a mechanism to establish 
the price, as agreed between the exporter and the importer. If the 
commodity was sold on the basis of CFR or CIF, the actual (if known at 
the time of application) or estimated value of freight and, in the case 
of sales made on a CIF basis, the actual (if known at the time of 
application) or estimated value of marine and war risk insurance, must 
be specified.
    (10) Description and value of discounts and allowances, if any.
    (11) Port value (includes upward loading tolerance, if any).
    (12) Guaranteed value.
    (13) Guarantee fee.
    (14) Name and location of the foreign bank issuing the letter of 
credit.

[[Page 587]]

    (15) The term length for the credit being extended and the intervals 
between principal payments for each shipment to be made under the export 
sale.
    (16) A statement indicating whether any portion of the export sale 
for which the exporter is applying for a payment guarantee is also being 
used as the basis for an application for participation in any of the 
following CCC or USDA export programs: Export Enhancement Program, Dairy 
Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program. The number of the Agreement assigned 
by USDA under one of these programs should be included, as applicable.
    (17) Other information as specified in Notices to Participants, as 
applicable.
    (18) The exporter's statement, ``All Section 1493.50 Certifications 
Are Being Made In This Application'' which, when included in the 
application by the exporter, will constitute a certification that it is 
in compliance with all the requirements set forth in Sec. 1493.50.
    (b) An application for a payment guarantee may be approved as 
submitted, approved with modifications agreed to by the exporter, or 
rejected by the GSM. In the event that the application is approved, the 
GSM will cause a payment guarantee to be issued in favor of the 
exporter. Such payment guarantee will become effective at the time 
specified in Sec. 1493.60(b). If, based upon a price review, the unit 
sales price of the commodity does not fall within the prevailing 
commercial market level ranges, as determined by CCC, the application 
will not be approved.



Sec. 1493.50  Certification requirements for obtaining payment guarantee.

    By providing the statement in Sec. 1493.40(a)(18), the exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been or will be met. The exporter will be required to provide 
further explanation or documentation with regard to applications that do 
not include this statement. The exporter, in submitting an application 
for a payment guarantee and providing the statement set forth in 
Sec. 1493.40(a)(18), certifies that:
    (a) The agricultural commodity or product to be exported under the 
payment guarantee is a U.S. agricultural commodity as defined by 
Sec. 1493.20(z).
    (b) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law;
    (c) If the agricultural commodity is vegetable oil or a vegetable 
oil product, that none of the agricultural commodity or product has been 
or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of the Tariff Act of 1930, 19 U.S.C. 1313, of 
any duty, tax or fee imposed under Federal law on an imported commodity 
or product;
    (d) No person or selling agency has been employed or retained to 
solicit or secure the payment guarantee, and that there is no agreement 
or understanding for a commission, percentage, brokerage, or contingent 
fee, except in the case of bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business; and
    (e) The information provided pursuant to Sec. 1493.30 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec. 1493.30, and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements. If the exporter breaches or violates these certifications 
with respect to a GSM-102 or GSM-103 payment guarantee, CCC will have 
the right, notwithstanding any other rights provided under this subpart, 
to annul guarantee coverage for any commodities not yet exported and/or 
to proceed against the exporter.

[59 FR 52876, Oct. 19, 1994, as amended at 62 FR 24561, May 6, 1997]



Sec. 1493.60  Payment guarantee.

    (a) CCC's obligation. The payment guarantee will provide that CCC 
agrees to pay the exporter or the exporter's assignee an amount not to 
exceed the

[[Page 588]]

guaranteed value, plus eligible interest, in the event that the foreign 
bank fails to pay under the foreign bank letter of credit or the related 
obligation. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. The payment guarantee will apply 
to the period beginning either on the date(s) of export(s) or on the 
date when interest begins to accrue, whichever is earlier, and will 
continue during the credit term specified in the payment guarantee or 
amendments thereto. However, the payment guarantee becomes effective on 
the date(s) of export(s) of the agricultural commodities or products 
thereof specified in the exporter's application for a payment guarantee.
    (c) Terms of the CCC payment guarantee. The terms of CCC's coverage 
will be set forth in the payment guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
Program Announcements and/or Notices to Participants in effect at the 
time the payment guarantee is approved by CCC.
    (d) Final date to export. The final date to export shown on the 
payment guarantee will be one month, as determined by CCC, after the 
contractual deadline for shipping.
    (e) Reserve coverage for loading tolerances. The exporter may apply 
for a payment guarantee and, if coverage is available, pay the guarantee 
fee, based at least on, the amount of the lower loading tolerance of the 
export sales contract; however, the exporter may also request that CCC 
reserve additional guarantee coverage to accommodate up to the amount of 
the upward loading tolerance specified in the export sales contract. If 
such additional guarantee coverage is available at the time of 
application and CCC determines to make such reservation, it will so 
indicate to the exporter. In the event that the exporter ships a 
quantity greater than the amount on which the guarantee fee was paid 
(i.e., lower loading tolerance), it may obtain the additional coverage 
from CCC, up to the amount of the upward loading tolerance, by filing 
for an amendment to the payment guarantee, and by paying the additional 
amount of fee applicable. If such amendment to the payment guarantee is 
not filed with CCC by the exporter within 30 days after the date of the 
last export against the sales contract, CCC may determine not to reserve 
the coverage originally set aside for the exporter.
    (f) Ineligible exports. Commodities with a date of export prior to 
the date of receipt by CCC of the exporter's telephonic or written 
application for a payment guarantee, or with a date of export made after 
the final date for export shown on the payment guarantee or any 
amendments thereof, are ineligible for GSM-102 or GSM-103 guarantee 
coverage, except where it is determined by the GSM to be in the best 
interests of CCC to provide guarantee coverage on such commodities.
    (g) Foreign agricultural component. CCC may approve payment 
guarantees under this subpart only in connection with sales of United 
States agricultural commodities as defined in Sec. 1493.20(z). CCC may 
not provide guarantee coverage under this subpart on credit extended for 
the value of any foreign agricultural component.
    (h) Additional requirements. The payment guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the payment guarantee are binding on the 
exporter or the exporter's assignee.
    (i) Amendments. A request for an amendment of a payment guarantee 
may be submitted only by the exporter (with the concurrence of the 
assignee, if any). CCC will consider such a request only if the 
amendment sought is consistent with this subpart and any applicable 
Program Announcements and Notices to Participants. Amendments may 
include, but will not be limited to, a change in the credit period and 
an extension of time to export. Any amendment to the payment guarantee, 
particularly those that result in an increase in CCC's liability under 
the payment guarantee, may result in an increase in the guarantee fee. 
(Technical corrections or corrections of a clerical error which may be 
submitted by the exporter or the exporter's assignee are not viewed as 
amendments.)

[[Page 589]]



Sec. 1493.70  Guarantee rates and fees.

    (a) Guarantee fee rates. The payment guarantee fee rates will be 
based upon the length of the payment terms provided for in the export 
sale contract, the degree of risk that CCC assumes, as determined by 
CCC, and any other factors which CCC determines appropriate for 
consideration. A current schedule of the guarantee fee rates charged by 
CCC under GSM-102 and GSM-103 will be available upon request from the 
FAS/USDA office specified in the Contacts P/R.
    (b) Calculation of fee. The guarantee fee will be computed by 
multiplying the guaranteed value by the guarantee fee rate.
    (c) Payment of fee. The exporter shall remit, with his written 
application, the full amount of the guarantee fee. Applications will not 
be approved until the guarantee fee has been received by CCC. The 
exporter's check for the guarantee fee shall be made payable to CCC and 
mailed or delivered by courier to the office specified in the Contacts 
P/R.
    (d) Refunds of fee. Guarantee fees paid in connection with approved 
applications will ordinarily not be refundable. CCC's approval of the 
application will be final and refund of the guarantee fee will not be 
made after approval unless the GSM determines that such refund will be 
in the best interest of CCC. If the application for a payment guarantee 
is not approved or is approved only for a part of the guarantee coverage 
requested, a full or pro rata refund of the fee remittance will be made.



Sec. 1493.80  Evidence of export.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of export report for each shipment made under the payment 
guarantee. This report must include the following:
    (1) Payment guarantee number
    (2) Date of export
    (3) Exporter's sale number
    (4) Exported value
    (5) Quantity
    (6) A full description of the commodity exported
    (7) Unit sales price received for the commodity exported and the 
basis (e.g., FOB, CFR, CIF). Where the unit sales price at export 
differs from the unit sales price indicated in the exporter's 
application for a payment guarantee, the exporter is also required to 
submit a statement explaining the reason for the difference.
    (8) Description and value of discounts and allowances, if any.
    (9) Number of the Agreement assigned by USDA under another program 
if any portion of the export sale was also approved for participation in 
the following CCC or USDA export programs: Export Enhancement Program, 
Dairy Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program.
    (10) The exporter's statement, ``All Sec. 1493.90 Certifications Are 
Being Made In This Evidence Of Export'' which, when included in the 
evidence of export by the exporter, will constitute a certification that 
it is in compliance with all the requirements set forth in Sec. 1493.90.
    (b) Time limit for submission of evidence of export. The exporter 
must provide a written report to the office specified in the Contacts P/
R within 60 calendar days if the export was by rail or truck; or 30 
calendar days if the export was by any other carrier. The time period 
for filing a report of export will commence upon each date of export of 
the commodity covered under a payment guarantee. If the evidence of 
export report is not received by CCC within the time period for filing, 
the payment guarantee will become null and void only if and only to the 
extent that failure to make timely filing resulted, or would be likely 
to result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the 
program;
    (3) Obstruction of the fair administration of the program; or
    (4) A threat to the integrity of the program. The time limit for 
submission of an evidence of export report may be extended if such 
extension is determined by the GSM to be in the best interests of CCC.
    (c) Export sales reporting. Exporters may have a mandatory reporting 
responsibility under Section 602 of the Agricultural Trade Act of 1978 
(7 U.S.C. 5712), as amended by Section 1531 of the Food, Agriculture, 
Conservation, and Trade Act of 1990 for exports of wheat

[[Page 590]]

and wheat flour, feed grains, oilseeds, cotton, and other agricultural 
commodities and products thereof.



Sec. 1493.90  Certification requirements for the evidence of export.

    By providing the statement contained in Sec. 1493.80(a)(10), the 
exporter is certifying that the information provided in the evidence of 
export report is true and correct and, further, that all requirements 
set forth in this section have been or will be met. The exporter will be 
required to provide further explanation or documentation with regard to 
reports that do not include this statement. If the exporter breaches or 
violates these certifications with respect to a GSM-102 or GSM-103 
payment guarantee, CCC will have the right, notwithstanding any other 
rights provided under this subpart, to annul guarantee coverage for any 
commodities not yet exported and/or to proceed against the exporter. The 
exporter, in submitting the evidence of export and providing the 
statement set forth in Sec. 1493.80(a)(10), certifies that:
    (a) The agricultural commodity or product exported under the payment 
guarantee is a U.S. agricultural commodity as defined by 
Sec. 1493.20(z).
    (b) Agricultural commodities of the grade, quality and quantity 
called for in the exporter's sales contract with the importer have been 
exported to the country specified in the payment guarantee;
    (c) A letter of credit has been opened in favor of the exporter by 
the foreign bank shown in the payment guarantee to cover the port value 
of the commodity exported;
    (d) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law; and
    (e) The information provided pursuant to Sec. 1493.30 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec. 1493.30 and the exporter will immediately notify CCC if there is 
a change of circumstances which would cause it to fail to meet such 
requirements.

[59 FR 52876, Oct. 19, 1994, as amended at 62 FR 24561, May 6, 1997]



Sec. 1493.100  Proof of entry.

    (a) Diversion. The diversion of commodities covered by a GSM-102 or 
GSM-103 payment guarantee to a country other than that shown on the 
payment guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the agricultural commodities 
exported in connection with the GSM-102 or GSM-103 programs in the 
country that was the intended country of destination of such 
commodities. Records demonstrating proof of entry must be in English or 
be accompanied by a certified or other translation acceptable to CCC. 
Records acceptable to meet this requirement include an original 
certification of entry signed by a duly authorized customs or port 
official of the importing country, by the importer, by an agent or 
representative of the vessel or shipline which delivered the 
agricultural commodity to the importing country, or by a private 
surveyor in the importing country, or other documentation deemed 
acceptable by the GSM showing:
    (1) That the agricultural commodity entered the importing country;
    (2) The identification of the export carrier;
    (3) The quantity of the agricultural commodity;
    (4) The kind, type, grade and/or class of the agricultural 
commodity; and
    (5) The date(s) and place(s) of unloading of the agricultural 
commodity in the importing country. [Records of proof of entry need not 
be submitted with a claim for loss, except as may be provided in 
Sec. 1493.110(b)(4)(ii).]



Sec. 1493.110  Notice of default and claims for loss.

    (a) Notice of default. If the foreign bank issuing the letter of 
credit fails to make payment pursuant to the terms

[[Page 591]]

of the foreign bank letter of credit or related obligation, the exporter 
or the exporter's assignee must submit a notice of default to CCC as 
soon as possible, but not later than 10 calendar days after the date 
that payment was due from the foreign bank (the due date). A notice of 
default must be submitted in writing to the Treasurer, CCC, at the 
address specified in the Contacts P/R. If the exporter or the exporter's 
assignee fails to promptly notify CCC of defaults in accordance with 
this paragraph, CCC may make the payment guarantee null and void with 
respect to any payment(s) applicable to such default. This time limit 
may be extended only under extraordinary circumstances and if such 
extension is determined by the Controller, CCC, to be in the best 
interests of CCC. The notice of default must include:
    (1) Payment guarantee number;
    (2) Name of the country;
    (3) Name of the defaulting bank;
    (4) Due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of foreign bank's refusal to pay, if applicable; and
    (7) Reason for foreign bank's refusal to pay, if known.
    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due date of the defaulted payment. A claim for loss must 
be submitted in writing to the Treasurer, CCC, at the address specified 
in the Contacts P/R. The claim for loss must include the following 
information and documents:
    (1) Payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;
    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue, and the interest rate on the foreign 
bank obligation applicable to the claim;
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i)(A) The foreign bank letter of credit securing the export sale; 
and
    (B) If applicable, the document(s) evidencing the related obligation 
owed by the foreign bank to the assignee financial institution which is 
related to the foreign bank's letter of credit issued in favor of the 
exporter. Such related obligation must be demonstrated in one of the 
following ways:
    (1) The related obligation, including a specific promise to pay on 
deferred payment terms, may be contained in the letter of credit as a 
special instruction from the issuing bank directly to the U.S. financial 
institution to refinance the amounts paid by the U.S. financial 
institution for obligations financed according to the tenor of the 
letter of credit; or
    (2) The related obligation may be memorialized in a separate 
document(s) specifically identified and referred to in the letter of 
credit as the agreement under which the foreign bank is obliged to repay 
the U.S. financial institution on deferred payment terms; or
    (3) The letter of credit payment obligations may be specifically 
identified in a separate document(s) setting forth the related 
obligation, or in a duly executed amendment thereto, as having been 
financed by the U.S. financial institution pursuant to, and subject to 
repayment in accordance with the terms of, such related obligation; or
    (4) The related obligation may be memorialized in the form of a 
promissory note executed by the foreign bank issuing the letter of 
credit in favor of the U.S. financial institution submitting the claim;
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill, 
or, if shipped by rail or truck, the entry certificate or similar 
document signed by an official of the importing country;
    (iii)(A) The exporter's invoice showing, as applicable, the FAS, 
FOB, CFR or CIF values; or
    (B) If there was an intervening purchaser, both the exporter's 
invoice to the intervening purchaser and the intervening purchaser's 
invoice to the importer;

[[Page 592]]

    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default 
under the applicable export sale. The instrument must reference the 
applicable foreign bank letter of credit and the related obligation, if 
applicable; and
    (v) A copy of the report(s) of export previously submitted by the 
exporter to CCC pursuant to Sec. 1493.80(a).
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the exporter or an exporter's assignee 
need only provide all of the required claims documents with the initial 
claim relating to a covered transaction. For subsequent claims relating 
to failure of the foreign bank to make scheduled installments on the 
same export shipment, the exporter or the exporter's assignee need only 
submit to CCC a notice of such failure containing the information stated 
in paragraph (b)(1), (2), and (3) of this section; an instrument of 
subrogation as per paragraph (b)(4)(iv) of this section, and including 
the date the original claim was filed with CCC.



Sec. 1493.120  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec. 1493.110, CCC will 
determine whether or not a loss has occurred for which CCC is liable 
under the applicable payment guarantee, this subpart and any applicable 
supplemental Program Announcements and Notices to Participants. If CCC 
determines that it is liable to the exporter and/or the exporter's 
assignee, CCC will pay the exporter or the exporter's assignee in 
accordance with paragraphs (b) and (c) of this section.
    (b) Amount of CCC's liability. CCC's maximum liability for any 
claims for loss submitted with respect to any payment guarantee, not 
including any late interest payments due in accordance with paragraph 
(c) of this section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the payment guarantee, plus 
eligible interest; or
    (2) The guaranteed percentage (as indicated in the payment 
guarantee) of the exported value indicated in the evidence of export, 
plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the day of reciept of a claim found 
by CCC to be in good order and continuing until and including the date 
that payment is made by CCC. Late interest will be paid on the 
guaranteed amount, as determined by paragraphs (b)(1) and (2) of this 
section, and will be calculated based on the average investment rate of 
the most recent Treasury 91-day bill auction as announced by the 
Department of Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract, the 
foreign bank's letter of credit, or any obligation owed by the foreign 
bank to the assignee U.S. financial institution which is related to the 
foreign bank's letter of credit issued in favor of the exporter, unless 
it is determined to be in the best interests of CCC by the Controller, 
CCC. Notwithstanding the foregoing, CCC at its option may declare the 
entire amount of the unpaid balance, plus accrued interest, in default 
and make payment to the exporter or the exporter's assignee in addition 
to such other claimed amount as may be due from CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to commodities covered by a 
payment guarantee, CCC will not hold the assignee responsible or take 
any action or raise any defense against the assignee for any action, 
omission, or statement by the exporter of which the assignee has no 
knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Sec. 1493.80 and Sec. 1493.90, excluding post-export adjustments (i.e., 
corrections to evidence of export reports); and

[[Page 593]]

    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec. 1493.110.



Sec. 1493.130  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the foreign bank of CCC's rights 
under the subrogation agreement to recover all moneys in default.
    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer, the foreign bank, or any other source whatsoever, such 
monies shall be immediately paid to the Treasurer, CCC. If such monies 
are not received by CCC within 15 business days from the date of 
recovery by the exporter or the exporter's assignee, the exporter or the 
exporter's assignee will owe to CCC interest from the date of recovery 
to the date of receipt by CCC. This interest will be calculated based on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and will accrue from such date to the date of 
payment by the exporter or the exporter's assignee to CCC. Such interest 
will be charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a payment 
guarantee for which a claim has been paid by CCC, CCC will pay the 
holder of the payment guarantee its pro rata share immediately, provided 
that the required information necessary for determining pro rata 
distribution has been furnished. If payment is not made by CCC within 15 
business days from the date of recovery or 15 business days from 
receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and such interest will accrue from such date to the 
date of payment by CCC. The interest will apply only to the portion of 
the recovery payable to the holder of the payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer or the foreign bank, and recoveries received by CCC from the 
exporter, the exporter's assignee, or any other source whatsoever, will 
be allocated by CCC to the exporter or the exporter's assignee and to 
CCC on a pro rata basis determined by their respective interests in such 
recoveries. The respective interest of each party will be determined on 
a pro rata basis, based on the combined amount of principal and interest 
in default. Once CCC has paid out a particular claim under a GSM-102 or 
GSM-103 payment guarantee, CCC prorates any collections it receives and 
shares these collections proportionately with the holder of the 
guarantee until both CCC and the holder of the guarantee have been 
reimbursed in full. Appendix A to Sec. 1493.130--Illustration of Pro 
Rata Allocation of Recoveries--provides an example of the methodology 
used by CCC in applying this paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
payment guarantee, the exporter may be liable to CCC for any amounts 
paid by CCC under the payment guarantee when and if it is determined by 
CCC that the exporter has engaged in fraud, or has been or is in 
material breach of any contractual obligation, certification or warranty 
made by the exporter for the purpose of obtaining the payment guarantee 
or for fulfilling obligations under GSM-102 or GSM-103. Further, the 
exporter's assignee may be liable to CCC for any amounts paid by CCC 
under the payment guarantee when and if it is determined by CCC that the 
exporter's assignee has engaged in fraud or otherwise violated program 
requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Sec. 1493.50(b) and Sec. 1493.90(d) or the failure of an exporter to 
comply with the provisions of Sec. 1493.100 or Sec. 1493.140(e) will not 
affect the validity of any payment guarantee with respect to an assignee 
which had no knowledge of such violation or failure to comply at the 
time such exporter applied for the payment guarantee or at the time of 
assignment of the payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter

[[Page 594]]

or the exporter's assignee will cooperate with CCC to effect recoveries 
from the foreign bank and/or the importer.

  Appendix A to Sec. 1493.130--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec. 1493.130(c), regarding pro rata sharing of recoveries made for 
claims filed under the GSM-102 and GSM-103 programs. A typical case 
might be as follows:
    1. The U.S. bank enters into a $300,000 three-year credit 
arrangement with the foreign bank calling for equal annual payments of 
principal and annual payments of interest at a rate of 10 percent per 
annum and a penalty interest rate of 12 percent per annum on overdue 
amounts until the overdue amount is paid.
    2. The foreign bank fails to make the final principal payment of 
$100,000 and an interest payment of $10,000, both due on January 31.
    3. On February 10, the U.S. bank files a claim in good order with 
CCC.
    4. CCC's guarantee states that CCC's maximum liability is limited to 
98 percent of the principal amount due ($98,000) and interest at a rate 
of 8 percent per annum (basis 365 days) on 98 percent of the principal 
($7,840).
    5. CCC pays the claim on February 22.
    6. The latest bond equivalent rate of the 52-week Treasury bill 
auction average which has been published by the Department of Treasury 
in effect on the date of nonpayment (January 31) is 9 percent. The 
latest investment rate of the 91-day Treasury Bill auction average which 
has been published by the Department of Treasury in effect on the date 
of nonpayment by CCC (February 11) is 7 percent.

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the payment 
guarantee would be computed as follows:
    1. CCC's Obligation under the Payment Guarantee:

 
 
 
(a).............................  Principal coverage-- $98,000.00
                                   (98%  x  $100,000).
(b).............................  Interest coverage--  $7,840.00
                                   (8%  x  $98,000).
                                                      ------------------
                                                       $105,840.00
(c).............................  Late interest due    $223.28
                                   from CCC (7% per
                                   annum for 11 days
                                   x  $105,840).
                                                      ------------------
(d).............................  Amount paid by CCC   $106,063.28
                                   on February 22.
 

    2. Foreign Bank's Obligation under the Letter of Credit or the 
Related Obligation:

 
 
 
(a).............................  Principal due        $100,000.00
                                   January 31.
                                  Interest due         $10,000.00
                                   January 31 (10%  x
                                    $100,000).
                                                      ------------------
 
                                  Amount owed by       $110,000.00
                                   foreign bank as of
                                   January 31.
(b).............................  Penalty interest     $795.62
                                   due (12% per annum
                                   for 22 days  x
                                   $100,000).
                                                      ------------------
(c).............................  Amount owed by       $110,795.62
                                   foreign bank as of
                                   February 22.
 

    3. Amount of Foreign Bank's Obligation Not Covered by CCC's Payment 
Guarantee: $4,668.55

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the foreign bank obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the foreign bank is 
$110,000, CCC would be entitled to 95.75 percent ($106,063.07 divided by 
$110,765.62) and the holder of the payment guarantee would be entitled 
to 4.21 percent ($4,668.55 divided by $110,795.62) of any recoveries of 
losses after settlement of the claim. Since in this example, the losses 
were recovered after the claim has been paid by CCC, Sec. 1493.130(b) 
would apply.



Sec. 1493.140  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a payment guarantee or the right to 
such proceeds only to a financial institution in the U.S. The assignment 
must cover all amounts payable under the payment guarantee not already 
paid, may not be made to more than one party, and may not, unless 
approved in advance by CCC, be:
    (i) Made to one party acting for two or more parties or
    (ii) Subject to further assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases

[[Page 595]]

where a financial institution is determined to be ineligible to receive 
an assignment, in accordance with paragraph (b) of this section, CCC 
will provide notice thereof, to the financial institution and to the 
exporter issued the payment guarantee, in lieu of an acknowledgment of 
assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC; or
    (2) Is the financial institution issuing the letter of credit or 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a payment guarantee approved by CCC if such financial institution:
    (1) At the time of assignment of a payment guarantee, is not in 
sound financial condition, as determined by the Treasurer of CCC;
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (d) Alternative satisfaction of payment guarantees. CCC may, with 
the agreement of the exporter (or if the right to proceeds payable under 
the payment guarantee has been assigned, with the agreement of the 
exporter's assignee), establish procedures, terms and/or conditions for 
the satisfaction of CCC's obligations under a payment guarantee other 
than those provided for in this subpart if CCC determines that those 
alternative procedures, terms, and/or conditions are appropriate in 
rescheduling the debts arising out of any transaction covered by the 
payment guarantee and would not result in CCC paying more than the 
amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a payment 
guarantee, the exporter or the exporter's assignee, as applicable, must 
maintain and make available all records pertaining to sales and 
deliveries of and extension of credit for agricultural commodities 
exported in connection with a GSM-102 or GSM-103 payment guarantee, 
including those records generated and maintained by agents, intervening 
purchasers, and related companies involved in special arrangements with 
the exporter. The Secretary of Agriculture and the Comptroller General 
of the United States, through their authorized representatives, must be 
given full and complete access to the premises of the exporter or the 
exporter's assignee, as applicable, during regular business hours from 
the effective date of the payment guarantee until the expiration of such 
five-year period to inspect, examine, audit, and make copies of the 
exporter's, exporter's assignee's, agent's, intervening purchaser's or 
related company's books, records and accounts concerning transactions 
relating to the payment guarantee, including, but not limited to, 
financial records and accounts pertaining to sales, inventory, 
processing, and administrative and incidental costs, both normal and 
unforeseen. During such period, the exporter or the exporter's assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the GSM, such records would pertain 
directly to the review of transactions undertaken by the exporter in 
connection with the payment guarantee.
    (2) The exporter must maintain the proof of entry required by 
Sec. 1493.100(b),

[[Page 596]]

and must provide access to such documentation if requested by the 
Secretary of Agriculture or his authorized representative for the five-
year period specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, all regulations, Program Announcements, and Notices to 
Participants relating to the GSM-102 or GSM-103 program, as applicable. 
Applicants for payment guarantees under these programs are hereby on 
notice that they will be bound by any terms contained in applicable 
Program Announcements or Notices to Participants issued prior to the 
date of approval of a payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by: wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority; and the name and title of the authorized 
person or officer. Further, the exporter or exporter's assignee must 
ensure that all information/reports required under these regulations are 
submitted within the required time limits. If requested in writing, CCC 
will acknowledge receipt of a submission by the exporter or the 
exporter's assignee. If acknowledgment of receipt is requested, the 
exporter or exporter's assignee must submit an extra copy of each 
document and a stamped self-addressed envelope for return by U.S. mail. 
If courier services are desired for the return receipt, the exporter or 
exporter's assignee must also submit a self-addressed courier service 
order which includes the recipient's billing code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (i) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information collection requirements contained in this part (7 
CFR part 1493) have been approved by the Office of Management and Budget 
(OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 and have 
been assigned OMB Control Number 0551-0004.



       Subpart C--CCC Facility Guarantee Program (FGP) Operations

    Source: 62 FR 42656, Aug. 8, 1997, unless otherwise noted.



Sec. 1493.200  General statement.

    This subpart governs the Commodity Credit Corporation's (CCC) 
Facility Guarantee Program (FGP). CCC will issue facility payment 
guarantees for project applications meeting the terms and conditions of 
the Facility Guarantee Program (FGP) and where private sector financing 
is otherwise not available. This subpart describes the criteria and 
procedures for applying for a facility payment guarantee, and contains 
the general terms and conditions of such a guarantee. These general 
terms and conditions may be supplemented by special terms and conditions 
specified in program announcements or notices to participants published 
prior to the issuance of a facility payment guarantee and, if so, will 
be incorporated by reference on the face of the facility payment 
guarantee issued by CCC.



Sec. 1493.210  Definition of terms.

    Terms set forth in this subpart will have the following meaning:
    Assignee. A financial institution in the United States which, for 
adequate consideration given, has obtained the legal rights to receive 
payment under the facility payment guarantee.
    CCC. The Commodity Credit Corporation, an agency and instrumentality 
of the United States within the U.S. Department of Agriculture, 
authorized

[[Page 597]]

pursuant to the Commodity Credit Corporation Charter Act of 1948, as 
amended, 15 U.S.C. 714 et seq., and subject to the general supervision 
and direction of the Secretary of Agriculture.
    Contacts P/R. A notice issued by Foreign Agricultural Service, U.S. 
Department of Agriculture (FAS/USDA) by public press release which 
contains specific names, addresses, and telephone and facsimile numbers 
of contacts within FAS/USDA and CCC. The Contacts P/R also contains 
details about where to submit information required to qualify for 
program participation, to apply for payment guarantees, to request 
amendments of facility payment guarantees, to submit evidence of export 
reports, and to give notices of default and file claims for loss.
    Contract value. The total negotiated dollar amount for the export 
sale of goods and services to emerging markets.
    Date of export for goods. The on-board date of an ocean bill of 
lading or an airway bill, the on-board ocean carrier date of an 
intermodal bill of lading; or, if exported by rail or truck, the date of 
entry shown on an entry certificate or similar document issued and 
signed by an official of the government of the importing country.
    Date of export for services. The date interest begins to accrue on 
credit extended to cover payment for services, except for freight and 
marine insurance where the date of export is the same date as for the 
goods exported.
    Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of an exporter, to an importer in connection 
with a sale of goods or services, in excess of the value of such goods 
or services. Discounts or allowances include, but are not limited to, 
the provision of additional goods, services or benefits; the promise to 
provide additional goods, services or benefits in the future; financial 
rebates; the assumption of any financial or contractual obligation; or 
the whole or partial release of the importer from any financial or 
contractual obligation.
    Facility. An opportunity or project that improves the handling, 
marketing, processing, storage, or distribution of imported agricultural 
commodities or products.
    GSM. The General Sales Manager, Foreign Agricultural Service, U.S. 
Department of Agriculture, acting in his capacity as Vice President, 
CCC; or his designee.
    U.S. goods. Goods that are assembled, processed or manufactured in, 
and exported from, the United States including goods which contain 
imported raw materials or imported components.
    U.S. services. Services performed by citizens or legal residents of 
the United States, including those temporarily residing outside the 
United States.



Sec. 1493.220  Exporter eligibility.

    An exporter may apply for a facility payment guarantee if such 
exporter:
    (a) Is a citizen or legal resident of the United States or is a 
business organized under the laws of any state of the United States or 
the District of Columbia;
    (b) Has an established place of business in the United States;
    (c) Has a registered agent for service of process in the United 
States; and
    (d) Is not suspended or debarred, or owned or controlled by a person 
who is suspended or debarred, from contracting with, or participating in 
programs administered by, a U.S. Government agency.



Sec. 1493.230  Eligible transactions.

    (a) Program announcements. From time to time CCC will issue program 
announcements indicating the availability of facility payment guarantees 
in connection with sales of goods or services to emerging markets. The 
announcements will specify the emerging markets, the maximum amount, in 
U.S. dollars, of guarantee exposure that CCC will undertake, and may 
specify special terms or conditions that will be applicable.
    (b) Sale requirements. CCC will issue facility payment guarantees 
only in connection with projects that CCC determines will benefit 
primarily exports of U.S. agricultural commodities and products, and 
only where there is a firm contract for the sale of goods or services 
for the establishment or improvement of an agriculture-related facility. 
The contract may be contingent, however, on the issuance of a CCC 
facility payment guarantee.

[[Page 598]]

    (c) Initial payment requirement. The contract for sale of goods or 
services between the exporter and the importer shall oblige the importer 
to make an initial payment(s) to the exporter of at least 15 percent of 
the net contract value in Sec. 1493.260(b)(1). Such initial payment(s) 
shall be in U.S. dollars or instruments having a definite value in U.S. 
dollars, and shall be made prior to the export of the goods or services.
    (d) Required method of payment. CCC will issue a facility payment 
guarantee only in connection with a sale in which payment will be made 
under either:
    (1) An irrevocable foreign bank letter of credit specifically 
stating the deferred payment terms under which the foreign bank is 
obligated to make payments in U.S. dollars as payments become due; or
    (2) An irrevocable foreign bank letter of credit supported by a 
related obligation specifically stating the deferred payment terms under 
which the foreign bank is obligated to make payment in U.S. dollars as 
such payments become due.
    (e) Form of letter of credit. The foreign bank letter of credit 
referred to in paragraph (d) of this section shall be an irrevocable 
commercial letter of credit, subject to the revision of the 
International Chamber of Commerce Uniform Customs and Practices for 
Documentary Credits in effect when the letter of credit is 
issued, providing for payment in U.S. dollars against stipulated 
documents and issued in favor of the exporter by a CCC-approved foreign 
banking institution.
    (f) Form of related obligation. The related obligation referred to 
in paragraph (d) of this section shall be in one of the following forms:
    (1) A letter of credit including a specific promise to pay on 
deferred payment terms as a special instruction from the issuing bank 
directly to the U.S. financial institution to refinance the amounts paid 
by the U.S. financial institution for obligations financed according to 
the tenor of the letter of credit;
    (2) A separate document specifically identified and referred to in 
the letter of credit as the agreement under which the foreign bank is 
obligated to repay the U.S. financial institution on deferred payment 
terms;
    (3) A separate document setting forth the related obligation, or in 
a duly executed amendment thereto, as having been financed by a U.S. 
financial institution pursuant to, and subject to, repayment in 
accordance with the terms of such related obligation; or
    (4) A promissory note executed by a foreign bank issuing the letter 
of credit in favor of the financial institution.



Sec. 1493.240  Initial application and letter of preliminary commitment.

    (a) Initial application. An exporter may apply for a facility 
payment guarantee by submitting the following information:
    (1) A cover sheet with the title: ``Application for a Facility 
Payment Guarantee--Preliminary Commitment'';
    (2) The program announcement number;
    (3) The emerging market;
    (4) The name, contact person, address, and telephone number and, if 
applicable, facsimile number and E-mail address of:
    (i) The exporter;
    (ii) The exporter's registered agent for service of process in the 
United States;
    (iii) The exporter's assignee, if applicable;
    (iv) The importer;
    (v) The end-user of the goods or services if other than the 
importer;
    (vi) The foreign bank expected to issue the letter of credit or 
related obligation; and
    (vii) The financial institution in the United States expected to 
provide financing;
    (5) A statement on letterhead from a:
    (i) Foreign bank indicating an interest in guaranteeing payment, in 
U.S. dollars, for goods or services to be exported under the facility 
payment guarantee at least equal to the net contract value listed in 
paragraph (a)(14) of this section, less the initial payment requirement 
listed in paragraph (a)(15) of this section; and
    (ii) Financial institution in the U.S. indicating an interest in 
financing the export sales of goods or services under the facility 
payment guarantee for an

[[Page 599]]

amount at least equal to the net contract value listed in paragraph 
(a)(14) of this section less the initial payment requirement listed in 
paragraph (a)(15) of this section. The financial institution must state 
that such financing would not otherwise be available without an FGP 
payment guarantee;
    (6) The period for which credit is being extended to finance the 
sale of goods or services covered by the facility payment guarantee;
    (7) The exporter's sales number pertinent to this application and a 
description of the status of the intended sale;
    (8) A description (e.g., a process flow diagram) of the agriculture-
related facility that will use the goods or services to be covered by 
the facility payment guarantee and an explanation of how these goods and 
services will be used to improve handling, marketing, processing, 
storage, or distribution of agricultural commodities or products;
    (9) A brief description of each good or service to be covered by the 
facility payment guarantee including, where applicable, brand name, 
model number, Standard Industrial Classification (SIC) or the North 
American Industry Classification System (NAICS) code, and contract 
specifications;
    (10) The final date for export of goods or services. If applicable, 
include construction start date, milestones (e.g., installation), and 
contractual deadline for completion of project;
    (11) The contract value for the sale of goods or services and the 
basis of sale for goods to be exported (e.g., FOB, CFR, CIF);
    (12) The description and value of the goods or cost of services 
listed in paragraph (a)(11) of this section that are not U.S. goods or 
services;
    (13) Identification and cost of, and justification for, those 
services listed in paragraph (a)(12) of this section for which the 
exporter requests CCC to provide coverage;
    (14) The net contract value in Sec. 1493.260(b)(1) obtained by 
subtracting paragraph (a)(12) of this section from paragraph (a)(11) of 
this section, and adding paragraph (a)(13) of this section;
    (15) The amount to be paid in accordance with the initial payment 
requirement (Sec. 1493.230(c));
    (16) The description and dollar amount of discounts and allowances 
provided in connection with the sale of goods or services covered by the 
facility payment guarantee;
    (17) The facility base value in Sec. 1493.260(b)(2) obtained by 
subtracting paragraphs (a)(15) and (a)(16) of this section from 
paragraph (a)(14) of this section;
    (18) The maximum guaranteed value under the facility payment 
guarantee determined by multiplying the facility base value listed in 
paragraph (a)(17) of this section by the guarantee rate of coverage 
announced by CCC in Sec. 1493.260(b)(3);
    (19) A map or other description of the facility's location and 
distance from major population centers of neighboring countries;
    (20) For all principal agricultural commodities or products (inputs) 
to be handled, marketed, processed, stored, or distributed, by the 
proposed project after completion, provide:
    (i) A list or table identifying such principal inputs;
    (ii) The likely countries of origin for each input;
    (iii) Estimated annual quantities, in metric tons, of each input 
listed in paragraph (a)(20)(i) of this section to be used by the project 
for five years from the final date of export or until the expiration of 
the facility payment guarantee, whichever comes first; and
    (iv) An analysis, including price, cost, and other assumptions (the 
reasons why U.S. agricultural commodities or products will be more 
competitive inputs than commodities or products from other sources, and 
whether the projected use of U.S. agricultural commodities or products 
depends on the availability of U.S. export bonus or credit guarantee 
programs), of which inputs listed in paragraph (a)(20)(i) of this 
section will represent increased imports of U.S. agricultural 
commodities or products:
    (A) To a greater degree than imports of agricultural commodities or 
products from other countries;
    (B) To or at levels significantly above those expected in the 
absence of the project; and

[[Page 600]]

    (C) For a period of five years from the final date of export or 
until expiration of the facility payment guarantee, whichever comes 
first.
    (21) If applicable, a list of agricultural outputs or final products 
of the proposed project and:
    (i) Projected annual quantities (for five years or until the 
expiration of the facility payment guarantee, whichever comes first), in 
metric tons, of each output to be marketed;
    (A) Within the emerging market; and
    (B) In any other country;
    (ii) Quantities, by country of origin, of products imported into the 
emerging market during the past year which would compete with such 
outputs; and
    (iii) An analysis of whether products of the project will 
significantly displace U.S. exports of similar agricultural commodities 
or products in any market;
    (22) If applicable, a description of any arrangements or 
understandings with other U.S. or foreign government agencies, or with 
financial institutions or entities, private or public, providing 
financing to the exporter in connection with this export sale, and 
copies of any documents relating to such arrangements;
    (23) A description of the exporter's experience selling goods or 
providing services similar to those for which the exporter seeks to 
obtain facility payment guarantee coverage;
    (24) A statement of how this project may encourage privatization of 
the agricultural sector, or benefit private farms or cooperatives, in 
the emerging market. Include in the statement the share of private 
sector ownership of the project;
    (25) The exporter's signature.
    (b) Application fee. The exporter shall pay the application fee 
specified in the program announcement at the time the application is 
submitted. An application will not be considered without payment of the 
specified fee. The application fee is nonrefundable.
    (c) Letter of preliminary commitment. CCC will determine whether, in 
its judgment, the project in connection with which the exporter seeks a 
facility payment guarantee is likely to increase exports of U.S. 
agricultural commodities or products to an emerging market; and whether 
the project is likely to benefit primarily U.S. agricultural commodities 
or products as opposed to commodities or products originating in other 
countries. If necessary, CCC may seek additional information from an 
applicant prior to making its determination. If CCC determines that an 
application meets these standards and appears to represent, in CCC's 
judgment, the best use of available resources, CCC will respond to the 
applicant with a letter of preliminary commitment indicating CCC's 
interest in issuing a facility payment guarantee conditioned on its 
approval of the exporter's final application.



Sec. 1493.250  Final application and issuance of a facility payment guarantee.

    (a) Final application. An exporter who has received a letter of 
preliminary commitment may, within six months of the date of such 
letter, submit a final application to CCC for a facility payment 
guarantee which shall include the following information:
    (1) A cover sheet with the title: ``Application for a Facility 
Payment Guarantee--Final Commitment.''
    (2) A letterhead statement from the importer's bank or other 
documentation confirming the importer has the financial ability to 
comply with the initial payment requirement in Sec. 1493.230(c);
    (3) Written evidence of a firm sale signed by the exporter and the 
importer, specifying at minimum, the following information: Goods or 
services to be exported, quantities of such items, delivery terms (e.g., 
FOB, CFR, CIF), delivery period(s), contract value, payment terms, and 
date of sale. A sales contract may be contingent upon obtaining a 
facility payment guarantee;
    (4) A description of any changes in the information submitted in the 
preliminary application; and
    (5) The exporter's signature;
    (b) Additional information. CCC shall have the right to request the 
exporter to furnish any other information and documentation it deems 
pertinent to the evaluation of the exporter's final application for a 
final commitment.

[[Page 601]]

CCC may request from the exporter an independent engineering study or 
economic feasibility study relating to the project.
    (c) Final commitment letter. After making a favorable determination 
on the exporter's submissions, CCC will issue a final commitment letter 
indicating the applicable exposure fee rate and stating that CCC is 
prepared to issue a facility payment guarantee upon receiving full 
payment of the exposure fee within an allotted time. The letter will 
also indicate the key terms and coverage of the guarantee to be issued. 
CCC will also inform exporters in writing when it denies their request 
for a facility payment guarantee.
    (d) Exposure fee. The exposure fee is calculated by multiplying the 
requested guaranteed value (up to the maximum established by CCC's final 
commitment letter) by the exposure fee rate. Once the facility payment 
guarantee is issued to the exporter, CCC will ordinarily not refund the 
exposure fee. If CCC does not issue a facility payment guarantee, or 
issues a guarantee for only part of the coverage requested, CCC will 
make a full or pro rata refund of the exposure fee, as appropriate.
    (e) Issuance of the facility payment guarantee. Upon receipt of the 
exposure fee, CCC will issue a facility payment guarantee.



Sec. 1493.260  Facility payment guarantee.

    (a) CCC's maximum obligation. CCC will agree to pay the exporter or 
the exporter's assignee an amount not to exceed the guaranteed value 
stipulated on the face of the facility payment guarantee, plus eligible 
interest, in the event that the foreign bank fails to pay under the 
foreign bank letter of credit or related obligation. The exact amount of 
CCC's liability in the event of default will be determined in accordance 
with Sec. 1493.310(b).
    (b) Calculation of maximum guarantee coverage. CCC will determine 
the maximum amount of its obligation under a facility payment guarantee 
by calculating a:
    (1) Net contract value equal to the contract value minus:
    (i) The value of goods that are not U.S. goods; and
    (ii) The cost of services that are not U.S. services (except those 
services the exporter requests CCC to determine are vital to the success 
of the project and approved to be included in the net contract value);
    (2) Facility base value equal to net contract value minus:
    (i) The amount to be paid in accordance with the initial payment 
requirement in Sec. 1493.230(c); and
    (ii) The amount of discounts and allowances; and
    (3) Maximum guaranteed value equal to:
    (i) A principal amount determined by multiplying the facility base 
value (as determined in Sec. 1493.260(b)(2)) by the guaranteed 
percentage specified in the program announcement; and
    (ii) Interest on such principal amount at the rate specified in the 
applicable program announcement, not to exceed the investment rate of 
the most recent Treasury 52-week bill auction in effect at that time.
    (c) Value and cost. For the purposes of this section:
    (1) Value means declared customs value of the goods; or, in the 
absence of specific information regarding declared customs value, the 
fair market wholesale value of the imported goods in the United States 
at the time they were acquired by the participant; and
    (2) Cost means actual amount paid by the exporter for the services 
in an arms-length transaction; or in the absence of an arms-length 
transaction, the fair market value of the services at the time the 
services were provided.
    (d) U.S. content test. (1) CCC will issue a guarantee only if the 
following items collectively represent less than 50 percent of the net 
contract value in Sec. 1493.260(b)(1):
    (i) The value of imported components (except for raw materials) that 
are assembled, processed, or manufactured into U.S. goods included in 
the net contract value;
    (ii) The cost of services that are not U.S. services (including 
freight on foreign flag carriers and transportation insurance registered 
with foreign agents) that, at the request of the exporter, CCC 
determines are vital to the success of the project and approves

[[Page 602]]

their inclusion in the net contract value;
    (2) For purpose of this subsection, minor or cosmetic procedures 
(e.g., affixing labels, cleaning, painting, polishing) do not qualify as 
assembling, processing or manufacturing;
    (3) For purpose of this subsection, local services which involve 
costs for hotels, meals, transportation, and other similar services 
incurred in the emerging market are not U.S. services.
    (e) Period of guarantee coverage. The payment guarantee will apply 
to the period beginning on the date(s) of export(s) and will continue 
during the credit term specified in the facility payment guarantee. For 
goods, the period of coverage will also apply from the date on which 
interest begins to accrue, if earlier than the date of export. The final 
payments of principal and interest by the foreign bank must come due 
within the period of guarantee coverage.
    (f) Terms of the CCC facility payment guarantee. The terms of CCC's 
coverage will be set forth in the facility payment guarantee and will 
include the provisions of this subpart, which may be supplemented by any 
program announcement(s) or notice(s) to participants in effect at the 
time the facility payment guarantee is approved by CCC.
    (g) Final date to export. The final date to export will be stated in 
the facility payment guarantee.
    (h) Ineligible exports. Goods or services with a date of export 
prior to the date CCC issues the facility payment guarantee are 
ineligible for coverage unless approved by the GSM.
    (i) Additional requirements. The facility payment guarantee may 
contain such additional terms, conditions, and limitations as are deemed 
necessary or desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the facility payment guarantee, are binding 
on the exporter or the exporter's assignee.
    (j) Amendments. Exporters must notify CCC of any amendments 
concerning contracts covered by a facility payment guarantee. CCC will 
determine if the contract amendments will require amendments to the 
facility payment guarantee. Amending the facility payment guarantee may 
result in an increase to the exposure fee. Requests made by the exporter 
to amend the facility payment guarantee so as to change the guaranteed 
value must have the concurrence of the assignee when an assignment has 
been made.
    (k) Effective date. The facility payment guarantee shall become 
effective on the date of export of the goods or services.

Appendix to Sec. 1493.260--Illustration of FGP Coverage of Imported Raw 
     Materials, Components, and Services That Are Not U.S. Services

    The following example illustrates CCC's regulations and policy 
options with regard to issuing a payment guarantee for a project which 
includes imported raw materials, imported components, and services that 
are not U.S. services:
    1. Ten grain trucks and one truck scale are to be exported from the 
U.S. to an emerging market. The trucks will provide the ability to 
purchase larger quantities of grain from the U.S. The contract value 
totals $2,025,000, cost, insurance and freight (CIF) basis.
    2. The fenders, hoods and doors of the trucks have been manufactured 
and assembled in the U.S. and contain some imported raw materials (sheet 
metal).
    3. Imported components consist of starters and alternators, with a 
U.S. customs valuation of $149,000. These items are installed into the 
trucks in the U.S.
    4. The truck scale was imported from Canada into the U.S. with a 
U.S. customs valuation of $20,000.
    5. A U.S. citizen, will travel on a foreign airline carrier to the 
emerging market (airfare is $1,000) to instruct mechanics in repair and 
maintenance of the trucks. He will be paid a salary for this service 
and, in addition, will be reimbursed separately for local costs in the 
emerging market (e.g., hotel, meals, transportation) which are estimated 
to be $5,000.
    6. The trucks are to be shipped on foreign flag vessels, and the 
marine insurance is to be placed with a foreign agent. The combined cost 
of these services that are not U.S. services for which the exporter 
seeks coverage is estimated to be $500,000.

          CCC's Approval of Services That Are Not U.S. Services

    CCC agrees to include in the net contract value the foreign flag 
freight and marine insurance ($500,000) and the airfare ($1,000) of the 
U.S. instructor (Sec. 1493.260(b)(1)).

[[Page 603]]

                    Calculation of Net Contract Value

    CCC will calculate the net contract value by subtracting from the 
contract value ($2,025,000) the U.S. customs value of the truck scale 
($20,000) in accordance with Sec. 1493.260(b)(1)(I) and the local costs 
to be incurred by the U.S. instructor ($5,000) in accordance with 
Sec. 1493.260(b)(1)(ii) to equal $2,000,000.

             CCC's Determination of U.S. Content Eligibility

    The imported components and services that are not U.S. services 
approved for coverage total $650,000 (i.e., $149,000 for starters and 
alternators, $1,000 for airfare, $500,000 for freight and insurance; or 
32.5 percent of the net contract value of $2,000,000 
(Sec. 1493.260(b)(1)). Since this is less than 50 percent of the net 
contract value the transaction meets the U.S. content test 
(Sec. 1493.260(d)).



Sec. 1493.270  Certifications.

    (a) Exporter's signature. The exporter's signature on documentation 
submitted to CCC under this subpart, is the exporter's certification 
that:
    (1) There have not been and are no arrangements for any payments in 
violation of the Foreign Corrupt Practices Act of 1977, as amended, or 
other U.S. Laws;
    (2) All information submitted to CCC is true and correct; and
    (3) The exporter is in compliance with this subpart.
    (b) False certification. False certifications under this subpart may 
result in the termination of the facility payment guarantee, suspension 
or debarment, or civil or criminal action.



Sec. 1493.280  Evidence of export report.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of export report for each shipment of goods or provision of 
services covered under the facility payment guarantee. Each report must 
be numbered in chronological order and contain the following information 
in the order prescribed below:
    (1) The facility payment guarantee number;
    (2) The date goods or services were exported or provided;
    (3) The exporter's sale number, bill of lading numbers, or 
identification of other documents that may be submitted to establish the 
contract value of the goods or services exported or provided;
    (4) The net contract value of the exported goods or services as 
determined in accordance with Sec. 1493.260(b)(1);
    (5) The amount paid in accordance with the initial payment 
requirement (Sec. 1493.230 (c));
    (6) A description and dollar value of discounts and allowances, if 
any;
    (7) The exported value of the shipment which is the net contract 
value of the goods or services exported in paragraph (a)(4) of this 
section minus:
    (i) The initial payment requirement listed in paragraph (a)(5) of 
this section; and
    (ii) The dollar amount of any discounts and allowances listed in 
paragraph (a)(6) of this section;
    (8) The name of the carrier and, if applicable, the name of the 
vessel;
    (9) The final payment schedule showing the payment due dates and 
amounts of principal, and payment due dates for interest accrual. If the 
payment schedule is unknown, the exporter must indicate in writing that: 
``The payment schedule will be provided in an amendment to the evidence 
of export report when the payment schedule has been determined;''
    (10) Written statements that:
    (i) The goods exported or services provided were included in the 
final application for a final commitment as approved by CCC for coverage 
under the facility payment guarantee and this subpart;
    (ii) The specifications and quantity of goods or services exported 
conform to the information contained in the exporter's application 
documents for a facility payment guarantee, or if different, that CCC 
has approved of such changes;
    (iii) A letter of credit has been opened in favor of the exporter by 
the foreign bank shown on the facility payment guarantee to cover the 
dollar amount of the sale of goods or services exported less the amount 
paid in accordance with the initial payment requirement and less 
discounts and allowances; and
    (11) The exporter's signature.
    (b) Final report of export. The final evidence of export report 
submitted

[[Page 604]]

under a facility payment guarantee must contain:
    (1) A written statement that exports under the facility payment 
guarantee have been completed;
    (2) The information requested in Sec. 1493.280(a) for the 
shipment(s) included in the final report; and
    (3) The combined total of all dollar amounts reported under 
Sec. 1493.280 (a) and (b) for all reports.
    (c) Time limit for submission of evidence of export report. Unless 
extended by CCC for good cause, the exporter must submit to CCC an 
evidence of export report:
    (1) Within 60 days of the date goods are exported by rail or truck;
    (2) Within 30 days of the date goods are exported by any other 
carrier; or
    (3) Within 30 days of the date of export of services.
    (d) Late reports. If the evidence of export report is not received 
by CCC within the time period for filing, the facility payment guarantee 
will become null and void only if and only to the extent that failure to 
make timely filing resulted, or would likely result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the FGP;
    (3) The obstruction of the fair administration of the FGP; or
    (4) A threat to the integrity of the FGP.



Sec. 1493.290  Proof of entry.

    (a) Diversion. The diversion of goods covered by a facility payment 
guarantee to a country other than that shown on the facility payment 
guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the goods authorized by the 
facility payment guarantee. Records demonstrating proof of entry must be 
in English or be accompanied by a certified or other translation 
acceptable to CCC. Records acceptable to meet this requirement include:
    (1) For goods: An original certificate, signed by a duly authorized 
customs or port official of the emerging market, by the importer, by an 
agent or representative of the vessel or ship line which delivered the 
goods to the emerging market, or by a private surveyor in the emerging 
market, or other documentation deemed acceptable by CCC:
    (i) Showing that the goods entered the emerging market;
    (ii) Identifying the export carrier;
    (iii) Describing the goods; and
    (iv) Indicating date and place the goods were unloaded in the 
emerging market.
    (2) [Reserved]



Sec. 1493.300  Notice of default and claims for loss.

    (a) Notice of default. If the foreign bank issuing the letter of 
credit fails to make payment pursuant to the terms of the foreign bank 
letter of credit or related obligation, the exporter or the exporter's 
assignee must submit a notice of default to CCC as soon as possible, but 
not later than ten days after the date that payment was due from the 
foreign bank (the due date). A notice of default must be submitted in 
writing to the Treasurer, CCC, at the address specified in the Contacts 
P/R. If the exporter or the exporter's assignee fails to promptly notify 
CCC of defaults in accordance with this paragraph, CCC may make the 
facility payment guarantee null and void with respect to any payment(s) 
applicable to such default. This time limit may be extended only under 
extraordinary circumstances and if approved by the Controller, CCC. The 
notice of default must include:
    (1) Facility payment guarantee number;
    (2) Name of the emerging market;
    (3) Name of the defaulting bank;
    (4) Payment due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of foreign bank's refusal to pay, if applicable; and
    (7) Reason for the foreign bank's refusal to pay, if known.

[[Page 605]]

    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due date of the defaulted payment. A claim for loss must 
be submitted in writing to the Treasurer, CCC, at the address specified 
in the Contacts P/R. The claim for loss must include the following 
information and documents:
    (1) Facility payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;
    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue and the interest rate on the foreign 
bank obligation applicable to the claim; and
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i)(A) The foreign bank's letter of credit securing the export sale, 
and;
    (B) If applicable, the document(s) evidencing the related obligation 
owed by the foreign bank to the assignee financial institution which is 
related to the foreign bank's letter of credit issued in favor of the 
exporter.
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill; 
or, if shipped by rail or truck, the entry certificate or similar 
document signed by an official of the emerging market;
    (iii) The exporter's sales invoice(s) showing the value and basis of 
sale (e.g., FOB, CFR, or CIF) or, if services are billed separately, 
documents that the exporter or its assignee relied upon in extending the 
credit to the issuing foreign bank;
    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default. 
The instrument must reference the applicable foreign bank letter of 
credit and the related obligation, if applicable; and
    (v) A copy of the evidence of export report(s) previously submitted 
by the exporter to CCC pursuant to Sec. 1493.280.
    (c) Subsequent claims for defaults on installments. The exporter or 
an exporter's assignee need only provide one claim which meets full 
documentation requirements relating to a covered transaction. For 
subsequent claims relating to such failures of the foreign bank to make 
scheduled installments on the same export, the exporter or the 
exporter's assignee need only submit to CCC a notice of such failure 
containing the information stated in paragraphs (b) (1), (2), and (3) of 
this section; an instrument of subrogation as per paragraph (b)(4)(iv) 
of this section, and the date the original claim was filed with CCC.



Sec. 1493.310  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec. 1493.300, CCC will 
determine whether or not a loss has occurred for which CCC is liable 
under the facility payment guarantee, this subpart, program 
announcement(s) and notice(s) to participants. If CCC determines that it 
is liable to the exporter or the exporter's assignee, CCC will pay the 
exporter or the exporter's assignee in accordance with paragraphs (b) 
and (c) of this section.
    (b) Amount of CCC's liability. CCC's maximum liability for any 
claims for loss submitted with respect to any facility payment 
guarantee, not including any late interest payments due in accordance 
with paragraph (c) of this section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the facility payment 
guarantee, plus eligible interest; or
    (2) The guaranteed percentage (as indicated in the facility payment 
guarantee) of the exported value indicated in the evidence of export 
report (Sec. 1493.280(a)(7)), plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the claim was found by CCC to be in 
good order and continuing

[[Page 606]]

until and including the date that payment is made by CCC. Late interest 
will be paid on the guaranteed amount, as determined by paragraphs 
(b)(1) and (2) of this section, and will be calculated based on the 
latest average investment rate of the most recent Treasury 91-day bill 
auction as announced by the Department of Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract, the 
foreign bank's letter of credit, or any obligation owed by the foreign 
bank to the assignee U.S. financial institution which is related to the 
foreign bank's letter of credit issued in favor of the exporter, unless 
it is determined to be in the best interest of CCC by the Controller, 
CCC. Notwithstanding the foregoing, CCC at its option may declare the 
entire amount of the unpaid balance, plus accrued interest, in default 
and make payment to the exporter or the exporter's assignee in addition 
to such other claimed amount as may be due from CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to the value of goods or 
services covered by a facility payment guarantee, CCC will not hold the 
assignee responsible or take any action or raise any defense against the 
assignee for any action, omission or statement by the exporter of which 
the assignee has no knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Sec. 1493.270 and Sec. 1493.280 excluding post-export adjustments (i.e., 
corrections of evidence of export reports); and
    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec. 1493.300.



Sec. 1493.320  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the foreign bank of CCC's rights 
under the subrogation agreement to recover all monies in default.
    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer, the foreign bank or any other source whatsoever, such 
monies shall be immediately paid to the Treasurer, CCC. If such monies 
are not received by CCC within 15 days from the date of recovery by the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will owe to CCC interest from the date of recovery to the date 
of receipt by CCC. This interest will be calculated based on the latest 
average investment rate of the most recent Treasury 91-day auction, as 
announced by the Department of Treasury, in effect on the date of 
recovery and will accrue from such date to the date of payment by the 
exporter or the exporter's assignee to CCC. Such interest will be 
charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a facility 
payment guarantee for which a claim has been paid by CCC, CCC will pay 
the holder of the facility payment guarantee its pro rata share 
immediately, provided that the required information necessary for 
determining pro rata distribution has been furnished. If payment is not 
made by CCC within 15 days from the date of recovery or 15 days from 
receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and will accrue from such date to the date of 
payment by CCC. The interest will apply only to the portion of the 
recovery payable to the holder of the facility payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer or the foreign bank, and recoveries received by CCC from the 
exporter, the exporter's assignee or any other source whatsoever, will 
be allocated by CCC to the exporter or the exporter's assignee and to 
CCC on a pro rata basis determined by their respective interests in such 
recoveries. The respective interest of each party will be determined on 
a pro rata basis, based on the combined

[[Page 607]]

amount of principal and interest in default. Once CCC has paid out a 
particular claim under a facility payment guarantee, CCC prorates any 
collections it receives and shares these collections proportionately 
with the holder of the guarantee until both CCC and the holder of the 
guarantee have been reimbursed in full. Appendix to Sec. 1493.320 
provides an example of the methodology used by CCC in applying this 
paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
facility payment guarantee, the exporter may be liable to CCC for any 
amounts paid by CCC under the facility payment guarantee when and if it 
is determined by CCC that the exporter engaged in fraud, or has been or 
is in breach of any contractual obligation, certification or warranty 
made by the exporter for the purpose of obtaining the facility payment 
guarantee or for fulfilling obligations under the FGP. Further, the 
exporter's assignee may be liable to CCC for any amounts paid by CCC 
under the facility payment guarantee when and if it is determined by CCC 
that the exporter's assignee engaged in fraud or otherwise violated 
program requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Sec. 1493.270 or the failure of an exporter to comply with the 
provisions of Sec. 1493.290 or Sec. 1493.330(e) will not affect the 
validity of any facility payment guarantee with respect to an assignee 
which had no knowledge of such violation or failure to comply at the 
time such exporter applied for the facility payment guarantee or at the 
time of assignment of the facility payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will cooperate with CCC to effect recoveries from the foreign 
bank or the importer.

   Appendix to Sec. 1493.320--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec. 1493.320, regarding pro rata sharing of recoveries made for claims 
filed under the FGP. For the purpose of this example only, even though 
CCC interest coverage is on a floating rate basis, a constant rate of 
interest is assumed. A typical case might be as follows:
    1. The U.S. bank enters into a $300,000 three-year credit 
arrangement for the export sale of goods and services with the foreign 
bank calling for equal semi-annual payments of principal and semi-annual 
payment of interest at a rate of 10 percent per annum and a penalty 
interest rate of 12 percent per annum on overdue amounts until the 
overdue amount is paid.
    2. Exported value reported to CCC equals $300,000.
    3. The foreign bank fails to make the final principal payment of 
$50,000 and an interest payment of $2,493.15, both due on January 31.
    4. On February 10, the U.S. bank files a notice of default and claim 
in good order with CCC.
    5. CCC's guarantee states that CCC's maximum liability is limited to 
95 percent of the principal amount due ($47,500) and interest at a rate 
of 8 percent per annum (basis 365 days) on 95 percent of the principal 
($1,894.80).
    6. CCC pays the claim on February 22.
    7. The latest investment rate of the 91-day Treasury Bill auction 
average which has been published by the Department of Treasury in effect 
on the date of nonpayment by CCC (February 11) is 7 percent.

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the facility 
payment guarantee would be computed as follows:

1. CCC's Obligation under the Facility Payment Guarantee:
    (a) Principal coverage--(95%  x  $50,000)..............   $47,500.00
    (b) Interest coverage--(8%  x  $47,500  x  182/365)....     1,894.80
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
    (c) Late interest due from CCC (7% per annum for 11           104.20
     days  x  $49,394.80)..................................
 
 
        Interest due January 31 (10%  x  $ 50,000  x  182/      2,493.15
         365)..............................................
------------------------------------------------------------
    (b) Penalty interest due (12% per annum for 22 days  x        361.64
     $ 50,000).............................................
------------------------------------------------------------

[[Page 608]]

 
3. Amount of Foreign Bank's Obligation Not Covered by CCC's    3,355.79.
 Payment Guarantee:........................................
 

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the foreign bank obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the foreign bank is 
$52,854.79, CCC would be entitled to 93.65 percent ($49,499.00 divided 
by $52,854.79) and the holder of the facility payment guarantee would be 
entitled to 6.35 percent ($3,355.79 divided by $52,854.79) of any 
recoveries of losses after settlement of the claim. Since in this 
example, the losses were recovered after the claim had been paid by CCC, 
Sec. 1493.320(b) would apply.



Sec. 1493.330  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a facility payment guarantee or the 
right to such proceeds only to a financial institution in the U.S. The 
assignment must cover all amounts payable under the facility payment 
guarantee not already paid, may not be made to more than one party, and 
may not, unless approved in advance by CCC, be subject to further 
assignment. Any assignment may be made to one party as agent or trustee 
for two or more parties participating in the assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases where a financial institution is determined to be 
ineligible to receive an assignment, in accordance with paragraph (b) of 
this section, CCC will provide notice thereof to such financial 
institution and to the exporter issued the facility payment guarantee in 
lieu of an acknowledgment of assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a facility payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC; or
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a facility payment guarantee approved by CCC if such financial 
institution:
    (1) At the time of assignment of a facility payment guarantee, is 
not in sound financial condition, as determined by the Treasurer of CCC;
    (2) Is the financial institution issuing the letter of credit or a 
branch, agency, or subsidiary of such institution; or
    (3) Is owned or controlled by an entity that owns or controls the 
financial institution issuing the letter of credit; or
    (4) Is the U.S. parent of the foreign bank issuing the letter of 
credit.
    (d) Alternative satisfaction of facility payment guarantees. CCC 
may, with the agreement of the exporter (or if the right to proceeds 
payable under the facility payment guarantee has been assigned, with the 
agreement of the exporter's assignee), establish procedures, terms or 
conditions for the satisfaction of CCC's obligations under a facility 
payment guarantee other than those provided for in this subpart if CCC 
determines that those alternative procedures, terms or conditions are 
appropriate in rescheduling the debts arising out of any transaction 
covered by the facility payment guarantee and would not result in CCC 
paying more than the amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a facility 
payment guarantee, the exporter or the exporter's assignee,

[[Page 609]]

as applicable, must maintain and make available all records pertaining 
to sales and deliveries of and extension of credit for goods or services 
exported in connection with a facility payment guarantee, including 
those records generated and maintained by agents, and related companies 
involved in special arrangements with the exporter. The Secretary of 
Agriculture and the Comptroller General of the United States, through 
their authorized representatives, must be given full and complete access 
to the premises of the exporter or the exporter's assignee, as 
applicable, during regular business hours from the effective date of the 
facility payment guarantee until the expiration of such five-year period 
to inspect, examine, audit, and make copies of the exporter's, 
exporter's assignee's, or a related company's books, records, and 
accounts concerning transactions relating to the facility payment 
guarantee, including, but not limited to, financial records and accounts 
pertaining to sales, inventory, manufacturing, processing, and 
administrative and incidental costs, both normal and unforeseen.
    (2) The exporter must maintain the proof of entry required by 
Sec. 1493.290(b), and must provide access to such document if requested 
by the Secretary of Agriculture or his authorized representative for the 
five-year period specified in paragraph (e)(1) of this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully acquaint themselves 
with, this subpart, program announcement(s), and notice(s) to 
participants relating to the FGP, as applicable. Applicants for facility 
payment guarantees under this program are hereby on notice that they 
will be bound by any terms contained in applicable program 
announcement(s) or notice(s) to participants issued prior to the date of 
approval of a facility payment guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by:
    (1) Wording indicating the delegation of authority or, in the 
alternative, by a certified copy of the delegation of authority; and
    (2) The name and title of the authorized person or officer. Further, 
the exporter or exporter's assignee must ensure that all information/
reports required under this subpart are submitted within the required 
time limits. If requested in writing, CCC will acknowledge receipt of a 
submission by the exporter or the exporter's assignee. If acknowledgment 
of receipt is requested, the exporter or exporter's assignee must submit 
an extra copy of each document and a stamped self-addressed envelope for 
return by U.S. mail. If courier services are desired for the return 
receipt, the exporter or exporter's assignee must also submit a self-
addressed courier service order which includes the recipient's billing 
code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or resident Commissioner, shall be admitted to any share or part of the 
facility payment guarantee or to any benefit that may arise therefrom, 
but this provision shall not be construed to extend to the facility 
payment guarantee if made with a corporation for its general benefit.
    (i) Deadlines. (1) Where a deadline is fixed in terms of days, it 
means business days and excludes Saturdays, Sundays and federal 
holidays.
    (2) Where a deadline is fixed in terms of months, the deadline falls 
on the same day of the month as the day triggering the deadline period, 
or if there is no same day, the last day of the month; and
    (3) Where a deadline would otherwise fall on a Saturday, Sunday or 
federal holiday, the deadline shall be the next business day.



       Subpart D--CCC Supplier Credit Guarantee Program Operations

    Source:  61 FR 33831, July 1, 1996, unless otherwise noted.

[[Page 610]]



Sec. 1493.400  General statement.

    (a) Overview. (1) This subpart contains the regulations governing 
the operations of the Supplier Credit Guarantee Program (SCGP). The 
restrictions and criteria set forth at subpart A for the Commodity 
Credit Corporation (CCC) Export Credit Guarantee Program (GSM-102) and 
the Intermediate Credit Guarantee Program (GSM-103) will apply to this 
subpart. The SCGP was developed to expand U.S. agricultural exports by 
making available payment guarantees to encourage U.S. exporters to 
extend financing on credit terms of not more than 180 days to importers 
of U.S. agricultural commodities.
    (2) The SCGP operates in cases where credit is necessary to increase 
or maintain U.S. exports to a foreign market and where private U.S. 
exporters would be unwilling to provide financing without CCC's 
guarantee. The program is operated in a manner intended not to interfere 
with markets for cash sales. The program is targeted toward those 
countries where the guarantees are necessary to secure financing of the 
exports but which have sufficient financial strength so that foreign 
exchange will be available for scheduled payments. In providing this 
credit guarantee facility, CCC seeks to expand market opportunities for 
U.S. agricultural exporters and assist long-term market development for 
U.S. agricultural commodities.
    (3) The credit facility created by this program is the SCGP payment 
guarantee (payment guarantee). The payment guarantee is an agreement by 
CCC to pay the exporter, or the U.S. financial institution that may take 
assignment of the exporter's right to proceeds, specified amounts of 
principal and, where applicable, interest due from, but not paid by, the 
importer incurring the obligation in connection with the export sale to 
which CCC's guarantee coverage pertains. By approving an exporter's 
application for a payment guarantee, CCC encourages private sector, 
rather than government, financing and incurs a substantial portion of 
the risk of default by the importer. CCC assumes this risk, in order to 
be able to operate the program for the purposes specified in 
Sec. 1493.2.
    (b) Credit facility mechanism. (1) For the purpose of the SCGP, CCC 
will consider applications for payment guarantees only in connection 
with export sales of U.S. agricultural commodities where the payment for 
the agricultural commodities will be made under an unconditional and 
irrevocable importer obligation to a U.S. exporter payable in U.S. 
dollars, as defined in Sec. 1493.410(n).
    (2) The exporter may assign the right to proceeds under the importer 
obligation to a U.S. bank or other financial institution so that the 
exporter may realize the proceeds of the sale prior to the deferred 
payment date(s) as set forth in the importer obligation.
    (3) The SCGP payment guarantee is designed to protect the exporter 
or the exporter's assignee against those losses specified in the payment 
guarantee resulting from defaults, whether for commercial or 
noncommercial reasons, by the importer under the importer's obligation.
    (c) Program administration. The SCGP will be administered pursuant 
to subpart A and this subpart and any Program Announcements and Notices 
to Participants issued by CCC pursuant to, and not inconsistent with, 
this subpart. This program is under the general administrative 
responsibility of the General Sales Manager (GSM), Foreign Agricultural 
Service (FAS/USDA). The review and payment of claims for loss will be 
administered by the Office of the Controller, CCC. Information regarding 
specific points of contact for the public, including names, addresses, 
and telephone and facsimile numbers of particular USDA or CCC offices, 
will be announced by a public press release (see Sec. 1493.410(c), 
``Contacts P/R'').
    (d) Country allocations and program announcements. From time to 
time, CCC will issue a Program Announcement to announce a SCGP 
allocation for a specific country. The Program Announcement for a 
country allocation will designate specific allocations for U.S. 
agricultural commodities or products thereof, will indicate the form of 
promissory note required by CCC, and will provide other pertinent 
information. Exporters may negotiate export sales to importers in that 
country for one of the commodities specified in the

[[Page 611]]

Program Announcement and seek payment guarantee coverage within the 
dollar amounts of specified coverage for that commodity. The Program 
Announcement will contain a requirement that the exporter's sales 
contract contain a shipping deadline within the applicable program year. 
The final date for a contractual shipping deadline will be stated in the 
Program Announcement. Program Announcements may also contain a specified 
``undesignated'' or ``unallocated'' dollar amount for the purpose that 
if dollar amounts specified for a specific commodity for a country 
become fully used, an additional allocation from the ``unallocated'' or 
``undesignated'' portion of the total country allocation may then be 
designated for a specific commodity. Program Announcements that include 
an ``unallocated'' or ``undesignated'' dollar amount will contain 
further information on the ``unallocated'' or ``undesignated'' portion 
of the country allocation.



Sec. 1493.410  Definition of terms.

    Terms set forth in this subpart and in CCC Program Announcements, 
Notices to Participants, and any other CCC-originated documents 
pertaining to the SCGP will have the following meanings:
    (a) Assignee. A financial institution in the United States which, 
for adequate consideration given, has obtained the legal rights to 
receive the payment of proceeds under the payment guarantee.
    (b) CCC. The Commodity Credit Corporation, an agency and 
instrumentality of the United States within the Department of 
Agriculture, authorized pursuant to the Commodity Credit Corporation 
Charter Act of 1948 (15 U.S.C. 714 et seq.), and subject to the general 
supervision and direction of the Secretary of Agriculture.
    (c) Contacts P/R. A notice issued by FAS/USDA by public press 
release which contains specific names, addresses, and telephone and 
facsimile numbers of contacts within FAS/USDA and CCC for use by persons 
interested in obtaining information concerning the operations of the 
SCGP. The Contacts P/R also contains details about where to submit 
information required to qualify for program participation, to apply for 
payment guarantees, to request amendments of payment guarantees, to 
submit evidence of export reports, and to give notices of default and 
file claims for loss.
    (d) Date of export. One of the following dates, depending upon the 
method of shipment: the on-board date of an ocean bill of lading or the 
on-board ocean carrier date of an intermodal bill of lading; the on-
board date of an airway bill; or, if exported by rail or truck, the date 
of entry shown on an entry certificate or similar document issued and 
signed by an official of the Government of the importing country.
    (e) Date of sale. The earliest date on which a contractual 
obligation exists between the exporter, or an intervening purchaser, if 
applicable, and the importer under which a firm dollar-and-cent price 
for the sale of agricultural commodities to the importer has been 
established or a mechanism to establish such price has been agreed upon.
    (f) Discounts and allowances. Any consideration provided directly or 
indirectly, by or on behalf of the exporter, or an intervening 
purchaser, to the importer in connection with a sale of an agricultural 
commodity, above and beyond the commodity's value, stated on the 
appropriate FOB, FAS, CFR or CIF basis. Discounts and allowances 
include, but are not limited to, the provision of additional goods, 
services or benefits; the promise to provide additional goods, services 
or benefits in the future; financial rebates; the assumption of any 
financial or contractual obligations; the whole or partial release of 
the importer from any financial or contractual obligations; or 
settlements made in favor of the importer for quality or weight.
    (g) Eligible interest. The maximum amount of interest, based on the 
interest rate indicated in CCC's payment guarantee or any amendments to 
such payment guarantee, which CCC agrees to pay the exporter or the 
exporter's assignee in the event that CCC pays a claim for loss. The 
maximum interest rate stated in the payment guarantee, when determined 
or adjusted by CCC, will not exceed the average investment rate of the 
most recent Treasury 52-

[[Page 612]]

week bill auction in effect at that time.
    (h) Exported value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, the value, 
FAS or FOB basis, U.S. point of export, of the export sale, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, is 
measured by the CFR or CIF value of the agricultural commodity less the 
cost of ocean freight, as determined at the time of application and, in 
the case of CIF sales, less the cost of marine and war risk insurance, 
as determined at the time of application, reduced by the value of any 
discounts or allowances granted to the importer in connection with the 
sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis, and where 
the commodity is sold on a CFR or CIF basis, point of entry, the total 
value of the export sale, CFR or CIF basis, point of entry, reduced by 
the value of any discounts or allowances granted to the importer in 
connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo) which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the exported 
value.
    (i) Exporter. A seller of U.S. agricultural commodities or products 
thereof that has qualified in accordance with the provisions of 
Sec. 1493.420.
    (j) FAS/USDA. The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (k) GSM. The General Sales Manager, FAS/USDA, acting in his capacity 
as Vice President, CCC, or his designee.
    (l) Guaranteed value. The maximum amount, exclusive of interest, 
that CCC agrees to pay the exporter or assignee under CCC's payment 
guarantee, as indicated on the face of the payment guarantee.
    (m) Importer. A foreign buyer that enters into a contract with an 
exporter, or with an intervening purchaser, for an export sale of 
agricultural commodities to be shipped from the U.S. to the foreign 
buyer.
    (n) Importer obligation. A promissory note or notes that conform(s) 
with the requirements for such note(s) specified in the applicable 
country or regional Program Announcement(s).
    (o) Incoterms. The following customary terms, as defined by the 
International Chamber of Commerce, Incoterms  current 
revision):
    (1) Free Alongside Ship (FAS);
    (2) Free on Board (FOB);
    (3) Cost and Freight (CFR, or alternatively, C&F, C and F, or CNF); 
and
    (4) Cost Insurance and Freight (CIF).
    (p) Intervening purchaser. A party that agrees to purchase U.S. 
agricultural commodities from an exporter and sell the same agricultural 
commodities to an importer.
    (q) Late interest. Interest, in addition to the interest due under 
the payment guarantee, which CCC agrees to pay in connection with a 
claim for loss, accruing during the period beginning on the first day 
after receipt of a claim which CCC has determined to be in good order 
and ending on the day on which payment is made on such claim for loss.
    (r) Notice to participants. A notice issued by CCC by public press 
release which serves one or more of the following functions: to remind 
participants of the requirements of the program; to clarify the program 
requirements contained in these regulations in a manner which is not 
inconsistent with the regulations; to instruct exporters to provide 
additional information in applications for payment guarantees under 
specific country and/or commodity allocations; and to supplement the 
provisions of a payment guarantee, in a manner not inconsistent with 
these regulations, before the exporter's application for such payment 
guarantee is approved.
    (s) Payment guarantee. An agreement under which CCC, in 
consideration of a

[[Page 613]]

fee paid, and in reliance upon the statements and declarations of the 
exporter, subject to the terms set forth in the written guarantee 
(including the required form of promissory note), this subpart, and any 
applicable Program Announcements or Notices to Participants, agrees to 
pay the exporter or the exporter's assignee in the event of a default by 
an importer under the importer obligation.
    (t) Port value. (1) Where CCC announces coverage on a FAS or FOB 
basis and:
    (i) Where the commodity is sold on a FAS or FOB basis, U.S. point of 
export, the value, FAS or FOB basis, U.S. point of export, of the export 
sale, including the upward tolerance, if any, as provided by the export 
sales contract, reduced by the value of any discounts or allowances 
granted to the importer in connection with such sale; or
    (ii) Where the commodity was sold on a CFR or CIF basis, point of 
entry, the value of the export sale, FAS or FOB, point of export, 
including the upward tolerance, if any, as provided by the export sales 
contract, is measured by the CFR or CIF value of the agricultural 
commodity less the value of ocean freight and, in the case of CIF sales, 
less the value of marine and war risk insurance, reduced by the value of 
any discounts or allowances granted to the importer in connection with 
the sale of the commodity; or
    (2) Where CCC announces coverage on a CFR or CIF basis and where the 
commodity was sold on CFR or CIF basis, point of entry, the total value 
of the export sale, CFR or CIF basis, point of entry, including the 
upward tolerance, if any, as provided by the export sales contract, 
reduced by the value of any discounts or allowances granted to the 
importer in connection with the sale of the commodity.
    (3) When a CFR or CIF commodity export sale involves the performance 
of non-freight services to be performed outside the United States (e.g., 
services such as bagging bulk cargo), which are not normally included in 
ocean freight contracts, the value of such services and any related 
materials not exported from the U.S. with the commodity must also be 
deducted from the CFR or CIF sales price in determining the port value.
    (u) Program announcement. An announcement issued by CCC which 
provides information on specific country and commodity allocations and 
may identify eligible agricultural commodities and countries, length of 
credit periods which may be covered, specify dollar limitations for CCC 
exposure in particular countries, the form of promissory note required 
for a particular country or region, and include other information and 
requirements.
    (v) SCGP. The Supplier Credit Guarantee Program described by this 
subpart.
    (w) United States or U.S. All of the 50 states, the District of 
Columbia, and the territories and possessions of the United States.
    (x) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.
    (y) USDA. United States Department of Agriculture.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6 1997]



Sec. 1493.420  Information required for program participation.

    Before CCC will accept an application for a payment guarantee under 
the SCGP, the applicant must qualify for participation in this program. 
Based upon the information submitted by the applicant and other publicly 
available sources, CCC will determine whether the applicant is eligible 
for participation in the program.
    (a) Submission of documentation. In order to qualify for 
participation in the SCGP, an applicant must submit to

[[Page 614]]

CCC, at the address specified in the Contacts P/R, the following 
information:
    (1) The address of the applicant's headquarters office and the name 
and address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the applicant, e.g., sole 
proprietorship, partnership, corporation, etc.;
    (3) The place of incorporation of the applicant, if the applicant is 
a corporation;
    (4) The name and U.S. address of the office(s) of the applicant, and 
statement indicating whether the applicant is a U.S. domestic 
corporation, a foreign corporation or another foreign entity. If the 
applicant has multiple offices, the address included in the information 
should be that which is pertinent to the particular export sale 
contemplated by the applicant under this subpart;
    (5) A certified statement describing the applicant's participation, 
if any, during the past three years in U.S. Government programs, 
contracts or agreements; and
    (6) A certification that: ``I certify, to the best of my knowledge 
and belief, that neither [name of applicant] nor any of its principals 
has been debarred, suspended, or proposed for debarment from contracting 
with or participating in programs administered by any U.S. Government 
agency. [''Principals,'' for the purpose of this certification, means 
officers; directors; owners of five percent or more of stock; partners; 
and persons having primary management or supervisory responsibility 
within a business entity (e.g., general manager, plant manager, head of 
a subsidiary division, or business segment, and similar positions).] I 
further agree that, should any such debarment, suspension, or notice of 
proposed debarment occur in the future, [name of applicant] will 
immediately notify CCC.''
    (b) Previous qualification. Any exporter that is qualified under 
subpart B, Sec. 1493.30 is qualified under this section to submit 
applications for a SCGP payment guarantee, and the information provided 
by the exporter pursuant to Sec. 1493.30 will be deemed to also have 
been provided under this section. Each application must include the 
statement required by Sec. 1493.430(a)(17) incorporating the 
certifications of Sec. 1493.440, including the certification in 
Sec. 1493.440(e) that the information previously provided pursuant to 
Sec. 1493.420 has not changed. If the exporter is unable to provide such 
certification, such exporter must update the information required by 
paragraph (a) of this section which has changed and certify that the 
remainder of the information previously provided has not changed.
    (c) Additional submissions. CCC will promptly notify applicants that 
have submitted information required by this section whether they have 
qualified to participate in the program. Any applicant failing to 
qualify will be given an opportunity to provide additional information 
for consideration by CCC.
    (d) Ineligibility for program participation. An applicant may be 
ineligible to participate in the SCGP if:
    (1) Such applicant is currently debarred, suspended, or proposed for 
debarment from contracting with or participating in any program 
administered by a U.S. Government agency; or
    (2) Such applicant is controlled or can be controlled, in whole or 
in part, by any individuals or entities currently debarred, suspended or 
proposed for debarment from contracting with or participating in 
programs administered by any U.S. Government agency.



Sec. 1493.430  Application for a payment guarantee.

    (a) A firm export sale must exist before an exporter may submit an 
application for a payment guarantee. An application for a payment 
guarantee may be submitted in writing or may be made by telephone, but, 
if made by telephone, it must be confirmed in writing to the office 
specified in the Contacts P/R. An application must identify the name and 
address of the exporter and include the following information:
    (1) Name of the destination country;
    (2) Name and address of the importer;
    (3) Name and address of the intervening purchaser, if any, and a 
statement that the commodity will be shipped directly to the importer in 
the destination country;
    (4) Date of sale;
    (5) Exporter's sale number;

[[Page 615]]

    (6) Delivery period as agreed between the exporter and the importer;
    (7) A full description of the commodity (including packaging, if 
any);
    (8) Mean quantity, contract loading tolerance and, if the exporter 
chooses, a request for CCC to reserve coverage up to the maximum 
quantity permitted by the contract loading tolerance;
    (9) Unit sales price of the commodity, or a mechanism to establish 
the price, as agreed between the exporter and the importer. If the 
commodity was sold on the basis of CFR or CIF, the actual (if known at 
the time of application) or estimated value of freight and, in the case 
of sales made on a CIF basis, the actual (if known at the time of 
application) or estimated value of marine and war risk insurance, must 
be specified;
    (10) Description and value of discounts and allowances, if any;
    (11) Port value (includes upward loading tolerance, if any);
    (12) Guaranteed value;
    (13) Guarantee fee;
    (14) The term length for the credit being extended and the intervals 
between principal payments for each shipment to be made under the export 
sale;
    (15) A statement indicating whether any portion of the export sale 
for which the exporter is applying for a payment guarantee is also being 
used as the basis for an application for participation in any of the 
following CCC or USDA export programs: Export Enhancement Program, Dairy 
Export Incentive Program, Sunflowerseed Oil Assistance Program, or 
Cottonseed Oil Assistance Program. The number of the Agreement assigned 
by USDA under one of these programs should be included, as applicable;
    (16) Other information as requested by CCC or specified in Program 
Announcements and Notices to Participants, as applicable; and
    (17) The exporter's statement, ``ALL SECTION 1493.440 CERTIFICATIONS 
ARE BEING MADE IN THIS APPLICATION'' which, when included in the 
application by the exporter, will constitute a certification that it is 
in compliance with all the requirements set forth in Sec. 1493.440.
    (b) An application for a payment guarantee may be approved as 
submitted, approved with modifications agreed to by the exporter, or 
rejected by the GSM. In the event that the application is approved, the 
GSM will cause a payment guarantee to be issued in favor of the 
exporter. Such payment guarantee will become effective at the time 
specified in Sec. 1493.450(b). If, based upon a price review, the unit 
sales price of the commodity does not fall within the prevailing 
commercial market level ranges, as determined by CCC, the application 
will not be approved.
    (c) Ineligible exporter. An exporter will be ineligible to obtain a 
payment guarantee if such exporter:
    (1) Directly or indirectly owns or controls the importer;
    (2) Is directly or indirectly owned or controlled by the importer; 
or
    (3) Is directly or indirectly owned or controlled by a person(s) or 
entity(ies) which also owns or controls the importer.



Sec. 1493.440  Certification requirements for payment guarantee.

    By providing the statement in Sec. 1493.430(a)(17), the exporter is 
certifying that the information provided in the application is true and 
correct and, further, that all requirements set forth in this section 
have been or will be met. The exporter will be required to provide 
further explanation or documentation with regard to applications that do 
not include this statement. The exporter, in submitting an application 
for a payment guarantee and providing the statement set forth in 
Sec. 1493.430(a)(17), certifies that:
    (a) The agricultural commodity or product to be exported under the 
payment guarantee is a U.S. agricultural commodity as defined by 
Sec. 1493.410(x).
    (b) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law;
    (c) If the agricultural commodity is vegetable oil or a vegetable 
oil product, that none of the agricultural commodity or product has been 
or will be used as a basis for a claim of a refund, as drawback, 
pursuant to section 313 of

[[Page 616]]

the Tariff Act of 1930, 19 U.S.C. 1313, of any duty, tax or fee imposed 
under Federal law on an imported commodity or product;
    (d) No person or selling agency has been employed or retained to 
solicit or secure the payment guarantee, and that there is no agreement 
or understanding for a commission, percentage, brokerage, or contingent 
fee, except in the case of bona fide employees or bona fide established 
commercial or selling agencies maintained by the exporter for the 
purpose of securing business; and
    (e) The information provided pursuant to Sec. 1493.420 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec. 1493.420, and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements. If the exporter breaches or violates these certifications 
with respect to a SCGP payment guarantee, CCC will have the right, 
notwithstanding any other rights provided under this subpart, to annul 
guarantee coverage for any commodities not yet exported and/or to 
proceed against the exporter.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]



Sec. 1493.450  Payment guarantee.

    (a) CCC's obligation. The payment guarantee will provide that CCC 
agrees to pay the exporter or the exporter's assignee an amount not to 
exceed the guaranteed value, plus eligible interest, in the event that 
the importer fails to pay under the importer obligation. unless CCC 
determines with respect to the particular transaction and claim that the 
guaranteed portion of the port value exceeded the prevailing U.S. market 
value for the same, or same type of agricultural commodity or product. 
In making this determination, CCC will adjust the prevailing U.S. market 
value for estimated freight and/or insurance costs if the export sale 
was made on a CFR or CIF basis. Payment by CCC will be in U.S. dollars.
    (b) Period of guarantee coverage. The payment guarantee will apply 
to a credit period not exceeding 180 days beginning either on the 
date(s) of export(s) or from the date when interest begins to accrue 
whichever is earlier, and will continue during the credit term specified 
in the payment guarantee or amendments thereto. However, the payment 
guarantee becomes effective on the date(s) of export(s) of the 
agricultural commodities or products thereof specified in the exporter's 
application for a payment guarantee.
    (c) Terms of the CCC payment guarantee. The terms of CCC's coverage 
will be set forth in the payment guarantee, as approved by CCC, and will 
include the provisions of this subpart, which may be supplemented by any 
Program Announcements and/or Notices to Participants in effect at the 
time the payment guarantee is approved by CCC.
    (d) Final date to export. The final date to export shown on the 
payment guarantee will be one month, as determined by CCC, after the 
contractual deadline for shipping.
    (e) Reserve coverage for loading tolerances. The exporter may apply 
for a payment guarantee and, if coverage is available, pay the guarantee 
fee, based at least on, the amount of the lower loading tolerance of the 
export sales contract; however, the exporter may also request that CCC 
reserve additional guarantee coverage to accommodate up to the amount of 
the upward loading tolerance specified in the export sales contract. If 
such additional guarantee coverage is available at the time of 
application and CCC determines to make such reservation, it will so 
indicate to the exporter. In the event that the exporter ships a 
quantity greater than the amount on which the guarantee fee was paid 
(i.e., lower loading tolerance), it may obtain the additional coverage 
from CCC, up to the amount of the upward loading tolerance, by filing 
for an amendment to the payment guarantee, and by paying the additional 
amount of fee applicable. If such amendment to the payment guarantee is 
not filed with CCC by the exporter within 30 days after the date of the 
last export against the sales contract, CCC may determine not to reserve 
the coverage originally set aside for the exporter.
    (f) Ineligible exports. Commodities with a date of export prior to 
the date

[[Page 617]]

of receipt by CCC of the exporter's telephonic or written application 
for a payment guarantee, or with a date of export made after the final 
date for export shown on the payment guarantee or any amendments 
thereof, are ineligible for guarantee coverage under this subpart, 
except where it is determined by the GSM to be in the best interests of 
CCC to provide guarantee coverage on such commodities.
    (g) Foreign agricultural component. CCC may approve payment 
guarantees under this subpart only in connection with sales of United 
States agricultural commodities as defined in Sec. 1493.410(x). CCC may 
not provide guarantee coverage under this subpart on credit extended for 
the value of any foreign agricultural component.
    (h) Additional requirements. The payment guarantee may contain such 
additional terms, conditions, and limitations as deemed necessary or 
desirable by the GSM. Such additional terms, conditions or 
qualifications, as stated in the payment guarantee are binding on the 
exporter or the exporter's assignee.
    (i) Amendments. A request for an amendment of a payment guarantee 
may be submitted only by the exporter (with the concurrence of the 
assignee, if any). CCC will consider such a request only if the 
amendment sought is consistent with this subpart and any applicable 
Program Announcements and Notices to Participants. Amendments may 
include, but will not be limited to, a change in the credit period and 
an extension of time to export. Any amendment to the payment guarantee, 
particularly those that result in an increase in CCC's liability under 
the payment guarantee, may result in an increase in the guarantee fee. 
(Technical corrections or corrections of a clerical error which may be 
submitted by the exporter or the exporter's assignee are not viewed as 
amendments.)



Sec. 1493.460  Guarantee rates and fees.

    (a) Guarantee fee rates. The current payment guarantee fee rate(s) 
will be available by Program Announcement.
    (b) Calculation of fee. The guarantee fee will be computed by 
multiplying the guaranteed value by the guarantee fee rate.
    (c) Payment of fee. The exporter shall remit, with his written 
application, the full amount of the guarantee fee. Applications will not 
be approved until the guarantee fee has been received by CCC. The 
exporter's check for the guarantee fee shall be made payable to CCC and 
mailed or delivered by courier to the office specified in the Contacts 
P/R.
    (d) Refunds of fee. Guarantee fees paid in connection with approved 
applications will ordinarily not be refundable. CCC's approval of the 
application will be final and refund of the guarantee fee will not be 
made after approval unless the GSM determines that such refund will be 
in the best interest of CCC. If the application for a payment guarantee 
is not approved or is approved only for a part of the guarantee coverage 
requested, a full or pro rata refund of the fee remittance will be made.



Sec. 1493.470  Evidence of export.

    (a) Report of export. The exporter is required to provide CCC an 
evidence of export report for each shipment made under the payment 
guarantee. This report must include the following:
    (1) Payment guarantee number;
    (2) Date of export;
    (3) Exporter's sale number;
    (4) Exported value;
    (5) Quantity;
    (6) A full description of the commodity exported;
    (7) Unit sales price received for the commodity exported and the 
basis (e.g., FOB, CFR, CIF). Where the unit sales price at export 
differs from the unit sales price indicated in the exporter's 
application for a payment guarantee, the exporter is also required to 
submit a statement explaining the reason for the difference;
    (8) Description and value of discounts and allowances, if any;
    (9) Number of the Agreement assigned by USDA under any other program 
if any portion of the export sale was also approved for participation in 
any of the following CCC or USDA export program: Export Enhancement 
Program, Dairy Export Incentive Program, Sunflowerseed Oil Assistance 
Program, or Cottonseed Oil Assistance Program; and
    (10) The exporter's statement, ``ALL SECTION 1493.480 CERTIFICATIONS

[[Page 618]]

ARE BEING MADE IN THIS EVIDENCE OF EXPORT'' which, when included in the 
evidence of export by the exporter, will constitute a certification that 
it is in compliance with all the requirements set forth in 
Sec. 1493.480.
    (b) Time limit for submission of evidence of export. The exporter 
must provide a written report to the office specified in the Contacts P/
R within 60 calendar days if the export was by rail or truck; or 30 
calendar days if the export was by any other carrier. The time period 
for filing a report of export will commence upon each date of export of 
the commodity covered under a payment guarantee. If the evidence of 
export report is not received by CCC within the time period for filing, 
the payment guarantee will become null and void only if and only to the 
extent that failure to make timely filing resulted, or would be likely 
to result, in:
    (1) Significant financial harm to CCC;
    (2) The undermining of an essential regulatory purpose of the 
program;
    (3) Obstruction of the fair administration of the program; or
    (4) A threat to the integrity of the program. The time limit for 
submission of an evidence of export report may be extended if such 
extension is determined by the GSM to be in the best interests of CCC.
    (c) Export sales reporting. Exporters may have a mandatory reporting 
responsibility under section 602 of the Agricultural Trade Act of 1978, 
as amended (7 U.S.C. 5712) for exports of wheat and wheat flour, feed 
grains, oilseeds, cotton, and other agricultural commodities and 
products thereof.



Sec. 1493.480  Certification requirements for the evidence of export.

    By providing the statement contained in Sec. 1493.470(a)(10), the 
exporter is certifying that the information provided in the evidence of 
export report is true and correct and, further, that all requirements 
set forth in this section have been or will be met. The exporter will be 
required to provide further explanation or documentation with regard to 
reports that do not include this statement. If the exporter breaches or 
violates these certifications with respect to a SCGP payment guarantee, 
CCC will have the right, notwithstanding any other rights provided under 
this subpart, to annul guarantee coverage for any commodities not yet 
exported and/or to proceed against the exporter. The exporter, in 
submitting the evidence of export and providing the statement set forth 
in Sec. 1493.470(a)(10), certifies that:
    (a) The agricultural commodity or product exported under the payment 
guarantee is a U.S. agricultural commodity as defined by 
Sec. 1493.410(x).
    (b) Agricultural commodities of the grade, quality and quantity 
called for in the exporter's sales contract with the importer have been 
exported to the country specified in the payment guarantee;
    (c) There is an importer obligation as defined in Sec. 1493.410(n) 
to cover the exported value of the commodity exported;
    (d) There have not been and will not be any corrupt payments or 
extra sales services or other items extraneous to the transaction 
provided, financed, or guaranteed in connection with the transaction, 
and that the transaction complies with applicable United States law; and
    (e) The information provided pursuant to Sec. 1493.420 has not 
changed, the exporter still meets all of the qualification requirements 
of Sec. 1493.420 and the exporter will immediately notify CCC if there 
is a change of circumstances which would cause it to fail to meet such 
requirements.

[61 FR 33831, July 1, 1996, as amended at 62 FR 24561, May 6, 1997]



Sec. 1493.490  Proof of entry.

    (a) Diversion. The diversion of commodities covered by a SCGP 
payment guarantee to a country other than that shown on the payment 
guarantee is prohibited, unless expressly authorized by the GSM.
    (b) Records of proof of entry. Exporters must obtain and maintain 
records of an official or customary commercial nature and grant 
authorized USDA officials access to such documents or records as may be 
necessary to demonstrate the arrival of the agricultural commodities 
exported in connection with the SCGP in the country that was the 
intended country of destination of

[[Page 619]]

such commodities. Records demonstrating proof of entry must be in 
English or be accompanied by a certified or other translation acceptable 
to CCC. Records acceptable to meet this requirement include an original 
certification of entry signed by a duly authorized customs or port 
official of the importing country, by the importer, by an agent or 
representative of the vessel or shipline which delivered the 
agricultural commodity to the importing country, or by a private 
surveyor in the importing country, or other documentation deemed 
acceptable by the GSM showing:
    (1) That the agricultural commodity entered the importing country;
    (2) The identification of the export carrier;
    (3) The quantity of the agricultural commodity;
    (4) The kind, type, grade and/or class of the agricultural 
commodity; and
    (5) The date(s) and place(s) of unloading of the agricultural 
commodity in the importing country. (Records of proof of entry need not 
be submitted with a claim for loss, except as may be provided in 
Sec. 1493.500(b)(4)(ii).)



Sec. 1493.500  Notice of default and claims for loss.

    (a) Notice of default. If the importer fails to make payment 
pursuant to the terms of the importer obligation, the exporter or the 
exporter's assignee must submit a notice of default to CCC as soon as 
possible, but not later than 10 calendar days after the date that 
payment was due from the importer (the due date). A notice of default 
must be submitted in writing to the Treasurer, CCC, at the address 
specified in the Contacts P/R. If the exporter or the exporter's 
assignee fails to promptly notify CCC of defaults in accordance with 
this paragraph, CCC may make the payment guarantee null and void with 
respect to any payment(s) applicable to such default. This time limit 
may be extended only under extraordinary circumstances and if such 
extension is determined by the Controller, CCC, to be in the best 
interests of CCC. The notice of default must include:
    (1) Payment guarantee number;
    (2) Name of the country;
    (3) Name of the defaulting importer;
    (4) Due date;
    (5) Total amount of the defaulted payment due, indicating separately 
the amounts for principal and interest;
    (6) Date of importer's refusal to pay, if applicable; and
    (7) Reason for importer's refusal to pay, if known.
    (b) Filing a claim for loss. A claim for a loss by the exporter or 
the exporter's assignee will not be paid if it is made later than six 
months from the due date of the defaulted payment. A claim for loss must 
be submitted in writing to the Treasurer, CCC, at the address specified 
in the Contacts P/R. The claim for loss must include the following 
information and documents:
    (1) Payment guarantee number;
    (2) A certification that the scheduled payment has not been 
received;
    (3) A certification of the amount of accrued interest in default, 
the date interest began to accrue, and the interest rate on the importer 
obligation applicable to the claim;
    (4) A copy of each of the following documents, with a cover document 
containing a signed certification by the exporter or the exporter's 
assignee that each page of each document is a true and correct copy:
    (i) The importer obligation;
    (ii) Depending upon the method of shipment, the negotiable ocean 
carrier or intermodal bill(s) of lading signed by the shipping company 
with the onboard ocean carrier date for each shipment, the airway bill, 
or, if shipped by rail or truck, the entry certificate or similar 
document signed by an official of the importing country;
    (iii)(A) The exporter's invoice showing, as applicable, the FAS, 
FOB, CFR or CIF values; or
    (B) If there was an intervening purchaser, both the exporter's 
invoice to the intervening purchaser and the intervening purchaser's 
invoice to the importer;
    (iv) An instrument, in form and substance satisfactory to CCC, 
subrogating to CCC the respective rights of the exporter and the 
exporter's assignee, if applicable, to the amount of payment in default 
under the applicable export sale. The instrument must reference the 
applicable importer obligation; and

[[Page 620]]

    (v) A copy of the report(s) of export previously submitted by the 
exporter to CCC pursuant to Sec. 1493.470(a).
    (c) Subsequent claims for defaults on installments. If the initial 
claim is found in good order, the exporter or an exporter's assignee 
need only provide all of the required claims documents with the initial 
claim relating to a covered transaction. For subsequent claims relating 
to failure of the importer to make scheduled installments on the same 
export shipment, the exporter or the exporter's assignee need only 
submit to CCC a notice of such failure containing the information stated 
in paragraph (b) (1), (2), and (3) of this section; an instrument of 
subrogation as per paragraph (b)(4)(iv) of this section, and including 
the date the original claim was filed with CCC.



Sec. 1493.510  Payment for loss.

    (a) Determination of CCC's liability. Upon receipt in good order of 
the information and documents required under Sec. 1493.500, CCC will 
determine whether or not a loss has occurred for which CCC is liable 
under the applicable payment guarantee, this subpart and any applicable 
supplemental Program Announcements and Notices to Participants. If CCC 
determines that it is liable to the exporter and/or the exporter's 
assignee, CCC will pay the exporter or the exporter's assignee in 
accordance with paragraphs (b) and (c) of this section.
    (b) Amount of CCC's liability. Subject to a determination by CCC 
with respect to prevailing U.S. market value pursuant to 
Sec. 1493.450(a) of this part, CCC's maximum liability for any claims 
for loss submitted with respect to any payment guarantee, not including 
any late interest payments due in accordance with paragraph (c) of this 
section, will be limited to the lesser of:
    (1) The guaranteed value as stated in the payment guarantee, plus 
eligible interest; or
    (2) The guaranteed percentage (as indicated in the payment 
guarantee) of the exported value indicated in the evidence of export, 
plus eligible interest.
    (c) Late interest payment. If a claim is not paid within one day of 
receipt of a claim which CCC has determined to be in good order, late 
interest will accrue in favor of the exporter or the exporter's assignee 
beginning with the first day after the day of receipt of a claim found 
by CCC to be in good order and continuing until and including the date 
that payment is made by CCC. Late interest will be paid on the 
guaranteed amount, as determined by paragraphs (b)(1) and (2) of this 
section, and will be calculated based on the average investment rate of 
the most recent Treasury 91-day bill auction as announced by the 
Department of Treasury as of the due date.
    (d) Accelerated payments. CCC will pay claims only for losses on 
amounts not paid as scheduled. CCC will not pay claims for amounts due 
under an accelerated payment clause in the export sales contract or the 
importer obligation unless it is determined to be in the best interests 
of CCC by the Controller, CCC. Notwithstanding the foregoing, CCC at its 
option may declare the entire amount of the unpaid balance, plus accrued 
interest, in default and make payment to the exporter or the exporter's 
assignee in addition to such other claimed amount as may be due from 
CCC.
    (e) Action against the assignee. Notwithstanding any other provision 
in this subpart to the contrary, with regard to commodities covered by a 
payment guarantee, CCC will not, except pursuant to a determination 
under Sec. 1493.450(a) of this part, hold the assignee responsible or 
take any action or raise any defense against the assignee for any 
action, omission, or statement by the exporter of which the assignee has 
no knowledge, provided that:
    (1) The exporter complies with the reporting requirements under 
Secs. 1493.470 and 1493.480, excluding post-export adjustments (i.e., 
corrections to evidence of export reports); and
    (2) The exporter or the exporter's assignee furnishes the statements 
and documents specified in Sec. 1493.500.



Sec. 1493.520  Recovery of losses.

    (a) Notification. Upon payment of loss to the exporter or the 
exporter's assignee, CCC will notify the importer of CCC's rights under 
the subrogation agreement to recover all moneys in default.

[[Page 621]]

    (b) Receipt of monies. (1) In the event that monies for a defaulted 
payment are recovered by the exporter or the exporter's assignee from 
the importer or any other source whatsoever, such monies shall be 
immediately paid to the Treasurer, CCC. If such monies are not received 
by CCC within 15 business days from the date of recovery by the exporter 
or the exporter's assignee, the exporter or the exporter's assignee will 
owe to CCC interest from the date of recovery to the date of receipt by 
CCC. This interest will be calculated based on the latest average 
investment rate of the most recent Treasury 91-day bill auction, as 
announced by the Department of Treasury, in effect on the date of 
recovery and will accrue from such date to the date of payment by the 
exporter or the exporter's assignee to CCC. Such interest will be 
charged only on CCC's share of the recovery.
    (2) If CCC recovers monies that should be applied to a payment 
guarantee for which a claim has been paid by CCC, CCC will pay the 
holder of the payment guarantee its pro rata share immediately, provided 
that the required information necessary for determining pro rata 
distribution has been furnished. If payment is not made by CCC within 15 
business days from the date of recovery or 15 business days from 
receiving the required information for determining pro rata 
distribution, whichever is later, CCC will pay interest calculated on 
the latest average investment rate of the most recent Treasury 91-day 
bill auction, as announced by the Department of Treasury, in effect on 
the date of recovery and such interest will accrue from such date to the 
date of payment by CCC. The interest will apply only to the portion of 
the recovery payable to the holder of the payment guarantee.
    (c) Allocation of recoveries. Recoveries made by CCC from the 
importer, and recoveries received by CCC from the exporter, the 
exporter's assignee, or any other source whatsoever, will be allocated 
by CCC to the exporter or the exporter's assignee and to CCC on a pro 
rata basis determined by their respective interests in such recoveries. 
The respective interest of each party will be determined on a pro rata 
basis, based on the combined amount of principal and interest in 
default. Once CCC has paid out a particular claim under a payment 
guarantee, CCC pro rates any collections it receives and shares these 
collections proportionately with the holder of the guarantee until both 
CCC and the holder of the guarantee have been reimbursed in full. 
Appendix A to Sec. 1493.520--Illustration of Pro Rata Allocation of 
Recoveries--provides an example of the methodology used by CCC in 
applying this paragraph (c).
    (d) Liabilities to CCC. Notwithstanding any other terms of the 
payment guarantee, the exporter may be liable to CCC for any amounts 
paid by CCC under the payment guarantee when and if it is determined by 
CCC that the exporter has engaged in fraud, or has been or is in 
material breach of any contractual obligation, certification or warranty 
made by the exporter for the purpose of obtaining the payment guarantee 
or for fulfilling obligations under SCGP. Further, the exporter's 
assignee may be liable to CCC for any amounts paid by CCC under the 
payment guarantee when and if it is determined by CCC that the 
exporter's assignee has engaged in fraud or otherwise violated program 
requirements.
    (e) Good faith. The violation by an exporter of the certifications 
in Secs. 1493.440(b) and 1493.480(d) or the failure of an exporter to 
comply with the provisions of Secs. 1493.490 or 1493.530(e) will not 
affect the validity of any payment guarantee with respect to an assignee 
which had no knowledge of such violation or failure to comply at the 
time such exporter applied for the payment guarantee or at the time of 
assignment of the payment guarantee.
    (f) Cooperation in recoveries. Upon payment by CCC of a claim to the 
exporter or the exporter's assignee, the exporter or the exporter's 
assignee will cooperate with CCC to effect recoveries from the importer.

  Appendix A to Sec. 1493.520--Illustration of Pro Rata Allocation of 
                               Recoveries

    The following example illustrates CCC's policy, as set forth in 
Sec. 1493.520(c), regarding pro rata sharing of recoveries made for 
claims filed under the SCGP. A typical case might be as follows:

[[Page 622]]

    1. The U.S. exporter enters into a $200,000, 180 day credit 
arrangement with the importer calling for two equal payments of 
principal and two equal payments of interest at a rate of 10 percent per 
annum and a penalty interest rate of 12 percent per annum (basis 360 
days) on overdue amounts until the overdue amount is paid. (Basis for 
interest calculation may be 360 or 365 days.)
    2. The importer fails to make the final principal payment of 
$100,000 and an interest payment of $2,500.00 (10% per annum for 90 days 
on $100,000), both due on January 31.
    3. On February 10, the U.S. exporter files a claim in good order 
with CCC.
    4. CCC's guarantee states that CCC's maximum liability is limited to 
60 percent of the principal amount due ($60,000) and interest at a rate 
of 8 percent per annum (basis 365 days) on 60 percent of the principal 
outstanding ($1,183.56) (8% per annum for 90 days on $60,000). (CCC's 
basis for interest calculation is 365 days.)
    5. CCC pays the claim on February 22.
    6. The average investment rate of the most recent 91-day Treasury 
Bill auction average which has been published by the Department of 
Treasury in effect on the date of nonpayment by CCC (January 31) is 7 
percent. (CCC's late interest rate.)

                       Computation of Obligations

    Using the above case, CCC's payment to the holder of the payment 
guarantee would be computed as follows:

1. CCC's Obligation under the Payment Guarantee:
    (a) Principal coverage--(60% $100,000)...........         $60,000.00
    (b) Interest coverage--(8% per annum for 90 days            1,183.56
     on $60,000, basis 365 days).....................
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
    (c) Late interest due from CCC (7% per annum for              129.07
     11 days on $61,183.56, basis 365 days)..........
 
 
        Interest due January 31 (10% per annum for 90           2,500.00
         days on $100,000, basis 360 days)...........
------------------------------------------------------
    (b) Penalty interest due (12% per annum for 22                751.67
     days on $102,500.00, basis 360 days)............
------------------------------------------------------
3. Amount of importer's obligation not covered by
 CCC's payment guarantee: $41,939.04 ($103,251.67-
 $61,312.63).........................................
 

          Computation of Pro Rata Sharing in Recovery of Losses

    In establishing each party's respective interest in any recovery of 
losses, the total amount due under the importer obligation would be 
determined as of the date the claim is paid by CCC (February 22). Using 
the above example in which the amount owed by the importer is 
$103,251.67, CCC would be entitled to 59.38 percent ($61,312.63 divided 
by $103,251.67) and the holder of the payment guarantee would be 
entitled to 40.62 percent ($41,939.04 divided by $103,251.67) of any 
recoveries of losses after settlement of the claim. Since in this 
example, the losses were recovered after the claim has been paid by CCC, 
Sec. 1493.520(b) would apply.



Sec. 1493.530  Miscellaneous provisions.

    (a) Assignment. (1) The exporter may assign the proceeds which are, 
or may become, payable by CCC under a payment guarantee or the right to 
such proceeds only to a financial institution in the U.S. The assignment 
must cover all amounts payable under the payment guarantee not already 
paid, may not be made to more than one party, and may not, unless 
approved in advance by CCC, be:
    (i) Made to one party acting for two or more parties; or
    (ii) Subject to further assignment.
    (2) An original and two copies of the written notice of assignment 
signed by the parties thereto must be filed by the assignee with the 
Treasurer, CCC, at the address specified in the Contacts P/R.
    (3) Receipt of the notice of assignment will ordinarily be 
acknowledged to the exporter and its assignee in writing by an officer 
of CCC. In cases

[[Page 623]]

where a financial institution is determined to be ineligible to receive 
an assignment, in accordance with paragraph (b) of this section, CCC 
will provide notice thereof, to the financial institution and to the 
exporter issued the payment guarantee, in lieu of an acknowledgment of 
assignment.
    (4) The name and address of the assignee must be included on the 
written notice of assignment.
    (b) Ineligibility of financial institutions to receive an 
assignment. A financial institution will be ineligible to receive an 
assignment of proceeds which may become payable under a payment 
guarantee if, at the time of assignment, such financial institution:
    (1) Is not in sound financial condition, as determined by the 
Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (c) Ineligibility of financial institutions to receive proceeds. A 
financial institution will be ineligible to receive proceeds payable 
under a payment guarantee approved by CCC if such financial institution:
    (1) At the time of assignment of a payment guarantee, is not in 
sound financial condition, as determined by the Treasurer of CCC;
    (2) Owns or controls the entity issuing the importer obligation; or
    (3) Is owned or controlled by an entity that owns or controls the 
entity issuing the importer obligation.
    (d) Alternative satisfaction of payment guarantees. CCC may, with 
the agreement of the exporter (or if the right to proceeds payable under 
the payment guarantee has been assigned, with the agreement of the 
exporter's assignee), establish procedures, terms and/or conditions for 
the satisfaction of CCC's obligations under a payment guarantee other 
than those provided for in this subpart if CCC determines that those 
alternative procedures, terms, and/or conditions are appropriate in 
rescheduling the debts arising out of any transaction covered by the 
payment guarantee and would not result in CCC paying more than the 
amount of CCC's obligation.
    (e) Maintenance of records and access to premises. (1) For a period 
of five years after the date of expiration of the coverage of a payment 
guarantee, the exporter or the exporter's assignee, as applicable, must 
maintain and make available all records pertaining to sales and 
deliveries of and extension of credit for agricultural commodities 
exported in connection with a payment guarantee, including those records 
generated and maintained by agents, intervening purchasers, and related 
companies involved in special arrangements with the exporter. The 
Secretary of Agriculture and the Comptroller General of the United 
States, through their authorized representatives, must be given full and 
complete access to the premises of the exporter or the exporter's 
assignee, as applicable, during regular business hours from the 
effective date of the payment guarantee until the expiration of such 
five-year period to inspect, examine, audit, and make copies of the 
exporter's, exporter's assignee's, agent's, intervening purchaser's, or 
related company's books, records and accounts concerning transactions 
relating to the payment guarantee, including, but not limited to, 
financial records and accounts pertaining to sales, inventory, 
processing, and administrative and incidental costs, both normal and 
unforeseen. During such period, the exporter or the exporter's assignee 
may be required to make available to the Secretary of Agriculture or the 
Comptroller General of the United States, through their authorized 
representatives, records that pertain to transactions conducted outside 
the program, if, in the opinion of the GSM, such records would pertain 
directly to the review of transactions undertaken by the exporter in 
connection with the payment guarantee.
    (2) The exporter must maintain the proof of entry required by 
Sec. 1493.490(b), and must provide access to such documentation if 
requested by the Secretary of Agriculture or his authorized 
representative for the five-year period specified in paragraph (e)(1) of 
this section.
    (f) Responsibility of program participants. It is the responsibility 
of all program participants to review, and fully

[[Page 624]]

acquaint themselves with, all regulations, Program Announcements, and 
Notices to Participants issued pursuant to this subpart. Applicants for 
payment guarantees are hereby on notice that they will be bound by any 
terms contained in applicable Program Announcements or Notices to 
Participants issued prior to the date of approval of a payment 
guarantee.
    (g) Submission of documents by principal officers. All required 
submissions, including certifications, applications, reports, or 
requests (i.e., requests for amendments), by exporters or exporters' 
assignees under this subpart must be signed by a principal or officer of 
the exporter or exporter's assignee or their authorized designee(s). In 
cases where the designee is acting on behalf of the principal or the 
officer, the signature must be accompanied by: Wording indicating the 
delegation of authority or, in the alternative, by a certified copy of 
the delegation of authority; and the name and title of the authorized 
person or officer. Further, the exporter or exporter's assignee must 
ensure that all information/reports required under these regulations are 
submitted within the required time limits. If requested in writing, CCC 
will acknowledge receipt of a submission by the exporter or the 
exporter's assignee. If acknowledgment of receipt is requested, the 
exporter or exporter's assignee must submit an extra copy of each 
document and a stamped self-addressed envelope for return by U.S. mail. 
If courier services are desired for the return receipt, the exporter or 
exporter's assignee must also submit a self-addressed courier service 
order which includes the recipient's billing code for such service.
    (h) Officials not to benefit. No member of or delegate to Congress, 
or Resident Commissioner, shall be admitted to any share or part of the 
payment guarantee or to any benefit that may arise therefrom, but this 
provision shall not be construed to extend to the payment guarantee if 
made with a corporation for its general benefit.
    (i) OMB control number assigned pursuant to the Paperwork Reduction 
Act. The information requirements contained in this part (7 CFR part 
1493, subpart D) have been approved by the Office of Management and 
Budget (OMB) in accordance with the provisions of 44 U.S.C. Chapter 35 
and have been assigned OMB Control Number 0551-0037.



PART 1494--EXPORT BONUS PROGRAMS--Table of Contents




             Subpart A--Export Enhancement Program Criteria

Sec.
1494.10  General statement.
1494.20  Criteria.

            Subpart B--Export Enhancement Program Operations

1494.101  General statement.
1494.201  Definitions of terms.
1494.301  Information required for program participation.
1494.401  Performance security.
1494.501  Submission of offers to CCC.
1494.601  Acceptance of offers by CCC.
1494.701  Payment of bonus.
1494.801  Enforcement and termination of agreements with CCC.
1494.901  Dispute resolution and appeals.
1494.1001  Miscellaneous provisions.

           Subpart C--Dairy Export Incentive Program Criteria

1494.1100  General statement.
1494.1101  Criteria.

          Subpart D--Dairy Export Incentive Program Operations

1494.1200  Program operations.
1494.1201  Paperwork Reduction Act.

    Source: 56 FR 25011, June 3, 1991, unless otherwise noted.



             Subpart A--Export Enhancement Program Criteria

    Authority: 7 U.S.C. 5663.

    Source: 56 FR 26324, June 7, 1991, unless otherwise noted.



Sec. 1494.10  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Commodity

[[Page 625]]

Credit Corporation's (CCC) Export Enhancement Program (EEP). These 
criteria are interrelated and will be considered together in order to 
select eligible commodities and eligible countries for EEP initiatives 
which will best meet the program's objectives. The objectives of the 
program are to discourage unfair trade practices by other countries, to 
increase U.S. agricultural commodity exports, and to encourage other 
countries exporting agricultural commodities to undertake serious 
negotiations on agricultural trade problems. Under the EEP, bonuses are 
made available by CCC to enable exporters to meet prevailing world 
prices for targeted commodities in targeted destinations. In the 
operation of the EEP, CCC will make reasonable efforts to avoid the 
displacement of usual marketings of U.S. agricultural commodities.



Sec. 1494.20  Criteria.

    The criteria considered by CCC in reviewing proposals for 
initiatives will include, but not be limited to, the following:
    (a) The expected contribution of proposed initiatives in furthering 
trade policy negotiations and, in particular, in furthering the U.S. 
trade policy negotiating strategy of countering competitors' subsidies 
and other unfair trade practices by displacing such countries' 
subsidized exports in targeted countries;
    (b) The contribution which initiatives will make toward realizing 
U.S. agricultural export goals and, in particular, in developing, 
expanding, or maintaining markets for U.S. agricultural commodities;
    (c) The effect that sales facilitated by initiatives would have on 
non-subsidizing exporters of agricultural products; and
    (d) The subsidy requirements of proposed initiatives compared to the 
expected benefits.



            Subpart B--Export Enhancement Program Operations

    Authority.  15 U.S.C. 714c; 7 U.S.C. 5602, 5651, 5661, 5662, 5676.



Sec. 1494.101  General statement.

    This subpart contains the regulations governing the operation of the 
Export Enhancement Program (EEP) of the Commodity Credit Corporation 
(CCC). CCC will, from time to time, announce, through public press 
release, initiatives to facilitate the export of U.S. agricultural 
commodities to targeted markets. The public press release, which will 
contain the name of a person for interested parties to contact, will be 
followed by the issuance of an Invitation for Offers (Invitation). 
Invitations will be issued pursuant to this subpart by the General Sales 
Manager (GSM) and will specify the eligible country(ies) (the targeted 
market), the unit of measure, the eligible commodity, the maximum 
quantity of the eligible commodity eligible for a CCC bonus, the quality 
specifications of the eligible commodity (including possible 
restrictions on type, kind, grade and/or class or other quality 
specifications), the eligible buyer(s), the method and rate for 
determining liquidated damages and performance security requirements, 
and any other terms and conditions peculiar to that Invitation. 
Invitations may be one of the following two types: Those inviting 
exporters which have a sales contract with an eligible buyer to submit a 
competitive offer for a CCC Bonus; and those inviting exporters which 
have a sales contract with an eligible buyer to apply for an Announced 
CCC Bonus. After an interested person has qualified to submit an offer 
for an eligible commodity, the eligible exporter may submit an offer to 
CCC in response to an Invitation. Such offer must contain the 
information required by this subpart and any additional information 
required by the applicable Invitation. The exporter's offer will include 
either the Announced CCC Bonus, if applicable, or an amount in dollars 
and cents for a bonus deemed necessary by the exporter to make a 
commercial sale of the eligible commodity for export to the eligible 
country competitive with export sales of the commodity by other 
exporting countries to buyers in the eligible country. If the exporter 
has furnished the required performance security and the offer is 
acceptable to CCC, then CCC will notify the exporter that its

[[Page 626]]

offer has been accepted. CCC and the exporter will enter into an 
Agreement in which CCC will agree to pay the bonus to the exporter in 
return for the exporter's submission of proof that the eligible 
commodity has been exported from the United States and entered into the 
eligible country, in accordance with the terms and conditions of the 
Agreement.



Sec. 1494.201  Definitions of terms.

    Terms used in this subpart, Invitations issued pursuant to this 
subpart, and any documents pertaining to the EEP shall have the 
following meaning, unless otherwise specified in such Invitations or 
documents:
    (a) Agreement or EEP Agreement--The Agreement entered into between 
CCC and the exporter consisting of:
    (1) The terms and conditions of this subpart;
    (2) The terms and conditions of the applicable Invitation;
    (3) The exporter's offer;
    (4) CCC's acceptance of the exporter's offer; and
    (5) The public press release for the Announced CCC Bonus in effect 
at the time of the offer, if applicable.
    (b) Announced CCC bonus--A CCC bonus announced by CCC by public 
press release in connection with an Invitation which specifies that the 
CCC bonus amount will be pre-determined and announced by CCC.
    (c) FSA--The Farm Service Agency, U.S. Department of Agriculture.
    (d) Bonus value--The CCC bonus multiplied by the quantity of the 
eligible commodity exported pursuant to an Agreement, provided that the 
eligible commodity enters into the eligible country. (The bonus value is 
paid to the exporter in CCC certificates or other form of payment.)
    (e) Business day--Days during which employees of the U.S. Department 
of Agriculture in Washington, DC or in Kansas City, Missouri, as 
applicable depending upon the office to which a submission is to be 
made, are on official duty during normal business hours.
    (f) CCC--The Commodity Credit Corporation, U.S. Department of 
Agriculture.
    (g) CCC bonus--A dollar and cents amount, established through CCC's 
acceptance of the exporter's offer for such bonus amount, to be paid to 
the exporter for each unit of the eligible commodity exported pursuant 
to an Agreement, provided that the eligible commodity enters into the 
eligible country.
    (h) CCC Certificate--The CCC Commodity Certificate or Certificates 
issued by CCC that may be transferred or exchanged for a CCC-owned 
commodity pursuant to CCC's regulations on Commodity Certificates, In 
Kind Payments, and Other Forms of Payment, currently codified at 7 CFR 
part 1470.
    (i) CCC Operations Division (CCCOD)--The CCC Operations Division, 
FAS, U.S. Department of Agriculture.
    (j) Date of entry--Either the date on the certificate of entry 
specified in Sec. 1494.401(f)(2) indicating that the eligible commodity 
entered the eligible country on that date or the date that an entry 
document was issued by a customs port authority or other government 
official, whichever is later.
    (k) Date of export--One of the following dates, depending upon the 
method of shipment:
    (1) The on-board date shown on the export carrier's bill of lading, 
when the eligible commodity is shipped from the U.S. without being 
transshipped through a Canadian port;
    (2) The on-board date at the Canadian port shown on the export 
carrier's bill of lading, when the eligible commodity is shipped from a 
Canadian transshipment port on the St. Lawrence River, provided its 
identity had been preserved until shipped from Canada;
    (3) The on-board date shown on the export carrier's through bill of 
lading, when the eligible commodity is loaded to a lash barge for 
shipment from the U.S.; or
    (4) The date of entry shown on an authenticated landing certificate 
or similar document issued by an official of the government of the 
eligible country, when the eligible commodity is shipped by rail or 
truck from the U.S.
    (l) Date of sale--The earliest date the exporter has knowledge that 
a sales contract, as defined in paragraph (bb) of this section, exists 
with an eligible buyer.

[[Page 627]]

    (m) Director--The Director, Kansas City Commodity Office, FSA, U.S. 
Department of Agriculture, or the Director's designee.
    (n) Eligible Buyer--Unless otherwise specified in the Invitation, a 
buyer, located in the eligible country, that has entered, or will enter, 
into a sales contract with an exporter. (The applicable Invitation may 
limit the eligible buyer to one or more particular buyers in an eligible 
country.)
    (o) Eligible country--The country or countries, as specified in an 
Invitation, which will be the only country or countries into which an 
exported eligible commodity must ultimately be entered in order for the 
exporter to earn a bonus from CCC under that Invitation.
    (p) Eligible commodity--The U.S. agricultural commodity specified as 
eligible for export under the applicable Invitation, which is of the 
kind, type, grade and/or class of commodity specified in the applicable 
Invitation. (If the eligible commodity is grain, it must meet the 
definition applicable for that grain under the U.S. Grain Standards Act 
and the regulations issued thereunder.)
    (q) Eligible exporter. A person that has been notified by CCC that 
such person is qualified to submit offers in response to Invitations.
    (r) Export or exported--The shipment of the eligible commodity from 
the United States or from the Canadian transshipment port, as permitted 
by this subpart, destined for the eligible country.
    (s) Exporter--An eligible exporter that enters into an Agreement 
with CCC under this subpart.
    (t) Export carrier--The carrier on which the eligible commodity is 
shipped under the Agreement to the eligible country or to a port in a 
nearby country, if transshipments other than through Canada are allowed 
by the applicable Invitation. (``Export carrier'' may mean an ocean 
vessel and, on Canadian transshipments, will mean the ocean vessel 
loaded at the Canadian transshipment port; or, on overland shipments, a 
railcar or truck; or a container or lash barge loaded with the eligible 
commodity for which a through on-board bill of lading is issued for 
shipment to the eligible country, provided that the loaded container or 
lash barge is subsequently lifted aboard an ocean vessel.)
    (u) FAS--The Foreign Agricultural Service, U.S. Department of 
Agriculture.
    (v) GSM--The General Sales Manager, FAS, U.S. Department of 
Agriculture, acting in the capacity of Vice President, CCC, or the GSM's 
designee.
    (w) Invitation--The Invitation for Offers issued by CCC pursuant to 
this subpart, generally specifying the eligible country, the eligible 
commodity, the maximum quantity of the eligible commodity eligible for a 
CCC bonus, the quality specifications of the eligible commodity, the 
eligible buyer(s), the method and rate for determining liquidated 
damages and performance security requirements, allowances for 
transshipments, and any other terms and conditions particular to that 
Invitation. (If the Invitation contains terms or conditions that are 
inconsistent with this subpart, the terms and conditions of the 
Invitation will prevail for the purposes of Agreements entered into 
pursuant to such Invitation.)
    (x) Notice to exporters--EEP Contacts--A notice issued by FAS by 
public press release which contains specific addresses; telephone, 
facsimile and telex numbers; and contacts within FAS and FSA to obtain 
further information concerning qualification as an eligible exporter, 
the submission of offers in response to Invitations, amendments to 
Agreements, requests for bonus payments, the submission of export and 
entry documentation, and other matters related to the EEP.
    (y) Official Inspection Certificate--A valid official export 
inspection or other quality analysis certificate, as specified in the 
applicable Invitation.
    (z) Official weight certificate--A valid official export weight or 
other quantity certificate, as specified in the applicable Invitation.
    (aa) Person--An individual, partnership, corporation, association or 
other legal entity.
    (bb) Sales contract--The sales contract entered into between an 
eligible exporter and an eligible buyer which sets forth the terms and 
conditions of a sale of the eligible commodity from the eligible 
exporter to the buyer. (Written

[[Page 628]]

evidence of sale may be in the form of a signed sales contract, an offer 
and acceptance between parties, or other documentary evidence of sale. 
The written evidence of sale for the purposes of the EEP must, at a 
minimum, document the following information: the eligible commodity, 
quantity, quality specifications, delivery terms (FOB, C&F, etc.) to the 
eligible country, delivery period, unit price, payment terms, date of 
sale, and evidence of agreement between buyer and seller. A sales 
contract with an intervening purchaser or an affiliate or subsidiary of 
the eligible exporter is not an eligible sales contract for the purpose 
of this subpart.)
    (cc) Transshipment--The entry of the eligible commodity into a 
country other than the eligible country which occurs prior to the 
subsequent entry of the eligible commodity into the eligible country.
    (dd) Time--All references to time shall refer to local time in 
Washington, DC.
    (ee) Unit of measure--The unit of measure for the eligible 
commodity, as specified in the applicable Invitation.
    (ff) United States or U.S.--All of the 50 States, the District of 
Columbia, and the territories and possessions of the United States.
    (gg) U.S. agricultural commodity. (1) An agricultural commodity or 
product entirely produced in the United States; or
    (2) A product of an agricultural commodity--
    (i) 90 percent or more of the agricultural components of which by 
weight, excluding packaging and added water, is entirely produced in the 
United States; and
    (ii) That the Secretary determines to be a high value agricultural 
product. For purposes of this definition, fish entirely produced in the 
United States include fish harvested by a documented fishing vessel as 
defined in title 46, United States Code, in waters that are not waters 
(including the territorial sea) of a foreign country.

[56 FR 25011, June 3, 1991, as amended at 60 FR 21039, May 1, 1995; 62 
FR 24561, May 6, 1997]



Sec. 1494.301  Information required for program participation.

    Before CCC will consider an offer from an interested person, such 
person must qualify for participation in the program. Based upon 
information submitted by the interested person and available from public 
sources, CCC will determine whether the interested person is eligible 
for participation in the program.
    (a) Submission of documentation. An interested person that wishes to 
qualify as an eligible exporter must furnish the following information 
or documentation to CCC at the address referenced in the Notice to 
Exporters--EEP Contacts:
    (1) The address of the interested person's office and the name and 
address of an agent in the U.S. for the service of process;
    (2) The legal form of doing business of the interested person, e.g., 
sole proprietorship, partnership, corporation, etc.;
    (3) The place of incorporation of the interested person, if the 
interested person is a corporation;
    (4) The name and address of an office(s) of the interested person 
within the U.S., if the interested person is a foreign corporation or 
other foreign entity; and
    (5) A certified statement describing the interested person's 
participation, if any, during the past three years in U.S. Government 
programs, contracts or agreements.
    (6) The following certification: ``I certify, to the best of my 
knowledge and belief, that neither [name of interested person] nor any 
of its principals has been debarred, suspended, or proposed for 
debarment from contracting with or participating in programs 
administered by any U.S. Government agency. [``Principals,'' for the 
purpose of this certification, means officers; directors; owners of five 
percent or more of stock; partners; and persons having primary 
management or supervisory responsibility within a business entity (e.g., 
general manager, plant manager, head of a subsidiary division or 
business segment, and similar positions).] I further agree that, should 
any such debarment, suspension, or notice of proposed debarment occur in 
the future,

[[Page 629]]

[name of interested person] will immediately notify CCC.''
    (b) Necessity to qualify. An interested person may not submit an 
offer, and CCC will not consider any such offer, until CCC has notified 
the interested person that such person has qualified as an eligible 
exporter.
    (c) Additional submissions. CCC will promptly notify interested 
persons that have submitted information required by this section whether 
they have qualified to have their offers considered. Any person failing 
to qualify will be notified of the basis of CCC's decision and will be 
given an opportunity to provide additional information for consideration 
by CCC.
    (d) Previous performance. CCC may request additional information 
with respect to the interested person's performance under any U.S. 
Government programs or in connection with any contracts or agreements 
with the U.S. Government during the past three years.
    (e) Ineligibility for program participation. A person may be 
ineligible to participate in the EEP if such person:
    (1) Is currently debarred, suspended or proposed for debarment from 
contracting with or participating in any program administered by a U.S. 
Government agency; or
    (2) Is controlled or can be controlled, in whole or in part, by any 
individuals or entities currently debarred, suspended or proposed for 
debarment from contracting with or participating in programs 
administered by a U.S. Government agency.
    (f) Duty to update information provided to CCC. An eligible exporter 
is under a continuing obligation to inform CCC of any changes in the 
information or documentation submitted to CCC pursuant to paragraph (a) 
of this section and to provide current and accurate information to CCC.
    (g) Payment of bonus to exporters without proven EEP participation. 
An eligible exporter that has not yet demonstrated its ability to 
participate successfully in the EEP will be eligible to receive a bonus 
payment(s) only after the eligible commodity specified in an EEP 
Agreement has entered into the eligible country. Such an exporter must 
furnish performance security under ``Option B'' of the applicable 
Invitation and follow the procedure specified in Sec. 1494.701(d) to 
request the payment of the bonus. An eligible exporter may demonstrate 
its ability to participate successfully in the EEP by entering or 
causing to be entered into the eligible country at least 95% of the 
quantity of the eligible commodity specified in any one EEP Agreement. 
CCC will consider that an exporter has proven its ability to participate 
successfully in the EEP as of the date on which CCC pays to the exporter 
a bonus for entry of a quantity that brings the total entered quantity 
for any one EEP Agreement to at least 95%. For all EEP Agreements that 
such exporter enters into with CCC subsequent to that date, the exporter 
may furnish performance security under ``Option A'' of the applicable 
Invitation and will be eligible to receive bonus payments in accordance 
with Sec. 1494.701(c).

[56 FR 25011, June 3, 1991, as amended at 60 FR 21039, May 1, 1995]



Sec. 1494.401  Performance security.

    (a) Requirement to establish performance security. Prior to the 
submission of an offer to CCC in response to an Invitation, an eligible 
exporter must establish performance security, in a form which is 
acceptable to CCC, in order to guarantee the eligible exporter's 
faithful performance of the Agreement. If CCC enters into an Agreement 
with the eligible exporter, this performance security must remain in 
effect until its cancellation or reduction is authorized by CCC pursuant 
to paragraph (f) of this section. An offer made by an eligible exporter 
will not be considered if proof of the establishment of the performance 
security is not made available to CCC by 3 p.m. on the date for which 
the offer is submitted for consideration.
    (b) Form of performance security. The performance security must be 
acceptable to CCC and may be an irrevocable standby letter of credit, a 
bond, or a certified or cashier's check. If a standby letter of credit 
is furnished as performance security, the opening bank may be a U.S. 
bank or a foreign bank. If the standby letter of credit is opened by a 
foreign bank, it must be 100 percent confirmed by a U.S. bank. If a

[[Page 630]]

bond is furnished as performance security, the surety(ies) must be among 
those appearing on the list of approved sureties maintained by the U.S. 
Department of the Treasury. If a cashier's or certified check is 
furnished as performance security, the bank issuing the cashier's or 
certified check must be a U.S. bank.
    (c) Amount of performance security. The amount of the performance 
security to be furnished to CCC in response to a particular Invitation 
will depend upon whether the eligible exporter intends to select 
``Option A'' or ``Option B'' for the timing of the bonus payment. If the 
eligible exporter furnishes performance security under ``Option A'' of 
the applicable Invitation, the eligible exporter may request payment of 
the bonus after export of the eligible commodity but before entry of the 
commodity into the eligible country. If the eligible exporter furnishes 
performance security under ``Option B'' of the applicable Invitation, 
the eligible exporter may request payment of the bonus only after the 
exported eligible commodity has entered into the eligible country. The 
applicable Invitation will specify the exact amount of performance 
security for the eligible commodity required under either ``Option A'' 
or ``Option B'' and the method and rate for determining liquidated 
damages. After the exporter and CCC enter into an Agreement, the 
exporter may request CCC to change the performance security option for 
an entire Agreement from ``Option B'' to ``Option A'' and, if CCC agrees 
to this change, the exporter will increase the performance security 
amount to the level required by the applicable Invitation for ``Option 
A''.
    (d) Additional security. The exporter shall promptly furnish such 
additional security as CCC may determine is necessary to protect CCC 
under an Agreement if the surety(ies) or obligating bank:
    (1) Becomes unacceptable to the U.S. Government or CCC; and/or
    (2) Fails to furnish reports on its financial condition as required 
by the U.S. Government or CCC.
    (e) Right to funds under the performance security. If CCC enters 
into an Agreement with an exporter under the EEP, CCC will have the 
right to funds from the performance security established by the exporter 
for such Agreement to recover:
    (1) The amount of any bonus paid to the exporter under the Agreement 
if the exporter fails to perform in accordance with such Agreement;
    (2) Any funds owed by the exporter to CCC related to the specific 
EEP Agreement for which the performance security was established, 
including those for liquidated damages, discounts for late performance, 
overpayments made by CCC, storage charges, or other damages or charges 
as determined by CCC; and/or
    (3) Any amounts or funds that could be owed by the exporter to CCC 
in accordance with subparagraphs (e) (1) and (2) of this section for 
unfulfilled obligations under the Agreement if the performance security 
should expire prior to the exporter's fulfillment of these obligations. 
Should the exporter fulfill these obligations, in accordance with the 
Agreement, after CCC has drawn upon the performance security, CCC will 
return the funds drawn to the exporter or other appropriate party, as 
determined by CCC. CCC may return the performance security if it 
determines that the exporter is not liable for any damages incurred by 
CCC as a result of the exporter's failure to fulfill its obligations 
under the Agreement and that the exporter will not retain any bonus 
payment which was not earned.
    (f) Cancellation or reduction of performance security. (1) CCC will 
agree, upon request by the exporter, to a cancellation of the 
performance security established for an Agreement when CCC determines, 
on the basis of evidence provided by the exporter or other evidence 
available to CCC, that:
    (i) The exporter has fully performed under the Agreement;
    (ii) The exporter has fully compensated CCC for all costs incurred 
or damages suffered by CCC, unless CCC has determined to hold the 
exporter harmless for such damages pursuant to Sec. 1494.801(d) as a 
result of the exporter's nonperformance of the Agreement; or
    (iii) It is no longer in the best interest of the EEP to require the 
exporter to maintain the performance security,

[[Page 631]]

and the exporter submits to CCC a written statement agreeing that all 
other terms and conditions of the Agreement will remain unchanged 
pending final resolution of the exporter's liabilities to CCC.
    (2) To support a request for the cancellation of performance 
security furnished in connection with an Agreement, the exporter must 
provide to CCC evidence of the export of the eligible commodity as 
provided by Sec. 1494.701(c), and the entry of the eligible commodity 
into the eligible country or countries. The entry certification must be 
in English or accompanied by a certified or other translation acceptable 
to CCC. To show entry of the eligible commodity into the eligible 
country, the exporter must furnish to CCC an original certification 
signed by a duly authorized customs or port official of the eligible 
country, by the eligible buyer, by an agent or representative of the 
vessel or shipline which delivered the eligible commodity to the 
eligible country, or by a private surveyor in the target country or 
other documentation deemed acceptable by the GSM showing:
    (i) That the eligible commodity entered the eligible country;
    (ii) The identification of the export carrier;
    (iii) The quantity of the eligible commodity unloaded;
    (iv) The kind, type, grade and/or class of the eligible commodity; 
and
    (v) The date(s) and place(s) of unloading of the eligible commodity 
in the eligible country.
    (3) If the exporter makes multiple shipments against a sales 
contract with an eligible buyer, CCC may agree to a proportional 
reduction in the amount of the required performance security when the 
exporter has furnished evidence that the exporter has performed under 
the Agreement with respect to a particular shipment.
    (4) Upon the payment of liquidated damages by an exporter to CCC 
under a specific Agreement or the determination by CCC, pursuant to 
Sec. 1494.801(d), to hold the exporter harmless for the payment of 
liquidated damages owed to CCC under a specific Agreement, CCC will 
allow the exporter to cancel or reassign that portion of the performance 
security opened for such specific Agreement that would relate to the 
value of the liquidated damages.



Sec. 1494.501  Submission of offers to CCC.

    (a) Consideration of offers. Unless otherwise specified in the 
Invitation, CCC will consider offers on a daily basis from the date of 
issuance of the Invitation until such time that CCC announces that 
offers will no longer be accepted under the Invitation, the total 
quantity of the eligible commodity announced in the Invitation has been 
awarded, or the Invitation has expired as indicated by the expiration 
date shown in the Invitation.
    (1) Prior to the submission of an offer to CCC, the eligible 
exporter must have entered into a sales contract, as defined in 
Sec. 1494.201(bb), with an eligible buyer for the export sale and the 
delivery of the eligible commodity to the eligible country.
    (2) The date of sale of the eligible exporter's sales contract with 
an eligible buyer must be after the issuance date of the applicable 
Invitation.
    (3) The sales contract between the eligible exporter and an eligible 
buyer may be conditioned upon the eligible exporter's entering into an 
Agreement with CCC under the EEP for the payment of a bonus.
    (4) CCC will not be responsible to any person for any loss caused by 
the failure of the eligible exporter to obtain a CCC bonus.
    (5) The eligible exporter must promptly notify CCC in writing of any 
amendment to the sales contract with an eligible buyer.
    (b) Submission of offers. Eligible exporters must submit offers, or 
modifications or withdrawals thereof, to the address, telephone, telex 
or facsimile numbers specified in the Notice to Exporters--Contacts for 
EEP. Telephonic offers must be confirmed in writing immediately 
thereafter by telex or facsimile. If a telephonic offer is not confirmed 
in writing by 9 a.m. on the next business day, the offer will not be 
considered. The date and time affixed to submissions will be as 
determined by CCC.
    (c) Content of offers. Offers to CCC for a CCC bonus under the EEP 
must contain the information shown below in

[[Page 632]]

the same numerical order as shown below. CCC reserves the right to 
reject any offer that so materially departs from this prescribed format 
that its consideration would hinder the offer review process. The 
applicable Invitation may require the submission of further information 
necessary for the consideration of an offer.
    (1) The use of the numerical designation assigned to the applicable 
Invitation, which shall signify that the offer is submitted subject to 
all the terms and conditions of this subpart and the Invitation in 
response to which the offer is being submitted for consideration by CCC.
    (2) The date and time for which the offer is submitted for 
consideration. The time shall be stated as ``after 3 p.m.'' For example, 
the information required by paragraphs (c)(1) and (c)(2) of this section 
could be stated as follows: ``Invitation No. GSM-500-1, Revision No. X, 
For Consideration After 3 p.m. on August 1, 1991.''
    (3) The full business name and address of the eligible exporter 
making the offer.
    (4) The name and title of the individual signing the offer.
    (5) The telephone number and telex or facsimile number of the 
eligible exporter submitting the offer.
    (6) The CCC bonus in dollar and cents requested by the eligible 
exporter for each unit of measure of the eligible commodity to be 
exported to the eligible country. The offer shall contain only one CCC 
bonus. In offers submitted in response to an Invitation in which CCC has 
announced the bonus amount, the eligible exporter shall state the dollar 
and cents amount of the Announced CCC Bonus.
    (7) The quantity, on a net weight basis, (less any dockage, if 
applicable) of the eligible commodity for which the eligible exporter 
wishes to receive a CCC bonus pursuant to an EEP Agreement. This 
quantity shall be exclusive of tolerances and expressed in the unit of 
measure specified in the applicable Invitation. This quantity may be 
less than the sales contract quantity.
    (8) The U.S. coast of export. The Invitation may require the 
eligible exporter to indicate: The coasts of export if more than one 
coast of export is allowed for an offer; the Canadian port if the 
eligible commodity is to be transshipped through a Canadian port on the 
St. Lawrence River; or the U.S. city and state from which the shipments 
will cross the border into the eligible country if the eligible 
commodity is to be shipped by rail or truck.
    (9) The quality of the eligible commodity to be exported to the 
eligible buyer, if required by the applicable Invitation, including any 
additional quality specifications not found in the Invitation but 
included in the tender specifications by the eligible buyer or the sales 
contract with the eligible buyer. The Invitation may limit an offer to 
one or more quality designations for the eligible commodity.
    (10) The names of the eligible buyer and the eligible country. 
Unless otherwise provided for in the applicable Invitation, an offer 
shall contain only one eligible buyer and one eligible country. The 
Invitation may also provide that the eligible buyer need not necessarily 
be located in the eligible country.
    (11) The date of sale of the sales contract with the eligible buyer.
    (12) The number assigned by the eligible exporter to the sales 
contract.
    (13) The quantity of the eligible commodity specified in the sales 
contract, expressed in the unit of measure specified in the applicable 
Invitation.
    (14) The sales contract loading tolerance, if any, expressed in a 
percentage.
    (15) The sales contract unit price, delivery terms (e.g., FOB, C&F, 
etc.); the nature of any arrangements or understandings of the eligible 
exporter and any other person that would affect the sales contract, 
including but not limited to arrangements or understandings concerning 
commissions, rebates, and other payments if applicable; credit payment 
terms (e.g., GSM-102, GSM-103, or other credit arrangements); and, if 
required by the applicable Invitation, the discharge port. The possible 
credit payment terms referenced in an offer are for CCC's information 
only and are not to be construed as a contingency for consideration or 
acceptance. The eligible exporter is fully responsible for the 
arrangement of such payment terms independently from the

[[Page 633]]

EEP offer and CCC bears no responsibility if such credit payment terms 
cannot be secured.
    (16) The delivery period specified in the sales contract expressed 
on the basis of either shipment from the United States or the Canadian 
transshipment port or arrival in the eligible country. If an arrival 
period is shown, the offer must also indicate an anticipated shipment 
period. If a multiple month delivery schedule is agreed upon in the 
sales contract the offer must specify the quantity of the eligible 
commodity to be delivered each month or at other specified intervals.
    (17) Any options which may be exercised by the eligible buyer under 
the sales contract. If the offer is accepted by CCC, the exporter must 
immediately inform CCC if any such options are exercised by the buyer.
    (18) The name and address of the sales agent, if any, for the sales 
contract.
    (19) The designation of bonus payment under ``Option A'' or ``Option 
B,'' as described in Sec. 1494.401(c).
    (20) The words ``ALL ITEM 20 CERTIFICATIONS ARE BEING MADE IN THIS 
OFFER'' which, when included in the offer by the eligible exporter, will 
indicate that the eligible exporter is certifying that:
    (i) The information furnished to CCC with respect to the sales 
contract is correct;
    (ii) The date of sale with an eligible buyer was after the issuance 
date of the applicable Invitation;
    (iii) The sale does not replace any sale made to the eligible buyer 
by the eligible exporter, or any affiliate or subsidiary of the eligible 
exporter, prior to the issuance date of the applicable Invitation;
    (iv) There are no other arrangements or understandings between the 
eligible exporter and any other person that would alter the information 
provided under paragraph (c) of this section;
    (v) There were and will be no corrupt payments or extra sales 
services, or other items extraneous to the export sale provided in 
connection with the export sale, and the transaction complied with 
applicable U.S. law;
    (vi) The CCC bonus requested in the offer has been arrived at 
independently, without any consultation, communication, or agreement 
with any other eligible exporter or competitor relating to:
    (A) The amount of the CCC bonus;
    (B) The intention to submit an offer; or
    (C) The methods or factors used to calculate the CCC bonus 
requested;
    (vii) The CCC bonus requested in the offer has not been and will not 
knowingly be disclosed by the eligible exporter, directly or indirectly, 
to any other eligible exporter or competitor before the time the offer 
is to be considered by CCC, unless otherwise required by law;
    (viii) No attempt has been made, or will be made, by the eligible 
exporter to induce any other concern to submit, or not to submit, an 
offer for the purpose of restricting competition;
    (ix) The signatory of the offer:
    (A) Is the person in the eligible exporter's organization 
responsible for determining the CCC bonus being requested and has not 
participated and will not participate in any action contrary to 
subparagraphs (c)(20) (vi), (vii), and (viii) of this section; or
    (B) Has been authorized in writing to act as agent for the eligible 
exporter for the purposes of paragraphs (b) and (c) of this section and 
certifies that the eligible exporter named in the offer and the 
signatory have not participated and will not participate in any action 
contrary to subparagraphs (c)(20) (vi), (vii), and (viii) of this 
section;
    (x) If the eligible commodity is vegetable oil or a vegetable oil 
product, that none of the eligible commodity has been or will be used as 
the basis of a claim of a refund, as drawback, pursuant to Section 313 
of the Tariff Act of 1930 (19 U.S.C. 1313) of any duty, tax or fee 
imposed under Federal law on an imported commodity or product;
    (xi) The agricultural commodity or product to be exported under an 
EEP Agreement is a U.S. agricultural commodity as defined by 
Sec. 1494.201(gg).
    (xii) The eligible exporter is providing the assurances required by 
Secs. 15.4 and 15b.5 of this title (7 CFR part 15 relates to various 
non-discrimination provisions);

[[Page 634]]

    (xiii) The eligible exporter still meets all of the qualification 
and program eligibility requirements of Sec. 1494.301 and will 
immediately notify CCC if there is a change of circumstances which 
should cause it to fail to meet such requirements; and
    (xiv) The eligible exporter is providing any other certification 
required by the applicable Invitation.

Any eligible exporter which is unable to make the certifications 
specified in this subparagraph (c)(20) must provide a written statement 
to that effect to CCC and may include any explanation or any additional 
information for the consideration of CCC. CCC will reject an offer if 
the eligible exporter states that it is unable to provide the required 
certifications, unless CCC determines that acceptance of the offer would 
be in the best interests of the EEP.
    (d) Conditional offers. Any qualification or condition in, or added 
to, the offer and not expressly authorized by this subpart or the 
applicable Invitation may make such offer ineligible for consideration 
by CCC.
    (e) CCC's right to additional information. CCC may require the 
individual who signed the offer to provide documentary evidence of such 
individual's authority to execute an Agreement with CCC on behalf of the 
eligible exporter making the offer. CCC may require the eligible 
exporter to submit any other information which CCC deems necessary for 
consideration of the eligible exporter's offer. The exporter must 
furnish a copy of the sales contract to CCC upon request.
    (f) Considerations in making an offer. In making an offer, the 
eligible exporter should take into consideration that the exchange of 
CCC Certificates which may be issued as a bonus will be governed by the 
terms and conditions stated on the certificates and by any applicable 
regulations or procedures issued by or on behalf of CCC.

[56 FR 25011, June 3, 1991, as amended at 62 FR 24561, May 6, 1997]



Sec. 1494.601  Acceptance of offers by CCC.

    (a) Establishment of acceptable sales prices and CCC bonuses. For 
each Invitation, CCC will establish sales prices for the eligible 
commodity and CCC bonus amounts which would be acceptable to CCC in 
terms of furthering the objectives of the EEP.
    (1) In establishing acceptable sales prices for the eligible 
commodity, CCC will consider available relevant market data.
    (2) In determining acceptable CCC bonus amounts, CCC may take into 
consideration factors such as, but not limited to, the following: The 
prevailing domestic market price of the eligible commodity; the price of 
the same agricultural commodity exported by other exporting countries to 
the eligible country; ocean freight rates for the export of the eligible 
commodity from the U.S. and other exporting countries to the eligible 
country; the particular preferences or purchasing practices of buyers in 
the eligible country which would customarily affect the acceptability of 
the eligible commodity relative to that of competing exports of the same 
agricultural commodity to the eligible country from other exporting 
countries; and the cost effectiveness of the payment of a CCC bonus 
amount in view of CCC's obligation to maximize the use of resources 
available for the operation of the EEP.
    (3) The acceptable sales prices and bonus amounts will be modified 
by CCC as necessary to take advantage of updated information that 
becomes available to CCC.
    (b) Acceptance of offers for a CCC bonus on a competitive basis. An 
offer from an eligible exporter for a CCC bonus on a competitive bonus 
that meets all of the requirements of this subpart will first be 
reviewed to determine if the offer contains an acceptable sales price. 
If the sales price contained in the offer is found to be acceptable, 
then the CCC bonus contained in the offer will be reviewed to determine 
if the CCC bonus requested is found to be acceptable. Offers with 
acceptable sales prices and acceptable CCC bonuses will be accepted 
under each Invitation beginning with the offer having the lowest CCC 
bonus amount, subject to the limitations in paragraphs (f) and (h) of 
this section.
    (c) Acceptance of offers for an announced CCC bonus. Offers from 
eligible exporters for an Announced CCC Bonus

[[Page 635]]

that meet all of the requirements of this subpart and which contain an 
acceptable sales price will be accepted under each Invitation on a 
first-come, first-served basis according to the time of receipt of the 
offer, as determined by CCC, subject to the limitations in paragraphs 
(f) and (h) of this section.
    (d) Notification of acceptance of offers. CCC will notify an 
eligible exporter by telephone of the acceptance or rejection of its 
offer as soon as possible after review of the exporter's offer by CCC 
but not later than 10 a.m. of the next business day after the date the 
offer was submitted for consideration. If an offer is rejected, CCC will 
notify the eligible exporter of the basis for the rejection. Acceptance 
of offers will be confirmed in writing. The date of the telephonic 
notification of acceptance by CCC of the eligible exporter's offer will 
be the effective date of the exporter's Agreement with CCC.
    (e) Announcement of acceptance of offers. CCC will generally 
announce the acceptance of offers by public press release as soon as 
possible after the notification to the exporter. The announcement will 
generally include the eligible commodity, the eligible country, the 
exporter, the delivery period, the CCC bonus, and, if applicable, the 
class of the eligible commodity.
    (f) Limitation on acceptance of offers. The total quantity of the 
eligible commodity, exclusive of tolerances, to be exported under all 
offers that are accepted by CCC pursuant to a particular Invitation will 
not be greater than the total quantity of the eligible commodity stated 
in such Invitation. CCC may refuse to accept further offers under an 
applicable Invitation if the quantity of the eligible commodity, 
exclusive of tolerances, already accepted totals the quantity, exclusive 
of tolerances, that is being tendered for by the eligible buyer, even 
though such quantity may be less than the total quantity available under 
that Invitation.
    (g) Rejection of offers. Any offer or part of an offer submitted for 
consideration that is not accepted by CCC by 10 a.m. of the next 
business day after the date for which the offer was submitted for 
consideration will be deemed to have been rejected.
    (h) CCC's right of rejection. Notwithstanding any other provisions 
of this subpart, CCC reserves the right to reject any or all offers 
submitted for consideration on a particular day, including those offers 
that have acceptable sales prices and CCC bonus amounts.



Sec. 1494.701  Payment of bonus.

    (a) Forms of bonus. The bonus may be paid to the exporter in CCC 
Certificates or in any other form specified in the applicable Invitation 
which CCC determines to be appropriate.
    (b) Quantity on which bonus is paid. The quantity of the eligible 
commodity exported from the U.S. which is eligible for the payment of a 
CCC bonus is the net weight (less any dockage, if applicable) or count 
which is established by the Official Inspection Certificate, the 
Official Weight Certificate or the export bill of lading, whichever is 
less. If the exporter has furnished performance security under ``Option 
A'' of the applicable Invitation and wishes the bonus to be paid prior 
to the entry of the eligible commodity into the eligible country, this 
quantity will be used in calculating the bonus value for the purposes of 
making payment to the exporter. If the exporter is not paid the bonus 
until the commodity enters into the eligible country, then this quantity 
will also be used in calculating the bonus value for the purposes of 
making payment to the exporter, unless in the determination of CCC, 
there is evidence to suggest that there was destruction, diversion or 
loss of the eligible commodity prior to entry into the eligible country. 
The payment of a bonus value to an exporter does not indicate that the 
bonus has been earned by the exporter under the Agreement; pursuant to 
Sec. 1494.801(a)(3), the bonus is not earned by the exporter until the 
eligible commodity enters into the eligible country in accordance with 
the Agreement and the exporter submits proof of such entry to CCC.
    (c) Request for bonus payment under ``Option A.'' If the exporter 
has furnished performance security under ``Option A'' of the applicable 
Invitation and wishes the bonus to be paid after export of the eligible 
commodity, the exporter must, within 30 calendar days after the date of 
export of the eligible

[[Page 636]]

commodity, furnish to the Director, at the address referenced in the 
Notice to Exporters--Contacts for EEP, a written request for payment of 
the bonus. All documents submitted to support such a request must be 
acceptable to the Director.
    (1) To support each bonus payment request, the exporter must furnish 
to the Director the following:
    (i) The original or an original copy of the on-board bill of lading 
issued for the export carrier and signed by an agent of the export 
carrier. The bill of lading must show:
    (A) The identification of the export carrier;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity;
    (D) An on-board date; and
    (E) That the eligible commodity is destined for the eligible 
country.
    (ii) The original or an original copy of the Official Weight 
Certificate, as required in the applicable Invitation. The certificate 
must show:
    (A) The identification of the export carrier, if known at the time 
of issuance;
    (B) The date and place of issuance; and
    (C) The weight or count of the eligible commodity.
    (iii) The original or an original copy of the Official Inspection 
Certificate, as required in the applicable Invitation. The certificate 
must show:
    (A) The identification of the export carrier, if known at the time 
of issuance;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity to which the certificate 
relates; and
    (D) The quality description of the eligible commodity.
    (iv) If the documents submitted under paragraphs (c)(1)(ii) and 
(iii) of this section do not specify the export carrier, the exporter 
must also submit a signed certification that the commodity represented 
by the Official Inspection and/or the Official Weight certificates is 
the identical eligible commodity represented on the export bill of 
lading.
    (2) If the export of the eligible commodity was by lash barge, the 
exporter must furnish, in addition to the documents required by 
paragraph (c)(1) of this section, a statement from the vessel's agent 
showing that the lash barge was loaded to the lash vessel named in the 
on-board lash bill of lading and that the eligible commodity is destined 
for the eligible country.
    (3) If the export of the eligible commodity was from a Canadian 
transshipment port on the St. Lawrence River, the exporter must furnish 
to the Director the following, in addition to the documents required by 
paragraph (c)(1) of this section:
    (i) Documentary evidence covering the movement of the eligible 
commodity from the United States to the export carrier described in the 
on-board bill of lading issued at the Canadian transshipment port and 
showing the information provided in paragraphs (c)(1) and, if 
applicable, (c)(2) of this section; and
    (ii) A certification that the eligible commodity exported is the 
identical eligible commodity that was shipped from the United States.
    (4) If the export of the eligible commodity was by railcar or truck, 
the exporter must furnish to the Director the following, in addition to 
the documents required by paragraphs (c)(1)(ii) and (iii) of this 
section:
    (i) The authenticated landing certificate or similar document issued 
by the government of the eligible country; and
    (ii) The original or an original copy of the bill of lading issued 
at the point of loading the railcar or truck. The bill of lading must 
show:
    (A) The identification of the export carrier;
    (B) The date and place of issuance;
    (C) The quantity of the eligible commodity;
    (D) The date that the railcar or truck was loaded; and
    (E) That the eligible commodity is destined for the eligible 
country.
    (d) Request for bonus payment under ``Option B.'' If the exporter 
has furnished performance security under ``Option B'' of the applicable 
Invitation and wishes the bonus to be paid after the entry of the 
exported eligible commodity into the eligible country, the exporter 
must, within 60 calendar days

[[Page 637]]

after the date of entry of the eligible commodity into the eligible 
country, furnish to the Director at the address referenced in the Notice 
to Exporters--Contracts for EEP, a written request for payment of the 
bonus. To support each request, the exporter must furnish to the 
Director, in a form acceptable to the Director, the documents specified 
in paragraph (c) of this section, as applicable, along with the 
certification of entry specified in Sec. 1494.401(f)(2).
    (e) Time frame for payment of a bonus. CCC will endeavor to pay the 
bonus to the exporter within 10 business days after CCC determines that 
the documents supporting the bonus request are acceptable.
    (f) Certificate amount. If CCC decides to pay the bonus in the form 
of a CCC Certificate(s), the dollar value of the certificate(s) issued 
to the exporter will be determined by multiplying the CCC bonus 
specified in the Agreement by the net quantity of the eligible commodity 
on which the bonus is to be paid, as specified in paragraph (b) of this 
section, less any dockage if applicable.
    (g) Late requests for bonus payment. If CCC decides to pay the bonus 
in the form of a CCC Certificate(s) and the exporter fails to request 
issuance of the certificate(s) within 30 calendar days after the date of 
export of the eligible commodity, if the exporter has chosen performance 
security ``Option A,'' or within 60 days after the entry of the eligible 
commodity into the eligible country, if the exporter has chosen 
performance security ``Option B'', CCC may, upon issuing the 
certificate(s), discount the certificate(s) in an amount determined 
appropriate by CCC to compensate it for costs which may be incurred by 
CCC as a result of the exporter's delay.



Sec. 1494.801  Enforcement and termination of agreements with CCC.

    (a) Performance in accordance with an Agreement with CCC. (1) An 
exporter which enters into an Agreement with CCC must ensure that the 
eligible commodity is exported from the U.S. and enters the eligible 
country in accordance with the terms and conditions of the Agreement.
    (2) The diversion of the eligible commodity to a country other than 
the eligible country is prohibited. Transshipments of the eligible 
commodity are permitted only if specifically allowed in the applicable 
Invitation or for shipment through a Canadian transshipment port on the 
St. Lawrence River if the eligible commodity had been shipped from the 
United States via the Great Lakes coastal range and its identity had 
been preserved until shipped from Canada.
    (3) Regardless of whether or not a bonus has been paid by CCC to the 
exporter pursuant to Sec. 1494.701, the bonus is not earned by the 
exporter until the eligible commodity enters into the eligible country 
in accordance with the Agreement. In order to retain a bonus or request 
payment of a bonus, depending upon the option chosen for furnishing 
performance security, and to request cancellation of the performance 
security, the exporter must provide evidence to CCC, as specified in 
Sec. 1494.401(f)(2), that the eligible commodity entered into the 
eligible country. If, on the basis of evidence available to it, CCC 
determines that there was destruction, diversion or loss of the eligible 
commodity prior to entry into the eligible country, CCC will not release 
the amount of performance security corresponding to the amount of 
eligible commodity for which insufficient evidence of entry into the 
eligible country was presented to CCC until:
    (i) CCC recovers from the exporter the amount of the bonus 
corresponding to such amount of the eligible commodity, if the exporter 
has already been paid the bonus under performance security ``Option A''; 
and
    (ii) The requirements of either Sec. 1494.401(f)(1)(ii) or 
Sec. 1494.401(f)(1)(iii) have been met.
    (4) The failure of an exporter to perform in full and to fulfill all 
of its obligations under the Agreement will constitute a breach of the 
Agreement. An exporter which breaches the Agreement may be required to 
forfeit its right to receive or retain part or all of the bonus 
authorized or paid under the Agreement and may also be liable to CCC for 
damages. Examples of an exporter's failure to perform under the

[[Page 638]]

Agreement include, but are not limited to, the following:
    (i) The exporter does not ship all of the required amount of the 
eligible commodity in accordance with the delivery period stated in the 
Agreement;
    (ii) The exporter exports an amount of the eligible commodity that 
is inconsistent with the quality specifications in the Agreement;
    (iii) The exporter is unable to provide a certification that all of 
the eligible commodity exported pursuant to the Agreement was entered 
into the eligible country;
    (iv) The eligible commodity is transshipped through any country, 
other than Canada, unless specifically allowed in the applicable 
Invitation; or
    (v) The eligible commodity is transshipped through Canada without 
having its identity preserved.
    (5) If the eligible commodity is to be delivered to the eligible 
buyer in multiple shipments, CCC may decide to consider the shipments 
separately in determining whether the exporter has failed to perform 
under the Agreement.
    (b) Return of bonus. An exporter that fails to fulfill all of its 
obligations under the Agreement shall be in default. If an exporter that 
has already been paid the bonus value defaults, CCC shall have the right 
to recover the bonus value paid for the quantity of the eligible 
commodity with respect to which the exporter failed to perform under the 
Agreement.
    (1) If CCC has paid this bonus value in the form of a CCC 
Certificate(s), the exporter shall pay to CCC the higher of:
    (i) The dollar value of the CCC Certificate(s);
    (ii) The dollar amount received for the CCC Certificate(s) if the 
CCC Certificate(s) was transferred to another party; or
    (iii) The dollar amount of the proceeds from the sale of the CCC-
owned commodities exchanged for the CCC Certificate(s) if the 
commodities were sold to another party.
    (2) If CCC has paid this bonus value in some other form, as 
specified in the applicable Invitation, the exporter shall pay to CCC 
the dollar and cents amount or equivalent of the bonus value paid to the 
exporter.
    (c) Liability for liquidated damages. The exporter's failure to 
perform under the Agreement will cause serious and substantial losses to 
CCC, such as damages to the EEP and CCC's domestic price support 
program, storage charges, and administrative and other costs incurred. 
If the exporter breaches the Agreement, the exporter will be liable to 
pay to CCC as liquidated damages an amount obtained by applying the 
method or rate for determining damages specified in the applicable 
Invitation to the quantity of the eligible commodity with respect to 
which the exporter failed to perform under such Agreement. In submitting 
an offer in response to an Invitation issued under this subpart, the 
exporter agrees that such liquidated damages are reasonable estimates of 
the probable actual damages which may be incurred by CCC.
    (d) Decision to hold the exporter harmless for liquidated damages. 
CCC will hold an exporter harmless for the payment of liquidated damages 
if:
    (1) The exporter's failure to perform under the Agreement was due to 
causes solely without the exporter's fault or negligence and the 
exporter had taken the necessary action to enable it to export the 
required quantity of the eligible commodity and enter it into the 
eligible country; or
    (2) The eligible commodity was lost or destroyed after it had been 
placed aboard the export carrier.

In making the decision whether to hold an exporter harmless pursuant to 
this paragraph, CCC may consider any information available to CCC, 
including any information provided to it by the exporter.
    (e) Fraud, scheme or device. Notwithstanding any other provision of 
law, CCC may take action to recover any bonus paid or to hold the 
exporter liable for the payment of damages caused to CCC if the exporter 
engages in fraud with respect to the EEP, or adopts or participates in 
adopting a scheme or device which is designed to evade this subpart or 
which has the effect of evading this subpart. Such acts shall include, 
but are not limited to:
    (1) Concealing information which is required by this subpart; or

[[Page 639]]

    (2) Submitting information which is known by the exporter to be 
false or erroneous.
    (f) CCC's right to recover amounts due CCC by exporters. If the 
exporter breaches its obligations under the Agreement and becomes liable 
to CCC for repayment of the bonus value or for liquidated or other 
damages, CCC reserves the right to recover such amounts due CCC by 
making a claim against the performance security furnished to CCC, as 
described under Sec. 1494.401, or by taking any other measures available 
to CCC as a result of this subpart or any laws or regulations, including 
debt settlement regulations, applicable to CCC.
    (g) Shipping tolerances. If the exporter exports and enters into the 
eligible country, in accordance with the requirements of the Agreement, 
a quantity of the eligible commodity which is less than the quantity 
specified in Sec. 1494.501(c)(7) but not less than such quantity minus 5 
percent, the exporter shall not be required to pay liquidated damages 
for failure to perform under the Agreement for the quantity which failed 
to be exported and entered into the eligible country. If an exporter 
exports and enters into the eligible country, in accordance with the 
requirements of the Agreement, a quantity of the eligible commodity 
which is greater than the quantity specified in Sec. 1494.501(c)(7), the 
exporter may request payment of the bonus value based upon the actual 
quantity, on a net weight basis, exported and entered into the eligible 
country, but not greater than the quantity specified in 
Sec. 1494.501(c)(7), plus 5 percent.
    (h) Termination of agreements. (1) CCC may, by written notice to the 
exporter, terminate an Agreement, in whole or in part, as a result of:
    (i) the failure of the exporter to carry out any provisions of the 
Agreement;
    (ii) the failure of the exporter to maintain a business office in 
the U.S.;
    (iii) the failure of the exporter to maintain an agent in the U.S. 
for service of process; or
    (iv) the suspension or debarment of the exporter from participation 
in CCC or other U.S. Government programs.

If an Agreement is terminated by CCC pursuant to this subparagraph, CCC 
will not compensate the exporter for any costs incurred by the exporter. 
The exporter will be liable to CCC for any funds owed to CCC for the 
repayment of any bonus already paid and may be liable to CCC for 
liquidated or other damages suffered by CCC. If CCC intends to hold the 
exporter liable for liquidated damages, and it has not already so 
notified the exporter prior to the termination of the Agreement, CCC 
will generally do so at the time that it notifies the exporter of the 
termination of the Agreement.
    (2) CCC may, by written notice to the exporter, terminate an 
Agreement, in whole or in part, if CCC determines it to be in the best 
interest of CCC. If an agreement is so terminated, the exporter will be 
compensated for reasonable losses, as determined by CCC, resulting from 
such termination. These losses will not include lost profits and will 
not exceed the bonus value under the Agreement.
    (i) Amendment of agreements. (1) CCC will have the authority to 
amend an Agreement, either before or after such Agreement has been 
breached by the exporter, if the exporter requests that the Agreement be 
amended and CCC determines that such amendment would serve the best 
interests of the EEP. The exporter may be required to submit documentary 
evidence to CCC to demonstrate that it is making progress toward 
fulfilling the Agreement before CCC will consider amending the 
Agreement. All requests for amendments submitted by exporters, and all 
amendments made by CCC to an Agreement, under this subpart shall be in 
writing.
    (2) Prior to amending an Agreement with the exporter, CCC will 
consider whether the amendment to the Agreement should include a 
reduction in the CCC bonus or a modification of the sales price. If CCC 
determines that the CCC bonus and the sales price are still acceptable, 
it may amend the Agreement to incorporate the exporter's requested 
change, while maintaining the current CCC bonus and sales price, 
provided that the amendment would otherwise serve the best interests of 
the EEP. If CCC determines that the CCC bonus and/or the sales price are 
no longer acceptable, due to changes in market or other conditions, it 
will so

[[Page 640]]

inform the exporter. If the exporter still requests that the Agreement 
be amended, CCC and the exporter will enter into discussions in an 
attempt to arrive at a new CCC bonus and/or sales price which would be 
acceptable to CCC. If these discussions are successful, then CCC may 
amend the Agreement to incorporate the exporter's requested change as 
well as the new CCC bonus and/or sales price, provided that the 
amendment would otherwise serve the best interests of the EEP. If these 
discussions are unsuccessful, then the Agreement will not be amended and 
the exporter will be considered to be in breach of the Agreement if it 
fails to perform under the terms of the Agreement.
    (j) Amendments to sales contracts. In the event of an amendment to 
the sales contract between the exporter and the eligible buyer or a 
change in the delivery schedule, CCC will determine whether the 
amendment or change would constitute a breach of the Agreement. If CCC 
determines that the amendment or change would constitute a breach of the 
Agreement, CCC may terminate the Agreement. In the alternative, if CCC 
determines that a continuation of the Agreement would serve the best 
interests of the EEP, and if the exporter requests an amendment, CCC may 
amend the Agreement to take into account the amendment to the sales 
contract or change in delivery schedule. An amendment to an Agreement 
will be in accordance with paragraph (i)(1) of this section. CCC will 
promptly advise the exporter of its determination in writing by letter, 
facsimile, or telex.



Sec. 1494.901  Dispute resolution and appeals.

    (a) Dispute resolution. (1) The Director of the CCC Operations 
Division (Director, CCCOD) and the exporter will attempt to resolve any 
disputes, including any adverse determinations made by CCC, arising 
under the EEP, this subpart, the applicable Invitation, or the 
Agreement.
    (2) The exporter may seek reconsideration of a determination by the 
Director, CCCOD relating to the Agreement by submitting a letter 
requesting reconsideration to the Director, CCCOD, within 30 days of the 
date of the determination. For the purposes of this section, the date of 
a determination will be the date of the letter or other means of 
notification to the exporter of the determination. The exporter may 
include with the letter requesting reconsideration any additional 
information which it wishes the Director, CCCOD, to consider in 
reviewing its request. The Director, CCCOD, will respond to the request 
for reconsideration within 30 days of the date on which the request or 
the final documentary evidence submitted by the exporter is received by 
him, whichever is later, unless the GSM extends the time permitted for 
response. If the exporter fails to request reconsideration of a 
determination by the Director, CCCOD, that the exporter owes any funds 
to CCC under the Agreement, then such funds will become a debt of the 
exporter to CCC at the expiration of the 30-day period for submitting 
such a request.
    (3) If the exporter requested a reconsideration of a determination 
by the Director, CCCOD, pursuant to subparagraph (a)(2) of this section, 
and the Director, CCCOD, upheld the original determination, then the 
exporter may appeal the determination to the GSM in accordance with the 
procedures set forth in paragraph (b) of this section. If the exporter 
fails to appeal the determination to the GSM, then any funds owed to CCC 
will become a debt of the exporter to CCC at the expiration of the 30-
day period for submitting an appeal to the GSM.
    (b) Appeal procedures. (1) An exporter which has exhausted the 
procedures set forth in paragraph (a) of this section may appeal to the 
GSM a determination of the Director, CCCOD, relating to the Agreement 
between the exporter and CCC. An appeal to the GSM must be in writing 
and filed with the office of the GSM no later than 30 days following the 
date of the final determination by the Director, CCCOD. In this appeal 
to the GSM, the exporter shall be entitled to an administrative hearing 
before the GSM, if the exporter indicates in its appeal letter that it 
desires such a hearing.
    (2) If the exporter does not desire an administrative hearing, the 
exporter

[[Page 641]]

may submit any additional written information or documentation which it 
desires the GSM to consider in acting upon its appeal. This information 
or documentation may be submitted to the GSM up until the time that a 
decision is made by the GSM. The GSM will base the determination upon 
information contained in the administrative record. The GSM will 
endeavor to make a decision on an appeal not involving a hearing within 
60 days of the date on which the GSM receives the appeal or the date 
that final documentary evidence is submitted by the exporter to the GSM, 
whichever is later.
    (3) If the exporter has indicated that it desires an administrative 
hearing, the GSM will set a date and time for the hearing which is 
mutually convenient for the GSM and the exporter. This date will 
ordinarily be within 60 days of the date on which the GSM receives the 
request for hearing. The hearing will be an informal procedure. The 
exporter and/or its counsel may present any administrative or 
documentary evidence to the GSM which it desires to have the GSM 
consider in making a determination. A transcript of the hearing will not 
ordinarily be prepared unless the exporter bears the costs involved in 
preparing the transcript, although the GSM may arrange to have a 
transcript prepared at the expense of the Government if it is determined 
to be appropriate. The exporter may provide additional written 
information to the GSM up until the time that the GSM makes a 
determination. The GSM will base the determination upon the information 
contained in the administrative record and will endeavor to make a 
decision within 60 days of the date of the hearing or the date of 
receipt of the transcript, if one is to be prepared, whichever is later.
    (4) The decision of the GSM will be the final determination of CCC 
and the exporter will be entitled to no further administrative appellate 
rights.
    (5) If the GSM upholds a determination of the Director, CCCOD, that 
the exporter owes any funds to CCC under the Agreement, then such funds 
will become a debt of the exporter to CCC.
    (c) Failure to comply with determination. If, for any reason, the 
exporter has failed to pay funds to CCC which have been determined to be 
owed to CCC under the Agreement and the exporter has exhausted its 
rights under this section or has failed to exercise such rights, then 
CCC will have the right to withdraw funds from the performance security 
established by the exporter or to take any other measures available to 
CCC as result of this subpart or any laws or regulations, including debt 
settlement regulations, applicable to CCC.
    (d) Exporter's obligation to perform. The exporter will continue to 
have an obligation to perform under the Agreement pending the conclusion 
of all procedures under this section.



Sec. 1494.1001  Miscellaneous provisions.

    (a) Assignments. The exporter may not assign the Agreement or any 
rights thereunder, including the right to receive a bonus under the 
Agreement.
    (b) Maintenance of records and access to premises. (1) For a period 
of five years after CCC agrees to the cancellation of an exporter's 
performance security for an Agreement, the exporter must maintain 
accurate records showing sales and deliveries of the eligible commodity 
exported in connection with the Agreement. The Secretary of Agriculture 
and the Comptroller General of the United States, through their 
authorized representatives, will have full and complete access to the 
premises of the exporter during regular business hours from the 
effective date of the Agreement until the expiration of such five-year 
period to inspect, examine, audit and make copies of the exporter's 
books, records and accounts concerning transactions relating to the 
Agreement, including, but not limited to, financial records and accounts 
pertaining to sales, inventory, processing, and administrative and 
incidental costs, both normal and unforeseen. From the effective date of 
the Agreement and until the expiration of such five-year period, the 
exporter may be required to make available to the Secretary of 
Agriculture and the Comptroller General of the United States, through 
their authorized representatives, records that pertain to transactions 
conducted outside the program, if, in the opinion of the GSM, such 
records would pertain directly to the review of transactions

[[Page 642]]

undertaken by the exporter in connection with the performance of an EEP 
Agreement.
    (2) The exporter must maintain the certification of entry specified 
in Sec. 1494.401(f)(2), and must provide access to such document if 
requested by the Secretary of Agriculture or an authorized 
representative, for the five-year period specified in subparagraph 
(b)(1) of this section.
    (c) Arrival verification reviews. CCC will review, on an annual 
basis, a sufficient number of exports made in connection with EEP 
Agreements to ensure that the eligible commodity which was exported 
pursuant to each such Agreement arrived in the eligible country 
specified in the Agreement.
    (d) Signatory on certifications. Any certification required from a 
person pursuant to this subpart or an Invitation must be signed by the 
person, if an individual, or by a partner or officer of the person, if 
the person is a partnership or a corporation, respectively.
    (e) Officials not to benefit. No member of or Delegate to Congress, 
or Resident Commissioner, will participate or share in any of the 
benefits of any Agreement entered into pursuant to the EEP, but this 
provision may not be construed to extend to an Agreement made by CCC 
with a corporation for its general benefit.
    (f) Paperwork Reduction Act. The information collection requirements 
contained in this subpart have been approved by the Office of Management 
and Budget (OMB) in accordance with the provisions of 44 U.S.C. chapter 
35 and have been assigned OMB control number 0551-0028.
    (g) Waiver of irregularities. CCC reserves the right to waive any 
informality or minor irregularity with respect to any aspect of the 
operation of the EEP or any Agreement executed thereunder in order to 
best accomplish the purposes of the program.



           Subpart C--Dairy Export Incentive Program Criteria

    Authority: 7 U.S.C. 5663.

    Source: 56 FR 26324, June 7, 1991, unless otherwise noted.



Sec. 1494.1100  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Commodity Credit Corporation's (CCC) Dairy Export Incentive Program 
(DEIP). These criteria are interrelated and will be considered together 
in order to select eligible commodities and eligible countries for DEIP 
initiatives which will best meet the program's objectives. The 
objectives of the program are to increase U.S. agricultural commodity 
exports and to encourage other countries exporting agricultural 
commodities to undertake serious negotiations on agricultural trade 
problems. Under the DEIP, bonuses are made available by CCC to enable 
exporters to meet prevailing world prices for targeted dairy products in 
targeted destinations. In the operation of the DEIP, CCC will make 
reasonable efforts to avoid the displacement of commercial export sales 
of U.S. dairy products and to ensure that sales facilitated by the DEIP 
are in addition to, and not in place of, any export sales of dairy 
products that the exporter would have otherwise made in the absence of 
the program.



Sec. 1494.1101  Criteria.

    The criteria considered in evaluating and approving proposals for 
the DEIP are those set forth in Sec. 1494.20 of this part.



          Subpart D--Dairy Export Incentive Program Operations

    Authority: 15 U.S.C. 713a-14, 714c.

    Source: 57 FR 45263, Oct. 1, 1992, unless otherwise noted.



Sec. 1494.1200  Program operations.

    This subpart contains the regulations governing the operation of the 
Dairy Export Incentive Program (DEIP) of the Commodity Credit 
Corporation (CCC). Under the DEIP, CCC facilitates the export of U.S. 
dairy products by paying bonuses to exporters which export U.S. dairy 
products to targeted markets in accordance with the terms and conditions 
of an Agreement entered into between the exporter and

[[Page 643]]

CCC. Except as otherwise provided in this subpart, the program 
operations provisions of subpart B of this part, relating to the Export 
Enhancement Program, will also apply to the DEIP. Any terms or 
conditions applicable to a particular Invitation for Offers (Invitation) 
under the DEIP, beyond those terms or conditions set forth in this 
subpart or subpart B of this part, will be specifically provided for in 
such Invitation.



Sec. 1494.1201  Paperwork Reduction Act.

    The information collection requirements contained in this subpart 
have been approved by the Office of Management and Budget (OMB) in 
accordance with the provisions of 44 U.S.C. chapter 35 and have been 
assigned OMB control No. 0551-0029.

                          PART 1495  [RESERVED]



PART 1496--PROCUREMENT OF PROCESSED AGRICULTURAL COMMODITIES FOR DONATION UNDER TITLE II, PUB. L. 480--Table of Contents




Sec.
1496.1  General statement.
1496.2  Administration.
1496.3  Definitions.
1496.4  Issuance of invitations.
1496.5  Consideration of bids.
1496.6  Data to be used.
1496.7  Final contract determinations.

    Authority: 7 U.S.C. 1721-1726a; 1731-1736g-2; 46 U.S.C. App. 
1241(b), and 1241(f).

    Source: 44 FR 27407, May 10, 1979, unless otherwise noted.



Sec. 1496.1  General statement.

    This subpart sets forth the policies, procedures and requirements 
governing procurement, including allocation to U.S. ports, of processed 
agricultural commodities for donation under Title II, Pub. L. 480.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5728, Feb. 25, 1987]



Sec. 1496.2  Administration.

    (a) The program will be carried out by the Farm Service Agency 
(referred to in this subpart as ``FSA'') under the general supervision 
and direction of the Executive Vice President of CCC. The program will 
be administered through the Office of the Deputy Administrator, 
Commodity Operations, FSA, Washington, DC and the Kansas City Commodity 
Office (KCCO), FSA, Kansas City, Missouri. Procurement will be in 
accordance with USDA-1, ``General Terms and Conditions for the 
Procurement of Agricultural Commodities or Services'', as amended or 
revised, applicable provisions of the Federal Acquisition Regulations 
(48 CFR), and applicable purchase announcements and bid invitations.
    (b) Purchases are made to fulfill commodity requests received in 
KCCO from AID.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5728, Feb. 25, 1987]



Sec. 1496.3  Definitions.

    As used in the regulations in this subpart and in the forms and 
documents related thereto, the following terms shall have the meaning 
assigned to them in this section.
    (a) AID means the Agency for International Development, an agency 
within the United States Department of State.
    (b) FSA means the Farm Service Agency, an agency within the United 
States Department of Agriculture.
    (c) DACO means the Deputy Administrator, Commodity Operations, FSA.
    (d) CCC means Commodity Credit Corporation, a corporate agency 
within the United States Department of Agriculture.
    (e) Commodity Office means the Kansas City Commodity Office, within 
FSA, which is responsible for assigned inventory management, 
acquisition, disposition and related program activities of CCC.
    (f) Lowest landed cost means the lowest combined total cost of the 
commodity plus transportation charges to the port of discharge.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5728, Feb. 25, 1987]



Sec. 1496.4  Issuance of invitations.

    From time to time, CCC will issue invitations to purchase or process 
agricultural products for utilization in the Title II, Pub. L. 480 
program. The invitations will specify the contract terms;

[[Page 644]]

the closing date for acceptance of bids; the date contracts will be 
awarded; and other pertinent information. Invitations will be issued at 
least 10 days prior to the deadline for submission of bids. The bid 
submission deadlines and contract awards will be timed so not more than 
one market day elapses between bid opening (bid submission deadline) and 
contract awards.



Sec. 1496.5  Consideration of bids.

    (a) Lowest landed cost. The general principle of awarding contracts 
that will result in the lowest landed cost will prevail. Lowest landed 
cost will be calculated on the basis of U.S. flag rates and service for 
that portion of the commodities being purchased that CCC determines is 
necessary and practicable to meet cargo preference requirements and on 
an overall (foreign and U.S. flag) basis for the remaining portion of 
the commodities being purchased. However, the additional factors set 
forth in this section will be considered in awarding contracts.
    (b)(1) Availability of ocean service. Prior to receipt of offers 
from commodity suppliers, CCC will review ocean freight information from 
available sources including, but not limited to, trade journal 
newspapers, port publications, and steamship publications to determine 
the availability of appropriate ocean service.
    (2) Additional information will be gathered, if necessary by direct 
contact with the steamship company involved, regarding such factors as 
the minimum tonnage and/or revenue required to perform the service 
needed.
    (3) Special emphasis will be placed on assuring that under normal 
conditions the vessels will be calling at U.S. ports to coordinate 
loading with cargo arrival from suppliers.
    (4) Freight rates will be obtained from published ocean tariffs to 
make cost comparisons between various steamship companies and coastal 
ranges.
    (5) Available service will be analyzed to ensure that the port or 
coastal range selected for exportation has available ocean 
transportation service that will provide maximum compliance with the 
stated policy of AID with regard to the utilization of U.S. and other 
flag vessels to carry commodities shipped under Title II, Pub. L. 480.
    (c) Adequacy of service. (1) Prior to the selection of a coastal 
range or U.S. port from which commodities will be shipped, the ocean 
transportation service available may be examined to determine adequacy 
of service. The data utilized may include, but not necessarily be 
limited to, the past performance of a particular vessel or steamship 
line in terms of loss and/or damage to cargo when received at 
destination port; past performance in meeting established delivery 
schedules, etc. CCC may eliminate from consideration ports or coastal 
ranges where ocean transportation service is considered inadequate by 
CCC. When clearly superior service is available at another port or 
coastal range it may be selected over other service.
    (d) Port performance. (1) Each port will be contacted prior to bid 
evaluation to determine their cargo handling capabilities for Title II, 
Pub. L. 480, commodities when it is reasonably expected that quantities 
of 1,000 tons or more may be shipped. Allocations to that port will be 
governed by the minimum or maximum quantities indicated.
    (2) Limits of quantities purchased for delivery to a port or coastal 
range may also be imposed by the amount of vessel space available during 
the expected delivery and loading period.
    (3) Prior to the final selection of a U.S. port from which 
commodities will be shipped, the adequacy of the port to receive, 
accumulate, warehouse, handle, store, and protect the cargo will be 
considered.
    (4) Factors which will be considered in this determination will 
include, but are not necessarily limited to, the adequacy of building 
structures, proper ventilation, freedom from insects and rodents, 
cleanliness, and overall good housekeeping and warehousing practices.
    (5) When it is determined that the U.S. port is congested, 
facilities are overloaded, and a vessel would not be able to dock and 
load cargo without delay, or when labor disputes or lack of labor will 
prohibit the loading of the cargo onboard a vessel in a timely

[[Page 645]]

manner, another coastal range or port will be considered.
    (e) Transit time. CCC will consider total transit time, as it 
relates to a final delivery date, in order to satisfy program 
requirements.
    (f) Great Lakes ports. (1) Commodities offered for delivery ``free 
alongside ship'' (f.a.s.) Great Lakes port range or intermodal bridge-
port Great Lakes port range that represent the overall (foreign and U.S. 
flag) lowest landed cost will be awarded on that basis. Such offers will 
not be reevaluated on a lowest landed cost U.S.-flag basis unless CCC 
determines that 25 percent of the total annual tonnage of bagged, 
processed or fortified commodities furnished under Title II of Public 
Law 480 has been, or will be, transported from the Great Lakes port 
range during that fiscal year.
    (2) CCC will consider commodity offers as offers for delivery 
``intermodal bridge-port Great Lakes port range'' only if:
    (i) The offer specifies delivery at a marine cargo-handling facility 
that is capable of loading ocean going vessels at a Great Lakes port, as 
well as loading ocean going conveyances such as barges and container 
vans, and
    (ii) The commodities will be moved from one transportation 
conveyance to another at such a facility.

[44 FR 27407, May 10, 1979, as amended at 52 FR 5729, Feb. 25, 1987; 63 
FR 11104, Mar. 6, 1998]



Sec. 1496.6  Data to be used.

    (a) CCC will use all available historical and current data as a 
basis for procurement considerations, including evaluations and 
decisions regarding the physical facilities and performance of ports. 
Heavy reliance will be placed upon current port conditions as determined 
from first hand observations and reports from USDA and other reliable 
sources.
    (b) The primary source of historical data will be documents used in 
the normal course of conducting business. Sources include contract 
documents, ocean bills of lading, survey and/or outturn reports made by 
commercial cargo surveyors, claim settlement agreements, claim payment 
documents, etc. CCC will utilize only such data and make only those 
analyses that it believes will provide a valid measure of program 
performance.



Sec. 1496.7  Final contract determinations.

    The KCCO shall be responsible for making lowest landed cost 
determinations. KCCO shall provide that information to an Ad Hoc 
Committee designated by the Administrator, FSA, to review the lowest 
landed cost determinations as a result of any or all of the factors 
referred to herein. If, after the committee makes its review and it is 
recommended that contracts should be awarded based on the additional 
factors which would override lowest landed cost determinations, these 
recommendations will be presented to the Contracting Officer for a final 
decision. These decisions will be fully documented and explained as to 
the reasons the lowest landed cost was not selected.



PART 1499--FOREIGN DONATION PROGRAMS--Table of Contents




Sec.
1499.1  Definitions.
1499.2  General purpose and scope.
1499.3  Eligibility requirements for Cooperating Sponsor.
1499.4  Availability of commodities from CCC inventory.
1499.5  Program Agreements and Plans of Operation.
1499.6  Usual marketing requirements.
1499.7  Apportionment of costs and advances.
1499.8  Ocean transportation.
1499.9  Arrangements for entry and handling in the foreign country.
1499.10  Restrictions on commodity use and distribution.
1499.11  Agreement between Cooperating Sponsor and Recipient Agencies.
1499.12  Sales and barter of commodities provided and use of proceeds.
1499.13  Processing, packaging and labeling of section 416(b) 
          commodities in the foreign country.
1499.14  Disposition of commodities unfit for authorized use.
1499.15  Liability for loss, damage, or improper distribution of 
          commodities--claims and procedures.
1499.16  Records and reporting requirements.
1499.17  Audits.
1499.18  Suspension of the program.
1499.19  Sample documents and guidelines for developing proposals and 
          reports.
1499.20  Paperwork reduction requirement.


[[Page 646]]


    Authority: 7 U.S.C. 1431(b); 7 U.S.C. 1736o; E.O. 12752.

    Source: 61 FR 60515, Nov. 29, 1996, unless otherwise noted.



Sec. 1499.1  Definitions.

    Activity--a Cooperating Sponsor's use of agricultural commodities 
provided under Program Agreements or use of sale proceeds.
    Agricultural Counselor or Attache--the United States Foreign 
Agricultural Service representative stationed abroad, who has been 
assigned responsibilities with regard to the country into which the 
commodities provided are imported, or such representative's designee.
    CCC--the Commodity Credit Corporation.
    Commodities--agricultural commodities or products.
    Director, P.L. 480-OD--the Director, Pub. L. 480 Operations 
Division, Foreign Agricultural Service, USDA.
    Director, CCCPSD--the Director, CCC Program Support Division, 
Foreign Agricultural Service, USDA.
    Director, PDD--the Director, Program Development Division, Foreign 
Agricultural Service, USDA.
    Deputy Administrator--Deputy Administrator for Export Credits, 
Foreign Agricultural Service, USDA.
    Force Majeure--damage caused by perils of the sea or other waters; 
collisions; wrecks; stranding without the fault of the carrier; 
jettison; fire from any cause; Act of God; public enemies or pirates; 
arrest or restraint of princes, princesses, rulers of peoples without 
the fault of the carrier; wars; public disorders; captures; or detention 
by public authority in the interest of public safety.
    General Sales Manager--General Sales Manager and Associate 
Administrator, Foreign Agricultural Service, USDA, who is a Vice 
President, CCC.
    KCCO--Kansas City Commodity Office, Farm Services Agency, USDA, P.O. 
Box 419205, Kansas City, Missouri, 64141-6205.
    KCMO/DMD--Kansas City Management Office/Debt Management Division, 
Farm Services Agency, USDA, P.O. Box 419205, Kansas City, Missouri, 
64141-6205.
    Ocean freight differential--the amount, as determined by CCC, by 
which the cost of ocean transportation is higher than would otherwise be 
the case by reason of the requirement that the commodities be 
transported on U.S.-flag vessels.
    Program Agreement--an agreement entered into between CCC and 
Cooperating Sponsors.
    Program income--interest on sale proceeds and money received by the 
Cooperating Sponsor, other than sales proceeds, as a result of carrying 
out approved activities.
    Recipient agency--an entity located in the importing country which 
receives commodities or commodity sale proceeds from a Cooperating 
Sponsor for the purpose of implementing activities.
    Sale proceeds--money received by a Cooperating Sponsor from the sale 
of commodities.
    Section 416(b)--Section 416(b) of the Agricultural Act of 1949.
    USDA--the United States Department of Agriculture.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997, as amended at 63 
FR 59877, Nov. 6, 1998]



Sec. 1499.2  General purpose and scope.

    This part establishes the general terms and conditions governing 
CCC's donation of commodities to Cooperating Sponsors under the section 
416(b) and Food for Progress programs. This does not apply to donations 
to intergovernmental agencies or organizations (such as the World Food 
Program) unless CCC and such intergovernmental agency or organization 
enters into an agreement incorporating this part.



Sec. 1499.3  Eligibility requirements for Cooperating Sponsor.

    A Cooperating Sponsor may be either:
    (a) A foreign government;
    (b) An entity registered with the Agency for International 
Development (AID) in accordance with AID regulations; or
    (c) An entity that demonstrates to CCC's satisfaction:
    (1) Organizational experience and resources available to implement 
and manage the type of program proposed, i.e., targeted food assistance 
or sale of

[[Page 647]]

commodities for economic development activities;
    (2) Experience working in the targeted country; and
    (3) Experience and knowledge on the part of personnel who will be 
responsible for implementing and managing the program. CCC may require 
that an entity submit a financial statement demonstrating that it has 
the financial means to implement an effective donation program.



Sec. 1499.4  Availability of commodities from CCC inventory.

    CCC will periodically announce the types and quantities of 
agricultural commodities available for donation from CCC inventory for 
the section 416(b) program.



Sec. 1499.5  Program Agreements and Plans of Operation.

    (a) Plan of Operation. (1) Prior to entering into a section 416(b) 
Program Agreement, a Cooperating Sponsor shall submit a Plan of 
Operation to the Director, PDD and to the Agricultural Counselor or 
Attache, if an Agricultural Counselor or Attache is resident in the 
country where activities are to be implemented. After approval by CCC, 
the Plan of Operation will be incorporated into the section 416(b) 
Program Agreement as ``Attachment A.''
    (2) CCC may require Cooperating Sponsors to submit a Plan of 
Operation in connection with the Food for Progress program.
    (3) A Plan of Operation shall be in the following format and provide 
the following information:

    1. Name and Address of Applicant:
    2. Country of Donation:
    3. Kind and Quantity of Commodities Requested:
    4. Delivery Schedule:
    5. Program Description:
    Provide the following information:
    (a) Activity objectives, including a description of any problems 
anticipated in achieving the activities' objectives;
    (b) Method for choosing beneficiaries of activities;
    (c) Program administration including, as appropriate, plans for 
administering the distribution or sale of commodities and the 
expenditure of sale proceeds, and identification of the administrative 
or technical personnel who will implement the activities;
    (d) Activity budgets, including costs that will be borne by the 
Cooperating Sponsor, other organizations or local governments;
    (e) The recipient agency, if any, that will be involved in the 
program and a description of each recipient agency's capability to 
perform its responsibilities as stated in the Plan of Operation;
    (f) Governmental or nongovernmental entities involved in the program 
and the extent to which the program will strengthen or increase the 
capabilities of such entities to further economic development in the 
recipient country;
    (g) Method of educating consumers as to the source of the provided 
commodities and, where appropriate, preparation and use of the 
commodity; and
    (h) Criteria for measuring progress towards achieving the objectives 
of activities and evaluating program outcome.
    6. Use of Funds or Goods and Services Generated:
    When the activity involves the use of sale proceeds, the receipt of 
goods or services from the barter of commodities, or the use of program 
income, the following information must be provided:
    (a) the quantity and type of commodities to be sold or bartered;
    (b) extent to which any sale or barter of the agricultural 
commodities provided would displace or interfere with any sales that may 
otherwise be made;
    (c) the amount of sale proceeds anticipated to be generated from the 
sale, the value of the goods or services anticipated to be generated 
from the barter of the agricultural commodities provided, or the amount 
of program income expected to be generated;
    (d) the steps taken to use, to the extent possible, the private 
sector in the process of selling commodities;
    (e) the specific uses of sale proceeds or program income and a 
timetable for their expenditure; and
    (f) procedures for assuring the receipt and deposit of sale proceeds 
and program income into a separate special account and procedures for 
the disbursement of the proceeds and program income from such special 
account.
    7. Distribution Methods:
    (a) a description of the transportation and storage system which 
will be used to move the agricultural commodities from the receiving 
port to the point at which distribution is made to the recipient;
    (b) a description of any reprocessing or repackaging of the 
commodities that will take place; and
    (c) a logistics plan that demonstrates the adequacy of port, 
transportation, storage, and warehouse facilities to handle the flow of 
commodities to recipients without undue spoilage or waste.
    8. Duty Free Entry:

[[Page 648]]

    Documentation indicating that any commodities to be distributed to 
recipients, rather than sold, will be imported and distributed free from 
all customs, duties, tolls, and taxes.
    9. Economic Impact:
    Information indicating that the commodities can be imported and 
distributed without a disruptive impact upon production, prices and 
marketing of the same or like products within the importing country.

    (b) Agreements. CCC and the Cooperating Sponsor will enter into a 
written Program Agreement which will incorporate the terms and 
conditions set forth in this part. The commodities provided by CCC, and 
any packaging, will meet the specifications set forth in such Program 
Agreement. A Program Agreement may contain special terms or conditions, 
in addition to or in lieu of, the terms and conditions set forth in the 
regulations in this part when CCC determines that such special terms or 
conditions are necessary to effectively carry out the particular Program 
Agreement.



Sec. 1499.6  Usual marketing requirements.

    (a) A foreign government Cooperating Sponsor shall provide to the 
Director, PDD, data showing commercial and non-commercial imports of the 
types of agricultural commodities requested during the prior five years, 
by country of origin, and an estimate of imports of such commodities 
during the current year.
    (b) CCC may require that a Program Agreement with a foreign 
government include a ``usual marketing requirement'' that establishes a 
specific level of imports for a specified period. The Program Agreement 
may also include a prohibition on the export of provided commodities, as 
well as of other similar commodities specified in the Program Agreement.



Sec. 1499.7  Apportionment of costs and advances.

    (a) CCC will bear the costs of processing, packaging, 
transportation, handling and other incidental charges incurred in 
delivering commodities to Cooperating Sponsors. CCC will deliver bulk 
grain shipments f.o.b. vessel, and shipments of all other commodities 
f.a.s. vessel or intermodal points. CCC will choose the point of 
delivery based on lowest cost to CCC.
    (b) When the General Sales Manager approves in advance and in 
writing, CCC may agree to bear all or a portion of reasonable costs 
associated with:
    (1) Transportation from U.S. ports to designated ports or points of 
entry abroad, maritime survey costs, and in cases of urgent and 
extraordinary relief requirements, transportation from designated ports 
or points of entry abroad to designated storage and distribution sites;
    (2) In cases of urgent and extraordinary relief requirements, 
reasonable storage and distribution costs; and
    (3) Under the Food for Progress Program, administration or 
monitoring of food assistance programs, or technical assistance 
regarding sales of commodities provided by CCC.
    (c) CCC will not pay any costs incurred by the Cooperating Sponsor 
prior to the date of the Program Agreement.
    (d) Except as provided in paragraph (b) of this section, the 
Cooperating Sponsor shall ordinarily bear all costs incurred subsequent 
to CCC's delivery of commodities at U.S. ports or intermodal points.
    (e) A Cooperating Sponsor seeking agreement by CCC to bear the costs 
identified in paragraphs (b)(2) or (b)(3) of this section shall submit 
to the Director, PDD, a Program Operation Budget detailing such costs. 
If approved, the Program Operation Budget shall become part of the 
Program Agreement. The non-government Cooperating Sponsor may make 
adjustments between line items of an approved Program Operations Budget 
up to 20 percent of the total amount approved or $5,000, whichever is 
less without any further approval. Adjustments beyond these limits must 
be specifically approved by the Director, PDD.
    (f) The Cooperating Sponsor may request advance of up to 85 percent 
of the amount of an approved Program Operating Budget. However, CCC will 
not approve any request for an advance received earlier than 60 days 
after the date of a previous advance made in connection with the same 
Program Agreement.

[[Page 649]]

    (g) Funds advanced shall be deposited in an interest bearing account 
until expended. Interest earned may be used only for the purposes for 
which the funds were advanced.
    (h) The Cooperating Sponsor shall return to CCC any funds not 
obligated as of the 180th day after being advanced, together with any 
interest earned on such unexpended funds. Funds and interest shall be 
returned within 30 days of such date.
    (i) The Cooperating Sponsor shall, not later than 10 days after the 
end of each calendar quarter, submit a financial statement to the 
Director, PDD, accounting for all funds advanced and all interest 
earned.
    (j) CCC will pay all other costs for which it is obligated under the 
Program Agreement by reimbursement. However, CCC will not pay any cost 
incurred after the final date specified in the Program Agreement.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec. 1499.8  Ocean transportation.

    (a) Cargo preference. Shipments of commodities provided under either 
the section 416(b) or Food for Progress programs are subject to the 
requirements of sections 901(b) and 901b of the Merchant Marine Act, 
1936, regarding carriage on U.S.-flag vessels. CCC will endeavor to meet 
these requirements separately for each program for each 12-month 
compliance period. A Cooperating Sponsor shall comply with the 
instructions of CCC regarding the quantity of commodities that must be 
carried on U.S. flag vessels.
    (b) Freight procurement requirements. When CCC is financing any 
portion of the ocean freight, whether on U.S.-flag or non-U.S. flag 
vessels, and the Cooperating Sponsor arranges ocean transportation:
    (1) The Cooperating Sponsor shall arrange ocean transportation 
through competitive bidding and shall obtain approval of all invitations 
for bids from the offices specified in the Program Agreement prior to 
issuance.
    (2) Invitations for bids shall be issued through the Transportation 
News Ticker (TNT), New York, and at least one other comparable means of 
trade communication.
    (3) Freight invitations for bids shall include specified procedures 
for payment of freight, including the party responsible for the freight 
payments, and expressly require that:
    (i) Offers include a contract canceling date no later than the last 
contract layday specified in the invitation for bids;
    (ii) Offered rates be quoted in U.S. dollars per metric ton;
    (iii) If destination bagging or transportation to a point beyond the 
discharge port is required, the offer separately state the total rate 
and the portion thereof attributable to the ocean segment of the 
movement;
    (iv) Any non-liner U.S. flag vessel 15 years or older offer, in 
addition to any other offered rate, a one-way rate applicable in the 
event the vessel is scrapped or transferred to foreign flag registry 
prior to the end of the return voyage to the United States;
    (v) In the case of packaged commodities, U.S. flag carriers specify 
whether delivery will be direct breakbulk shipment, container shipment, 
or breakbulk transshipment and identify whether transshipment (including 
container relays) will be via U.S. or foreign flag vessel;
    (vi) Vessels offered subject to Maritime Administration approval 
will not be accepted; and
    (vii) Offers be received by a specified closing time, which must be 
the same for both U.S. and non-U.S. flag vessels.
    (4) In the case of shipments of bulk commodities and non-liner 
shipments of packaged commodities, the Cooperating Sponsor shall open 
offers in public in the United States at the time and place specified in 
the invitation for bids and consider only offers that are responsive to 
the invitation for bids without negotiation. Late offers shall not be 
considered or accepted.
    (5) All responsive offers received for both U.S. flag and foreign 
flag service shall be presented to KCCO which will determine the extent 
to which U.S.-flag vessels will be used.
    (6) The Cooperating Sponsor shall promptly furnish the Director, 
Public Law 480-OD, or other official specified in the Program Agreement, 
copies of all offers received with the time of receipt indicated 
thereon. The Director,

[[Page 650]]

Public Law 480-OD, or other official specified in the Program Agreement, 
will approve all vessel fixtures. The Cooperating Sponsor may fix 
vessels subject to the required approval; however, the Cooperating 
Sponsor shall not confirm a vessel fixture until advised of the required 
approval and the results of the Maritime Administration's guideline rate 
review. The Cooperating Sponsor shall not request guideline rate advice 
from the Maritime Administration. The Cooperating Sponsor will, promptly 
after receipt of vessel approval, issue a public notice of the fixture 
details on the TNT or other means of communication approved by the 
Director, Public Law 480-OD.
    (7) Non-Vessel Operating Common Carriers may not be employed to 
carry shipments on either U.S. or foreign-flag vessels.
    (8) The Cooperating Sponsor shall promptly furnish the Director 
Public Law 480-OD, a copy of the signed laytime statement and statement 
of facts at the discharge port.
    (c) Shipping agents. (1) The Cooperating Sponsor may appoint a 
shipping agent to assist in the procurement of ocean transportation. The 
Cooperating Sponsor shall nominate the shipping agent in writing to the 
Deputy Administrator, Room 4077-S, Foreign Agricultural Service, U.S. 
Department of Agriculture, Washington, DC 20250-1031, and include a copy 
of the proposed agency agreement. The Cooperating Sponsor shall specify 
the time period of the nomination.
    (2) The shipping agent so nominated shall submit the information and 
certifications required by 7 CFR 17.4 to the Deputy Administrator.
    (3) A person may not act as a shipping agent for a Cooperating 
Sponsor unless the Deputy Administrator has notified the Cooperating 
Sponsor in writing that the nomination is accepted.
    (d) Commissions. (1) When any portion of the ocean freight is paid 
by CCC, total commissions earned on U.S. and foreign flag bookings by 
all parties arranging vessel fixtures, shall not exceed 2\1/2\ percent 
of the total freight costs.
    (2) Address commissions are prohibited.
    (e) Contract terms. When CCC is paying any portion of the ocean 
freight, charter parties and liner booking contracts must conform to the 
following requirements, as applicable:
    (1) Packaged commodities on liner vessels shall be shipped on the 
basis of full berth terms with no demurrage or despatch;
    (2) Shipments of bulk liquid commodities may be contracted in 
accordance with trade custom. Other bulk commodities, including 
shipments that require bagging or stacking for the account of the 
vessel, shall be shipped on the basis of vessel load, free out, with 
demurrage and despatch applicable at load and discharge ports; except 
that, if bulk commodities require further inland distribution, they 
shall be shipped on the basis of vessel load with demurrage and despatch 
at load and berth terms discharge, i.e., no demurrage, despatch, or 
detention at discharge. Demurrage and despatch shall be settled between 
the ocean carrier and commodity suppliers at load port and between the 
ocean carrier and charterers at discharge ports. CCC is not responsible 
for resolving disputes involving the calculation of laytime or the 
payment of demurrage or despatch.
    (3) If the Program Agreement requires the Cooperating Sponsor to 
arrange an irrevocable letter of credit for ocean freight, the 
Cooperating Sponsor shall be liable for detention of the vessel for 
loading delays attributable solely to the decision of the ocean carrier 
not to commence loading because of the failure of the Cooperating 
Sponsor to establish such letter of credit. Charter parties and liner 
booking contracts may not contain a specified detention rate. The ocean 
carrier shall be entitled to reimbursement, as damages for detention for 
all time so lost, for each calendar day or any part of the calendar day, 
including Saturdays, Sundays and holidays. The period of such delay 
shall not commence earlier than upon presentation of the vessel at the 
designated loading port within the laydays specified in the charter 
party or liner booking contract, and upon notification of the vessel's 
readiness to load in accordance with the terms of the applicable charter 
party or liner booking contract. The period of such

[[Page 651]]

delay shall end at the time that operable irrevocable letters of credit 
have been established for ocean freight or the time the vessel begins 
loading, whichever is earlier. Time calculated as detention shall not 
count as laytime. Reimbursement for such detention shall be payable no 
later than upon the vessel's arrival at the first port of discharge.
    (4) Charges including, but not limited to charges for inspection, 
fumigation, and carrying charges, attributable to the failure of the 
vessel to present before the canceling date will be for the account of 
the ocean carrier.
    (5) Ocean freight is earned under a charter party when the vessel 
and cargo arrive at the first port of discharge, Provided, That if a 
force majeure prevents the vessel's arrival at the first port of 
discharge, 100% of the ocean freight is payable or, if the charter party 
provides for completing additional requirements after discharge such as 
bagging, stacking, or inland transportation, not more than 85% of the 
ocean freight is payable, at the time the General Sales Manager 
determines that such force majeure was the cause of nonarrival; and
    (6) When the ocean carrier offers delivery to destination ports on 
U.S.-flag vessels, but foreign-flag vessels are used for any part of the 
voyage to the destination port without first obtaining the approval of 
the Cooperating Sponsor, KCCO, and any other approval that may be 
required by the Program Agreement, the ocean freight rate will be 
reduced to the lowest responsive foreign-flag vessel rate offered in 
response to the same invitation for bids and the carrier agrees to pay 
CCC the difference between the contracted ocean freight rate and the 
freight rate offered by such foreign-flag vessel.
    (f) Coordination between CCC and the Cooperating Sponsor. When a 
Program Agreement specifies that the Cooperating Sponsor will arrange 
ocean transportation:
    (1) KCCO will furnish the Cooperating Sponsor, or its agent, with a 
Notice of Commodity Availability (Form CCC-512) which will specify the 
receiving country, commodity, quantity, and date at U.S. port or 
intermodal delivery point.
    (2) The Cooperating Sponsor shall complete the Form CCC-512 
indicating name of steamship company, vessel name, vessel flag and 
estimated time of arrival at U.S. port; and shall sign and return the 
completed form to KCCO, with a copy to the Director, P.L. 480-OD. If CCC 
agrees to pay any part of the ocean transportation for liner cargoes, 
the Cooperating Sponsor shall also indicate on the Form CCC-512 the 
applicable Federal Maritime Commission tariff rate, and tariff 
identification.
    (3) KCCO will issue instructions to have the commodity delivered 
f.a.s. or f.o.b. vessel, U.S. port of export or intermodal delivery 
point, consigned to the Cooperating Sponsor.
    (g) Documents required for payment of freight--(1) General rule. To 
receive payment for ocean freight, the following documents shall be 
submitted to the Director, CCCPSD:
    (i) One signed copy of completed Form CCC-512;
    (ii) Four copies of the original on-board bills of lading indicating 
the freight rate and signed by the originating carrier;
    (iii) For all non-containerized grain cargoes,
    (A) One signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate (Vessel Hold Certificate);
    (B) One signed copy of the National Cargo Bureau Certificate of 
Readiness (Vessel Hold Inspection Certificate); and
    (C) One signed copy of the National Cargo Bureau Certificate of 
Loading;
    (iv) For all containerized grain and grain product cargoes, one 
signed copy of the FGIS Container Condition Inspection Certificate;
    (v) One signed copy of liner booking note or charter party covering 
ocean transportation of cargo;
    (vi) For charter shipments, a signed notice of arrival at first 
discharge port submitted by the Cooperating Sponsor;
    (vii) For all liner cargoes, a copy of the tariff page.
    (viii) Four copies of either:
    (A) A request by the Cooperating Sponsor for reimbursement of ocean

[[Page 652]]

freight or ocean freight differential indicating the amount due, and 
accompanied by a certification from the ocean carrier that payment has 
been received from the Cooperating Sponsor; or
    (B) A request for direct payment to the ocean carrier, indicating 
amount due; or
    (C) A request for direct payment of ocean freight differential to 
the ocean carrier accompanied by a certification from the carrier that 
payment of the Cooperating Sponsor's portion of the ocean freight has 
been received.
    (ix) Each request to CCC for payment must provide a document, on 
letterhead and signed by an official or agent of the requester, the name 
of the entity to receive payment, the bank ABA number to which payment 
is to be made; the account number for the deposit at the bank; the 
requester's taxpayer identification number; and the type of the account 
into which funds will be deposited.
    (2) In cases of force majeure. To receive payment in cases where the 
General Sales Manager determines that circumstances of force majeure 
have prevented the vessel's arrival at the first port of discharge, the 
Cooperating Sponsor shall submit all documents required by paragraph 
(g)(1) of this section except for the notice of arrival required by 
paragraph (g)(1)(vi) of this section.
    (h) CCC payment of ocean freight or ocean freight differential--(1) 
General rule. CCC will pay, not later than 30 days after receipt in good 
order of the required documentation, 100 percent of either the ocean 
freight or the ocean freight differential, whichever is specified in the 
Program Agreement.
    (2) Additional requirements after discharge. Where the charter party 
or liner booking note provide for the completion of additional services 
after discharge, such as bagging, stacking or inland transportation, CCC 
will pay, not later than 30 days after receipt in good order of the 
required documentation, either not more than 85 percent of the total 
freight charges or 100 percent of the ocean freight differential, 
whichever is specified in the Program Agreement. CCC will pay the 
remaining balance, if any, of the freight charges not later than 30 days 
after receipt of notification from the Cooperating Sponsor that such 
additional services have been provided; except that CCC will not pay any 
remaining balance where the GSM determines that the vessel's arrival at 
first port of discharge was prevented by force majeure.
    (3) No demurrage. CCC will not pay demurrage.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997, as amended at 63 
FR 8837, Feb. 23, 1998; 63 FR 59877, Nov. 6, 1998]



Sec. 1499.9  Arrangements for entry and handling in the foreign country.

    (a) The Cooperating Sponsor shall make all necessary arrangements 
for receiving the commodities in the recipient country, including 
obtaining appropriate approvals for entry and transit. The Cooperating 
Sponsor shall store and maintain the commodities from time of delivery 
at port of entry or point of receipt from originating carrier in good 
condition until their distribution, sale or barter.
    (b) When CCC has agreed to pay costs of transporting, storing, and 
distributing commodities from designated points of entry or ports of 
entry, the Cooperating Sponsor shall arrange for such services, by 
through bill of lading, or by contracting directly with suppliers of 
services, as CCC may approve. If the Cooperating Sponsor contracts 
directly with the suppliers of such services, the Cooperating Sponsor 
may seek reimbursement by submitting documentation to CCC indicating 
actual costs incurred. All supporting documentation must be sent to the 
Director, CCCPSD. CCC, at its option, will reimburse the Cooperating 
Sponsor for the cost of such services in U.S. dollars at the exchange 
rate in effect on the date of payment by CCC, or in foreign currency.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997]



Sec. 1499.10  Restrictions on commodity use and distribution.

    (a) The Cooperating Sponsor may use the commodities provided only in 
accordance with the terms of the Program Agreement.
    (b) Commodities shall not be distributed within the importing 
country on

[[Page 653]]

the basis of political affiliation, geographic location, or the ethnic, 
tribal or religious identity or affiliations of the potential consumers 
or recipients.
    (c) Commodities shall not be distributed, handled or allocated by 
military forces without specific CCC authorization.
    (d) In the event that its participation in the program terminates, 
the non-government cooperating sponsor will safeguard any undistributed 
commodities and sales proceeds and dispose of such commodities and 
proceeds as directed by CCC.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec. 1499.11  Agreement between Cooperating Sponsor and recipient agencies.

    (a) The Cooperating Sponsor shall enter into a written agreement 
with a recipient agency prior to the transfer of any commodities, sale 
proceeds or program income to the recipient agency. Copies of such 
agreements shall be provided to the Agricultural Counselor or Attache, 
and the Director, PDD. Such agreements shall require the recipient 
agency to pay the Cooperating Sponsor the value of any commodities, sale 
proceeds or program income that are used for purposes not expressly 
permitted under the Program Agreement, or that are lost, damaged, or 
misused as result of the recipient agency's failure to exercise 
reasonable care;
    (b) CCC may waive the requirements of paragraph (a) of this section 
where it determines that such an agreement is not feasible or 
appropriate.



Sec. 1499.12  Sales and barter of commodities provided and use of proceeds.

    (a) Commodities may be sold or bartered without the prior approval 
of CCC where damage has rendered the commodities unfit for intended 
program purposes and sale or barter is necessary to mitigate loss of 
value.
    (b) A Cooperating Sponsor may, but is not required to, negotiate an 
agreement with the host government under which the commodities imported 
for a sale or barter may be imported, sold, or bartered without 
assessment of duties or taxes. In such cases and where the commodities 
are sold, they shall be sold at prices reflecting prevailing local 
market value.
    (c) The Cooperating Sponsor shall deposit all sale proceeds into an 
interest-bearing account unless prohibited by the laws or customs of the 
importing country or CCC determines that to do so would constitute an 
undue burden. Interest earned on such deposits shall only be used for 
approved activities.
    (d) Except as otherwise provided in this part, the Cooperating 
Sponsor may use sale proceeds and resulting interest only for those 
purposes approved in the applicable Plan of Operation.
    (e) CCC will approve the use of sale proceeds and interest to 
purchase real and personal property where local law permits the 
Cooperating Sponsor to retain title to such property, but will not 
approve the use of sale proceeds or interest to pay for the acquisition, 
development, construction, alteration or upgrade of real property that 
is;
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious activity, or
    (2) Used in whole or in part for sectarian purposes; except that, a 
Cooperating Sponsor may use such sale proceeds or interest to pay for 
repairs or rehabilitation of a structure located on such real property 
to the extent necessary to avoid spoilage or loss of provided 
commodities but only if such structure is not used in whole or in part 
for any religious or sectarian purposes while the provided commodities 
are stored in such structure. When not approved in the Plan of 
Operation, such use may be approved by the Agricultural Counsellor or 
Attache.
    (f) The Cooperating Sponsor shall follow commercially reasonable 
practices in procuring goods and services and when engaging in 
construction activity in accordance with the approved Plan of Operation. 
Such practices shall include procedures to prevent fraud, self-dealing 
and conflicts of interest, and shall foster free and open competition to 
the maximum extent practicable.
    (g) To the extent required by the Program Agreement, the Cooperating 
Sponsor shall submit to the Controller, CCC, and to the Director, PDD, 
an inventory of all assets acquired with sale

[[Page 654]]

proceeds or interest or program income. In the event that its 
participation in the program terminates, the Cooperating Sponsor shall 
dispose, at the direction of the Director, PDD, of any property, real or 
personal, so acquired.

[61 FR 60515, Nov. 29, 1996; 62 FR 2719, Jan. 17, 1997]



Sec. 1499.13  Processing, packaging and labeling of section 416(b) commodities in the foreign country.

    (a) Cooperating Sponsors may arrange for the processing of 
commodities provided under a section 416(b) Program Agreement, or for 
packaging or repackaging prior to distribution. When a third party 
provides such processing, packaging or repackaging, the Cooperating 
Sponsor shall enter into a written agreement requiring that the provider 
of such services maintain adequate records to account for all 
commodities delivered and submit periodic reports to the Cooperating 
Sponsor. The Cooperating Sponsor shall submit a copy of the executed 
agreement to the Agricultural Counselor or Attache.
    (b) If, prior to distribution, the Cooperating Sponsor arranges for 
packaging or repackaging commodities provided under section 416(b), the 
packaging shall be plainly labeled in the language of the country in 
which the commodities are to be distributed with the name of the 
commodity and, except where the commodities are to be sold or bartered 
after processing, packaging or repackaging, to indicate that the 
commodity is furnished by the people of the United States of America and 
not to be sold or exchanged. If the commodities are not packaged, the 
Cooperating Sponsor shall, to the extent practicable, display banners, 
posters or other media containing the information prescribed in this 
paragraph.
    (c) CCC will reimburse Cooperating Sponsors that are nonprofit 
private voluntary organizations or cooperatives for expenses incurred 
for repackaging if the packages of commodities provided under section 
416(b) are discharged from the vessel in damaged condition, and are 
repackaged to ensure that the commodities arrive at the distribution 
point in wholesome condition. No prior approval is required for such 
expenses equaling $500 or less. If such expense is estimated to exceed 
$500, the authority to repackage and incur such expense must be approved 
by the Agricultural Counselor or Attache in advance of repackaging.



Sec. 1499.14  Disposition of commodities unfit for authorized use.

    (a) Prior to delivery to Cooperating Sponsor at discharge port or 
point of entry. If the commodity is damaged prior to delivery to a 
governmental Cooperating Sponsor at discharge port or point of entry 
overseas, the Agricultural Counselor or Attache will immediately arrange 
for inspection by a public health official or other competent authority. 
If the commodity is damaged prior to delivery to a nongovernmental 
Cooperating Sponsor at the discharge port or point of entry, the 
nongovernmental Cooperating Sponsor shall arrange for such inspection. 
If inspection discloses the commodity to be unfit for the use authorized 
in the Program Agreement, the Agricultural Counselor or Attache or the 
nongovernmental Cooperating Sponsor shall dispose of the commodities in 
accordance with the priority set forth in paragraph (b) of this section. 
Expenses incidental to the handling and disposition of the damaged 
commodity will be paid by CCC from the sale proceeds or from an 
appropriate CCC account designated by CCC. The net proceeds of sales 
shall be deposited with the U.S. Disbursing Officer, American Embassy, 
for the credit of CCC in an appropriate CCC account designated by CCC; 
however, if the commodities are provided for a sales program, the net 
sale proceeds, net of expenses incidental to handling and disposition of 
the damaged commodity, shall be deposited to the special account 
established for sale proceeds. The Cooperating Sponsor shall consult 
with CCC regarding the inspection and disposition of commodities and 
accounting for sale proceeds in the event the Cooperating Sponsor 
executed a sales agreement under which title passed to the purchaser 
prior to delivery to the Cooperating Sponsor.
    (b) After delivery to Cooperating Sponsor. (1) If after arrival in a 
foreign

[[Page 655]]

country and after delivery to a Cooperating Sponsor, it appears that the 
commodity, or any part thereof, may be unfit for the use authorized in 
the Program Agreement, the Cooperating Sponsor shall immediately arrange 
for inspection of the commodity by a public health official or other 
competent authority approved by the Agricultural Counselor or Attache. 
If no competent local authority is available, the Agricultural Counselor 
or Attache may determine whether the commodities are unfit for the use 
authorized in the Program Agreement and, if so, may direct disposal in 
accordance with this paragraph (b) of this section. The Cooperating 
Sponsor shall arrange for the recovery of that portion of the 
commodities designated during the inspection as suitable for authorized 
use. If, upon inspection, the commodity (or any part thereof) is 
determined to be unfit for the authorized use, the Cooperating Sponsor 
shall notify the Agricultural Counselor or Attache of the circumstances 
pertaining to the loss or damage. With the concurrence of the 
Agricultural Counselor or Attache, the commodity determined to be unfit 
for authorized use shall be disposed of in the following order of 
priority:
    (i) By transfer to an approved section 416(b) program for use as 
livestock feed. CCC shall be advised promptly of any such transfer so 
that shipments from the United States to the livestock feeding program 
can be reduced by an equivalent amount;
    (ii) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, or industrial use, at the highest obtainable price. When the 
commodity is sold, all U.S. Government markings shall be obliterated or 
removed;
    (iii) By donation to a governmental or charitable organization for 
use as animal feed or for other non-food use; or
    (iv) If the commodity is unfit for any use or if disposal in 
accordance with paragraph (b)(1) (i), (ii) or (iii) of this section is 
not possible, the commodity shall be destroyed under the observation of 
a representative of the Agricultural Counselor or Attache, if 
practicable, in such manner as to prevent its use for any purpose.
    (2) Actual expenses incurred, including third party costs, in 
effecting any sale may be deducted from the sale proceeds and, if the 
commodities were intended for direct distribution, the Cooperating 
Sponsor shall deposit the net proceeds with the U.S. Disbursing Officer, 
American Embassy, with instructions to credit the deposit to an 
appropriate CCC account as designated by CCC. If the commodities were 
intended to be sold, the Cooperating Sponsor shall deposit the gross 
proceeds into the special interest bearing account and, after approved 
costs related to the handling and disposition of damaged commodities are 
paid, shall use the remaining funds for purposes of the approved 
program. The Cooperating Sponsor shall promptly furnish to the 
Agricultural Counselor or Attache a written report of all circumstances 
relating to the loss and damage on any commodity loss in excess of 
$5,000; quarterly reports shall be made on all other losses. If the 
commodity was inspected by a public health official or other competent 
authority, the report and any supplemental report shall include a 
certification by such public health official or other competent 
authority as to the condition of the commodity and the exact quantity of 
the damaged commodity disposed. Such certification shall be obtained as 
soon as possible after the discharge of the cargo. A report must also be 
provided to the Chief, Debt Management Division, KCMO/DMD, of action 
taken to dispose of commodities unfit for authorized use.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec. 1499.15  Liability for loss, damage, or improper distribution of commodities--claims and procedures.

    (a) Fault of Cooperating Sponsor prior to loading on ocean vessel. 
The Cooperating Sponsor shall immediately notify KCCO, Chief, Export 
Operations Division if the Cooperating Sponsor will not have a vessel 
for loading at the U.S. port of export in accordance with the agreed 
shipping schedule. CCC will determine whether the commodity will be: 
moved to another available outlet; stored at the port for delivery to 
the Cooperating Sponsor when a vessel is

[[Page 656]]

available for loading; or disposed of as CCC may deem proper. The 
Cooperating Sponsor shall take such action as directed by CCC and shall 
reimburse CCC for expenses incurred if CCC determines that the expenses 
were incurred because of the fault or negligence of the Cooperating 
Sponsor.
    (b) Fault of others prior to loading on ocean vessel. The 
Cooperating Sponsor shall immediately notify the Chief, Debt Management 
Office, KCMO/DMD, when any damage or loss to the commodity occurs that 
is attributable to a warehouseman, carrier, or other person between the 
time title is transferred to a Cooperating Sponsor and the time the 
commodity is loaded on board vessel at the designated port of export. 
The Cooperating Sponsor shall promptly assign to CCC any rights to 
claims which may arise as a result of such loss or damage and shall 
promptly forward to CCC all documents pertaining thereto. CCC shall have 
the right to initiate claims, and retain the proceeds of all claims, for 
such loss or damage.
    (c) Survey and outturn reports related to claims against ocean 
carriers. (1) If the Program Agreement provides that CCC will arrange 
for an independent cargo surveyor to attend the discharge of the cargo, 
CCC will require the surveyor to provide a copy of the report to the 
Cooperating Sponsor.
    (2)(i) If the Cooperating Sponsor arranges for an independent cargo 
surveyor, the Cooperating Sponsor shall forward to the Chief, Debt 
Management Office, KCMO/DMD, any narrative chronology or other 
commentary it can provide to assist in the adjudication of ocean 
transportation claims and shall prepare such a narrative in any case 
where the loss is estimated to be in excess of $5,000.00. The 
Cooperating Sponsor may, at its option, also engage the independent 
surveyor to supervise clearance and delivery of the cargo from customs 
or port areas to the Cooperating Sponsor or its agent and to issue 
delivery survey reports thereon.
    (ii) In the event of cargo loss and damage, the Cooperating Sponsor 
shall provide to the Chief, Debt Management Office, KCMO/DMD, the names 
and addresses of individuals who were present at the time of discharge 
and during survey and who can verify the quantity lost or damaged. For 
bulk grain shipments, in those cases where the Cooperating Sponsor is 
responsible for survey and outturn reports, the Cooperating Sponsor 
shall obtain the services of an independent surveyor to:
    (A) Observe the discharge of the cargo;
    (B) Report on discharging methods including scale type, calibrations 
and any other factor which may affect the accuracy of scale weights, 
and, if scales are not used, state the reason therefore and describe the 
actual method used to determine weights;
    (C) Estimate the quantity of cargo, if any, lost during discharge 
through carrier negligence;
    (D) Advise on the quality of sweepings;
    (E) Obtain copies of port or vessel records, if possible, showing 
quantity discharged;
    (F) Provide immediate notification to the Cooperating Sponsor if 
additional services are necessary to protect cargo interests or if the 
surveyor has reason to believe that the correct quantity was not 
discharged; and
    (G) In the case of shipments arriving in container vans, list the 
container van numbers and seal numbers shown on the container vans, and 
indicate whether the seals were intact at the time the container vans 
were opened, and whether the container vans were in any way damaged. To 
the extent possible, the independent surveyor should observe discharge 
of container vans from the vessel to ascertain whether any damage to the 
container van occurred and arrange for surveying as container vans are 
opened.
    (iii) Cooperating Sponsors shall send copies to KCMO/DMD, Chief, 
Debt Management Office of all reports and documents pertaining to the 
discharge of commodities.
    (iv) CCC will reimburse the Cooperating Sponsor for costs incurred 
upon receipt of the survey report and the surveyor's invoice or other 
documents that establish the survey cost. CCC will not reimburse a 
Cooperating Sponsor for the costs of a delivery survey unless the 
surveyor also prepares a discharge survey, or for any other survey not

[[Page 657]]

taken contemporaneously with the discharge of the vessel, unless CCC 
determines that such action was justified in the circumstances.
    (3) Survey contracts shall be let on a competitive bid basis unless 
CCC determines that the use of competitive bids would not be 
practicable. CCC may preclude the use of certain surveyors because of 
conflicts of interest or lack of demonstrated capability to properly 
carry out surveying responsibilities.
    (4) If practicable, all surveys shall be conducted jointly by the 
surveyor, the consignee, and the ocean carrier, and the survey report 
shall be signed by all parties.
    (d) Ocean carrier loss and damage. (1) Notwithstanding transfer of 
title, CCC shall have the right to file, pursue, and retain the proceeds 
of collection from claims arising from ocean transportation cargo loss 
and damage arising out of shipments of commodities provided to 
governmental Cooperating Sponsors; however, when the Cooperating Sponsor 
pays the ocean freight or a portion thereof, it shall be entitled to pro 
rata reimbursement received from any claims related to ocean freight 
charged. CCC will pay general average contributions for all valid 
general average incidents which may arise from the movement of commodity 
to the destination ports. CCC shall receive and retain all allowances in 
general average.
    (2) Nongovernmental Cooperating Sponsors shall: file notice with the 
ocean carrier immediately upon discovery of any cargo loss or damage; 
promptly initiate claims against the ocean carriers for such loss and 
damage; take all necessary action to obtain restitution for losses, and 
(iv) provide CCC copies of all such claims. Notwithstanding the 
preceding sentence the nongovernmental Cooperating Sponsor need not file 
a claim when the cargo loss is less than $100, or in any case when the 
loss is between $100 and $300 and the nongovernmental Cooperating 
Sponsor determines that the cost of filing and collecting the claim will 
exceed the amount of the claim. The nongovernmental Cooperating Sponsor 
shall transmit to KCMO/DMD, Chief, Debt Management Office information 
and documentation on such lost or damaged shipments when no claim is to 
be filed. In the event of a declaration General Average:
    (i) The Cooperating Sponsor shall assign all claim rights to CCC and 
shall provide CCC all documentation relating to the claim, if 
applicable;
    (ii) CCC will be responsible for settling general average and marine 
salvage claims;
    (iii) CCC has sole authority to authorize any disposition of 
commodities which have not commenced ocean transit or of which the ocean 
transit is interrupted;
    (iv) CCC will receive and retain any monetary proceeds resulting 
from such disposition;
    (v) CCC will initiate, prosecute, and retain all proceeds of cargo 
loss and damage against ocean carriers and any allowance in general 
average; and
    (vi) CCC will pay any general average or marine salvage claims 
determined to be due.
    (3) Amounts collected by nongovernmental Cooperating Sponsors on 
claims against ocean carriers which are less than $200 may be retained 
by the nongovernmental Cooperating Sponsor. On claims involving loss or 
damage of $200 or more, nongovernmental Cooperating Sponsors may retain 
from collections received by them, either $200 plus 10 percent of the 
difference between $200 and the total amount collected on the claim, up 
to a maximum of $500; or the actual administrative expenses incurred in 
collection of the claim, provided retention of such administrative 
expenses is approved by CCC. Allowable collection costs shall not 
include attorneys fees, fees of collection agencies, and similar costs. 
In no event will CCC pay collection costs in excess of the amount 
collected on the claim.
    (4) A nongovernmental Cooperating Sponsor also may retain from claim 
recoveries remaining after allowable deductions for administrative 
expenses of collection, the amount of any special charges, such as 
handling and packing costs, which the nongovernmental Cooperating 
Sponsor has incurred on the lost or damaged commodity and which are 
included in the claims and paid by the liable party.
    (5) A nongovernmental Cooperating Sponsor may redetermine claims on

[[Page 658]]

the basis of additional documentation or information not considered when 
the claims were originally filed when such documentation or information 
clearly changes the ocean carrier's liability. Approval of such changes 
by CCC is not required regardless of amount. However, copies of 
redetermined claims and supporting documentation or information shall be 
furnished to CCC.
    (6) A nongovernmental Cooperating Sponsor may negotiate compromise 
settlements of claims of any amount, provided that proposed compromise 
settlements of claims having a value of $5,000 or more shall require 
prior approval in writing by CCC. When a claim is compromised, a 
nongovernmental Cooperating Sponsor may retain from the amount 
collected, the amounts authorized in paragraph (d)(3) of this section, 
and in addition, an amount representing such percentage of the special 
charges described in paragraph (d)(4) of this section as compromised 
amount is to the full amount of the claim. When a claim is less than 
$600, a nongovernmental Cooperating Sponsor may terminate collection 
activity when it is determined that pursuit of such claims will not be 
economically sound. Approval for such termination by CCC is not 
required; however, the nongovernmental Cooperating Sponsor shall notify 
KCMO/DMD, Chief, Debt Management Division when collection activity on a 
claim is terminated.
    (7) All amounts collected in excess of the amounts authorized in 
this section to be retained shall be remitted to CCC. For the purpose of 
determining the amount to be retained by a nongovernmental Cooperating 
Sponsor from the proceeds of claims filed against ocean carriers, the 
word ``claim'' shall refer to the loss and damage to commodities which 
are shipped on the same voyage of the same vessel to the same port 
destination, irrespective of the kinds of commodities shipped or the 
number of different bills of lading issued by the carrier.
    (8) If a nongovernmental Cooperating Sponsor is unable to effect 
collection of a claim or negotiate an acceptable compromise settlement 
within the applicable period of limitation or any extension thereof 
granted in writing by the party alleged responsible for the damage, the 
nongovernmental Cooperating Sponsor shall assign its rights to the claim 
to CCC in sufficient time to permit the filing of legal action prior to 
the expiration of the period of limitation or any extension thereof. 
Generally, a nongovernmental Cooperating Sponsor should assign claim 
rights to CCC no later than 60 days prior to the expiration of the 
period of limitation or any extension thereof. In all cases, a 
nongovernmental Cooperating Sponsor shall keep CCC informed of the 
progress of its collection efforts and shall promptly assign their claim 
rights to CCC upon request. Subsequently, if CCC collects on or settles 
the claim, CCC shall, except as indicated in this paragraph pay to a 
nongovernmental Cooperating Sponsor the amount to which it would have 
been entitled had it collected on the claim. The additional 10 percent 
on amounts collected in excess of $200 will be payable, however, only if 
CCC determines that reasonable efforts were made to collect the claim 
prior to the assignment, or if payment is determined to be commensurate 
with the extra efforts exerted in further documenting the claim. If 
documentation requirements have not been fulfilled and the lack of such 
documentation has not been justified to the satisfaction of CCC, CCC 
will deny payment of all allowances to the nongovernmental Cooperating 
Sponsor.
    (9) When a nongovernmental Cooperating Sponsor permits a claim to 
become time-barred, or fails to take timely actions to insure the right 
of CCC to assert such claims, and CCC determines that the 
nongovernmental Cooperating Sponsor failed to properly exercise its 
responsibilities under the Agreement, the nongovernmental Cooperating 
Sponsor shall be liable to the United States for the cost and freight 
value of the commodities lost to the program.
    (e) Fault of Cooperating Sponsor in country of distribution. If a 
commodity, sale proceeds or program income is used for a purpose not 
permitted by the Program Agreement, or if a Cooperating Sponsor causes 
loss or damage to a commodity, sale proceeds, or program income through 
any act or omission or

[[Page 659]]

failure to provide proper storage, care and handling, the cooperating 
sponsor shall pay to the United States the value of the commodities, 
sale proceeds or program income lost, damaged or misused. CCC will 
consider normal commercial practices in the country of distribution in 
determining whether there was a proper exercise of the Cooperating 
Sponsor's responsibility. Payment by the Cooperating Sponsor shall be 
made in accordance with paragraph (g) of this section.
    (f) Fault of others in country of distribution and in intermediate 
country. (1) In addition to survey or outturn reports to determine ocean 
carrier loss and damage, the Cooperating Sponsor shall, in the case of 
landlocked countries, arrange for an independent survey at the point of 
entry into the recipient country and make a report as set forth in 
paragraph (c)(1) of this section. CCC will reimburse the Cooperating 
Sponsor for the costs of survey as set forth in paragraph (c)(2)(iv) of 
this section.
    (2) Where any damage to or loss of the commodity or any loss of sale 
proceeds or program income is attributable to a warehouseman, carrier or 
other person, the Cooperating Sponsor shall make every reasonable effort 
to pursue collection of claims for such loss or damage. The Cooperating 
Sponsor shall furnish a copy of the claim and related documents to the 
Agricultural Counselor or Attache. Cooperating Sponsors who fail to file 
or pursue such claims shall be liable to CCC for the value of the 
commodities or sale proceeds or program income lost, damaged, or 
misused: Provided, however, that the Cooperating Sponsor may elect not 
to file a claim if the loss is less than $500. The Cooperating Sponsor 
may retain $150 of any amount collected on an individual claim. In 
addition, Cooperating Sponsors may, with the written approval of the 
Agricultural Counselor or Attache, retain amounts to cover special costs 
of collection such as legal fees, or pay such collection costs with sale 
proceeds or program income. Any proposed settlement for less than the 
full amount of the claim requires prior approval by the Agricultural 
Counselor or Attache. When the Cooperating Sponsor has exhausted all 
reasonable attempts to collect a claim, it shall request the 
Agricultural Counselor or Attache to provide further instructions.
    (3) The Cooperating Sponsor shall pursue any claim by initial 
billings and at least three subsequent demands at not more than 30 day 
intervals. If these efforts fail to elicit a satisfactory response, the 
Cooperating Sponsor shall pursue legal action in the judicial system of 
country unless otherwise agreed by the Agricultural Counselor or 
Attache. The Cooperating Sponsors must inform the Agricultural Counselor 
or Attache in writing of the reasons for not pursuing legal action; and 
the Agricultural Counselor or Attache may require the Cooperating 
Sponsor to obtain the opinion of competent legal counsel to support its 
decision prior to granting approval. If the Agricultural Counselor or 
Attache approves a Cooperating Sponsor's decision not to take further 
action on the claim, the Cooperating Sponsor shall assign the claim to 
CCC and shall forward all documentation relating to the claim to KCMO/
DMD.
    (4) As an alternative to legal action in the judicial system of the 
country with regard to claims against a public entity of the government 
of the cooperating country, the Cooperating Sponsor and the cooperating 
country may agree in writing to settle disputed claims by an appropriate 
administrative procedure or arbitration.
    (g) Determination of value. The Cooperating Sponsor shall determine 
the value of commodities misused, lost or damaged on the basis of the 
domestic market price at the time and place the misuse, loss or damage 
occurred. When it is not feasible to determine such market price, the 
value shall be the f.o.b. or f.a.s. commercial export price of the 
commodity at the time and place of export, plus ocean freight charges 
and other costs incurred by the U.S. Government in making delivery to 
the Cooperating Sponsor. When the value is determined on a cost basis, 
the Cooperating Sponsor may add to the value any provable costs it has 
incurred prior to delivery by the ocean carrier. In preparing the claim 
statement, these costs shall be clearly segregated from costs incurred 
by the

[[Page 660]]

Government of the United States. With respect to claims other than ocean 
carrier loss or damage claims, the Cooperating Sponsor may request the 
Agricultural Counselor or Attache to approve a commercially reasonable 
alternative basis to value the claim.
    (h) Reporting losses to the Agricultural Counselor or Attache or CCC 
designated representative. (1) The Cooperating Sponsor shall promptly 
notify the Agricultural Counselor or Attache or CCC designated 
representative, in writing, of the circumstances pertaining to any loss, 
damage, or misuse of commodities valued at $500 or more occurring within 
the country of distribution or intermediate country. The report shall be 
made as soon as the Cooperating Sponsor has adequately investigated the 
circumstances, but in no event more than ninety days from the date the 
loss became known to the Cooperating Sponsor. The report shall identify 
the party in possession of the commodities and the party responsible for 
the loss, damage or misuse; the kind and quantities of commodities; the 
size and type of containers; the time and place of misuse, loss, or 
damage; the current location of the commodity; the Program Agreement 
number, the CCC contract numbers, or if unknown, other identifying 
numbers printed on the commodity containers; the action taken by the 
Cooperating Sponsor with respect to recovery or disposal; and the 
estimated value of the commodity. The report shall explain why any of 
the information required by this paragraph cannot be provided. The 
Cooperating Sponsor shall also report the details regarding any loss or 
misuse of sale proceeds or program income.
    (2) The Cooperating Sponsor shall report quarterly to the 
Agricultural Counselor or Attache any loss, damage to or misuse of 
commodities resulting in loss of less than $500. The Cooperating Sponsor 
shall inform the Agricultural Counselor or Attache or CCC designated 
representative if it has reason to believe there is a pattern or trend 
in the loss, damage, or misuse of such commodities and submit a report 
as described in paragraph (h)(1) of this section, together with any 
other relevant information the Cooperating Sponsor has available to it. 
The Agricultural Counselor or Attache may require additional information 
about any commodities lost, damaged or misused.
    (i) Handling claims proceeds. Claims against ocean carriers shall be 
collected in U.S. dollars (or in the currency in which freight is paid) 
and shall be remitted (less amounts authorized to be retained) by 
Cooperating Sponsors to CCC. Claims against Cooperating Sponsors shall 
be paid to CCC in U.S. dollars. With respect to commodities lost, 
damaged or misused, amounts paid by Cooperating Sponsors and third 
parties in the country of distribution shall be deposited with the U.S. 
Disbursing Officer, American Embassy, preferably in U.S. dollars with 
instructions to credit the deposit to an appropriate CCC account as 
determined by CCC, or in local currency at the highest rate of exchange 
legally obtainable on the date of deposit with instructions to credit 
the deposit to an appropriate CCC account as determined by CCC. With 
respect to sale proceeds and program income, amounts recovered may be 
deposited in the same account as the sale proceeds and may be used for 
purposes of the program.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59877, Nov. 6, 1998]



Sec. 1499.16  Records and reporting requirements.

    (a) Records and reports--general requirements. The Cooperating 
Sponsor shall maintain records for a period of three (3) years from the 
date of export of the commodities that accurately reflect the receipt 
and use of the commodities and any proceeds realized from the sale of 
commodities. The Government of the Exporting Country may, at reasonable 
times, inspect the Cooperating Sponsor's records pertaining to the 
receipt and use of the commodities and proceeds realized from the sale 
of the commodities, and have access to the Cooperating Sponsor's 
commodity storage and distribution sites and to locations of activities 
supported with proceeds realized from the sale of the commodities.
    (b) Evidence of export. The Cooperating Sponsor's freight forwarder 
shall, within thirty (30) days after export,

[[Page 661]]

submit evidence of export of the agricultural commodities to the Chief, 
Export Operations Division, KCCO. If export is by sea or air, the 
Cooperating Sponsor's freight forwarder shall submit five copies of the 
carrier's on board bill of lading or consignee's receipt authenticated 
by a representative of the U.S. Customs Service. The evidence of export 
must show the kind and quantity of agricultural commodities exported, 
the date of export, and the destination country.
    (c) Reports. (1) The Cooperating Sponsor shall submit a semiannual 
logistics report to the Agricultural Counselor or Attache and to the 
Director, CCC Program Support Division, FAS/USDA, Washington, DC 20250-
1031, covering the receipt of commodities. Cooperating sponsors must 
submit reports on Form CCC-620 and submit the first report by May 16 for 
agreements signed during the period, October 1 through March 31, or by 
November 16 for agreements signed during the period, April 1 through 
September 30. The first report must cover the time period from the date 
of signing and subsequent reports must be provided at six months 
intervals covering the period from the due date of the last report until 
all commodities have been distributed or sold and such distribution or 
sale reported to CCC. The report must contain the following data:
    (i) Receipts of agricultural commodities including the name of each 
vessel, discharge port(s) or point(s) of entry, the date discharge was 
completed, the condition of the commodities on arrival, any significant 
loss or damage in transit; advice of any claim for, or recovery of, or 
reduction of freight charges due to loss or damage in transit on U.S. 
flag vessels;
    (ii) Estimated commodity inventory at the end of the reporting 
period;
    (iii) Quantity of commodity on order during the reporting period;
    (iv) Status of claims for commodity losses both resolved and 
unresolved during the reporting period;
    (v) Quantity of commodity damaged or declared unfit during the 
reporting period; and
    (vi) Quantity and type of the commodity that has been directly 
distributed by the Cooperating Sponsor, distribution date, region of 
distribution, and estimated number of individuals benefiting from the 
distribution.
    (2) If the Program Agreement authorizes the sale or barter of 
commodities by the Cooperating Sponsor, the Cooperating Sponsor shall 
also submit a semiannual monetization report to the Agricultural 
Counselor or Attache and to the Director, CCC Program Support Division, 
FAS/USDA, Washington, DC 20250-1031, a monetization report covering the 
deposits into and disbursements from the special account for the 
purposes specified in the Program Agreement. Cooperating Sponsors must 
submit reports on Form CCC-621 and submit the first report by May 16 for 
agreements signed during the period, October 1 through March 31, or by 
November 16 for agreements signed during the period, April 1 through 
September 30. The first report must cover the time period from the date 
of signing and subsequent reports must be provided at six months 
intervals covering the period from the due date of the last report until 
all funds generated from commodity sales have been distributed and such 
distribution reported to CCC. The report must contain the following 
information and include both local currency amounts and U.S. dollar 
equivalents:
    (i) Quantity and type of commodities sold;
    (ii) Proceeds generated from the sale;
    (iii) Proceeds deposited to the special account including the date 
of deposit;
    (iv) Interest earned on the special account;
    (v) Disbursements from the special account, including date, amount 
and purpose of the disbursement;
    (vi) Any balance carried forward in the special account from the 
previous reporting period; and
    (vii) In connection with a section 416(b) Program Agreement only, a 
description of the effectiveness of sales and barter provisions in 
facilitating the distribution of commodities and products to targeted 
recipients, and a description of the extent, if any, that sales, barter 
or use of commodities:
    (A) Affected the usual marketings of the United States;
    (B) Displaced or interfered with commercial sales of the United 
States;

[[Page 662]]

    (C) Disrupted world commodity prices or normal patterns of trade 
with friendly countries;
    (D) Discouraged local production and marketing of commodities in the 
recipient country;
    (E) Achieved the objectives of the Program Agreement; and
    (F) Could be improved in future agreements.
    (3) The Cooperating Sponsor shall furnish the Government of the 
Exporting Country such additional information and reports relating to 
the agreement as the Government of the Exporting Country may reasonably 
request.

[61 FR 60515, Nov. 29, 1996, as amended at 63 FR 59878, Nov. 6, 1998]



Sec. 1499.17  Audits.

    Nongovernmental Cooperating Sponsors shall assure that audits are 
performed to assure compliance with Program Agreements and the 
provisions of this part. An audit undertaken in accordance with OMB 
Circular A-133, shall fulfill the audit requirements of this section. 
Audits shall be performed at least annually until all commodities have 
been distributed and sale proceeds expended. Both the auditor and the 
auditing standards to be used by the Cooperating Sponsor must be 
acceptable to CCC. The Cooperating Sponsor is also responsible for 
auditing the activities of recipient agencies that receive more than 
$25,000 of provided commodities or sale proceeds. This responsibility 
may be satisfied by relying upon independent audits of the recipient 
agency or upon a review conducted by the Cooperating Sponsor.



Sec. 1499.18  Suspension of the program.

    All or any part of the assistance provided under a Program 
Agreement, including commodities in transit, may be suspended by CCC if:
    (a) The Cooperating Sponsor fails to comply with the provisions of 
the Program Agreement or this part;
    (b) CCC determines that the continuation of such assistance is no 
longer necessary or desirable; or
    (c) CCC determines that storage facilities are inadequate to prevent 
spoilage or waste, or that distribution of commodities will result in 
substantial disincentive to, or interference with, domestic production 
or marketing in the recipient country.



Sec. 1499.19  Sample documents and guidelines for developing proposals and reports.

    CCC has developed guidelines to assist the Cooperating Sponsors in 
developing proposals and reporting on program logistics and commodity 
sales. Cooperating Sponsors may obtain these guidelines from the 
Director, PDD.



Sec. 1499.20  Paperwork reduction requirement.

    The paperwork and record keeping requirements imposed by this part 
have been previously submitted to the Office of Management and Budget 
(OMB) for review under the Paperwork Reduction Act of 1995. OMB has 
assigned control number 0551-0035 for this information collection.

[[Page 663]]



                CHAPTER XV--FOREIGN AGRICULTURAL SERVICE,






                        DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1520            Availability of information to the public...         665
1530            Sugar import licensing......................         666
1540            International agricultural trade............         689
1550            Programs to help develop foreign markets for 
                    agricultural commodities................         694
1560            Procedures to monitor Canadian fresh fruit 
                    and vegetable imports...................         697
1570            Export Bonus Programs.......................         698

[[Page 665]]



PART 1520--AVAILABILITY OF INFORMATION TO THE PUBLIC--Table of Contents




                           Subpart A--General

Sec.
1520.1  General statement.
1520.2  Organizational description.

   Subpart B--Availability of Program Information Staff Manuals, and 
                            Related Material

1520.3  Public inspection and copying.
1520.4  Indexes.

             Subpart C--Availability of Identifiable Records

1520.5  Request for records.
1520.6  Appeals.

    Authority: 5 U.S.C. 552.

    Source: 40 FR 27008, June 26, 1975, unless otherwise noted.



                           Subpart A--General



Sec. 1520.1  General statement.

    This part is issued in accordance with the regulations of the 
Secretary of Agriculture part 1, subpart A of subtitle A, of this title 
(7 CFR 1.1 to 1.16 and appendix A thereto), implementing the Freedom of 
Information Act (5 U.S.C. 552). The Secretary's Regulations, as 
implemented by the regulations in this part govern the availability of 
records of the Foreign Agricultural Service (FAS) to the public.



Sec. 1520.2  Organizational description.

    The description of the organization of FAS is published as a notice 
in the Federal Register and may be revised from time to time in like 
manner. Such description contains a listing of FAS organizational units 
and their functions.



   Subpart B--Availability of Program Information Staff Manuals, and 
                            Related Material



Sec. 1520.3  Public inspection and copying.

    5 U.S.C. 552(a)(2) requires that certain materials be made available 
for public inspection and copying. Members of the public may request 
access to such materials through the Information Division, FAS, Room 
5074, South Building, Department of Agriculture, 14th Street and 
Independence Avenue, SW., Washington, DC 20250-1004. The office will be 
open from 8:30 a.m. to 5 p.m. Monday through Friday, except legal 
holidays.

[61 FR 2898, Jan. 30, 1996]



Sec. 1520.4  Indexes.

    5 U.S.C. 552(a)(2) required that each agency publish or otherwise 
make available a current index of all materials required to be made 
available for public inspection and copying. Copies of the FAS Index may 
be obtained free of charge by telephoning (202) 720-7115 or writing to 
the Freedom of Information Officer, Information Division, FAS, Ag Box 
1004, Department of Agriculture, 14th Street and Independence Avenue, 
SW., Washington, DC 20250-1004.

[61 FR 2898, Jan. 30, 1996]



             Subpart C--Availability of Identifiable Records



Sec. 1520.5  Request for records.

    (a) Requests for records under 5 U.S.C. 552(a)(3) shall be made in 
accordance with 7 CFR 1.3(a) and addressed to the Freedom of Information 
Officer, Information Division, Foreign Agricultural Service, Ag Box 
1004, Department of Agriculture, 14th Street and Independence Avenue, 
SW., Washington, DC 20250-1004.
    (b) Processing of a request for information can be facilitated if 
``FOIA REQUEST'' is placed in capital letters on the front of the 
envelope and at the top of the letter. Additional information may be 
obtained by telephoning the FAS Information Division on (202) 720-7115.

[61 FR 2868, Jan. 30, 1996]



Sec. 1520.6  Appeals.

    (a) Any person whose request under Sec. 1520.5 is denied shall have 
the right to appeal such denial. This appeal shall be submitted in 
accordance with 7 CFR 1.3(e) and addressed to the Administrator, Foreign 
Agricultural Service, Department of Agriculture, 14th and Independence 
Avenue, SW., Washington, DC 20250-1001.

[[Page 666]]

    (b) In the event the request is denied and the requestor wishes to 
appeal such decision, it will facilitate processing such appeal by 
placing the words ``FOIA APPEAL'' in capital letters on the front of the 
envelope and at the top of the appeal letter. Additional information may 
be obtained by telephoning the FAS Information Division on (202) 720-
7115.

[40 FR 27008, June 26, 1975, as amended at 61 FR 2898, Jan. 30, 1996]



PART 1530--SUGAR IMPORT LICENSING--Table of Contents




           Subpart A--Sugar To Be Re-exported in Refined Form

Sec.
1530.100  Definitions.
1530.101  Application for a license.
1530.102  Issuance of a license.
1530.103  Bond requirements.
1530.104  Entry of sugar.
1530.105  Proof of export and notice of drawback claims.
1530.106  Transfer of sugar.
1530.107  Charges and credits to licenses.
1530.108  Replacement of sugars; substitution of sugars.
1530.109  Records.
1530.110  Enforcement.
1530.111  Appeals.
1530.112  Waivers.
1530.113  Expiration of licenses.
1530.114  Paperwork Reduction Act assigned number.
1530.115  Transitional provisions.

     Subpart B--Sugar To Be Re-exported in Sugar Containing Products

1530.200  Definitions.
1530.201  Application for a license.
1530.202  Issuance of a license.
1530.203  Bond requirements.
1530.204  Transfer of sugar.
1530.205  Proof of export and notice of drawback claims.
1530.206  Charges and credits to licenses.
1530.207  Replacement of sugars; substitution of sugars.
1530.208  Records.
1530.209  Enforcement.
1530.210  Appeals.
1530.211  Waivers.
1530.212  Expiration of licenses.
1530.213  Paperwork Reduction Act assigned number.
1530.214  Transitional provisions.

        Subpart C--Sugar for the Production of Polyhydric Alcohol

1530.300  Definitions.
1530.301  Application for a license.
1530.302  Issuance of a license.
1530.303  Bond requirements.
1530.304  Entry of sugar.
1530.305  Proof of production of polyhydric alcohols.
1530.306  Charges and credits to licenses.
1530.307  Replacement of sugars; substitution of sugars.
1530.308  Records.
1530.309  Enforcement.
1530.310  Appeals.
1530.311  Waivers.
1530.312  Expiration of licenses.
1530.313  Paperwork Reduction Act assigned number.
1530.314  Transitional provisions.

    Authority: Presidential Proclamation No. 6179, 55 FR 38293; 
additional U.S. note 3 to chapter 17 of the Harmonized Tariff Schedule 
of the United States (19 U.S.C. 1202).

    Source: 55 FR 41489, Oct. 12, 1990, unless otherwise noted.



           Subpart A--Sugar To Be Re-exported in Refined Form



Sec. 1530.100  Definitions.

    For purposes of this subpart, unless the context indicates 
otherwise, the following words and phrases have the meaning ascribed to 
them:
    (a) Additional U.S. note 3 means paragraph (c) of additional U.S. 
note 3 to chapter 17 of the HTS, unless otherwise described.
    (b) Agent means a licensed customhouse broker, freight forwarder, or 
other person authorized to act on behalf of the licensee.
    (c) Date of entry is the date when the U.S. Customs Service entry 
form is properly executed and deposited, together with any estimated 
duties and special import fees and any related documents required by law 
or regulation to be filed with such form at the time of entry with the 
appropriate customs official.
    (d) Date of export means the on-board date of an ocean carrier bill 
of lading or an airway bill or on-board date of an intermodal bill of 
lading; if exported by rail or truck, the date of entry shown on an 
authenticated landing certificate

[[Page 667]]

or similar document issued by an official of the government of the 
importing country; or the date of export established by such other proof 
of export as is acceptable to the Licensing Authority.
    (e) Date of Transfer means the date of shipment of sugar transferred 
from a refiner to a manufacturer.
    (f) Department means the United States Department of Agriculture.
    (g) Drawback and drawback entry have the meanings ascribed to them 
in 19 CFR part 191.
    (h) Enter or entry, with respect to sugar imported into the customs 
territory of the United States, refers to sugar that is entered or 
withdrawn from warehouse for consumption.
    (i) HTS means the Harmonized Tariff Schedule of the United States.
    (j) License means a license, issued by the Secretary through the 
Licensing Authority, which permits the entry, in accordance with the 
provisions of this subpart, of raw cane sugar described in subheading 
1701.11.02 of the HTS for the purpose of being refined and re-exported 
in refined form or of being transferred to a manufacturer under the 
provisions of subpart B of this part.
    (k) Licensee means a refiner to whom a license has been issued 
pursuant to the provisions of this subpart.
    (l) Licensing Authority means the Team Leader, import Quota 
Programs, import Policies and Trade Analysis Division, Foreign 
Agricultural Service, U.S. Department of Agriculture, or the Team 
Leader's designee.
    (m) Manufacturer means a person who is the recipient of a transfer 
of refined sugar from a refiner, who uses the sugar to produce a sugar 
containing product within the customs territory of the United States, 
and who exports or causes to be exported such product under a license 
issued under the provisions of subpart B of this part.
    (n) Notice of Transfer means a document, in form and substance 
satisfactory to the Licensing Authority, that is signed by both the 
licensee and a manufacturer certifying delivery of a specified quantity 
of refined sugar, corresponding to sugar imported under the provisions 
of this subpart, from the licensee to the manufacturer.
    (o) Number 11 contract price means the daily closing price per pound 
of raw sugar for the nearby Number 11 contract of the New York Coffee, 
Sugar and Cocoa Exchange.
    (p) Number 14 contract price means the daily closing price per pound 
of raw sugar for the nearby Number 14 contract of the New York Coffee, 
Sugar and Cocoa Exchange.
    (q) Person means any individual, partnership, corporation, 
association, estate, trust or any other business enterprise or legal 
entity.
    (r) Program means the licensing program provided for in the 
regulations in this subpart and includes the requirements and 
limitations of HTS subheading 1701.11.02 and additional U.S. note 3.
    (s) Raw value means, for a given quantity of sugar, the equivalent 
of that quantity of sugar in terms of ordinary commercial raw sugar 
testing 96 degrees by the polariscope as determined in accordance with 
regulations issued by the Secretary of the Treasury (19 CFR part 151, 
subpart B).
    (t) Refined sugar means commercial refined sugar testing 99.7 
degrees or above by the polariscope as determined in accordance with 
regulations issued by the Secretary of the Treasury.
    (u) Refiner means any person in the United States who engages in the 
processing (refining) of raw sugar into refined sugar by substantially 
subjecting the raw sugar to the processes of affination or defecation, 
clarification, and further purification by absorption or 
crystallization.
    (v) Sugar containing product means any product (other than articles 
described in subheadings 1701.11.01, 1701.11.02, 1701.11.03, 1701.12.01, 
1701.12.02, 1701.91.21, 1701.91.22, 1701.99.01, 1701.99.02, 1702.90.31, 
1702.90.32, 1806.10.41, 1806.10.42, 2106.90.11 and 2106.90.12 of the 
HTS) to which sugar has been added as an ingredient and which is to be 
exported without further processing.



Sec. 1530.101  Application for a license.

    (a) An applicant for a license must apply in writing to the 
Licensing Authority. The letter of application shall contain at a 
minimum the following information:

[[Page 668]]

    (1) The name and address of the applicant and of the refinery or 
refineries at which the raw cane sugar entered under subheading 
1701.11.02 will be processed (refined);
    (2) The license amount requested, not to exceed the maximum license 
amount;
    (3) A description of the kind and polarity of refined sugars to be 
exported or transferred;
    (4) The name of the firm that will establish a performance bond in 
favor of the United States Government on behalf of the applicant; and
    (5) A certification that the refiner shall:
    (i) Refine a quantity of sugar equal to the quantity of sugar 
entered under the license;
    (ii) Export or transfer such sugar or corresponding sugar within the 
applicable time limits; and
    (iii) Shall not request credit on the refiner's license, if such 
license is issued, for the exportation or transfer of any refined sugar, 
or if such credit has been granted, shall promptly (within 5 business 
days of the filing of a drawback entry) notify the Licensing Authority 
and request that such credit be revoked, if the exportation of such 
refined sugar or any sugar containing product manufactured with the use 
of such transferred sugar has resulted in, or has been used as the basis 
of a claim by the licensee or any other person for, a refund, as 
drawback, of any duties paid on the importation of any sugars, syrups or 
molasses described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS.
    (b) A licensee shall promptly notify the Licensing Authority if any 
of the information described in paragraph (a) of this section has 
changed and shall submit an amended application upon the request of the 
Licensing Authority.
    (c) The Licensing Authority may waive any provisions of this section 
for good cause if it is determined that such a waiver will not adversely 
affect the purposes of this program.



Sec. 1530.102  Issuance of a license.

    (a) The Secretary of Agriculture, through the Licensing Authority, 
may issue a license to a refiner under which the refiner may import 
sugar described in HTS subheading 1701.11.02 in accordance with the 
provisions of this program. The license may contain such conditions, 
limitations or restrictions as the Licensing Authority determines to be 
appropriate for the purposes of this program. The Licensing Authority 
may add or modify such conditions, limitations or restrictions at such 
time and in such manner as the Licensing Authority, in his or her 
discretion, determines to be necessary or appropriate for the purposes 
of this program. A refiner may hold only one license at any given time.
    (b) A quantity of refined sugar equivalent to the quantity of sugar, 
raw value, imported under a license, adjusted in accordance with 
Sec. 1530.107 of this subpart, must be exported within 90 days of the 
date of entry of such sugar or must be transferred to a manufacturer 
within 90 days of the date of entry of such sugar.
    (c) The maximum license amount is 50,000 metric tons of sugar, raw 
value. Quantities of sugar imported under the license will be charged to 
the license and quantities of refined sugar exported or transferred will 
be credited to the license as provided in Sec. 1530.107. At no time may 
the outstanding balance of charges or credits exceed the maximum license 
amount except as a result of adjustments for polarization made pursuant 
to Sec. 1530.107(c).
    (d) The licensee shall reserve all rights, if any, to claim drawback 
refunds with respect to the exportation or transfer of refined sugar 
under this program. No credit on a license shall be made if any refund, 
as drawback, of any duties paid on the importation of any sugars, syrups 
or molasses described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS is claimed 
or received on the basis, or as a result, of the exportation of such 
refined sugar or any sugar containing products manufactured with the use 
of such transferred sugar.
    (e) If a licensee has made a full settlement of the balance on a 
license, the licensee may surrender the license on terms and conditions 
acceptable to the Licensing Authority. A licensee may,

[[Page 669]]

with the written permission of the Licensing Authority, transfer a 
license to another refiner who does not hold a license, subject to such 
terms and conditions as the Licensing Authority may impose as he or she 
determines to be necessary or appropriate to carry out the purposes of 
this subpart.
    (f) The licensee may utilize an agent to import, export or make 
transfers of sugar. The licensee must provide to the Licensing Authority 
a written authorization designating such person to act as an agent for 
the purpose of importing, exporting or transferring sugar. If the 
licensee uses an agent to export the refined sugar, the licensee shall 
notify the Licensing Authority in writing of the agent's identity, and 
the agent shall certify to the Licensing Authority in writing that the 
refined sugar has been exported from the customs territory of the United 
States.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30863, July 8, 1991]



Sec. 1530.103  Bond requirements.

    (a) Unless the licensee has posted a performance bond with the U.S. 
Customs Service which is satisfactory to the Licensing Authority with 
respect to the requirements of this program, the licensee shall post a 
performance bond which meets the requirements of this section with the 
Licensing Authority. However, no bond will be required for the quantity 
of any sugar imported under license that corresponds to a quantity of 
sugar that has been exported or transferred prior to the importation of 
such sugar and credited to the license in accordance with Sec. 1530.107, 
provided that the Licensing Authority issues a written waiver of the 
bond requirement.
    (b) A bond may cover entries made either during the period of time 
specified in the bond (term bond) or for a specified entry (single entry 
bond).
    (c) Only the licensee who will process (refine) the sugar may be the 
principal on a bond to cover such sugar to be re-exported in refined 
form. The surety or sureties shall be among those listed by the 
Secretary of the Treasury as acceptable on Federal bonds.
    (d) The obligation under the bond shall be made effective as of the 
date of entry of the imported sugar.
    (e) The amount of the bond shall be equal to 20 cents per pound of 
sugar imported under the license.
    (f) The appropriate customs official or the Licensing Authority, as 
appropriate, will release the obligation under the bond by 20 cents per 
pound for the quantity of sugar credited to the license in accordance 
with Sec. 1530.107.
    (g) If the licensee fails to qualify for a credit to the license 
within 95 days of the date of export of corresponding sugar in an amount 
sufficient to offset the charge to the license for that corresponding 
sugar or if such a credit initially granted is subsequently revoked, 
payment will be made to the United States of America under the bond of a 
monetary amount equal to the difference between the Number 11 contract 
price and the Number 14 contract price, per pound of raw sugar, in 
effect on the last market day before the date of entry of the sugar or 
the last market day before the end of the period during which export was 
required, whichever difference is greater, times the quantity of refined 
sugar, converted to raw value, that should have been, but was not, 
exported in timely compliance with the requirements of this subpart. In 
the event no Number 11 contract price or Number 14 contract price is 
reported by the New York Coffee, Sugar and Cocoa Exchange, for the 
relevant market day, the Licensing Authority may estimate such price as 
he or she deems appropriate.
    (h) Within 10 business days of the date of issuance of a license, 
the licensee shall submit to the Licensing Authority a copy of the 
performance bond.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30863, July 8, 1991]



Sec. 1530.104  Entry of sugar.

    (a) The licensee shall be permitted to enter imported sugar under 
subheading 1701.11.02 of the HTS in conformity with the conditions, 
limitations and restrictions of the license, the provisions of this 
subpart and additional U.S. note 3, and any other procedures specified 
by the Licensing Authority.
    (b) The licensee must present the license to the appropriate U.S. 
Customs Service official at the time of entry.

[[Page 670]]

Such customs official will mark on the license:
    (1) The quantity of sugar entered;
    (2) The date of entry; and
    (3) The customs entry number.
    (c) The licensee shall submit to the Licensing Authority a copy of 
the license, as marked by the customs official, within 10 business days 
after each entry of sugar.
    (d) The licensee shall submit to the Licensing Authority a 
statement, certified as true and accurate, of the polarization and 
weight of the imported sugar to be charged to the license. This 
statement must adequately identify the imported sugar and state the 
basis for the determination of the polarization of the sugar. The basis 
for such determination must be either the settlement polarization or 
some other means approved by the Licensing Authority.



Sec. 1530.105  Proof of export and notice of drawback claims.

    (a) The licensee shall provide a written certification that he or 
she has exported a specified quantity of refined sugar. The 
certification shall include:
    (1) The licensee's name, address, and license number;
    (2) A description of the refined sugar exported, the polarity of 
such sugar, and its weight;
    (3) An identification of the imported sugar to which the exported 
sugar corresponds, including the quantity and polarization of the 
imported sugar;
    (4) The date of export, the port or point from which exported, the 
bill of lading number(s), and an identification of the vessel or other 
export carrier and any agent used in connection with the export;
    (5) The country of destination and foreign consignee;
    (6) The entry number of a claim, if any, by the licensee or any 
other person for a refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS on the basis, or as a result, of the 
exportation of the refined sugar and the amount of such refund; and
    (7) A statement that the sugar has been exported from the customs 
territory of the United States, that the licensee has reserved all 
rights to claim drawback refunds, and that no refund, as drawback, of 
any duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 
1702.90.32, 1806.10.42, or 2106.90.12 of the HTS has been or will be 
claimed or received on the basis, or as a result, of the exportation of 
the refined sugar.
    (b) The certification must be submitted to the Licensing Authority 
within 95 days of the date of export. The Licensing Authority will not 
credit the license for sugar exported unless satisfactory and timely 
certification is received.
    (c) Notice of drawback claims. Whenever the licensee knows or has 
reason to know that any claim has been made, by the licensee or any 
other person for a refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheading 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS on the basis, or as a result, of the 
exportation of refined sugar under this program or of sugar containing 
products produced from sugar transferred from the licensee to a 
manufacturer, under the provisions of subpart B of this part, the 
licensee shall within 5 business days provide a written notification to 
the Licensing Authority. This notification shall include the following 
information, if known or reasonably believed to be true by the licensee:
    (1) The licensee's name, address, and license number;
    (2) A description of the refined sugar or sugar containing products 
exported, and the weight of such refined sugar or sugar containing 
products;
    (3) An identification of the imported sugar to which the exported 
sugar or sugar contained in the exported sugar containing products 
corresponds, including the quantity of the imported sugar;
    (4) The date of export, the port or point from which exported, the 
bill of lading number(s), and an identification of the vessel or other 
export carrier and any agent used in connection with the export;

[[Page 671]]

    (5) The country of destination and foreign consignee;
    (6) The entry number of the drawback claim and the amount of such 
refund of duties; and
    (7) The identity of the person who filed such drawback entry.
    (d) The Licensing Authority may waive any of the provisions of this 
section if compliance with the relevant provisions of HTS subheading 
1701.11.02, additional U.S. note 3, and all other regulations in this 
subpart is otherwise established to the Licensing Authority's 
satisfaction.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30863, July 8, 1991]



Sec. 1530.106  Transfer of sugar.

    (a) Transfers of sugar from a licensee to a manufacturer must 
conform with the conditions of the license, the provisions of this 
program and the program provided for in subpart B of this part, and any 
other procedures specified by the Licensing Authority.
    (b) Refined sugar transferred under a license must be shipped by the 
licensee to the manufacturer within 90 days of the date of entry of the 
sugar entered under subheading 1701.11.02 of the HTS to which the 
refined sugar corresponds.
    (c) The licensee shall submit to the Licensing Authority, within 10 
business days of the transfer of sugar, a Notice of Transfer which must 
adequately identify the refined sugar transferred by the licensee, 
including the polarization and weight of the transferred sugar and the 
date of transfer.
    (d) The licensee may make transfers of refined sugar to more than 
one manufacturer; however, the combined total of such transfers may not 
exceed the maximum license amount.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30863, July 8, 1991]



Sec. 1530.107  Charges and credits to licenses.

    (a) Charges will be made to a license, effective as of the date of 
entry, for quantities of sugar (adjusted on the basis set forth in 
paragraph (c) of this section to determine raw value) entered under the 
license, when the licensee submits the information required by 
Sec. 1530.104 or when the Licensing Authority otherwise determines that 
the licensee has made an entry under subheading 1701.11.02 of the HTS.
    (b) At the request of the licensee and upon satisfactory and timely 
proof that the licensee has complied with all of the requirements of 
this program, the Licensing Authority will credit a license for:
    (1) Quantities of refined sugar, adjusted pursuant to paragraph (c) 
of this section, for which proof of export has been submitted in 
accordance with the provisions of Sec. 1530.105 of this subpart, but 
such credit, if granted conditionally, will become final only when the 
Licensing Authority is satisfied that no refund, as drawback, of any 
duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 
1702.90.32, 1806.10.42, or 2106.90.12 of the HTS has been or will be 
claimed or received on the basis, or as a result, of the exportation of 
the refined sugar;
    (2) Quantities of refined sugar, adjusted pursuant to paragraph (c) 
of this section, for which a Notice of Transfer has been submitted to 
the Licensing Authority in accordance with Sec. 1530.106 of this 
subpart; and
    (3) Quantities of sugar charged to the license which the Licensing 
Authority determines have been destroyed, lost in processing the sugar, 
or otherwise disposed of so as to render the exportation or transfer of 
a corresponding quantity of sugar impossible or unnecessary.
    (c) Adjustments of the quantities of imported sugar charged to the 
license and refined sugar exports credited to the license will be made 
as follows:
    (1) To obtain the raw value for imported sugar with a polarization 
of 92 degrees or above, the adjustment will be made by multiplying the 
polarization times 0.0175, subtracting 0.68 from this product, and 
multiplying the difference by the weight. Expressed algebraically, this 
formula is: [(polarization  x  0.0175) -0.68]  x  weight.
    (2) To obtain the raw value for imported sugar with a polarization 
of less than 92 degrees, the adjustment will be made by dividing the 
total sugar content by 0.972.
    (3) To determine the quantity of refined sugar that must be exported 
to

[[Page 672]]

equal a corresponding quantity of imported sugar charged to a license, 
the adjustment will be made by dividing the quantity of sugar imported, 
expressed in raw value, by 1.07.
    (d) The Licensing Authority may revoke any credit previously made to 
a license is the Licensing Authority determines, on the basis of 
evidence obtained after the credit was granted, that the licensee had 
not complied with all of the requirements of this subpart or if the 
exported sugar is re-exported or returned to the customs territory of 
the United States without having undergone a substantial transformation.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30863, July 8, 1991]



Sec. 1530.108  Replacement of sugars; substitution of sugars.

    (a) The sugar exported or transferred does not have to be the same 
sugar that was entered under subheading 1701.11.02 of the HTS.
    (b) Exportation or transfer of sugar for credit to the license may 
occur any time after the date on which the license was issued by the 
Licensing Authority. Any quantity of sugar exported or transferred after 
the date on which the license was issued, but prior to the entry of the 
corresponding sugar, will be treated as having been exported or 
transferred within the time limits of Sec. 1530.102(b).



Sec. 1530.109  Records.

    (a) Each licensee requesting credit in accordance with 
Sec. 1530.107(b) shall keep records to establish for all refined sugar 
exported under the provisions of this program:
    (1) The quantity and identity of the sugar, raw value, entered under 
subheading 1701.11.02 of the HTS;
    (2) The date or inclusive dates of processing (refining);
    (3) The quantity and description of the articles produced, and their 
polarities;
    (4) The quantity of sugar, refined basis, exported under the 
provisions of this subpart;
    (5) The quantity of sugar, refined basis, transferred to a 
manufacturer under the provisions of this subpart, and the identity of 
such manufacturer;
    (6) The country of destination, foreign consignee, date of export, 
port, export carrier and any agent used in connection with the export 
and all documents relating to such exportation, including but not 
limited to an original, certified U.S. Customs Service Form 7512, an 
original bill of lading or copy of a U.S. Customs Service Form 7511, and 
any contract, invoice, bill of lading, dock receipt, ship's manifest, or 
copies thereof; and
    (7) Any drawback entry, including all related documents, filed by 
the licensee or any other person for a refund, as drawback, of any 
customs duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.01, 1701.11.02, 1701.11.03, 1701.12.01, 
1701.12.02, 1701.91.21, 1701.91.22, 1701.99.01, 1701.99.02, 1702.90.31, 
1702.90.32, 1806.10.41, 1806.10.42, 2106.90.11 and 2106.90.12 of the HTS 
on the basis, or as a result, of the exportation of the refined sugar 
and the amount of any such refund paid.
    (b) All records required by this section to be kept by a licensee 
shall be retained for at least 5 years after a license is credited for 
the exportation or transfer of the refined sugar.
    (c) The licensee must, upon request, make the records covered by 
this section available for inspection and copying by the Licensing 
Authority or other appropriate official of the Federal Government.
    (d) If, after inspection of the records, the Licensing Authority 
determines that such records are inadequate to establish that the 
imported sugar was refined by the licensee, sugar was lost or destroyed 
or otherwise disposed of to render exportation or transfer impossible or 
unnecessary, refined sugar was exported, drawback of duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS was not claimed or received on the basis, or as 
a result, of the exportation of the refined sugar, or any other 
requirement of this program was complied with, the Licensing Authority 
may revoke credits granted for the appropriate quantity of sugar.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30864, July 8, 1991]

[[Page 673]]



Sec. 1530.110  Enforcement.

    (a) If at any time after receiving the proof of export described in 
Sec. 1530.105 of this subpart, the Licensing Authority determines that 
the export of a quantity of refined sugar corresponding to the quantity 
of sugar entered under the license did not occur, and if the bond has 
been released under Sec. 1530.103, the Licensing Authority may hold the 
licensee liable for the difference between the Number 11 contract price 
and the Number 14 contract price, per pound of raw sugar, in effect on 
the last market day before the date of entry of the sugar or the last 
market day before the end of the period during which export was 
required, whichever difference is greater, times the quantity of refined 
sugar, converted to raw value, that should have been, but was not, 
exported. In the event no Number 11 contract price or Number 14 contract 
price is reported by the New York Coffee, Sugar and Cocoa Exchange, for 
the relevant market day, the Licensing Authority may estimate such price 
as he or she deems appropriate.
    (b) If at any time after receiving the licensee's certification that 
no refund, as drawback, of any duties paid on the importation of any 
sugars, syrups or molasses described in subheadings 1701.11.03, 
1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, or 
2106.90.12 of the HTS has been or will be claimed or received on the 
basis, or as a result, of the exportation of any refined sugar, the 
Licensing Authority determines that a refund of such customs duties has 
been claimed or received by the licensee or any other person, and if the 
bond has been released under Sec. 1530.103, the Licensing Authority may 
hold the licensee liable for the difference between the Number 11 
contract price and the Number 14 contract price, per pound of raw sugar, 
in effect on the last market day before the date of entry of the sugar 
or the last market day before the end of the period during which export 
was required, whichever difference is greater, times the quantity of 
sugar, converted to raw value, that should have been, but was not, 
exported. In the event no Number 11 contract price or Number 14 contract 
price is reported by the New York Coffee, Sugar and Cocoa Exchange, for 
the relevant market day, the Licensing Authority may estimate such price 
as he or she deems appropriate.
    (c) If at any time the Licensing Authority determines that a 
licensee has failed to comply with the requirements of this subpart, 
including the requirements of HTS subheading 1701.11.02 and of the 
relevant provisions of additional U.S. note 3, the Licensing Authority 
may, after notice to the licensee, suspend or revoke the license issued 
to the licensee under this program and may refuse to issue a license to 
that refiner. The Licensing Authority may suspend or revoke a license if 
claims are filed under 19 CFR part 191 for the refund, as drawback, of 
any duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 
1702.90.32, 1806.10.42, or 2106.90.12 of the HTS on the basis, or as a 
result, of the exportation of refined sugar under this program or if any 
claim under 19 CFR part 191 is denied on the basis that such refined 
sugar was not exported.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30864, July 8, 1991]



Sec. 1530.111  Appeals.

    (a) Any action or determination of the Licensing Authority under 
this subpart may be appealed to the Director, Import Policies and Trade 
Analysis Division, Foreign Agricultural Service (FAS), within 30 days 
from the date of notification. The appeal must be presented in writing 
and must specifically state any reason as to why such determination 
should not stand. The Director, Import Policies and Trade Analysis 
Division, FAS, will provide such person with an opportunity for an 
informal hearing on such matter.
    (b) A further appeal from the final decision of the Director, Import 
Policies and Trade Analysis Division, FAS, may be made to the 
Administrator, FAS, within five business days of the notification of the 
decision of the Director, Import Policies and Trade Analysis Division, 
FAS.



Sec. 1530.112  Waivers.

    Upon written application of the licensee, the Licensing Authority 
may

[[Page 674]]

extend the period for the export of refined sugar, may temporarily 
increase the maximum amount of the license, may extend the period for 
submitting proof of export, or may temporarily waive or modify any other 
requirement imposed by this subpart if such waiver or modification is 
necessary or appropriate under unusual, unforeseen or extraordinary 
circumstances and will not frustrate the purposes of this program and if 
compliance with the relevant provisions of HTS subheading 1702.11.02, 
additional U.S. note 3 is established to the Licensing Authority's 
satisfaction. The Licensing Authority may specify additional 
requirements or procedures in place of the requirements or procedures 
waived or modified.



Sec. 1530.113  Expiration of licenses.

    (a) The licenses issued under this program shall expire upon written 
notice to the licenses by the Licensing Authority. The notice will state 
the date on which the licensees will expire and any other details 
applicable to the expiration of the licenses.
    (b) If there have been no charges or credits on the License within 
12 months of the date on which the license was issued, or any subsequent 
period of 18 months, the license may be deemed to have expired.



Sec. 1530.114  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 35 and OMB number 0551-0015 has been assigned.



Sec. 1530.115  Transitional provisions.

    (a) All licenses issued to refiners prior to October 1, 1990, 
pursuant to the former provisions of 7 CFR 6.101, are canceled effective 
October 9, 1990.
    (b) Any refiner who, on September 30, 1990, held a license which had 
a balance of charges and credits other than zero and which is canceled 
pursuant to paragraph (a) of this section may be issued a new license 
upon such refiner's agreement to:
    (1) Fully settle the balance outstanding on such previous license, 
by bringing such balance to zero;
    (2) Comply with all the provisions of this subpart, subheading 
1701.11.02 of the HTS, and additional U.S. note 3; and
    (3) Comply with any terms, conditions and procedures imposed by the 
Licensing Authority in order to assure an orderly transition.
    (c) During the transitional period between October 1, 1990, and the 
promulgation of a final rule to replace the interim rule issued on 
October 9, 1990, the Licensing Authority may modify or waive any 
requirement of this subpart, including the requirements that a refiner 
make a written application for a license prior to the issuance of the 
license and make a written application for a waiver under Sec. 1530.111 
of this subpart, if the Licensing Authority determines such modification 
or waiver is necessary or appropriate to assure an orderly transition 
and will not frustrate the purposes of this program.



     Supbart B--Sugar To Be Re-exported in Sugar Containing Products



Sec. 1530.200  Definitions.

    For purposes of this subpart, unless the context indicates 
otherwise, the following words and phrases have the meanings ascribed to 
them:
    (a) Additional U.S. note 3 means paragraph (c) of additional U.S. 
note 3 to chapter 17 of the HTS.
    (b) Agent means customs house broker, freight forwarder, sugar 
refiner, or other person authorized to act on behalf of the licensee.
    (c) Corresponding sugar means the identical sugar entered under 
subheading 1701.11.02 of the HTS, such sugar after having been refined, 
or other sugar substituted for, or in replacement of, such imported or 
refined sugar in accordance with Secs. 1530.108 and 1530.207 of this 
part.
    (d) Date of entry is the date when the U.S. Customs Service entry 
form is properly executed and deposited, together with any estimated 
duties and special import fees and any related documents required by law 
or regulation to be filed with such form at the time of entry with the 
appropriate customs official.

[[Page 675]]

    (e) Date of export means the on-board date of an ocean carrier bill 
of lading or an airway bill or on-board date of an intermodal bill of 
lading; if exported by rail or truck, the date of entry shown on an 
authenticated landing certificate or similar document issued by an 
official of the government of the importing country; or the date of 
export established by such other proof of export as is acceptable to the 
Licensing Authority.
    (f) Date of Transfer means the date of shipment of sugar transferred 
from a refiner to a manufacturer.
    (g) Drawback and drawback entry have the meanings ascribed to them 
in 19 CFR part 191.
    (h) Enter or entry, with respect to sugar imported into the customs 
territory of the United States, refers to sugar that is entered or 
withdrawn from warehouse for consumption.
    (i) HTS means the Harmonized Tariff Schedule of the United States.
    (j) License means a license, issued by the Secretary through the 
Licensing Authority, which permits the transfer, in accordance with the 
provisions of this subpart, of refined sugar, corresponding to sugar 
imported under subpart A of this part, from a refiner to a manufacturer.
    (k) Licensee means a manufacturer to whom a license has been issued 
pursuant to the provisions of this subpart.
    (l) Licensing Authority means the Team Leader, Import Quota 
Programs, Import Policies and Trade Analysis Division, Foreign 
Agricultural Service, U.S. Department of Agriculture, or the Team 
Leader's designee.
    (m) Manufacturer means a person who is the recipient of a transfer 
or refined sugar from a refiner, who uses the sugar to produce a sugar 
containing product within the customs territory of the United States, 
and who exports or causes to be exported such product.
    (n) Notice of Transfer means a document, in form and substance 
satisfactory to the Licensing Authority, that is signed by both a 
refiner and the licensee certifying delivery of a specified quantity of 
refined sugar, corresponding to sugar imported under the provisions of 
subpart A of this part, from the refiner to the licensee.
    (o) Number 11 contract price means the daily closing price per pound 
of raw sugar for the nearby Number 11 contract of the New York Coffee, 
Sugar and Cocoa Exchange.
    (p) Number 14 contract price means the daily closing price per pound 
of raw sugar for the nearby Number 14 contract of the New York Coffee, 
Sugar and Cocoa Exchange.
    (q) Person means any individual, partnership, corporation, 
association, estate, trust or any other business entity.
    (r) Program means the licensing program provided for in the 
regulations in this subpart and includes the requirements and 
limitations of HTS subheading 1701.11.02 and additional U.S. note 3.
    (s) Raw value means, for a given quantity of sugar, the equivalent 
of that quantity of sugar in terms of ordinary commercial raw sugar 
testing 96 degrees by the polariscope as determined in accordance with 
regulations issued by the Secretary of the Treasury.
    (t) Refiner means any person in the United States who engages in the 
processing (refining) of raw sugar into refined sugar by substantially 
subjecting the raw sugar to the processes of (1) affination or 
defecation, (2) clarification, and (3) further purification by 
absorption or crystallization and who holds a license issued under the 
regulations in subpart A of this part.
    (u) Sugar means commercial refined sugar testing 99.7 degrees or 
above by the polariscope as determined in accordance with regulations 
issued by the Secretary of the Treasury.
    (v) Sugar containing product means any product (other than articles 
described in subheadings 1701.11.01, 1701.11.02, 1701.11.03, 1701.12.01, 
1701.12.02, 1701.91.21, 1701.91.22, 1701.99.01, 1701.99.02, 1702.90.31, 
1702.90.32, 1806.10.41, 1806.10.42, 2106.90.11 and 2106.90.12 of the 
HTS) to which sugar has been added as an ingredient and which is to be 
exported without further processing.
    (w) Valueless sugar means sugar which has no commercial recovery 
value.

[[Page 676]]



Sec. 1530.201  Application for a license.

    (a) An applicant for a license must apply in writing to the 
Licensing Authority. The letter of application shall contain as a 
minimum the following information:
    (1) The name and address of the applicant and of the facility or 
facilities at which transferred sugar will be used to manufacture the 
sugar containing product(s);
    (2) The license amount requested, not to exceed the maximum license 
amount;
    (3) A description of the kind and polarity of refined sugar to be 
received from a refiner(s);
    (4) The name of the firm that will establish a performance bond in 
favor of the United States Government on behalf of the applicant;
    (5) A description of the sugar containing product(s) to be exported 
and estimated sugar content of such product(s); and
    (6) A certification that the manufacturer shall:
    (i) Use a quantity of sugar equal to the quantity of sugar 
transferred under the license to manufacture sugar containing products;
    (ii) Export such sugar containing products within the applicable 
time limits; and
    (iii) Shall not request credit on the manufacturer's license, if 
such license is issued, for the exportation of any sugar containing 
products, or if such credit has been granted, shall promptly (within 5 
business days of the filing of a drawback entry) notify the Licensing 
Authority and request that such credit be revoked, if the exportation of 
such sugar containing product manufactured with the use of such 
transferred sugar has resulted in, or has been used as the basis of a 
claim by the licensee or any other person for, a refund, as drawback, of 
any duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 
1702.90.32, 1806.10.42, or 2106.90.12 of the HTS.
    (b) A licensee shall promptly notify the Licensing Authority if any 
of the information described in paragraph (a) of this section has 
changed and shall submit an amended application upon the request of the 
Licensing Authority.
    (c) The Licensing Authority may waive any provisions of this section 
for good cause if it is determined that such a waiver will not adversely 
affect the purposes of this program.



Sec. 1530.202  Issuance of a license.

    (a) The Secretary of Agriculture, through the Licensing Authority, 
may issue a license to a manufacturer under which the manufacturer, in 
accordance with the provisions of this program, may receive transfers of 
sugar from refiners for the purpose of manufacturing sugar containing 
products to be exported. The license may contain such conditions, 
limitations, or restrictions as the Licensing Authority determines to be 
appropriate for the purposes of this program. The Licensing Authority 
may add or modify such conditions, limitations or restrictions at such 
time and in such manner as the Licensing Authority, in his or her 
discretion, determines to be necessary or appropriate for the purposes 
of this program.
    (b) A quantity of sugar equivalent to the quantity of sugar 
transferred under a license must be exported in a sugar containing 
product within 18 months of the date of transfer from the refiner. 
However, the Licensing Authority may credit a license for valueless 
sugar lost in normal product manufacture.
    (c) The maximum license amount is 10,000 short tons (20 million 
pounds) of sugar. Quantities of sugar transferred under the license will 
be charged to the license and quantities of sugar contained in sugar 
containing products exported will be credited to the license as provided 
in Sec. 1530.206. At no time may the outstanding balance of charges or 
credits exceed the maximum license amount.
    (d) The licensee shall reserve all rights, if any, to claim drawback 
refunds with respect to the exportation of sugar containing products 
under this program. No credit on a license shall be made if any refund, 
as drawback, of any duties paid on the importation of any sugars, syrups 
or molasses described in subheading 1701.11.03, 1701.12.02, 1701.91.22, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS is claimed 
or received on the basis, or as

[[Page 677]]

a result, of the exportation of the sugar containing product.
    (e) If a licensee has made a full settlement of the balance on a 
license, the licensee may surrender the license on terms and conditions 
acceptable to the Licensing Authority. A licensee may, with the written 
permission of the Licensing Authority, transfer a license to another 
manufacturer who does not hold a license, subject to such terms and 
conditions as the Licensing Authority may impose as he or she determines 
to be necessary or appropriate to carry out the purposes of this 
subpart.
    (f) The licensee may utilize an agent for the transfer of refined 
sugar or the exportation of sugar containing products. The agent must, 
upon request, produce for inspection by the Licensing Authority written 
authorization designating such person to act as an agent for the purpose 
of receiving transferred sugar. If the licensee uses an agent to export 
sugar containing products, the licensee shall notify the Licensing 
Authority in writing of the agent's identity, and the agent shall 
certify to the Licensing Authority in writing that the sugar containing 
products have been exported from the customs territory of the United 
States.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30864, July 8, 1991]



Sec. 1530.203  Bond requirements.

    (a) A licensee shall post a performance bond, which meets the 
requirements of this section, with the Licensing Authority. However, no 
bond will be required for the quantity of any sugar transferred under 
license that corresponds to a quantity of sugar that has been exported 
in sugar containing products prior to the transfer of such sugar and 
credited to the license in accordance with Sec. 1530.206, provided that 
the Licensing Authority issues a written waiver of the bond requirement.
    (b) A bond may cover transfers made either during the period of time 
specified in the bond (term bond) or for a specified transfer (single 
entry bond).
    (c) Only the licensee who will use the sugar may be the principal on 
a bond to cover such sugar to be transferred. The surety or sureties 
shall be among those listed by the Secretary of the Treasury as 
acceptable on Federal bonds.
    (d) The obligation under the bond shall be made effective as of the 
date of transfer of the corresponding sugar.
    (e) The amount of the bond shall be equal to 20 cents per pound of 
sugar transferred under the license.
    (f) The Licensing Authority will release the obligation under the 
bond for transferred sugar by 20 cents per pound for the quantity of 
sugar credited to the license in accordance with Sec. 1530.206, as 
determined by the Licensing Authority.
    (g) If the licensee fails to qualify for a credit to the license 
within 95 days of the date of export of sugar containing products or the 
last date on which such products should have been exported, whichever 
occurs first, in an amount sufficient to offset the charge to the 
license for corresponding sugar, or if such a credit initially granted 
is subsequently revoked, payment will be made to the United States of 
America under the bond of a monetary amount equal to the difference 
between the Number 11 contract price and the Number 14 contract price, 
per pound of raw sugar, in effect on the last market day before the date 
of entry of the sugar or the last marketday before the end of the period 
during which export was required, whichever difference is greater, times 
the quantity of refined sugar, converted to raw value, that should have 
been, but was not, exported in the form of sugar containing products in 
timely compliance with the requirements of this subpart. In the event no 
Number 11 contract price or Number 14 contract price is reported by the 
New York Coffee, Sugar and Cocoa Exchange, for the relevant market day, 
the Licensing Authority may estimate such price as he or she deems 
appropriate.
    (h) Within 10 business days of the date of issuance of a license, 
the licensee shall submit to the Licensing Authority a copy of the 
performance bond.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30865, July 8, 1991]



Sec. 1530.204  Transfer of sugar.

    (a) Transfers of sugar from a refiner to a licensee must conform 
with the

[[Page 678]]

conditions of the license, the provisions of this program and the 
program provided for in subpart A of this part, and any other procedures 
specified by the Licensing Authority.
    (b) Refined sugar transferred under a license must be shipped by the 
refiner to the licensee within 90 days of the date of entry of the sugar 
entered under subheading 1701.11.02 of the HTS to which the refined 
sugar corresponds.
    (c) The licensee shall submit to the Licensing Authority, within 10 
business days of the transfer of sugar, a Notice of Transfer which must 
adequately identify the refined sugar received from a refiner, including 
the weight of the transferred sugar and the date of transfer.
    (d) The licensee may receive transfers of refined sugar from more 
than one refiner, as specified on the application for a license; 
however, the combined total of such transfers may not exceed the maximum 
license amount.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30865, July 8, 1991]



Sec. 1530.205  Proof of export and notice of drawback claims.

    (a) The licensee shall provide a written certification that he or 
she has exported a specified quantity of sugar in sugar containing 
products. The certification shall include:
    (1) The licensee's name, address, and license number;
    (2) The product description, the percentage of sugar in such 
product, and the total weight of sugar contained in the sugar containing 
product exported;
    (3) The percentage of valueless sugar lost in normal product 
manufacture and the quantity of valueless sugar actually lost in the 
manufacture of the product exported;
    (4) The date of export, the port or point from which exported, the 
bill of lading number(s), and an identification of the vessel or other 
export carrier and any agent used in connection with the export;
    (5) The country of destination and foreign consignee;
    (6) An identification of the transferred sugar which corresponds to 
the sugar exported in the sugar containing product, including the 
quantity of the transferred sugar;
    (7) The entry number of a claim, if any, by the licensee or any 
other person for a refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS on the basis, or as a result, of the 
exportation of the sugar containing product and the amount of such 
refund;
    (8) A statement that the sugar containing products have been 
exported, that the licensee has reserved all rights to claim drawback 
refunds, and that no refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS has been or will be claimed or received on the 
basis, or as a result, of the exportation of the sugar containing 
product.
    (b) The certification must be submitted to the Licensing Authority 
within 95 days of the date of export. The Licensing Authority will not 
credit the license for sugar exported in sugar containing products 
unless satisfactory and timely certification is received.
    (c) Notice of drawback claims. Whenever the licensee knows or has 
reason to know that any claim has been made, by the licensee or any 
other person for a refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS on the basis, or as a result, of the 
exportation of sugar containing products produced from sugar transferred 
from a refiner to the licensee or corresponding sugars, under the 
provisions of Sec. 1530.204 of this subpart, the licensee shall within 5 
business days provide a written notification to the Licensing Authority. 
This notification shall include the following information, if known or 
reasonably believed to be true by the licensee:
    (1) The licensee's name, address, and license number;
    (2) A description of the sugar containing products exported, and the 
weight of such sugar containing products;

[[Page 679]]

    (3) An identification of the imported sugar to which the sugar 
contained in the exported sugar containing products corresponds, 
including the quantity of the imported sugar;
    (4) The date of export, the port or point from which exported, the 
bill of lading number(s), and an identification of the vessel or other 
export carrier and any agent used in connection with the export;
    (5) The country of destination and foreign consignee;
    (6) The entry number of the drawback claim and the amount of such 
refund of duties; and
    (7) The identity of the person who filed such drawback entry.
    (d) The Licensing Authority may waive any of the provisions of this 
section if compliance with the relevant provisions of HTS subheading 
1701.11.02, additional U.S. note 3, and all other regulations in this 
subpart is otherwise established to the Licensing Authority's 
satisfaction.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30865, July 8, 1991; 57 
FR 175, Jan. 3, 1992]



Sec. 1530.206  Charges and credits to licenses.

    (a) Charges will be made to a license for quantities of sugar 
transferred under the license, effective as of the date of transfer, 
when the licensee submits the information required by Sec. 1530.204 or 
when the Licensing Authority otherwise determines that a transfer has 
been made.
    (b) At the request of the licensee and upon satisfactory and timely 
proof that the licensee has complied with all of the requirements of 
this program, the Licensing Authority will credit a license for:
    (1) Quantities of sugar in the sugar containing products for which 
proof of export has been submitted in accordance with the provisions of 
Sec. 1530.205 of this subpart, but such credit, if granted 
conditionally, will become final only when the Licensing Authority is 
satisfied that no refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS has been or will be claimed or received on the 
basis, or as a result, of the exportation of the sugar containing 
product; and
    (2) Quantities of sugar charged to the license which the Licensing 
Authority determines have been destroyed, lost in the production 
process, or otherwise disposed of so as to render the use or exportation 
of a corresponding quantity of sugar in sugar containing products 
impossible or unnecessary.
    (c) The Licensing Authority may revoke any credit previously made to 
a license if the Licensing Authority determines, on the basis of 
evidence obtained after the credit was granted, that the licensee had 
not complied with all of the requirements of this subpart or if the 
exported sugar containing products are re-exported or returned to the 
customs territory of the United States without having undergone a 
substantial transformation.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30865, July 8, 1991; 57 
FR 175, Jan. 3, 1992]



Sec. 1530.207  Replacement of sugars; substitution of sugars.

    (a) The sugar exported in sugar containing products does not have to 
be identical to the sugar transferred.
    (b) Exportation of sugar in sugar containing products for credit to 
the license may occur any time after the date on which the license was 
issued by the Licensing Authority. Any quantity of sugar exported in 
sugar containing products after the date on which the license was 
issued, but prior to the transfer of the corresponding sugar, will be 
treated as having been exported within the time limits of 
Sec. 1530.202(b).



Sec. 1530.208  Records.

    (a) Each licensee requesting credit in accordance with 
Sec. 1530.206(b) shall keep records to establish for all sugar 
containing products exported under the provisions of this program:
    (1) The date or inclusive dates of manufacture;
    (2) The quantity and identity of the sugar, refined basis, 
transferred to the licensee under the provisions of this subpart;
    (3) The quantity and description of the articles manufactured;

[[Page 680]]

    (4) The quantity of sugar, refined basis, contained in the sugar 
containing products exported;
    (5) The country of destination, foreign consignee, date of export, 
port, export carrier and any agent used in connection with the export 
and all documents relating to such exportation, including but not 
limited to an original, certified U.S. Customs Service Form 7512, an 
original bill of lading or copy of a U.S. Customs Service Form 7511, and 
any contract, invoice, bill of lading, dock receipt, ship's manifest, or 
copies thereof; and
    (6) Any drawback entry, including all related documents, filed by 
the licensee or any other person for a refund, as drawback, of any 
customs duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.01, 1701.11.02, 1701.11.03, 1701.12.01, 
1701.12.02, 1701.91.21, 1701.91.22, 1701.99.01, 1701.99.02, 1702.90.31, 
1702.90.32, 1806.10.41, 1806.10.42, 2106.90.11 and 2106.90.12 of the HTS 
on the basis, or as a result, of the exportation of the sugar containing 
product and the amount of any such refund paid.
    (b) Each licensee requesting credit for valueless sugar lost in 
normal product manufacture, or destroyed or otherwise disposed of, shall 
also keep records to establish the quantity of valueless sugar lost, 
disposed of, or destroyed.
    (c) All records required by this section to be kept by a licensee 
shall be retained for at least 5 years after a license is credited for 
the exportation of the sugar containing product.
    (d) The licensee must, upon request, make the records covered by 
this section available for inspection and copying by the Licensing 
Authority or other appropriate official of the Federal Government.
    (e) If, after inspection of the records, the Licensing Authority 
determines that such records are inadequate to establish that refined 
sugar was transferred, an appropriate sugar containing product was 
manufactured, valueless sugar was lost or destroyed, appropriate sugar 
containing products were exported, drawback of duties paid on the 
importation of any sugars, syrups or molasses described in subheadings 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS was not claimed or received on the basis, or as 
a result, of the exportation of the sugar containing product, or any 
other requirement of this program was complied with, the Licensing 
Authority may revoke credits granted for the appropriate quantity of 
sugar.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30865, July 8, 1991]



Sec. 1530.209  Enforcement.

    (a) If at any time after receiving the proof of export described in 
Sec. 1530.205 of this subpart, the Licensing Authority determines that 
the export of sugar in the form of sugar containing products 
corresponding to the quantity of sugar transferred under the license did 
not occur, and has not been otherwise disposed of or lost in the 
manufacturing process as valueless sugar, and if the bond has been 
released under Sec. 1530.203, the Licensing Authority may hold the 
licensee liable for the difference between the Number 11 contract price 
and the Number 14 contract price, per pound of raw sugar, in effect on 
the last market day before the date of transfer of the sugar or the last 
market day before the end of the period during which export was 
required, whichever difference is greater, times the quantity of sugar, 
converted to raw value, that should have been, but was not, exported in 
sugar containing products. In the event no Number 11 contract price or 
Number 14 contract price is reported by the New York Coffee, Sugar and 
Cocoa Exchange, for the relevant market day, the Licensing Authority may 
estimate such price as he or she deems appropriate.
    (b) If at any time after receiving the licensee's certification that 
no refund, as drawback, of any duties paid on the importation of any 
sugars, syrups or molasses described in subheadings 1701.11.03, 
1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, or 
2106.90.12 of the HTS has been or will be claimed or received on the 
basis, or as a result, of the exportation of any sugar containing 
product, the Licensing Authority determines that a refund of such 
customs duties has been claimed or received by the licensee or any other 
person, and if the bond has been released

[[Page 681]]

under Sec. 1530.203, the Licensing Authority may hold the licensee 
liable for the difference between the Number 11 contract price and the 
Number 14 contract price, per pound of raw sugar, in effect on the last 
market day before the date of transfer of the sugar or the last market 
day before the end of the period during which export was required, 
whichever difference is greater, times the quantity of sugar, converted 
to raw value, that should have been, but was not, exported in sugar 
containing products. In the event no Number 11 contract price or Number 
14 contract price is reported by the New York Coffee, Sugar and Cocoa 
Exchange, for the relevant market day, the Licensing Authority may 
estimate such price as he or she deems appropriate.
    (c) If at any time the Licensing Authority determines that a 
licensee has failed to comply with the requirements of this subpart, 
including the requirements of HTS subheading 1701.11.02 and of the 
relevant provisions of additional U.S. note 3, the Licensing Authority 
may, after notice to the licensee, suspend or revoke the license issued 
to the licensee under this program and may refuse to issue a license to 
that manufacturer. The Licensing Authority may suspend or revoke a 
license if claims are filed under 19 CFR part 191 for the refund, as 
drawback, of any duties paid on the importation of any sugars, syrups or 
molasses described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS on the 
basis, or as a result, of the exportation of a sugar containing product 
under this program or if any other claim under 19 CFR part 191 is denied 
on the basis that the sugar containing product was not exported.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30866, July 8, 1991]



Sec. 1530.210  Appeals.

    (a) Any action or determination of the Licensing Authority under 
this subpart may be appealed to the Director, Import Policies and Trade 
Analysis Division, Foreign Agricultural Service (FAS), within 30 days 
from the date of notification. The appeal must be presented in writing 
and must specifically state any reason as to why such determination 
should not stand. The Director, Import Policies and Trade Analysis 
Division, FAS, will provide such person with an opportunity for an 
informal hearing on such matter.
    (b) A further appeal from the final decision of the Director, Import 
Policies and Trade Analysis Division, FAS, may be made to the 
Administrator, FAS, within five business days of the notification of the 
decision of the Director, Import Policies and Trade Analysis Division, 
FAS.



Sec. 1530.211  Waivers.

    Upon written application of the licensee, the Licensing Authority 
may extend the period for the export of sugar containing products, may 
temporarily increase the maximum amount of the license, may extend the 
period for submitting proof of export, or may temporarily waive or 
modify any other requirement imposed by this subpart if such waiver or 
modification is necessary or appropriate under unusual, unforeseen or 
extraordinary circumstances and will not frustrate the purposes of this 
program and if compliance with the relevant provisions of HTS subheading 
1701.11.02, additional U.S. note 3 is established to the Licensing 
Authority's satisfaction. The Licensing Authority may specify additional 
requirements or procedures in place of the requirements or procedures 
waived or modified.



Sec. 1530.212  Expiration of licenses.

    (a) The licenses issued under this program shall expire upon written 
notice to the licensees by the Licensing Authority. The notice will 
state the date on which the licenses will expire and any other details 
applicable to the expiration of the licenses.
    (b) If there have been no charges or credits on the license within 
12 months of the date on which the license was issued, or any subsequent 
period of 18 months, the license may be deemed to have expired.



Sec. 1530.213  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44

[[Page 682]]

U.S.C. chapter 35 and OMB number 0551-0015 has been assigned.



Sec. 1530.214  Transitional provisions.

    (a) All licenses issued to manufacturers prior to October 1, 1990, 
pursuant to the provisions of 7 CFR 1530.201, under the program for 
``Sugar to be Re-exported in Sugar Containing Products,'' are canceled 
effective October 9, 1990.
    (b) Any manufacturer who, on September 30, 1990, held a license 
which had a balance of charges and credits other than zero and which is 
canceled pursuant to paragraph (a) of this section may be issued a new 
license upon such manufacturer's agreement to:
    (1) Fully settle the balance outstanding on such previous license, 
by bringing such balance to zero;
    (2) Comply with all the provisions of this subpart, subheading 
1701.11.02 of the HTS, and additional U.S. note 3; and
    (3) Comply with any terms, conditions and procedures imposed by the 
Licensing Authority in order to assure an orderly transition.
    (c) During the transitional period between October 1, 1990, and the 
promulgation of a final rule to replace the interim rule issued on 
October 9, 1990, the Licensing Authority may modify or waive any 
requirement of this subpart, including the requirements that a 
manufacturer make a written application for a license prior to the 
issuance of the license and make a written application for a waiver 
under Sec. 1530.210 of this subpart, if the Licensing Authority 
determines such modification or waiver is necessary or appropriate to 
assure an orderly transition and will not frustrate the purposes of this 
program.



        Subpart C--Sugar for the Production of Polyhydric Alcohol



Sec. 1530.300  Definitions.

    For purposes of this subpart, unless the context indicates 
otherwise, the following words and phrases have the meanings ascribed to 
them:
    (a) Additional U.S. note 3 means paragraph (c) of additional U.S. 
note 3 to chapter 17 of the HTS.
    (b) Agent means a licensed customs house broker, freight forwarder, 
or other person authorized to act on behalf of the licensee.
    (c) Date of entry is the date when the U.S. Customs Service entry 
form is properly executed and deposited, together with any estimated 
duties and special import fees and any related documents required by law 
or regulation to be filed with such form at the time of entry with the 
appropriate customs official.
    (d) Drawback and drawback entry have the meanings ascribed to them 
in 19 CFR part 191.
    (e) Enter or entry, with respect to sugar imported into customs 
territory of the United States, refers to sugar that is entered or 
withdrawn from warehouse for consumption.
    (f) HTS means the Harmonized Tariff Schedule of the United States.
    (g) License means a license, issued by the Secretary of Agriculture, 
through the Licensing Authority, which permits the entry, in accordance 
with the provisions of this subpart, of raw cane sugar described in 
subheading 1701.11.02 of the HTS for the sole purpose of producing 
(other than by distillation) polyhydric alcohols, except polyhydric 
alcohols for use as a substitute for sugar in human food consumption.
    (h) Licensee means a manufacturer to whom a license has been issued 
pursuant to the provisions of this subpart.
    (i) Licensing Authority means the Team Leader, Import Quota 
Programs, Import Policies and Trade Analysis Division, Foreign 
Agricultural Service, U.S. Department of Agriculture, or the Team 
Leader's designee.
    (j) Manufacturer means a person who is engaged in the production 
(other than by distillation) of polyhydric alcohols from sugar.
    (k) Number 11 contract price means the daily closing price per pound 
of raw sugar for the nearby Number 11 contract of the New York Coffee, 
Sugar and Cocoa Exchange.
    (l) Number 14 contract price means the daily closing price per pound 
of raw sugar for the nearby Number 14 contract of the New York Coffee, 
Sugar and Cocoa Exchange.
    (m) Person means any individual, partnership, corporation, 
association, estate, trust or any other business enterprise or legal 
entity.

[[Page 683]]

    (n) Program means the licensing program provided for in the 
regulations in this subpart and includes the requirements and 
limitations of HTS subheading 1701.11.02 and additional U.S. note 3.
    (o) Sugar means raw cane sugar described in subheading 1701.11.02 of 
the HTS.



Sec. 1530.301  Application for a license.

    (a) An applicant for a license must apply in writing to the 
Licensing Authority. The letter of application shall contain as a 
minimum the following information:
    (1) The name and address of the applicant and of the facility or 
facilities at which imported sugar will be used to produce polyhydric 
alcohols;
    (2) The license amount requested, not to exceed the anticipated 
requirements of the manufacturer on an annual basis;
    (3) The name of the person that will establish a performance bond in 
favor of the United States Government on behalf of the applicant;
    (4) The anticipated requirements of the manufacturer for sugar to be 
used in the production (other than by distillation) of polyhydric 
alcohols, except polyhydric alcohols for use as a substitute for sugar 
in human food consumption, on an annual basis; and
    (5) The total quantity of polyhydric alcohol produced (other than by 
distillation), except polyhydric alcholols for use as a substitute for 
sugar in human food consumption, by the manufacturer during the previous 
12-month period, and the total quantity of polyhydric alcohol produced 
by the manufacturer during the previous 12-month period.
    (b) An application for a license shall contain a certification that 
the manufacturer shall use the quantity of sugar entered under a license 
solely for the production (other than by distillation) of polyhydric 
alcohols, except polyhydric alcohols for use as a substitute for sugar 
in human food consumption, and that the manufacturer shall notify the 
Licensing Authority, within 95 days of the exportation of any polyhydric 
alcohols, if such exportation has resulted in, or has been used as the 
basis of a claim by the licensee or any other person for, a refund, as 
drawback, of any duties paid on the importation of any sugars, syrups or 
molasses described in subheadings 1701.11.03, 1701.12.02, 1701.91.92, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS and the 
amount of such refund.
    (c) A licensee shall promptly notify the Licensing Authority if any 
of the information described in paragraph (a) of this section has 
changed and shall submit an amended application upon the request of the 
Licensing Authority.
    (d) The Licensing Authority may waive any provisions of this section 
for good cause if it is determined that such a waiver will not adversely 
affect the purposes of this program.



Sec. 1530.302  Issuance of a license.

    (a) The Secretary of Agriculture, through the Licensing Authority, 
may issue a license to a manufacturer under which the manufacturer, in 
accordance with the provisions of this program, may enter raw cane sugar 
described in subheading 1701.11.02 of the HTS for the sole purpose of 
producing (other than by distillation) polyhydric alcohols, except 
polyhydric alcohols for use as a substitute for sugar in human food 
consumption. The license shall state the maximum amount of sugar which 
may be imported under the license. The license may contain such 
additional conditions, limitations or restrictions as the Licensing 
Authority determines to be appropriate for the purposes of this program. 
The Licensing Authority may add or modify such conditions, limitations 
or restrictions at such time and in such manner as the Licensing 
Authority, in his or her discretion, determines to be necessary or 
appropriate for the purposes of this program.
    (b) The total quantity of sugar imported under a license must be 
used or the sole purpose of producing (other than by distillation) 
polyhydric alcohols, except polyhydric alcohols for use as a substitute 
for sugar in human food consumption, within 180 days of the date of 
entry of such sugar.
    (c) The maximum amount of sugar which may be imported under the 
license will be the requirements of the manufacturer for sugar to be 
used in the production (other than by distillation) of polyhydric 
alcohols, except

[[Page 684]]

polyhydric alcohols for use as a substitute for sugar in human food 
consumption, during the 12-month period following the effective date of 
the license, as determined by the Licensing Authority. Quantities of 
sugar imported under the license will be charged to the license and 
quantities of sugar used for the sole purpose of producing (other than 
by distillation) polyhydric alcohols, except polyhydric alcohols for use 
as a substitute for sugar in human food consumption, will be credited to 
the license as provided in Sec. 1530.306. At no time may the charges to 
the license exceed the maximum license amount specified in the license.
    (d) The licensee shall reserve all rights, if any, to claim drawback 
refunds with respect to the exportation of polyhydric alcohols under 
this program. No credit on a license shall be made if any refund, as 
drawback, of any duties paid on the importation of any sugars, syrups or 
molasses described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS is claimed 
or received on the basis, or as a result, of the exportation of such 
polyhydric alcohols.
    (e) If a licensee has made a full settlement of the balance on a 
license, the licensee may surrender the license on terms and conditions 
acceptable to the Licensing Authority. A licensee may not transfer a 
license to any other person. Any attempt to transfer or assign a license 
shall be null and void and shall be grounds for the revocation of the 
license by the Licensing Authority.
    (f) The licensee may utilize an agent to enter imported sugar. The 
licensee must provide to the Licensing Authority a copy of a written 
authorization designating such person to act as an agent for the purpose 
of entering sugar, and the agent shall produce such authorization for 
inspection by the appropriate U.S. Customs Service official at the time 
of entry. If the licensee uses an agent to export polyhydric alcohol, 
the licensee shall notify the Licensing Authority in writing of the 
agent's identity.



Sec. 1530.303  Bond requirements.

    (a) Unless the licensee has posted a performance bond with the U.S. 
Customs Service which is satisfactory to the Licensing Authority with 
respect to the requirements of this program, the licensee shall post a 
performance bond, which meets the requirements of this section, with the 
Licensing Authority.
    (b) A bond may cover entries made either during the period of time 
specified in the bond (term bond) or for a specified entry (single entry 
bond).
    (c) Only the licensee who will use the sugar may be the principal on 
a bond to cover such sugar to be imported. The surety or sureties shall 
be among those listed by the Secretary of the Treasury as acceptable on 
Federal bonds.
    (d) The obligation under the bond shall be made effective as of the 
date of entry of the sugar.
    (e) The amount of the bond shall be equal to 20 cents per pound of 
sugar imported under the license.
    (f) The appropriate customs official or the Licensing Authority, as 
appropriate, will release the obligation under the bond by 20 cents per 
pound for the quantity of sugar used in the production of polyhydric 
alcohols and credited to the license in accordance with Sec. 1530.306, 
as determined by the Licensing Authority.
    (g) If the licensee fails to qualify for a credit to the license 
within 95 days of the date of production of polyhydric alcohols in a 
quantity sufficient to offset the charge to the license for the imported 
sugar used for producing such polyhydric alcohols, or if such a credit 
initially granted is subsequently revoked, payment will be made to the 
United States of America under the bond of a monetary amount equal to 
the difference between the Number 11 contract price and the Number 14 
contract price, per pound of raw sugar, in effect on the last market day 
before the date of entry of the sugar or the last market day before the 
end of the period during which production of polyhydric alcohol was 
required, whichever difference is greater, times the quantity of raw 
sugar that should have been, but was not, used in the production of 
polyhydric alcohol in timely

[[Page 685]]

compliance with the requirements of this subpart. In the event no Number 
11 contract price or Number 14 contract price is reported by the New 
York Coffee, Sugar and Cocoa Exchange, for the relevant market day, the 
Licensing Authority may estimate such price as he or she deems 
appropriate.
    (h) Within 10 business days of the date of issuance of a license, 
the licensee shall submit to the Licensing Authority a copy of the 
performance bond.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30866, July 8, 1991]



Sec. 1530.304  Entry of sugar.

    (a) The licensee shall be permitted to enter imported sugar under 
subheading 1701.11.02 of the HTS in conformity with the conditions, 
limitations and restrictions of the license, the provisions of this 
subpart and additional U.S. note 3, and any other procedures specified 
by the Licensing Authority.
    (b) The licensee must present the license to the appropriate U.S. 
Customs Service official at the time of entry. Such customs official 
will mark on the license:
    (1) The quantity of sugar entered;
    (2) The date of entry; and
    (3) The customs entry number.
    (c) The licensee shall submit to the Licensing Authority a copy of 
the license, as marked by the customs official, within 10 business days 
after each entry of sugar.



Sec. 1530.305  Proof of production of polyhydric alcohols.

    (a) Certificate of use. Within 30 days of the date of production of 
polyhydric alcohols from sugar imported under a license, the licensee 
shall provide a written certification, signed by the licensee, to the 
Licensing Authority that he or she has used, within 180 days of the date 
of entry of sugar under the license, such sugar for the sole purpose of 
producing (other than by distillation) polyhydric alcohols, except 
polyhydric alcohols for use as a substitute for sugar in human food 
consumption. The certification shall include:
    (1) The licensee's name, address, and license number;
    (2) The customs entry number(s), date(s) of entry, and total weight 
of sugar used in the production of such polyhydric alcohols;
    (3) The date(s) on which such polyhydric alcohols were produced; and
    (4) The following certification, with all blank spaces appropriately 
filled in as indicated by the instructions placed in brackets:


    The undersigned hereby certifies that between [insert date(s) of 
production of polyhydric alcohols] ________, 19____, and ________, 
19____, the undersigned has used [insert total weight of imported sugar] 
________ pounds of sugar, imported on [insert date of entry] ________, 
19____, for the sole purpose of producing (other than by distillation) 
polyhydric alcohols, except polyhydric alcohols for use as a substitute 
for sugar in human food consumption. The undersigned further certifies 
that the quantity of sugar shown on this certificate of use does not 
include any sugar previously covered by another certificate of use.



    (b) If polyhydric alcohols produced with sugar imported under the 
license are exported, the licensee shall provide an additional written 
certification, signed by the licensee, to the Licensing Authority, 
within 95 days of the date of exportation of the polyhydric alcohols. 
The certification shall include:
    (1) The licensee's name, address, and license number;
    (2) The customs entry number(s), date(s) of entry, and total weight 
of sugar used in the production of such polyhydric alcohols;
    (3) The date(s) on which such polyhydric alcohols were produced;
    (4) The date of export, the port or point from which exported, the 
bill of lading number(s), and an identification of the vessel or other 
export carrier and any agent used in connection with the export;
    (5) The country of destination and foreign consignee;
    (6) The entry number of a claim, if any, by the licensee or any 
other person for a refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheading 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS on the basis, or as a result, of the 
exportation of the

[[Page 686]]

polyhydric alcohol and the amount of such refund; and
    (7) A statement that the licensee has reserved all rights to claim 
drawback refunds with respect to the exportation of the polyhydric 
alcohol, and that no refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheading 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS has been or will be claimed or received on the 
basis, or as a result, of the exportation of the polyhydric alcohol.
    (c) If polyhydric alcohols produced with sugar imported under the 
license are exported, the licensee shall provide to the Licensing 
Authority, within 95 days of the date of exportation of the polyhydric 
alcohols, the following documentation:
    (1) An original, certified U.S. Customs Service Form 7512; and
    (2) An original bill of lading or copy of a U.S. Customs Service 
Form 7511.
    (d) Notice of drawback claims. Whenever the licensee knows or has 
reason to know that any claim has been made, by the licensee or any 
other person for a refund, as drawback, of any duties paid on the 
importation of any sugars, syrups or molasses described in subheading 
1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, 
or 2106.90.12 of the HTS on the basis, or as a result, of the 
exportation of polyhydric alcohol, whether or not such polyhydric 
alcohol was produced from sugar imported under the licensee's license, 
the licensee shall within 5 business days provide a written notification 
to the Licensing Authority. This notification shall include the 
following information, if known or reasonably believed to be true by the 
licensee:
    (1) The licensee's name, address, and license number;
    (2) A description, and the weight, of such polyhydric alcohol 
exported;
    (3) An identification of the imported sugar which was used in the 
production of the polyhydric alcohol, including the quantity of the 
imported sugar;
    (4) The date of export, the port or point from which exported, the 
bill of lading number(s), and an identification of the vessel or other 
export carrier and any agent used in connection with the export;
    (5) The country of destination and foreign consignee;
    (6) The entry number of the drawback claim and the amount of such 
refund of duties; and
    (7) The identity of the person who filed such drawback entry.
    (e) The Licensing Authority may waive any of the provisions of this 
section if compliance with the relevant provisions of HTS subheading 
1701.11.02, additional U.S. note 3, and all other regulations in this 
subpart is otherwise established to the Licensing Authority's 
satisfaction.



Sec. 1530.306  Charges and credits to licenses.

    (a) Charges will be made to a license, effective as of the date of 
entry, for quantities of sugar entered under the license, when the 
licensee submits the license as required by Sec. 1530.304(c) or when the 
Licensing Authority otherwise determines that the licensee has made an 
entry under subheading 1701.11.02 of the HTS.
    (b) At the request of the licensee and upon satisfactory and timely 
proof that the licensee has complied with all of the requirements of 
this program, the Licensing Authority will credit a license for 
quantities of sugar for which a Certificate of Use has been submitted in 
accordance with the provisions of Sec. 1530.305 of this subpart, but 
such credit, if granted conditionally, will become final only when the 
Licensing Authority is satisfied that no refund, as drawback, of any 
duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 1701.99.02, 
1702.90.32, 1806.10.42, or 2106.90.12 of the HTS has been or will be 
claimed or received on the basis, or as a result, of the exportation of 
the polyhydric alcohol.
    (c) The Licensing Authority may revoke any credit previously made to 
a license if the Licensing Authority determines, on the basis of 
evidence obtained after the credit was granted, that the licensee had 
not complied

[[Page 687]]

with all of the requirements of this subpart.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30866, July 8, 1991]



Sec. 1530.307  Replacement of sugars; substitution of sugars.

    The sugar used in the production of polyhydric alcohols under this 
program need not be the identical sugar imported under the license. The 
licensee may substitute other sugar for sugar imported under the license 
or replace such imported sugar with other sugar.

[56 FR 30866, July 8, 1991]



Sec. 1530.308  Records.

    (a) Each licensee requesting credit in accordance with 
Sec. 1530.306(b) shall keep records to establish for all sugar imported, 
and for all polyhydric alcohol produced, under the provisions of this 
program:
    (1) The quantity and identity of the sugar imported by the licensee 
under the provisions of this subpart, including the customs entry 
numbers;
    (2) The quantity and description of the polyhydric alcohols 
manufactured and the date or inclusive dates of manufacture;
    (3) The quantity of sugar actually used in the production (other 
than by distillation) of polyhydric alcohols, except polyhydric alcohols 
for use as a substitute for sugar in human food consumption; and
    (4) If any polyhydric alcohols have been exported, the country of 
destination, foreign consignee, date of export, port, export carrier and 
any agent used in connection with the export and all documents relating 
to such exportation, including but not limited to any contract, invoice, 
bill of lading, dock receipt, ship's manifest, or copies thereof; and 
all drawback entries, if any, including all related documents, filed by 
the licensee or any other person for a refund, as drawback, of any 
customs duties paid on the importation of any sugars, syrups or molasses 
described in subheadings 1701.11.01, 1701.11.02, 1701.11.03, 1701.12.01, 
1701.12.02, 1701.91.21, 1701.91.22, 1701.99.01, 1701.99.02, 1702.90.31, 
1702.90.32, 1806.10.41, 1806.10.42, 2106.90.11, and 2106.90.12 of the 
HTS on the basis, or as a result, of the exportation of the polyhydric 
alcohol and the amount of any such refund paid.
    (b) All records required by this section to be kept by a licensee 
shall be retained for at least 5 years after a license is credited for 
the production of the polyhydric alcohol.
    (c) The licensee must, upon request, make the records covered by 
this section available for inspection and copying by the Licensing 
Authority or other appropriate official of the Federal Government.
    (d) If, after inspection of the records, the Licensing Authority 
determines that such records are inadequate to establish that the sugar 
imported under the license was used for the sole purpose of producing 
(other than by distillation) polyhydric alcohols, except polyhydric 
alcohols for use as a substitute for sugar in human food consumption, or 
that drawback of duties on the importation of any sugars, syrups or 
molasses described in subheadings 1701.11.03, 1701.12.02, 1701.91.22, 
1701.99.02, 1702.90.32, 1806.10.42, or 2106.90.12 of the HTS was not 
claimed or received on the basis, or as a result, of the exportation of 
the polyhydric alcohol, or that any other requirement of this program 
was complied with, the Licensing Authority may revoke credits granted 
for the appropriate quantity of sugar.



Sec. 1530.309  Enforcement.

    (a) If at any time after receiving the proof of production of 
polyhydric alcohol described in Sec. 1530.305 of this subpart, the 
Licensing Authority determines that the sugar entered under the license 
was not used for the sole purpose of producing (other than by 
distillation) polyhydric alcohols, except polyhydric alcohols for use as 
a substitute for sugar in human food consumption, and if the bond has 
been released under Sec. 1530.303, the Licensing Authority may hold the 
licensee liable for the difference between the Number 11 contract price 
and the Number 14 contract price, per pound of raw sugar, in effect on 
the last market day before the date of entry of the sugar or the last 
market day before the end of the period during which production of 
polyhydric alcohol was required, whichever difference is greater, times

[[Page 688]]

the quantity of sugar that should have been, but was not, used in such 
production of such polyhydric alcohol. In the event no Number 11 
contract price or Number 14 contract price is reported by the New York 
Coffee, Sugar and Cocoa Exchange, for the relevant market day, the 
Licensing Authority may estimate such price as he or she deems 
appropriate.
    (b) If at any time after receiving the licensee's certification that 
no refund, as drawback, of any duties paid on the importation of any 
sugars, syrups or molasses described in subheadings 1701.11.03, 
1701.12.02, 1701.91.22, 1701.99.02, 1702.90.32, 1806.10.42, or 
2106.90.12 of the HTS has been or will be claimed or received on the 
basis, or as a result, of the exportation of any polyhydric alcohol, the 
Licensing Authority determines that a refund of such customs duties has 
been claimed or received by the licensee or any other person, and if the 
bond has been released under Sec. 1530.303, the Licensing Authority may 
hold the licensee liable for the difference between the Number 11 
contract price and the Number 14 contract price, per pound of raw sugar, 
in effect on the last market day before the date of entry of the sugar 
or the last market day before the end of the period during which export 
was required, whichever difference is greater, times the quantity of 
sugar used in the production of such polyhydric alcohol. In the event no 
Number 11 contract price or Number 14 contract price is reported by the 
New York Coffee, Sugar and Cocoa Exchange for the relevant market day, 
the Licensing Authority may estimate such price as he or she deems 
appropriate.
    (c) If at any time the Licensing Authority determines that a 
licensee has failed to comply with the requirements of this subpart, 
including the requirement of HTS subheading 1701.11.02 and of the 
relevant provisions of additional U.S. note 3, the Licensing Authority 
may, after notice to the licensee, suspend or revoke the license issued 
to the licensee under this program and may refuse to issue a license to 
that manufacturer.

[55 FR 41489, Oct. 12, 1990, as amended at 56 FR 30866, July 8, 1991]



Sec. 1530.310  Appeals.

    (a) Any action or determination of the Licensing Authority under 
this subpart may be appealed to the Director, Import Policies and Trade 
Analysis Division, Foreign Agricultural Service (FAS), within 30 days 
from the date of notification. The appeal must be presented in writing 
and must specifically state any reason as to why such determination 
should not stand. The Director, Import Policies and Trade Analysis 
Division, FAS, will provide such person with an opportunity for an 
informal hearing on such matter.
    (b) A further appeal from the final decision of the Director, Import 
Policies and Trade Analysis Division, FAS, may be made to the 
Administrator, FAS, within five business days of the notification of the 
decision of the Director, Import Policies and Trade Analysis Division, 
FAS.



Sec. 1530.311  Waivers.

    Upon written application of the licensee, the Licensing Authority 
may extend the period for the production of polyhydric alcohols, may 
temporarily increase the maximum amount of the license, may extend the 
period for submitting proof of use, or may temporarily waive or modify 
any other requirement imposed by this subpart if such waiver or 
modification is necessary or appropriate under unusual, unforeseen or 
extraordinary circumstances and will not frustrate the purposes of this 
program and if compliance with the relevant provisions of HTS subheading 
1701.11.02, additional U.S. note 3 is established to the Licensing 
Authority's satisfaction. the Licensing Authority may specify additional 
requirements or procedures in place of the requirements or procedures 
waived or modified.



Sec. 1530.312  Expiration of licenses.

    (a) The licenses issued under this program shall expire upon written 
notice to the licensees by the Licensing Authority. The notice will 
state the date on which the licenses will expire and any other details 
applicable to the expiration of the licenses.
    (b) If there have been no charges or credits on the license within 
12 months

[[Page 689]]

of the date on which the license was issued, or any subsequent period of 
18 months, the license may be deemed to have expired.



Sec. 1530.313  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements in these regulations in accordance with 44 
U.S.C. chapter 35 and OMB number 0551-0015 has been assigned.



Sec. 1530.314  Transitional provisions.

    (a) All licenses issued to manufacturers prior to October 1, 1990, 
pursuant to the provisions of 7 CFR 1530.201, under the program for 
``Sugar for Production of Polyhydric Alcohol,'' are canceled effective 
October 9, 1990.
    (b) Any manufacturer who, on September 30, 1990, held a license 
which had a balance of charges and credits other than zero and which is 
canceled pursuant to paragraph (a) of this section may be issued a new 
license upon such manufacturer's agreement to:
    (1) Fully settle the balance outstanding on such previous license, 
by bringing such balance to zero;
    (2) Comply with all the provisions of this subpart, subheading 
1701.11.02 of the HTS, and additional U.S. note 3; and
    (3) Comply with any terms, conditions and procedures imposed by the 
Licensing Authority in order to assure an orderly transition.
    (c) During the transitional period between October 1, 1990, and the 
promulgation of a final rule to replace the interim rule issued on 
October 9, 1990, the Licensing Authority may modify or waive any 
requirement of this subpart, including the requirements that a 
manufacturer make a written application for a license prior to the 
issuance of the license and make a written application for a waiver 
under Sec. 1530.210 of this subpart, if the Licensing Authority 
determines such modification or waiver is necessary or appropriate to 
assure an orderly transition and will not frustrate the purposes of this 
program.



PART 1540--INTERNATIONAL AGRICULTURAL TRADE--Table of Contents




    Subpart A--Emergency Relief From Duty-Free Imports of Perishable 
                                Products

Sec.
1540.1  Applicability of subpart.
1540.2  Definitions.
1540.3  Who may file request.
1540.4  Contents of request.
1540.5  Submission of recommendations.
1540.6  Information.
1540.7  Paperwork Reduction Act assigned number.

 Subpart B--Emergency Relief From Certain Perishable Products Imported 
                               From Israel

1540.20  Applicability of subpart.
1540.21  Definition.
1540.22  Who may file request.
1540.23  Contents of request.
1540.24  Determination of the Secretary of Agriculture.
1540.25  Information.
1540.26  Paperwork Reduction Act assigned number.

    Subpart C--Emergency Relief From Duty-Free Imports of Perishable 
                 Products From Certain Andean Countries

1540.40  Applicability of subpart.
1540.41  Definitions.
1540.42  Who may file request.
1540.43  Contents of request.
1540.44  Submission of recommendations by the Secretary of Agriculture.
1540.45  Information.

    Authority: Sec. 213(f), Pub. L. 98-67, 97 Stat. 391 (19 U.S.C. 
2703(f)); 5 U.S.C. 301; sec. 404, Pub. L. 98-573, 98 Stat. 3016, as 
amended (19 U.S.C. 2112 note); 5 U.S.C. 301.



    Subpart A--Emergency Relief From Duty-Free Imports of Perishable 
                                Products

    Authority: Sec. 213(f), Pub. L. 98-67, 97 Stat. 391 (19 U.S.C. 
2703(f); 5 U.S.C. 301.

    Source: 49 FR 22265, May 29, 1984, unless otherwise noted.

    Cross Reference: For United States International Trade Commission 
regulations on investigations of import injury and the rules pertaining 
to the filing of a section 201 petition, see 19 CFR part 206.

[[Page 690]]



Sec. 1540.1  Applicability of subpart.

    This subpart applies to requests for emergency relief from duty-free 
imports of perishable products filed with the Department of Agriculture 
under section 213(f) of the Caribbean Basin Economic Recovery Act of 
1983, title II of Pub. L. 98-67, 97 Stat. 384 (19 U.S.C. 2701 et seq.) 
(the Act).



Sec. 1540.2  Definitions.

    (a) Perishable product means:
    (1) Live plants provided for in subpart A of part 6 of schedule 1 of 
the Tariff Schedules of the United States (TSUS);
    (2) Fresh or chilled vegetables provided for in items 135.10 through 
138.42 of the TSUS;
    (3) Fresh mushrooms provided for in item 144.10 of the TSUS;
    (4) Fresh fruit provided for in items 146.10, 146.20, 146.30, 146.50 
through 146.62, 146.90, 146.91, 147.03 through 147.33, 147.50 through 
149.21 and 149.50 of the TSUS;
    (5) Fresh cut flowers provided for in items 192.17, 192.18, and 
192.21 of the TSUS; and
    (6) Concentrated citrus fruit juice provided for in items 165.25 and 
165.35 of the TSUS.
    (b) Beneficiary country means any country listed in section 212(b) 
of the Act with respect to which there is in effect a proclamation by 
the President designating such country as a beneficiary country for 
purposes of the Act.



Sec. 1540.3  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group or workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported into the United States 
duty-free under the provisions of the Act from a beneficiary 
country(ies) in such increased quantities as to be a substantial cause 
of serious injury, or the threat thereof, to such domestic industry.



Sec. 1540.4  Contents of request.

    A request for emergency action under section 213(f) of the Act shall 
be submitted in duplicate to the Administrator, Foreign Agricultural 
Service, United States Department of Agriculture, Washington, DC 20250. 
Such requests shall be supported by appropriate information and data and 
shall include to the extent possible:
    (a) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (b) The beneficiary country(ies) of origin of the allegedly 
injurious imports;
    (c) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from the 
designated beneficiary country(ies) in increased quantities as compared 
with imports of the same product from the designated beneficiary 
country(ies) during a previous representative period of time (including 
a statement of why the period used should be considered to be 
representative);
    (d) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from the beneficiary country(ies); and
    (e) A statement indicating why emergency action would be warranted 
under section 213(f) of the Act (including all available evidence that 
the injury caused by the increased quantities of imports from the 
beneficiary country(ies) would be relieved by the suspension of the 
duty-free treatment accorded under the Act).

A copy of the petition and the supporting evidence filed with the United 
States International Trade Commission under section 201 of the Trade Act 
of 1974, as amended, must be provided with the request for emergency 
action.



Sec. 1540.5  Submission of recommendations.

    If the Secretary has reason to believe that the perishable product 
which is the subject of a petition under Sec. 1540.4 of this subpart is 
being imported into the United States in such increased quantities as to 
be a substantial cause of serious injury, or the threat thereof, to the 
domestic industry producing a perishable product like or directly

[[Page 691]]

competitive with the imported perishable product and that emergency 
action is warranted, the Secretary, within 14 days after the filing of 
the petition under Sec. 1540.4 of this subpart, shall recommend to the 
President that the President take emergency action. If the Secretary 
determines not to recommend the imposition of emergency action, the 
Secretary shall publish a notice of such determination and will so 
advise the petitioner within 14 days after the filing of the petition.



Sec. 1540.6  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation of section 213(f) of the Act 
should address such inquiries to the Administrator, Foreign Agricultural 
Service, United States Department of Agriculture, Washington, DC 20250.



Sec. 1540.7  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 25, and OMB number 0551-0018 has been assigned.



 Subpart B--Emergency Relief From Certain Perishable Products Imported 
                               From Israel

    Authority: Sec. 404, Pub. L. 98-573, 98 Stat. 3016, as amended (19 
U.S.C. 2112 note); 5 U.S.C. 301.

    Source: 50 FR 43692, Oct. 29, 1985, unless otherwise noted.

    Cross Reference: For U.S. International Trade Commission regulations 
concerning investigations of import injury and the rules pertaining to 
the filing of a section 201 petition, see 19 CFR part 206.



Sec. 1540.20  Applicability of subpart.

    This subpart applies to requests filed with the Department of 
Agriculture under section 404 of the Trade and Tariff Act of 1984, Pub. 
L. 98-573, for emergency relief from imports of certain perishable 
products from Israel entering the United States at a reduced rate of 
duty or duty-free pursuant to a trade agreement between the United 
States and Israel entered into under section 102(b)(1) of the Trade Act 
of 1974, as amended.



Sec. 1540.21  Definition.

    Perishable product means:
    (a) Live plants provided for in subpart A of part 6 of schedule 1 of 
the 1985 Tariff Schedules of the United States (the ``TSUS'');
    (b) Fresh or chilled vegetables provided for in items 135.03 through 
138.46 of the TSUS;
    (c) Fresh mushrooms provided for in item 144.10 of the TSUS;
    (d) Fresh fruits provided for in items 146.10, 146.20, 146.30, 
146.50 through 146.62, 146.90, 146.91, 147.03 through 147.44, 147.50 
through 149.21 and 149.50 of the TSUS;
    (e) Fresh cut flowers provided for in items 192.17, 192.18, and 
192.21 of the TSUS; and
    (f) Concentrated citrus fruit juice provided for in items 165.25, 
165.29 and 165.36 of the TSUS.



Sec. 1540.22  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group or workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported from Israel into the 
United States at a reduced duty or duty-free under the provisions of a 
trade agreement between the United States and Israel entered into under 
section 102(b)(1) of the Trade Act of 1974, as amended, in such 
increased quantities as to be a substantial cause of serious injury, or 
the threat thereof, to such domestic industry.



Sec. 1540.23  Contents of request.

    A request for emergency action under section 404 of the Trade and 
Tariff Act of 1984 shall be submitted in duplicate to the Administrator, 
Foreign Agricultural Service, United States Department of Agriculture, 
Washington, DC 20250. Such request shall be supported by appropriate 
information and data and shall include to the extent possible:

[[Page 692]]

    (a) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (b) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from Israel in 
increased quantities as compared with imports of the same product from 
Israel during a previous representative period of time (including a 
statement of why the period selected by the petitioner should be 
considered to be representative);
    (c) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from Israel; and
    (d) A statement indicating why emergency action would be warranted 
under section 404 (including all available evidence that the injury 
caused by the increased quantities of imports from Israel would be 
relieved by the withdrawal of the reduction of the duty or elimination 
of the duty-free treatment provided to the product under the trade 
agreement). A copy of the petition and the supporting evidence filed 
with the United States International Trade Commission under section 201 
of the Trade Act of 1974, as amended, must be provided with the request 
for emergency action.



Sec. 1540.24  Determination of the Secretary of Agriculture.

    If the Secretary of Agriculture has reason to believe that the 
perishable product(s) which is the subject of a petition under this 
subpart is being imported into the United States in such increased 
quantities as to be a substantial cause of serious injury, or the threat 
thereof, to the domestic industry producing a perishable product like or 
directly competitive with the imported perishable product and that 
emergency action is warranted, the Secretary, within 14 days after the 
filing of the petition under Sec. 1540.23 shall recommend to the 
President that the President take emergency action. If the Secretary 
determines not to recommend the imposition of emergency action, the 
Secretary, within 14 days after the filing of the petition, will publish 
in the Federal Register a notice of such determination and will so 
advise the petitioner.



Sec. 1540.25  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation of section 404 of the Trade 
and Tariff Act of 1984 should address such inquiries to the 
Administrator, Foreign Agricultural Service, United States Department of 
Agriculture, Washington, DC 20250.



Sec. 1540.26  Paperwork Reduction Act assigned number.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations in accordance 
with 44 U.S.C. chapter 25, and OMB number 0551-0023 has been assigned.



    Subpart C--Emergency Relief From Duty-Free Imports of Perishable 
                 Products From Certain Andean Countries

    Authority: Title II, sec. 204(e), Pub. L. 102-182, 105 Stat. 1239 
(19 U.S.C. 3203(e)); 5 U.S.C. 301.

    Source: 58 FR 16104, Mar. 25, 1993, unless otherwise noted.

    Cross Reference: For United States International Trade Commission 
regulations on investigations of import injury and the rules pertaining 
to the filing of a section 201 petition, see 19 CFR part 206.



Sec. 1540.40  Applicability of subpart.

    This subpart applies to requests for emergency relief from duty-free 
imports of perishable products filed with the Department of Agriculture 
under section 204(e) of the Andean Trade Preference Act, title II of 
Public Law 102-182, 105 Stat. 1236 (19 U.S.C. 3201 et seq.) (the 
``Act'').



Sec. 1540.41  Definitions.

    (a) Perishable product means:
    (1) Live plants and fresh cut flowers provided for in chapter 6 of 
the Harmonized Tariff Schedule (HTS);
    (2) Fresh or chilled vegetables provided in heading 0701 through 
0709 (except subheading 0709.52.00) and heading 0714 of the HTS;

[[Page 693]]

    (3) Fresh fruit provided for in subheadings 0804.20 through 0810.90 
(except citrons of subheadings 0805.90.00, tamarinds and kiwi fruit of 
subheading 0810.90.20, and cashew apples, mameyes colorados, sapodillas, 
soursops and sweetsops of subheading 0810.90.40) of the HTS; or
    (4) Concentrated citrus fruit juice provided for in subheadings 
2009.11.00, 2009.19.40, 2009.20.40, 2009.30.20, and 2009.30.60 of the 
HTS.
    (b) Beneficiary country means any country listed in subsection 
203(b)(1) of the Act with respect to which there is in effect a 
proclamation by the President designating such country as a beneficiary 
country for purposes of the Act.



Sec. 1540.42  Who may file request.

    A request under this subpart may be filed by an entity, including a 
firm, or group of workers, trade association, or certified or recognized 
union which is representative of a domestic industry producing a 
perishable product like or directly competitive with a perishable 
product that such entity claims is being imported into the United States 
duty-free under the provisions of the Act from a beneficiary 
country(ies) in such increased quantities as to be a substantial cause 
of serious injury, or the threat thereof, to such domestic industry.



Sec. 1540.43  Contents of request.

    (a) A request for emergency action under section 204(e) of the Act 
shall be submitted in duplicate to the Administrator, Foreign 
Agricultural Service, United States Department of Agriculture, 
Washington, DC 20250. Such request shall be supported by appropriate 
information and data and shall include to the extent possible:
    (1) A description of the imported perishable product(s) allegedly 
causing, or threatening to cause, serious injury;
    (2) The beneficiary country(ies) of origin of the allegedly 
injurious imports;
    (3) Data showing that the perishable product allegedly causing, or 
threatening to cause, serious injury is being imported from the 
designated beneficiary country(ies) in increased quantities as compared 
with imports of the same product from the designated beneficiary 
country(ies) during a previous representative period of time (including 
a statement of why the period used should be considered to be 
representative);
    (4) Evidence of serious injury or threat thereof to the domestic 
industry substantially caused by the increased quantities of imports of 
the product from the beneficiary country(ies); and
    (5) A statement indicating why emergency action would be warranted 
under section 204(e) of the Act (including all available evidence that 
the injury caused by the increased quantities of imports from the 
beneficiary country(ies) would be relieved by the suspension of duty-
free treatment accorded under the Act).
    (b) A copy of the petition and the supporting evidence filed with 
the United States International Trade Commission under Section 201 of 
the Trade Act of 1974, as amended, must be provided with the request for 
emergency action.



Sec. 1540.44  Submission of recommendations by the Secretary of Agriculture.

    If the Secretary has reason to believe that the perishable 
product(s) which is the subject of a petition under Sec. 1504.43 of this 
subpart is being imported into the United States in such increased 
quantities as to be a substantial cause of serious injury, or the threat 
thereof, to the domestic industry producing a perishable product like or 
directly competitive with the imported perishable product and that 
emergency action is warranted, the Secretary, within 14 days after the 
filing of the petition under Sec. 1540.43 of this subpart, shall 
recommend to the President that the President take emergency action. If 
the Secretary determines not to recommend the imposition of emergency 
action, the Secretary within 14 days after the filing of the petition 
shall publish a notice of such determination and so advise the 
petitioner.



Sec. 1540.45  Information.

    Persons desiring information from the Department of Agriculture 
regarding the Department's implementation

[[Page 694]]

of section 204(e) of the Act should address such inquiries to the 
Administrator, Foreign Agricultural Service, United States Department of 
Agriculture, Washington, DC 20250. Issued at Washington, DC this 19th 
day of March, 1993.



PART 1550--PROGRAMS TO HELP DEVELOP FOREIGN MARKETS FOR AGRICULTURAL COMMODITIES--Table of Contents




Sec.
1550.1  Purpose and scope.
1550.2  Definitions.
1550.3  Market Development Project Agreements.
1550.4  Export Incentive Program Agreements.
1550.5  Program participation and benefits.
1550.6  Compliance with program requirements.
1550.7  Paperwork Reduction Act assigned number.

    Authority: Sec. 601 of the Agricultural Act of 1954, as amended (7 
U.S.C. 1761); Secs. 108(d)(2)(B) and 108(f) of the Agricultural Trade 
Development and Assistance Act of 1954, as amended (7 U.S.C. 1708); Sec. 
4214(d) of the Agricultural Competitiveness and Trade Act of 1988 (7 
U.S.C. 5234(d)); E.O. 12220, 45 FR 44245.

    Source: 54 FR 37784, Sept. 13, 1989, unless otherwise noted.



Sec. 1550.1  Purpose and scope.

    (a) This part sets forth policies and requirements with respect to 
the conduct by the FAS of programs utilizing public or private entities 
in the United States to help develop foreign markets for United States 
agricultural commodities on a mutually benefiting basis. As far as 
practicable, FAS relies upon representatives of the private U.S. 
agricultural sector to carry out market development activities through 
cooperative agreements.
    (b) These activities include entering into contracts pursuant to 
which FAS procures, for a stated consideration, property and services 
needed in developing markets for U.S. agricultural commodities.



Sec. 1550.2  Definitions.

    (a) Agricultural commodities includes agricultural commodities and 
products thereof.
    (b) Affiliate or affiliated organization means any partnership, 
association, company, corporation, trust, or any other legal entity in 
which the program participant has any investment other than an 
investment in any mutual fund.
    (c) Cooperator means an entity entering into a Market Development 
Project Agreement.
    (d) Export Incentive Program Agreements mean cooperative agreements 
between FAS and a private United States entity for the purpose of 
maintaining, expanding or creating foreign markets for United States 
agricultural commodities through the promotion of brand-identified 
agricultural commodities.
    (e) FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    (f) Incentive payment means FAS reimbursement for eligible promotion 
costs incurred under the terms of an Export Incentive Program Agreement.
    (g) Market Development Project Agreements mean cooperative 
agreements between FAS and United States agricultural trade associations 
or associations of State Departments of Agriculture for the purpose of 
maximizing sales in foreign markets of U.S. agricultural commodities. 
Activities to be undertaken are intended to promote specific commodities 
on a generic or brand-identified basis, or through programs which 
include both elements.
    (h) Participant or program participant means any entity entering 
into an agreement within the scope of this part 1550.
    (i) Project funds are funds made available by FAS to program 
participants.
    (j) Sales teams are teams engaged in activities intended to result 
in specific sales by team members.
    (k) Trade teams are teams engaged in activities to promote the 
interests of the entire agricultural sector represented by the program 
participant.



Sec. 1550.3  Market Development Project Agreements.

    (a) Eligible Organizations. In selecting trade and Agricultural 
groups as cooperators, representative nonprofit U.S. agricultural trade 
organizations will be used to the maximum extent

[[Page 695]]

possible. Organizations selected should represent the commodity being 
promoted on the broadest possible basis, with priority given to those 
which are industry-wide or nationwide in membership and scope. 
Cooperators must demonstrate an ability to provide U.S.-based staff 
capable of developing, supervising, and carrying out projects overseas, 
and be willing and able to contribute resources to a joint project.
    (b) Use of Third Parties. A Cooperator that enters into a Market 
Development Project Agreement may undertake market development 
activities directly or through a third party provided that such 
Cooperator remains responsible for the activities of the third party.
    (c) Contributions. Cooperators are expected to contribute funds or 
make in-kind contributions towards completion of approved market 
development projects. Contributions by third parties will be accepted as 
partially satisfying the contribution obligation of the Cooperator.
    (d) Project Funds. FAS will make funds available, up to the amount 
stated in the Market Development Project Agreement, to reimburse 
Cooperators for expenditures incurred in conducting activities 
authorized by the agreement and budgeted in a marketing plan approved in 
advance by FAS. Funds will be paid in United States dollars unless the 
Cooperator and FAS specifically agree that payment will be made in 
foreign currencies.
    (e) Consideration of Projects. Market Development Project Agreements 
will be entered into by FAS only if it is determined that such 
agreements could contribute to the effective creation, expansion, or 
maintenance of foreign markets for U.S. agricultural commodities based 
on available supplies of those commodities for export and international 
market conditions. Marketing plans will be required from organizations 
selected to participate in Market Development Project Agreements and 
will serve as a basis for the expenditure of funds committed to Market 
Development Project Agreements. Marketing plans will be reviewed 
according to the following criteria:
    (1) The market potential for the commodities covered in the markets 
identified for promotional effort and the identification of conditions 
affecting the level of U.S. exports which could be influenced by the 
projects proposed;
    (2) The extent and complexity of activities proposed in relation to 
each Cooperator's prior export market development experience and U.S.-
based staff resources;
    (3) The likelihood of these activities influencing conditions 
affecting the level of U.S. exports.



Sec. 1550.4  Export Incentive Program Agreements.

    (a) Eligible Organizations. Export Incentive Program (EIP) 
agreements will be entered into with private U.S. entities.
    (b) Use of Third Parties. An entity that enters into an Export 
Incentive Program Agreement may undertake market development activities 
directly or through a third party provided such entity remains 
responsible for the activity.
    (c) Reimbursement. After submission of a claim for an incentive 
payment, FAS will reimburse a percentage of eligible promotion costs 
defined in the Export Incentive Program Agreement, up to the amount 
stated in the Agreement, to carry out the purposes of the project. Such 
a claim will be submitted on a marketing year basis or at such other 
time as may be agreed by FAS. The amount of funds to be paid by FAS on 
each claim will be specified in the Agreement and will be based upon 
either a stated percentage of the promotional expenditures claimed, 
volume of exports over a stated period, or a combination of both. Funds 
will be paid in U.S. dollars only.
    (d) Consideration of Projects. Export Incentive Program Agreements 
will be entered into by FAS only if it is determined that such 
agreements with private firms could contribute to the effective 
creation, expansion, or maintenance of foreign markets for the 
commodities concerned. Project proposals will be reviewed in relation to 
market conditions in the countries where activities are proposed, and in 
relation to the proposing firm's prior experience in exporting and in 
market promotion activites abroad, based upon the same criteria set 
forth in Sec. 1550.3(e)(1)--(3).

[[Page 696]]



Sec. 1550.5  Program participation and benefits.

    (a) Scope. This section establishes requirements applicable only to 
participation in Market Development Project Agreements and any other 
agreement with FAS that specifically incorporates the provisions of this 
part.
    (b) General. It is the policy of FAS to insure that the benefits 
generated by agreements are as broadly distributed throughout the 
relevant agricultural sector as feasible and, particularly, that no 
program participant derive an unfair advantage or benefit from 
activities conducted pursuant to the agreement, whether funded with 
project funds or industry contributions.
    (c) Industry Participation. When required by FAS, program 
participants shall promptly furnish to FAS for approval its criteria for 
the selection of U.S. agricultural industry representatives to 
participate in activities conducted pursuant to the agreement such as 
trade teams, sales teams, and trade fairs, and its criteria for the 
selection of firms to participate in U.S. brand-identified promotions. 
Such criteria must ensure participation on an equitable basis by a 
representative cross section of the relevant U.S. agricultural industry. 
If FAS requests submission of criteria for approval, the program 
participant shall not use criteria disapproved by FAS after the program 
participant has been notified of FAS's disapproval.
    (d) Distribution of Information. All program participants shall 
provide, on a timely basis, upon request of any entity in the United 
States, other than a representative of a foreign government, any and all 
data developed and produced with project funds or contributions. Any fee 
charged in connection therewith may not exceed the costs incurred in 
assembling, duplicating and distributing the requested material.
    (e) Export Activities and Related Services. (1) Neither program 
participants nor their affiliated organizations shall, during the term 
of the agreement, make export sales of agricultural commodities of the 
kind which are promoted, in whole or in part, with project funds.
    (2) Neither the program participants nor affiliated organizations 
may assess fees for services provided to exporters in facilitating an 
export sale if the promotional activities intended to directly result in 
that specific export sale are supported, in whole or in part, by project 
funds. This paragraph applies to activities such as those involving 
discussions with potential buyers or the solicitation of specific sales 
including activities performed by sales teams and performed through 
trade fairs rather than activities of a more general promotional nature. 
This paragraph does not apply to checkoffs or membership dues based on 
commodity sales, when such assessments are a condition of membership in 
the participating organization.
    (3) Participants in approved program activities shall not use the 
activities to promote private self-interests or conduct private 
business, except as members of sales teams or as part of a U.S. brand-
identified promotion when such activities are specifically approved by 
FAS.



Sec. 1550.6  Compliance with program requirements.

    (a) Within 30 days after the effective date of these regulations, 
program participants shall submit a written statement to the 
Administrator, FAS, that neither they, nor their affiliated 
organizations, will make export sales of agricultural commodities 
promoted, in whole or in part, with project funds during the term of any 
agreement between the program participant and FAS within the scope of 
Sec. 1550.5. FAS may from time to time require program participants to 
submit certifications as to export sales for purposes of this part.
    (b) In the event of noncompliance with any provision of these 
regulations, FAS may disallow a claim submitted under an agreement for 
expenses incurred after the effective date of these regulations or 
terminate the agreement in addition to any other remedy available to 
FAS.



Sec. 1550.7  Paperwork Reduction Act assigned number.

    Information collection requirements contained in these regulations 
have

[[Page 697]]

been submitted to OMB for approval under control number 0551-0026. 
However, these requirements are not effective until final clearance is 
received from OMB.



PART 1560--PROCEDURES TO MONITOR CANADIAN FRESH FRUIT AND VEGETABLE IMPORTS--Table of Contents




Sec.
1560.1  Scope.
1560.2  Definitions.
1560.3  Determination of fresh fruit or vegetable.
1560.4  Calculation of data to support imposition of temporary duty.
1560.5  Calculation of data to support removal of temporary duty.

    Authority: Secs. 105 and 301(a) of the United States-Canada Free-
Trade Agreement Implementation Act of 1988, Pub. L. 100-449 (102 Stat. 
1855 and 1865-67).

    Source: 54 FR 1327, Jan. 13, 1989, unless otherwise noted.



Sec. 1560.1  Scope.

    This part outlines the procedures that will be used by the 
Administrator of the Foreign Agricultural Service to monitor and inform 
the Secretary of Agriculture of data regarding the importation of fresh 
fruits and vegetables from Canada.



Sec. 1560.2  Definitions.

    The following definitions shall be applicable to this part:
    (a) Administrator means the Administrator of the Foreign 
Agricultural Service, United States Department of Agriculture.
    (b) Average Monthly Import Price means the average unit value for 
all shipments of a particular Canadian fresh fruit or vegetable imported 
into the United States from Canada during a particular calendar month 
based on official data from the U.S. Customs Service and/or the Bureau 
of Census, and shall be calculated by dividing the total value of the 
fresh fruit or vegetable imported in that month by the total quantity of 
the fresh fruit or vegetable imported in that month.
    (c) Average Planted Acreage means the average of the annual planted 
acreage in the U.S. for a particular fresh fruit or vegetable for the 
preceding five years excluding the years with the highest and lowest 
acreages based on available data from agencies within the United States 
Department of Agriculture and data from appropriate state agencies, as 
required.
    (d) Canadian fresh fruit or vegetable means a fresh fruit or 
vegetable that is a product of Canada as determined in accordance with 
the rules of origin set forth in section 202 of the U.S.-Canada Free-
Trade Agreement Implementation Act of 1988.
    (e) Corresponding Five-Year Average Monthly Import Price for a 
particular day means the average import price of a Canadian fresh fruit 
or vegetable imported into the United States from Canada, for the 
calendar month in which that day occurs, for that month in each of the 
preceding 5 years, excluding the years with the highest and lowest 
monthly averages.
    (f) F.O.B. Point of Shipment Price in Canada means the daily average 
of prices of a particular Canadian fresh fruit or vegetable imported 
into the United States from Canada that are reported to the U.S. Customs 
Service at the U.S. border as part of the official documentation 
accompanying such shipments less freight costs where applicable.
    (g) Fresh Fruit or Vegetable means a fruit or vegetable determined 
in accordance with Sec. 1560.3 within one of the HS headings.
    (h) HS heading means any of the following tariff headings of the 
Harmonized System (HS) as modified by the description for each heading:

------------------------------------------------------------------------
         HS tariff heading                       Description
------------------------------------------------------------------------
07.01.............................  Potatoes, fresh or chilled.
07.02.............................  Tomatoes, fresh or chilled.
07.03.............................  Onions, shallots, garlic, leeks, and
                                     other alliaceous vegetables, fresh
                                     or chilled.
07.04.............................  Cabbages, cauliflowers, kohlrabi,
                                     kale and similar edible brassicas,
                                     fresh or chilled.
07.05.............................  Lettuce (lactica sativa) and chicory
                                     (cichorium spp.), fresh or chilled.
07.06.............................  Carrots, salad beets or beetroot,
                                     salsify, celeriac, radishes and
                                     similar edible roots (excluding
                                     turnips), fresh or chilled.
07.07.............................  Cucumbers and gherkins, fresh or
                                     chilled.
07.08.............................  Leguminous vegetables, shelled or
                                     unshelled, fresh or chilled.
07.09.............................  Other vegetables (excluding
                                     truffles), fresh or chilled.
08.06.10..........................  Grapes, fresh.
08.08.20..........................  Pears and quinces, fresh.
08.09.............................  Apricots, cherries, peaches
                                     (including nectarines), plums and
                                     sloes, fresh.

[[Page 698]]

 
08.10.............................  Other fruit (excluding cranberries
                                     and blueberries), fresh.
------------------------------------------------------------------------

    (i) Import Price means the unit value based on data available from 
the U.S. Customs Service of a particular Canadian fresh fruit or 
vegetable imported into the U.S. from Canada taking into account any 
other relevant data, as necessary.
    (j) Secretary means the Secretary of Agriculture.
    (k) United States means the United States Customs Territory which 
includes the fifty states, the District of Columbia and Puerto Rico.
    (l) Wine Grape means grapes of labrusca, vinifera or hybrid vinifera 
varieties used for making wine.
    (m) Working Day means a day which falls on a Monday through Friday, 
excluding holidays observed by the United States Government and days in 
which the U.S. Customs Service is not operating.



Sec. 1560.3  Determination of fresh fruit or vegetable.

    The specific group of articles that will be monitored as a 
particular fresh fruit or vegetable will be determined based on the 
practicability of monitoring at the eight digit subheading level of the 
Harmonized Tariff Schedule of the United States. The determination of 
practicability will be made by the Administrator taking into account: 
(a) The availability of reliable volume and price data on imports from 
Canada and data on U.S. planted acreage, (b) market differentiation for 
the group of articles, and (c) such other factors as the Administrator 
determines to be appropriate.



Sec. 1560.4  Calculation of data to support imposition of temporary duty.

    The Administrator will inform the Secretary when the following 
conditions are met with respect to a particular fresh fruit or vegetable 
imported into the United States from Canada:
    (a) If for each of five consecutive working days the import price of 
the fresh fruit or vegetable is below ninety percent of the 
corresponding five-year average monthly import price for such fresh 
fruit or vegetable excluding the years with the highest and lowest 
corresponding monthly import price; and
    (b) The planted acreage in the United States for such fresh fruit or 
vegetable based on the most recent data available is no higher than the 
average planted acreage over the preceding five years excluding the 
years with the highest and lowest planted acreages. For the purposes of 
calculating any planted acreage increase attributed directly to a 
reduction in wine grape planted acreage existing on October 4, 1987 
shall be excluded.



Sec. 1560.5  Calculation of data to support removal of temporary duty.

    During the time a temporary duty on a particular fresh fruit or 
vegetable is imposed pursuant to section 301(a) of the United States-
Canada Free-Trade Agreement Implementation Act of 1988, the 
Administrator will inform the Secretary if the F.O.B. point of shipment 
price in Canada of such fresh fruit or vegetable exceeds, for five 
consecutive working days, ninety percent of the corresponding five-year 
average monthly import price excluding the years with the highest and 
lowest average corresponding monthly import price, adjusted to an F.O.B. 
point of shipment price, if necessary, for that fresh fruit or 
vegetable.



PART 1570--EXPORT BONUS PROGRAMS--Table of Contents




   Subpart A--Sunflowerseed Oil Assistance Program and Cottonseed Oil 
                       Assistance Program Criteria

Sec.
1570.10  General statement.
1570.20  Criteria.

             Subpart B--SOAP and COAP Drawback Certification

1570.1100  Drawback certification.

    Source: 56 FR 42223, Aug. 27, 1991, unless otherwise noted.

[[Page 699]]



   Subpart A--Sunflowerseed Oil Assistance Program and Cottonseed Oil 
                       Assistance Program Criteria

    Authority: 7 U.S.C. 5663.



Sec. 1570.10  General statement.

    This subpart sets forth the criteria to be considered in evaluating 
and approving proposals for initiatives to facilitate export sales under 
the Sunflowerseed Oil Assistance Program (SOAP) and Cottonseed Oil 
Assistance Program (COAP) administered by the Foreign Agricultural 
Service (FAS). These criteria are interrelated and will be considered 
together in order to select eligible countries for SOAP and COAP 
initiatives which will best meet the programs' objective. The objective 
of the programs is to encourage the sale of additional quantities of 
sunflowerseed oil and cottonseed oil in world markets at competitive 
prices. Under the SOAP and the COAP, bonuses are made available by FAS 
to enable exporters to meet prevailing world prices for sunflowerseed 
oil and cottonseed oil in targeted destinations. In the operation of the 
SOAP and the COAP, FAS will make reasonable efforts to avoid the 
displacement of usual marketings of U.S. agricultural commodities.



Sec. 1570.20  Criteria.

    The criteria considered by FAS in reviewing proposals for SOAP and 
COAP initiatives will include, but not be limited to, the following:
    (a) The expected contribution which initiatives will make toward 
realizing U.S. agricultural export goals and, in particular, in 
developing, expanding, or maintaining markets for U.S. sunflowerseed 
and/or cottonseed oil;
    (b) The subsidy requirements of proposed initiatives in relation to 
the sums made available to operate the programs in any given fiscal 
year; and
    (c) The likelihood that sales facilitated by initiatives would have 
the unintended effect of displacing normal commercial sales of 
sunflowerseed and/or cottonseed oil.



             Subpart B--SOAP and COAP Drawback Certification

    Authority: 7 U.S.C. 5676.



Sec. 1570.1100  Drawback certification.

    An offer submitted by an exporter to FAS for an export bonus under 
the SOAP or the COAP must contain, in addition to any other information 
required by FAS, a certification stating the following: ``None of the 
eligible commodity (sunflowerseed oil and/or cottonseed oil) has been or 
will be used as the basis for a claim of a refund, as drawback, pursuant 
to section 313 of the Tariff Act of 1930 (19 U.S.C. 1313) of any duty, 
tax, or fee imposed under Federal law on an imported commodity or 
product.'' This certification must be signed by the exporter, if the 
exporter is an individual, or by a partner or officer of the exporter, 
if the exporter is a partnership or a corporation, respectively. FAS 
will reject any offer that does not contain the prescribed 
certification.


[[Page 701]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of current CFR titles, subtitles, chapters, subchapters and 
parts and an alphabetical list of agencies publishing in the CFR are 
included in the CFR Index and Finding Aids volume to the Code of Federal 
Regulations which is published separately and revised annually.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 703]]

            Material Approved for Incorporation by Reference

                     (Revised as of January 1, 1999)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


7 CFR (PARTS 1200-1599)

COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE
                                                                   7 CFR


Joint Cotton Industry Bale Packaging Committee, National Cotton Council 
of America

  P.O. Box 12285
  Memphis, TN 38112
Specifications for Cotton Bale Packaging Material,                1427.5
  June 1995.



[[Page 705]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 1999)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2--[Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)
        II  Federal Claims Collection Standards (General 
                Accounting Office--Department of Justice) (Parts 
                100--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Advisory Committee on Federal Pay (Parts 1400--1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
       VII  Advisory Commission on Intergovernmental Relations 
                (Parts 1700--1799)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)

[[Page 706]]

      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)

[[Page 707]]

        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
      XIII  Northeast Dairy Compact Commission (Parts 1300--1399)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)

[[Page 708]]

     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--499)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)

[[Page 709]]

         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700-1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Export Administration, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)

[[Page 710]]

        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)

[[Page 711]]

       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development, International 
                Development Cooperation Agency (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  United States Information Agency (Parts 500--599)
        VI  United States Arms Control and Disarmament Agency 
                (Parts 600--699)
       VII  Overseas Private Investment Corporation, International 
                Development Cooperation Agency (Parts 700--799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Board for International Broadcasting (Parts 1300--
                1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

[[Page 712]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Multifamily Housing Assistance 
                Restructuring, Department of Housing and Urban 
                Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--999)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 713]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Part 1001)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--799)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)

[[Page 714]]

       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
        VI  Bureau of Mines, Department of the Interior (Parts 
                600--699)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)

[[Page 715]]

       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)
      XXIX  Presidential Commission on the Assignment of Women in 
                the Armed Forces (Part 2900)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100-1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

[[Page 716]]

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
       XIV  Assassination Records Review Board (Parts 1400-1499)

             Title 37--Patents, Trademarks, and Copyrights

         I  Patent and Trademark Office, Department of Commerce 
                (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
         V  Council on Environmental Quality (Parts 1500--1599)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)

[[Page 717]]

        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans 
                Employment and Training, Department of Labor 
                (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300.99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Parts 303-1--303-2)
       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Health Care Financing Administration, Department of 
                Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)

[[Page 718]]

       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
      XXII  Christopher Columbus Quincentenary Jubilee Commission 
                (Parts 2200--2299)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

[[Page 719]]

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  United States Information Agency (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)

[[Page 720]]

        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Highway Administration, Department of 
                Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)

[[Page 721]]

        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 723]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 1999)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Commission on Intergovernmental          5, VII
     Relations
Advisory Committee on Federal Pay                 5, IV
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 724]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Arms Control and Disarmament Agency, United       22, VI
     States
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Assassination Records Review Board                36, XIV
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Board for International Broadcasting              22, XIII
Census Bureau                                     15, I
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Christopher Columbus Quincentenary Jubilee        45, XXII
     Commission
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I`
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Export Administration, Bureau of                15, VII
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office                     37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 725]]

  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                25, III, LXXVII; 48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export Administration, Bureau of                  15, VII
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1

[[Page 726]]

Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               4, II
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II; 49, III
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Pay, Advisory Committee on                5, IV
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Property Management Regulations System    41, Subtitle C
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I, II
General Services Administration                   5, LVII
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Property Management Regulations System  41, 101, 105
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302

[[Page 727]]

  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Health Care Financing Administration            42, IV
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Health Care Financing Administration              42, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Inspector General, Office of                    24, XII
  Multifamily Housing Assistance Restructuring,   24, IV
       Office of
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Information Agency, United States                 22, V
  Federal Acquisition Regulation                  48, 19
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Intergovernmental Relations, Advisory Commission  5, VII
     on
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  Mines, Bureau of                                30, VI

[[Page 728]]

  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
  International Development, United States        22, II; 48, 7
       Agency for
  Overseas Private Investment Corporation         5, XXXIII; 22, VII
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             4, II
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training, Office of    41, 61; 20, IX
       the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Management and Budget, Office of                  5, III, LXXVII; 48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Mines, Bureau of                                  30, VI

[[Page 729]]

Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Multifamily Housing Assistance Restructuring,     24, IV
     Office of
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National and Community Service, Corporation for   45, XII, XXV
National Council on Disability                    34, XII
National Credit Union Administration              12, VII
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Dairy Compact Commission                7, XIII
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office                       37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
     Acquisition Regulation
[[Page 730]]

  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Commission on the Assignment of      32, XXIX
     Women in the Armed Forces
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II; 49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV

[[Page 731]]

  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Statistics Brureau                 49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training, Office of the  41, 61; 20, IX
     Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 733]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
1986, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 1986, see the ``List of CFR Sections 
Affected 1949-1963, 1964-1972, and 1973-1985'' published in seven 
separate volumes.

                                  1986

7 CFR
                                                                   51 FR
                                                                    Page
Chapter XI
1205.500--1205.540 (Subpart)  Authority citation revised............6098
1205.500  (n) removed...............................................6098
    (d) revised; (n) added.........................................37705
1205.513  (d) through (j) redesignated as (e) through (k); (d) 
        added......................................................37705
1205.514  Heading, introductory text, (a), and (b) revised; (d) 
        added.......................................................6098
1205.515  Redesignated as 1205.516 and (b) revised; new 1205.515 
        added.......................................................6099
1205.516  Redesignated from 1205.515 and (b) revised................6099
1205.520  (b) revised...............................................6099
1230  Added........................................................11554
1230.1--1230.91 (Subpart A)  Added.................................31903
1230.71  (e) table heading corrected...............................36383
1230.100--1230.102 (Subpart B)  Added..............................31910
1230.501--1230.512 (Subpart A)  Redesignated as (Subpart D)........31903
1240  Added........................................................17918
1240.1--1240.67  Correctly added............................26148, 29210
1260  Authority citation revised...................................26138
    Revised........................................................11559
1260.101--1260.217 (Subpart A)  Added..............................26138
1260.201  Effective date pending...................................26132
1260.202  Effective date pending...................................26132
    Corrected......................................................26686
1260.203  Corrected................................................26686
1260.211  (a) corrected............................................26686
1260.301--1260.316 (Subpart B)  Added; interim.....................35197
1260.500--1260.640 (Subpart A)  Redesignated as Subpart B..........26138
1260.500--1260.640 (Subpart B)  Redesignated from Subpart A........26138
    Redesignated as (Subpart C); interim...........................35197
1260.500--1260.640 (Subpart C)  Redesignated from (Subpart B); 
        interim....................................................35197
1280  Removed......................................................39739
    Technical correction...........................................40408
Chapter XIV
1403  Heading and authority citation revised.......................46994
1403.1--1403.6 (Subpart A)  Heading added..........................46995
1403.21--1403.32 (Subpart B)  Added................................46995
1421  Authority citation revised....................................8455
    Technical correction...........................................11419
1421.1--1421.30 (Subpart)  Heading amended; interim.................8455
    Confirmed......................................................36905
1421.1  Amended; interim............................................8455
    Confirmed......................................................36905
1421.3  (g) revised; interim........................................8455
    Confirmed......................................................36905
    (a) (1) and (2) amended; (a)(3) added..........................36930
1421.6  (c) revised; interim.......................................32625
1421.7  (a) revised; interim.......................................32626
1421.18  (a) and (c) revised; interim...............................8455

[[Page 734]]

    Confirmed......................................................36905
1421.30  Added; interim.............................................8456
    Confirmed......................................................36905
1421.50--1421.60 (Subpart)  Heading amended; interim................8455
    Confirmed......................................................36905
1421.50  Nomenclature change; interim...............................8455
    Confirmed......................................................36905
1421.57  (c) added; interim.........................................8457
    Confirmed......................................................36905
1421.90--1421.100 (Subpart)  Heading amended; interim...............8455
    Confirmed......................................................36905
1421.90  Nomenclature change; interim...............................8455
    Confirmed......................................................36905
1421.91  (c) revised...............................................21878
1421.93  Introductory text, (a), and (b) redesignated as (a), (b), 
        and (c); new (b) revised...................................21878
1421.94  Introductory text, (a), (b), (c), and (d) redesignated as 
        (a), (b), (c), (d), and (e); new (d) revised...............21878
1421.97  (c) added; interim.........................................8457
    Confirmed......................................................36905
1421.150--1421.158 (Subpart)  Removed..............................36930
1421.210--1421.220 (Subpart)  Heading amended; interim..............8455
    Confirmed......................................................36905
1421.210  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.211  (b) revised..............................................21878
1421.213  Introductory text, (a), and (b) redesignated as (a), 
        (b), and (c); new (b) revised..............................21878
1421.214  Introductory text, (a), (b), (c), (d), and (e) 
        redesignated as (a), (b), (c), (d), and (e), and (f); new 
        (d) revised................................................21879
1421.217  (c) added; interim........................................8457
    Confirmed......................................................36905
1421.245--1421.254 (Subpart)  Heading amended; interim..............8455
    Confirmed......................................................36905
1421.245  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.252  (c) added; interim........................................8457
    Confirmed......................................................36905
1421.280--1421.291 (Subpart)  Heading amended; interim..............8455
    Confirmed......................................................36905
1421.280  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.302  (b) revised; interim......................................8456
    Confirmed......................................................36905
1421.309  Added; interim............................................8456
    Confirmed......................................................36905
1421.320--1421.325 (Subpart)  Added; interim.......................32298
    Confirmed......................................................46997
1421.335--1421.345 (Subpart)  Heading amended; interim..............8455
    Confirmed......................................................36905
1421.335  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.342  (c) added; interim........................................8457
    Confirmed......................................................36905
1421.365--1421.374 (Subpart)  Heading amended; interim..............8455
    Confirmed......................................................36905
1421.365  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.366  (b) revised..............................................21879
1421.368  Introductory text, (a), and (b) redesignated as (a), 
        (b), and (c); new (b) revised..............................21879
1421.369  Introductory text, (a), (b), (c), and (d) redesignated 
        as (a), (b), (c), (d), and (e); new (d) revised............21879
1421.372  (c) added; interim........................................8457
    Confirmed......................................................36905
1421.460--1421.471 (Subpart)  Heading amended; interim..............8455
    Confirmed......................................................36905
1421.460  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.467  (c) added; interim........................................8457
    Confirmed......................................................36905
1421.530--1421.544 (Subpart)  Removed; interim......................8455
    Confirmed......................................................36905
1421.558--1421.572 (Subpart)  Removed; interim......................8455
    Confirmed......................................................36905
1421.630--1421.644 (Subpart)  Removed; interim......................8455
    Confirmed......................................................36905
1421.670--1421.684 (Subpart)  Removed; interim......................8455
    Confirmed......................................................36905
1421.700--1421.714 (Subpart)  Removed..............................36930

[[Page 735]]

1421.720--1421.734 (Subpart)  Removed..............................36930
1421.745  Nomenclature change; interim..............................8455
    Confirmed......................................................36905
1421.752  (d) revised; interim.....................................21730
    Confirmed......................................................36905
1421.800--1421.806 (Subpart)  Removed; interim......................8455
    Confirmed......................................................36905
1421.5552  (a)(3) revised; eff. 4-1-87.............................32627
1421.5555  (b) revised; eff. 4-1-87................................32627
1421.5558  Heading, (a)(2), and (b) revised; (a)(3) added; eff. 4-
        1-87.......................................................32627
1425  Revised; interim..............................................8457
    Technical correction...........................................11419
    Revised........................................................36924
1425.4  Heading and (a) revised; interim...........................21836
1425.11  (c) revised; interim......................................21836
1425.13  (c) revised; interim......................................21836
1425.16  (c) revised; interim......................................21836
1425.17  (b)(4) revised; interim...................................21836
1425.19  Revised; interim..........................................21836
1427  Authority citation revised....................................8463
    Technical correction...........................................11419
1427.5  (l) revised................................................28322
1427.8  (e), (f), and (g) added; interim............................8463
    Confirmed......................................................36905
1427.22  (a) (1) and (2) revised; interim...........................8463
    Confirmed......................................................36905
1427.26  Added; interim.............................................8464
    Confirmed......................................................36905
1427.50--1427.55 (Subpart)  Added; interim.........................32299
    Confirmed......................................................46997
1427.75--1427.79 (Subpart)  Added; interim.........................32300
    Confirmed......................................................46997
1430.340--1430.351 (Subpart)  Added................................11528
1430.450--1430.470 (Subpart)  Added.................................7915
1434.1--1434.36 (Subpart)  Heading amended; interim................25853
1434.1  Amended; interim...........................................25853
1434.3  (h) added; interim.........................................25853
    (a) revised....................................................36930
1434.4  (e) amended; interim.......................................25853
1434.6  (b) amended; interim.......................................25854
1434.8  (b) revised; interim.......................................25854
1434.18  (c) added; interim........................................25854
1434.25  (a), (b), and (c) amended; (d) added; interim.............25854
1434.26  (a) amended; interim......................................25854
1434.27  Amended; interim..........................................25854
1435.1--1435.14 (Subpart)  Removed; interim........................39508
1435.15--1435.25 (Subpart)  Removed; interim.......................39508
1435.26--1435.33 (Subpart)  Removed; interim.......................39508
1435.34--1435.44 (Subpart)  Removed; interim.......................39508
1435.45--1435.54 (Subpart)  Removed; interim.......................39508
1435.55--1435.65 (Subpart)  Removed; interim.......................39508
1435.66--1435.75 (Subpart)  Removed; interim.......................39508
1435.200--1435.206 (Subpart)  Added................................16287
1435.300--1435.313 (Subpart)  Added; interim.......................39509
1446.70--1446.143 (Subpart)  Added.................................21884
1446.70--1446.148 (Subpart)  Revised...............................44764
1446.71  (b) corrected.............................................46997
1446.72  (o) and (bb) corrected....................................45837
1446.105  (b) corrected............................................45837
1446.107  Amended..................................................27513
1446.109  (e) added................................................27513
1446.112  (c) added................................................27513
1446.124  Corrected................................................45837
1446.125  Corrected................................................46997
1446.129  Existing text designated as (a) and heading added; (b) 
        and (c) added..............................................27513
1446.131  (e) added................................................27513
1464  Authority citation revised...................................32426
1464.2  (b)(1)(i) and (2)(vii) amended.............................32426
1464.3  (e) corrected...............................................4703
    Revised........................................................32426
1464.5  Amended....................................................32426
1464.7  Revised....................................................32426
1464.8  Revised....................................................32426
1464.9  Revised....................................................32427
1464.10  (a)(2) amended; (a)(9) and (g) through (j) added; (b) 
        through (f) revised........................................32427
1468  Authority citation revised...................................17612
1468.1--1468.26 (Subpart)  Removal confirmed........................9174
1468.101--1468.127 (Subpart)  Heading revised......................17612
1468.101  Amended..................................................17612

[[Page 736]]

1468.103  Amended..................................................17612
1468.104  (a) through (l) paragraph designations removal and 
        section amendment confirmed.................................9174
1468.105  Revision confirmed........................................9174
1468.106  Introductory text designation as (a), (a) through (e) 
        redesignation as (b) through (f), and new (a), (b), and 
        (f) revision confirmed......................................9174
1468.107  Heading and (b) through (e) revision confirmed............9174
1468.108  Revision confirmed........................................9174
1468.110  (b) revision confirmed....................................9174
1468.111  (a) introductory text, (3) and (8) and (b) introductory 
        text and (3) revision confirmed.............................9174
1468.127  Addition confirmed........................................9174
1472  Authority citation revised...................................17613
1472.1401--1472.1455 (Subpart)  Removal confirmed...................5159
1472.1501--1472.1556 (Subpart)  Heading revised....................17613
1472.1501  Amended.................................................17613
1472.1503  Amended.................................................17613
1472.1504  Amendment confirmed......................................5159
1472.1505  Revision confirmed.......................................5159
1472.1506  Introductory text and (a) through (g) redesignation as 
        (a) through (h) and new (a), (b), (c), and (h) revisions 
        confirmed...................................................5159
1472.1507  Heading, (b), (c), (d), and (e) revisions confirmed......5159
1472.1509  (b) revision confirmed...................................5159
1472.1510  (a) introductory text, (3), and (8), and (b) 
        introductory text and (3) revisions confirmed...............5159
1472.1556  Addition confirmed.......................................5159
1474.4  (c) added..................................................36930
1475.52  (h), (l), (m), and (n) revised; interim...................28804
1475.53  Revised; interim..........................................28804
1475.54  (a) revised; interim......................................28804
    (a)(1) correctly designated....................................31316
1475.55  (d)(3), (e) (2) and (3) revised; interim..................28805
1475.56  Revised; interim..........................................28805
1475.58  (c) revised; interim......................................28805
1476.120--1476.127 (Subpart)  Added................................21328
1477  Added; interim...............................................41759
    Addition confirmed and authority citation revised..............46596
1477.3  (c), (e), and (f) revised..................................46596
1477.5  (c) revised................................................46596
1477.7  (a) and (b) revised; (c) and (d) redesignated as (d) and 
        (e); new (c) added.........................................46596
1493  Heading revised..............................................26541
1493.1--1493.15 (Subpart A)  Authority citation revised............26541
1493.1  Revised....................................................26541
1493.2  (e) and (f) revised; (j) through (n) redesignated as (l) 
        through (p); new (n) and (o) revised; and new (j) and (k) 
        added......................................................26541
1493.3  (a) amended................................................26541
1493.4  (b), (c), and (d) revised..................................26541
1493.5  Amended....................................................26542
1493.8  (a) and (b)(3) (iii) and (iv) revised......................26542
1493.9  (a) amended; (d) revised...................................26542
1493.10  (d) revised...............................................26542
1493.12  Amended...................................................26542
1493.16  Added.....................................................26542
1493.17  Added.....................................................26542

                                  1987

7 CFR
                                                                   52 FR
                                                                    Page
Chapter XI
1200  Authority citation revised...................................12899
1200.2  (a) revised................................................12899
1205.1--1205.19 (Subpart)  Removed.................................12899
1207.1--1207.19 (Subpart)  Removed.................................12899
1240  Authority citation revised....................................3103
1240.100--1240.125 (Subpart)  Added.................................3103
1250  Authority citation revised...................................31377
1250.1--1250.19 (Subpart)  Removed.................................12899
1250.514  Revised; interim.........................................31377
    Technical correction...........................................33903
    Revision confirmed.............................................38907
Chapter XIV
1403  Authority citation revised....................................2394
1403.21--1403.46 (Subpart B)  Heading revised; interim..............2394
1403.46  Added; interim.............................................2394
1421.1  Amended.....................................................1434
1421.4  (b) amended.................................................1434
1421.6  (c) revision confirmed......................................1433
1421.7  (a) revision confirmed......................................1433

[[Page 737]]

1421.22  (c)(2) amended.............................................1434
1421.400--1421.406 (Subpart)  Heading amended; authority citation 
        revised.....................................................1434
1421.400  Nomenclature change.......................................1434
1421.420--1421.425 (Subpart)  Removed...............................1434
1421.741  Revised..................................................30658
1421.742  Revised..................................................30658
1421.752  Heading revised..........................................30658
1421.753  (a) amended..............................................30658
1421.754  Amended..................................................30658
1421.900--1421.917 (Subpart)  Authority citation revised............1316
1421.902  Revised...................................................1316
1427.1--1427.26 (Subpart)  Authority citation revised..............25355
1427.5  (l) revised................................................25355
1434.1--1434.36 (Subpart)  Heading amendment confirmed.............11619
1434.1  Amended; interim...........................................11618
    Amendment confirmed.....................................11619, 48082
1434.2  (c) removed; (d) and (e) redesignated as (c) and (d); 
        interim....................................................11618
    (c) removal and (d) and (e) redesignation as (c) and (d) 
confirmed..........................................................48082
1434.3  (h) addition confirmed.....................................11619
1434.4  (a) amended; interim........................................6776
    (e) amendment confirmed........................................11619
    (a) amendment confirmed........................................48082
1434.6  (b) amended; interim........................................6776
    (b) amendment confirmed.................................11619, 48082
1434.7  (c) introductory text amended; interim.....................11619
    (c) introductory text amendment confirmed......................48082
1434.8  (b) revision confirmed.....................................11619
1434.18  (c) addition confirmed....................................11619
1434.25  (a), (b), and (c) amendment and (d) addition confirmed....11619
1434.26  (a) amendment confirmed...................................11619
1434.27  Amendment confirmed.......................................11619
1434.34  (f) removed; (g) and (h) redesignated as (f) and (g); 
        interim....................................................11619
    (f) removal and (g) and (h) redesignation as (f) and (g) 
confirmed..........................................................48082
1438  Removed.......................................................1434
1446.141  Added; interim...........................................49349
1468.103  Amended; interim..........................................4277
    Comment time extended..........................................10732
    Amendment confirmed............................................42078
1468.107  (c) (1) and (2) revised; (c) (3) and (4) removed; 
        interim.....................................................4277
    Comment time extended..........................................10732
    (c) (1) and (2) revision and (c) (3) and (4) removal confirmed
                                                                   42078
1468.116  (c), (d) and (e) redesignated as (d), (e) and (f); new 
        (c) added; interim..........................................4277
    Comment time extended..........................................10732
    (c), (d) and (e) redesignation as (d), (e) and (f) and new (c) 
addition confirmed.................................................42078
1472.1503  Amended; interim.........................................4277
    Comment time extended..........................................10732
    Amendment confirmed............................................42078
1472.1507  (c)(1) and (2) revised; (c)(3) and (4) removed; interim
                                                                    4277
    (c) (3) and (4) correctly removed; comment time extended.......10732
    (c) (1) and (2) revision and (c) (3) and (4) removal confirmed
                                                                   42078
1472.1545  (c), (d) and (e) redesignated as (d), (e) and (f); new 
        (c) added; interim..........................................4277
    Comment time extended..........................................10732
    (c), (d) and (e) redesignation as (d), (e) and (f) and new (c) 
addition confirmed.................................................42078
1475.52  (h), (l), (m), and (n) revision confirmed.................10728
1475.53  Revision confirmed........................................10728
1475.54  (a) revision confirmed....................................10728
1475.55  (d)(3), and (e) (2) and (3) revision confirmed............10728
1475.56  Revision confirmed........................................10728
1475.58  (c) revision confirmed....................................10728
1475.69  Added.....................................................10728
1476  Removed.......................................................1434
1477  Authority citation revised....................................4129
1477.3  (e) (2), (3), and (4) added; interim........................4130
    Confirmed......................................................18198
1480  Removed.......................................................1434
1493.1--1493.15 (Subpart A)  Authority citation revised............17550
1493.2  (f) and (o) revised........................................17550
1496.1  (b) and (c) removed; (a) designation removed................5728
1496.2  (a) amended; (b) revised....................................5728
1496.3  (f) and (h) removed; (g) redesignated as (f) and revised; 
        (e) revised.................................................5728

[[Page 738]]

1496.5  (a) revised; (f) added......................................5729

                                  1988

7 CFR
                                                                   53 FR
                                                                    Page
Chapter XI
1210  Added; interim...............................................51091
1230.32  (b)(2) revised............................................30245
1230.58  (g) revised...............................................30245
1230.71  (b)(3) and (e) revised.....................................1910
    (b) (2), (3), (4) redesignated as (b) (3), (4), and (5); new 
(b)(2) added.......................................................30245
1230.74  (b) revised; (c) added....................................30245
1230.94  Removed....................................................1911
1230.100--1230.102 (Subpart B)  Redesignated as 1230.400--1230.402 
        (Subpart C).................................................1910
1230.100--1230.120 (Subpart B)  Added...............................1911
1230.110  Revised..................................................27478
    Revised; interim...............................................52628
1230.400--1230.402 (Subpart C)  Redesignated from 1230.100--
        1230.102 (Subpart B)........................................1910
1230.601--1230.640 (Subpart E)  Added..............................28184
1240.115  (e) revised..............................................37731
1240.117  (d) revised...............................................8148
1260.151  Revised; interim.........................................52631
1260.172  (b)(2) revised; interim..................................52631
1260.301--1260.316 (Subpart B)  Revised.............................5754
1260.500--1260.640 (Subpart C)  Redesignated as (Subpart D).........9858
1260.401--1260.441 (Subpart C)  Added...............................9858
1260.500--1260.640 (Subpart D)  Redesignated from (Subpart C).......9858
Chapter XIV
1403.2  (a) revised................................................37987
1403.3  (c) revised................................................37988
1403.46  (d) revised................................................3331
1405  Authority citation revised...................................47659
1405.1--1405.2  Revised............................................47659
1408  Authority citation revised...................................50205
1408.4  (b)(3) revised.............................................50205
1408.11  (a) revised...............................................50205
1413  Redesignated from Part 713; interim..........................20290
    Redesignation confirmed........................................47659
1421  Authority citation revised..................................11240,
20281, 37702
1421.1--1421.32 (Subpart)  Heading amended..........................6132
    Heading revised; interim.......................................20281
    Heading revision confirmed.....................................47659
1421.1  Amended.....................................................6132
    Revised; interim...............................................20282
    Revision confirmed; amended....................................47659
1421.2  Revised; interim...........................................20282
    Revision confirmed.............................................47659
1421.3  (e) revised.................................................6132
    Redesignated as 1421.4 and (a), (d), (g), (h) and (i) revised; 
new 1421.3 added; interim..........................................20282
    Amendments at 53 FR 20282 confirmed............................47659
1421.4  (b) and (c) revised.........................................6132
    Removed; new 1421.4 redesignated from 1421.3 and (a), (d), 
(g), (h) and (i) revised; interim..................................20282
    Amendments at 53 FR 20282 confirmed; (a) revised...............47659
1421.5  Revised; interim...........................................20283
    Revision confirmed; (b)(1) revised.............................47659
1421.6  (c) amended.................................................6133
    Revised; interim...............................................20284
    (a)(1)(i) revised; (c) added...................................34011
    Revised........................................................47659
1421.7  Revised; interim...........................................20284
    Revision confirmed.............................................47659
    (e) revised....................................................47660
1421.8  Revised.....................................................6133
    Revised; interim...............................................20285
    Revision confirmed.............................................47659
1421.9  (a) revised; (e) through (i) added; interim................20285
    Amendments at 53 FR 20285 confirmed............................47659
    (i) revised....................................................47660
1421.10  Redesignated as 1421.11; new 1421.10 added; interim.......20286
    Amendments at 53 FR 20286 confirmed............................47659
1421.11  Removed; new 1421.11 redesignated from 1421.10; interim 
                                                                   20286
    Amendments at 53 FR 20286 confirmed............................47659
    Amended........................................................47660
1421.12  (b) amended................................................6133
    Revised; interim...............................................20286
    Revision confirmed.............................................47659
    (b)(2) and (3) revised.........................................47660
1421.14  (c) removed................................................6132
1421.15  Introductory text amended; (b) revised.....................6133
1421.16  (c) revised................................................6133

[[Page 739]]

    (a), (b) and (d) revised; interim..............................20287
    Amendments at 53 FR 20287 confirmed............................47659
1421.17  Heading and (a)(2) introductory text revised; (b) 
        amended; (j) added; interim................................20287
    Amendments at 53 FR 20287 confirmed............................47659
1421.18  (c)(2) revised; (c)(3) removed.............................6133
    Redesignated as 1421.20; new 1421.18 added; interim............20287
    Redesignation at 53 FR 20287 corrected.........................27450
    Amendments at 53 FR 20287 confirmed............................47659
    (b)(4)(i)(A) revised...........................................47660
1421.19  (e) added..................................................6133
    (a) and (b) revised; interim...................................20288
    Amendments at 53 FR 20287 confirmed............................47659
1421.20  Removed; new 1421.20 redesignated from 1421.18; interim 
                                                                   20287
    (a)(1) amended; (c)(3) revised; interim........................20288
    Redesignation at 53 FR 20287 corrected.........................27450
    Amendments at 53 FR 20287 and 20288 confirmed..................47659
1421.21  (a) revised; interim......................................20288
    (a) revision confirmed.........................................47659
1421.22  (j) removed; (k) and (l) redesignated as (j) and (k).......6132
    (a) amended; (c) revised........................................6133
    Revised; interim...............................................20288
    Revision confirmed.............................................47659
1421.23  (c) removed; (d) redesignated as (c).......................6132
1421.24  Revised; interim..........................................20289
    Revision confirmed.............................................47659
1421.25  Redesignated as 1421.31; new 1421.25 added; interim.......20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.26  Removed; new 1421.26 redesignated from 1421.287; interim 
                                                                   20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.27  Redesignated as 1421.29; new 1421.27 redesignated from 
        1421.289; interim..........................................20289
    (a)(2) revised; interim........................................20290
    Amendments at 53 FR 20289 and 20290 confirmed..................47659
1421.28  Removed; new 1421.28 redesignated from 1421.290; interim 
                                                                   20289
    (d) amended; interim...........................................20290
    Amendments at 53 FR 20289 and 20290 confirmed..................47659
1421.29  Redesignated as 1421.32; new 1421.29 redesignated from 
        1421.27; interim...........................................20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.31  Redesignated from 1421.25; interim........................20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.32  Redesignated from 1421.29; interim........................20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.50--1421.60 (Subpart)  Heading amended.........................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.50  Nomenclature change........................................6132
1421.51  (b) revised................................................6134
1421.54  (c) introductory text and (1) revised; (e) amended.........6134
1421.59  (d), (e) and (f) revised...................................6134
1421.90--1421.100 (Subpart)  Heading amended........................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.90  Nomenclature change........................................6132
1421.91  (c) revised................................................6134
1421.94  (d) heading, (1) introductory text, and (i) revised; (f) 
        added.......................................................6134
1421.99  (d) revised; (e) and (f) added.............................6134
1421.210--1421.219 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.210  Nomenclature change.......................................6132
1421.211  (b) revised...............................................6135
1421.214  (d) heading, (1) introductory text and (i) revised; (f) 
        amended.....................................................6135
1421.219  (d), (e) and (f) revised..................................6135
1421.245--1421.254 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.245  Nomenclature change.......................................6132
1421.246  (b) revised...............................................6135

[[Page 740]]

1421.249  (c) introductory text and (1) revised; (e) added..........6135
1421.254  Existing text designated as (a) and heading added; (b) 
        added.......................................................6136
1421.280--1421.291 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.280  Nomenclature change.......................................6132
1421.287  Redesignated as 1421.26; interim.........................20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.289  Redesignated as 1421.27; interim.........................20286
    Amendments at 53 FR 20286 confirmed............................47659
1421.290  Redesignated as 1421.28; interim.........................20289
    Amendments at 53 FR 20289 confirmed............................47659
1421.300--1421.312 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.300  Nomenclature change.......................................6132
1421.306  Nomenclature change.......................................6132
1421.311  Revised...................................................6136
1421.322  Amended; interim.........................................20290
    Amendment confirmed............................................47659
1421.335--1421.345 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.335  Nomenclature change.......................................6132
1421.336  (b) revised...............................................6136
1421.339  (c) introductory text and (1) revised; (e) amended........6136
1421.344  (d), (e) and (f) revised..................................6136
1421.365--1421.374 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.365  Nomenclature change.......................................6132
1421.366  (b) revised...............................................6136
1421.369  (d) heading, (1) introductory text and (i) revised........6136
1421.400--1421.406 (Subpart)  Removed...............................6132
1421.460--1421.471 (Subpart)  Heading amended.......................6132
    Removed; interim...............................................20290
    Removal confirmed..............................................47659
1421.460  Nomenclature change.......................................6132
1421.461  (b) revised...............................................6137
1421.464  (c) introductory text and (1) revised; (e) amended........6137
1421.470  (d), (e) and (f) revised..................................6137
1421.741  Revised; interim.........................................11240
    Revised........................................................34011
1421.742  Revised; interim.........................................11240
    Revision confirmed.............................................37702
1421.745  Nomenclature change.......................................6132
1421.753  (a) amended; interim.....................................11240
    (a) amendment confirmed........................................37702
1421.756  Added....................................................37702
1421.900  Revised..................................................34011
1421.901--421.904  Removed.........................................34011
1421.905  Nomenclature change.......................................6132
    Removed........................................................34011
1421.906--1421.917  Removed........................................34011
1421.5557  Revised..................................................8746
1421.5558  (a)(4) added; (b) revised...............................10062
1425  Authority citation revised...................................19883
1425.16  (b)(1)(iii) revised.......................................19883
    Technical correction...........................................21964
1425.17  (a)(1) revised............................................19883
    Technical correction...........................................21964
1425.19  (c) removed...............................................19884
    Technical correction...........................................21964
1427.5  (l) revised................................................26762
1430  Authority citation revised.....................................107
1430.340--1430.351 (Subpart)  Heading revised; interim...............107
    Heading revision confirmed.....................................45887
1430.340  Revised; interim...........................................107
    Revision confirmed.............................................45887
1430.343  (a) revised; interim.......................................108
    (a) revision confirmed.........................................45887
1446.70--1446.148 (Subpart)  Authority citation revised.....28998, 35985
1446.72  Introductory text amended; (ee)(1) (iii) and (iv), and 
        (2)(iii) redesignated as (ee)(1) (iv) and (v), and 
        (2)(iv); new (ee)(1) (iv) and (v), (2)(iv), and (2) flush 
        text, and (3) revised; new (ee)(1)(iii) and (2)(iii) 
        added; interim.............................................35985
1446.98  (b)(2), (c) (1) and (2) introductory text, and (d) 
        introductory text revised; (b)(5) added; interim...........35986
1446.99  (a) introductory text amended; (a) (1) and (2) added; 
        interim....................................................35986
1446.102  (b), (c), (d), and (e) revised; interim..................35986
1446.106  (b) and (c) revised......................................28998
    (a) amended; interim...........................................35986

[[Page 741]]

1446.116  (d) added; interim.......................................35986
1446.138  Revised; interim.........................................35986
1446.140  (a)(2) and (b)(2) revised; interim.......................35986
1464  Authority citation revised...................................43675
1464.7  (d) added..................................................43675
1464.10  (g) removed; (i)(5)(i) amended............................43675
1470  Redesignated from Part 770...................................20290
    Redesignation confirmed........................................47659
1475  Revised; interim.............................................40208
1477  Revised......................................................37703
1478  Added........................................................40016
1479  Added; interim...............................................41309
1497  Added........................................................29571
    Authority citation revised.....................................37707
1497.1  (h) added..................................................37707
1498  Added........................................................29577

                                  1989

7 CFR
                                                                   54 FR
                                                                    Page
Chapter XI
1210  Technical correction............................................88
1210.301--1210.367 (Subpart)  Added; interim.......................24545
1210.400--1210.404 (Subpart)  Added; interim.......................38205
1230.110  Revised...........................................15915, 38814
    Table corrected................................................46222
1250.336  (g) through (k) redesignated as (i) through (m); new (g) 
        and (h) added; interim.......................................100
    Regulations at 54 FR 99 confirmed..............................11493
    (g) corrected..................................................12310
1250.346  Amended; interim...........................................100
    Regulations at 54 FR 100 confirmed.............................11493
1250.349  Existing text designated as (a) and amended; (b) added; 
        interim......................................................100
    Regulations at 54 FR 100 confirmed.............................11493
    (b) corrected..................................................12310
1250.514  Revised..................................................38208
1250.523  Introductory text revised; (d) added.....................38208
    (d)(2) introductory text corrected.............................39077
1260.151  Regulation at 53 FR 52631 confirmed; (a) revised.........15918
1260.172  Regulation at 53 FR 52631 confirmed; (b)(2) revised......15918
    (b)(2) corrected...............................................28019
Chapter XIV
1403  Revised......................................................52878
1404  Added........................................................52883
1405  Authority citation revised...................................52013
1405.4  Added......................................................52013
1408  Removed......................................................52884
1413  Technical correction..........................................6232
1413.3  (g), (n) and (y) revised; interim...........................2993
1421  Authority citation revised............................11500, 30717
1421.9  (b) amended................................................52012
1421.12  (a) revised; interim......................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1421.18  (b) revised; interim......................................30717
    Regulation at 54 FR 30717 confirmed............................52012
1421.19  Heading revised...........................................52012
1421.20  (c)(1)(ii) amended........................................52012
1421.245--1421.254 (Subpart)  Removed..............................52012
1421.280--1421.291 (Subpart)  Removed..............................52012
1421.300--1421.301 (Subpart)  Removed..............................52012
1421.750  (f) added; interim.......................................30718
    Regulation at 54 FR 30718 confirmed............................52012
1421.900--1421.917 (Subpart)  Removed..............................52012
1427  Authority citation revised...................................11494
1427.1  Revised; interim...........................................11494
    Regulation at 54 FR 11494 confirmed............................25445
1427.2  Revised; interim...........................................11494
    Regulation at 54 FR 11494 confirmed............................25445
1427.3  Revised; interim...........................................11495
    Regulation at 54 FR 11495 confirmed............................25445
1427.4  (a) revised; (d) through (g) added; interim................11495
    Regulation at 54 FR 11495 confirmed............................25445
1427.5  (a) through (c) revised; (d) through (o) removed; (p) and 
        (q) redesignated as (d) and (e); interim...................11495
    Regulation at 54 FR 11495 confirmed............................25445
1427.6  (d) removed; interim.......................................11496
    Regulation at 54 FR 11496 confirmed............................25445
1427.7  (a) redesignated in part as (a)(1); (a)(2) added...........41239

[[Page 742]]

1427.8  (b), (c), and (g) removed; (a) and (d) revised; (f) 
        amended; interim...........................................11496
    Regulation at 54 FR 11496 confirmed............................25445
1427.11  Removed; interim..........................................11496
    Regulation at 54 FR 11496 confirmed............................25445
1427.13  Revised; interim..........................................11496
    Regulation at 54 FR 11496 confirmed............................25445
1427.14  Revised; interim..........................................11496
    Regulation at 54 FR 11496 confirmed; correctly designated......25445
1427.15  Removed; interim..........................................11497
    Regulation at 54 FR 11497 confirmed............................25445
1427.16  Removed; interim..........................................11497
    Regulation at 54 FR 11497 confirmed............................25445
1427.18  (c) amended; (g) revised; interim.........................11497
    Regulation at 54 FR 11497 confirmed............................25445
1427.21  Revised; interim..........................................11497
    Regulation at 54 FR 11497 confirmed............................25445
1427.22  Revised; interim..........................................11497
    Regulation at 54 FR 11497 confirmed............................25445
    (a)(2) redesignated as (a)(2)(i); new (a)(2)(ii) added.........41239
1427.23  Revised; interim..........................................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.25  Removed; interim..........................................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.75--1427.79 (Subpart)  Removed; interim.......................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.160  Revised; interim.........................................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.161  Revised; interim.........................................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.162  Revised; interim.........................................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.163  (b) revised; interim.....................................11498
    Regulation at 54 FR 11498 confirmed............................25445
1427.164  Revised; interim.........................................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.165  Revised; interim.........................................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.168  Removed; new 1427.168 redesignated from 1427.175; 
        interim....................................................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.169  Revised; interim.........................................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.172  Revised; interim.........................................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.173  Revised; interim.........................................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.175  Redesignated as 1427.168; interim........................11499
    Regulation at 54 FR 11499 confirmed............................25445
1427.176  Removed; interim.........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1427.177  Removed; interim.........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1427.178  Removed; interim.........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1427.180  Removed; interim.........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1427.181  Removed; interim.........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1430  Authority citation revised...................................52012
1430.291--1430.312 (Subpart)  Removed..............................52012
1430.320--1430.331 (Subpart)  Removed..............................52012
1430.340--1430.351 (Subpart)  Removed..............................52013
1430.400--1430.422 (Subpart)  Removed..............................52013
1434  Authority citation revised...................................11500
1434.1  Revised; interim...........................................41588
1434.2  Revised; interim...........................................41588
1434.12  Removed; interim..........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1434.13  Revised; interim..........................................11500
    Regulation at 54 FR 11500 confirmed............................25445

[[Page 743]]

1434.14  Revised; interim..........................................11500
    Regulation at 54 FR 11500 confirmed; revised...................25445
1434.18  Removed; interim..........................................11500
    Regulation at 54 FR 11500 confirmed............................25445
1434.21  (b) revised; interim......................................41589
1434.28  Removed; interim..........................................41589
1435  Authority citation revised...................................52013
1435.76--1435.86 (Subpart)  Removed................................52013
1435.95--1435.107 (Subpart)  Removed...............................52013
1435.110--1435.123 (Subpart)  Removed..............................52013
1435.300--1435.313 (Subpart)  Regulation at 51 FR 39509 confirmed 
                                                                   41053
1435.300  Revised; interim.........................................41589
1435.301  Revised; interim.........................................41589
1435.303  Nomenclature change; interim.............................41589
1435.305  (c) revised; interim.....................................41589
1435.307  (b)(5)(ii) revised; interim..............................41589
1435.310  (b) revised; interim.....................................41589
1435.311  (d) revised; interim.....................................41589
1446.1--1446.17 (Subpart)  Removed.................................52013
1446.50--1446.67 (Subpart)  Removed................................52013
1446.138  Revised..................................................30368
    (b) amended; interim...........................................40859
1475  Authority citation revised............................43944, 46608
1475.1  Amended....................................................43944
1475.3  Amended.............................................43944, 46608
1475.4  (a) introductory text and (4) and (d) revised..............43945
1475.6  (c)(2), (3)(i), (d)(5), (e) (12) and (14), (g)(1)(i)(A), 
        (ii), (2) (i), (ii), and (h)(4) revised; (c)(3)(iii) added
                                                                   43945
    (d)(5), (e)(13), and (g)(1)(i)(A) revised......................46608
1475.7  (a) (2) and (3) revised....................................43946
1475.8  (d)(1)(i) revised..........................................43946
1475.9  Revised....................................................43946
1475.12  Redesignated as 1475.13; new 1475.12 added................43946
1475.13  Redesignated as 1475.14; new 1475.13 redesignated from 
        1475.12....................................................43946
1475.14  Redesignated as 1475.15; new 1475.14 redesignated from 
        1475.13....................................................43946
1475.15  Redesignated as 1475.17; new 1475.15 redesignated from 
        1475.14....................................................43946
1475.16  Redesignated as 1475.18; new 1475.16 added................43946
1475.17  Redesignated as 1475.19; new 1475.17 redesignated from 
        1475.15....................................................43946
1475.18  Redesignated as 1475.20 and (b) revised; new 1475.18 
        redesignated from 1475.16..................................43946
1475.19  Redesignated as 1475.21; new 1475.19 redesignated from 
        1475.17....................................................43947
1475.20  Redesignated as 1475.22 and revised; new 1475.20 
        redesignated from 1475.18..................................43947
1475.21  Redesignated from 1475.19.................................43947
1475.22  Redesignated from 1475.20 and revised.....................43947
1475.101  (b) revised..............................................43947
1475.102  (a) (1) through (5) redesignated as (a) (2) through (6); 
        new (a)(1) added...........................................43947
1475.103  (a) revised; (e) added...................................43947
1475.202  (e) (1) and (2) redesignated as (e) (2) and (3); new 
        (e)(1) added; (g) amended; (h) revised.....................43947
1475.302  (b) amended; (d)(3)(i) and (4)(i) revised................43948
1475.501  Revised..................................................43948
1475.502  Amended..................................................43948
1475.503  Revised..................................................43948
1475.504  (a) revised..............................................43948
1477  Revised......................................................40372
1478  Revised......................................................47670
1479  Regulation at 53 FR 41309 confirmed............................965
1479.6  (a) and (f) amended; (c) revised.............................965
1479.7  (c) introductory text redesignated as (c)(1) and amended; 
        (c) (1), (2), (3), and (4) redesignated as (c)(1) (i), 
        (ii), (iii), and (iv); new (c)(2) added......................965
1479.8  (a) and (b)(3) amended.......................................965
1485  Added........................................................37783
Chapter XV
1550  Added........................................................37784
1560  Added; interim................................................1327

[[Page 744]]

                                  1990

7 CFR
                                                                   55 FR
                                                                    Page
Chapter XI
1210.200--1210.207 (Subpart)  Regulation at 53 FR 51091 confirmed 
                                                                    2048
1210.203  Regulation at 53 FR 51092 confirmed; (d)(2) and (3) 
        revised.....................................................2048
1210.250--1210.252 (Subpart)  Regulation at 53 FR 51092 confirmed 
                                                                    2048
1210.500--1210.540 (Subpart)  added................................13256
1210.518  (c)(2)(iv) corrected.....................................20443
1230.110  Revised...........................................21848, 29341
    Regulation at 55 FR 29341 confirmed............................42555
1250.202  (a) amended...............................................6973
1250.347  Revised...................................................6973
1250.348  Redesignated as 1250.349; new 1250.348 added..............6973
1250.349  Redesignated as 1250.350; new 1250.349 redesignated from 
        1250.348....................................................6973
1250.350  Redesignated as 1250.351; new 1250.350 redesignated from 
        1250.349....................................................6973
1250.351  Redesignated as 1250.352; new 1250.351 redesignated from 
        1250.350....................................................6973
1250.352  Redesignated as 1250.353; new 1250.352 redesignated from 
        1250.351....................................................6973
1250.353  Redesignated as 1250.354; new 1250.353 redesignated from 
        1250.352....................................................6973
1250.354  Redesignated from 1250.353................................6973
1250.514  Revised...................................................6974
1250.530  Revised...................................................6974
1260.141  Heading, (a), and (c) revised............................20445
Chapter XIV
1405  Authority citation revised....................................1570
1405.5  Added; interim..............................................1571
1413  Authority citation revised....................................1571
1413.1  (a) and (b) amended; interim................................1571
1413.3  (r)(1) revised; interim.....................................1571
1413.6  (f) added; interim..........................................1571
1413.7  (h) added; interim..........................................1571
1413.50  (d) added; interim.........................................1571
1413.102  (e)(3) revised; interim...................................1571
1413.104  (d)(2) revised; interim...................................1571
1413.108  (a)(3) removed; interim...................................1571
1413.110  Added; interim............................................1571
1421.3  (c) removed.................................................7691
1421.750  (f) revised; interim......................................1571
1421.752  Heading, (b), and (c) revised.............................7691
1421.5552  (a)(9) revised..........................................11572
1430.340--1430.351 (Subpart)  Added.................................2363
1430.341  (j)(1) corrected..........................................4306
1430.343  (e) corrected.............................................4306
1430.347  Corrected.................................................4306
1434.1  Regulation at 54 FR 41588 confirmed........................29181
1434.2  Regulation at 54 FR 41588 confirmed........................29181
1434.21  Regulation at 54 FR 41589 confirmed.......................29181
1434.28  Regulation at 54 FR 41589 confirmed.......................29181
1435.300  Regulation at 54 FR 41589 confirmed......................29181
1435.301  Regulation at 54 FR 41589 confirmed......................29181
1435.303  Regulation at 54 FR 41589 confirmed......................29181
1435.305  Regulation at 54 FR 41589 confirmed......................29181
1435.307  Regulation at 54 FR 41589 confirmed......................29181
1435.310  Regulation at 54 FR 41589 confirmed......................29181
1435.311  Regulation at 54 FR 41589 confirmed......................29181
1446  Authority citation revised....................................1384
1446.138  Regulation at 54 FR 40859 confirmed.......................1386
1446.141  (a), (c), and (d) revised.................................1384
1478.1  Revised....................................................19054
1478.17  Added.....................................................19054
1497  Authority citation revised....................................1572
1497.3  Amended; interim............................................1572
1497.5  Revised; interim............................................1573
1497.10  Revised; interim...........................................1573
1497.11  Removed; interim...........................................1574
1497.13  Revised; interim...........................................1574
1497.16  Revised; interim...........................................1574
1497.18  Revised; interim...........................................1574
1497.19  Amended; interim...........................................1575
1497.22  Amended; interim...........................................1575
1498  Authority citation revised....................................1575
1498.3  Amended; interim............................................1575
1498.4  (b)(1) revised; interim.....................................1576
Chapter XV
1530  Revised; interim.............................................41489
    Comment time extended; interim.................................47740

[[Page 745]]

                                  1991

7 CFR
                                                                   56 FR
                                                                    Page
Chapter XI
1205  Authority citation revised............................14635, 31286
1205.200  Revised..................................................31286
1205.201  (a) and (n) revised; (q), (r) and (s) added..............31286
1205.202  (a)(2) and (3) revised; (a)(5) and (c) added.............31287
1205.203  (a) revised; (b)(1) redesignated as (b)(1)(i) and 
        revised; (b)(1) concluding text designated as (b)(1)(ii) 
                                                                   31287
1205.204  Revised..................................................31287
1205.205  (a) and (c) revised......................................31287
1205.206  (c) revised; (d) added...................................31288
1205.208  Heading revised; existing text designated as (a); (b) 
        added......................................................31288
1205.210  Revised..................................................31288
1205.302  Revised..................................................64472
1205.304  Revised..................................................64472
1205.305  Redesignated as 1205.307; new 1205.305 added.............64472
1205.306  Redesignated as 1205.308; new 1205.306 added.............64472
1205.307  Redesignated as 1205.309; new 1205.307 redesignated from 
        1205.305...................................................64472
1205.308  Redesignated as 1205.311; new 1205.308 redesignated from 
        1205.306...................................................64472
1205.309  Redesignated as 1205.312; new 1205.309 redesignated from 
        1205.307...................................................64472
1205.310  Redesignated as 1205.313; new 1205.310 added.............64472
1205.311  Redesignated as 1205.314; new 1205.311 redesignated from 
        1205.308...................................................64472
1205.312  Redesignated as 1205.315; new 1205.312 redesignated from 
        1205.309...................................................64472
1205.313  Redesignated as 1205.316; new 1205.313 redesignated from 
        1205.310...................................................64472
1205.314  Redesignated as 1205.318; new 1205.314 redesignated from 
        1205.311...................................................64472
1205.315  Redesignated as 1205.319; new 1205.315 redesignated from 
        1205.312...................................................64472
1205.316  Redesignated as 1205.320; new 1205.316 redesignated from 
        1205.313 and revised.......................................64472
1205.317  Redesignated as 1205.321; new 1205.317 added.............64472
1205.318  Redesignated as 1205.322; new 1205.318 redesignated from 
        1205.314...................................................64472
1205.319  Redesignated as 1205.323; new 1205.319 redesignated from 
        1205.315...................................................64472
1205.320  Redesignated as 1205.324; new 1205.320 redesignated from 
        1205.316...................................................64472
1205.321  Redesignated as 1205.325; new 1205.321 redesignated from 
        1205.317...................................................64472
1205.322  Redesignated as 1205.326; new 1205.322 redesignated from 
        1205.318 and revised.......................................64472
1205.323  Redesignated as 1205.327; new 1205.323 redesignated from 
        1205.319...................................................64472
1205.324  Redesignated as 1205.328; new 1205.324 redesignated from 
        1205.320 and revised.......................................64472
    Corrected......................................................66670
1205.325  Redesignated as 1205.329; new 1205.325 redesignated from 
        1205.321...................................................64472
    Revised........................................................64473
1205.326  Redesignated as 1205.330; new 1205.326 redesignated from 
        1205.322...................................................64472
1205.327  Redesignated as 1205.331; new 1205.327 redesignated from 
        1205.323...................................................64472
    Revised........................................................64473
1205.328  Redesignated as 1205.332; new 1205.328 redesignated from 
        1205.324...................................................64472
    Revised........................................................64473
1205.329  Redesignated as 1205.333; new 1205.329 redesignated from 
        1205.325...................................................64472
1205.330  Redesignated as 1205.334; new 1205.330 redesignated from 
        1205.326...................................................64472
1205.331  Redesignated as 1205.335; new 1205.331 redesignated from 
        1205.327...................................................64472
    (b) revised....................................................64473
1205.332  Redesignated as 1205.336; new 1205.332 redesignated from 
        1205.328...................................................64472
    (c) and (i) revised............................................64473
1205.333  Redesignated as 1205.337; new 1205.333 redesignated from 
        1205.329...................................................64472

[[Page 746]]

    Introductory text revised......................................64473
1205.334  Redesignated as 1205.338; new 1205.334 redesignated from 
        1205.330...................................................64472
    (b) and (c) revised; (d) added.................................64473
1205.335  Redesignated as 1205.339; new 1205.335 redesignated from 
        1205.331...................................................64472
    Revised........................................................64473
1205.336  Redesignated as 1205.340; new 1205.336 redesignated from 
        1205.332...................................................64472
    Revised........................................................64474
1205.337  Redesignated as 1205.341; new 1205.337 redesignated from 
        1205.333...................................................64472
1205.338  Redesignated as 1205.343; new 1205.338 redesignated from 
        1205.334...................................................64472
    Revised........................................................64474
1205.339  Redesignated as 1205.345; new 1205.339 redesignated from 
        1205.335...................................................64472
    Revised........................................................64474
1205.340  Redesignated as 1205.346; new 1205.340 redesignated from 
        1205.336...................................................64472
    Revised........................................................64474
1205.341  Redesignated as 1205.347; new 1205.341 redesignated from 
        1205.337...................................................64472
    Concluding text revised........................................64474
1205.342  Redesignated as 1205.348.................................64472
1205.342  Added....................................................64475
1205.343  Redesignated from 1205.338...............................64472
    Revised........................................................64474
1205.345  Redesignated from 1205.339...............................64472
    (b) and (c) revised............................................64475
1205.346  Redesignated from 1205.340...............................64472
1205.347  Redesignated from 1205.341...............................64472
1205.348  Redesignated from 1205.342...............................64472
1205.402  Revised..................................................65980
1205.403  Revised..................................................65981
1205.500--1205.540 (Subpart)  Authority citation removed...........14635
1205.514  (d) revised..............................................14635
1205.515  (d) added................................................14635
1207  Authority citation revised...................................40228
1207.200  Revised..................................................40228
1207.201  (a) revised; (i) added...................................40228
1207.202  (a) and (c) revised; (b) amended.........................40228
1207.203  (b), (c)(2), (3), (e) and (f) revised; (c) introductory 
        text amended; (c)(4) added.................................40229
1207.204  (c) revised..............................................40229
1207.302  Revised..................................................40229
1207.306  Revised..................................................40229
1207.312  Added....................................................40229
1207.313  Added....................................................40229
1207.320  (c), (d) and (e) redesignated as (d), (e) and (f); new 
        (c) added; (a), new (d) and new (f) revised................40229
1207.321  (b) and (d) revised......................................40229
1207.322  Heading and introductory text revised; (d) redesignated 
        as (e) and amended; new (d) added..........................40229
1207.328  (f) and (h) revised; (j) and (k) added...................40230
1207.342  (a) amended; (c) and (d) redesignated as (e) and (f); 
        new (c) and (d) added......................................40230
1207.343  Revised..................................................40230
1207.350  Introductory text, (a), (b) and (c) redesignated as (a) 
        introductory text, (1), (2) and (3); new (b) added.........40230
1207.351  Amended..................................................40230
1207.352  Revised..................................................40230
1207.362  (b) revised..............................................40230
1207.363  (d) revised..............................................40231
1207.412  Undesignated center heading and section removed..........40231
1207.500  (a) through (h) removed; new (a) added; (i) redesignated 
        as (b).....................................................40231
1207.502  Added....................................................40231
1207.503  (a) amended; (b) redesignated as (c) and revised; new 
        (b) and (d) added..........................................40231
1207.507  (a) revised..............................................40231
1207.510  Revised..................................................40231
1207.512  Introductory text revised................................40231
1207.513  (a) and (c)(1) revised; (b) redesignated as (b)(1) and 
        amended; (b)(2) added......................................40231
1207.514  Revised..................................................40232
1207.515  Amended..................................................40232
1207.532  Introductory text revised................................40232
1207.533  Revised..................................................40232
1207.540  Revised..................................................40232
1207.550  Removed..................................................40232

[[Page 747]]

1210.341  (e) and (f) temporarily suspended in part through 8-31-
        91; interim.................................................5925
1210.518  (d) temporarily suspended through 8-31-91; interim........5925
    (c)(1), (4)(ii), (d)(1) and (2) revised; interim...............15808
    Regulation at 56 FR 15808 confirmed............................32064
1210.520  Introductory text, (b) introductory text and (c) 
        revised; interim...........................................29400
    Regulation at 56 FR 29400 confirmed............................51321
1220  Added........................................................15810
    Authority citation revised.....................................31048
1220.101--1220.257 (Subpart A)  Added..............................31049
1220.110  (b) revised; interim.....................................42923
1220.115  (b) revised; interim.....................................42923
1220.223  (a)(1) amended; (a)(5)(ii) revised; interim..............42923
1220.301--1220.332 (Subpart B)  Added..............................42925
1230.71  (b)(4) introductory text amended; (b)(4)(i), (ii) through 
        (iv) removed...................................................6
1230.110  Revised..................................................26590
    (b) table corrected............................................32952
    Revised........................................................51637
1230.111  Added........................................................6
1230.112  Added....................................................51637
1240  Authority citation revised...................................37456
    Authority citation revised.....................................64476
1240.10  Revised...................................................37456
1240.11  Redesignated as 1240.12; new 1240.11 added................37456
1240.12  Redesignated as 1240.13; new 1240.12 redesignated from 
        1240.11....................................................37456
1240.13  Redesignated as 1240.14; new 1240.13 redesignated from 
        1240.12....................................................37456
1240.14  Redesignated as 1240.15; new 1240.14 redesignated from 
        1240.13....................................................37456
1240.15  Redesignated as 1240.16; new 1240.15 redesignated from 
        1240.14....................................................37456
1240.16  Redesignated as 1240.17; new 1240.16 redesignated from 
        1240.15....................................................37456
1240.17  Redesignated as 1240.18; new 1240.17 redesignated from 
        1240.16....................................................37456
1240.18  Redesignated as 1240.19; new 1240.18 redesignated from 
        1240.17....................................................37456
1240.19  Redesignated as 1240.20; new 1240.19 redesignated from 
        1240.18....................................................37456
1240.20  Redesignated as 1240.21; new 1240.20 redesignated from 
        1240.19....................................................37456
1240.21  Redesignated as 1240.22; new 1240.21 redesignated from 
        1240.20....................................................37456
1240.22  Redesignated from 1240.21.................................37456
1240.30  Revised...................................................37456
1240.32  (b)(7) redesignated as (b)(8); new (b)(7) added; (a)(1) 
        and new (b)(8)(iii) revised................................37456
1240.34  (a) revised...............................................37456
1240.38  (k) revised...............................................37456
1240.41  (c) and (g) revised; (h) through (l) redesignated as (i) 
        through (m); new (h) added.................................37456
1240.42  (b), (c) and (d) redesignated as (c), (e) and (f); (a) 
        and new (c) revised; new (b) and (d) added.................37457
1240.43  (a) revised...............................................37457
    Revised........................................................64476
1240.50  Revised...................................................37457
1240.51  Revised...................................................37457
1240.62  (b) revised; (c) redesignated as (d); new (c) added.......37457
1240.67  Revised...................................................37457
1240.106  Revised..................................................37458
1240.114  (a) revised..............................................37458
1240.115  (c)(1), (2)(i) and (d) revised; (c)(2)(ii) removed; 
        (c)(2)(iii) redesignated as (c)(2)(ii).....................37458
1240.116  (a) revised..............................................37458
1240.117  Removed..................................................64476
1240.118  Revised..................................................37458
1240.120  Revised..................................................37458
1240.121  Revised..................................................37458
1240.122  Revised..................................................37458
1240.125  Revised..................................................37458
1240.200  Revised..................................................37458
1240.201  (h) and (i) revised......................................37459
1240.203  (e) revised..............................................37459
1270  Revised.......................................................8103
Chapter XIV
1403  Authority citation revised..............................359, 32319
    Technical correction............................................6422
1403.1  Amended....................................................66955

[[Page 748]]

1403.3  Amended....................................................66955
1403.4  (a) introductory text, (4) and (5)(i) revised..............66955
1403.7  (b)(3) reviswed; (t) added.................................66955
1403.9  (d)(2), (e) and (g) revised................................66955
1403.10  (a) and (b) revised.......................................66956
1403.11  Revised...................................................66956
1403.12  Revised...................................................66956
1403.16  (a) revised; (l) added....................................66956
1403.21  Added; interim..............................................359
    Added..........................................................32319
1404.3  (a) designation and (b) removed; interim.....................361
    Regulation at 56 FR 361 confirmed..............................11915
1404.4  (a)(2)(ii) amended; interim..................................361
    Regulation at 56 FR 361 confirmed..............................11915
1404.5  Removed; interim.............................................361
    Regulation at 56 FR 361 confirmed..............................11915
1405.4  Revised....................................................47127
1405.5  Regulation at 55 FR 1571 confirmed...........................480
1410  Added........................................................15985
1413  Revised......................................................16176
1413.1  Regulation at 55 FR 1571 confirmed...........................480
1413.3  Regulation at 55 FR 1571 confirmed...........................480
1413.6  Regulation at 55 FR 1571 confirmed...........................480
1413.7  Regulation at 55 FR 1571 confirmed...........................480
1413.11  (j) added.................................................22616
1413.50  Regulation at 55 FR 1571 confirmed..........................480
1413.102  Regulation at 55 FR 1571 confirmed.........................480
1413.104  Regulation at 55 FR 1571 confirmed.........................480
1413.108  Regulation at 55 FR 1571 confirmed.........................480
1413.110  Regulation at 55 FR 1571 confirmed.........................480
1414  Added........................................................16192
1421  Authority citation revised................2666, 5746, 16265, 20104
1421.1--1421.32 (Subpart)  Revised.................................20105
1421.7  (c) added..................................................47127
1421.9  Heading and (g) introductory text corrected................26853
1421.18  (b)(15)(ii)(C) corrected..................................26853
    (b)(15)(ii)(A) correctly revised...............................28033
    (b)(6)(i) correctly revised....................................42683
1421.25  (c)(5)(i) corrected.......................................28033
1421.200--1421.216 (Subpart)  Added; interim........................2666
    Regulation at 56 FR 2666 confirmed.............................15812
1421.320--1421.324 (Subpart)  Revised..............................20121
1421.740  (c) added.................................................5746
1421.742  Revised............................................5746, 16265
1421.750  Regulation at 55 FR 1571 confirmed.........................480
1421.5551  (a)(1) revised..........................................46371
1425  Authority citation revised...................................14847
1425.7  Revised....................................................14847
1427  Authority citation revised............................11502, 41434
1427.1--1427.26 (Subpart)  Revised.................................41750
1427.5  (b)(2)(iii) revised..........................................480
1427.50--1427.58 (Subpart)  Revised; interim.......................41434
1427.52  Amended...................................................59853
1427.100--1427.109 (Subpart)  Added; interim.......................41435
1427.103  (c)(2) removed; (b)(3) and (c)(3) through (6) 
        redesignated as (b)(4) and (c)(2) through (5); (b)(2) and 
        new (c)(5) amended; new (b)(3) and (c)(6) added; new 
        (c)(4) revised.............................................59853
1427.107  (e) revised..............................................59853
1427.160--1427.175 (Subpart)  Revised..............................41760
1427.1085  (c) removed.............................................11502
1430  Technical correction.........................................61096
1430.340--1430.351 (Subpart)  Removed...............................4527
1430.340--1430.361 (Subpart)  Added.................................4527
1434  Revised; interim..............................................9594
    Revised........................................................23196
1435  Authority citation revised............................28034, 55607
    Revised........................................................47127
1435.200--1435.206 (Subpart)  Revised; interim.....................28034
    Added..........................................................55607
1435.400--1435.404 (Subpart)  Added; interim.......................47353
1435.402  (b)(1) revised...........................................59196
1446  Revised; interim.............................................16230
    Regulation at 56 FR 16230 confirmed............................38328
1446.103  Amended..................................................38328
1446.308  (d)(2) revised...........................................38329

[[Page 749]]

1446.401  (a) and (c)(2)(vi) revised...............................38329
1446.402  (a)(3) and (b)(4) revised; (c) redesignated as (d); new 
        (c) added..................................................38329
1446.403  (b)(1)(ii) revised.......................................38330
1446.404  (a)(3) added.............................................38330
1446.407  (d) revised..............................................38330
1446.408  (a) and (c)(1) revised; (b) amended......................38330
1446.410  (a) and (b) amended......................................38330
1446.412  (b) introductory text and (1) introductory text revised; 
        (b)(2) introductory text and (3) introductory text amended
                                                                   38330
1446.503  (b) amended..............................................38330
1446.601  (f) amended..............................................38330
1446.602  (a) introductory text, (e) introductory text and (f) 
        introductory text amended; (a)(3), (4), (6), (b) 
        introductory text and (d) revised..........................38330
1446.703  (a)(8), (9) and (b)(9) amended; (a)(10) and (b)(10) 
        removed; (b)(11) redesignated as (b)(10)...................38331
1446.704  (b)(3)(ii) revised.......................................38331
1446.807  Revised..................................................38331
1464  Nomenclature change..........................................21259
1464.2  (b)(2)(i), (3) and (4) amended.............................21259
1464.4  (b) amended; (c) removed...................................21259
1464.5  Amended....................................................21259
1464.7  (b)(3), (4) and (5) added..................................21259
1464.8  (d)(2) amended.............................................21259
1464.9  (c) added..................................................21259
1464.10  (i)(5)(i), (ii) and (j)(2) amended........................21259
1464.11  Redesignated as 1464.12; new 1464.11 added................21259
1464.12  Redesignated from 1464.11.................................21259
1468  Revised......................................................40233
1470  Authority citation revised.....................................361
1470.4  (g)(2) revised; (i) added; interim...........................361
    Regulation at 56 FR 361 confirmed..............................11915
1470.8  Added; interim...............................................362
    Regulation at 56 FR 362 confirmed..............................11915
1472  Removed......................................................40240
1475  Revised......................................................33192
1477  Authority citation revised.....................................364
1477.1  Revised; interim......................................364, 26761
    Regulation at 56 FR 364 confirmed..............................20520
    Regulation at 56 FR 26761 confirmed............................41055
1477.18  Added; interim..............................................364
    Regulation at 56 FR 364 confirmed..............................20520
1477.19  Added; interim..............................................364
    Regulation at 56 FR 364 confirmed..............................20520
1477.20  Added; interim..............................................365
    Regulation at 56 FR 365 confirmed..............................20520
1477.21  Added; interim............................................26761
    Regulation at 56 FR 26761 confirmed............................41055
1485  Meetings.....................................................46108
1485.1--1485.7 (Subpart A)  Heading added; interim.................40747
1485.1  Amended; interim...........................................40747
1485.10--1485.29 (Subpart B)  Added; interim.......................40747
1493  Revised; interim.............................................26006
1493.30  (c) corrected.............................................41391
1493.50  (e) corrected.............................................41391
1493.60  (a) corrected.............................................41391
1493.110  (a) introductory text corrected..........................41391
1494  Added........................................................25011
    Authority citation removed.....................................26324
1494.10--1494.20 (Subpart A)  Added; interim.......................26324
1494.101--1494.1001 (Subpart B)  Authority citation added..........26324
1494.1100--1494.1101 (Subpart C)  Added; interim...................26324
1494.1200--1494.1203 (Subpart D)  Added; interim...................26325
    Suspended to 7-3-91; interim...................................28037
1497  Revised......................................................15968
1497.3  Regulation at 55 FR 1572 confirmed...........................480
1497.5  Regulation at 55 FR 1573 confirmed...........................480
1497.10  Regulation at 55 FR 1573 confirmed..........................480
1497.11  Regulation at 55 FR 1574 confirmed..........................480
1497.13  Regulation at 55 FR 1574 confirmed..........................480
1497.16  Regulation at 55 FR 1574 confirmed..........................480
1497.18  Regulation at 55 FR 1574 confirmed..........................480
1497.19  Regulation at 55 FR 1575 confirmed..........................480
1498.1  Revised....................................................15978

[[Page 750]]

1498.3  Regulation at 55 FR 1575 confirmed...........................480
    (a) revised; (b) redesignated as (c) and amended; new (b) 
added..............................................................15978
1498.4  Regulation at 55 FR 1576 confirmed...........................480
Chapter XV
1530.102  (b) and (f) revised......................................30863
1530.103  (g) revised..............................................30863
1530.105  (a) and (b) revised......................................30863
1530.106  (b) and (d) revised......................................30863
1530.107  (b) revised..............................................30863
1530.109  (a) and (d) revised......................................30864
1530.110  Revised..................................................30864
1530.202  (b) revised..............................................30864
1530.203  (g) revised..............................................30865
1530.204  (b) revised..............................................30865
1530.205  (a) and (b) revised......................................30865
1530.206  (b) revised..............................................30865
1530.208  (a) revised..............................................30865
1530.209  (a) and (b) revised......................................30866
1530.303  (g) revised..............................................30866
1530.306  (b) revised..............................................30866
1530.307  Revised..................................................30866
1530.309  (a) and (b) revised......................................30866
1570  Added; interim...............................................42223

                                  1992

7 CFR
                                                                   57 FR
                                                                    Page
Chapter XI
1205.500  (o) through (r) added....................................29185
1205.505  Revised..................................................29186
1205.510  Revised..................................................29186
    Revised; interim...............................................29432
    Regulation at 57 FR 29432 confirmed............................53435
1205.511  Revised..................................................29190
1205.512  (h) revised..............................................29190
1205.513  (k) revised..............................................29190
1205.514  Redesignated as 1205.516.................................29190
    Added..........................................................29191
1205.515  Redesignated as 1205.517; new 1205.515 added.............29191
1205.516  Redesignated as 1205.518; new 1205.516 redesignated from 
        1205.514 and revised.......................................29190
1205.517  Redesignated from 1205.515 and revised...................29191
1205.518  Redesignated from 1205.516...............................29190
1205.520  Undesignated center heading and section revised..........29192
1205.525  Revised..................................................29192
1205.530  (a)(2) revised...........................................29192
1205.531  Revised..................................................29192
1205.532  Revised..................................................29192
1205.533  Revised..................................................29192
1205.540  Revised..................................................29192
1205.541  Added (OMB numbers)......................................29192
1207  Authority citation revised...................................40083
1207.325  (a) amended; interim.....................................40083
1207.328  (k) removed; interim.....................................40083
1207.343  Removed; interim.........................................40083
1207.500  (c) added; interim.......................................40083
1207.510  Revised; interim.........................................40083
1207.514  Removed; interim.........................................40083
1209  Added........................................................31951
    Technical correction...........................................35004
1209.301  (g) corrected............................................34349
1211  Added........................................................18799
1211.1--1211.78 (Subpart A)  Heading added; interim................27900
1211.250--1211.252 (Subpart C)  Added; interim.....................27900
1212  Added.........................................................2988
1212.250--1212.252 (Subpart C)  Added; interim.....................21592
1220.110  (b) revised..............................................31095
1220.115  (b) revised..............................................31095
1220.223  (a)(5)(ii) revised.......................................31096
1220.301--1220.332 (Subpart B)  Revised............................29439
1230.110  Revised..................................................49135
1240  Technical correction.........................................11262
Chapter XIV
1413.1  (a) revised; interim.......................................14462
    Regulation at 57 FR 14462 confirmed............................34203
1413.3  Amended; interim...........................................14462
    Regulation at 57 FR 14462 confirmed............................34203
1413.5  Added; interim.............................................14462
    Regulation at 57 FR 14462 confirmed............................34203
1413.6  (a)(4)(v) removed; (a)(4)(vi) and (vii) redesignated as 
        (a)(4)(v) and (vi); (a)(4) introductory text, (i), and new 
        (a)(4)(vi) revised; interim................................14462
    Regulation at 57 FR 14462 confirmed............................34203
1413.7  (c) introductory text and (1) revised; interim.............14462
    Regulation at 57 FR 14462 confirmed............................34203
1413.10  (b) removed; (c) and (d) redesignated as (b) and (c); new 
        (d) added; interim.........................................14462

[[Page 751]]

    Regulation at 57 FR 14462 confirmed............................34203
1413.11  (a) and (b)(4) revised....................................12409
    Regulation at 57 FR 14463 confirmed............................34203
    (j) removed; interim...........................................14463
1413.50  (a)(1), (4) and (5) revised; interim......................14463
    Regulation at 57 FR 14463 confirmed............................34203
1413.54  (a)(1) revised.............................................3922
    Regulation at 57 FR 14463 confirmed............................34203
    (b), (c)(1), (d) and (e) revised...............................12409
    (a)(2) revised.................................................14326
    (a)(3) revised; (a)(5) added...................................14328
    (c)(3) redesignated as (c)(4); (c)(2) and new (c)(4) revised; 
new (c)(3) and (f) added; interim..................................14463
    (a)(4) revised.................................................15001
    (a)(1) and (d) revised.........................................55056
1413.61  (b)(2) removed; (b)(3) and (4) redesignated as (b)(2) and 
        (3); (a), (b)(1)(iii), (iv), and new (b)(2) and (3) 
        revised; interim...........................................14463
    Regulation at 57 FR 14463 confirmed............................34203
1413.62  (e) removed; (f) through (h) redesignated as (e) through 
        (g); interim...............................................14464
    Regulation at 57 FR 14464 confirmed............................34203
1413.63  (a)(1), (c)(1) and (4) revised; (c)(5) and (6) added; 
        interim....................................................14464
    Regulation at 57 FR 14464 confirmed............................34203
1413.72  (c) removed; (d) redesignated as (c) and revised; interim
                                                                   14464
    Regulation at 57 FR 14464 confirmed............................34203
1413.79  (b)(1)(v) and (d) removed; (b)(1)(iii), (iv), (2) and (3) 
        revised; interim...........................................14464
    Regulation at 57 FR 14464 confirmed............................34203
1413.108  (b)(1) introductory text and (2) introductory text 
        revised; interim...........................................14464
    Regulation at 57 FR 14464 confirmed............................34203
1413.109  (d) added................................................12409
1413.111  (b)(1) removed; (b)(2) revised; interim..................14464
    Regulation at 57 FR 14464 confirmed; (b)(2)(iv) and (v) 
revised............................................................34203
1413.150  (a)(3) introductory text revised; interim................14465
    Regulation at 57 FR 14465 confirmed............................34203
1414.4  Amended; interim...........................................14465
    Regulation at 57 FR 14465 confirmed............................34203
1414.6  (a) revised; interim.......................................14465
    Regulation at 57 FR 14465 confirmed............................34203
1421.7  (c) revised................................................12409
    (c)(8) revised.................................................46480
    (c)(1) revised.................................................55056
1421.25  (a)(5)(vi) and (6) revised.................................4544
    (a)(5)(ii), (v)(A)(2), (vi), (6) and (7) revised...............49637
1421.27  (a)(2)(i) and (ii) added..................................46480
1421.29  (c) revised; (g) added....................................49638
1421.217  Added....................................................62474
1421.740--1421.756 (Subpart)  Removed..............................62474
1421.742  Revised............................................3717, 27354
1425  Authority citation revised....................................1369
1425.10  (b)(3) revised.............................................1369
1427.3  Amended; interim...........................................40594
1427.4  (g) removed; interim.......................................40595
1427.5  (a) introductory text revised..............................14328
    (a)(1)(ii), (2), (b)(1)(viii), (ix), (2)(iii) introductory 
text, (c)(2) introductory text (c)(2) introductory text and (i) 
introductory text and (d) revised; (a)(3) removed; (b)(2)(iii)(A) 
amended; interim...................................................40595
1427.6  (a)(3) revised; (c) amended; interim.......................40595
1427.7  (b) introductory text revised; interim.....................40595
1427.8  (a), (b) and (c) redesignated as (b), (c) and (d); new (a) 
        added; new (c) introductory text revised...................14328
1427.9  Revised; interim...........................................40595
1427.11  (f)(2) revised; (g)(4) amended; interim...................40595
1427.12  Revised; interim..........................................40596
1427.15  (a), (b)(1)(ii), (c)(1) introductory text, (ii), (c)(3), 
        (4) and (d) through (f) revised; interim...................40596
1427.17  Revised; interim..........................................40596

[[Page 752]]

1427.18  (a)(1) introductory text revised; interim.................40596
1427.19  (c)(1)(ii)(A) revised; interim............................40596
    (h) added......................................................49638
1427.23  (b)(2), (3) and (c) revised; (b)(4), (5), (6), (f) and 
        (g) added; interim.........................................40596
    (h) added......................................................49638
1427.25  (c)(4) and (e) revised....................................49638
1427.50  (a) revised...............................................14328
1427.51  (f) revised...............................................14328
1427.56  Revised...................................................14329
1427.100  (a) and (b) revised......................................14329
1427.101  (f) revised..............................................14329
1427.103  (b)(3) and (c)(4) revised................................14329
1427.106  Revised..................................................14329
1427.107  (b) through (e) redesignated as (c) through (f); new (b) 
        added; new (f) revised.....................................14329
    (a) and (b) revised............................................49639
1427.167  Revised; interim.........................................40597
1427.168  (c) added; interim.......................................40597
1427.175  Removed; interim.........................................40597
1430.340  (a) and (d) amended; (b)(5) added........................30897
1430.341  (u) revised..............................................30898
1435.4  (b) revised................................................33425
1435.6  (e)(1) introductory text revised; interim..................12410
    Regulation at 57 FR 12410 confirmed............................37685
1435.7  (c) revised; interim.......................................12411
    Regulation at 57 FR 12410 confirmed............................37685
1435.9  (c) revised; interim.......................................12411
    Regulation at 57 FR 12411 confirmed............................37685
1435.12  (d) revised; interim......................................12411
    Regulation at 57 FR 12411 confirmed............................37685
1435.400--1435.404 (Subpart)  Regulation at 56 FR 47353 confirmed 
                                                                   32158
1435.401  Revised..................................................32158
1435.402  Revised..................................................32159
1446.307  (b) revised..............................................27145
    Regulation at 57 FR 27141 confirmed and (b) revised............49633
1446.309  (a)(1) amended; (a)(7) added.............................27145
1446.410  (b) revised..............................................27145
1446.703  (b) heading and introductory text revised................27145
1446.704  Revised..................................................27145
1464.7  (e) added..................................................43583
1464.8  (i) added..................................................43584
1464.10  (j)(4) amended............................................43584
1477  Revised......................................................10963
1478  Revised......................................................10968
1494.1200--1494.1201 (Subpart D)  Revised..........................45263
Chapter XV
1530.205  Heading corrected..........................................175
1530.206  (b) correctly designated...................................175

                                  1993

7 CFR
                                                                   58 FR
                                                                    Page
Chapter XI
1205  Technical correction.........................................58231
1205.510  (b)(2) and (3) revised...................................52216
1207.510  (b)(1), (2), (3) and (c) revised..........................3359
1209.1--1209.77 (Subpart A)  Added..................................3449
1209.200--1209.280 (Subpart B)  Added; interim......................8197
1210.401  (f) amended...............................................3355
1210.403  (h) revised...............................................3355
1210.404  Removed...................................................3356
1210.517  (a)(3) through (11) redesignated as (a)(4) through (12); 
        new (a)(3) added; new (a)(9) and new (10) revised...........3356
1210.540  Revised (OMB number)......................................3356
1211  Authority citation revised...................................41024
1211.51  (g) suspended through 10-31-93; interim...................41024
1211.251  (h) introductory text revised.............................3363
1211.300--1211.310 (Subpart D)  Added; interim.....................38280
    Regulation at 58 FR 38280 confirmed............................51570
1212.251  (l) introductory text revised.............................3366
1220  Authority citation revised...................................32437
1220.312  (d) revised; interim.....................................40732
    Regulation at 58 FR 40732 confirmed; eff. 1-10-94..............64672
1220.315  Removed; interim.........................................40732
    Regulation at 57 FR 40732 confirmed; eff. 1-10-94..............64672
1220.400--1220.402 (Subpart C)  Added; interim.....................32438
    Regulation at 58 FR 32438 confirmed............................47984
1220.501--1220.537 (Subpart E)  Added..............................60546

[[Page 753]]

1230.110  Revised..................................................47205
1250.519  Added....................................................34697
1260.141  (a) revised..............................................12999
Chapter XIV
1410.13  (a) removed; (b), (c) and (d) redesignated as (a), (b) 
        and (c).....................................................4064
1410.103  (d)(2), (3), (4) and (f)(2) revised.......................4064
1410.108  Introductory text and (b) amended.........................4064
1410.110  (d) revised...............................................4064
1413.11  (b)(4)(iii) added.........................................12331
1413.54  (a)(2) and (d) revised.....................................4305
    (b), (c)(1) and (e) revised....................................12331
    (a)(5)(ii) and (d)(3)(ii) revised; (a)(5)(iii) and (d)(3)(iii) 
added..............................................................12333
    (a)(4)(ii) and (d)(3) revised; (a)(4)(iii) added...............15417
    (a)(3)(ii) and (d)(3)(iv) revised; (a)(3)(iii) and (d)(3)(v) 
added..............................................................15756
    (d)(3)(iii) correctly designated...............................18304
1413.61  Heading revised; (b)(4) added; interim....................57722
1413.79  (b)(4) added; interim.....................................57722
1413.104  (a)(8) and (b) revised...................................12333
1413.109  (d) revised..............................................12333
1421  Authority citation revised............................14498, 58740
1421.1  (c)(1) revised.............................................38664
1421.4  (i) revised; interim.......................................14498
    (i) revised....................................................58740
1421.5  (b)(1), (2)(i), (ii), (4)(ii), (c)(2) introductory text, 
        (i), (d)(2), (f) and (i) revised; (e)(3) added; interim....14499
    (b)(1), (2)(i), (ii), (4)(ii), (c)(2) introductory text, (i), 
(d)(2), (e)(3), (f) and (i) revised................................58741
1421.6  (c) revised; (e) added; interim............................45040
    (a)(1) revised.................................................57724
    (d)(2)(i) revised..............................................58741
    Regulation at 58 FR 45040 confirmed............................62509
1421.7  (c)(2) through (6), (9) and (10) revised....................4306
    (c)(8)(iii) added..............................................33886
1421.8  (a) and (c) revised; interim...............................14499
    (a) and (c) revised............................................58741
1421.9  (f)(2)(iv)(A), (vi)(C), (viii)(A), (C), (G), (H), 
        (xi)(E)(5), (xiii)(G), (xiv)(B)(5), (6), and (g)(2)(iv)(A) 
        introductory text revised; (f)(2)(ix)(B) through (G) and 
        (xii)(F)(1) through (3) redesignated as (f)(2)(ix)(C) 
        through (H) and (xii)(F)(2) through (4); (f)(2)(viii)(I), 
        (ix)(B), (xii)(F)(1), (xiii)(E)(5), (6), and (7) added; 
        (f)(2)(xiv)(B)(7) through (12) removed.....................14499
    (f)(2)(iv)(A), (vi)(C), (viii)(A), (C), (G), (H), (I), 
(ix)(B), (xi)(E)(5), (xii)(F)(1), (xiii)(E)(5), (6), 7), (G), 
(xiv)(B)(5), (6) and (g)(2)(iv)(A) introductory text revised.......58742
1421.12  (d) revised; interim......................................14500
    (c) revised....................................................57724
    (d) revised....................................................58742
1421.13  Removed; interim..........................................14500
1421.14  (b) revised; interim......................................14500
    (b) revised....................................................58742
1421.15  Revised; interim..........................................14500
    Revised........................................................58742
1421.16  Revised; interim..........................................14500
    Revised........................................................58742
1421.17  (a)(2) introductory text, (3) introductory text, (b)(1), 
        (c) introductory text, (1), (e) and (f) revised; (g), (h) 
        and (i) removed; interim...................................14502
    (a)(2) introductory text, (3) introductory text, (b)(1), (c) 
introductory text, (1), (e) and (f) revised........................58744
1421.18  (b)(2), (5), (7)(i), (9)(iv), (10), (12)(ii), (iv)(D), 
        (v) introductory text, (13)(iii), (iv)(D)(3), (v) 
        introductory text, (vi), (vii), (14)(iii), (v) 
        introductory text, (vi) and (15)(ii)(E), (F) and (G) 
        revised; (b)(13)(viii), (14)(iv)(F) through (H) and 
        (15)(ii)(D)(5) added; interim..............................14502
    (b)(2), (5), (7)(i), (9)(iv), (10), (12)(ii), (iv)(D), (v) 
introductory text, (13)(iii), (iv)(D)(3), (v) introductory text, 
(vi), (vii), (viii), (14)(iii), (iv)(F), (G), (H), (v) 
introductory text, (vi), (15)(ii)(D)(5), (E), (F) and (G) revised 
                                                                   58744

[[Page 754]]

1421.19  (a) revised; interim......................................14503
    (a) revised....................................................58745
1421.20  (a) introductory text, (b) and (c)(1)(ii) revised; 
        interim....................................................14503
    (b) revised....................................................38665
    (a) introductory text, (b) and (c)(1)(ii) revised..............58745
1421.22  (d) added; interim........................................14503
    (a) and (d) revised............................................58745
1421.23  (c) revised...............................................58746
1421.25  (a)(1) introductory text and (ii)(A) revised; (d) 
        removed; (e) and (f) redesignated as (d) and (e); interim 
                                                                   14504
    (d) redesignated as (f) and revised; (e) removed; new (d) and 
(e) added..........................................................38665
    (b) and (c) revised............................................57724
    (a)(1) introductory text and (ii)(A) revised...................58746
1421.27  (a)(2)(ii) revised; (a)(2)(iii) added.....................33886
1421.29  (b)(3) redesignated as (b)(4); new (b)(3), (h) and (i) 
        added; (f) revised; interim................................14504
    (b)(3), (f), (h) and (i) revised...............................58746
1421.31  Revised...................................................58746
1421.203  Revised; interim..................................14504, 45040
    Revised.................................................58747, 68016
    Regulation at 58 FR 45040 confirmed............................62509
1421.210  (b)(5)(iv) revised; interim..............................14504
    (b)(5)(iv) revised.............................................58747
1421.214  Revised; interim.........................................14505
    Revised........................................................58747
1421.217  (c) revised..............................................38510
1421.740  Removal correctly designated.............................28446
1427.1  (b)(2)(i), (ii) and (iii) revised; (b)(2)(iv) added; 
        interim....................................................51988
    Regulation at 58 FR 51988 confirmed............................65103
1427.3  Regulation at 57 FR 40594 confirmed........................15262
    Amended........................................................51988
    Regulation at 58 FR 51988 confirmed............................65103
1427.4  Regulation at 57 FR 40595 confirmed........................15262
1427.5  (a), (b)(1)(iii) introductory text, (A), (v)(A), (2)(iii) 
        introductory text and (A), (iv)(A), (c)(2)(iii)(D), (3) 
        and (d) revised; (b)(1)(iii)(D) added......................51988
    Regulation at 57 FR 40595 confirmed............................15262
    Regulation at 58 FR 51988 confirmed............................65103
1427.6  Regulation at 57 FR 40595 confirmed........................15262
    (a)(3) and (c) revised.........................................51989
    Regulation at 58 FR 51989 confirmed............................65103
1427.7  Regulation at 57 FR 40595 confirmed........................15262
    (a) introductory text and (b) introductory text revised........51989
    Regulation at 58 FR 51989 confirmed............................65103
1427.8  (a)(2)(ii) revised; (a)(2)(iii) added......................12333
    (a)(1)(ii) revised; (a)(1)(iii) added..........................15756
    (d) revised....................................................51989
    Regulation at 58 FR 51989 confirmed............................65103
1427.9  Regulation at 57 FR 40595 confirmed........................15262
    (e) removed; (f) redesignated as (e); (a), (b), (c) and new 
(e) revised........................................................51989
    Regulation at 58 FR 51989 confirmed............................65103
1427.11  Regulation at 57 FR 40595 confirmed.......................15262
    (f)(2) and (g)(3) revised......................................51989
    Regulation at 58 FR 51989 confirmed............................65103
1427.12  Regulation at 57 FR 40596 confirmed.......................15262
    Revised........................................................51989
    Regulation at 58 FR 51989 confirmed............................61503
1427.13  (a), (b) and (c) revised..................................51989
    Regulation at 58 FR 51989 confirmed............................65103
1427.14  Revised...................................................51990
    Regulation at 58 FR 51990 confirmed............................65103
1427.15  Regulation at 57 FR 40596 confirmed.......................15262
    Revised........................................................51990
    Regulation at 58 FR 51990 confirmed............................65103
1427.17  Regulation at 57 FR 40596 confirmed.......................15262
    Revised........................................................51990
    Regulation at 58 FR 51990 confirmed............................65103

[[Page 755]]

1427.18  Regulation at 57 FR 40596 confirmed.......................15262
    (a)(1)(iv) amended; (a)(1)(v) redesignated as (a)(1)(vi); new 
(a)(1)(v) and (e) through (i) added; (a)(2) and (d) revised........51990
    Regulation at 58 FR 51990 confirmed............................65103
1427.19  Regulation at 57 FR 40596 confirmed.......................15262
    (b) introductory text revised..................................51991
    Regulation at 58 FR 51991 confirmed............................65103
1427.23  Regulation at 57 FR 40596 confirmed.......................15262
    (b)(3) revised.................................................51991
    Regulation at 58 FR 51991 confirmed............................65103
1427.25  (f)(1) revised; interim...................................41994
    Regulation at 58 FR 41994 confirmed............................57725
1427.107  (d)(3) revised; (e) and (f) redesignated as (f) and (g); 
        new (e) added; interim.....................................42843
    Regulation at 58 FR 42843 confirmed............................57725
1427.109  (c)(3) and (e) revised; interim..........................42843
    Regulation at 58 FR 42843 confirmed............................57725
1427.160  (c) and (d) revised......................................51991
    Regulation at 58 FR 51991 confirmed............................65103
1427.163  (b) revised..............................................51991
    Regulation at 58 FR 51991 confirmed............................65103
1427.165  (b) revised..............................................51992
    Regulation at 58 FR 51992 confirmed............................65103
1427.167  Regulation at 57 FR 40597 confirmed......................15262
1427.168  Regulation at 57 FR 40597 confirmed......................15262
    Revised........................................................51992
    Regulation at 58 FR 51992 confirmed............................65103
1427.172  (b)(3), (4) introductory text, (i) and (ii) revised......51992
    Regulation at 58 FR 51992 confirmed............................65103
1427.175  Regulation at 57 FR 40597 confirmed......................15262
    Added..........................................................51992
    Regulation at 58 FR 51992 confirmed............................65103
1430  Authority citation revised...................................61001
1430.340--1430.361 (Subpart)  Heading revised......................61001
1430.340  (a), (b)(1), (2), (4), (5) and (d) revised...............61001
1430.341  (i) redesignated as (k); (d) through (h) and (j) through 
        (w) redesignated as (e) through (i) and (m) through (z); 
        new (d), (j) and (l) added; new (u)(1) and new (x) 
        introductory text revised..................................61001
1430.343  (a)(3) redesignated as (a)(5); (a)(2) and new (a)(5) 
        revised; new (a)(3) and (4) added..........................61001
1430.344  (a) revised..............................................61002
1434.3  (a), (f) and (g) revised; interim..........................14505
    (a), (f) and (g) revised.......................................58747
1434.4  (a), (b)(1) introductory text, (2) introductory text, 
        (2)(i) and (f) revised; interim............................14505
    (a), (b)(1) introductory text, (2) introductory text, (2)(i) 
and (f) revised....................................................58747
1434.5  Removed; interim...........................................14505
1434.6  Heading and (a) revised; interim...........................14505
    Heading and (a) revised........................................58748
1434.7  (b) and (c) revised; interim...............................14505
    (b) and (c) revised............................................58748
1434.9  (a)(1) and (2)(i) revised; interim.........................14506
    (a)(1) and (2)(i) revised......................................58748
1434.10  (a) and (e) revised; interim..............................14506
    (a) and (e) revised............................................58748
1434.15  (c) revised; interim......................................14506
    (c) revised....................................................58748
1434.16  (a)(1) revised; interim...................................14506
    (a)(1) revised.................................................58749
1434.19  Removed; interim..........................................14506
1434.21  (a) revised...............................................58749
1434.22  (a), (b) introductory text, (e) and (f) revised; (g) 
        removed; interim...........................................14506
    (a), (b) introductory text, (e) and (f) revised................58749
1434.23  Revised; interim..........................................14507
    Revised........................................................58749
1434.24  Heading, (a)(3), (d) and (e)(2) revised; interim..........14508
    Heading, (a)(3), (d) and (e)(2) revised........................58750

[[Page 756]]

1434.25  (a)(2)(i) revised; (f) removed; (g) and (h) redesignated 
        as (f) and (g); interim....................................14508
    (a)(2)(i) revised..............................................58751
1434.26  (b)(3) redesignated as (b)(4); new (b)(3) added; (e) 
        removed; (f) redesignated as (e) and revised; interim......14508
    (b)(3) and (e) revised.........................................58751
1434.27  (c) revised; interim......................................14508
    (a), (c), (d) and (e) revised..................................58751
1434.28  (c) revised...............................................58751
1434.32  (b) amended; interim......................................14508
    (b) amended....................................................58751
1435.500--1435.529 (Subpart)  Added; interim.......................36124
1435.530  Added; interim...........................................41995
1446.303  (g)(5) amended; interim..................................41626
    Regulation at 58 FR 41626 confirmed............................62509
1464  Authority citation revised............................11962, 68020
1464.12  Redesignated as 1464.24; new 1464.12 added................11962
1464.13  Added.....................................................36863
1464.14  Added.....................................................36863
1464.15  Added.....................................................36863
1464.16  Added.....................................................36863
1464.17  Added.....................................................36863
1464.18  Added.....................................................36863
1464.19  Added.....................................................36859
1464.24  Redesignated from 1464.12.................................11962
1464.101--1464.108 (Subpart B)  Added; interim.....................68020
1474  Removed......................................................57724
1475.3  Table revised; interim.....................................62512
1475.6  Heading, (c), (e)(4), (i)(1)(i)(A) and (2)(iii) revised; 
        interim....................................................62512
1475.10  (b) revised; interim......................................62513
1475.17  (a), (c) and (g) revised; interim.........................62513
1475.22  Revised; interim..........................................62513
1477  Authority citation revised.............................9108, 51758
1477.1  Revised....................................................51758
1477.3  Amended..............................................9108, 51758
1477.4  Revised.....................................................9109
    (b) revised; (c) and (d) added.................................51759
1477.5  (a)(3) and (4)(ii) amended; (a)(5) added....................9109
    (a)(4)(ii), (b)(4) and (g)(4) revised; (b)(5), (g)(7) and (8) 
added..............................................................51759
1477.7  (b) and (d) revised; (e) and (f) added......................9109
    (b)(5) through (9) added.......................................51759
1477.8  Revised.....................................................9109
    Existing text designated as (a); (b) added.....................51760
1477.9  (a)(1) revised.......................................9109, 51760
1477.10  (d)(2) and (e) revised.....................................9110
    (c), (d)(2) and (e) revised....................................51760
1477.12  (c) revised................................................9110
1477.20  Redesignated as 1477.21; new 1477.20 added................19768
    Heading revised................................................51760
1477.21  Redesignated from 1477.20.................................19768
    Redesignated as 1477.25; new 1477.21 added.....................51760
1477.22  Added.....................................................51761
1477.25  Redesignated from 1477.21.................................51760
1478  Authority citation revised.............................9110, 51761
1478.1  (a) revised.................................................9110
1478.3  (b) amended..........................................9110, 51761
1478.4  Revised..............................................9111, 51761
1478.5  Revised.....................................................9111
    (a) revised; (d) added.........................................51761
1478.6  Revised.....................................................9111
1478.8  (d) and (e) revised.........................................9111
    (b) and (d) revised............................................51762
1478.9  Revised.....................................................9112
    (a) and (b) revised............................................51762
1485  Authority citation revised...................................60550
1485.11  (oo) added; interim.......................................60550
1485.12  (a) amended; (b)(2)(iv) and (viii) revised; (b)(2)(xi) 
        added; interim.............................................60550
1485.13  (b)(7)(i) revised; (b)(8) and (c)(2) added; (c) existing 
        text redesignated as (c)(1); interim.......................60551
1485.14  (d)(1)(ii), (e)(2)(iv) and (3)(i) revised; (e)(4)(vii), 
        (viii), (ix) and (8) added; interim........................60551
1485.15  (a)(1) amended; (a)(2) revised; (a)(3) added; interim.....60551
1485.27  (a) revised; interim......................................60552
1485.28  (a) revised; interim......................................60552
1493  Authority citation revised...................................11789
1493.200--1493.340 (Subpart C)  Added; interim.....................11789
1493.210  Corrected................................................13684
1493.220  Correctly designated..............................15901, 21218

[[Page 757]]

Chapter XV
1540.40--1540.45 (Subpart C)  Added; interim.......................16104

                                  1994

7 CFR
                                                                   59 FR
                                                                    Page
Chapter XI
Chapter  XI Policy statement.......................................51083
1205.510  (b)(3) revised; interim..................................33902
    Regulation  at 59 FR 33902 confirmed...........................44034
    (b)(2)  and (3) revised........................................59111
1207.501  Revised; interim.........................................44036
    Regulation  at 59 FR 44036 confirmed; eff. 1-9-95..............63697
1207.507  (a) amended; interim.....................................44036
    Regulation  at 59 FR 44036 confirmed; eff. 1-9-95..............63697
1207.510  (b)(3) table revised; interim............................44036
    Regulation  at 59 FR 44036 confirmed; eff. 1-9-95..............63697
1208  Added........................................................67143
1208.85  OMB number................................................67153
1210.200  Revised..................................................44614
1210.201  (a), (g) and (h) introductory text amended; (j) and (k) 
        added......................................................44614
1210.202  Revised..................................................44614
1210.203  (b), (d)(1), (2) and (3) revised; (d)(4) added...........44615
1210.204  Heading, (a)(1), (d) and (e) revised; (b) removed; (c) 
        redesignated as (b); new (b) amended; new (c) added........44615
1210.401  (b) amended..............................................18948
1210.501  Added....................................................18948
1211  Authority citation revised...................................11898
1211.30--1211.39  Undesignated center heading removed..............11898
1211.30  Removed...................................................11898
1211.31  Removed...................................................11898
1211.32  Removed...................................................11898
1211.33  Removed...................................................11898
1211.34  Removed...................................................11898
1211.35  Removed...................................................11898
1211.36  Removed...................................................11898
1211.37  Removed...................................................11898
1211.38  Removed...................................................11898
1211.39  Removed...................................................11898
1211.40--1211.42  Undesignated center heading removed..............11898
1211.40  Removed...................................................11898
1211.41  Removed...................................................11898
1211.42  Removed...................................................11898
1211.51  Removed...................................................11898
1211.54  Removed...................................................11898
1211.56  Removed...................................................11898
1211.72  Removed...................................................11898
1211.77  Removed...................................................11898
1220  Referendum results...........................................15327
1230.110  Revised..................................................46324
1240  Authority citation revised...................................22493
    Technical  correction..........................................24217
1240.50  (a) amended; interim......................................22493
1240.114  (b) amended; interim.....................................22493
1250  Authority citation revised...................................64560
1250.336  (c) revised..............................................38876
1250.347  Revised; eff. 2-1-95.....................................64560
1250.348  (a) introductory text amended............................38876
1250.510  Revised..................................................12155
1250.514  Amended; eff. 2-1-95.....................................64560
Chapter XIV
1413  Revised; interim.............................................59290
1413.54  (a)(5)(ii) and (iii) revised; (a)(5)(iv) and (d)(4) added
                                                                   22495
    (a)(3)(ii)  and (iii) revised; (a)(3)(iv) and (d)(4)(iii) 
added..............................................................22496
    (a)(4)(iii)  revised; (a)(4)(iv) and (d)(4)(v) added...........25795
    (a)(1)(iii),  (2)(iii)(B), (C) and (e) revised; (a)(1)(iv), 
(2)(iv), (d)(4)(i) and (ii) added..................................39251
1413.104  (a)(8)(ii), (iii) and (b) revised; (a)(8)(iv) added......22495
1413.110  (b) revised; interim.....................................10574
    (a)  amended; (b) revised......................................59640
1414  Revised; interim.............................................59314
1415  Added; interim...............................................59317
1416  Added; interim...............................................59320
1421.1  (a) revised; interim.......................................34347
1421.3  Revised; interim...........................................34348
1421.4  (b) and (f) revised; interim...............................34348
1421.5  (b)(1), (4)(iv) and (d)(2) revised; interim................34348
1421.7  (c)(7)(iii) and (iv) added.................................25795
    (b)  removed; (c) and (d) redesignated as (b) and (c); new 
(c)(1) revised; new (c)(3) redesignated as (c)(4); new (c)(3) 
added; interim.....................................................34348
    (b)(1)(iv),  (2)(iv), (3)(iv), (4)(iv), (5)(iv), (6)(iv), 
(9)(iv) and (10)(iv) added.........................................39251
    (b)(8)(iii)  amended; (b)(8)(iv) added.........................47529
1421.8  (b)(2) revised; interim....................................34348

[[Page 758]]

1421.9  (f)(2)(iv)(E), (F) and (xiv)(B)(5)(v) revised; 
        (f)(2)(iv)(G) removed; interim.............................34348
1421.11  (a) revised; interim......................................34349
1421.14  Removed; interim..........................................34349
1421.16  (a)(1) introductory text, (1)(i), (2), (3), (b)(1), (2), 
        (c), (d) introductory text, (2), (e), (k)(1)(ii)(C), (D), 
        (l)(1)(ii) and (iii) revised; (k)(1)(ii)(E), (l)(1)(iv) 
        and (q) added; interim.....................................34349
1421.17  (a), (c)(1), (3) and (e) revised; interim.................34349
1421.18  (b)(12)(iv)(B), (13)(iv)(D) introductory text, (5) and 
        (15)(ii)(G) revised; interim...............................34350
1421.19  (b) revised; interim......................................34350
1421.20  (a)(2) revised; (e) added; interim........................34350
1421.22  (c)(3)(i)(A) and (4) revised; (e) through (i) added; 
        interim....................................................34350
1421.27  (a)(2)(iii) amended; (a)(2)(iv) added.....................47529
1421.29  (b)(3), (c) and (g) revised; (h) removed; (i) 
        redesignated as (h); interim...............................34351
1421.202  Revised; interim.........................................34351
1421.205  (a) introductory text, (2) and (b) revised; interim......34351
1421.206  (b) revised; interim.....................................34351
1421.207  (b)(1), (2)(i) and (iii) revised; interim................34351
1421.208  Revised; interim.........................................34352
1421.210  (a), (b)(2), (4) introductory text, (ii), (5)(i), (ii), 
        (iv), (c)(1) introductory text and (2) through (5) 
        revised; interim...........................................34352
1421.211  Revised; interim.........................................34353
1421.215  Revised; interim.........................................34353
1421.217  (d) added................................................25796
1421.320  (a) and (c)(2) revised; interim..........................34353
1421.321  Introductory text revised; interim.......................34353
1421.323  Revised; interim.........................................34353
1421.324  Revised; interim.........................................34353
1427.1  (b)(3) revised; interim....................................39252
1427.3  Amended; interim...........................................39252
1427.4  (b) revised; interim.......................................39253
1427.5  (b)(2)(iii) introductory text and (A) revised..............37399
    (b)(1)(v)(B)(4)  and (c)(2)(ii) revised; interim...............39253
1427.6  (b) revised; interim.......................................39253
1427.8  (a)(2)(ii) and (iii) revised; (a)(2)(iv) added.............22495
    (a)(1)(ii)  and (iii) revised; (a)(1)(iv) added................22496
1427.11  (h) removed; (i) redesignated as (h); (a)(1), (e) 
        introductory text, (f)(2), (3), (g) introductory text, (2) 
        and new (h) revised; interim...............................39253
1427.14  Removed; interim..........................................39253
1427.18  (e), (f)(2) and (g)(2) revised; (f)(3) and (j) added; 
        interim....................................................39253
1427.23  (f) removed; (g) and (h) redesignated as (f) and (g) and 
        revised; interim...........................................39254
1427.107  (a)(1)(i), (ii) and (2)(i) through (iv) revised; 
        (a)(2)(v) redesignated as (a)(2)(viii); new (a)(2)(v), 
        (vi) and (vii) added; (c)(2) amended.......................17919
1427.168  Removed; interim.........................................39254
1427.171  Amended; interim.........................................39254
1427.174  Revised..................................................39254
1427.175  (a)(1), (e) and (f)(2) revised; (f)(3) and (i) added; 
        interim....................................................39254
1434.1  (a) revised; interim.......................................23790
1434.6  (b) revised; interim.......................................23790
1434.7  (c)(1) and (2) added; interim..............................23791
1434.13  (b) revised; interim......................................23791
1434.14  Removed; interim..........................................23791
1434.16  (a)(1) revised; interim...................................23791
1434.17  (a)(3) and (4) revised; (a)(5), (6) and (7) added; 
        interim....................................................23791
1434.23  (a)(2), (3), (b)(1), (2), (c), (d) introductory text, (2) 
        and (e) revised; (k) added; interim........................23791
1434.24  (f) added; interim........................................23792
1434.25  (a)(1) revised; interim...................................23792
1434.26  (b)(3) revised; interim...................................23792
1434.27  (c)(3) added; interim.....................................23792
1435.200--1435.206 (Subpart)  Regulation at 57 FR 62489 confirmed 
        and revised................................................41224
1464.12  Existing text designated as (a); (b) added.................6867
1464.13  Existing text designated as (a); (b) added................27220
1464.14  Existing text designated as (a); (b) added................27220
1464.15  Existing text designated as (a); (b) added................27220
1464.16  Existing text designated as (a); (b) added................27221

[[Page 759]]

1464.17  Existing text designated as (a); (b) added................27221
1464.18  Existing text designated as (a); (b) added................27221
1464.19  Existing text designated as (a); (b) added................22725
1464.101--1464.108 (Subpart  B) Regulation at 58 FR 68020 eff. 
        date corrected to 1-1-94....................................1274
    Revised........................................................10944
1468.3  Amended;  interim..........................................47531
1468.4  (b) revised.................................................2284
    (c)(3)  and (4) revised; (c)(5) added; interim.................47531
    (b)(1)(ii)(D),  (2)(iv) and (3)(iv) added; (b)(2)(iii) revised
                                                                   48788
1468.5  (b) and (d) revised; interim...............................47531
1468.6  (b)(5) and (6) revised; interim............................47531
1468.8  (a) and (b) revised; interim...............................47532
    (a)(1)  and (b) revised........................................48789
1468.10  (a) revised; interim......................................47532
1468.13  (a) revised; interim......................................47532
1468.15  Removed; interim..........................................47533
1475.3  Regulation at 58 FR 62512 confirmed.........................9919
1475.6  Regulation at 58 FR 62512 confirmed.........................9919
1475.10  Regulation at 58 FR 62513 confirmed........................9919
1475.17  Regulation at 58 FR 62513 confirmed........................9919
1475.22  Regulation at 58 FR 62513 confirmed........................9919
1493  Revised......................................................52876
Chapter XV
1540.40--1540.45 (Subpart C)  Regulation at 58 FR 16104 confirmed 
                                                                   25797

                                  1995

7 CFR
                                                                   60 FR
                                                                    Page
Chapter XI
1200  Authority citation revised...................................37326
1200.50--1200.52  (Subpart) Added..................................37326
1205  Authority citation revised...................................61198
1205.50--1205.52  (Subpart) Removed................................37327
1205.200--1205.210  (Subpart) Removed..............................61198
1205.510  (b)(2) and (3) revised...................................36034
1207  Authority citation revised...................................61198
1207.200--1205.207  (Subpart) Removed..............................61198
1207.250--1207.252  (Subpart) Removed..............................37327
1209  Authority citation revised...................................61198
1209.200--1209.280 (Subpart B)  Regulation at 58 FR 8197 confirmed
                                                                   13614
1209.260  Amended..................................................13614
1209.300--1209.307 (Subpart C)  Removed............................61198
1209.400--1209.402 (Subpart D)  Removed............................37327
1210.200--1210.207  (Subpart) Removed..............................61198
1210.250--1200.252  (Subpart) Removed..............................37327
1210.251  (a) amended..............................................10797
1210.252  (b)(3) amended...........................................10797
1210.302  Amended..................................................10797
1210.305  Revised..................................................10797
1210.306  Amended..................................................10797
1210.314  Added....................................................10797
1210.315  Added....................................................10797
1210.320  (a) revised; (d), (e) and (f) added......................10797
1210.321  (a), (b), (c) and (d) redesignated as (b), (c), (e) and 
        (f); new (a) and new (d) added; new (c) amended; new 
        (f)(1) removed; (f)(2) and (3) redesignated as (f)(1) and 
        (2); new (b) introductory text, (1), (4), (e), (f) 
        introductory text and (1) revised..........................10798
1210.322  (a), (b) and (d) revised.................................10798
    (b) and (d) corrected..........................................13515
1210.325  (a) revised..............................................10798
1210.328  (d), (g), (i), (k), (m) and (n) amended..................10798
1210.340  (b) amended..............................................10798
1210.341  (d) through (i) redesignated as (e) through (j); (a), 
        (b) and new (e) revised; new (d) added; new (f), new (g) 
        and new (h) amended........................................10798
    Corrected......................................................13515
1210.342  Existing text designated as (a); (b), (c) and (d) added 
                                                                   10799
1210.343  Removed..................................................10799
1210.350  Introductory text and (a) through (d) redesignated as 
        (a) introductory text, and (1) through (4); new (b) and 
        new (c) added..............................................10799

[[Page 760]]

1210.351  Amended..................................................10799
1210.352  (a)(1) amended...........................................10799
1210.362  Amended..................................................10799
1210.363  (b) revised..............................................10799
1210.364  (d) amended..............................................10799
1210.400--1210.403  Undesignated center heading added..............10799
1210.401  (b) revised..............................................10799
1210.402  (a) revised; (b) amended.................................10799
1210.404  Undesignated center heading and section added............10800
1210.405  Redesignated from 1210.503; undesignated center heading 
        added; (a) revised.........................................10800
1210.503  Redesignated as 1210.405.................................10800
1210.505  Amended..................................................10800
1210.515  (a) revised; (b) redesignated as (c); new (b) added......10800
1210.518  (a) and (b) revised; (c)(1), (2)(viii) and (d)(1) 
        amended....................................................10801
1210.519  Introductory text, (a) and (b) amended...................10801
1210.520  Revised..................................................10801
1210.521  Revised..................................................10801
1210.530  Introductory text amended................................10801
1210.531  Amended..................................................10801
1210.532  Revised..................................................10801
1211  Removed......................................................47862
    Authority citation revised.....................................61198
1211.250--1211.252 (Subpart C)  Removed............................37327
1211.300--1211.310 (Subpart D)  Removed............................61198
1212  Authority citation revised...................................37327
    Removed........................................................65020
1212.2  Amended.....................................................7438
1212.5  Amended.....................................................7438
1212.18  Amended....................................................7438
1212.30  (a) amended; (b) revised; (c) and concluding text removed
                                                                    7438
1212.31  (k) existing and concluding text redesignated as (k)(1) 
        and (2); heading, (a) and new (k)(1) revised................7438
1212.32  Amended....................................................7438
1212.34  Revised....................................................7438
1212.37  (a) amended................................................7439
1212.40  (o) removed; (p), (q) and (r) redesignated as (o), (p) 
        and (q).....................................................7439
1212.64  (j) added..................................................7439
1212.65  (c)(2)(viii) amended.......................................7439
1212.67  (a) introductory text revised..............................7439
1212.68  (a) amended; (d) added.....................................7439
1212.69  Amended....................................................7439
1212.84  (a) amended................................................7439
1212.90  Authority citation revised.................................7438
    Added; interim; eff. 10-11-95 through 12-31-95.................52837
1212.250--1212.252 (Subpart C)  Removed............................37327
1220.106  Removed..................................................58500
1220.120  Removed..................................................58500
1220.124  Removed..................................................58500
1220.201  Heading and (a) revised; (f) removed; (g) redesignated 
        as (f).....................................................29962
    (f) removed....................................................58500
1220.212  (a) revised..............................................29962
    (j) removed....................................................58500
1220.224  Removed..................................................58500
1220.225  Removed..................................................58500
1220.226  Removed..................................................58500
1220.227  Removed..................................................58500
1220.228  (a)(1)(v), (vi), (b)(5)(i) and (6)(iii) removed..........58500
1220.312  (b) amended..............................................58500
1220.400--1220.402 (Subpart C)  Removed............................37327
1220.501--1220.537 (Subpart E)  Removed............................61198
1220.701--1220.731 (Subpart F)  Added..............................15029
1230.30  (b)(2) and (c)(2) removed; (b)(3) and (c)(3) amended......58501
1230.31  (a) removed; (b) amended..................................58501
1230.72  (a) and (b) amended.......................................58501
1230.74  (b) revised; (c) removed..................................33683
1230.77  Removed...................................................58501
1230.110  Revised..................................................29965
1230.112  Revised..................................................29965
1230.115  Added....................................................33683
1230.400--1230.402 (Subpart C)  Removed............................37327
1230.501  Removed..................................................58501
1230.502  Removed..................................................58501
1230.503  Removed..................................................58501
1230.504  Removed..................................................58501
1230.505  Removed..................................................58501
1230.506  Removed..................................................58501
1230.507  Removed..................................................58501
1230.508  Removed..................................................58501
1230.509  Removed..................................................58501
1230.510  Removed..................................................58501
1230.511  Removed..................................................58501

[[Page 761]]

1230.512  Removed..................................................58501
1230.601--1230.640 (Subpart E)  Removed............................61198
1240.50  Regulation at 59 FR 22493 confirmed........................9609
1240.114  Regulation at 59 FR 22493 confirmed.......................9609
1240.250--1240.252  (Subpart) Removed..............................37327
1250.200--1250.207 (Subpart E)  Removed............................61198
1250.250--1250-252  (Subpart) Removed..............................37327
1250.328  (d) and (e) amended......................................66861
1250.336  (g) and (h) removed......................................66861
1250.350  Removed..................................................66861
1250.360  Removed..................................................66861
1250.523  Undesignated center heading and section removed..........66861
1250.552  Undesignated center heading and section removed..........66861
1260  Authority citation revised............................58502, 61198
1260.110  Removed..................................................58502
1260.141  (a) revised..............................................62020
1260.150  (i) and (j) removed......................................58502
1260.151  (c) removed..............................................58502
1260.173  Removed..................................................58502
1260.174  Removed..................................................58502
1260.181  (b)(5) removed...........................................58502
1260.401--1260.441 (Subpart C)  Removed............................61198
1260.580  Removed..................................................58502
1260.590  Removed..................................................58502
1270  Authority citation revised...................................61198
1270.1--1270.18  (Subpart) Removed.................................61198
1280  Added........................................................64306
1290  Removed......................................................37327
Chapter XIV
Chapter  XIV Nomenclature change....................................1710
    Nomenclature change............................................64297
1403.7  (a)(3) and (4) amended; (a)(5) added; (m)(4) removed; 
        (m)(5) and (6) redesignated as (m)(4) and (5); (q) revised
                                                                   43706
1403.9  (c) revised................................................43706
1405  Authority citation revised...................................32899
1405.6  Added......................................................32899
1410.116  (a)(5) added; interim....................................22458
1413  Regulation at 59 FR 59290 confirmed..........................33331
1413.8  Amended; interim...........................................44257
1413.26  (a)(1) revised; interim...................................44257
1413.43  (h)(1) revised; interim...................................44257
1413.49  Added.....................................................33331
1413.50  (a), (b) and (c) redesignated as (b), (c) and (d); new 
        (a) added; interim.........................................44257
1413.54  (a)(5)(iii) and (iv) revised; (a)(5)(v) and (d)(5) added 
                                                                   17985
    (a)(3)(iii) and (iv) revised; (a)(3)(v) and (d)(5)(iii) added 
                                                                   31624
    (a)(4)(iv) revised; (a)(4)(v) and (d)(5)(v) added..............43002
    (c)(1) and (4) revised; interim................................44257
    (a)(1)(iii), (iv), (2)(iii)(C), (iv) and (e) revised; 
(a)(1)(v), (2)(v), (d)(5)(i) and (ii) added........................48019
1413.61  (a)(5) added; interim.....................................44258
1413.64  (a) introductory text, (1) and (d) revised; interim.......44258
1413.65  (g) introductory text; interim............................44258
1413.103  (a)(8)(v) added; (b) revised.............................17985
1414  Regulation at 59 FR 59314 confirmed..........................33331
1414.28  (a) revised; interim......................................44258
1414.30  (b)(1)(i)(C) revised; interim.............................44258
1415  Regulation at 59 FR 59317 confirmed..........................33331
1415.9  Amended; interim...........................................44258
1415.13  (a)(1)(i), (ii) and (iii) revised; (a)(1)(iv) and (v) 
        added; interim.............................................44258
1415.15  (b)(1)(ii), (2)(i) through (v), (e) and (h) revised; (f) 
        amended; interim...........................................44258
1415.20  (f) and (g) revised; interim..............................44259
1416  Regulation at 59 FR 59320 confirmed..........................33331
1416.100  (a) introductory text revised; interim...................44259
1416.101  (a) revised; interim.....................................44259
1416.103  (b) and (e) revised; interim.............................44259
1416.110  Second (b) correctly redesignated as (c).................57823
1416.400  (b) revised; interim.....................................44259
1421.1  Regulation at 59 FR 34347 confirmed.........................1709
1421.3  Regulation at 59 FR 34348 confirmed.........................1709
1421.4  Regulation at 59 FR 34348 confirmed.........................1709
1421.5  Regulation at 59 FR 34348 confirmed.........................1709

[[Page 762]]

1421.7  Regulation at 59 FR 34348 confirmed.........................1709
    (b)(8)(iv) revised; (b)(8)(v) added............................27870
    (b)(7)(v) added................................................43002
    (b)(1)(v), (2)(v), (3)(v), (4)(v), (5)(v), (6)(v), (9)(v) and 
(10)(v) added......................................................48020
1421.8  Regulation at 59 FR 34348 confirmed.........................1709
1421.9  Regulation at 59 FR 34348 confirmed.........................1709
1421.11  Regulation at 59 FR 34349 confirmed........................1709
1421.14  Regulation at 59 FR 34349 confirmed........................1709
1421.16  Regulation at 59 FR 34349 confirmed........................1709
1421.17  Regulation at 59 FR 34349 confirmed........................1709
1421.18  Regulation at 59 FR 34350 confirmed........................1709
1421.19  Regulation at 59 FR 34350 confirmed........................1709
1421.20  Regulation at 59 FR 34350 confirmed........................1709
1421.22  Regulation at 59 FR 34350 confirmed........................1709
1421.27  (a)(2)(iv) revised; (a)(2)(v) added.......................27870
1421.29  Regulation at 59 FR 34351 confirmed........................1709
1421.202  Regulation at 59 FR 34351 confirmed.......................1709
1421.205  Regulation at 59 FR 34351 confirmed.......................1709
1421.206  Regulation at 59 FR 34351 confirmed.......................1709
1421.207  Regulation at 59 FR 34351 confirmed.......................1709
1421.208  Regulation at 59 FR 34352 confirmed.......................1709
1421.210  Regulation at 59 FR 34352 confirmed.......................1709
1421.211  Regulation at 59 FR 34353 confirmed.......................1709
1421.215  Regulation at 59 FR 34353 confirmed.......................1709
1421.217  (e) added................................................48020
1421.320  Regulation at 59 FR 34353 confirmed.......................1709
1421.321  Regulation at 59 FR 34353 confirmed.......................1709
1421.323  Regulation at 59 FR 34353 confirmed.......................1709
1421.324  Regulation at 59 FR 34353 confirmed.......................1709
1425  Authority citation revised....................................2680
1425.3  (i) and (j) redesignated as (j) and (k); (d), new (j) and 
        new (k) revised; new (i) added..............................2680
1425.4  (a), (b)(7) and (c) introductory text revised; (e) and (f) 
        added.......................................................2681
1425.6  (b)(2) revised..............................................2681
1425.7  (a) revised.................................................2681
1425.8  (b)(2) and (e) revised......................................2681
1425.9  Introductory text, (d) and (g) revised......................2681
1425.10  (b)(3) revised.............................................2682
1425.11  (c)(3) revised.............................................2682
1425.14  (c) revised................................................2682
1425.16  Redesignated as 1425.17; new 1425.16 added.................2682
1425.17  Redesignated as 1425.18; new 1425.17 redesignated from 
        1425.16; (a)(2), (b)(1)(i), (ii), (iii), (2) and (c)(2) 
        revised; (c)(5) added.......................................2682
1425.18  Redesignated as 1425.19; new 1425.18 redesignated from 
        1425.17.....................................................2682
    (a) and (1) revised; (b)(5) added...............................2683
1425.19  Redesignated as 1425.20; new 1425.19 redesignated from 
        1425.18.....................................................2682
1425.20  Redesignated as 1425.21; new 1425.20 redesignated from 
        1425.19.....................................................2682
    Revised.........................................................2683
1425.21  Redesignated as 1425.22; new 1425.21 redesignated from 
        1425.20.....................................................2682
1425.22  Redesignated as 1425.24; new 1425.22 redesignated from 
        1425.21.....................................................2682
1425.23  Redesignated as 1425.25....................................2682
    Added...........................................................2683
1425.24  Redesignated from 1425.22..................................2682
1425.25  Redesignated from 1425.23..................................2682
1427.1  Regulation at 59 FR 39252 confirmed.........................1710
1427.3  Regulation at 59 FR 39252 confirmed.........................1710
1427.4  Regulation at 59 FR 39253 confirmed.........................1710
1427.5  Regulation at 59 FR 39253 confirmed.........................1710

[[Page 763]]

    (b)(2)(iii) introductory text and (A) revised..................38477
1427.6  Regulation at 59 FR 39253 confirmed.........................1710
1427.8  (a)(2)(iii) and (iv) revised; (a)(2)(v) added..............17985
    (a)(1)(iii) and (iv) revised; (a)(1)(v) added..................31624
1427.11  Regulation at 59 FR 39253 confirmed........................1710
1427.14  Regulation at 59 FR 39253 confirmed........................1710
1427.18  Regulation at 59 FR 39253 confirmed........................1710
1427.23  Regulation at 59 FR 39254 confirmed........................1710
1427.168  Regulation at 59 FR 39254 confirmed.......................1710
1427.171  Regulation at 59 FR 39254 confirmed.......................1710
1427.174  Regulation at 59 FR 39254 confirmed.......................1710
1427.175  Regulation at 59 FR 39254 confirmed.......................1710
1434.1  Regulation at 59 FR 23790 confirmed..........................322
1434.6  Regulation at 59 FR 23790 confirmed..........................322
1434.7  Regulation at 59 FR 23791 confirmed..........................322
1434.13  Regulation at 59 FR 23791 confirmed.........................322
1434.14  Regulation at 59 FR 23791 confirmed.........................322
1434.16  Regulation at 59 FR 23791 confirmed.........................322
1434.17  Regulation at 59 FR 23791 confirmed.........................322
1434.23  Regulation at 59 FR 23791 confirmed.........................322
1434.24  Regulation at 59 FR 23792 confirmed.........................322
1434.25  Regulation at 59 FR 23792 confirmed.........................322
1434.26  Regulation at 59 FR 23792 confirmed.........................322
1434.27  Regulation at 59 FR 23792 confirmed.........................322
1435.4  (c) redesignated as (e); new (c) and (d) added..............5837
1435.500--1435.529  (Subpart) Regulation at 58 FR 36124 confirmed 
                                                                    7700
1435.500  (a)(1) and (2) revised....................................7700
1435.502  Amended...................................................7700
1435.507  (a) introductory text.....................................7700
1435.510  (d) revised...............................................7700
1435.513  (f) revised; (g) removed; (h) redesignated as (g).........7700
1435.514  (a) revised...............................................7701
1435.520  (b) revised...............................................7701
1435.521  (c)(1) revised............................................7701
1435.528  (a) and (b) revised.......................................7701
1435.530  Regulation at 58 FR 41995 confirmed.......................7701
1443  Removed......................................................51886
1446.103  Amended; interim.........................................35835
    Regulation at 60 FR 35835 confirmed............................61199
1464.7  (f) added; interim.........................................21037
    Regulation at 60 FR 21037 confirmed............................57165
1464.11  (f) added; interim........................................19667
1464.12  (c) added.................................................22460
1464.13  (c) added.................................................38234
1464.14  (c) added.................................................38234
1464.15  (c) added.................................................38234
1464.16  (c) added.................................................38234
1464.17  (c) added.................................................38234
1464.18  (c) added.................................................38234
1464.19  (c) added.................................................27868
1464.102  (c) and (d) added; interim...............................19667
1468.3  Amended....................................................22461
1468.4  (b)(1)(ii)(E), (2)(v) and (3)(v) added.....................28524
1468.18  (d) added.................................................22461
1477.1  Revised....................................................52610
1477.2  Revised....................................................52610
1477.3  Amended....................................................52611
1477.4  (d) redesignated as (e); (c)(2) and new (e) revised; new 
        (d) added..................................................52611
1477.5  (g) redesignated as (h); (a) introductory text, (1), (2), 
        (3), (b)(5), (c)(1), (2), (f) and new (h) revised; (c)(6) 
        and new (g) added..........................................52612
    (a) corrected..................................................54409
1477.6  Revised....................................................52612
1477.7  (a) revised; (b)(7), (8) and (9) redesignated as (b)(8), 
        (9) and (10); new (b)(7) added.............................52613
1477.9  (a)(1) and (3) revised.....................................52613
1477.10  (d)(2) and (e) introductory text revised..................52613
1477.11  (c) added.................................................52613
1477.13  (d) revised...............................................52613
1477.19  (h) through (m) redesignated as (i) through (n); new (h) 
        and (o) added..............................................52613

[[Page 764]]

1477.21  Introductory text revised; (b) through (e) redesignated 
        as (c) through (f); new (b) added..........................52613
1477.22  (a)(1) introductory text revised; (a)(3) added............52613
1477.23  Added.....................................................52614
1477.24  Added.....................................................52614
1477.25  Redesignated as 1477.26...................................52614
1477.26  Redesignated from 1477.25.................................52614
1478  Authority citation revised...................................52614
1478.1  Revised....................................................52614
1478.2  (a) and (d) revised; (c)(3) and (4) added..................52614
1478.3  Revised....................................................52615
1478.4  Revised....................................................52616
1478.5  (a), (c) and (d) revised; (e) added........................52616
1478.6  (a) revised; (e) added.....................................52616
1478.7  (b) amended................................................52617
1478.8  (b)(4), (c) and (d) revised................................52617
1478.9  Revised....................................................52617
1478.10  Revised...................................................52617
1478.11  Revised...................................................52617
1478.12  Revised...................................................52618
1478.14  Revised...................................................52618
1478.16  Revised...................................................52618
1485  Revised.......................................................6363
1494.201  (q) revised; interim.....................................21039
1494.301  (a)(1) and (b) removed; (a)(2) through (6) and (c) 
        through (g) redesigntated as (a)(1) through (5) and (b) 
        through (f); introductory text, (a) introductory text, new 
        (b), new (d), new (e) and new (f) revised; new (a)(6) and 
        new (g) added; interim.....................................21039

                                  1996

7 CFR
                                                                   61 FR
                                                                    Page
Chapter XI
1205.510  (b)(2) and (3) revised...................................31819
    (b)(6)(i) revised..............................................31822
1208.52  Stayed; eff. 1-15-95 through 4-30-96......................14952
1208.100--1208.150 (Subpart B)  Added..............................30501
1220.228  (b)(5)(ii) and (6) removed...............................50694
1220.257  Amended..................................................50694
1220.330--1220.332  Undesignated center heading removed............50694
1220.330  Removed..................................................50694
1220.331  Removed..................................................50694
1220.332  Removed..................................................50694
1220.500--1220.555 (Subpart D)  Removed............................50694
1220.701--1220.731 (Subpart F)  Removed............................50694
1230.110  Revised..................................................28003
    (b) correctly revised..........................................35597
1240.115  (e) revised..............................................29462
    Regulation at 61 FR 29462 eff. date corrected to 6-12-96.......33175
    (e) corrected..................................................38356
1280  Referendum results...........................................13061
1280.101--1280.246 (Subpart A)  Added..............................19517
1280.101  Stayed...................................................33646
1280.102  Stayed...................................................33646
1280.103  Stayed...................................................33646
1280.104  Stayed...................................................33646
1280.105  Stayed...................................................33646
1280.106  Stayed...................................................33646
1280.107  Stayed...................................................33646
1280.108  Stayed...................................................33646
1280.109  Stayed...................................................33646
1280.110  Stayed...................................................33646
1280.111  Stayed...................................................33646
1280.112  Stayed...................................................33646
1280.113  Stayed...................................................33646
1280.114  Stayed...................................................33646
1280.115  Stayed...................................................33646
1280.116  Stayed...................................................33646
1280.117  Stayed...................................................33646
1280.118  Stayed...................................................33646
1280.119  Stayed...................................................33646
1280.120  Stayed...................................................33646
1280.121  Stayed...................................................33646
1280.122  Stayed...................................................33646
1280.123  Stayed...................................................33646
1280.124  Stayed...................................................33646
1280.125  Stayed...................................................33646
1280.126  Stayed...................................................33646
1280.201  Stayed...................................................33646
1280.202  Stayed...................................................33646
1280.203  Stayed...................................................33646
1280.204  Stayed...................................................33646
1280.205  Stayed...................................................33646
1280.206  Stayed...................................................33646
1280.207  Stayed...................................................33646
1280.208  Stayed...................................................33646
1280.209  Stayed...................................................33646
1280.210  Stayed...................................................33646
1280.211  Stayed...................................................33646
1280.212  Stayed...................................................33646
1280.213  Stayed...................................................33646
1280.214  Stayed...................................................33646
1280.215  Stayed...................................................33646
1280.216  Stayed...................................................33646

[[Page 765]]

1280.217  Stayed...................................................33646
1280.218  Stayed...................................................33646
1280.219  Stayed...................................................33646
1280.220  Stayed...................................................33646
1280.221  Stayed...................................................33646
1280.222  Stayed...................................................33646
1280.223  Stayed...................................................33646
1280.224  Regulation at 61 FR 19521 eff. date delayed..............33646
1280.225  Regulation at 61 FR 19521 eff. date delayed..............33646
1280.226  Regulation at 61 FR 19522 eff. date delayed..............33646
1280.227  Regulation at 61 FR 19522 eff. date delayed..............33646
1280.228  Regulation at 61 FR 19522 eff. date delayed..............33646
1280.229  Stayed...................................................33646
1280.230  Stayed...................................................33646
1280.231  Stayed...................................................33646
1280.232  Stayed...................................................33646
1280.233  Stayed...................................................33646
1280.234  Stayed...................................................33646
1280.235  Stayed...................................................33646
1280.240  Stayed...................................................33646
1280.241  Stayed...................................................33646
1280.242  Stayed...................................................33646
1280.243  Stayed...................................................33646
1280.244  Stayed...................................................33646
1280.245  Stayed...................................................33646
1280.246  Stayed...................................................33646
1280.301--1280.318 (Subpart B)  Added..............................21059
    Regulation at 61 FR 21059 eff. date delayed....................33646
1280.400--1280.414 (Subpart C)  Added..............................21051
    Stayed.........................................................33646
Chapter XIV
1400  Added........................................................37566
1401  Redesignated from Part 1470..................................37575
1402  Revised......................................................37575
1405  Revised......................................................37575
1410  Heading revised; interim.....................................43945
1410.1  Amended; interim...........................................43945
1410.2  (a) and (f)(1) revised; (f)(2) and (h) amended; (g) and 
        (h) redesignated (h) and (i); new (g) added; interim.......43945
1410.3  (b) amended; interim.......................................43945
1410.13  (d) added; interim........................................43946
1410.102  (a) and (b) amended; interim.............................43946
1410.103  (a)(1), (b)(4), (c) and (f)(2) amended; interim..........43946
1410.111  (a) amended; interim.....................................43946
1410.116  (a)(5) revised; interim..................................43946
1412  Added........................................................37575
1412.206  (d) corrected............................................49049
    (f) corrected..................................................49050
1412.207  (b), (d)(1) and (2) corrected............................49050
1412.401  (a) and (b)(2)(iii) corrected............................49050
1412.403  Corrected................................................49050
1412.407  Corrected................................................49050
1413  Removed......................................................37581
1421  Authority citation revised...................................37581
1421.1--1421.32  (Subpart) Revised.................................37581
1421.6  (e) revised................................................11515
1421.200--1421.217  (Subpart) Heading revised......................37595
1421.200  Revised..................................................37595
1421.201  Removed..................................................37581
1421.202  Removed..................................................37581
1421.203  Removed..................................................37581
1421.204  Removed..................................................37581
1421.205  Removed..................................................37581
1421.206  Removed..................................................37581
1421.207  Removed..................................................37581
1421.208  Removed..................................................37581
1421.209  Removed..................................................37581
1421.210  Removed..................................................37581
1421.211  Removed..................................................37581
1421.212  Removed..................................................37581
1421.213  Removed..................................................37581
1421.214  Removed..................................................37581
1421.215  Removed..................................................37581
1421.216  Removed..................................................37581
1421.217  Removed..................................................37581
1421.320--1421.324  (Subpart) Removed..............................37595
1425  Revised......................................................37595
1427  Authority citation revised...................................37601
1427.1--1427.26  (Subpart) Designated as Subpart A.................37600
    Revised........................................................37601
1427.50--1427.58  (Subpart) Designated as Subpart B................37600
1427.100--1427.109  (Subpart) Designated as Subpart C..............37600
1427.100  (a) revised; (b)(1) introductory text revised; (b)(3) 
        added......................................................37611
1427.101  (a) revised..............................................37611
1427.103  (a)(1) and (2) revised...................................37611
1427.107  (a)(1) introductory text, (ii), (2) introductory text, 
        (d) introductory text and (e) introductory text amended; 
        (f)(1)(iii) added..........................................37611

[[Page 766]]

1427.108  (c)(2) and (d) revised; (c)(3) added.....................37611
1427.109  (a)(3) revised...........................................37611
1427.160--1427.175  (Subpart) Designated as Subpart D..............37601
    Revised........................................................37612
1427.1081--1427.1089  (Subpart) Designated as Subpart E............37601
1430  Authority citation revised...................................37615
1430.282  (Subpart) Designated as Subpart A and revised............37615
1430.340--1430.361  (Subpart) Designated as Subpart B..............37616
1430.362  Added....................................................37616
1430.400--1430.410 (Subpart C)  Added..............................37616
1430.450--1430.470  (Subpart) Removed..............................37615
1434  Revised......................................................37618
1435  Revised......................................................37618
1435.4  (e) redesignated as (f); new (e) added.....................15881
1437  Added........................................................69005
1439  Redesignated from Part 1475; nomenclature change.............32644
1446  Authority citation revised...................................37623
1446.101  Amended..................................................37623
1446.103  Amended..................................................37623
1446.203  (b) revised..............................................37623
1446.307  (b) and (d) revised......................................37624
1446.308  (a), (d) and (e)(1) revised; (f) removed; (g) 
        redesignated as (f)........................................37624
1446.401  (a)(1) revised...........................................37624
1446.410  (b) revised..............................................37625
1464.8  Introductory text revised..................................33304
1464.9  (a) revised................................................33304
1464.12  (d) added.................................................37673
1464.13  (d) added.................................................63702
1464.14  (d) added.................................................63702
1464.15  (d) added.................................................63702
1464.16  (d) added.................................................63702
1464.17  (d) added.................................................63702
1464.18  (d) added.................................................63702
1464.19  (d) added.................................................50425
1467  Redesignated from Part 620...................................42141
    Nomenclature change............................................42143
1467.1  Heading revised............................................42141
1467.2  (c), (f) and (h) revised; (g) amended......................42141
1467.3  Amended....................................................42141
1467.4  (a) and (b)(2) amended; (b)(1), (c) introductory text, 
        (d)(2), (3) introductory text and (e)(2) revised...........42141
1467.6  (a), (b) and (c) redesignated as (b), (c) and (d); new (a) 
        added......................................................42142
1467.7  Heading and (b) heading revised............................42142
1467.8  (b)(4), (5) and (e)(2) removed; (e)(3) redesignated as 
        (e)(2); (b)(3), new (e)(2) and (h) revised.................42142
1467.9  (a) introductory text amended; (a)(2) revised..............42142
1467.10  Heading and (d)(5) revised................................42142
1467.11  (a) revised; (b) amended..................................42142
1467.12  (b) revised...............................................42142
1467.13  (b)(1) revised............................................42142
1467.14  (a) and (c) amended.......................................42143
1467.17  (a) revised...............................................42143
1468  Revised......................................................37625
1470  Redesignated as Part 1401....................................37575
1475  Redesignated as Part 1439....................................32644
1485  Nomenclature change..........................................58780
1485.11  (i) and (gg) amended......................................32644
    (ff) revised...................................................58780
1485.12  (b) revised...............................................58780
1485.13  (c)(1)(i) and (3)(i) amended..............................32644
1485.14  (a) amended...............................................32644
1485.16  (c)(24) revised; interim...................................3548
    (h) revised....................................................24206
    (a)(2), (d)(27) and (29) amended...............................32644
    Regulation at 61 FR 3548 confirmed.............................53303
1485.20  (a)(1) and (3)(iii) amended...............................32644
1485.23  (c)(2)(v) revised; (c)(2)(vi) removed; interim.............3548
    (a)(2) amended.................................................32644
    Regulation at 61 FR 3548 confirmed.............................53303
1487  Removed.......................................................8208
1491  Removed.......................................................8208
1492  Removed.......................................................8208
1493.400--1493.530 (Subpart D)  Added; interim.....................33831
1495  Removed.......................................................8208
1497  Removed......................................................37574
1498  Removed......................................................37574
1499  Added........................................................60515
Chapter XV
1520.3  Revised.....................................................2898
1520.4  Revised.....................................................2898

[[Page 767]]

1520.5  Revised.....................................................2898
1520.6  (a) and (b) amended.........................................2898

                                  1997

7 CFR
                                                                   62 FR
                                                                    Page
Chapter XI
1205.10--1205.30  (Subpart) Added...................................1660
1205.510  (b)(5) revised...........................................22878
    (b)(2) and (3)(ii) table revised...............................46414
    (b)(3)(ii) table corrected.....................................50244
1205.520  (b) introductory text revised............................22879
1207.322  (a) and (d)(1) through (5) suspended; (b), (c) and (d) 
        introductory text suspended in part; interim...............46179
1207.503  (a), (b) and (c) revised; interim........................46179
1207.505  Revised; interim.........................................46179
1207.513  (c)(2) revised; interim..................................46179
1208.50  Note added................................................40257
1208.200--1208.207 (Subpart C)  Added; eff. 5-14-97 through 8-15-
        97.........................................................18036
1209.300--1209.307 (Subpart C)  Added; interim.....................66975
1214  Added........................................................54312
1215  Added; eff. 3-22-97 through 8-31-97..........................13535
    Added..........................................................39389
1220.201  (a) table revised........................................37489
    (a) table corrected............................................41485
1220.315  Correctly removed; CFR correction........................53731
1230.110  Revised..................................................26206
1280  Removed......................................................38898
Chapter XIII
Chapter  XIII Established..........................................29638
    Referendum results......................................29646, 62827
1301.11  (b) revised...............................................62825
1304.5  (a) revised................................................62825
1305.1  Revised....................................................62825
1306.1  Revised....................................................62826
1306.2  Revised....................................................62826
1306.3  Revised....................................................62826
1307.1  Revised....................................................62826
1307.2  Revised....................................................62826
1307.4  (f) revised................................................62827
1381  Added; interim...............................................35065
1381.3  (h) correctly revised......................................36651
Chapter XIV
1410  Revised.......................................................7625
1412  Comment period extension.....................................63441
1412.201  (c) added; interim.......................................55152
1412.207  (d) revised; interim.....................................55152
1412.302  (b) revised; interim.....................................55152
1412.303  (a)(2) and (4) revised; (a)(6) removed; interim..........55152
1412.304  (b) revised; interim.....................................55152
1414  Removed; interim.............................................33985
1415  Removed; interim.............................................33985
1416  Removed; interim.............................................33985
1421.27  (a)(2) amended; (a)(3) removed; (a)(4) redesignated as 
        (a)(3).....................................................62692
1422  Removed......................................................51760
1427.5  (b)(2) revised.............................................19023
1427.11  Heading and (a) revised...................................19023
1434  Removed; interim.............................................33985
1435.1  (a) and (b) designation removed............................34612
1435.2  Amended....................................................34612
1435.105  (a)(1) and (g) revised; (h) added........................34612
1437  Removed; interim.............................................33985
    Reinstated.....................................................36978
    Heading revised; interim.......................................53930
    Technical correction...........................................62693
1437.1  Revised; interim...........................................53930
1437.3  Amended; interim...........................................53930
1437.4  (a) amended; (b)(10) revised; interim......................53931
1437.5  (f) added; interim.........................................53931
1437.7  (a) amended; (k) and (l) added; interim....................53931
1437.8  (b)(4) revised; (e) and (f) added; interim.................53931
1437.9  (b)(2) revised; interim....................................53932
1437.11  Introductory text revised; (c) added; interim.............53932
1439.402  (a) revised; interim......................................3197
    (a) revised....................................................44392
1439.601--1439.602  (Subpart) Added................................44392
1439.701--1439.702  (Subpart) Added................................44393
1439.800--1439.810  (Subpart) Added; interim.......................33984
1446.103  Amended..................................................62692
1446.310  Added....................................................62693
1446.311  Added....................................................62693
1464.2  (a) amended.................................................3198
1464.8  (h) removed; (i) redesignated as (h)........................3198
1464.11  Amended; (f) removed.......................................3198
1464.12  (e) added.................................................24800
1464.13  (e) added.................................................43922
1464.14  (e) added.................................................43922
1464.15  (e) added.................................................43922

[[Page 768]]

1464.16  (e) added.................................................43922
1464.17  (e) added.................................................43922
1464.19  (e) added.................................................30230
1464.102  Revised...................................................3198
1464.104  (b) revised...............................................3198
1464.106  (a)(1) revised............................................3198
1464.108  Amended...................................................3199
1466  Added........................................................28284
1468  Removed; interim.............................................33985
1477  Removed; interim.............................................33985
1478  Removed; interim.............................................50850
1479  Removed; interim.............................................33985
1489  Removed; interim.............................................33985
1493.20  (z) revised...............................................24561
1493.50  (a) revised...............................................24561
1493.90  (a) revised...............................................24561
1493.200--1493.330 (Subpart C)  Added; interim.....................42656
1493.410  (x) revised..............................................24561
1493.440  (a) revised..............................................24561
1493.480  (a) revised..............................................24561
1494.201  (gg) revised.............................................24561
1494.501  (c)(20)(xi) revised......................................24561
1499.1  Corrected...................................................2719
1499.8  (h)(3) corrected............................................2719
1499.9  Heading correctly added.....................................2719
1499.12  (d) corrected..............................................2719

                                  1998

7 CFR
                                                                   63 FR
                                                                    Page
Chapter XI
1205.510  (b)(2)  and (3)(ii) table revised........................27819
1207.322  Regulation at 62 FR 46179 confirmed......................53546
1207.503  Regulation at 62 FR 46179 confirmed......................53546
1207.505  Regulation at 62 FR 46179 confirmed......................53546
1207.513  Regulation at 62 FR 46179 confirmed......................53546
1230.110  Revised..................................................45936
Chapter XIII
1301  Referendum results notice....................................10111
1301.11  (b) revised...............................................65523
1301.12  Revised...................................................65523
1301.13  (e) added.................................................10110
1301.23  (d) and (e) added.........................................65523
1304.2  (c) and (d) added..........................................65524
1306.3  (d), (e) and (f) redesignated as (e), (f) and (g); new (d) 
        added......................................................46388
1361  Added; interim...............................................37756
1371  Added; interim...............................................37758
Chapter XIV
1412.201  Regulation at 62 FR 55152 confirmed; (c) revised.........31103
1412.206  (a) revised..............................................31103
1412.207  Regulation at 62 FR 55152 confirmed; (d)(1) and (2) 
        revised....................................................31103
1412.302  Regulation at 62 FR 55152 confirmed......................31103
    (b) revised....................................................31104
1412.303  Regulation at 62 FR 55152 confirmed......................31103
    (a)(2) and (4) revised; (a)(6) added...........................31104
1412.304  Regulation at 62 FR 55152 confirmed......................31103
    (b) revised....................................................31104
1425  Revised; interim.............................................17312
1439.901--1439.911  (Subpart) Added; interim.......................65525
1446  Authority citation revised...................................41713
1446.103  Amended; interim.........................................41713
1464.12  (f) added.................................................55938
1464.19  (f) added.................................................55940
1468  Added........................................................51786
1478  Regulation at 62 FR 50850 confirmed...........................3701
1485.11  Amended...................................................29940
    Corrected......................................................32041
1485.13  (c)(3)(i) removed; (c)(3)(ii) through (xii) redesignated 
        as (c)(3)(i) through (xi)..................................29940
1485.14  (c)(4) revised; (d)(2) amended; (d)(3) removed............29940
1485.16  (a)(1), (b)(6), (7), (9), (c)(8), (25), (d)(3) and (h)(3) 
        revised; (a)(2) removed; (a)(3) redesignated as (a)(2); 
        (b)(11) added..............................................29940
    (b)(6) correctly designated; (b)(11) and (c)(8) corrected......32041
1485.20  (a)(3)(vi) revised........................................29941
1485.21  Revised...................................................29941
    Corrected......................................................32041
1496  Authority citation revised...................................11104
1496.5  (b)(1) and (f) revised.....................................11104
1499.1  Amended....................................................59877
1499.7  (e) and (i) amended........................................59877
1499.8  (b)(4) and (c)(2) amended; interim..........................8837
    Regulation at 63 FR 8837 confirmed.............................59876
    (b) introductory text, (g) heading and (1) heading revised; 
(g)(1)(i), (iii)(A), (B), (C), (iv) and (vi) amended; (g)(1)(vii) 
redesignated as (g)(1)(viii); new (g)(1)(vii) and (ix) added.......59877

[[Page 769]]

1499.10  (d) added.................................................59877
1499.14  (b)(2) amended............................................59877
1499.15  Amended; (d)(2) and (f)(3) amended; (d)(2)(i) through 
        (vi) added.................................................59877
1499.16  (c)(1) introductory text and (2) introductory text 
        amended....................................................59878