[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2001 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          7
          Parts 700 to 899
          Revised as of January 1, 2001

          Agriculture





          Containing a codification of documents 
          of general applicability and future effect

          As of January 1, 2001

          With Ancillaries

          Published by:
          Office of the Federal Register
          National Archives and Records
          Administration

          A Special Edition of the Federal Register


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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2001


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                            Table of Contents



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

  Title 7:
    Subtitle B--Regulations of the Department of Agriculture 
      (Continued):
          Chapter VII--Farm Service Agency, Department of 
          Agriculture                                                5
          Chapter VIII--Grain Inspection, Packers and 
          Stockyard Administration (Federal Grain Inspection 
          Service), Department of Agriculture                      509
  Finding Aids:
      Material Approved for Incorporation by Reference........     661
      Table of CFR Titles and Chapters........................     663
      Alphabetical List of Agencies Appearing in the CFR......     681
      List of CFR Sections Affected...........................     691



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

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  7 CFR 700.1 refers 
                       to title 7, part 700, 
                       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, 2001), 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 
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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

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

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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

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

January 1, 2001.



[[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, 2001.

    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.

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

[[Page 1]]



                          TITLE 7--AGRICULTURE




                  (This book contains parts 700 to 899)

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

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

                                                                    Part

chapter vii--Farm Service Agency, Department of Agriculture.         700

chapter viii--Grain Inspection, Packers and Stockyard 
  Administration (Federal Grain Inspection Service), 
  Department of Agriculture.................................         800

[[Page 3]]

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

[[Page 5]]



                            CHAPTER VII--FARM
                SERVICE AGENCY, DEPARTMENT OF AGRICULTURE




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


  Editorial Note: 1. Nomenclature changes to chapter VII appear at 59 FR 
60299, Nov. 23, 1994, as corrected at 59 FR 66438, Dec. 27, 1994.

  2. Nomenclature changes to chapter VII appear at 60 FR 64297, Dec. 15, 
1995.

             SUBCHAPTER A--AGRICULTURAL CONSERVATION PROGRAM
Part                                                                Page
700             Experimental Rural Clean Water Program......           7
701             Conservation and environmental programs.....          21
702             Colorado River Basin Salinity (CRSC) Control 
                    Program.................................          40
707             Payments due persons who have died, 
                    disappeared, or have been declared 
                    incompetent.............................          49
708             Record retention requirements--all programs.          51
SUBCHAPTER B--FARM MARKETING QUOTAS, ACREAGE ALLOTMENTS, AND PRODUCTION 
                               ADJUSTMENT
711             Marketing quota review regulations..........          53
714             Refunds of penalties erroneously, illegally, 
                    or wrongfully collected.................          62
717             Holding of referenda........................          65
718             Provisions applicable to multiple programs..          78
723             Tobacco.....................................         101
729             Peanuts.....................................         182
                SUBCHAPTER C--REGULATIONS FOR WAREHOUSES
735             Cotton warehouses...........................         213
736             Grain warehouses............................         241
737             Tobacco warehouses..........................         268
738             Wool warehouses.............................         287
739             Dry bean warehouses.........................         303
740             Nut warehouses..............................         320
741             Sirup warehouses............................         339
742             Cottonseed warehouses.......................         356

[[Page 6]]

743             [Reserved]

                     SUBCHAPTER D--SPECIAL PROGRAMS
750             Soil Bank [Note]............................         377
752             Water Bank Program..........................         377
755             Regional programs...........................         384
759             Small hog operation payment program.........         392
760             Indemnity payment programs..................         396
761             General and administrative..................         403
762             Guaranteed farm loans.......................         404
773             Special Apple Loan Program..................         446
774             Emergency Loan for Seed Producers Program...         450
777             Disaster payment program for 1990 crop of 
                    sugarcane, sugar beets, soybeans and 
                    peanuts.................................         453
780             Appeal regulations..........................         456
781             Disclosure of foreign investment in 
                    agricultural land.......................         459
782             End-Use Certificate Program.................         465
783             1997 Tree Assistance Program................         471
784             Lamb Meat Adjustment Assistance Program.....         477
        SUBCHAPTER E--PROVISIONS COMMON TO MORE THAN ONE PROGRAM
792             Debt settlement policies and procedures.....         483
795             Payment limitation..........................         492
                      SUBCHAPTER F--PUBLIC RECORDS
798             Availability of information to the public...         499
                 SUBCHAPTER G--ENVIRONMENTAL PROTECTION
799             Environmental quality and related 
                    environmental concerns--compliance with 
                    the National Environmental Policy Act...         501

[[Page 7]]





             SUBCHAPTER A--AGRICULTURAL CONSERVATION PROGRAM



PART 700--EXPERIMENTAL RURAL CLEAN WATER PROGRAM--Table of Contents




                           Subpart A--General

Sec.
700.1  Purpose and scope.
700.2  Objective.
700.3  Administration.
700.4  Definitions.
700.5  Responsibilities.
700.6  Officials not precluded from exercising authority.

              Subpart B--Project Authorization and Funding

700.10  Applicability.
700.11  Availability of funds.
700.12  Eligible project areas.
700.13  Project applications.
700.14  Review and approval of project applications.
700.15  Transfer of funds.
700.16  Termination of project funding.

                 Subpart C--Participant's RCWP Contracts

700.20  Eligible land.
700.21  Eligible person (participant).
700.22  Application for assistance.
700.23  Water quality plan.
700.24  Cost-sharing.
700.25  RCWP contract.
700.26  Contract modifications.
700.27  Cost-share payment.
700.28  Appeals.
700.29  Contract violations.

                  Subpart D--Monitoring and Evaluation

700.40  General program monitoring and evaluation.
700.41  Comprehensive USDA/EPA joint project water, quality monitoring, 
          evaluation and analysis.
700.42  Program evaluation.
700.43  Public benefits when installing BMP's.

    Authority: Pub. L. 96-108, 93 Stat. 821, 835.

    Source: 45 FR 14009, Mar. 4, 1980, unless otherwise noted.



                           Subpart A--General



Sec. 700.1  Purpose and scope.

    (a) The purpose of this part is for the U.S. Department of 
Agriculture (USDA), with certain concurrences by the U.S. Environmental 
Protection Agency (EPA), to set forth regulations to carry out an 
experimental Rural Clean Water Program (RCWP) as authorized by the 
Agriculture, Rural Development and Related Agencies Appropriations Act, 
fiscal year 1980, Pub. L. 96-108 (hereinafter referred to as the ``1980 
Appropriations Act'') and subsequent appropriations.
    (b) The RCWP will provide financial and technical assistance to 
private land owners and operators (participants) having control of 
agricultural land. The assistance is provided through long-term 
contracts of 3 to 10 years to install best management practices (BMPs) 
in approved project areas which have critical water quality problems 
resulting from agricultural activities. The project area must reflect 
the water quality priority concerns developed through the established 
water quality management program process. Participation RCWP is 
voluntary.
    (c) This is a new USDA program using the experiences under various 
on-going USDA programs and the established water quality management 
program of EPA.

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]



Sec. 700.2  Objective.

    The objectives of the RCWP are to:
    (a) Improve impaired water use and quality in the approved project 
area in the most cost-effective manner possible in keeping with the 
provision of adequate supplies of food, fiber, and a quality 
environment.
    (b) Assist agricultural land owners and operators to reduce 
agricultural nonpoint source water pollutants and to improve water 
quality in rural areas to meet water quality standards or water quality 
goals.
    (c) Develop and test programs, policies and procedures for the 
control of agricultural nonpoint source pollution.

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]

[[Page 8]]



Sec. 700.3  Administration.

    At the national level, the Secretary of Agriculture will administer 
the RCWP in consultation with the Administrator, EPA, including EPA's 
concurrence in the selection of the BMPs, as provided in the 1980 
Appropriations Act and subsequent appropriations. Authority to approve 
projects is reserved to the Secretary. The Secretary of Agriculture 
hereby delegates responsibility for administration of the program to the 
Administrator, Farm Service Agency (FSA) and the coordination of 
technical assistance to the Chief, Soil Conservation Service (SCS). FSA 
will be assisted by other USDA agencies in accordance with existing 
authorities.
    (a) A National Rural Clean Water Coordinating Committee (NCC), 
chaired by the Administrator, FSA, will assist in carrying out the RCWP.
    (b) A State Rural Clean Water Coordinating Committee (SCC) will 
assist the State ASC Committee in administering the program. The State 
ASC Committee Chairperson will chair the SCC. Where two or more States 
are involved in a project area the Deputy Administrator, State and 
County Operations (DASCO), FSA, shall develop a coordinating process.
    (c) A Local Rural Clean Water Coordinating Committee (LCC) will be 
established to assure coordination at the project level. The LCC 
committee will be chaired by the County ASC Committee Chairperson and 
will assist the County ASC Committee as provided in these regulations 
and as otherwise developed by the SCC and the LCC. Where two or more 
counties are involved in a project area, the SCC shall develop a 
coordination process.

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981 59 
FR 60299, Nov. 23, 1994]



Sec. 700.4  Definitions.

    (a) Adequate Level of Participation. An adequate level of 
participation is reached when participants having control of 75 percent 
(unless a different level is approved by the Administrator, FSA, with 
the concurrence of the NCC), of the identified critical area(s) or 
source(s) of the agricultural nonpoint source pollution problem in the 
project area, are under contract.
    (b) Administrative Services. The administration of the RCWP except 
for the technical phases as assigned in Sec. 700.5 of these regulations.
    (c) Agricultural Land. That portion(s) of a farm or ranch used to 
produce: Grains, row crops, seed crops, vegetables, hay, pasture, 
orchards, vineyards, trees, field grown ornamentals, livestock or other 
agricultural commodities.
    (d) Agricultural Nonpoint Source Pollution. Pollution originating 
from diffuse sources, including, but not limited to, land areas and 
return flows from agricultural lands such as:
    (1) Animal waste areas and land used for livestock and/or crop 
production, or
    (2) Lands with silviculturally related pollution.
    (3) Concentrated animal feeding operations defined as point sources 
in 40 CFR 125.1 and 125.51, are not eligible for assistance under RCWP.
    (e) Applicant. A person in an approved project area who applies for 
RCWP assistance.
    (f) Average Cost. The calculated cost, determined by recent actual 
local costs and current cost estimates, considered necessary for 
carrying out BMPs or an identifiable unit thereof.
    (g) Best Management Practice (BMP). A single practice or a system of 
practices to improve water quality included in the approved RCWP 
application that reduces or prevents agricultural nonpoint source 
pollution.
    (h) BMP Costs. The amount of money actually paid or obligated to be 
paid by the participant for equipment use, materials and services for 
carrying out BMPs or an identifiable unit of a BMP. Loss of income from 
crops during the first twelve months following the conversion of 
productive cropland to permanent vegetative cover or trees may be 
considered a part of the BMP cost for a project where it is determined 
that harvesting or grazing restrictions are necessary in order to 
establish properly the practice and the reimbursement for loss of income 
is necessary to provide incentives to achieve an adequate level of 
participation as defined in 7 CFR 700.4(a). If the participant uses 
personal resources, the cost

[[Page 9]]

includes the computed value of personal labor, equipment use, and 
materials.
    (i) BMP Life Span. Each BMP shall have a life span of not less than 
5 years unless otherwise approved by the Administrator, FSA.
    (j) Conservation District (CD). A subdivision of a State or 
territory organized pursuant to the State Soil Conservation District 
Law, as amended. In some States these are called soil conservation 
districts, soil and water conservation districts, resource conservation 
districts, or natural resource districts.
    (k) Contract. The document that includes the water-quality plan and 
is executed by the participant and approved by the County ASC Committee. 
Such document evidences the agreement between parties for carrying out 
BMPs on the participant's land.
    (l) Contract Period. That period of time, 3 to 10 years, established 
as necessary to implement the BMPs needed to solve the water quality 
problems in the contract.
    (m) Cost-Share Level. That percentage of the total cost of 
installing a BMP which is to be borne by the government under the RCWP.
    (n) Cost Share Rate. The amount of money per unit (cubic yard, acre, 
etc.) to be paid for carrying out BMPs under the RCWP.
    (o) County ASC Committee. The County ASC Committee elected by the 
farmers/ranchers in the county as provided for under section 8(b) of the 
Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)).
    (p) Critical Areas or Sources. Those designated areas or sources of 
agricultural nonpoint source pollutants identified in the project area 
as having the most significant impact on the impaired use of the 
receiving waters.
    (q) Direct Costs. The costs that can be specifically identified with 
the program.
    (r) Farmer/Rancher. An owner and/or operator who has a vested 
interest in the operation of the farm or ranch.
    (s) Federal Funds Authorized. The total amount of funds authorized 
to approved projects.
    (t) Fiscal Year. The fiscal year beginning October 1 and ending 
September 30.
    (u) Identifiable Unit. A part of a BMP that can be clearly 
identified as a separate component in carrying out BMPs in the water 
quality plan.
    (v) Implementation. The act of carrying out or executing a water 
quality plan, including both installation and maintenance of BMPs.
    (w) Maximum Payment Limitation. The total amount of RCWP payments 
which a participant may receive for the full contract period. The total 
amount of such payments shall not exceed $50,000.
    (x) Offsite Benefits. Favorable effects of BMPs that occur away from 
the land of the participant receiving RCWP assistance and which accrue 
to the public.
    (y) Participant. A land owner and/or operator who is an agricultural 
producer and applies for and receives assistance under RCWP.
    (z) Participant's Water Quality Plan. The plan that identifies 
critical agricultural nonpoint sources of pollution, identifies water 
quality problems and schedules the application of BMPs which contribute 
to meeting the water quality objectives of the project.
    (aa) Plan of Work. A written strategy for implementing the approved 
project, outlining the actions needed and to be taken by various USDA, 
State and local agencies and interested groups.
    (bb) Pooling Agreement. An agreement between two or more 
participants or ranchers to pool their resources to treat a common 
critical area or source.
    (cc) Privately-Owned Rural Land. Lands not owned by Federal, State, 
or local governments that include cropland, pastureland, forest land, 
rangeland, and other associated lands.
    (dd) Project Area. The geographic determination included in the 
project application as agreed upon by the SCC and LCC, and approved by 
the Secretary, utilizing the water quality planning process which 
identifies agricultural nonpoint source water quality problems.
    (ee) Project Life Span. The maximum total life span of a project 
shall be not greater than fifteen (15) years from the date RCWP funds 
are first made available for the project.

[[Page 10]]

    (ff) RCWP Project. The total system of BMPs, administrative support, 
institutional arrangements, cost-sharing, technical and community 
support that are authorized in a RCWP project application.
    (gg) Secretary. The Secretary of the U.S. Department of Agriculture.
    (hh) Silvicultural. The science and art of cultivating (growing and 
tending) forest crops based on the knowledge of forestry. Silviculture-
related pollution is included as agriculture nonpoint source pollution 
in the RCWP.
    (ii) Standards and Specifications. Requirements that establish the 
minimum acceptable quality level for planning, designing, installing, 
and maintaining BMPs.
    (jj) State ASC Committee (STC). The State ASC Committee appointed by 
the Secretary in accordance with Section 8 b of the Soil Conservation 
and Domestic Allotment Act, as amended.
    (kk) Technical Assistance. The preparation of the participant's 
water quality plan, the design, layout and implementation of BMPs to 
accomplish the purposes of the water quality plan, and water quality 
monitoring and evaluation.
    (ll) Water Quality Management Program. A Federal-state-local program 
for addressing and solving point and non-point source pollution problems 
consistent with national clean water goals. The basic authority for this 
program is in section 208 of the Federal Water Pollution Control Act, as 
amended, (Pub. L. 92-500).

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]



Sec. 700.5  Responsibilities.

    (a) The United States Department of Agriculture (USDA) shall:
    (1) Administer the RCWP by entering into contracts with land owners 
and operators to install and maintain BMPs to control agricultural 
nonpoint source pollution for improved water quality and:
    (i) Consult with EPA in the selection of projects;
    (ii) Obtain concurrence from EPA in approval of BMPs; and
    (iii) Insure an adequate joint USDA/EPA monitoring and evaluation 
plan is carried out on selected projects.
    (2) Provide technical assistance and share the cost of carrying out 
BMPs as specified in the contracts.
    (3) Evaluate the overall effectiveness of the program in improving 
water quality.
    (b) The Environmental Protection Agency (EPA) will:
    (1) Participate on the NCC, SCC and LCC.
    (2) Furnish information from the water quality management planning 
process which can assist in identifying areas with the most critical 
water quality problems for project applications.
    (3) Participate in the approval of project applications for funding.
    (4) Concur with the Secretary on BMPs recommended by the County and 
State ASC Committees and approved by the Secretary for funding, or 
recommended by the Secretary, with concurrence of the Administrator, 
EPA, and approved by the State and County ASC Committees.
    (5) Assist USDA in evaluating the effectiveness of the program in 
improving water quality, including concurrence on projects selected for 
comprehensive monitoring and evaluation and development of the criteria 
for the comprehensive, joint USDA/EPA water quality monitoring, 
evaluation, and analysis program.
    (c) The Farm Service Agency shall:
    (1) Serve as chairperson of the NCC, SCC and LCC and be responsible 
for developing and administering the RCWP.
    (2) Provide to the Secretary those project applications recommended 
for approval, including the recommendations of the NCC.
    (3) Through County FSA Offices, provide the administrative support 
in all approved RCWP projects, such as accepting applications, preparing 
and approving contracts, carrying out funds control, issuing cost-share 
payments, otherwise administering contracts and payments, provide 
compliance oversight, maintain records and develop reports.
    (4) Enter into agreements with Federal, State and local agencies and 
others as needed for support to be provided in an approved RCWP project.

[[Page 11]]

    (5) Through County and Community ASC Committees work with landowners 
and operators in the project area to encourage participation.
    (6) Develop cost-share rates for installing needed BMPs.
    (7) Assure that RCWP is in addition to and is coordinated with other 
related programs.
    (8) Provide guidance to State and County ASC Committees and 
coordinate the Agricultural Conservation Program (ACP), the Forestry 
Incentives Program (FIP), and related conservation programs, with RCWP.
    (9) Allocate project funds to County ASC Committees in the approved 
project areas.
    (10) Designate the State ASC Chairperson where a project area 
involves a part(s) of two or more States to chair the SCC, for that 
project.
    (d) The Soil Conservation Service (SCS) shall:
    (1) Participate on the NCC, SCC and LCC.
    (2) Coordinate technical assistance and recommend appropriate agency 
or group to provide technical assistance on a project by project basis.
    (3) Provide technical assistance for the appropriate BMPs.
    (4) Assist the LCC in developing criteria for use by the County ASC 
Committees and the Conservation Districts in determining priorities of 
assistance among individual applicants for developing the water quality 
plan.
    (5) Provide technical assistance in developing and certifying the 
technical adequacy of the participant's water quality plan.
    (e) The Forest Service (FS) shall:
    (1) Participate on the NCC and as appropriate, SCC and LCC.
    (2) Have technical responsibility for forestry.
    (3) Provide technical assistance for appropriate BMPs, by providing 
technical assistance through the State Forestry Agency (State Forester 
as appropriate) for planning, applying and maintaining forestry BMPs.
    (4) Participate in the monitoring and evaluation as appropriate.
    (5) As appropriate, assist in developing the water quality plan to 
assure that the most critical water quality problems are addressed.
    (f) The Science and Education Administration (SEA), through the 
State and County Extension Services, Appropriate, shall:
    (1) Participate on the NCC, SCC and LCC.
    (2) Develop, implement, and coordinate informational and educational 
programs for agricultural nonpoint source water pollution control.
    (3) Encourage the State and County Extension Services to develop and 
carry out a comprehensive educational and informational program.
    (4) Provide technical assistance for appropriate BMPs including, but 
not limited to, fertilizer management, pest management, conservation 
tillage, and animal waste as appropriate.
    (g) The Economics and Statistics Service (ESS) shall:
    (1) Participate on the NCC and as appropriate, SCC and LCC.
    (2) Assist in the economic evaluation of RCWP projects and BMPs.
    (3) Make data available from existing and planned ESS surveys 
relating to water quality and related matters.
    (4) Conduct socioeconomic research, within ESS authorities and 
funds, on relevant policy and program issues pertinent to RCWP.
    (5) Assist in the annual program evaluation and be responsible for 
the economic component of the comprehensive evaluation of selected 
projects.
    (h) The Farmers Home Administration (FmHA) shall:
    (1) Participate on the NCC, SCC and LCC.
    (2) Provide assistance and coordinate their farm loan and grant 
programs with RCWP.
    (3) Assist in the annual program evaluation.
    (i) The National Rural Clean Water Coordinating Committee (NCC). The 
NCC is chaired by the Administrator, FSA. Other members of the National 
Committee are Director, Office of Environmental Quality, the 
Administrators of, FmHA, and ESS: the Chief of FS, SCS; the Director of 
SEA; and the Assistant Administrator for Water and Waste Management, 
EPA. Nonfederal agencies such as Conservation Districts, State soil and 
water conservation agencies, State water quality management agencies, 
and other organizations

[[Page 12]]

may attend as observers. The duties of the NCC are to:
    (1) Assist the Administrator, FSA, in developing the program 
regulations and procedures.
    (2) Recommend to the Administrator, FSA, the project applications to 
be approved.
    (3) Advise the Secretary on the maximum Federal contribution to the 
total cost of the project and establish the maximum cost-share levels of 
BMPs.
    (4) Assist in coordinating individual agency programs with the RCWP.
    (5) Make recommendations as appropriate on the technical aspects of 
the program.
    (6) Recommend project areas and criteria for comprehensive joint 
USDA/EPA water quality monitoring, evaluation, and analysis.
    (7) Annually review the plans of work and recommend changes in the 
projects.
    (8) Annually review the progress in each project and periodically 
advise the Secretary, the Under Secretary for International Affairs and 
Commodity Programs, and Assistant Secretary for Natural Resources and 
the Environment on program and policy issues.
    (j) The State Rural Clean Water Coordinating Committee (SCC). The 
SCC is chaired by the STC chairperson. Members include a representative 
of the agency members on the NCC or their designee. Other members are 
the State water quality agency having responsibility for the water 
quality management program, the State soil and water conservation 
agency, the State Director, Cooperative Extension Service, and others, 
including those recommended by the Governor, and approved by the 
Chairperson of SCC. Other State and local agencies, and organizations, 
or individuals may attend as observers. The duties of the committee are 
to:
    (1) Submit its recommendations for approval of project 
application(s) to the State ASC Committee for forwarding to the NCC, 
through the Administrator, FSA.
    (2) Insure that each project application referred to the state ASC 
committee includes a water quality monitoring plan which specifies the 
organization(s) responsible for general monitoring, including cost and 
budget breakdown by organization(s).
    (3) Assure coordination of activities at the project level by 
assisting in determining the composition and responsibilities of the 
LCC.
    (4) Assure adequate public participation, including public 
meeting(s), and appropriate environmental evaluation in the preparation 
of RCWP applications.
    (5) Provide oversight for the RCWP in the State and to assist USDA 
and EPA in their comprehensive, joint water quality monitoring and 
evaluation of selected project areas, including coordination with the 
LCC.
    (6) Develop procedures for coordination between the RCWP and other 
water quality programs.
    (7) Assist the State ASC Committee in developing the membership of 
the LCC. For multi county projects, there will be one LCC.
    (8) Annually review and approve the plan(s) of work and changes 
proposed by the LCC and forward a copy to the NCC through the 
administrator, FSA.
    (k) The Local Rural Clean Water Coordinating Committee (LCC). The 
LCC is chaired by the County ASC Committee Chairperson. Other members 
include a representative of the agency members on the NCC, or their 
designee, where applicable, and a representative of the soil and water 
conservation district, the designated water quality management agency, 
State forestry agency, the Director, County Extension Service, and 
others recommended by the LCC and approved by the STC. (Where more than 
one county is in a project area only one LCC will be established in the 
project area.) The duties of the committee are to ensure that a process 
exists and actions are taken to implement any approved project. The 
duties will include, among others which may be outlined by the SCC, the 
following:
    (1) Assure an adequate level of public participation in implementing 
the project.
    (2) Provide project coordination, including development of the plan 
of work for implementing the approved project using various USDA 
agencies, local agencies and interested groups.
    (i) Enlist resources from other agencies and local groups.

[[Page 13]]

    (ii) Conduct informational and educational activities relating to 
the project.
    (iii) Develop criteria with the SCC for use by the County ASC 
Committee and the soil conservation district to establish priorities 
among individual applications for developing water quality plans.
    (iv) Assure the development of an adequate plan for project 
monitoring and evaluation.
    (3) Consult with SCC for coordination with USDA State officials, 
State water quality official, and EPA regional representatives to 
develop criteria for project plan of work and project coordination.
    (4) Review the project Plan of Work annually and recommend changes 
in the approved project to the SCC.
    (l) State ASC Committee shall:
    (1) Provide the chairperson for the SCC and be responsible for 
administration of the RCWP project(s) in the State.
    (2) Submit those project applications recommended by the SCC to the 
Administrator, FSA.
    (3) Provide overall administrative support for the RCWP through the 
County ASC Committee(s).
    (4) Designate a County ASC Committee Chairperson to serve as 
Chairperson of the LCC in multi-county projects.
    (5) Approve the BMPs for inclusion in project applications.
    (6) Be responsible for all other administrative functions as 
provided in these regulations.
    (m) The Governor of each State, at the Governor's option, may:
    (1) Recommend to the SCC Chairperson appropriate additional 
individuals for membership on the SCC.
    (2) Furnish to the SCC a listing of the water quality priority areas 
in the State which are to be used by the SCCs and LCCs in considering 
and developing project applications.
    (n) the State soil and water conservation agency will:
    (1) Participate on the SCC.
    (2) Assist in preparing and submitting RCWP project applications.
    (3) Carry out responsibilities of soil conservation districts, 
including participation on the LCC, where no soil conservation district 
exists.
    (o) The State water quality agency will:
    (1) Participate on the SCC.
    (2) Provide expertise in preparing RCWP project applications.
    (3) Assist in monitoring and evaluating the effectiveness of the 
water quality projects.
    (p) The County ASC Committee shall:
    (1) Be responsible for administration of the RCWP at the local 
level.
    (2) Provide the chairperson of the LCC.
    (3) Provide overall administrative support for the RCWP approved 
project through the FSA County Office, including accepting applications, 
administering the contracts and making payments and preparing reports.
    (4) Recommend approval of BMP's.
    (5) Together with the Soil Conservation District, determine the 
priority for technical assistance among individual applicants for water 
quality plans bases on criteria developed by the LCC to assure that the 
most critical water quality problems are addressed.
    (6) Establish the recommended cost share level for BMP's in the RCWP 
project applications in consultation with the LCC.
    (7) Utilize the Community ASC Committee(s) and LCC in encouraging 
farmers in the project area to install needed BMPs on the priority basis 
developed by the LCC.
    (8) Be responsible for developing, and annually reviewing, and 
carrying out the plan of work for the approved project.
    (q) The Soil Conservation District will:
    (1) Participate on the LCC.
    (2) Assist in the preparation and submission of applications for the 
RCWP.
    (3) Assist in the promotion of the approved RCWP project.
    (4) Together with the County ASC Committee, determine the priority 
of technical assistance among individual applicants for water quality 
plans based on criteria developed by the LCC to assure that the most 
critical water quality problems are addressed.

[[Page 14]]

    (5) Approve applicants' water quality plans and revisions.

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981; 59 
FR 60299, Nov. 23, 1994]



Sec. 700.6  Officials not precluded from exercising authority.

    Nothing in these regulations shall preclude the Secretary; 
Administrator, FSA; NCC; or Deputy Administrator, State and County 
Operations, FSA; from administering any or all phases of the RCWP 
programs delegated to the LCC, County ASC Committee, SCC, State ASC 
Committee or any employee(s) where the committee or employee fails to 
perform a function required in these regulations. In exercising this 
authority either the Secretary, Administrator, FSA, or Deputy 
Administrator, FSA, may delegate a person or persons to be in charge 
with full authority to carry out the program or other function(s) 
without regard to the LCC, ASC committee(s), or employee(s) for such 
period of time as is deemed necessary.

[59 FR 60299, Nov. 23, 1994]



              Subpart B--Project Authorization and Funding



Sec. 700.10  Applicability.

    The RCWP is applicable in project areas that meet the criteria for 
eligibility contained in Sec. 700.12 and are authorized for funding by 
the Secretary.



Sec. 700.11  Availability of funds.

    (a) The allocation of funds to the County ASC Committee(s) in a 
project area is to be made on the basis of the total funds needed to 
carry out the approved project.
    (b) The obligation of Federal funds for RCWP contracts with 
participants is to be made on the basis of the total contract costs.



Sec. 700.12  Eligible project areas.

    (a) Only those project areas which reflect the water quality 
priority concerns developed through the established water quality 
management program planning process and have identified agricultural 
nonpoint source water quality problems are eligible for authorization 
under RCWP. Only those critical areas or sources of pollutants 
significantly contributing to the water quality problems are eligible 
for financial and technical assistance.
    (b) An RCWP project area is a hydrologically related land area. 
Exceptions may be made for ease of administration, or to focus on 
concentrated critical areas. To be designated as an RCWP project area 
eligible for authorization, the area's water quality problems must be 
related to agricultural nonpoint source pollutants, including but not 
limited to, sediment, animal waste, irrigation return flows, runoff, or 
leachate that contain high concentrations of nitrogen, phosphorus, 
dissolved solids, toxics (pesticides and heavy metals), or high pathogen 
levels.



Sec. 700.13  Project applications.

    Existing and subsequent project applications submitted for 
consideration must contain adequate information on each item specified 
in Sec. 700.14. Instructions on such information requirements will be 
issued by the Administrator, FSA. Opportunity will be provided prior to 
final approval of a project for the LCC and the SCC, in consultation 
with the Govenor, through the applicable County and State ASC 
Committees, for modification necessary to bring them into conformance 
with the provisions of these regulations.



Sec. 700.14  Review and approval of project applications.

    (a) In reviewing applications and recommending priorities, the NCC 
will consider the following:
    (1) Severity of the water quality problem caused by agricultural and 
silvicultural related pollutants, including:
    (i) State designated uses of the water affected.
    (ii) Kinds, sources, and effects of pollutants.
    (iii) Miles of stream or acres of water bodies affected, extent of 
groundwater contamination.
    (2) Demonstration of public benefits from the project, including:
    (i) Effects on human health.

[[Page 15]]

    (ii) Population benefited by improved water quality.
    (iii) Effects on the natural environment.
    (iv) Additional beneficial uses of the waters that result from 
improvement of the water quality.
    (3) Economic, and technical feasibility to control water quality 
problems within the life of the project, including:
    (i) Size of the area and extent of BMPs needed.
    (ii) Cost per participant and cost per acre or source for solution 
of problem.
    (iii) Cost effectiveness of BMPs.
    (iv) Adequacy of planned actions to meet the project's objectives.
    (4) Suitability of the project for the experimental RCWP in the 
testing of programs, policies and procedures for the control of 
agricultural non-point source pollution, including:
    (i) A project representative of a geographic area with significant 
water quality problems.
    (ii) The potential of the project for monitoring and evaluation, 
including existing base line data.
    (5) State, local and other input in the project area, including:
    (i) Funds for cost-sharing general monitoring and technical 
assistance.
    (ii) Commitment of local leadership to promote the program.
    (iii) Commitment of farmers and ranchers to participate in RCWP.
    (6) The project's contribution to meeting the national water quality 
goals taking into consideration of other major sources of pollutants 
which affect the water quality in or near the project area.
    (b) Based on the project application, the NCC is to recommend an 
upper limit of the Federal contribution to the total cost of the 
project. This includes both BMP cost-share and technical assistance 
costs.
    (c) All project applications will be reviewed by EPA. BMPs approval 
for funding require EPA concurrence, except that the Secretary may 
assume EPA's concurrence, if EPA does not act within 15 days following 
receipt of the request for concurrence.
    (d) The Secretary will approve proj- ects for funding taking into 
consideration the recommendations of the NCC and consultation with EPA. 
The Chairperson, State ASC Committee, through the SCC, will assure that 
involved Federal, State, and local agencies are informed of the project 
approval.



Sec. 700.15  Transfer of funds.

    (a) Upon approval of a project, the Administrator, FSA, will 
transfer funds to the State(s) ASC Committee for funding the project. 
The State committee will transfer funds to the County ASC Committee(s) 
for the county or counties in an approved project.
    (b) FSA will transfer funds to the applicable agency or organization 
providing specific technical assistance and/or expanded information and 
education. The transfer will be made on a project by project basis.

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]



Sec. 700.16  Termination of project funding.

    (a) Based on evidence of failure to accomplish the approved project 
objectives, including inadequate level of participation, the 
Administrator, FSA, may issue a termination notice after conferring with 
the Administrator, EPA, and the NCC.
    (b) The State ASC Committee shall give 10-day written notice to the 
applicable County ASC Committee of intent to terminate project funding. 
The termination shall establish the effective date of termination and 
the date for return of funds.
    (c) After receipt of a project termination, the County ASC Committee 
shall not make any new commitments or enter into any new RCWP contracts. 
Those contracts in force at the time of project termination will remain 
in force until completed.



                 Subpart C--Participant's RCWP Contracts



Sec. 700.20  Eligible land.

    RCWP is only applicable to privately owned agricultural lands in 
approved project areas. Indian tribal lands and lands owned by 
irrigation districts are eligible lands.

[[Page 16]]



Sec. 700.21  Eligible person (participant).

    (a) Any land owner or operator whose land or activities in a project 
area is contributing to the area's agricultural nonpoint source water 
quality problems and who has an approved water quality plan is eligible 
to enter into an RCWP contract. For the purpose of this section, an 
eligible person is an individual, partnership, corporation (except 
corporations whose stock is publicly traded), Indian tribe, irrigation 
district or other entity.
    (b) Federal, State or local governments, or subdivisions thereof 
(except irrigation districts), are not considered as an eligible person 
for RCWP contracts.
    (c) This program will be conducted in compliance with all 
requirements respecting nondiscrimination as contained in the Civil 
Rights Act of 1964 and amendments thereto and the Regulations of the 
Secretary of Agriculture (7 CFR 15.1 through 15.12)

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]



Sec. 700.22  Application for assistance.

    (a) Land owners or operators in an approved project area must apply 
for RCWP assistance through the office of the County ASC Committee(s) by 
completing the prescribed application form.
    (b) The priority for developing water quality plans among applicants 
is to be determined by the County ASC Committee and the soil 
conservation district based on the criteria developed by the LCC in 
consultation with the SCC, with technical assistance from SCS.



Sec. 700.23  Water quality plan.

    (a) The participant's water quality plan, developed with technical 
assistance and certification by the SCS or its designee and approved by 
the CD, is to include appropriate approved BMPs. Such BMPs must reduce 
the amount of pollutants that enter a stream, aquifer, or lake by:
    (1) Methods such as reducing the application rates or changing the 
application methods or potential pollutants.
    (2) Methods such as practices or combinations of practices which 
prevent potential pollutants from leaving source areas or reduce the 
amount of potential pollutants that reach a stream or lake after leaving 
a source area.
    (b) Participants' water quality plans shall include BMPs for the 
treatment of all critical areas or sources on the farm on that land 
within the project area regardless of eligibility for cost-sharing with 
RCWP funds. Management type BMPs which are not cost-shared but for which 
technical advice will be given project participants shall be listed in 
the plan. A water quality plan is not required for that portion of a 
farm that does not include a critical area or source.
    (c) The participant is responsible for compliance with all 
applicable Federal, State, and local laws including those relating to 
the environment, in installing BMPs to solve the nonpoint source water 
quality problems.
    (d) Time schedules for implementing BMPs are to be provided in the 
participant's water quality plan.
    (e) The SCS or its designee shall make an annual status review to 
assure the technical adequacy of the implementation of the water quality 
plan.



Sec. 700.24  Cost-sharing.

    (a) The maximum cost-share for each project will be approved by the 
Secretary, taking into consideration the recommendation of the NCC. The 
Federal cost-share for each BMP shall not exceed 75 percent of the cost 
of carrying out the practice unless otherwise approved by the 
Administrator, FSA.
    (b) The combined cost-sharing by Federal, State, or Subdivision 
thereof shall not exceed 100% of the cost of carrying out the BMP.
    (c) The County ASC Committee(s) in consultation with the LCC will 
annually set maximum individual BMP cost-share rates for the project 
area.
    (d) BMPs to be cost shared must have a positive effect on water 
quality.
    (e) Cost sharing is not to be made available for measures installed 
primarily for:
    (1) Bringing additional land into crop production.
    (2) Increasing production on existing crop land.
    (3) Flood protection.

[[Page 17]]

    (4) Structural measures authorized for installation under Pub. L. 
83-566, Watershed Protection and Flood Prevention Act.

[45 FR 14009, Mar. 4, 1980, as amended at 46 FR 29454, June 2, 1981]



Sec. 700.25  RCWP contract.

    (a) In order to participate in the RCWP, each landowner, operator, 
or person who controls or shares in the control of a tract of land on 
which one or more of the BMP's will be performed must execute the RCWP 
contract in which they agree to carry out the water quality plan.
    (b) The participant must furnish satisfactory evidence of his or her 
control of the tract of land on which one or more of the BMP's will be 
performed.
    (c) Cost-sharing payments cannot be provided for any measure that is 
initiated before the contract is approved by the County ASC Committee.
    (d) RCWP contracts shall include the basic contract document, the 
participant's water-quality plan, schedule of operations, and special 
provisions as needed.
    (e) Technical assistance will be provided to participants to develop 
the water quality plan and to install BMPs.
    (f) SCS or its designee shall approve the technical adequacy of the 
Water Quality Plan.
    (g) Participants shall install BMPs according to the specifications 
that are applicable at the time the contract is signed or the measures 
are installed.
    (h) The contract period is to be not less than 3 and not more than 
10 years. A contract is to extend for at least 1 year after the 
application of the last cost-shared BMPs. All contract items are to be 
accomplished prior to contract expiration.
    (i) BMPs are to be maintained by the participant at no cost to the 
RCWP.
    (j) All BMPs in the water-quality plan shall be maintained for the 
established life span of the BMP.
    (k) The County ASC Committee in consultation with the LCC shall 
establish a BMP life span for each BMP offered in the approved project 
area. Each BMP cost-shared shall have a life span of at least 5 years, 
unless otherwise approved by the Administrator, FSA.
    (l) A participant may enter into a pooling agreement with other 
participants to solve mutual water quality problems.
    (m) Participants are responsible for:
    (1) Accomplishing the water quality plan.
    (2) Obtaining and maintaining any required permits and easements 
necessary to perform the planned work.
    (3) Applying or arranging for the application of BMPs, as scheduled 
in the plan, according to approved standards and specifications.
    (4) The operation and maintenance of BMPs installed during the 
contract period.
    (5) Obtaining the authorities, rights, easements, or other approvals 
necessary to maintain BMPs in keeping with applicable laws and 
regulations.
    (n) Unless otherwise approved by the NCC, the County ASC Committees 
shall not enter into any new RCWP contracts after five (5) years from 
the date when RCWP funds are first made available to the project.

(Pub. L. 96-108, 98 Stat. 821, 835 and Pub. L. 96-528, 94 Stat. 3095, 
3111)

[45 FR 14009, Mar. 4, 1980, as amended at 48 FR 42803, Sept. 20, 1983]



Sec. 700.26  Contract modifications.

    (a) The County ASC Committee by mutual agreement with the landowner 
or operator, may modify contracts previously entered into if it is 
determined to be desirable to carry out the purposes of the program, 
facilitate the practical administration thereof, or to accomplish 
equitable treatment with respect to other conservation, land-use, and/or 
water quality programs.
    (b) Requirements of active contracts may be modified by the County 
ASC Committee only if such modifications are specifically provided for 
in these regulations. The concurrence of SCS or its designee and the CD 
are necessary when modifications involve a technical aspect of the 
participant's water quality plan. A contract may be modified only if it 
is determined that such modifications are desirable to carry out 
purposes of the program or to facilitate the program's practical 
administration.

[[Page 18]]

    (c) Contracts may be modified when the participants add or delete 
land to the farm.
    (d) Contracts may be modified to add, delete, or substitute BMPs 
when:
    (1) The installed measure failed to achieve the desired results 
through no fault of the participant.
    (2) The installed measure deteriorated because of conditions beyond 
the control of the participant.
    (3) Another BMP will achieve the desired results.
    (4) The extent of the BMP is changed.
    (e) Contract modifications are not required when items of work are 
accomplished prior to scheduled completion or within 1 year following 
the year of scheduled completion. Other time schedule revisions will 
require modification.
    (f) If, during the contract period, all or part of the right and 
interest in the land is transferred by sale or other transfer action, 
the contract is terminated on that portion of the contract, the 
participant:
    (1) Forfeits all right to any future cost-share payments on the 
transferred portion.
    (2) Must refund all cost-share payments that have been made on the 
transferred land unit unless the new land owner or operator becomes a 
party to the contract, except the payment may be retained where it is 
determined by the County ASC Committee after consultation with the 
technical agency and the CD, that the established BMPs will provide 
water quality benefits for the designed life of the BMP.
    (g) If the new land owner or operator becomes a party to the 
contract:
    (1) Payment which has been earned, may be made to the participant 
who applied the BMPs and had control prior to the transfer.
    (2) The new land owner or operator is to assume all obligations of 
the previous participant with respect to the transferred land.
    (3) The contract with the new participant is to remain in effect 
with the original terms and conditions, except that;
    (4) The original contract is to be modified in writing to show the 
changes caused by the transfer. If the modification is not acceptable to 
the County ASC Committee, the provisions of paragraphs (f)(1) and (2) of 
this section apply.



Sec. 700.27  Cost-share payment.

    (a) General. Participants are to obtain or contract for materials or 
services as needed to install BMPs. Federal cost-share payments are to 
be made by the County ASC Committee upon certification by the District 
Conservationist, SCS, or designee, that the BMPs, or an identifiable 
unit thereof, have been properly carried out and meet the appropriate 
standards and specifications.
    (b) Payment maximum. The maximum RCWP cost-share payment to a 
participant shall be limited to $50,000.
    (c) Basis for cost-share payment. (1) Cost-share payments are to be 
made by the County ASC Committee at the cost-share percentage specified 
in the project approval notice and by one of the following methods as 
set out in the contract:
    (i) Average cost; or
    (ii) Actual cost but not to exceed the average cost.
    (2) If the average cost at the time of starting the installation of 
a BMP or identifiable unit is less than the costs specified in the 
contract, payment is to be at the lower rate. If the costs at the start 
of installation are higher, payment may be made at the higher rate. A 
modification will be necessary if the higher cost results in a 
significant increase in the total cost-share obligation. Cost-share 
payment is not to be made until the modification reflecting the increase 
is approved.
    (d) Average cost development. Average costs are to be developed by 
the County ASC Committee for each project using cost data from the local 
area. These costs shall be reviewed by the SCC for consistency with 
average costs in other USDA programs. These average costs shall be 
updated annually by the County ASC Committee in consultation with the 
LCC.
    (e) Application for payment. Cost-share payments shall be made by 
the County ASC Committee after a participant has completed a BMP or an 
identifiable unit of a BMP and it is determined to

[[Page 19]]

meet standards and specifications. Application for payment must be 
submitted to the County ASC Committee, on the prescribed form and be 
supported by such cost receipts as are required by the County ASC 
Committee. It is the participant's responsibility to apply for payments.
    (f) Authorizations for payments to suppliers. (1) The contract may 
authorize that part or all of the Federal cost share for a BMP or an 
identifiable unit be made directly to suppliers of materials or 
services. The materials or services must be delivered or performed 
before payment is made.
    (2) Federal cost shares will not be in excess of the cost share 
attributable to the material or service used or not in excess of the 
cost share for all identifiable units as may be requested by the 
participant.
    (g) Material inspection and analysis. When authorizations for 
payments to suppliers are specified, the County ASC Committee, its 
representatives, or the Federal Government reserve the right to inspect, 
sample, and analyze materials or services prior to their use.
    (h) Assignments, set-offs, and claims. (1) Any person who may be 
entitled to any cost-share may assign rights thereto in accordance with 
regulations governing the assignments of payments. (31 U.S.C. 203, as 
amended, and 41 U.S.C. 15, as amended.)
    (2) If any participant to whom compensation is payable under RCWP is 
indebted to the United States and such indebtedness is listed on the 
county register of indebtedness maintained by the County ASC Committee, 
the compensation due the participant must be used (set-off) to reduce 
that indebtedness. Indebtedness to USDA is to be given first 
consideration. Setoffs made pursuant to this section are not to deprive 
the participant of any right to contest the justness of the indebtedness 
involved. (See 7 CFR part 13.)
    (3) Any cost-share payment due any participant shall be allowed 
without deduction of claims for advances except as provided for above 
and without regard to any claim or lien against any crop, or proceeds 
thereof, in favor of the participant or any other creditor.
    (i) Access to land unit and records. The County ASC Committee, the 
agency providing technical assistance or representatives thereof, shall 
have the right of access at reasonable times to land under application 
or contract, and the right to examine any program records to ascertain 
the accuracy of any representations made in the applications or 
contract.
    (j) Suspension of payments. No cost-share payments will be made 
pending a decision on whether or not a contract violation has occurred.
    (k) Ineligible payments. The filing of requests for payment for BMPs 
not carried out, or for BMPs carried out in such a manner that they do 
not meet the contract specifications, constitutes a violation of the 
contract.



Sec. 700.28  Appeals.

    (a) The applicant may, prior to execution of the contract, request 
that the County ASC Committee review or reconsider administrative 
criteria being used in developing his or her contract.
    (1) The applicant shall make a written request to the County ASC 
Committee setting forth the basis for the appeal.
    (2) The County ASC Committee shall have 30 days in which to make a 
decision and notify the applicant in writing.
    (3) The decision of the County ASC Committee may be appealed to the 
State ASC Committee.
    (4) The State ASC Committee decision shall be final.
    (b) The applicant/participant may request and receive a review by 
the SCS State Conservationist of criteria used in developing the water 
quality plan or BMP specifications.
    (c) After the contract has been executed, the participant may 
request and receive a review of administrative procedures under the FSA 
appeals procedures set out in 7 CFR part 780.



Sec. 700.29  Contract violations.

    (a) The following actions constitute a violation of the RCWP 
contract by a participant:
    (1) Knowingly or negligently damaging or causing BMPs to become 
impaired.
    (2) Failing to comply with the terms of the contract.
    (3) Filing a false claim.

[[Page 20]]

    (4) Misusing conservation materials or services.
    (5) Adopting a land use or practice during the contract period which 
tends to defeat the purposes of the program.
    (b) Contract termination as a result of violations. (1) The 
participant agrees to forfeit all rights to further cost-sharing 
payments under a contract and to refund all cost-share payments received 
if the County ASC Committee with the concurrence of the State ASC 
Committee, determines that:
    (i) There was a violation of the contract during the time the 
participant had control of the land.
    (ii) The violation was of such a nature as to warrant termination of 
the contract.
    (2) The participant shall be obligated to refund all cost-share 
payments, including those paid to vendors for materials and services.
    (c) Payment adjustments and refunds resulting from violations. (1) 
The participant agrees to refund cost-share payments received under the 
contract or to accept payment adjustments if the County ASC Committee 
determines and the State ASC Committee concurs that:
    (i) There was a violation of the contract during the time the 
participant had control of the land.
    (ii) The nature of the violation does not warrant termination of the 
contract.
    (2) Payment adjustments may include decreasing the rate of the cost 
share, or deleting from the contract a cost-share commitment, or 
withholding cost-share payments earned but not paid. The participant who 
signs the contract may be obligated to refund cost-share payments.



                  Subpart D--Monitoring and Evaluation



Sec. 700.40  General program monitoring and evaluation.

    (a) Requirement. All approved RCWP projects will be monitored in 
sufficient detail to determine BMP application progress and to generally 
document water quality improvement trends through the life of the 
project. This will include, among others, data on BMP installation 
progress, payments made, refunds and periodic water quality monitoring 
for addressing short and long-term trends in water quality.
    (b) Monitoring Report. A water quality monitoring report will be 
submitted as a part of the annual progress report. The initial report 
will include:
    (1) A description of water quality monitoring strategy for the area.
    (2) Data collection schedule.
    (3) Parameters being monitored (and baseline values).
    (4) Collection and analytical methods.
    (5) A summary of existing data and trends.

Subsequent reports will update the initial data and report any 
significant changes in water quality land use.
    (c) Program Monitoring Funding. The project application and the 
proposed monitoring plan are to include an estimate of the local and 
State financial and technical support. General monitoring will not be 
financed with RCWP funds.



Sec. 700.41  Comprehensive USDA/EPA joint project water quality monitoring, evaluation, and analysis.

    (a) Requirement. The Secretary and Administrator, EPA will jointly 
select a limited number of projects to be comprehensively monitored and 
evaluated from a list of projects recommended by the NCC. The NCC will 
develop criteria for selecting the project areas.
    (b) Project Selection. The NCC will recommend projects for this 
comprehensive program. The project areas are to be representative of the 
agricultural and silvicultural nonpoint source pollution problems.
    (c) Plan Development. After a project is selected for the 
comprehensive monitoring and evaluation, the SCC is to submit within 90 
days, a plan for USDA-EPA review and approval. USDA and EPA will have 30 
days for the plan review and approval process.
    (d) Plan Requirements. In general, the comprehensive monitoring plan 
will address and include the following:
    (1) Objective. Define the purpose and scope of the monitoring 
program and establish clear objectives for each activity proposed.
    (2) Monitoring Strategy. Define the basic hydrological and 
meteorological

[[Page 21]]

factors within the proposed RCWP project area and identify the strategy 
and parameters to be used to identify the changes in water quality 
attributable to the installation of BMPs. Wherever possible, identify 
and quantify changes in land use, land use patterns and farming 
practices that will affect the quantity, quality or timing of nonpoint 
source pollutants reaching an aquatic system and detail information as 
to number and location of sampling stations and the frequency of sample 
collection.
    (3) Socioeconomic Impacts. Identify the positive and negative 
impacts on the landowners in the project area and estimate the community 
or off-site benefits expected of the project if completed as planned.
    (4) Institutional Aspects. Identify and clearly define the role and 
responsibility for each participating agency including, where 
appropriate fiscal and manpower commitments.
    (5) Educational Aspects. Clearly define the approache(s) to be used 
to inform and educate individual landowners. Include procedures for 
periodic evaluation of this effort so the mid-course corrections can be 
made if needed.
    (6) Quality Assurance. To insure that the data collected is usable 
to make National projections, a quality assurance program must be 
included that is consistent with that of the EPA Region within which the 
project is located.
    (7) Data Storage. The data collected on comprehensive monitoring 
projects must be available to USDA and EPA RCWP user groups.
    (e) Reporting. Reports for these projects are to be made at least 
annually to the NCC based on guidance sent to the SCC by the 
Administrator, FSA.
    (f) Funding. Funding for the comprehensive monitoring will be 
provided from RCWP funds and other authorizations.



Sec. 700.42  Program evaluation.

    (a) The RCWP will be evaluated annually by the USDA. The evaluation 
will be based on the reports provided in these regulations and on 
special studies undertaken by USDA or EPA as part of the RCWP program.
    (b) The USDA Deputy Under Secretary for International Affairs and 
Commodity Program will have the responsibility for coordinating the 
program evaluation and preparing an annual report for transmittal to the 
Secretary of Agriculture and the Administrator of EPA. The Deputy 
Assistant Secretary for Natural Resources and the Director of Economics, 
Policy Analysis and Budget, USDA, and the Assistant Administrator for 
Water and Waste Management, EPA will assist in this effort.



Sec. 700.43  Public benefits when installing BMP's.

    All BPM's implemented under this program shall be in compliance with 
regulations promulgated under part 799 on environmental quality and 
related environmental concerns or similar regulations issued by a 
technical agency. Persons responsible for any aspect of performing BMPs 
shall carry out their responsibilities in such a way as to promote 
public benefits:
    (a) By improving or preserving environmental quality and ecological 
balance.
    (b) By preventing or abating pollution and other environmental 
degradation.
    (c) Benefiting the community by means such as preserving open space 
or enhancing the appearance of the area.
    (d) Benefiting wildlife and other desirable life forms.
    (e) Preserving historic, archaeological, or scenic sites, wetlands, 
ecologically critical areas and prime farmland.
    (f) Avoiding the creation of hazards to persons or animals.
    (g) Avoiding actions that may adversely affect an endangered or 
threatened species and flood plains.



PART 701--CONSERVATION AND ENVIRONMENTAL PROGRAMS--Table of Contents




Sec.
701.1  Background.
701.2  Definitions.

               Subpart--Agricultural Conservation Program

701.3  Program objective.
701.4  State funds.
701.5  County funds.
701.6  Availability of funds.

[[Page 22]]

701.7  Eligible person.
701.8  Eligible land.
701.9  Conservation practices.
701.10  County programs.
701.11  State programs.
701.12  Selection of practices.
701.13  Levels and rates of cost-sharing.
701.14  Starting of practices.
701.15  Method of approval.
701.16  Long-term agreements.
701.17  Replacement, enlargement, or restoration.
701.18  Pooling agreements.
701.19  Special provisions for low-income farmers and ranchers.
701.20  Encumbering land.
701.21-701.22  [Reserved]
701.23  Maximum cost-share limitation.
701.24  Completion of practices.
701.25  Time of filing payment application.
701.26  Other program provisions.

                  Subpart--Forestry Incentives Program

701.27  Program objective.
701.28  [Reserved]
701.29  Designated counties.
701.30  Eligible person, land, and ownerships.
701.31  Program funds.
701.32  Eligible practices and cost-share requirements.
701.33  The National program.
701.34  Development of State programs.
701.35  Development of county programs.
701.36  Adaptation of practices.
701.37  Levels and rates of cost-sharing.
701.38  Prior approval for cost-sharing.
701.39  Methods of approval.
701.40  Long-term agreements.
701.41  Restoration of practices.
701.42  Maximum cost-share limitations.
701.43  Completion of practice.
701.44  Time of filing payment application.
701.45  Other program provisions.

                 Subpart--Emergency Conservation Program

701.46  Program objective.
701.47  Program availability.
701.48  Eligibility of person and land.
701.49  Emergency conservation program practices.
701.50  Practice approval.
701.51  Extent of cost-sharing.
701.52  Eligible costs.
701.53  Filing requests.
701.54  Approving requests.
701.55  Pooling agreements.
701.56  Payment approval.
701.57  Other program provisions.

                       Subpart--General Provisions

701.58  Restriction on program eligibility.
701.59  Delegation of authority.
701.60  Practice specifications.
701.61  Responsibility for technical phases of practices.
701.62  Items of cost on which rates of cost-sharing may be based.
701.63  Handbook, bulletins, instructions, and forms.
701.64  Opportunity for requesting cost-shares.
701.65  Repair, upkeep and maintenance of practices.
701.66  Public benefits when installing practices.
701.67  Payments for uncompleted practices.
701.68  Practices involving the establishment or improvement of 
          vegetative cover.
701.69  Failure to meet minimum requirements or failure to comply fully 
          with program provisions.
701.70  Practices carried out with aid from ineligible persons.
701.71  Division of cost-shares.
701.72  Death, incompetency, or disappearance.
701.73  Applying cost-share limitations.
701.74  Persons eligible to file application for payment of cost-shares.
701.75  Time and manner of filing application and required information.
701.76  Appeals.
701.77  Performance based on advice or action of county or State 
          committee.
701.78  Compliance with regulatory measures.
701.79  Maintenance and use of practice.
701.80  Actions defeating purpose of program.
701.81  Depriving others of cost-shares.
701.82  Filing of false claims.
701.83  Cost-shares not subject to claims.
701.84  Assignments.
701.85  Environmental considerations.
701.86  Information collection requirements.

    Authority: 16 U.S.C. 590d, 590g-590o, 590p(a), 590q, 1501-1510, 
1606, 2101-2111, 2201-2205; 48 U.S.C. 1469d(c).

    Source: 45 FR 49522, July 25, 1980, unless otherwise noted.



Sec. 701.1  Background.

    (a) Through the conservation and environmental programs administered 
by the Department of Agriculture, the Federal Government will share with 
farmers, ranchers, and other eligible private landowners in the United 
States and the applicable territories and possessions of the United 
States, the cost of carrying out:
    (1) Approved soil and water conservation and pollution abatement 
practices, including related wildlife conservation practices.
    (2) Approved forestry practices.

[[Page 23]]

    (3) Emergency conservation measures, in accordance with the 
provisions of this part and such modifications there of as may hereafter 
be made.
    (b) Cost-sharing may be made available to eligible program 
participants by the Farm Service Agency for:
    (1) Soil and water conservation and pollution abatement practices 
under the Agricultural Conservation Program.
    (2) Forestry practices under the Agricultural Conservation Program 
or Forestry Incentives Program.
    (3) Practices to correct damage to land or conservation practices 
caused by natural disaster under the Emergency Conservation Program.
    (4) Installation of water conservation measures under the Emergency 
Conservation Program during periods of severe drought.
    (c) Information on the practices for which costs will be shared, the 
exact specifications and rates of cost-sharing for such practices, and 
the eligibility requirements for participating in the programs, may be 
obtained from the Agricultural Stabilization and Conservation county 
committee (hereinafter referred to as ``county committee'') for the 
county in which the farm, ranch or other eligible land is located or 
from the Agricultural Stabilization and Conservation State committee 
(hereinafter referred to as ``State committee''), for the State in which 
such county is located.



Sec. 701.2  Definitions.

    (a) County conservation review group consists of the county 
committee; the county extension agent; a representative of the Soil 
Conservation Service; a representative of the U.S. Forest Service; a 
representative of the Farmers Home Administration; a representative of 
the State forestry agency or its equivalent, when the representative 
accepts an invitation to be a member of the group; and a representative 
of the conservation district in the county, where the governing board of 
the district accepts an invitation to designate a representative (if 
there is more than one district in the county, the governing boards of 
the districts may jointly designate only one person to represent all of 
the districts). The county conservation review group shall have the 
responsibilities as provided for in Secs. 701.10 and 701.35.
    (b) Farm or ranch means that area of land considered as a farm under 
the regulations governing reconstitution of farms, allotments, and 
bases, part 719 of this chapter, as amended, and, for the forestry 
incentives program, ``farm'' or ``ranch'' means eligible land (or 
ownership tracts) as provided in Sec. 701.30.
    (c) National conservation review group consists of representatives 
of the Farm Service Agency; Soil Conservation Service; U.S. Forest 
Service; Science and Education Administration; Economics, Statistics, 
and Cooperatives Service; Farmers Home Administration; Office of the 
General Counsel, U.S. Department of Agriculture; Office of Budget 
Planning and Evaluation, U.S. Department of Agriculture; Environmental 
Protection Agency; and Office of Management and Budget. The national 
conservation review group is responsible for recommending changes in 
program administrative procedures and policy guidelines, and evaluations 
of program effectiveness and operating arrangements.
    (d) Program year means the Federal fiscal year for accounting 
purposes.
    (e) State means any one of the United States, Puerto Rico, the 
Virgin Islands, and (1) In the case of the Agricultural Conservation 
Program and the Emergency Conservation Program, Guam and the 
Commonwealth of the Northern Mariana Islands; and (2) In the case of the 
Forestry Incentives Program, Guam, American Samoa, the Commonwealth of 
the Northern Mariana Islands, the Trust Territory of the Pacific Islands 
and the Territories and possessions of the United States.
    (f) State conservation review group consists of the State committee, 
the State Director of Extension; the State Conservationist of the Soil 
Conservation Service; a representative of the U.S. Forest Service; a 
representative of the Farmers Home Administration; a representative of 
the State forestry agency, or its equivalent, when the representative 
accepts an invitation to be a member of the group; a representative of 
the State Soil Conservation Committee, or its equivalent, when the

[[Page 24]]

representative accepts an invitation to be a member of the group; and a 
representative of the State Water Quality Agency, or its equivalent when 
it accepts an invitation to be a member of the group. The State 
conservation review group has the responsibility provided for in 
Sec. 701.11.
    (g) State forestry committee, or its equivalent, consists of the 
State forester or equivalent State official, who serves as chairperson; 
and a head or representative at the State level of the following USDA 
agencies: Farm Service Agency; U.S. Forest Service; Science and 
Education Administration; Farmers Home Administration; Soil Conservation 
Service. At the discretion of the committee, State and local interests 
may also be involved. The function of the State forestry committee is to 
coordinate forestry budget proposals, agency roles in education, 
technical assistance, technology transfers, and forestry incentives.
    (h) In the regulations in this part and in all instructions, forms, 
and documents in connection therewith, all other words and phrases 
specifically relating to FSA operations shall, unless the context or 
subject matter otherwise requires, have the meanings assigned to them in 
the regulations governing reconstitution of farms, allotments and bases, 
part 719 of this chapter, as amended.

[45 FR 49522, July 25, 1980, as amended at 47 FR 46998, Oct. 22, 1982; 
53 FR 15657, May 3, 1988]



               Subpart--Agricultural Conservation Program



Sec. 701.3  Program objective.

    (a) The objective of the Agricultural Conservation Program 
(hereinafter referred to in this subpart as the ``program'') is to 
assure the continued supply of food and fiber necessary for the 
maintenance of a strong and healthy people and economy, and to provide 
for environmental conservation or enhancement.
    (b) This will be accomplished through a program that has been 
formulated and is to be carried out, taking into consideration:
    (1) The need to control erosion and sedimentation from agricultural 
land and conserve the water resources on such land.
    (2) The need to control pollution from animal wastes.
    (3) The need to facilitate sound resource management systems through 
soil and water conservation.
    (4) The need to encourage voluntary compliance by agricultural 
producers with Federal and State requirements to solve point and non-
point sources of pollution.
    (5) National priorities reflected in the National Environmental 
Policy Act of 1969 and other congressional and administrative actions.
    (6) The degrees to which the measures contribute to the national 
objective of assuring a continuous supply of food and fiber necessary 
for the maintenance of a strong and healthy people and economy.
    (7) The type of conservation measures needed to improve water 
quality in rural America.
    (8) The types of conservation measures needed that have significant 
energy conserving benefits.

[45 FR 49522, July 25, 1980, as amended at 47 FR 939, Jan. 8, 1982]



Sec. 701.4  State funds.

    Funds available for practices to be performed under the program will 
be distributed among the States in accordance with conservation needs as 
determined by the Secretary.



Sec. 701.5  County funds.

    The State committee will allocate the funds available for practices 
among the counties within the State consistent with the program 
objective, and will give particular consideration to the furtherance of 
special projects, watershed conservation projects, resources 
conservation development projects, approved State water quality plans, 
and other conservation and pollution abatement projects sponsored by 
local people and organizations.



Sec. 701.6  Availability of funds.

    (a) The provisions of the program are subject to such legislation as 
the Congress of the United States may hereafter enact; the paying of the 
cost-shares provided herein is contingent

[[Page 25]]

upon such appropriation as the Congress may provide for such purpose; 
and the amounts of such cost-shares will be within the limits finally 
determined by such appropriation.
    (b) Funds available for the Agricultural Conservation Program may be 
made available as needed for practices to be performed under the Naval 
Stores Conservation Program, in accordance with instructions issued by 
the Deputy Administrator, State and County Operations.



Sec. 701.7  Eligible person.

    An eligible person is a farmer or rancher who as an individual, 
partnership, association, corporation, estate, trust, or other business 
enterprise, or other legal entity (excluding districts which have taxing 
authority, Federal agencies, States and State agencies, but not 
excluding political subdivisions of a State) and, as an owner, landlord, 
tenant, or sharecropper, participates in the operation of a farm or 
ranch.



Sec. 701.8  Eligible land.

    (a) The program is applicable to:
    (1) Privately-owned lands;
    (2) Land owned by a State or political subdivision of a State;
    (3) Lands owned by corporations which are partly owned by the United 
States;
    (4) Lands temporarily owned by the United States or a corporation 
wholly owned by it, which were not acquired or reserved for conservation 
purposes, including lands administered by the Farmers Home 
Administration, the U.S. Department of Defense, or by any other 
government agency designated by the Deputy Administrator, State and 
County Operations;
    (5) Any cropland farmed by private persons which is owned by the 
United States or a corporation wholly owned by it;
    (6) Indian lands, except that where grazing operations are carried 
out on Indian lands administered by the Department of the Interior, such 
lands are within the scope of the program only if covered by a written 
agreement approved by the Department of the Interior giving the operator 
an interest in the grazing and forage growing on the land and a right to 
occupy the land in order to carry out the grazing operations; and
    (7) Noncropland owned by the United States on which practices are 
performed by private persons where such practices directly conserve or 
benefit nearby or adjoining privately-owned lands of the persons 
performing the practices and such persons maintain and use such 
federally-owned noncropland under agreement with the Federal agency 
having jurisdiction thereof.
    (b) The program is not applicable to:
    (1) Noncropland owned by the United States which was acquired or 
reserved for conservation purposes, or which is to be retained 
permanently under Government ownership, including, but not limited to, 
grazing lands administered by the Forest Service of the U.S. Department 
of Agriculture, or by the Bureau of Land Management (including lands 
administered under the Taylor Grazing Act), or the Fish and Wildlife 
Service of the U.S. Department of the Interior, except as indicated in 
paragraph (a)(7) of this section.
    (2) Nonprivate persons for performance of practices on any land 
owned by the United States or a corporation wholly owned by it.



Sec. 701.9  Conservation practices.

    Conservation practices as specified by the Deputy Administrator, 
State and County Operations, FSA, are made available nationally under 
the Agricultural Conservation Program and may be included in the State 
and county programs. Practices shall not be primarily production 
oriented or have little or no conservation or pollution abatement 
benefits. The practices are designed to be consistent with the 
agricultural conservation policy stated in section 7 of the Soil 
Conservation and Domestic Allotment Act, as amended, and national 
program policy, and are developed primarily to meet a definite need to 
accomplish one or more of the following:
    (a) Establish long-lasting protective cover.
    (b) Improve or sustain existing protective cover.
    (c) Conserve or safely dispose of water.
    (d) Benefit wildlife.

[[Page 26]]

    (e) Establish or improve stands of forest trees.
    (f) Give protection against soil erosion.
    (g) Prevent or abate agricultural-related pollution of water, land, 
and air.
    (h) Meet special State or county conservation needs.
    (i) Encourage energy conservation practices.

[45 FR 49522, July 25, 1980, as amended at 47 FR 939, Jan. 8, 1982]



Sec. 701.10  County programs.

    (a) A program shall be developed in each county by the county 
committee, in consultation with the county conservation review group, in 
accordance with the National and State development guidelines and 
policies provided. At least one public meeting per year shall be held 
for this purpose.
    (b) The county program shall be that approved by the State committee 
and the Secretary or designee.

[45 FR 49522, July 25, 1980, as amended at 47 FR 46998, Oct. 22, 1982]



Sec. 701.11  State programs.

    (a) The State committee, in consultation with the State conservation 
review group, shall develop recommendations for the State program. The 
chairperson of the State conservation review group may also invite 
others with conservation or water quality interests to participate in 
such deliberations. At least one public meeting per year shall be held 
for this purpose.
    (b) The State program shall consist of the guidelines and practices 
selected by the State committee after considering the recommendations 
submitted by the county committee to the State review group and approved 
by the Secretary or designee.

[45 FR 49522, July 25, 1980, as amended at 47 FR 46999, Oct. 22, 1982]



Sec. 701.12  Selection of practices.

    The practices to be included in the State or county program shall be 
only those practices for which cost-sharing is essential to permit 
accomplishment of the program objective.



Sec. 701.13  Levels and rates of cost-sharing.

    (a) The maximum level of cost-sharing for each practice shall be the 
percentage of the average cost of performing the practice considered 
necessary to obtain the needed performance of the practice, but at a 
level such that the participant will make a significant contribution to 
the cost of performing the practice.
    (b) Levels of cost-sharing under annual agreements for each practice 
shall not be in excess of 75 percent of the average cost of carrying out 
the practice as determined by the county committee. However, where the 
Deputy Administrator, State and County Operations, determines a higher 
level of cost-sharing is necessary to provide adequate incentive for 
producer to carry out a conservation practice, the Deputy Administrator, 
State and County Operations, may specifically authorize a higher level. 
(See Sec. 701.19 for special provision for low-income farmers.)
    (c) Levels of cost-sharing under long term agreements shall not be 
in excess of 75 percent nor less than 50 percent of the average cost for 
each practice as determined by the county committee.
    (d) For the purpose of establishing rates of cost-sharing, the 
average cost of performing a practice may be the average cost for a 
county or a part of a county, as determined by the county committee.

[45 FR 49522, July 25, 1980, as amended at 47 FR 939, Jan. 8, 1982]



Sec. 701.14  Starting of practices.

    Costs will not be shared for practices or components of practices 
that are started before a formal approval is given by the county 
committee.

[47 FR 939, Jan. 8, 1982]



Sec. 701.15  Method of approval.

    The county committee will determine the extent to which Federal 
funds will be made available to share the cost of each approved 
practice, taking into consideration the county allocation, the 
conservation and environmental problems in the county, the land 
involved, and the practices for

[[Page 27]]

which requested cost-sharing is considered by the county committee as 
most needed. The method approved shall provide for the issuance of 
notices of approval showing for each approved practice the number of 
units of the practice for which the Federal Government will share in the 
cost and the amount of the cost-share for the performance of that number 
of units of the practice. To the extent practicable, notices of approved 
practices shall be issued before performance of the practice is started. 
No practice may be approved for cost-sharing except as authorized by the 
county program, or in accordance with procedures incorporated therein. 
Available funds for cost-sharing shall not be allocated on a pro-rata 
basis, but shall be directed to the accomplishment of the most enduring 
benefits attainable.
    (a) Cost-sharing may be approved under annual agreements or long-
term agreements.
    (b) Annual agreements may be approved in all counties. Long-term 
agreements are limited to farms or ranches which are within Soil 
Conservation Districts (or comparable districts) through which the Soil 
Conservation Service provides planning and technical services, except:
    (1) Farms and ranches located within a county designated for the 
Great Plains Conservation Program are only eligible for long-term 
agreements that cover part of a farm. Long-term agreements that cover 
whole farms shall not be approved in these counties.
    (2) Farms and ranches not located within a Soil Conservation 
District (or comparable district) may be eligible for a long-term 
agreement, provided conservation plans of operations are developed by 
the farmer or rancher in cooperation with the Soil Conservation Service 
and approved by an appropriate State official or, in cases where an 
appropriate State official is not available, approved by the Soil 
Conservation Service.



Sec. 701.16  Long-term agreements.

    (a) The period of a long-term agreement will be for not less than 
three (3) program years nor more than ten (10) program years. The county 
committee and the signatories to the agreement in consultation with the 
Soil Conservation Service representative, will mutually determine the 
period of the agreement.
    (b) The long-term agreement will be based on a conservation plan of 
operations for the farm or ranch or portion thereof which has been 
approved by the Soil Conservation District (or comparable district) or, 
for farms or ranches not located in a Soil Conservation District (or 
comparable district), by an appropriate State Official or the Soil 
Conservation Service, as applicable.
    (c) The long-term agreement will provide that the farmer or rancher 
will carry out those measures in the conservation plan of operations 
which are determined to be essential to meeting the basic conservation 
needs of the farm or ranch, or portion thereof, whether or not cost-
sharing is approved for such measures.
    (d) The owner of the farm or ranch will be required to be a 
signatory to a long-term agreement, whether or not that person 
contributes to the cost of approved practices thereon.
    (e) Any signatory to a long-term agreement who is not an owner of 
the farm or ranch must provide assurance of control of the land for the 
duration of the period of the agreement.
    (f) The level of cost-sharing, as provided in Sec. 701.13, in effect 
for practices in all years of a long-term agreement shall be the level 
in effect for the beginning year of the agreement. The rate of cost-
sharing for payment purposes for such practice will be based on the 
average cost of performing the practice at the time the practice is 
performed.
    (g) A long-term agreement may be cancelled for failure to comply 
with the terms of the agreement if, after consulting with the Soil 
Conservation District (or comparable district) board or, if none exists, 
with a representative of the Soil Conservation Service, the county 
committee and State committee find that the seriousness of the 
irregularities warrant such action. If the agreement is cancelled, the 
signatories to the agreement are jointly and severally responsible for 
refunding all cost-shares paid and will forfeit all rights to further 
payments under the

[[Page 28]]

agreement. In such a case, no other refund or forfeiture provisions of 
these regulations apply.
    (h) A long-term agreement may be revised in accordance with 
instructions issued by the Deputy Administrator, State and County 
Operations, by mutual agreement between the signatories to the agreement 
and the county committee based on approved changes in the Conservation 
plan of operations for the farm or ranch.
    (i) An eligible person who acquires control of land under an 
approved agreement may elect to become a successor in interest under 
such agreement.
    (j) An agreement will be terminated with respect to land for which 
loss of control has occurred and where the person acquiring control of 
such land elects not to become a successor in interest under the 
agreement. If the loss of control is for reasons beyond the control of 
the signatories to the agreement, the county committee will determine 
whether or not any cost-shares previously paid shall be refunded, but in 
no event shall the refund be greater than would be required in cases 
where loss of control is voluntary. If the loss of control is voluntary 
on the part of the signatories to the agreement, the signatories will be 
jointly and severally responsible for refunding all cost-shares paid and 
will forfeit all rights to further payments, with respect to the land 
for which control is lost. However, a refund will not be required for 
cost-shares where, the county committee and the State committee 
determine, after consulting with a representative of the Soil 
Conservation Service, that failure to perform the remaining practices in 
the agreement will not impair the effectiveness of the practices which 
have been performed and that the completed practices have provided 
conservation benefits consistent with the cost-shares which have been 
paid.
    (k) An agreement may be terminated by the county committee, after 
considering the recommendation of the Soil Conservation District (or 
comparable district) board or, if none exists, with a representative of 
the Soil Conservation Service, if such action is in the public interest. 
The county committee will determine the amount of cost-shares previously 
paid that shall be refunded.
    (l) An agreement may be terminated by the county committee upon the 
written request of the participant(s) to an agreement where no cost-
shares have been paid for any of the scheduled practices and where the 
participant(s) does(do) not intend to perform any of the scheduled 
practices.



Sec. 701.17  Replacement, enlargement, or restoration.

    The establishment or installation of a practice, for the purposes of 
the program shall be deemed to include the replacement, enlargement, or 
restoration of a practice for which cost-sharing has been allowed if the 
practice has served for its normal lifespan, or if all of the following 
conditions exist:
    (a) Replacement, enlargement, or restoration of the practice is 
needed to solve the problem.
    (b) The failure of the original practice was not due to the lack of 
proper maintenance by the current operator.
    (c) The county committee believes that the replacement, enlargement 
or restoration of the practice merits consideration under the program to 
an equal extent with other practices.



Sec. 701.18  Pooling agreements.

    Farmers, ranchers, or eligible landowners in any local area may 
agree in writing, with the approval of the county committee, to perform 
designated practices which, by conserving or improving resources of the 
community, will solve a mutual conservation, pollution, or other 
environmental problem on the land of the participants. For purposes of 
eligibility for cost-sharing, practices carried out under such an 
approved written agreement shall be regarded as having been carried out 
on the land of the persons who performed the practices.



Sec. 701.19  Special provisions for low-income farmers and ranchers.

    (a) Except as otherwise provided in Sec. 701.13(c), the county 
committee may approve, in the case of low-income farmers and ranchers as 
defined in this section, level of cost-sharing of up to 80 percent of 
the average cost of performing practices.

[[Page 29]]

    (b) A low-income farmer or rancher is one who, as determined by the 
county committee, is a small producer whose livelihood is largely 
dependent on the farm or ranch and whose prospective income and 
financial resources for the current year are such that the farmer or 
rancher could not reasonably be expected to perform needed conservation 
practices at levels of cost-sharing applicable to other persons in the 
county.
    (c) In approving requests for cost-sharing the county committee 
shall give special consideration to requests filed by low-income farmers 
and ranchers.

[45 FR 49522, July 25, 1980, as amended at 47 FR 939, Jan. 8, 1982]



Sec. 701.20  Encumbering land.

    In order to receive cost-share assistance for a conservation 
practice in a Salinity Control Project area, a person participating in 
the program shall agree, as a condition of eligibility to receive such 
assistance, that a recordable encumbrance may be filed by FSA with 
respect to the land on which the conservation practice is installed. 
Such encumbrance shall reflect the amount of the cost-share assistance 
which is received by the program participant for the practice and shall 
continue until such time as the established lifespan for the practice 
has expired. Notwithstanding the foregoing, this requirement may be 
waived by the county committee if such committee determines, with the 
concurrence of the State committee and after consultation with 
appropriate Federal, State and local authorities, that the land will not 
likely be converted to a nonagricultural use within the next five years.

[48 FR 33847, July 26, 1983]



Secs. 701.21-701.22  [Reserved]



Sec. 701.23  Maximum cost-share limitation.

    For each program year the total amount which may be received by any 
person under this subpart for approved practices shall not exceed $3,500 
except that (a) the total amount received for approved practices, 
including those carried out under pooling agreements, shall not exceed 
$10,000 and (b) the total amount received under an ACP long-term 
agreement (LTA) shall not exceed the annual payment limitation ($3,500) 
multiplied by the number of years of the LTA.

[52 FR 19716, May 27, 1987]



Sec. 701.24  Completion of practices.

    Cost-sharing for the practices contained in this part is conditioned 
upon the performance of the practice in accordance with all applicable 
specifications and program provisions.



Sec. 701.25  Time of filing payment application.

    Payment of cost-shares will be made only upon application submitted 
on the prescribed form to the county office by a date established by the 
county committee. Any application for payment may be rejected if any 
form or information required of the applicant is not submitted to county 
office within the applicable time limit.



Sec. 701.26  Other program provisions.

    Other provisions as contained in Secs. 701.1 and 701.2 and in the 
subpart, General Provisions, apply to the Agricultural Conservation 
Program.



                  Subpart--Forestry Incentives Program



Sec. 701.27  Program objective.

    The objective of the Forestry Incentives Program (hereinafter 
referred to in this subpart as the ``program'') is to help assure a 
future supply of timber. This will be accomplished by encouraging 
landowners to apply forestry practices for the following:
    (a) Production of softwood and hardwood timber and other forest-
resources associated therewith to increase afforestation of suitable 
open lands.
    (b) Reforestation of cutover and understocked forest lands.
    (c) Timber stand improvement.
    (d) Intensive multipurpose management.
    (e) Protection of forest resources.

[[Page 30]]



Sec. 701.28  [Reserved]



Sec. 701.29  Designated counties.

    The State committee in consultation with the State Forester, will 
designate the counties or parts of counties in which the program will be 
operated. The following will be considered in making the selections:
    (a) The total acreage in the county devoted to desirable types of 
softwood and hardwood timber.
    (b) The estimated area in the county that is under eligible 
ownership.
    (c) The estimated acreage suitable for the production of forest 
products.
    (d) The availability of funds.
    (e) The enhancement of other forest resources.



Sec. 701.30  Eligible person, land, and ownerships.

    (a) An eligible person is a private individual, group, Indian Tribe 
or other native group, association, corporation excluding corporations 
whose stocks are publicly traded, or other legal entity which owns 
eligible land. Firms principally engaged in the manufacture of wood 
products are not eligible. However, forest landowners who manufacture 
forest products on a part-time or irregular basis, are eligible.
    (b) Eligible land is ``nonindustrial'' private forest land capable 
of producing at least 50 cubic feet of wood per acre per year.
    (c) Eligible farms are those not exceeding a total of 1,000 acres of 
eligible private nonindustrial forest land in the United States or any 
commonwealth, territory or possession of the United States. The State 
Committee with the concurrence of the State Forester may approve cost-
sharing with landowners owning more than 1,000 but not more than 5,000 
acres of eligible forest land where it is deemed to be to the public's 
significant benefit.
    (d) Significant public benefits are primarily those resulting from 
cost-effective timber production, with related benefits to aesthetics, 
recreation, other resource values, watershed protection and erosion 
reduction.



Sec. 701.31  Program funds.

    (a) State and counties. Each designated State and county will 
receive a share of the funds provided nationally for the program. Funds 
will be distributed on the basis of the forest production opportunities 
in each State, considering the acreage of private nonindustrial forest 
lands, the number of eligible owners, the potential productivity of such 
lands and the need for reforestation, timber stand improvement, other 
forestry management needs, and the enhancement of other forest 
resources. The Director, Conservation and Environmental Protection 
Division, FSA, will allocate funds after consultation with 
representatives of the U.S. Forest Service and a committee of not less 
than five State foresters or equivalent State officials selected by a 
majority of the State foresters or equivalent State officials. The State 
committee will consult with the State forester when determining the 
allocation of such funds to the designated counties.
    (b) A limitation on the amount of funds which may be obligated under 
long-term agreements shall be established by the State committee in 
accordance with guidelines provided by the Deputy Administrator, State 
and County Operations.



Sec. 701.32  Eligible practices and cost-share requirements.

    (a) Cost-sharing may be available for the following National 
practices and authority:
    (1) Practice FP1. Planting Trees.
    (2) Practice FP2. Improving a Stand of Forest Trees.
    (3) Practice authority--SF Practice. Special Forestry Practices. The 
Director, Conservation and Environmental Protection Division, FSA, after 
consultation with the Forest Service, may approve special forestry 
practices needed to solve a significant and unique local condition for 
which the National practices are not adequate. Such practices may be 
approved for inclusion in a county program after consultation with the 
program development group, and the recommendation of the county 
committee, the service forester, the State committee and the State 
forester.
    (b) A forest management plan is required as a condition of cost-
sharing.

[[Page 31]]

The plan will be developed in consultation with the landowner, approved 
by the service forester, and will contain information for accurate 
evaluation of practice effectiveness. The participant will be required 
to perform those measures in the plan which are essential to the 
effectiveness of the practice for which costs are shared. In the 
development of the plan, consideration will be given to wildlife, 
watershed protection, recreation, erosion control, aesthetics, and other 
associated forest resources values as well as cost-effective timber 
production.



Sec. 701.33  The National program.

    The National program is based on recommendations developed by the 
Director, Conservation and Environmental Protection Division, FSA, in 
consultation with representatives of the U.S. Forest Service and the 
committee of State foresters provided for in Sec. 701.31.



Sec. 701.34  Development of State programs.

    (a) A State program shall be developed in each State in accordance 
with the provisions contained in this part and in the National program 
and such modifications thereof as may thereafter be made. The program 
shall be developed by the State forestry committee as provided in 
Sec. 701.2.
    (b) The program for the State shall be that recommended by the State 
committee and State forester and approved by the Director, Conservation 
and Environmental Protection Division, FSA, after consulting the U.S. 
Forest Service.



Sec. 701.35  Development of county programs.

    (a) A county program shall be developed in each designated county in 
accordance with the provisions of the State program and such 
modifications thereof as may be made. The county program shall be 
developed by the county conservation review group. The county 
conservation review group, working with the governing body of the 
conservation district, the State forestry agency representatives, the 
county supervisor of the Farmers Home Administration, and others with 
conservation and environmental interest, shall develop recommendations 
for the county program.
    (b) The program for the county shall be that recommended by the 
county committee and service forester and approved by the State 
committee and State forester.

[45 FR 49522, July 25, 1980, as amended at 47 FR 46999, Oct. 22, 1982]



Sec. 701.36  Adaptation of practices.

    (a) The practices included in the State program meet the conditions 
and requirements of the National program. National program provisions 
may be modified or deleted to make practices more restrictive where such 
changes meet the objectives of the program.
    (b) The practices included in the county program must meet the 
conditions and requirements of the State program. State program 
provisions may be modified or deleted to make practices more restrictive 
where such changes will still result in the practices effectively 
meeting the objectives of the program.



Sec. 701.37  Levels and rates of cost-sharing.

    (a) The maximum cost-share for each practice shall be the percentage 
of the actual cost of performing the practice considered necessary to 
obtain the needed performance of the practice, but which will be such 
that the participant will make a significant contribution to the cost of 
performing the practice.
    (b) Levels of cost-sharing shall be approved by the State ASC 
committee and shall not be in excess of 65 percent of actual costs 
incurred by the landowners.
    (c) For the purpose of establishing rates of cost-sharing, the 
average cost of performing a practice may be the average cost for a 
State, a county or a part of a county, as determined by the State 
committee.
    (d) The rates of cost-sharing for practices included in the county 
program may be lower than the rates approved for general use in the 
State.

[45 FR 49522, July 25, 1980, as amended at 47 FR 20109, May 11, 1982]

[[Page 32]]



Sec. 701.38  Prior approval for cost-sharing.

    Costs will be shared only for those practices, or components of 
practices, for which cost-sharing is requested and approval issued 
before performance thereof is started.



Sec. 701.39  Methods of approval.

    The county committee will determine the extent to which Federal 
funds will be made available to share the cost of each approved 
practice. Approvals shall be made based on consideration of the county 
allocation, cost-effective opportunities for increasing timber 
production, potential for enhancing other forest resources, the forestry 
needs in the county, and the practices for which requested cost-sharing 
is considered by the county committee as most needed. The method 
approved shall provide for the issuance of notices of approval showing 
for each approved practice the number of units of the practice for which 
the Federal Government will share in the cost and the amount of the 
cost-share for the performance of that number of units of the practice. 
Notices of appeared practices shall be issued before performance of the 
practice may be started. No practice may be approved for cost-sharing 
except as authorized by the National, State or county program, or in 
accordance with procedures incorporated therein. Available funds for 
cost-sharing shall not be allocated on a pro-rata basis, but shall be 
directed to the accomplishment of the most production attainable.
    (a) Cost-sharing may be approved under annual agreements or long-
term agreements.
    (b) Land covered by a Great Plains Conservation Program contract is 
not excluded from an annual or long-term agreement if otherwise eligible 
and is approved by both the Forest Service and the Soil Conservation 
Service.
    (c) The same practices, cost-share levels and general program 
provisions apply to both annual agreements and long-term agreements.



Sec. 701.40  Long-term agreements.

    (a) The period of a long-term agreement will be for not less than 
three (3) years nor more than 10 (10) years. The county committee and 
the signatories to the agreement in consultation with the State forestry 
representative, will mutually determine the scheduling of essential 
practices and practice cost-sharing over the period of the agreement.
    (b) The long-term agreement will be based on a forest management 
plan for the land which has been developed by the service forester.
    (c) The long-term agreement will provide that the owner will carry 
out those measures in the forest management plan which are determined to 
be essential whether or not cost-sharing is approved for such measures.
    (d) The level of cost-sharing in effect for practices in all years 
of a long-term agreement shall be the level in effect for the beginning 
year of the agreement. The rate of cost-sharing for payment purposes for 
such practice will be based on the average cost of performing the 
practice at the time the practice is performed.
    (e) A long-term agreement may be canceled for failure to comply with 
the terms of the agreement if, after consulting with the service 
forester, the county committee and State committee find that the 
seriousness of the irregularities warrant such action. If the agreement 
is canceled, the signatories to the agreement are jointly and severally 
responsible for refunding all cost-shares paid and will forfeit all 
rights to further payments under the agreement. In such a case no other 
refund or forfeiture provisions of these regulations apply.
    (f) A long-term agreement may be revised in accordance with 
instructions issued by the Deputy Administrator, State and County 
Operations, where there is a change in status of the participants or the 
land under agreement.
    (g) An eligible person who acquires control of land under an 
approved agreement may elect to become a successor in interest under 
such agreement.
    (h) An agreement will be terminated with respect to land for which 
loss of control has occurred and where the person acquiring control of 
such land elects not to become a successor in interest under the 
agreement. If the loss of control is for reasons beyond the

[[Page 33]]

control of the signatories to the agreement, the county committee will 
determine whether or not any cost-shares previously paid shall be 
refunded, but in no event shall the refund be greater than would be 
required in cases where loss of control is voluntary. If the loss of 
control is voluntary on the part of the signatories, they will be 
jointly and severally responsible for refunding all cost-shares paid and 
will forfeit all rights to further payments, with respect to the land 
for which control is lost. A refund will not be required for cost-shares 
where, the county committee and the State committee determine, after 
consulting with the service forester, that failure to perform the 
remaining practices in the agreement will not impair the effectiveness 
of the practices which have been performed and that the completed 
practices will provide forestry benefits consistent with the cost-shares 
which have been paid.
    (i) An agreement may be terminated if, after considering the 
recommendation of the service forester, the county committee recommends 
and the State committee concurs that such action is in the public 
interest.



Sec. 701.41  Restoration of practices.

    (a) Cost-sharing may be authorized under the program only for the 
establishment or installation of the practices contained in this part. 
Cost-sharing may not be authorized for repeating any of the practices in 
this part with the same owner on the same acreage, except as provided in 
paragraph (b) or (c) of this section.
    (b) Cost-sharing may be authorized for the replacement, enlargement, 
or restoration of practices for which cost-sharing has been allowed 
under the program only if all of the following conditions exist:
    (1) Replacement or restoration of the practice is needed to solve 
the problem.
    (2) The failure of the original practice was not due to the lack of 
proper maintenance by the current operator.
    (3) The county committee believes that the replacement or 
restoration of the practice merits consideration under the program to an 
equal extent with other practices cost-shared.
    (c) Cost-sharing may be authorized for timber stand improvement 
measures carried out in repetitive steps where, in the judgment of the 
service forester, the stand treatment warrants such silvicultural 
practice.



Sec. 701.42  Maximum cost-share limitations.

    For each fiscal year the total of all cost-shares paid to any 
eligible person shall not exceed the sum of $10,000 with respect to 
eligible ownerships (Sec. 701.30(b)) in the United States or any 
commonwealth, territory or possessions of the United States for approved 
practices carried out under annual and/or long-term agreements.



Sec. 701.43  Completion of practice.

    Cost-sharing for the practices contained in this subpart is 
conditioned upon the performance of the practices in accordance with all 
applicable specifications and program provisions.



Sec. 701.44  Time of filing payment application.

    Payment of cost-shares will be made only upon application submitted 
on the prescribed form to the county office by the prescribed time limit 
or any authorized extension thereof. Any application for payment may be 
rejected if any form or information required of the applicant is not 
submitted to the county office within the applicable time limit.



Sec. 701.45  Other program provisions.

    Other provisions as contained in Secs. 701.1 and 701.2 and in the 
subpart, General Provisions, apply to the Forestry Incentives Program. 
st



                 Subpart--Emergency Conservation Program



Sec. 701.46  Program objective.

    The objective of the Emergency Conservation Program is to cost-share 
with eligible persons to rehabilitate farmlands damaged by wind and 
water erosion, floods, hurricanes, or other natural disasters and to 
provide water conservation or water enhancement measures during periods 
of severe drought.

[[Page 34]]



Sec. 701.47  Program availability.

    (a) The county committee may implement the program subject to the 
availability of funds where new conservation problems have been created 
on farmland by a natural disaster or wind erosion which, if not treated; 
will:
    (1) Impair or endanger the land or water resource.
    (2) Materially affects the productive capacity of the land or water 
resource.
    (3) Represent damage which is unusual in character and, except for 
wind erosion, shall not be the type that would recur frequently in the 
same area.
    (4) Be so costly to rehabilitate that Federal assistance is or will 
be required to return the land to productive agricultural use.
    (b) Subject to the availability of funds, the county committee with 
the concurrence of the State committee and approval of the Deputy 
Administrator, State and County Operations may implement the program to 
carry out emergency water conservation and water enhancement measures 
during periods of severe drought.



Sec. 701.48  Eligibility of person and land.

    Eligibility of person and land is the same as for the Agricultural 
Conservation Program as provided in Secs. 701.7 and 701.8.



Sec. 701.49  Emergency conservation program practices.

    (a) Except for severe drought and wind erosion, cost-sharing may be 
offered for emergency conservation practices only to replace or restore 
farmland to a condition similar to that existing prior to the natural 
disaster. Cost-sharing may not be offered for the solution of 
conservation problems existing prior to the disaster.
    (b) Emergency Conservation Program practices for which cost-sharing 
may be authorized are generally:
    (1) Removing debris from farmland.
    (2) Grading, shaping, releveling or similar measures.
    (3) Restoring permanent fences.
    (4) Restoring structures and other installations.
    (5) Emergency wind control measures.
    (6) Drought emergency measures.
    (7) Other emergency conservation measures.



Sec. 701.50  Practice approval.

    Practices listed in Sec. 701.49(b)(1) through (5) may be approved by 
the county committees. Practices (6) and (7) of Sec. 701.49(b) must be 
approved by the Deputy Administrator, State and County Operations.



Sec. 701.51  Extent of cost-sharing.

    (a) The maximum payment under this subpart per person, per disaster, 
is limited to $200,000, including the amount of any payment received by 
such person as the result of a disaster under a pooling agreement.
    (b) The cost-share payments which may be made by FSA for a practice 
under the program shall, subject to the maximum payment amount specified 
in paragraph (a) of this section and any other limitation as may apply, 
be further limited to the level of cost-share assistance established by 
the county committee not to exceed the following amounts:
    (1) 64 percent of the first $62,500 of eligible reimbursable costs; 
plus
    (2) 40 percent of the second $62,500 of eligible reimbursable costs; 
plus
    (3) 20 percent of the remaining eligible reimbursable costs up to 
such amount as would produce a cost-share not in excess of the 
limitation in paragraph (a) of this section.



Sec. 701.52  Eligible costs.

    Upon determination that a person is eligible for Emergency 
Conservation Program assistance, cost-sharing shall be granted for all 
reasonable costs incurred in the completion of the practice. Such costs 
may include personal labor, equipment, and other such costs which are 
determined by the county committee to be related to the costs of 
carrying out the practice. County committees shall limit costs for the 
use of personal equipment to an amount that reflects out-of-pocket 
expenses. Expenses for personal labor and personal equipment should be 
less than rates charged by contractors who expect to make a profit for 
their efforts.

[[Page 35]]



Sec. 701.53  Filing requests.

    The county committee shall establish a sign up period for filing 
cost-sharing requests immediately after the county committee's decision 
has been made (by the Deputy Administrator, State and County Operations, 
in cases of drought) to implement the Emergency Conservation Program in 
the county. Such periods should be at least 30 days in length. Late 
filed requests may be accepted by the county committee in justifiable 
cases.



Sec. 701.54  Approving requests.

    County committees will issue practice approvals only when the 
requested practice has been determined eligible for cost-sharing 
assistance and the eligible person has indicated he/she is ready to 
start the practice.



Sec. 701.55  Pooling agreements.

    Pooling agreements may be used on the same basis as provided for in 
the Agricultural Conservation Program in Sec. 701.18.



Sec. 701.56  Payment approval.

    The county committee is authorized to approve payments not to exceed 
$10,000 per person, per disaster. Cost-share assistance in excess of 
$10,000 must be approved by the Deputy Administrator, State and County 
Operations, or designee.



Sec. 701.57  Other program provisions.

    Other provisions of this part as provided for in Secs. 701.1 and 
701.2 and in the subpart, General Provisions, apply to the Emergency 
Conservation Program.



                       Subpart--General Provisions



Sec. 701.58  Restriction on program eligibility.

    The regulations in part 796 of this chapter prohibiting the making 
of payments to program participants who harvest or knowingly permit to 
be harvested for illegal use, marijuana or other such prohibited drug-
producing plants on any part of the land owned or controlled by them are 
applicable to these programs.



Sec. 701.59  Delegation of authority.

    No delegation of authority contained in these programs to a State or 
county committee shall preclude the Deputy Administrator, State and 
County Operations or designee, from determining any question arising 
under these programs or from reversing or modifying any determination 
made by a State or county committee.



Sec. 701.60  Practice specifications.

    (a) Minimum specifications that practices must meet to be eligible 
for cost-sharing shall be set forth in the county program, or 
incorporated therein by specific reference to a standard publication or 
other written document containing such specifications.
    (b) Practice specifications shall represent those levels of 
performance which are needed in order for the practice to be effective 
in meeting the program objective and which are not in excess of levels 
for which cost-sharing can be justified.



Sec. 701.61  Responsibility for technical phases of practices.

    The Soil Conservation Service and the U.S. Forest Service are 
responsible for technical phases of the practice as assigned and such 
assignment will be specified in State and county programs.
    (a) The State conservationist of the Soil Conservation Service may 
utilize assistance from private, State or Federal agencies in carrying 
out the assigned responsibilities. No responsibilities will be assigned 
for counties when the Deputy Administrator, State and County Operations 
and the Administrator, SCS, determines that it would not be 
administratively practicable for the Soil Conservation Service to 
discharge such responsibilities. In such counties, these 
responsibilities shall be assumed by the county committees. The Soil 
Conservation Service may utilize to the fullest extent available 
resources of the State forestry agencies in carrying out assigned 
responsibilities for practices involving the establishment of wind-
breaks or shelterbelts on farmland to prevent wind erosion.

[[Page 36]]

    (b) The U.S. Forest Service is responsible for the technical phases 
of practices or components of practices involving the planting of trees 
for forestry purposes and those involving the improving or protecting of 
a stand of forest trees, as specified in State and county programs. The 
U.S. Forest Service may utilize the assistance of private, State or 
Federal agencies in carrying out these assigned responsibilities, but 
services of State forestry agencies will be utilized to the extent that 
such services are available.
    (c) The technical assistance to be furnished in servicing assigned 
practices will include, where appropriate, the following technical 
phases:
    (1) Determining whether the practice is needed and practicable;
    (2) Selecting the site (if necessary), complying with environmental 
and cultural regulations, determining the specific measures needed, and 
performing any required layout work for the practice;
    (3) Supervising the installation of the practice if needed to assure 
conformity with specifications; and
    (4) Certifying the extent performed and whether the specifications 
for the practice have been met. The technical agency shall perform all 
four phases for all assigned practices in State and county programs, 
except as may be provided in instructions issued by the Deputy 
Administrator, State and County Operations.



Sec. 701.62  Items of cost on which rates of cost-sharing may be based.

    Except as otherwise provided by the specific FSA procedural 
handbooks, notices, and regulations, the cost of any direct and 
significant factor in the performance of a practice may be considered in 
establishing the rate of cost-sharing for the practice.



Sec. 701.63  Handbook, bulletins, instructions, and forms.

    The Deputy Administrator, State and County Operations is authorized 
to prepare and issue handbooks, bulletins, instructions, and forms, 
required in administering these programs. Copies of handbooks, 
bulletins, instructions and forms, containing detailed information on 
these programs as they apply to specific States, counties, areas, farms, 
ranches and other eligible ownerships, will be available in the office 
of the State committee and the office of the county committee.



Sec. 701.64  Opportunity for requesting cost-shares.

    Farmers, ranchers, eligible landowners, or eligible persons, 
regardless of race, sex, religion, color, or national origin, shall be 
given an opportunity to request that the Federal Government share in the 
cost of those practices they consider to be needed on their farm, ranch, 
or other eligible land. The county committee shall direct the available 
funds for cost-sharing to those practices where cost-sharing is 
considered most essential to the accomplishment of the program 
objective.



Sec. 701.65  Repair, upkeep and maintenance of practices.

    Cost-sharing is not authorized for repairs or for normal upkeep or 
maintenance of any practice.



Sec. 701.66  Public benefits when installing practices.

    Persons responsible for any aspect of performing practices are to be 
encouraged to install the practices in such a way to promote public 
benefits by improving or preserving environmental quality and ecological 
balance by preventing or abating pollution and other environmental 
degradation; benefiting the community by such means as preserving open 
space, or enhancing the appearance of the area; benefiting wildlife and 
other desirable life forms; preserving historic, archeological, or 
scenic sites, wetlands, ecologically critical areas and prime farmlands; 
avoiding the creation of hazards to persons or animals and avoiding 
actions that may adversely affect an endangered or threatened species 
and flood plains.



Sec. 701.67  Payments for uncompleted practices.

    Cost-shares approved under these programs will not be considered as 
earned until all components of the approved practice are completed in 
accordance with applicable specifications and program provisions. Cost-
shares

[[Page 37]]

for completed components may be paid only on the condition that the 
farmers, ranchers, or eligible landowners, will complete the remaining 
components of the practice within the time prescribed by the county 
committee regardless of whether cost-sharing is offered for them, unless 
they are prevented from doing so because of reasons beyond their 
control.



Sec. 701.68  Practices involving the establishment or improvement of vegetative cover.

    (a) Costs for practices involving the establishment or improvement 
of vegetative cover, including trees may be shared even though a good 
stand is not established, if the country committee determines, in 
accordance with standards approved by the State committee, that the 
practice was carried out in a manner which could normally result in the 
establishment of a good stand, and that failure to establish a good 
stand was due to weather or other conditions beyond the control of the 
operator. The county committee may require as a condition of cost-
sharing in such cases that the area be reseeded or replanted or that 
other needed protective measures be carried out. Cost-sharing in such 
cases may be approved also for repeat applications of measures 
previously carried out or for additional eligible measures. Cost-sharing 
for such measures shall be approved to the extent such measures are 
needed to assure a good stand even though less than that required by the 
applicable practice wording for initial approvals.
    (b) In the case of Foresty Incentives Program, replanting of trees 
is required where the landowner received cost-sharing for site 
preparation.



Sec. 701.69  Failure to meet minimum requirements or failure to comply fully with program provisions.

    (a) Notwithstanding other provisions of these programs, costs may be 
shared for performance actually rendered even though the minimum 
requirements for a practice are not met, if the farmer, rancher, 
eligible landowner, or eligible person establishes to the satisfaction 
of the county committee and the county representative of any other 
agency having responsibility for technical phases of the practice that a 
reasonable effort was made to meet the minimum requirements and that the 
practice as performed adequately solves the problem.
    (b) Notwithstanding the provisions in paragraph (a) of this section, 
the terms and conditions of contracts entered into pursuant to programs 
in this part may be modified to grant relief when the Deputy 
Administrator, State and County Operations, determines that a person 
acting in good faith failed to fully comply with the program provisions.



Sec. 701.70  Practices carried out with aid from ineligible persons.

    (a) Except as provided in paragraph (b) of this section, financial 
assistance which is made available, or will be made available, to a 
program participant from a person ineligible for cost-share assistance 
under this part for the practice, including aid from a State or Federal 
agency other than assistance made available under this part, shall be 
deducted from the program participant's total costs incurred for the 
practice for purposes of determining the applicant's eligible 
reimbursable costs under this part.
    (b) Third party contributions need not be deducted under paragraph 
(a) of this section where it is determined by the State ASC Committee, 
in accordance with instructions of the Deputy Administrator, State and 
County Operations (DASCO), FSA, that an exception would be in 
furtherance of program objectives. However, the total cost-share paid 
may not, in any case, exceed the net contribution (exclusive of any 
contribution by ineligible persons) otherwise made by the applicant to 
the cost of carrying out the practice.

[56 FR 46368, Sept. 12, 1991]



Sec. 701.71  Division of cost-shares.

    (a) The cost-share for a practice shall be credited to the person 
who carried out the practice. If more than one person contributed to the 
carrying out of the practice, the cost-share for the practice shall be 
divided among those persons in the proportion that the county committee 
determines they contributed to the carrying out of the

[[Page 38]]

practice. In making this determination, the county committee shall take 
into consideration the value of the labor, equipment, or material 
contributed by each person toward the carrying out of the practice, and 
shall assume that each contributed equally unless the county committee 
is satisfied that their respective contributions were not in equal 
proportion. Any advances made by FSA toward the cost of materials or 
services under Sec. 701.21, the furnishing of land, and the furnishing 
of the right to use water, will not be considered as a contribution to 
the carrying out of any practice.
    (b) The allowance by an eligible person of a credit to another 
eligible person in the form of an adjustment in rental, an exchange of 
cash, or other consideration, will not be considered as a contribution 
to the carrying out of any practice, unless the county committee is 
satisfied that such credit is directly related to the cost or cost-share 
of the practice. A person will not be considered as having contributed 
to the carrying out of a practice if the county committee determines 
that a person has been, or is to be, fully reimbursed for contributions 
made to the performance of the practice, through an adjustment in 
rental, an exchange of cash, or other consideration.



Sec. 701.72  Death, incompetency, or disappearance.

    In case of death, incompetency, or disappearance of any person, any 
cost-shares due shall be paid to the successor, determined in accordance 
with provisions of the regulations in part 707 of this chapter, as 
amended.



Sec. 701.73  Applying cost-share limitations.

    (a) All or any part of cost-share which otherwise would be due any 
person for a program year may be withheld, or required to be refunded, 
if, with respect to that program year, the person has adopted, or 
participated in adopting, any scheme or device, including the 
dissolution, reorganization, revival, formation, or use of any 
corporation, partnership, estate, trust, or any other means, designed to 
evade a maximum cost-share limitation.
    (b) The rules set forth in 7 CFR 795.3 through 795.22 shall apply in 
determining whether certain individuals or other entities are to be 
considered as separate persons for the purpose of applying any maximum 
payment limitations provided for in this part. In cases where more than 
one rule would appear to be applicable, the rule which is most 
restrictive as to number of persons shall apply.

[45 FR 49522, July 25, 1980, as amended at 51 FR 12985, Apr. 17, 1986]



Sec. 701.74  Persons eligible to file application for payment of cost-shares.

    Any eligible person who bore a part of the cost of an approved 
practice is eligible to file an application for payment of cost-shares 
due.



Sec. 701.75  Time and manner of filing application and required information.

    It shall be the responsibility of persons participating in these 
programs to submit to the county office forms and information needed to 
establish the extent of the performance of approved practices and 
compliance with applicable program provisions. The time limits for 
submission of such forms and information shall be established where 
necessary for efficient administration of the programs. Such time limits 
shall afford a full and fair opportunity to those eligible to file the 
forms and information within the period prescribed. At least 2 weeks 
notice of any general time limits prescribed shall be given to the 
public. The notice shall be given by mailing notice to the office of 
each county committee and making copies available to the press. Other 
means of notification; including radio announcements and individual 
notices to person(s) affected, shall be used to the extent practicable. 
Notice of such time limits which are applicable to individual persons, 
such as time limits for reporting performance of approved practices, 
shall be issued in writing to the person(s) affected. Exceptions to the 
time limits may be made in cases where failure to submit required forms 
and information within the applicable time limits is due to reasons 
beyond the control of the farmer or rancher.

[[Page 39]]



Sec. 701.76  Appeals.

    Any person may obtain review of determinations affecting 
participation in:
    (a) The Forestry Incentive Program, in accordance with part 614 of 
this title; and
    (b) All other programs within this part, in accordance with part 780 
of this title.

[60 FR 67316, Dec. 29, 1995]



Sec. 701.77  Performance based on advice or action of county or State committee.

    Cases involving performance rendered in good faith in reliance upon 
action or advice of an authorized representative of a county or State 
committee shall be handled in accordance with part 790 of this chapter.



Sec. 701.78  Compliance with regulatory measures.

    Persons who carry out practices under these programs shall be 
responsible for obtaining the authorities, rights, easements, or other 
approvals necessary to the performance and maintenance of the practices 
in keeping with applicable laws and regulations. The person with whom 
the cost of the practice is shared shall be responsible to the Federal 
Government for any losses it may sustain because such persons infringe 
on the rights of others or fail to comply with applicable laws or 
regulations.



Sec. 701.79  Maintenance and use of practice.

    Each person receiving cost-share assistance under these programs is 
responsible for the maintenance and proper use of the practice. Each 
practice shall have an established lifespan or minimum period of time 
that it is expected to function as a conservation practice with proper 
maintenance. If it is determined that a practice has not been properly 
maintained for the established lifespan, the person receiving the cost-
share assistance shall refund all or any part of such cost-share 
assistance as determined to be appropriate by the county committee. 
Further, any agreement providing for cost-share assistance will be 
terminated with respect to the land on which the practice is located if 
there is voluntary loss of control of the land by the person receiving 
the cost-share assistance and the person acquiring control of such land 
elects not to become a successor in interest to the agreement. If the 
agreement providing for cost-share assistance is terminated as a result 
of the voluntary loss of control of the land, each person receiving 
cost-share assistance under that agreement shall be liable for refunding 
to FSA any cost-share assistance which has been received with respect to 
the practice. In addition, such person shall forfeit any right to 
receive any further cost-share assistance with respect to the land on 
which the practice is located.

[48 FR 33848, July 26, 1983]



Sec. 701.80  Actions defeating purpose of program.

    If the county committee finds with the concurrence of the State 
committee, or if the State committee finds, that a person has taken any 
action which tends to defeat the purposes of these programs, it may 
withhold or require a refund of all or part of any of these program 
payments otherwise due or paid that person during the program year. 
These actions include, but are not limited to, failure to properly 
maintain or deliberately destroying a practice carried out under a 
previous program year.



Sec. 701.81  Depriving others of cost-shares.

    If the State committee finds that any person has employed any scheme 
or device to deprive any other person of cost-shares, it may impose a 
penalty. The State committee may withhold or require a refund of all or 
part of any of these program payments otherwise due or paid that person 
during the program year. A scheme or device includes, but is not limited 
to, coercion, fraud or misrepresentation.



Sec. 701.82  Filing of false claims.

    If the State committee finds that any person has knowingly supplied 
false information or has knowingly filed a false claim, that person is 
ineligible for cost-sharing under the program year with respect to which 
information or

[[Page 40]]

claim is filed. False information or false claims include a claim for 
payment for a practice not carried out or for practices which do not 
meet the required specifications. Any amounts paid under these 
circumstances shall be refunded and any amounts otherwise due the person 
shall be withheld. The withholding or refunding of cost-shares will be 
in addition to any other penalty or liability otherwise imposed by law.



Sec. 701.83  Cost-shares not subject to claims.

    Any cost-share or portion thereof due any person shall be allowed 
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 issued by the Secretary governing set-offs and 
withholdings, part 13 of this title, as amended, shall be applicable to 
these programs.



Sec. 701.84  Assignments.

    Any person who may be entitled to any cost-share under these 
programs may assign the right thereto, in whole or in part, in 
accordance with the regulations governing the assignment of payments at 
7 CFR part 709.



Sec. 701.85  Environmental considerations.

    All actions implemented under the programs in this part shall be in 
compliance with regulations issued as part 799--Environmental Quality 
and Related Environmental concerns which includes the procedures for 
complying with the National Environmental Policy Act, for Floodplain 
Management and Wetland Protection and for other environmental concerns.



Sec. 701.86  Information collection requirements.

    Information collection requirements contained in this part have been 
approved by the Office of Management and Budget under the provisions at 
44 U.S.C. Chapter 35 and have been assigned OMB Numbers 0560-0078, 0560-
0079, and 0560-0082.

[54 FR 41819, Oct. 12, 1989]



PART 702--COLORADO RIVER BASIN SALINITY (CRSC) CONTROL PROGRAM--Table of Contents




Sec.
702.1  General.
702.2  Definitions.
702.3  Administration.
702.4  Applicability.
702.5  Eligible land.
702.6  Eligible entity.
702.7  Salinity control plan.
702.8  Eligible salinity reduction practices (SRP's).
702.9  CRSC Contract and obligations of the participant.
702.10  Operation and maintenance agreements.
702.11  Obligations of USDA.
702.12  Availability of cost-share payments.
702.13  Levels and rates of cost-share payments.
702.14  Assignments.
702.15  Payments not subject to claims.
702.16  Maximum amount of cost-share payments.
702.17  Transfers of land and contract modifications.
702.18  Violations.
702.19  CRSC Contracts and operation and maintenance agreements not in 
          conformity with regulations.
702.20  Appeals.
702.21  Access to land.
702.22  Performance based upon advice or action of representatives of 
          the Department or a CD.
702.23  Filing of false claims.
702.24  Depriving others of payments.
702.25  Miscellaneous.
702.26  Paperwork Reduction Act assigned numbers.

    Authority: Sec. 201, Pub. L. 93-320, 88 Stat. 271; Sec. 2, Pub. L. 
98-569, 98 Stat. 2933 (43 U.S.C. 1592(c)).

    Source: 52 FR 16741, May 5, 1987, unless otherwise noted.



Sec. 702.1  General.

    The regulations in this part set forth the terms and conditions of 
the Colorado River Salinity Control (CRSC) Program authorized by section 
202 of the Colorado River Basin Salinity Control Act, as amended (43 
U.S.C. 1592) (the Act). Under the Act the Secretary is authorized to:
    (a) Identify salt-source areas in the Colorado River Basin;
    (b) Develop plans for implementing conservation measures that will 
reduce the salt load in the Colorado River, including the voluntary 
replacement of

[[Page 41]]

incidental fish and wildlife values foregone;
    (c) Share the cost of establishing such conservation measures and 
practices;
    (d) Provide technical assistance;
    (e) Monitor and evaluate changes in salt contributions to the 
Colorado River; and
    (f) Carry out related research, demonstration and education 
activities.



Sec. 702.2  Definitions.

    (a) The following definitions shall be applicable for the purposes 
of this part:
    (1) Applicant means an entity who has offered to enter into a CRSC 
Contract in accordance with the provisions of this part;
    (2) Actual cost means the direct costs of establishing a salinity 
reduction practice, and includes the cost of labor, supplies, and other 
necessary activities;
    (3) Average cost means the cost, determined by averaging actual 
costs and current cost estimates, considered to be necessary for a 
participant to carry out a salinity reduction practice, a designated 
component of a salinity reduction practice, or a system of practices;
    (4) Conservation District (CD) means a subdivision of a State 
organized pursuant to applicable State law. The term includes bodies 
variously known in the States as conservation district, soil 
conservation district, soil and water conservation district, natural 
resource district, resource conservation district, or natural resource 
conservation district;
    (5) Components means measurable units of a salinity reduction 
practice which, when completed by the program participant, can be 
certified by the Soil Conservation Service (SCS) as reasonable, 
identifiable progress toward completion of the practice with respect to 
which cost-share payment is being made under the CRSC program;
    (6) Conservation treatment means the combination of salinity 
reduction practices that will provide the salinity control treatment 
required to reduce seepage and improve irrigation water management in 
order to achieve the projected salt load reductions indicated in the 
applicable published USDA Salinity Control Report. Such treatment may 
include replacement of incidental fish and wildlife values foregone as a 
result of salinity control treatment applied by the participant under 
the CRSC program.
    (7) CRSC Contract means the contract including the salinity control 
plan, entered into in writing between the local Agricultural 
Stabilization and Conservation Committee (COC) and the participant which 
sets forth the terms and conditions for participation in the CRSC 
Program established in accordance with this part.
    (8) Cost-effective means maximization of the CRSC Program on-farm 
and offsite benefits at the least Federal cost per unit of salinity 
reduction.
    (9) Cost-share assistance means the providing of financial resources 
to assist program participants in establishing conservation treatment 
identified in participants' contracts;
    (10) Cost-share rate means a fixed amount of cost-share funds paid 
per unit for carrying out certain salinity reduction practices.
    (11) Deputy Administrator means the FSA Deputy Administrator for 
State and County Operations, or designee.
    (12) Entity means an individual or group of individuals, Indian 
tribe, partnership, firm, joint-stock company, corporation, association, 
trust, estate, irrigation district/company, or other public or nonpublic 
entity (except federal agencies), and wherever applicable, a State, a 
political subdivision of a State, or any agency thereof;
    (13) Fish and wildlife values foregone means incidental fish and 
wildlife habitats that may be affected adversely by salinity reduction 
practices applied by the program participant;
    (14) Irrigation district/company means a group of individuals 
(private or public) associated together in a locality, that has a vested 
interested in the operation of an irrigation distribution system that 
serve as a specific area. This definition includes irrigation districts, 
mutual water companies or districts, water conservancy districts, canal 
companies, and other similar entities;
    (15) Lifespan means the period of time during which a salinity 
reduction practice is expected to effectively achieve

[[Page 42]]

or provide the results for which it was developed and implemented.
    (16) Offsite benefits means those benefits which accrue downstream 
as a result of reduced salinity concentrations in the Colorado River by 
the salt load reductions achieved through implementation of the CRSC 
Program and/or its constituent practices and treatments;
    (17) On-farm benefits means those benefits which accrue on a farm 
from improved irrigation systems and efficiencies, including reduced 
production costs, reduced labor costs, reduced operation and maintenance 
costs, and improved crop yields;
    (18) Operation and Maintenance Agreement means the agreement entered 
into between the COC and the participant which sets forth the terms and 
conditions requiring the participant to use and maintain the salinity 
reduction practices for their effective lifespans as set forth in the 
agreement;
    (19) Participant means any entity who has entered into an approved 
CRSC Contract with the COC to participate in the CRSC Program;
    (20) Project implementation plan means a plan of operations 
developed by Farm Service Agency, Extension Service and Soil 
Conservation Service, in consultation with local officials for the 
purpose of implementing a project plan for a specific salt source area;
    (21) Project plan means that plan of conservation treatment that is 
identified in the applicable USDA Salinity Control Report as the 
preferred plan for implementation of salinity reduction practices in a 
specific salt source area. The project plan will identify cost-effective 
salinity reduction practices, the land which should receive conservation 
treatment on a priority basis in relation to other land in the specific 
salt source area, and the levels of conservation treatment needed in the 
specific salt source area in order to achieve the most cost-effective 
salinity control objectives for the particular area to be achieved;
    (22) Salinity control plan means the plan and schedule of operations 
that sets forth salinity reduction practices that must be establish on a 
specific unit of land. The salinity control plan shall be developed by 
the applicant with assistance from the SCS and must be approved by the 
CD;
    (23) Salinity Reduction Practice (SRP) means a specific conservation 
practice designed to reduce salt loading from a salt source area or to 
replace incidental fish and wildlife values foregone that is identified 
in a project plan and project implementation plan for a salt-source 
area;
    (24) Salt-source area means a geographical area within the Colorado 
River Basin that has been identified by SCS as a significant 
contributing source of salt to the Colorado River;
    (25) Specifications means minimum quantity and quality requirements 
established by SCS to meet the standard for a specific conservation 
practice;
    (26) State Conservationist means the SCS official in charge of 
agency operations within a state, as set forth in part 600 of this 
chapter;
    (27) Technical assistance means use of personnel and financial 
resources to identify salt-source areas, develop project plans, prepare 
salinity control plans, contracts, and designs, supervise plan 
installation, and carry out research, demonstration, education, 
monitoring, and evaluation activities;
    (28) USDA Salinity Control Report means a report that identifies 
salt source areas in the Colorado River Basin and establishes a cost-
effective project plan for such areas designed to reduce the salinity 
levels in the Colorado River. The USDA Salinity Control Report is 
prepared and published by the Soil Conservation Service with provision 
for public comment;
    (29) Technical guide means a document on file in the local SCS 
office containing technical information and specifications for the 
conservation of soil, water, plant, animal, and related natural 
resources specifically applicable to the area for which it is prepared.
    (b) In the regulations in this part and in all instructions, forms, 
and documents in connection therewith, all other words and phrases 
shall, unless the context of subject matter otherwise requires, have the 
meanings assigned to them in the regulations governing reconstitutions 
of farms, allotments and bases, 7 CFR part 719.

[52 FR 16741, May 5, 1987, as amended at 58 FR 11785, Mar. 1, 1993]

[[Page 43]]



Sec. 702.3  Administration.

    (a) Farm Service Agency. (1) The Farm Service Agency (FSA), under 
the general supervision of the Administrator, FSA, shall administer the 
program established by this part. This program shall be carried out in 
the field by State ASC committees (STC) and local county ASC committees 
(COC).
    (2) Except as provided in paragraph (b) of this section, the Deputy 
Administrator, State and County Operations, FSA (Deputy Administrator), 
may determine any question arising under the program provided for in 
this part, may reverse or modify any determination made by an STC or COC 
in connection with this program, and may administer any and all phases 
of this program delegated to the COC, STC, or any employee(s) where the 
COC, STC, or any employee fails to perform a function required in these 
regulations. In exercising this authority, the Deputy Administrator may 
authorize a person or persons to carry out this program for such period 
of time as is deemed necessary.
    (b) Soil Conservation Service. (1) The Soil Conservation Service 
(SCS) shall:
    (i) Identify salt source areas in the Colorado River Basin;
    (ii) Develop USDA Salinity Control Reports;
    (iii) Assist participants in developing salinity control plans; and
    (iv) Provide such other technical assistance in the implementation 
of the CRSC Program as is determined to be necessary.
    (2) The Chief, SCS, may determine any question arising under the 
CRSC Program with respect to the activities of SCS, State 
Conservationists, and conservation districts.
    (3) In developing the USDA Salinity Control Report and implementing 
the project plan, SCS shall coordinate with other agencies of the U.S. 
Department of Agriculture, the United States Department of the Interior, 
and the Environmental Protection Agency.
    (c) The Extension Service (ES) shall develop and coordinate 
information and educational programs and may provide other technical 
support to carry out the program provided for by this part.
    (d) Other USDA agencies such as Cooperative State Research Service 
(CSRS) and the Agricultural Research Service (ARS) may conduct research 
and may provide other technical support needed to carry out the CRSC 
Program.



Sec. 702.4  Applicability.

    (a) The provision of this part shall be applicable to areas within 
the Colorado River Basin that have been identified by SCS as salt source 
areas.
    (b) The program provided for by this part shall be applicable to 
private lands, Indian tribal lands, lands owned or controlled by 
irrigation districts or companies, Federal land under the control of the 
USDA, and State and local government lands.



Sec. 702.5  Eligible land.

    For the purposes of this part, eligible land is land that is within 
the Colorado River Basin area which:
    (a) Has been identified by SCS as a salt source area;
    (b) Is the subject of a published USDA Salinity Control Report and 
an approved project implementation plan;
    (c) Has been irrigated at least two years during the period between 
1982 and 1986, inclusive; and
    (d) Notwithstanding the criteria articulated in paragraphs (a) 
through (c) of this section, the Deputy Administrator has final 
authority to approve land for CRSC program eligibility if one of the 
following conditions is satisfied:
    (1) If it is determined impossible to reorganize the existing 
irrigation system to increase irrigation efficiencies to obtain salt 
load reduction, irrigated land may be exchanged for nonirrigated land.
    (2) Nonirrigated wildlife areas devoted to replacing incidental fish 
and wildlife values foregone because of the CRSC program.
    (3) Incidental land, which in the course of improving or 
reorganizing the existing irrigation system, becomes irrigable.

[52 FR 16741, May 5, 1987, as amended at 58 FR 11785, Mar. 1, 1993]

[[Page 44]]



Sec. 702.6  Eligible entity.

    In order to be eligible to enter into a CRSC Contract, an entity 
must own or have control over eligible land.



Sec. 702.7  Salinity control plan.

    (a) The applicant, in consultation with SCS, shall develop the 
salinity control plan which is the most cost-effective consistent with 
the project plan.
    (b) All salinity control plans must be approved by the CD in order 
for the SRP's contained therein to be eligible for cost-share 
assistance.
    (c) When approving salinity control plans, the CD shall ensure that 
the salinity control plan is consistent with the approved project plan 
and cost-effective SRP's identified in the approved project 
implementation plan for the area.



Sec. 702.8  Eligible salinity reduction practices (SRP's).

    (a) Eligible SRP's are those practices specified in the project 
implementation plan and the participant's salinity control plan that:
    (1) Significantly reduce the salt loading from a unit of land; or
    (2) Replace incidental fish and wildlife values foregone; or
    (3) Reduce erosion or seepage to a degree which significantly 
benefits salinity control.
    (b) Notwithstanding the foregoing provisions of this section, the 
following practices shall not be considered to be eligible SRP's:
    (1) Practices installed primarily for the purpose of bringing 
additional land into production, for increasing production above that 
which is incidental to application of conservation treatment for 
salinity control, or for flood protection; and
    (2) Practices which are installed or commenced before the contract 
for cost-share assistance has been approved.



Sec. 702.9  CRSC Contract and obligations of the participant.

    (a) In order to receive cost-share assistance in accordance with 
this part, an eligible entity must enter into a CRSC Contract with a COC 
and, if required by the COC, enter into separate operation and 
maintenance agreements in accordance with Sec. 702.10 of this part.
    (b) The CRSC Contract will be comprised of:
    (1) The terms and conditions of the contract; and
    (2) The salinity control plan.
    (c) All CRSC Contracts shall have a term of not less than 3 nor more 
than 10 years.
    (d) Eligible entities may offer to enter into a CRSC Contract in 
accordance with this part through the COC located in the same county as 
the eligible land or such other COC designated to administer contracts 
in the project area.
    (e) By entering into a CRSC Contract, the participant agrees to:
    (1) Carry out the terms and conditions of the CRSC Contract;
    (2) Implement the salinity control plan:
    (i) In accordance with the schedule of completion dates included in 
such plan, unless an extension of time is granted by the COC in 
consultation with the CD; and
    (ii) Install all SRP's included in the salinity control plan in 
accordance with the SCS field office technical guide, regardless of 
whether the applicant receives cost-share assistance with respect to a 
SRP;
    (3) Acquire all authorities, rights, easements, permits or other 
approvals necessary to install and maintain the SRP's and for compliance 
with applicable Federal, State, and local laws and regulations;
    (4) Hold the Federal government harmless for any losses it may 
sustain if the participant infringes on the rights of others or fails to 
comply with applicable Federal, State, or local laws or regulations;
    (5) Operate and maintain, at no cost to the Federal government, the 
SRP's as specified in the salinity control plan and ACP-245, Practice 
Approval and Payment Application, or as specified in separate operation 
and maintenance agreements entered into by the participant for the 
effective lifespan of the SRP's, as determined by SCS; and
    (6) Not undertake any action on the land subject to the CRSC 
Contract that tends to defeat the purposes of the program provided for 
by this part.

[[Page 45]]

    (f) All entities who have a present possessory interest in the land, 
to be eligible for CRSC cost share, must sign a CRSC contract.
    (g) The participant and each entity signing the CRSC Contract shall 
be jointly and severally responsible for compliance with the contract 
and the provisions of this part and for any refunds or payments which 
may be required for violation of any of the terms and conditions of the 
CRSC Contract and the provisions of this part.
    (h) The CRSC contract may require that all participants and/or 
landowners, as a condition of eligibility for cost-share assistance, 
grant to the Secretary a recordable security interest in the property or 
equipment of the SRP's that are installed, with the value of the granted 
interest to be determined by FSA.
    (i) The Deputy Administrator, or the Deputy Administrator's 
designee, may, in consultation with SCS and the CD, accept or reject 
offers to enter into a CRSC Contract.
    (j) CRSC Contracts shall be implemented, and salinity control plans 
shall be developed, in the order of priority within the applicable salt 
source area that is established by the COC and CD in consultation with 
SCS.

[52 FR 16741, May 5, 1987, as amended at 58 FR 11785, Mar. 1, 1993]



Sec. 702.10  Operation and maintenance agreements.

    (a) The participant shall enter into with the COC any operation and 
maintenance agreements determined to be necessary by the COC in order to 
ensure proper operation and maintenance of the SRP's provided for in the 
CRSC Contract.
    (b) The operation and maintenance agreement will be comprised of:
    (1) The terms and conditions of the agreement; and
    (2) An operation and maintenance plan prepared by SCS.
    (c) By entering in a operation and maintenance agreement, the 
participant agrees to:
    (1) Carry out the terms and conditions of the operation and 
maintenance agreement;
    (2) Operate and maintain, at no cost to the Federal government, the 
SRP's for the effective lifespan of all SRP's included in the operation 
and maintenance agreement;
    (3) Operate, maintain and inspect the SRP's in accordance with the 
operation and maintenance plan;
    (4) Obtain prior COC and SCS approval of all plans, designs, and 
specifications for any alteration to the SRP's;
    (5) Prohibit the installation of any structure or facility that will 
interfere with the operation and maintenance of the SRP's;
    (6) Notify the COC and SCS of any agreement to be entered into with 
other parties for the operation and maintenance of all or part of SRP's 
and provide the COC and SCS with a copy of such agreement when it has 
been signed by the participant and the other party; and
    (7) Not undertake any action on the land subject to the operation 
and maintenance agreement that tends to defeat the purposes of the CRSC 
program;
    (d) The participant and each person signing the operation and 
maintenance agreement shall be jointly and severally responsible for 
compliance with the operation and maintenance agreement and the 
provisions of this part and for any refunds or payment adjustments that 
may be required for violation of any of the terms and conditions of the 
operation and maintenance agreement and provisions of this part.



Sec. 702.11  Obligations of USDA.

    FSA shall, subject to the availability of funds, share the cost with 
participants of establishing eligible SRP's specified in the salinity 
control plan at the levels and rates of cost-sharing determined in 
accordance with the provisions of Sec. 702.13 and SCS shall provide such 
technical assistance as may be necessary to assist the participant in 
carrying out the CRSC Contract.



Sec. 702.12  Availability of cost-share payments.

    (a) Cost-share payments shall be made available to a participant in 
a CRSC Contract upon a determination by the COC that SCS has certified 
that

[[Page 46]]

the eligible SRP or an identifiable portion thereof has been established 
in accordance with the appropriate standards and specifications and that 
such SRP would serve the functional purposes for which the practice is 
intended.
    (b) Cost-share payments may be made available under this part only 
for the establishment or installation of an eligible SRP.
    (c) Cost-share assistance may be approved for the replacement, 
enlargement, or restoration of SRP's installed under a CRSC Contract if 
such practices, as originally installed, failed to achieve the desired 
salinity reduction and if:
    (1) The replacement, enlargement, or restoration of the SRP is 
required to solve identified problems or to achieve salt reduction 
benefits;
    (2) The approved specifications for the SRP were met in the original 
installation of the practice; and
    (3) The failure of the SRP to solve the identified problem or to 
achieve salt reduction benefits was caused by circumstances beyond the 
control of the participant.
    (d) If a participant has taken any action which tends to defeat the 
purposes of the program provided for by this part, the COC may withhold 
or require a refund of all or part of any payments otherwise due or paid 
that participant in accordance with this part. Such actions include, but 
are not limited to, failure to properly maintain or deliberately 
destroying a SRP.



Sec. 702.13  Levels and rates of cost-share payments.

    (a) The level of Federal cost-share assistance for the required 
SRP's for the project shall be determined by formulas as established in 
the USDA Salinity Control Report.
    (b) Except as provided in paragraph (c) of this section, cost-share 
payments shall not exceed the lesser of 70 percent of the average cost 
or 70 percent of the actual cost of the installation of the SRP.
    (c) The Deputy Administrator, in consultation with the USDA Salinity 
Control Coordinating Committee, may approve cost-share levels in excess 
of 70 percent of the average or actual cost of installation of the SRP 
or in excess of the level based on the ratio of on-farm and offsite 
benefits if such increased assistance is necessary to obtain acceptable 
program participation. Higher cost-share levels shall be considered only 
when one or more of the following apply, unless the Secretary finds at 
his descretion that such cost-sharing requirement would result in a 
failure to proceed with needed on-farm measures:
    (1) On-farm benefits that are low relative to offsite benefits;
    (2) Higher degree of project cost-effectiveness and magnitude of 
salinity reduction benefits to be achieved relative to other projects;
    (3) The need for and the cost of implementing voluntary SRP's to 
replace incidental fish and wildlife values foregone;
    (d) The combined cost-share assistance provided by Federal, State, 
and local governments or subdivisions thereof shall not exceed 100 
percent of the cost of installing the SRP.

[52 FR 16741, May 5, 1987, as amended at 58 FR 11786, Mar. 1, 1993]



Sec. 702.14  Assignments.

    Any participant entitled to cost-share payments under this program 
may assign the right to receive such payment, in whole or in part, as 
provided in the regulations at 7 CFR part 709, Assignment of Payment, or 
as provided in instructions issued by the Deputy Administrator.



Sec. 702.15  Payments not subject to claims.

    Subject to the regulations found at 7 CFR part 13, any cost-share 
payment or portion thereof due any entity shall be allowed without 
regard to questions of title under State law, and without regard to any 
claim or lien against the practice in favor of the owner or any other 
creditor, except agencies of the United States Government.



Sec. 702.16  Maximum amount of cost-share payments.

    (a) Maximum payments for on-farm SRP's.
    (1) Except as provided in paragraph (a)(2) of this section, the 
maximum amount of cost-share payments that a

[[Page 47]]

COC may approve for the establishment of on-farm SRP's on all land owned 
or controlled by a participant for the life of the program provided for 
by this part shall not exceed $100,000.
    (2) The Deputy Administrator may approve cost-share payments to a 
participant for the establishment of on-farm SRP's in excess of 
$100,000.
    (b) Except as provided in paragraphs (b)(1) and (b)(2) of this 
section, the maximum program cost-share payment that a COC may approve 
for implementing required SRP's for installing and improving canals and 
laterals on all land owned and controlled by a participant for the life 
of the program shall not exceed $200,000.
    (1) Upon the request of the COC, the STC may authorize the COC to 
approve cost-share payments to a participant for the establishment of 
canal and lateral improvements in an amount that exceeds, $200,000 but 
not greater than $400,000.
    (2) Upon the request of the COC, the Deputy Administrator may 
authorize the COC to approve cost-share payments to a participant for 
the establishment of canal and laterals improvements in amounts 
exceeding $400,000.
    (c) Cost-sharing payments in excess of $100,000 shall be considered 
only when such payment will result in greater total offsite benefits, 
because the offsite benefits for the participants SCP, are greater than 
those of other participants under consideration at the same time and one 
or more of the following conditions exist:
    (1) The cost of establishing required SRP's on the participant's 
land is high relative to the cost of installing practices on other 
similar land because of barriers or limitations imposed by nature or by 
man through past irrigation system practices;
    (2) The extent of SRP's that must be established on a participant's 
land; and
    (3) Increases in the cost of conservation materials and services 
that are beyond the participant's control.



Sec. 702.17  Transfers of land and contract modifications.

    (a) CRSC Contracts may be transferrred or modified with the 
agreement of all parties to the contract. The transferee shall assume 
full responsibility for performance under the CRSC Contract, including 
the implementation of scheduled SRP's and the operation and maintenance 
of existing and scheduled SRP's.
    (b) A participant who sells or loses control of the land under a 
CRSC Contract or any related operation and maintenance agreement to a 
new owner who refuses to perform the provisions of the CRSC Contract or 
operation and maintenance agreement or a participant who sells the water 
rights before there is compliance with all of the terms and conditions 
of a CRSC Contract or operation and maintenance agreement may be 
required to refund all or a portion of the cost-share assistance earned 
under the program.



Sec. 702.18  Violations.

    (a)(1) If a participant violates the CRSC Contract or any related 
operations and maintenance agreement, the COC may, after considering the 
recommendations of the CD and SCS, terminate the CRSC Contract and 
operation and maintenance agreement.
    (2) If the CRSC Contract is terminated by the COC in accordance with 
this section, the participant shall forfeit all rights to further cost-
share payments under the CRSC Contract and shall refund all or part of 
the payments received as determined by the COC.
    (b) The following actions constitute a violation of the CRSC 
Contract or any related operation and maintenance agreement by a 
participant:
    (1) Destruction of a SRP on land which is the subject of a CRSC 
Contract, unless prior approval in writing is granted by FSA with SCS 
concurrence;
    (2) Failure to comply with the terms and conditions of the CRSC 
Contract and any related operation and maintenance agreements;
    (3) Filing of a false claim;
    (4) Undertaking any action during the CRSC Contract or any operation 
and maintenance agreement period that tends to defeat the purpose of the 
program, including the destruction of any existing conservation 
practices that were established under any other cost-share program 
unless the participant provides evidence that all of the

[[Page 48]]

participant's obligations under such other program have been met; or
    (5) Employment of any scheme or device to obtain cost-share 
assistance or additional cost-share assistance, or to deprive any other 
land user of cost-share assistance or the right to participate in the 
program.
    (c) The Deputy Administrator may terminate any CRSC Contract and any 
related operation and maintenance agreements by mutual agreement with 
the paticipant based upon recommendations from COC, STC, SCS, and CD, if 
the termination of the CRSC Contract and operation and maintenance 
agreement is determined to be in the best interest of the public.
    (d) If the participant fails to perform the terms and conditions of 
the CRSC contract and the Deputy Administrator determines, after 
considering the recommendations of the CD and SCS, that such failure 
does not warrant termination of the CRSC contract, the Deputy 
Administrator may require such participant to refund all or part of the 
payments received under the CRSC contract, or to accept such adjustments 
in the payment as are determined to be appropriate by the Deputy 
Administrator.

[52 FR 16741, May 5, 1987, as amended at 58 FR 11786, Mar. 1, 1993]



Sec. 702.19  CRSC Contracts and operation and maintenance agreements not in conformity with regulations.

    If, after a CRSC Contract and related operation and maintenance 
agreement are entered in by the COC with a participant, it is discovered 
that such contract and operation and maintenance agreement are not in 
conformity with the provisions of this part as the result of a 
misunderstanding of the program procedures by a signatory to the 
contract and operation and maintenance agreement, a modification of the 
contract and operation and maintenance agreement may be made by mutual 
agreement. If the parties to the CRSC Contract and operation and 
maintenance agreement cannot reach agreement with respect to such 
modification, the contract and operation and maintenance agreement shall 
be terminated and all payments paid or payable under the contract shall 
be forfeited or refunded to the Federal government, except as may 
otherwise be allowed in accordance with the provisions of Sec. 702.18 of 
this part.



Sec. 702.20  Appeals.

    The participant may obtain a review, in accordance with the 
provisions of 7 CFR part 614 and 7 CFR part 11, of any administrative 
decision made under the provisions of this part.

[60 FR 67316, Dec. 29, 1995]



Sec. 702.21  Access to land.

    The COC, SCS or other agency providing technical services or 
representatives thereof shall have the right of access to land for which 
application to enter into a CRSC Contract has been made or for which a 
CRSC Contract has been entered into and the right to examine any program 
records to ascertain the accuracy of any representation made in the 
application or to determine compliance with the contract.



Sec. 702.22  Performance based upon advice or action of representatives of the Department or a CD.

    Notwithstanding any other provision of law, performance rendered in 
good faith in reliance upon the action or advice of any authorized 
representative of a CD, a representative of SCS or the STC or COC may be 
accepted by the Chief of SCS or the Deputy Administrator, as applicable, 
as meeting the requirements of this program. SCS or the Deputy 
Administrator, respectively, may grant relief because of such good faith 
reliance to the extent it is deemed necessary to provide fair and 
equitable treatment.



Sec. 702.23  Filing of false claims.

    (a) If it is determined by the COC, with STC concurrence, that any 
participant has knowingly submitted false information or filed a false 
claim, such participant shall be ineligible for payments under the 
provisions of this part with respect to the calendar year in which the 
false information or claim was filed.
    (b) False information or false claims include a claim for payment 
for a SRP not carried out or for the establishment of SRP's which do not 
meet the required specifications. Any amounts

[[Page 49]]

paid under these circumstances shall be refunded and any amounts 
otherwise due the participant shall be withheld. The withholding or 
refunding of such payments will be in addition to any other penalty or 
liability otherwise imposed by law.



Sec. 702.24  Depriving others of payments.

    If the COC with STC concurrence finds that any participant has 
employed any scheme or device to deprive any other person of payments 
under this part, it may withhold or require a refund of all or part of 
any program payment otherwise due or paid that person in accordance with 
the CRSC Contract. A scheme or device includes, but is not limited to, 
coercion, fraud, or misrepresentation.



Sec. 702.25  Miscellaneous.

    (a) In accordance with the regulations set forth at 7 CFR part 796:
    (1) No payment shall be made to any participant who harvests or 
knowingly permits to be harvested for illegal use, marihuana or other 
such prohibited drug-producing plants on any part of the lands owned or 
controlled by such participants; and
    (2) Any participant who is convicted under Federal or State law of 
planting, cultivating, growing, producing, harvesting, or storing a 
controlled substance in any crop year shall be ineligible for any 
payments under this part during that crop year and the four (4) 
succeeding crop years.
    (b) In case of death, incompetency, or disappearance of any 
participant, any cost-share payment due shall be paid to the 
participant's successor in accordance with provisions of 7 CFR part 707.



Sec. 702.26  Paperwork Reduction Act assigned numbers.

    The Office of Management and Budget has approved the information 
collection requirements contained in these regulations under the 
provisions of 44 U.S.C. Chapter 33 and OMB number 0560-0128 has been 
assigned.



PART 707--PAYMENTS DUE PERSONS WHO HAVE DIED, DISAPPEARED, OR HAVE BEEN DECLARED INCOMPETENT--Table of Contents




Sec.
707.1  Applicability.
707.2  Definitions.
707.3  Death.
707.4  Disappearance.
707.5  Incompetency.
707.6  Death, disappearance, or incompetency of one eligible to apply 
          for payment pursuant to the regulations in this part.
707.7  Form of application.

    Authority: 54 Stat. 728, as amended, sec. 121, 70 Stat. 197, sec. 
375, 52 Stat. 66, as amended, sec. 124(i), 75 Stat. 300, sec. 307(h), 76 
Stat. 617, sec. 318, 76 Stat. 622, sec. 324(2), 76 Stat. 630, sec. 704, 
68 Stat. 911, secs. 4, 8(b), 49 Stat. 164, 1149, as amended, sec. 
101(4), 76 Stat. 606, sec. 3, 77 Stat. 45, sec. 4, 62 Stat. 1070; 5 
U.S.C. 301, 7 U.S.C. 1334 note, 1339, 1375, 1379j, 1385, 1783, 1809; 16 
U.S.C. 590d, 590h(b), 590(e), 590p(h), 15 U.S.C. 714b(d)(j)(k).

    Source: 30 FR 6246, May 5, 1965, unless otherwise noted.



Sec. 707.1  Applicability.

    This part applies to all programs in title 7 of the Code of Federal 
Regulations which are administered by the Farm Service Agency under 
which payments are made to eligible program participants. This part also 
applies to all other programs to which this part is applicable by the 
individual program regulations.



Sec. 707.2  Definitions.

    ``Person'' when relating to one who dies, disappears, or becomes 
incompetent, prior to receiving payment, means a person who has earned a 
payment in whole or in part pursuant to any of the programs to which 
this part is applicable. ``Children'' shall include legally adopted 
children who shall be entitled to share in any payment in the same 
manner and to the same extent as legitimate children of natural parents. 
``Brother'' or ``sister'', when relating to one who, pursuant to the 
regulations in this part, is eligible to apply for the payment which is 
due a person who

[[Page 50]]

dies, disappears, or becomes incompetent prior to the receipt of such 
payment, shall include brothers and sisters of the half blood who shall 
be considered the same as brothers and sisters of the whole blood. 
``Payment'' means a payment by draft, check or certificate pursuant to 
any of the Programs to which this part is applicable. Payments shall not 
be considered received for the purposes of this part until such draft, 
check or certificate has been negotiated or used.



Sec. 707.3  Death.

    (a) Where any person who is otherwise eligible to receive a payment 
dies before the payment is received, payment may be made upon proper 
application therefor, without regard to claims of creditors other than 
the United States, in accordance with the following order of precedence:
    (1) To the administrator or executor of the deceased person's 
estate.
    (2) To the surviving spouse, if there is no administrator or 
executor and none is expected to be appointed, or if an administrator or 
executor was appointed but the administration of the estate is closed 
(i) prior to application by the administrator or executor for such 
payment or (ii) prior to the time when a check, draft, or certificate 
issued for such payment to the administrator or executor is negotiated 
or used.
    (3) If there is no surviving spouse, to the sons and daughters in 
equal shares. Children of a deceased son or daughter of a deceased 
person shall be entitled to their parent's share of the payment, share 
and share alike. If there are no surviving direct descendants of a 
deceased son or daughter of such deceased person, the share of the 
payment which otherwise would have been made to such son or daughter 
shall be divided equally among the surviving sons and daughters of such 
deceased person and the estates of any deceased sons or daughters where 
there are surviving direct descendants.
    (4) If there is no surviving spouse and no direct descendant, 
payment shall be made to the father and mother of the deceased person in 
equal shares, or the whole thereof to the surviving father or mother.
    (5) If there is no surviving spouse, no direct descendant, and no 
surviving parent, payment shall be made to the brothers and sisters of 
the deceased person in equal shares. Children of a deceased brother or 
sister shall be entitled to their parent's share of the payment, share 
and share alike. If there are no surviving direct descendants of the 
deceased brother or sister of such deceased person, the share of the 
payment which otherwise would have been made to such brother or sister 
shall be divided equally among the surviving brothers and sisters of 
such deceased person and the estates of any deceased brothers or sisters 
where there are surviving direct descendants.
    (6) If there is no surviving spouse, direct descendant, parent, or 
brothers or sisters or their descendants, the payment shall be made to 
the heirs-at-law in accordance with the law of the State of domicile of 
the deceased person.
    (b) If any person who is entitled to payment under the above order 
of precedence is a minor, payment of his share shall be made to his 
legal guardian, but if no legal guardian has been appointed payment 
shall be made to his natural guardian or custodian for his benefit, 
unless the minor's share of the payment exceeds $1,000, in which event 
payment shall be made only to his legal guardian.
    (c) Any payment which the deceased person could have received may be 
made jointly to the persons found to be entitled to such payment or 
shares thereof under this section or, pursuant to instructions issued by 
the Farm Service Agency, a separate payment may be issued to each person 
entitled to share in such payment.



Sec. 707.4  Disappearance.

    (a) In case any person otherwise eligible to receive payment 
disappears before receiving the payment, such payment may be made upon 
proper application therefor, without regard to claims of creditors other 
than the United States, to one of the following in the order mentioned:
    (1) The conservator or liquidator of his estate, if one be duly 
appointed.
    (2) The spouse.
    (3) An adult son or daughter or grandchild for the benefit of his 
estate.

[[Page 51]]

    (4) The mother or father for the benefit of his estate.
    (5) An adult brother or sister for the benefit of his estate.
    (6) Such person as may be authorized under State law to receive 
payment for the benefit of his estate.
    (b) A person shall be deemed to have disappeared if (1) he has been 
missing for a period of more than 3 months, (2) a diligent search has 
failed to reveal his whereabouts, and (3) such person has not 
communicated during such period with other persons who would be expected 
to have heard from him. Evidence of such disappearance must be presented 
to the county committee in the form of a statement executed by the 
person making the application for payment, setting forth the above 
facts, and must be substantiated by a statement from a disinterested 
person who was well acquainted with the person who has disappeared.



Sec. 707.5  Incompetency.

    (a) Where any person who is otherwise eligible to receive a payment 
is adjudged incompetent by a court of competent jurisdiction before the 
payment is received, payment may be made, upon proper application 
therefor, without regard to claims of creditors other than the United 
States, to the guardian or committee legally appointed for such 
incompetent person. In case no guardian or committee has been appointed, 
payment, if not more than $1,000, may be made without regard to claims 
of creditors other than the United States, to one of the following in 
the order mentioned for the benefit of the incompetent person:
    (1) The spouse.
    (2) An adult son, daughter, or grandchild.
    (3) The mother or father.
    (4) An adult brother or sister.
    (5) Such person as may be authorized under State law to receive 
payment for him (see standard procedure prescribed for the respective 
region).
    (b) In case payment is more than $1,000, payment may be made only to 
such person as may be authorized under State law to receive payment for 
the incompetent.



Sec. 707.6  Death, disappearance, or incompetency of one eligible to apply for payment pursuant to the regulations in this part.

    In case any person entitled to apply for a payment pursuant to the 
provisions of Sec. 707.3, Sec. 707.4, Sec. 707.5, or this section, dies, 
disappears, or is adjudged incompetent, as the case may be, after he has 
applied for such payment but before the payment is received, payment may 
be made upon proper application therefor, without regard to claims of 
creditors other than the United States, to the person next entitled 
thereto in accordance with the order of precedence set forth in 
Sec. 707.3, Sec. 707.4, or Sec. 707.5, as the case may be.



Sec. 707.7  Form of application.

    Persons desiring to claim payment in accordance with this part 707 
may do so on Form FSA-325, ``Application for Payment of Amounts Due 
Persons Who Have Died, Disappeared, or Have Been Declared Incompetent''. 
If the person who died, disappeared, or was declared incompetent did not 
apply for payment by filing the applicable program application for 
payment form, such program application for payment must also be filed in 
accordance with applicable regulations. If the payment is made under the 
Naval Stores Conservation Program, Part II of the Form FSA-325 shall be 
executed by the local District Supervisor of the U.S. Forest Service. In 
connection with applications for payment under all other programs 
itemized in Sec. 707.1, Form FSA-325, and program applications for 
payments where required, shall be filed with the FSA county office where 
the person who earned the payment would have been required to file his 
application.



PART 708--RECORD RETENTION REQUIREMENTS--ALL PROGRAMS--Table of Contents




    Authority: Sec. 4, 49 Stat. 164, secs. 7-17, 49 Stat. 1148, as 
amended; 16 U.S.C. 590d, 590g-590q.



Sec. 708.1  Record retention period.

    For the purposes of the programs in this chapter, no receipt, 
invoice, or other record required to be retained by any agricultural 
producer as evidence

[[Page 52]]

tending to show performance of a practice under any such program needs 
to be retained by such producer more than two years following the close 
of the program year of the program.

[25 FR 105, Jan. 7, 1960. Redesignated at 26 FR 5788, June 29, 1961]

[[Page 53]]





SUBCHAPTER B--FARM MARKETING QUOTAS, ACREAGE ALLOTMENTS, AND PRODUCTION 
                               ADJUSTMENT



PART 711--MARKETING QUOTA REVIEW REGULATIONS--Table of Contents




                                 General

Sec.
711.1  Effective date.
711.2  Expiration of time limitations.
711.3  Definitions.
711.4  Forms.
711.5  Public information.

                            Review Committee

711.6  Eligibility as member of a panel.
711.7  Appointment of members of a panel.
711.8  Oath of office.
711.9  Composition of review committee.
711.10  Term of office.
711.11  Compensation.
711.12  Effect of change in composition of review committee.

                              Jurisdiction

711.13  Areas of venue and jurisdiction.

                     Application for Review of Quota

711.14  Application for review.
711.15  Matters subject to review.
711.16  County committee answer.
711.17  Amendments.

                        Hearing and Determination

711.18  Place and schedule of hearing.
711.19  Notice of hearing.
711.20  Continuances.
711.21  Conduct of hearing.
711.22  Nonappearance of applicant.
711.23  Determination by review committee.
711.24  Service of determination.
711.25  Reopening of hearing.
711.26  Record of hearing.

                            Court Proceedings

711.27  Procedure in the case of court proceedings.

                               Puerto Rico

711.28  Special provisions applicable to Puerto Rico.

                           OMB Control Numbers

711.29  OMB control numbers assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: Secs. 301, 363-368, 371, 374, 375, 379, 52 Stat. 38, as 
amended, 63-66, amended, 79 Stat. 1211, as amended; 7 U.S.C. 1301, 1363-
1368, 1371, 1374, 1375, 1379.

    Source: 35 FR 15355, Oct. 2, 1970, unless otherwise noted.

                                 General



Sec. 711.1  Effective date.

    The Marketing Quota Review Regulations (26 FR 10204, 27 FR 4831, 
6539, 28 FR 3913, 31 FR 4271, 5663, 32 FR 15704) shall remain in effect 
and shall apply to all actions and proceedings taken prior to October 
15, 1970, and such regulations are superseded as of midnight, October 
14, 1970. The provisions of Secs. 711.1 to 711.50 are effective October 
15, 1970.



Sec. 711.2  Expiration of time limitations.

    The provisions of part 720 of this chapter concerning the expiration 
of time limitations shall apply to this part.



Sec. 711.3  Definitions.

    (a) General terms. In determining the meaning of the provisions of 
this part, unless the context indicates otherwise, words importing the 
singular include and apply to several persons or things, words importing 
the plural include the singular, words importing the masculine gender 
include the feminine as well, and words used in the present tense 
include the future as well as the present. The definitions in part 719 
of this chapter shall apply to this part.
    (b) Act. Act means the Agricultural Adjustment Act of 1938, and any 
amendments or supplements thereto.
    (c) Applicant. Applicant means the farmer who filed an application 
for review of a farm marketing quota and if a hearing involves the quota 
of a farm resulting from the reconstitution by division of a parent 
farm, the farm operator of each farm resulting from such reconstitution 
shall be considered an applicant for purposes of this part.
    (d) Clerk. Clerk means the county executive director for the county 
in which the application for review is filed unless another employee of 
the county or State office is designated by the State executive director 
to serve as clerk to the review committee.
    (e) Review committee. Review committee means three farmers 
designated

[[Page 54]]

to review a quota by the State executive director from the panel of 
farmers appointed by the Secretary under section 363 of the Act.
    (f) Quota. Quota means the farm marketing quota established under 
the Act for a farm during a year in which quotas are approved in the 
national referendum for a commodity, including any of the following 
factors:
    (1) Farm acreage allotment, farm marketing quota, and any 
adjustments in such allotment and quota resulting from: (i) Program 
violations; (ii) lease and transfer; (iii) sale and purchase; (iv) 
overmarketing and undermarketing; (v) release and reapportionment; (vi) 
eminent domain transactions; and (vii) forfeiture and reallocation.
    (2) Farm preliminary yield, farm normal yield and farm yield.
    (3) A determination of the land constituting a farm for which a farm 
acreage allotment or farm marketing quota is established, including the 
following: (i) Land devoted to nonagricultural use, (ii) land used for 
agricultural purposes, (iii) cropland acreage; and (iv) tillable 
cropland.
    (4) Acreage planted to the commodity on the farm.
    (5) Actual production for the farm.
    (6) Farm marketing excess (acres or pounds).
    (7) Marketing quota penalties, including but not limited to, 
assessments for marketing quota violations involving: (i) False 
identification, (ii) failure to account for production and disposition, 
(iii) failure to file a report, and (iv) the filing of a false report.

(Secs. 301, 363-368, 371, 374, 375, 379, 52 Stat. 38 as amended, 63-64, 
as amended, 66, as amended; 7 U.S.C. 1301, 1363-1368, 1375)

[35 FR 15355, Oct. 2, 1970, as amended by Amdt. 9, 45 FR 37398, June 3, 
1980; 49 FR 38240, Sept. 28, 1984]



Sec. 711.4  Forms.

    The following general forms, as revised from time to time, are 
prescribed for use in connection with review proceedings;
    (a) MQ-53 Application for Review of Farm Marketing Quota.
    (b) MQ-54 Notice of Untimely Filing of Review Application.
    (c) MQ-56 Notice of Hearing of Review Application.
    (d) MQ-58 Determination of Review Committee Farm Marketing Quota.
    (e) MQ-59 Oath of Review Committeeman.



Sec. 711.5  Public information.

    The clerk shall maintain a record of applications and review 
committee proceedings which shall be available at the office of the 
clerk for public inspection and copying in accordance with part 798 of 
this chapter.

                            Review Committee



Sec. 711.6  Eligibility as member of a panel.

    Any farmer who meets the eligibility requirements for county 
committeeman prescribed in the regulations in part 7 of subtitle A of 
this title, as amended, in a county within the area of venue for which 
he is to be appointed shall be eligible for appointment as a member of a 
review committee panel for such area of venue. If the area of venue 
consists of only one county or a part of a county, these eligibility 
requirements must be met in such county or in a nearby county. No farmer 
whose legal residence is in one State shall be eligible for appointment 
as a member of a review committee panel for an area of venue in another 
State.



Sec. 711.7  Appointment of members of a panel.

    The Secretary shall appoint six or more eligible farmers to serve as 
members of a review committee panel in each area of venue. Notice of 
appointment shall be sent to the State committee, which shall notify the 
farmers so appointed. Appointments may be made before, during, or after 
the period in which applications for review of quotas are required to be 
filed. Notwithstanding the foregoing, the Secretary shall have the 
continuing power to revoke or suspend any appointment made pursuant to 
the regulations in this part, and subject to the provisions of the act, 
to make such other appointment deemed proper.

[[Page 55]]



Sec. 711.8  Oath of office.

    Each farmer appointed to serve as a member of a review committee 
panel shall, as soon as possible after appointment, execute an oath of 
office on such form as may be prescribed by the Deputy Administrator, 
duly subscribed and sworn to or affirmed before a notary public. No 
farmer shall serve on a review committee unless such oath of office has 
been duly executed and filed with the State executive director or the 
clerk. A farmer appointed for consecutive terms to serve as a member of 
a review committee panel shall not be required to file a new oath of 
office after the original filing. If the form of oath of office is 
materially changed, a new oath of office shall be executed if required 
by the Deputy Administrator.



Sec. 711.9  Composition of review committee.

    (a) Three designated members from the panel constitute a review 
committee. Three members from the panel shall act as a review committee 
to hear applications for review for the prescribed area of venue. The 
State executive director shall designate from the panel of members for 
the prescribed area of venue three members who shall act as a review 
committee to hear specific applications and shall designate one of these 
three members as chairman of the review committee and another member as 
vice-chairman. Where the number of applications pending require two or 
more review committees for prompt disposition of such applications, the 
State executive director shall designate the members of each review 
committee, the chairman and vice chairman thereof, and the specific 
application to be heard by each review committee. Two or more review 
committees may hear applications concurrently in an area of venue. In 
the absence of the chairman, the vice chairman shall perform the duties 
and exercise the powers of the chairman. The State executive director 
shall notify members of each review committee of the schedule of 
hearings. No member shall serve in any case in which a quota will be 
reviewed for a farm in which such member, any of his relatives or 
business associates, is interested, nor shall any member serve where he 
had acted as State, county, or community committee member on a quota to 
be reviewed by the review committee.
    (b) Only two members present to commence hearing. Where only two 
members of a review committee are present to commence a hearing, 
although three members were scheduled to hear the application, at the 
request of or with the consent of the applicant in writing, a hearing 
conducted by two members of the review committee shall be deemed to be a 
regular hearing of the review committee as to such application. The 
determination made by such members shall constitute the determination of 
the review committee. In the event such members cannot agree upon a 
determination, such fact shall be set forth in writing and a new hearing 
scheduled by the State executive director. If the applicant does not 
consent in writing to a hearing conducted by two members of the review 
committee, the hearing shall be rescheduled.
    (c) Only two members remain to complete a hearing. Where only two 
members of a review committee remain to complete a hearing commenced 
with three members, due to serious illness, death, or other cause which 
prevents one of the members from completing the hearing within a 
reasonable time, at the request or with the consent of the applicant in 
writing, the remaining two members of the review committee shall 
henceforth constitute an entire review committee for the purpose of such 
hearing. In the event such members cannot agree upon a determination, 
such fact shall be set forth in writing and a new hearing scheduled by 
the State executive director. If the applicant does not consent in 
writing to completion of the hearing by two members of the review 
committee, the hearing shall be rescheduled.
    (d) Reopened or remanded hearings. In the case of a reopened or 
remanded hearing, if any member of the review committee is no longer in 
office because of death, resignation, or ineligibility, the State 
executive director shall designate another member of the review 
committee panel to serve on the review committee. If a hearing held 
pursuant to paragraph (b) or (c) of this section is reopened or remanded 
and

[[Page 56]]

only one review committee member is available to hear such reopened or 
remanded hearing, the State executive director shall designate two 
additional members from the review committee panel to serve on the 
review committee.



Sec. 711.10  Term of office.

    Appointment as a member of a review committee panel shall be for a 
term of 3 calendar years. A member may be reappointed for succeeding 
terms. Notwithstanding the foregoing, a review committee shall continue 
in office to conclude hearings before it which are begun during such 3-
year term and make final determinations thereof, or to hold a reopened 
hearing, or to conclude a hearing remanded to it by a court.

[Amdt. 3, 38 FR 967, Jan. 8, 1973]



Sec. 711.11  Compensation.

    The members designated as review committeemen shall receive 
compensation when serving at the same rate as that received by the 
members of the county committee which established the quotas sought to 
be reviewed. No member of a review committee shall be entitled to 
receive compensation for services as such member for more than 30 days 
in any one year. Payment of compensation, reimbursement for travel 
expenses and rates therefor, shall be made under such conditions as may 
be prescribed by the Deputy Administrator.



Sec. 711.12  Effect of change in composition of review committee.

    Nothing contained in Secs. 711.6 to 711.11 relating to any vacancy 
or revocation or suspension of appointment and nothing done pursuant 
thereto shall be construed as affecting the validity of any prior 
hearing conducted or determination made in accordance with the 
regulations in this part, in which the member of the review committee 
whose office has become vacant participated, or as affecting in any way 
court proceeding which may be instituted to review such determination.

                              Jurisdiction



Sec. 711.13  Areas of venue and jurisdiction.

    (a) Areas of venue. The State committee shall establish one or more 
areas of venue in the State. An area of venue may consist of all or part 
of a county, or more than one county within a State. In establishing 
areas of venue, the State committee shall take into consideration the 
requirements of section 363 of the Act as to eligibility of review 
committee members, the prompt handling of applications for review, 
transportation problems and the limit of 30-day service by review 
committeemen in any one year.
    (b) Jurisdiction. A review committee shall have jurisdiction within 
the area of venue for which it is established to hear applications 
respecting quotas established or denied by written notice issued by the 
county committee or other authorized official for farms within its area 
of venue, in accordance with this part.
    (c) A listing of the areas of venue within a State shall be 
available from the State FSA office and the Deputy Administrator.

[35 FR 15355, Oct. 2, 1970, as amended at 49 FR 38240, Sept. 28, 1984]

                     Application for Review of Quota



Sec. 711.14  Application for review.

    (a) Manner and time of filing. Any farmer who is dissatisfied with 
his quota may, within 15 days after the date of mailing to him of notice 
of such quota, file a written application for review thereof by the 
review committee. Such 15-day period is prescribed in accordance with 
section 363 of the Act. Unless application for review is timely filed, 
as determined under this section, the quota established by the notice 
shall not be subject to review by the review committee. Notice of quota 
subject to review under this part includes an official written notice as 
to the land constituting the farm. For example, a notice denying a 
request for farm reconstitution would be such a reviewable notice of 
quota. An application shall be in writing and addressed to, and filed 
with, the county executive director for the county from which the

[[Page 57]]

notice of quota was received. Any application (Form MQ-53 available on 
request) whether made on Form MQ-53 or not, shall contain the following:
    (1) Date of application and commodity (including type where 
applicable, e.g. Upland cotton, Flue-cured tobacco).
    (2) Correct full name and address of applicant.
    (3) Brief statement of each ground upon which the application is 
based.
    (4) A statement of the amount of quota which it is claimed should 
have been established.
    (5) Signature of applicant.

In any case where an application is timely filed for review of a quota 
on a farm which was reconstituted by division of a parent farm into two 
or more farms, such application shall be considered an application for 
review of the reconstitution of the parent farm. In any such case the 
farm operator of each farm resulting from such reconstitution shall be 
considered an applicant for purposes of this part with all the rights 
and privileges provided in this part. If an action may be taken by an 
applicant which affects the rights of any other applicant in the case, 
the other applicants shall be given the opportunity to concur in such 
action or to oppose such action.
    (b) Procedure where application is not timely filed. The county 
committee shall examine each application for review. If the application 
is not filed within the prescribed 15-day period, the county executive 
director shall send a notice of untimely filing on Form MQ-54 by 
certified mail to the applicant at the address shown on the application. 
The applicant may file a request in writing with the county executive 
director within 15 days after the date of mailing such notice to him 
requesting a review committee hearing on the sole issue of whether the 
application was filed within the prescribed 15-day period. In the 
absence of timely request in writing for such review committee hearing, 
the application shall be deemed withdrawn by the applicant. If timely 
request in writing for such review committee hearing is filed, a copy of 
the application and request shall be forwarded by the county executive 
director to the State executive director with a request that a hearing 
on the sole issue of timely filing be scheduled before the review 
committee. In cases involving the sole issue of timely filing of an 
application, the review committee shall determine whether the date the 
application was filed, or the postmark date in case of mailing by the 
applicant, was within the 15-day period. If the review committee 
determines that the application was timely filed, a hearing on the 
merits of the application shall be held. In addition, a hearing on the 
merits shall be conducted and the application treated as timely filed in 
any case where the review committee determines that the applicant in 
good faith requested review of his quota by the county or State 
committee under the regulations in part 780 of this chapter in reliance 
upon action or advice of any authorized representative of a county or 
State committee and subsequently filed application for review under this 
part within a reasonable time after he learns that the quota is subject 
to review committee jurisdiction.
    (c) Withdrawal of application. An application may be withdrawn upon 
the written request of the applicant. Any application so withdrawn or 
deemed withdrawn under paragraph (b) of this section shall be endorsed 
by the clerk ``Dismissed by the applicant''.
    (d) Procedure where application is timely filed. The county 
committee shall examine each application for review and where an 
application is found to be timely filed, the county executive director 
shall forward a copy of the application to the State executive director 
with a request that a hearing on the merits be scheduled before the 
review committee.



Sec. 711.15  Matters subject to review.

    In all cases, the review committee shall consider only such factors 
as, under applicable provisions of law and regulations, are required or 
permitted to be considered by the county committee in the establishment 
of the quota being reviewed. The establishment of national marketing 
quotas and apportionment of national acreage allotments and marketing 
quotas among States and counties and the establishment of reserve 
acreages and quotas at

[[Page 58]]

the national level and apportionment of such reserves among States and 
counties are not subject to review by a review committee. Review of a 
quota may include any of the factors which enter into the establishment 
of such quota for the farm and crop year as set forth in Sec. 711.3(f): 
Provided, however, That any factor of such quota considered by a review 
committee in a prior determination for the farm and crop year shall not 
be considered in a subsequent review proceeding. For example, a 
determination of the farm acreage allotment by the review committee 
would not be reconsidered upon any application for review of the farm 
marketing excess for the same farm and crop year.

[49 FR 38240, Sept. 28, 1984]



Sec. 711.16  County committee answer.

    (a) The county committee shall prepare a written answer to each 
application scheduled for hearing setting forth the pertinent facts, the 
applicable regulations, the data used in establishing the quota and any 
other matters deemed pertinent:
    (b) Provided, That the answer may be limited to the issue of timely 
filing where the hearing is limited to that issue. If the county 
committee determines that the increase, adjustment or other 
determination requested in the application is proper in whole or in 
part, the written answer shall set forth the proposed determination and 
in such cases, the applicant shall be notified by the county committee 
of such proposed determination prior to the scheduled review hearing if 
practicable to do so. In the event the applicant is satisfied with the 
proposed determination, the county committee shall, upon the withdrawal 
of the application, take the necessary action to revise the quota within 
the limits of the Act and applicable commodity regulations if the 
required amount of acreage allotment or marketing quota is available in 
the county. The State executive director may perform the functions of 
the county committee under this section and the functions of the county 
committee and county executive director under Sec. 711.14 (b) and (d) in 
any case where the application for review involves a notice of farm 
marketing quota issued by officials other than the county committee.

[35 FR 15355, Oct. 2, 1970, as amended at 49 FR 38240, Sept. 28, 1984]



Sec. 711.17  Amendments.

    Upon due request, and within the discretion of the review committee, 
the right to amend the application and all procedural documents in 
connection with any hearing, shall be granted upon such reasonable terms 
as the review committee may deem right and proper.

                        Hearing and Determination



Sec. 711.18  Place and schedule of hearing.

    The place of hearing shall be in the office of the county committee 
through which the quota sought to be reviewed was established, or such 
other appropriate place in the county as may be designated by the State 
executive director or by the review committee in cases arising under 
Sec. 711.21: Provided, however, That the place of hearing may be in some 
other county if agreed to in writing by the applicant. The State 
executive director shall schedule applications for hearings and forward 
such schedule to the clerk.



Sec. 711.19  Notice of hearing.

    The clerk shall give written notice on Form MQ-56 to the applicant 
by depositing such notice in the U.S. mail, certified and addressed to 
the last known address of the applicant at least 10 days prior to the 
time appointed for the hearing and copies of such notice shall also be 
sent to the county committee and the State office. If the applicant 
requests waiver of such 10-day period, the hearing may be scheduled 
earlier upon consent of the other interested parties. The notice of the 
hearing shall specify the time and place of the hearing, contain a 
statement of the statutory authority for the hearing, state that the 
application will be heard by the review committee duly appointed for the 
area of venue in which the applicant's farm is located, and that a 
verbatim transcript may be obtained by the applicant if he makes 
arrangement therefor before the hearing and pays the expense thereof.

[[Page 59]]



Sec. 711.20  Continuances.

    Hearings shall be held at the time and place set forth in the notice 
of hearing or in any subsequent notice amending or superseding the prior 
notice, but may without notice other than an announcement at the hearing 
by the chairman of the review committee, be continued from day to day or 
adjourned to a different place in the county or to a later date or to a 
date and place to be fixed in a subsequent notice to be issued pursuant 
to Sec. 711.19. In the event a full committee of three is not present, 
those members present, or in the absence of the entire committee, the 
clerk, shall postpone the hearing unless the hearing is held pursuant to 
Sec. 711.9 (b) or (c). There shall not be a continuance for lack of a 
full committee in the case of a reopened or remanded hearing where the 
hearing was initially held pursuant to Sec. 711.9 (b) or (c) and the two 
review committeemen who previously held the hearing are present and 
eligible to serve.



Sec. 711.21  Conduct of hearing.

    (a) Open to public. Except as otherwise provided in Secs. 711.1 to 
711.50, each hearing shall take place before the entire review committee 
and shall be presided over by the chairman of such committee. The 
hearing shall be open to the public and shall be conducted in a fair and 
impartial manner and in such a way as to afford the applicant, members 
of the appropriate county and community committees, and appropriate 
officers and agents of the Department of Agriculture, and all persons 
appearing on behalf of such parties, reasonable opportunity to give and 
produce evidence relevant to the quota being reviewed.
    (b) Consolidation of hearings. Wherever practicable, two or more 
applications relating to the same commodity and the same farm shall be 
consolidated by the review committee on its own motion or at the request 
of the State executive director and heard at the same time on the same 
record. In any case involving two or more farms resulting from 
reconstitution by division of a parent farm, the hearing shall be 
consolidated.
    (c) Representation. The applicant and the Secretary may be 
represented at the hearing. The county committee shall be present or 
represented at the hearing.
    (d) Order of procedure. At the commencement of the hearing, the 
chairman of the review committee shall read or cause to be read the 
pertinent portions of the application for review. The written answer of 
the county committee shall be submitted and shall be made a part of the 
record of the hearing. If the applicant asserts and shows to the 
satisfaction of the review committee that he has not been informed of 
the county committee's position in time to afford him adequate 
opportunity to prepare and present his case, the review committee shall 
continue the hearing, without notice other than announcement thereof at 
the hearing, for such period of time as will afford the applicant 
reasonable opportunity to meet the issues of fact and law involved. 
After answer by the county committee and following such continuance, if 
any, as may be granted by the review committee, evidence shall be 
received with respect to the matters relevant to the quota under review 
in such order as the chairman of the review committee shall prescribe. 
The review committee may take official notice of relevant publications 
of the Department of Agriculture and regulations of the Secretary.
    (e) Submission of evidence. The burden of proof shall be upon the 
applicant as to all issues of fact raised by him. Each witness shall 
testify under oath or affirmation administered by the member of the 
review committee who is presiding at the hearing. The review committee 
shall confine the evidence to pertinent matters and shall exclude 
irrelevant, immaterial, or unduly repetitious evidence. Interested 
persons shall be permitted to present oral and documentary evidence, to 
submit rebuttal evidence and to conduct such cross-examination as may be 
required for a full and true disclosure of the facts. The hearing shall 
be concluded within such reasonable time as may be determined by the 
review committee.
    (f) Transcript of testimony. The review committee shall provide for 
the taking of such notes including but not limited to stenographic 
reports or recordings at the hearing as will enable it to make

[[Page 60]]

a summary of the proceedings and the testimony received at the hearing. 
The testimony received at the hearing shall be reported verbatim by a 
representative of a private firm under an existing Departmental contract 
for such services if the review committee, the State Executive Director, 
or the applicant, requests such transcript be made. If such transcript 
is so requested, the State Executive Director shall advise the Deputy 
Administrator, State and County Operations, prior to the hearing date 
who will then arrange for the service. A copy of such transcript shall 
be furnished to each of the following: The review committee, the State 
Executive Director, and the Regional Attorney, Office of the General 
Counsel, United States Department of Agriculture. The applicant or his 
representative may obtain a copy from the firm at his own expense.
    (g) Written arguments and proposed findings. The review committee 
shall permit the applicant, the members of the appropriate county and 
community committees, and appropriate officers and agents of the 
Department of Agriculture to file written arguments and proposed 
findings of fact and conclusions, based on the evidence adduced at the 
hearing, for the consideration of the review committee within such 
reasonable time after the conclusion of the hearing as may be prescribed 
by the review committee. Such written arguments and proposed findings 
shall be filed in triplicate with the clerk and an additional copy 
thereof shall be provided to the other party.

[35 FR 15355, Oct. 2, 1970, as amended by Amdt. 5, 38 FR 16989, June 28, 
1973]



Sec. 711.22  Nonappearance of applicant.

    (a) Original hearing. If, at the time of the hearing, the applicant 
is absent and no appearance is made on his behalf, the review committee 
shall, after a lapse of such period of time as it may consider proper 
and reasonable, have the name of the absent applicant called in the 
hearing room. If, upon such call, there is no response, and no 
appearance on behalf of such applicant and no continuance has been 
requested by the applicant, the review committee shall thereupon close 
the hearing, as to such applicant, and, without further proceedings in 
the case, make a determination dismissing the application.
    (b) Reopened or remanded hearing. If, at a hearing which is reopened 
pursuant to Sec. 711.25 or remanded by a court, the applicant is absent 
and no appearance is made on his behalf, the review committee shall 
continue the hearing for a reasonable period of time and if the 
applicant does not appear at such continued hearing, the review 
committee shall make a determination.



Sec. 711.23  Determination by review committee.

    As soon as practicable after hearing on an application, including a 
hearing on the sole issue of timely filing, the review committee shall 
make a determination upon the application. If it is determined by the 
review committee that the application should be dismissed for untimely 
filing or denied, the review committee shall so indicate. If it is 
determined that the application should be granted in whole or in part, 
the review committee shall establish the quota which it finds to be 
proper. Each determination made by the review committee shall be in 
writing, shall contain specific findings of fact and conclusions 
together with the reasons or basis therefor, and shall be based upon and 
made in accordance with reliable, probative, and substantial evidence 
adduced at the hearing. The concurrence of two members of the review 
committee shall be sufficient to make a determination. The written 
determination shall contain such subscription by each member of the 
review committee as will indicate his concurrence therein or his dissent 
therefrom. In case of an increase in the quota, the review committee 
shall specifically state in the determination in what respect, if any, 
the county committee has failed properly to apply the act and 
regulations thereunder. If such increase is based upon evidence not 
available to the county committee, the findings of the review committee 
shall so indicate. The appropriate county executive director shall make 
available to the review committee such clerical and stenographic 
assistance as may be required.

[[Page 61]]



Sec. 711.24  Service of determination.

    A copy of the determination, certified by the clerk as a true and 
correct copy of the signed original, shall be served upon the applicant 
by sending the same by certified mail addressed to the applicant at his 
last known address. The copy of the determination shall contain at the 
top thereof substantially the following statement: ``To all persons who, 
as operator, landlord, tenant, or sharecropper, are or will be 
interested in the above-named commodity on the farm identified below in 
the year for which the marketing quota being reviewed is established'' 
and such statement shall constitute notice to all such persons. The 
clerk shall make a notation on the original determination of the date 
and place of such mailing. The clerk forthwith shall forward two copies 
of such determination to the State office, and one copy to the county 
committee. The determination of the review committee does not become 
final until the period for reopening of hearing under Sec. 711.25 has 
expired without any reopening; or if reopened thereunder, such 
determination becomes final upon issuance of a new determination 
pursuant to the reopened hearing, subject to further appeal to a court 
by the applicant.



Sec. 711.25  Reopening of hearing.

    (a) Upon motion of review committee. Upon its own motion within 15 
days from the date of mailing to the applicant of a copy of the 
determination of the review committee, the review committee may reopen a 
hearing for the purpose of taking additional evidence or of adding any 
relevant matter or document.
    (b) Upon written request based on new evidence. Upon written request 
by the applicant, the county committee, the State executive director, or 
other interested parties, to the review committee within 15 days from 
the date of mailing to the applicant of a copy of the determination of 
the review committee, the review committee shall reopen the hearing for 
the purpose of taking additional evidence or of adding any relevant 
matter or document if the review committee finds that such evidence or 
documents constitute new evidence not available to the parties at the 
time of the hearing.
    (c) Upon written notice by the Secretary. Upon written notice by the 
Secretary or on his behalf by the Deputy Administrator to the review 
committee within 45 days from the date of mailing to the applicant of a 
copy of the determination of the review committee on Form MQ-58, the 
hearing shall be deemed reopened and the State executive director shall 
schedule the reopened hearing.
    (d) Schedule of reopened hearing. Schedule of and notice of any 
reopened hearing shall follow the requirements of Secs. 711.18 and 
711.19 insofar as practicable. Notwithstanding the provisions of 
paragraphs (a), (b), and (c) of this section, no hearing shall be 
reopened after an appeal to a court pursuant to section 365 of the act 
has been timely filed by the applicant. No special hearing to contest a 
reopening of a hearing shall be scheduled; however, the applicant may 
present evidence and arguments to contest the reopening when the 
reopened hearing is held.



Sec. 711.26  Record of hearing.

    The record of the proceedings shall be prepared by the clerk and 
shall consist of the following:
    (a) All procedural documents in the case under review, including the 
application and written notices of quota and hearing and any other 
written notice in connection with the application.
    (b) Copies of regulations presented at the hearing.
    (c) The answer of the county committee or the State executive 
director.
    (d) The summary of the proceedings and the testimony prepared by the 
review committee if a verbatim transcript is not made, or a transcript 
of the testimony where a verbatim transcript is made, in accordance with 
Sec. 711.21(f), to which shall be annexed any documentary evidence 
received at the hearing.
    (e) Any written arguments or proposed findings of fact and 
conclusions filed in connection with the hearing.
    (f) The written determination of the review committee.
    (g) A list of all papers included in the record and a certificate by 
the clerk

[[Page 62]]

stating that such record is true, correct and complete.

                            Court Proceedings



Sec. 711.27  Procedure in the case of court proceedings.

    Upon the institution of any suit against the review committee for 
the purpose of reviewing its determination upon any application for 
review, the review committee is required by section 365 of the Act to 
certify and file in court a transcript of the record upon which the 
determination was made, together with the findings of fact made by the 
review committee. Any suit for review is required to be instituted by 
the applicant within 15 days after a notice of the review committee's 
determination is mailed to him. Such suit may be instituted in the U.S. 
District Court or in any court of record of the State having general 
jurisdiction, sitting in the county of the district in which the 
applicant's farm is located. The bill of complaint in such proceeding 
may be served by delivering a copy thereof to any member of the review 
committee. Any member of the review committee served with papers in such 
suit shall immediately forward such papers to the clerk. No member of 
the review committee shall appear or permit any appearance in his behalf 
or in behalf of the review committee, or take any action in respect to 
the defense of such suit, except in accordance with the instructions 
from the Deputy Administrator.

                               Puerto Rico



Sec. 711.28  Special provisions applicable to Puerto Rico.

    Notwithstanding the provisions of Secs. 711.1 to 711.50, the 
Caribbean Area Agricultural Stabilization and Conservation Committee 
(hereinafter referred to as the ``ASC Committee'') shall perform, 
insofar as applicable, the duties and assume such responsibilities and 
be subject to the limitations as are otherwise required of State and 
county committees except as provided herein. The Director, Caribbean 
Area FSA office, shall recommend members of the review committee panel, 
the areas of venue, and perform the functions of the State executive 
director. Any farmer who is eligible to vote in a referendum for which a 
quota has been proclaimed shall be eligible for appointment as a member 
of a review committee panel. The clerk shall be the ASC district 
supervisor of the district in which the review committee will hold its 
hearings. Where it is impractical or impossible to use the United States 
mail to serve the applicant with notice of hearing or determination, use 
shall be made of such other method of service as is available. However, 
when such other method is used, the ASC Committee shall make provision 
for keeping an accurate record of the date and method of delivery to the 
applicant.

                           OMB Control Numbers



Sec. 711.29  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR part 711) have been approved by the Office of 
Management and Budget (OMB) in accordance with the provisions of the 44 
U.S.C. Chapter 35 and have been assigned OMB control number 0560-0068.

[49 FR 38240, Sept. 28, 1984]



PART 714--REFUNDS OF PENALTIES ERRONEOUSLY, ILLEGALLY, OR WRONGFULLY COLLECTED--Table of Contents




Sec.
714.35  Basis, purpose, and applicability.
714.36  Definitions.
714.37  Instructions and forms.
714.38  Who may claim refund.
714.39  Manner of filing.
714.40  Time of filing.
714.41  Statement of claim.
714.42  Designation of trustee.
714.43  Recommendation by county committee.
714.44  Recommendation by State committee.
714.45  Approval by Deputy Administrator.
714.46  Certification for payment.

    Authority: Secs. 372, 375, 52 Stat. 65, as amended, 66, as amended; 
7 U.S.C. 1372, 1375.

    Source: 35 FR 12098, July 29, 1970, unless otherwise noted.

[[Page 63]]



Sec. 714.35  Basis, purpose, and applicability.

    (a) Basis and purpose. The regulations set forth in this part are 
issued pursuant to the Agricultural Adjustment Act of 1938, as amended, 
for the purpose of prescribing the provisions governing refunds of 
marketing quota penalties erroneously, illegally, or wrongfully 
collected with respect to all commodities subject to marketing quotas 
under the Act.
    (b) Applicability. This part shall apply to claims submitted for 
refunds of marketing quota penalties erroneously, illegally, or 
wrongfully collected on all commodities subject to marketing quotas 
under the Act. It shall not apply to the refund of penalties which are 
deposited in a special deposit account pursuant to sections 314(b), 
346(b), 356(b), or 359 of the Agricultural Adjustment Act of 1938, as 
amended, or paragraph (3) of Pub. L. 74, 77th Congress, available for 
the refund of penalties initially collected which are subsequently 
adjusted downward by action of the county committee, review committee, 
or appropriate court, until such penalties have been deposited in the 
general fund of the Treasury of the United States after determination 
that no downward adjustment in the amount of penalty is warranted. All 
prior regulations dealing with refunds of penalties which were contained 
in this part are superseded upon the effective date of the regulations 
in this part.



Sec. 714.36  Definitions.

    (a) General terms. 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 or things, words imparting 
the plural include the singular, words imparting the masculine gender 
include the feminine as well, and words used in the present tense 
include the future as well as the present. The definitions in part 719 
of this chapter shall apply to this part. The provisions of part 720 of 
this chapter concerning the expiration of time limitations shall apply 
to this part.
    (b) Other terms applicable to this part. The following terms shall 
have the following meanings:
    (1) ``Act'' means the Agricultural Adjustment Act of 1938, and any 
amendments or supplements thereto.
    (2) ``Claim'' means a written request for refund of penalty.
    (3) ``Claimant'' means a person who makes a claim for refund of 
penalty as provided in this part.
    (4) ``County Office'' means the office of the Agricultural 
Stabilization and Conservation County Committee.
    (5) ``Penalty'' means an amount of money collected, including 
setoff, from or on account of any person with respect to any commodity 
to which this part is applicable, which has been covered into the 
general fund of the Treasury of the United States, as provided in 
section 372(b) of the Act.
    (6) ``State office'' means the office of the Agricultural 
Stabilization and Conservation State Committee.



Sec. 714.37  Instructions and forms.

    The Deputy Administrator shall cause to be prepared and issued such 
instructions and forms as are necessary for carrying out the regulations 
in the part.



Sec. 714.38  Who may claim refund.

    Claim for refund may be made by:
    (a) Any person who was entitled to share in the price or 
consideration received by the producer with respect to the marketing of 
a commodity from which a deduction was made for the penalty and bore the 
burden of such deduction in whole or in part.
    (b) Any person who was entitled to share in the commodity or the 
proceeds thereof, paid the penalty thereon in whole or in part and has 
not been reimbursed therefor.
    (c) Any person who was entitled to share in the commodity or the 
proceeds thereof and bore the burden of the penalty because he has 
reimbursed the person who paid such penalty.
    (d) Any person who, as buyer, paid the penalty in whole or in part 
in connection with the purchase of a commodity, was not required to 
collect or pay such penalty, did not deduct the amount of such penalty 
from the price paid the producer, and has not been reimbursed therefor.
    (e) Any person who paid the penalty in whole or in part as a surety 
on a

[[Page 64]]

bond given to secure the payment of penalties and has not been 
reimbursed therefor.
    (f) Any person who paid the whole or any part of the sum paid as a 
penalty with respect to a commodity included in a transaction which in 
fact was not a marketing of such commodity and has not been reimbursed 
therefor.



Sec. 714.39  Manner of filing.

    Claim for refund shall be filed in the county office on a form 
prescribed by the Deputy Administrator. If more than one person is 
entitled to file a claim, a joint claim may be filed by all such 
persons. If a separate claim is filed by a person who is a party to a 
joint claim, such separate claim shall not be approved until the 
interest of each person involved in the joint claim has been determined.



Sec. 714.40  Time of filing.

    Claim shall be filed within 2 years after the date payment was made 
to the Secretary. The date payment was made shall be deemed to be the 
date such payment was deposited in the general fund of the Treasury as 
shown on the certificate of deposit on which such payment was scheduled.



Sec. 714.41  Statement of claim.

    The claim shall show fully the facts constituting the basis of the 
claim; the name and address of and the amount claimed by every person 
who bore or bears any part or all of the burden of such penalty; and the 
reasons why such penalty is claimed to have been erroneously, illegally, 
or wrongfully collected. It shall be the responsibility of the county 
committee to determine that any person who executes a claim as agent or 
fiduciary is properly authorized to act in such capacity. There should 
be attached to the claim all pertinent documents with respect to the 
claim or duly authenticated copies thereof.



Sec. 714.42  Designation of trustee.

    Where there is more than one claimant and all the claimants desire 
to appoint a trustee to receive and disburse any payment to be made to 
them with respect to the claim, they shall be permitted to appoint a 
trustee. The person designated as trustee shall execute the declaration 
of trust.



Sec. 714.43  Recommendation by county committee.

    Immediately upon receipt of a claim, the date of receipt shall be 
recorded on the face thereof. The county committee shall determine, on 
the basis of all available information, if the data and representations 
on the claim are correct. The county committee shall recommend approval 
or disapproval of the claim, and attach a statement to the claim, signed 
by a member of the committee, giving the reasons for their action. After 
the recommendation of approval or disapproval is made by the county 
committee, the claim shall be promptly sent to the State committee.



Sec. 714.44  Recommendation by State committee.

    A representative of the State committee shall review each claim 
referred by the county committee. If a claim is sent initially to the 
State committee, it shall be referred to the appropriate county 
committee for recommendation as provided in Sec. 714.43 prior to action 
being taken by the State committee. Any necessary investigation shall be 
made. The State committee shall recommend approval or disapproval of the 
claim, attaching a statement giving the reasons for their action, which 
shall be signed by a representative of the State committee. After 
recommending approval or disapproval, the claim shall be promptly sent 
to the Deputy Administrator.



Sec. 714.45  Approval by Deputy Administrator.

    The Deputy Administrator shall review each claim forwarded to him by 
the State committee to determine whether, (a) the penalty was 
erroneously, illegally, or wrongfully collected, (b) the claimant bore 
the burden of the payment of the penalty, (c) the claim was timely 
filed, and (d) under the applicable law and regulations the claimant is 
entitled to a refund. If a claim is filed initially with the Deputy 
Administrator, he shall obtain the recommendations of the county 
committee and the State committee if he deems such action necessary in

[[Page 65]]

arriving at a proper determination of the claim. The claimant shall be 
advised in writing of the action taken by the Deputy Administrator. If 
disapproved, the claimant shall be notified with an explanation of the 
reasons for such disapproval.



Sec. 714.46  Certification for payment.

    An officer or employee of the Department of Agriculture authorized 
to certify public vouchers for payment shall, for and on behalf of the 
Secretary of Agriculture, certify to the Secretary of the Treasury of 
the United States for payment all claims for refund which have been 
approved.



PART 717--HOLDING OF REFERENDA--Table of Contents




                                 General

Sec.
717.1  Definitions.
717.2  Supervision of referenda and prescribed method of balloting.
717.3  Voting eligibility.
717.4  Register of eligible voters.

                   Holding Referenda at Polling Places

717.5  Community referendum committees.
717.6  Place for balloting.
717.7  Time of voting.
717.8  Notice of referendum.
717.9  Manner of voting.
717.10  Local arrangements for holding the referendum.
717.11  Issuing ballots.
717.12  Community referendum committee's canvass of ballots.
717.13  Community committee's reporting and record of results of 
          referendum.
717.14  County committee's canvass of ballots.
717.15  County committee's reporting and record of results of the 
          referendum.
717.16  Investigation as to correctness of summary of the referendum.
717.17  State committee's reporting and record of result of the 
          referendum.

                    Holding Referenda by Mail Ballot

717.18  Issuing ballots.
717.19  Manner of voting.
717.20  Receiving and tabulating voted ballots.
717.21  Canvassing voted ballots.
717.22  Reporting and record of result of the referendum.

                              Miscellaneous

717.23  Applicability of this part to Puerto Rico.
717.24  Result of referendum.
717.25  Disposition of ballots and records.
717.26  Applicability.

    Authority: Secs. 312, 317, 336, 343, 344a, 358, 376, 52 Stat. 46, as 
amended; 79 Stat. 66, as amended; 52 Stat. 55, as amended, 56, as 
amended; 79 Stat. 1197, as amended; 55 Stat. 88 as amended; 52 Stat. 66, 
as amended; 7 U.S.C. 1312, 1314c, 1336, 1343, 1344b, 1358, 1376.

    Source: 33 FR 18345, Dec. 11, 1968, unless otherwise noted.

                                 General



Sec. 717.1  Definitions.

    In determining the meaning of the provisions in this part, unless 
the context indicates otherwise, words importing the singular include 
and apply to several persons or things, words importing the plural 
include the singular, words importing the masculine gender include the 
feminine as well, and words used in the present tense include the future 
as well as the present.
    (a) General terms. The definitions in part 719 of this chapter shall 
apply to this part. The provisions of part 720 of this chapter 
concerning the expiration of time limitations shall apply to this part.
    (b) Act. The Agricultural Adjustment Act of 1938 and any amendments 
or supplements thereto.
    (c) Referendum community. For referenda conducted by mail ballot, 
the entire county shall be the referendum community. For referenda 
conducted at polling places, the referendum community shall conform with 
the community established by the State committee for purposes of 
elective areas under the regulations in the subpart--Selection and 
Functions of Agricultural Stabilization and Conservation County and 
Community Committees in part 7, subtitle A, of this title (Sec. 7.7, 33 
FR 12955), as amended from time to time: Provided, That a referendum 
community may be composed of an area differing from the community so 
established in the following cases:
    (1) A referendum community may be established by the county 
committee, with the approval of a representative of the State committee, 
to conform to a

[[Page 66]]

political township, a local voting precinct for purposes of general 
elections, or a combination of such townships or precincts;
    (2) A referendum community may be established by the county 
committee, if it determines eligible producers will be given a 
convenient place to vote, which consists of a combination of a community 
with less than 25 farms on which there are producers eligible to vote, 
with one or more communities; and
    (3) The entire county shall be the referendum community in counties 
with less than 100 farms on which there are producers eligible to vote 
unless the county committee, with the approval of the State committee, 
determines that more than one referendum community is needed in the 
county.

The county committee shall maintain in the county office, and make 
available for public inspection, a descriptive list of the referendum 
communities established for the county for referenda conducted at 
polling places.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 
1969]



Sec. 717.2  Supervision of referenda and prescribed method of balloting.

    (a) Supervision of referenda. The Deputy Administrator shall be in 
charge of and responsible for conducting each referendum required by the 
Act. Each State committee shall be in charge of and responsible for 
conducting such referendum in its State. Each county committee shall be 
responsible for the proper holding of such referendum in its county. It 
shall be the duty of the Deputy Administrator and of each committee to 
conduct each referendum by secret ballot in a fair, unbiased, and 
impartial manner in accordance with this part.
    (b) Prescribed method of balloting. Each referendum held under this 
part shall be by mail ballot unless the Administrator, FSA, or the 
Deputy Administrator prescribes that a particular referendum shall be 
held at polling places.



Sec. 717.3  Voting eligibility.

    (a) Statutory requirements--(1) Tobacco quotas proclaimed on an 
acreage basis under section 312(a) of the Act. Within 30 days after the 
proclamation under section 312(a) of the Act of national marketing 
quotas on an acreage basis for any kind of tobacco for the next 3 
succeeding marketing years, there shall be a referendum under section 
312(c) of the Act of farmers engaged in the production of the crop of 
such tobacco harvested immediately prior to the holding of the 
referendum to determine whether such farmers are in favor of or opposed 
to such quotas for the 3-year period. If more than one-third of the 
farmers voting oppose such quotas, the quotas so proclaimed for the 3-
year period shall not be in effect: Provided, That such referendum 
result shall not preclude the proclamation of national marketing quotas 
for such kind of tobacco for the next 3 succeeding marketing years 
subject to a referendum as required under this paragraph. If the 
referendum results in approval of quotas for the 3-year period, no 
further referendum applicable to such quotas shall be held (i) unless a 
new proclamation during the 3-year period is made pursuant to 
subdivision (3) of section 312(a) of the Act in which case a referendum 
shall be held as provided in this paragraph (a)(1)(i) of this section, 
or (ii) unless quotas on an acreage-poundage basis are established 
pursuant to section 317(c) of the Act, in which case a special 
referendum shall be held as provided in paragraph (a)(2) of this 
section.
    (2) Tobacco quotas proclaimed on an acreage-poundage basis under 
section 317(c) of the Act. During the first or second marketing year of 
the 3-year period for which marketing quotas for any kind of tobacco are 
in effect on an acreage basis, if the Secretary, under section 317(c) of 
the Act, determines that marketing quotas on an acreage-poundage basis 
would result in a more effective program, at the time of the next 
announcement of the amount of the marketing quota on an acreage basis, 
the Secretary shall also announce the national acreage allotment and 
national average yield goal. Within 45 days after such announcement of 
acreage-poundage quotas there shall be a special referendum under 
section 317(c) of the Act of farmers engaged in the production of the 
kind of tobacco of the most recent crop to determine

[[Page 67]]

whether such farmers favor the establishment of marketing quotas on an 
acreage-poundage basis for the next 3 marketing years. If more than two-
thirds of the farmers voting in the special referendum favor marketing 
quotas on an acreage-poundage basis, such quotas shall be in effect for 
the next 3 marketing years and the marketing quotas on an acreage basis 
shall cease to be in effect at the beginning of such 3-year period and 
no further special referendum applicable to such 3-year period shall be 
held. If marketing quotas on an acreage-poundage basis are not favored 
by more than two-thirds of the farmers voting in the special referendum, 
marketing quotas on an acreage basis as previously proclaimed shall 
continue in effect.
    (3) Tobacco quotas proclaimed on an acreage-poundage basis under 
section 317(d) of the Act. If marketing quotas on an acreage-poundage 
basis have been made effective for a kind of tobacco, the Secretary 
shall proclaim a national marketing quota for such kind of tobacco for 
the next 3 succeeding marketing years if the marketing year is the last 
year of 3 consecutive years for which marketing quotas previously 
proclaimed will be in effect. Such proclamation may be on an acreage-
poundage basis or on an acreage basis. Within 30 days after such 
proclamation, there shall be a referendum under section 312(c) of the 
Act of farmers engaged in the production of the crop of such kind of 
tobacco harvested immediately prior to the holding of the referendum to 
determine whether such farmers are in favor of or opposed to such quotas 
for the next 3 succeeding marketing years. If more than one-third of the 
farmers voting oppose such quotas, the quotas so proclaimed for the 3-
year period shall not be in effect: Provided, That such referendum 
result shall not preclude the proclamation of national marketing quotas 
for such kind of tobacco for the next 3 succeeding marketing years under 
section 312(a) of the Act subject to a referendum thereon as provided in 
paragraph (a)(1) of this section. If a referendum results in approval of 
quotas for 3 marketing years on an acreage basis, no further referendum 
applicable to such 3 marketing years shall be held except as may be 
required under section 317(c) of the Act. If a referendum results in 
approval of quotas for 3 marketing years on an acreage-poundage basis, 
no further referendum applicable to such 3 marketing years shall be 
held.
    (4) Tobacco quotas proclaimed but disapproved in 3 successive years. 
Under section 312(a)(4) of the Act, if producers have disapproved 
national marketing quotas for a kind of tobacco in referenda held in 3 
successive years subsequent to 1952, a national marketing quota shall 
not be proclaimed for any marketing year within the 3-year period for 
which quotas were disapproved unless prior to November 10 of the 
marketing year, one-fourth or more of the farmers engaged in the 
production of the crop of tobacco harvested in the calendar year in 
which such marketing year begins petition the Secretary to proclaim a 
national marketing quota for each of the next 3 succeeding marketing 
years.
    (5) [Reserved]
    (6) Extra long staple cotton quotas. Not later than December 15 
following the proclamation of a national quota for extra long staple 
cotton there shall be a referendum under section 343 of the Act, of 
farmers engaged in the production of extra long staple cotton in the 
calendar year in which the referendum is held to determine whether such 
farmers are in favor of or opposed to the quota for the next marketing 
year. If more than one-third of the farmers voting in the referendum 
oppose the quota, such quota shall not be in effect.
    (7) [Reserved]
    (8) Rice quotas. Within 30 days after the proclamation of a national 
marketing quota for rice there shall be a referendum under section 
354(b) of the Act of farmers engaged in the production of the 
immediately preceding crop of rice to determine whether such farmers are 
in favor of or opposed to the quota for the next marketing year. If more 
than one-third of the farmers voting in the referendum oppose the quota, 
such quota shall not be in effect.
    (9) Peanut quotas. Not later than December 15 of each calendar year 
there shall be a referendum under section 358(b) of the Act of farmers 
engaged in

[[Page 68]]

the production of peanuts in the calendar year in which the referendum 
is held to determine whether such farmers are in favor of or opposed to 
marketing quotas with respect to the crops of peanuts produced in the 3 
calendar years immediately following the year in which the referendum is 
held. If more than one-third of the farmers voting in the referendum 
oppose such quotas, the quotas so proclaimed shall not be in effect: 
Provided, That such referendum result shall not preclude the 
proclamation of quotas in the next calendar year for a 3-year period 
subject to a referendum as required under this paragraph. If quotas are 
favored, no further referendum with respect to the 3-year period shall 
be held.
    (b) Farmers engaged in the production of a commodity. For purposes 
of referenda with respect to marketing quotas for tobacco, extra long 
staple cotton, rice and peanuts the phrase ``farmers engaged in the 
production of a commodity'' includes any person who is entitled to share 
in a crop of the commodity, or the proceeds thereof because he shares in 
the risks of production of the crop as an owner, landlord, tenant, or 
sharecropper (landlord whose return from the crop is fixed regardless of 
the amount of the crop produced is excluded) on a farm on which such 
crop is planted in a workmanlike manner for harvest: Provided, That any 
failure to harvest the crop because of conditions beyond the control of 
such person shall not affect his status as a farmer engaged in the 
production of the crop. In addition, the phrase ``farmers engaged in the 
production of a commodity'' also includes each person who it is 
determined would have had an interest as a producer in the commodity on 
a farm for which a farm allotment for the crop of the commodity was 
established and no acreage of the crop was planted but an acreage of the 
crop was regarded as planted for history acreage purposes under the 
applicable commodity regulations.
    (c) Special conditions applicable to peanuts and rice--(1) Peanuts. 
In the case of a referendum for marketing quotas for peanuts, farmers 
engaged in the production of peanuts as determined under paragraph (b) 
of this section shall not be eligible to vote in the referendum if the 
farm does not have any production of peanuts subject to marketing 
quotas. Under section 359(b) of the Act, marketing quotas are not 
applicable to peanuts produced on any farm on which the acreage 
harvested for nuts is 1 acre or less provided the producers who share in 
the peanuts produced on such farm do not share in the peanuts produced 
on any other farm. Under section 359(b) of the Act, marketing quotas are 
not applicable to peanuts which it is established (i) were not picked or 
threshed either before or after marketing from the farm, or (ii) were 
marketed by the producer before drying or removal of moisture from such 
peanuts either by natural or artificial means for consumption 
exclusively as boiled peanuts.
    (2) Rice. In the case of a referendum for a marketing quota for 
rice, farmers engaged in the production of rice as determined under 
paragraph (b) of this section shall not be eligible to vote in the 
referendum if the farm is not subject to marketing quotas. Under section 
353(d) of the Act, marketing quotas are not applicable (i) to 
nonirrigated rice produced on any farm on which the acreage planted to 
nonirrigated rice does not exceed 3 acres, or (ii) to rice produced 
outside the continental United States.
    (d) [Reserved]
    (e) One vote limitation. Each person eligible to vote in a 
particular marketing quota referendum shall be entitled to only one vote 
in such referendum regardless of the number of farms in which such 
person is interested or the number of communities, counties, or States 
in which farms are located in which farms such person is interested: 
Provided, That:
    (1) The individual members of a partnership shall each be entitled 
to one vote, but the partnership as an entity shall not be entitled to 
vote;
    (2) An individual eligible voter shall be entitled to one vote even 
though he is interested in an entity (including but not limited to a 
corporation) which entity is also eligible to vote;
    (3) A person shall also be entitled to vote in each instance of his 
capacity as a fiduciary (including but not limited to a guardian, 
administrator, executor or trustee) if in such fiduciary capacity

[[Page 69]]

he is eligible to vote but the person for whom he acts as a fiduciary 
shall not be eligible to vote.
    (f) Joint and family interest. Where several persons, such as 
members of a family, have participated or will participate in the 
production of a commodity under the same lease or cropping agreement, 
only the person or persons who signed the lease or agreement, or agreed 
to an oral lease or agreement, shall be eligible to vote. Where two or 
more persons have produced or will produce a commodity as joint tenants, 
tenants in common, or owners of community property, each such person 
shall be entitled to one vote if otherwise eligible. The eligibility of 
one spouse does not affect the eligibility of the other spouse.
    (g) Minors. A minor shall be entitled to one vote if he is otherwise 
eligible and is 18 years of age or older when he votes.
    (h) [Reserved]
    (i) Interpretation. In the case of any commodity on a farm where no 
acreage of the commodity is actually planted but an acreage of the 
commodity is regarded as planted under applicable regulations of the 
Department, persons on the farm who it is determined would have had an 
interest in the commodity as a producer if an acreage of the commodity 
had been actually planted shall be eligible to vote in the referendum.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 2, 36 FR 12730, July 7, 
1971]



Sec. 717.4  Register of eligible voters.

    Prior to the date of the referendum a register shall be prepared by 
the county office manager listing the name and address of each known 
eligible voter. For referenda conducted at polling places a register 
shall be prepared for each referendum community. For referenda conducted 
by mail ballot the entire county is considered to be the referendum 
community and one register shall be prepared for the county.

                   Holding Referenda at Polling Places



Sec. 717.5  Community referendum committees.

    (a) Where one referendum is to be conducted. Except where the entire 
county is to be considered a referendum community, the county committee 
shall designate a community referendum committee for each referendum 
community. Each referendum committee shall consist of at least three 
regular members and one alternate. The membership of the referendum 
committee shall be chosen from among the farmers who reside in the 
community and who are eligible to vote in the referendum or who are 
community committeemen elected pursuant to the regulations in the 
subpart--Selection and Functions of Agricultural Stabilization and 
Conservation County and Community committees (part 7 of this title). The 
county committee shall name one member of the community referendum 
committee as chairman and another member thereof as vice chairman. The 
vice chairman shall act as the chairman in the event of the absence or 
incapacity of the chairman and the alternate shall serve on the 
committee in the place of any regular member who cannot serve. The 
community referendum committee shall be responsible for the proper 
holding of the referendum in its community in a fair, unbiased and 
impartial manner in accordance with this part. In counties where the 
entire county is treated as one referendum community, the county 
committee shall perform, in addition to its other duties, the duties of 
the community referendum committee.
    (b) Where two or more referenda are to be conducted. Where two or 
more referenda are to be held in the county on the same day, the 
provisions of paragraph (a) of this section shall be applicable except 
that (1) the total number of farms on which there are producers eligible 
to vote in any one or more of such referenda shall be used to determine 
whether there are 100 or

[[Page 70]]

more farms on which there are producers who are eligible to vote in the 
referenda, and (2) each community referendum committee shall be chosen 
from among the farmers who reside in the community and who are eligible 
to vote in any of such referenda or who are community committeemen 
elected pursuant to the regulations in the subpart--Selection and 
Functions of Agricultural Stabilization and Conservation County and 
Community committees (part 7 of this title).



Sec. 717.6  Place for balloting.

    The county committee shall designate only one polling place for 
balloting in each referendum community. The polling place shall be one 
well known to and readily accessible to the persons in the community and 
shall be equipped and arranged so that each voter can mark and cast his 
ballot in secret and without coercion, duress, or interference of any 
sort whatsoever. Subject to the provisions of Sec. 717.9(c) for absentee 
ballots, a farmer or producer eligible to vote, shall vote only at a 
polling place designated for the referendum community in which he was 
engaged in the production of the commodity for which the referendum is 
held.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 2, 36 FR 12730, July 7, 
1971]



Sec. 717.7  Time of voting.

    There shall be no voting except on the day fixed for the holding of 
the referendum (except as provided in Sec. 717.9(c) in the case of 
absentee ballots) and the day fixed for the holding of the referendum 
shall be the same in all neighborhoods, communities, counties, and 
States. The date for holding the referendum shall be determined by the 
Secretary in accordance with the provisions of law applicable thereto 
and stated in the notice of the referendum prescribed by him. The time 
that polls shall be opened and closed on the date fixed for holding the 
referendum in the States and Puerto Rico is as follows:

------------------------------------------------------------------------
                                                                Polls to
                       State                         Polls to    close
                                                    open a.m.     p.m.
------------------------------------------------------------------------
Alabama...........................................       7:00       7:00
Alaska............................................       8:00       6:00
Arizona...........................................       8:00       6:00
Arkansas..........................................       8:00       6:30
California........................................       8:00       6:00
Colorado..........................................       7:00       7:00
Connecticut.......................................       8:00       6:00
Delaware..........................................       8:00       6:00
Florida...........................................       7:00       7:00
Georgia...........................................       7:00       7:00
Idaho.............................................       8:00       8:00
Illinois..........................................       8:00       6:00
Indiana...........................................       8:00       6:00
Iowa..............................................       8:00       8:00
Kansas............................................       8:00       8:00
Kentucky..........................................       8:00       6:00
Louisiana.........................................       8:00       6:00
Maine.............................................       8:00       6:00
Maryland..........................................       8:00       6:00
Massachusetts.....................................       8:00       6:00
Michigan..........................................       8:00       8:00
Minnesota.........................................       8:00       8:00
Mississippi.......................................       8:00       6:00
Missouri..........................................       8:00       6:00
Montana...........................................       8:00       7:00
Nebraska..........................................       8:00       8:00
Nevada............................................       8:00       6:00
New Hampshire.....................................       8:00       6:00
New Jersey........................................       8:00       6:00
New Mexico........................................       8:00       6:00
New York..........................................       8:00       6:00
North Carolina....................................       7:00       7:00
North Dakota......................................       8:00       9:00
Ohio..............................................       8:00       6:00
Oklahoma..........................................       8:00       6:00
Oregon............................................       8:00       8:00
Pennsylvania......................................       8:00       9:00
Rhode Island......................................       8:00       6:00
South Carolina....................................       7:00       7:00
South Dakota......................................       8:00       8:00
Tennessee.........................................       8:00       7:00
Texas.............................................       8:00       7:00
Utah..............................................       8:00       6:00
Vermont...........................................       8:00       6:00
Virginia..........................................       7:00       7:00
Washington........................................       8:00       8:00
West Virginia.....................................       8:00       8:00
Wisconsin.........................................       8:00       8:00
Wyoming...........................................       8:00       8:00
Puerto Rico.......................................       8:00       6:00
------------------------------------------------------------------------


The times listed in this section shall be the local time in effect for 
the area in which the polling place is located.



Sec. 717.8  Notice of referendum.

    (a) Posting a notice. The county committee shall give public notice 
of the referendum in each referendum community by posting a notice at 
one or more places open to the public within such community prior to the 
date of the referendum. Such notice shall be on a form prescribed by the 
Deputy Administrator and shall state the commodity or commodities and 
marketing year, or years, or crops for which the referendum is to be 
held, the location of the polling place in the community, the date of 
the referendum, and the

[[Page 71]]

hours when the polls will be opened and closed. The county executive 
director is authorized to sign such notice on behalf of the county 
committee.
    (b) Use of agencies of public information. The county committee and 
community referendum committees shall utilize, to the extent practicable 
(without advertising expense), all available agencies of public 
information, including newspapers, radio, television and other means, to 
give persons in the county public notice of the day and hours of voting, 
the location of polling places, and the rules governing eligibility to 
vote. Such notice should be given as soon as practicable after the 
arrangements for holding the referendum in the county have been made.



Sec. 717.9  Manner of voting.

    (a) Secret ballot. The voting in the referendum shall be by secret 
ballot. Each voter shall, at the time he is handed the form on which to 
cast his ballot, be instructed to mark his ballot form so as to indicate 
clearly how he votes and in such manner that no one else shall see how 
he votes and then to fold his ballot and place it in the ballot box 
without allowing anyone else to see how he voted. A suitable place where 
each voter may mark and cast his ballot in secret and without coercion, 
duress, or interference of any sort whatever, shall be provided in each 
polling place. Every unchallenged ballot shall be placed in the ballot 
box by the person who voted it. The fact that a voter fails to fold a 
ballot placed in the ballot box shall not invalidate it. It shall be the 
duty of each community referendum committee to see that no device of any 
sort whatever is used whereby any voter's ballot may be identified 
except as provided in this part in the case of a challenged ballot or an 
absentee ballot.
    (b) Voting by proxy prohibited. There shall be no voting by proxy or 
agent, or in any manner except by the eligible voter (or the challenged 
voter under paragraph (d) of this section) personally depositing in the 
ballot box his ballot as marked by him (except as provided in the case 
of an absentee ballot), but a duly authorized officer of a corporation, 
association, or other legal entity, may cast its vote.
    (c) Absentee ballots. Any person who will not be present on the day 
of the referendum in the county in which he is eligible to vote or who 
will be prevented from voting in person on the day of the referendum 
because of physical incapacity, or whose religious belief forbids him 
from voting on the day of the referendum, may obtain prior to the date 
of the referendum, one ballot from a State or county FSA office 
conveniently situated for him, or from the Commodity Programs Division, 
FSA, Department of Agriculture, Washington, D.C., and cast an absentee 
ballot. The office so issuing the ballot form shall endorse on the 
reverse side thereof a statement in substantially the following form 
identifying the place in which it was issued and the county to which it 
will be mailed or delivered, initialed and dated by the person issuing 
such form.
    Issued in ________ County ________ State, or by ________________ 
State FSA Office, or by ________________ Division, FSA, Washington, 
D.C., for use in ________ County, ________ State.

The issuing office shall keep a register showing for each ballot form so 
issued by it to be voted absentee, the name and address to whom issued, 
the date of issuance, and the county and State in which the ballot is to 
be voted, and the name and title of the person who issued the ballot. 
The person to whom the ballot is issued shall mark the ballot so as to 
indicate clearly how he votes and place the ballot in a plain envelope 
which shall be marked clearly with the words ``Absentee Ballot,'' sealed 
and inserted in another envelope which shall be marked clearly with the 
voter's name and return address, sealed and delivered, or mailed, 
postage paid, to the county committee for the county in which he is 
eligible to vote. All absentee ballots must, in order to be accepted, 
reach the county office for the county in which the voter is eligible to 
vote by not later than the hour for closing the polls in the county on 
the day of the referendum. No such ballot shall be counted unless the 
voter's name and address appear on the envelope and it is determined 
that he is eligible to vote.

[[Page 72]]

    (d) Challenged ballots. The community referendum committee or any 
member thereof shall challenge the eligibility of any person to vote in 
the referendum where (1) the community referendum committee or any 
member thereof is unable to determine that the person is eligible to 
vote in the referendum in the community, or (2) the community referendum 
committee or any member thereof has reason to believe that such person 
has previously voted in the referendum in another community in the same 
or another county in person or by mail, or (3) the person's name and 
address have not been entered on the register of eligible voters, prior 
to its delivery to the referendum committee, unless the referendum 
committee is satisfied that the person is eligible to vote. In every 
case where the eligibility of the voter is challenged, his ballot form, 
after being marked by the challenged person so as to show how he votes, 
but in such manner that no one else sees how he votes, shall be folded 
and placed by him (or by a member of the committee if he refuses) in an 
envelope, which shall then be sealed and placed in another envelope, 
identified with his name and address, the word ``Challenged'' and a 
statement of the reason for the challenge, and shall then be placed in 
the ballot box. The county committee shall make an investigation in each 
case of controversy or dispute regarding the eligibility of a voter to 
vote in the referendum. In each case of a challenged ballot the 
eligibility of the person to vote in the referendum shall be determined 
by the county committee as soon as may be possible after the polls are 
closed and before the time for forwarding to the State committee the 
county summary of ballots. If it is determined that the person whose 
vote was challenged is eligible to vote, the sealed envelope containing 
the ballot shall be placed with the challenged ballot of every other 
person found to be eligible to vote until all challenged ballots have 
been passed upon by the county committee. If it is determined that the 
person whose vote was challenged is not eligible, the sealed envelope 
shall be marked ``Not eligible'' and signed by a member of the county 
committee and shall not be opened. When all of the challenged ballots 
have been passed upon by the county committee, the challenged ballots 
which were cast by eligible voters shall be opened and tabulated on the 
county summary of ballots, but no disclosure shall be made as to how any 
particular person voted.
    (e) Ballot box. Each polling place shall be furnished with a 
suitable ballot box. Any container of sufficient size so arranged that 
no ballot can be read or removed without breaking seals on the container 
will be suitable. When strip adhesive paper or corresponding seals are 
used on the ballot box, such seals shall be signed or initialed by the 
chairman or a member of the community referendum committee so that 
breaking or replacing the seal will so destroy or affect the identifying 
marks as to show that the seal has been tampered with.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 
1969]



Sec. 717.10  Local arrangements for holding the referendum.

    The county committee shall make all arrangements for the proper 
holding of the referendum in accordance with this part prior to the date 
of the referendum. The county committee shall instruct each community 
referendum committee concerning its duties so that each member of the 
committee understands his duties and the duties of the committee in all 
respects, with particular emphasis as to (a) issuing ballot forms, (b) 
challenged ballots, (c) recording votes, (d) tabulating ballots, and (e) 
certifying results of the referendum in the referendum community. The 
county executive director shall furnish each community referendum 
committee an adequate supply of forms prior to the time the polls in the 
county are opened for the acceptance of ballots, by delivering the 
ballot forms and the forms for the community summary of ballots to each 
chairman of the several community referendum committees.



Sec. 717.11  Issuing ballots.

    The community referendum committee shall open the polling place for 
the issuance of ballot forms and the casting of ballots at the time 
designated and shall thereafter until the

[[Page 73]]

time when the polls are required to be closed and the casting of ballots 
discontinued issue a ballot to each person who is eligible to vote and 
applies for a ballot and to each person who claims to be eligible to 
vote and insists upon voting even though his eligibility to vote is 
challenged by a member of the committee. The community referendum 
committeeman who issued the ballot form shall immediately enter on the 
register of voters opposite the name and address of the person voting, a 
record of the issuance of the ballot, the casting of the ballot, and any 
challenge of the eligibility of the person casting the ballot. Ballot 
forms shall be issued and ballots placed in the ballot box while at 
least two members serving on the community referendum committee are 
physically present in the polling place and in position to see each 
ballot form as it is issued and each ballot as it is placed in the 
ballot box.



Sec. 717.12  Community referendum committee's canvass of ballots.

    Immediately after the polls are closed, the community referendum 
committee shall open the ballot box and canvass the ballots cast. The 
canvass of the ballots shall be kept open to the public. A ballot shall 
be considered as a spoiled ballot if it is mutilated or marked in such a 
way that it is not possible to determine with certainty how the ballot 
was intended to be counted on a particular question. The envelope 
containing the challenged ballots shall not be opened. The total number 
of ballots issued as shown on the register of voters shall be determined 
and the total number of ballots cast, including the spoiled and 
challenged ballots, shall be determined. The number of ballots cast in 
favor of and the number of ballots cast in opposition to the question on 
which the referendum was held shall be determined. The spoiled ballots 
and challenged ballots shall not be considered in favor of or against 
the question. If any member of the community referendum committee should 
see or learn how any person besides himself voted, whether or not the 
ballot was challenged, spoiled, or otherwise, he shall not disclose such 
knowledge to a fellow committeeman or any other person except in an 
investigation conducted under this part.



Sec. 717.13  Community committee's reporting and record of results of referendum.

    The community referendum committee shall notify the county committee 
by telephone, telegraph, messenger, or in person of the preliminary 
count of the votes on each question and of the number of spoiled and 
challenged ballots, as soon as may be possible. All the spoiled ballots 
shall be placed in an envelope and sealed and marked with the initials 
of the chairman (or vice chairman) of the community referendum committee 
and the designation ``Spoiled Ballots'' followed by the number of 
spoiled ballots and the names of the community, the county and the 
State. The community referendum committee shall execute the 
certification as to the accuracy of the register of eligible voters and 
ballots cast. The community referendum committee shall then prepare and 
execute the community summary of ballots and post one copy thereof, as 
soon as it is executed, in a conspicuous place at the polling place, so 
that it will remain posted and accessible to the public for at least 3 
calendar days after the holding of the referendum. The community 
referendum committee shall seal the voted ballots, including those 
challenged and spoiled, the register of eligible voters and ballots 
cast, and the community summary of ballots, in one or more envelopes 
appropriately identified by the names of the community, the county, and 
the State, and the nature of the referendum and the date on which it was 
held, and deliver them to the county committee not later than 9 a.m., 
local time, on the second calendar day after the date of the referendum, 
together with the unused ballot and other forms. The chairman (or vice 
chairman) of the community referendum committee shall be responsible for 
the safe delivery of such reports, ballots, and forms to the county 
committee.

[[Page 74]]



Sec. 717.14  County committee's canvass of ballots.

    The county committee, after the closing of the polls, shall open and 
canvass the absentee ballots received and determine the eligibility of 
each voter. If any person voting absentee is found to be ineligible to 
vote, or the ballot is so mutilated or marked that it is not possible to 
determine with certainty how the person intended to vote, such ballot 
shall not be counted as for or against the question in the referendum. 
The county committee shall meet and pass upon the challenged ballots as 
soon as may be reasonably possible after the challenged ballots are 
received from the community referendum committees, but not later than 4 
calendar days after the day of the referendum. The result of the 
referendum in each community shall be reviewed and summarized as soon as 
may be reasonably possible after the records, ballots, and forms are 
received from the several community referendum committees. Every meeting 
of the county committee for the purpose of canvassing the ballots cast 
and reviewing and tabulating the results of the referendum shall be open 
to the public. No member of the county committee who learns how any 
person besides himself voted, whether the ballot was an absentee ballot, 
challenged, spoiled, or otherwise, shall disclose such knowledge to any 
fellow committeeman or other person except in an investigation conducted 
under this part.



Sec. 717.15  County committee's reporting and record of results of the referendum.

    The county committee shall notify the State committee by telephone, 
telegraph, or messenger (who may be a member of the county committee), 
as to the preliminary count of the votes on each question and the number 
of challenged ballots by the several community referendum committees as 
soon as possible. The county committee shall, as soon as may be 
reasonably possible, but in no event later than 4 calendar days after 
the date of the referendum, have prepared and certified the county 
summary of ballots. Such summary shall be prepared and certified in 
triplicate, one copy of which shall be sent to the State committee, one 
copy posted for 30 calendar days in a conspicuous place accessible to 
the public in or near the office of the county committee, and one copy 
filed in the office of the county committee and kept available for 
public inspection. One copy of each community summary shall likewise be 
posted for 30 calendar days in a conspicuous place accessible to the 
public in or near the office of the county committee.



Sec. 717.16  Investigation as to correctness of summary of the referendum.

    The county committee shall make an investigation in each case of a 
dispute or challenge regarding the correctness of the summary of the 
referendum in a community. No dispute or challenge shall be investigated 
by the county committee unless it is brought to its attention within 3 
calendar days after the date on which the referendum was held. The 
county committee shall promptly decide the dispute or the challenge and 
report its findings to the State committee within 5 calendar days after 
the holding of the referendum and send by certified mail, or deliver in 
person, to the office of the State committee all voted ballots, register 
forms, and community summary sheets involved in the dispute or 
challenge.



Sec. 717.17  State committee's reporting and record of result of the referendum.

    The State committee for each State shall notify the Deputy 
Administrator by telegraph or telephone as to the preliminary count of 
the votes in the State as soon as the preliminary results of the 
referendum are made known to the State committee. The county summaries 
of ballots shall be summarized on the State summary of ballots as soon 
as possible, but in no event later than 7 calendar days after the date 
of the referendum, unless there is a dispute or challenge regarding the 
correctness of the summary for any county, in which case the State 
committee shall complete its investigation thereof, decide the dispute 
or challenge, and prepare the State summary accordingly within 14 
calendar

[[Page 75]]

days after the date of the referendum. The State summary shall be 
prepared in triplicate and certified to by the State executive director. 
The original and one copy of the State summary shall be forwarded to the 
Director of the FSA Division having the responsibility for the commodity 
for which the referendum was held. One copy of the State summary shall 
be filed for a period of 5 years in the office of the State committee 
available for public inspection.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 
1969]

                    Holding Referenda by Mail Ballot



Sec. 717.18  Issuing ballots.

    The county committee shall furnish each person who is eligible to 
vote in a particular referendum a ballot suitable for mailing back to 
the office of the county committee. If a person who is eligible to vote 
in a particular referendum is not furnished a ballot, he may obtain one 
during the referendum period from the office of the county committee for 
the county in which he is eligible to vote or from any other FSA office 
where ballots are available, including the Commodity Programs Division, 
FSA, Department of Agriculture, Washington, D.C. When a ballot is issued 
from an FSA office other than the FSA office in the county in which the 
producer is eligible to vote in a particular referendum, the issuing 
office shall keep a register showing to whom it was issued, the person's 
address, the county and State in which the ballot is to be voted, and 
the name and title of the person who issued the ballot.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 1, 34 FR 12940, Aug. 9, 
1969]



Sec. 717.19  Manner of voting.

    (a) Voting procedure. Each person to whom a ballot is issued by mail 
or in person may vote in the referendum by marking the ballot so as to 
indicate clearly how the vote is cast, placing the ballot in a plain 
envelope, sealing the envelope provided by FSA which is marked clearly 
with the voter's name and return address, signing the certification on 
such envelope or making his mark thereto (which mark shall be 
witnessed), sealing such envelope, and delivering or mailing the 
envelope to the offfice of the county committee for the county in which 
the person is eligible to vote.
    (b) Voting by proxy prohibited. There shall be no voting by proxy or 
agent except as provided in Sec. 717.3.

(Secs. 312, 317, 336, 343, 344, 354, 358, 375, 52 Stat. 46, as amended, 
79 Stat. 66, 52 Stat. 55, as amended, 56, as amended, 79 Stat. 1197, 52 
Stat. 61, as amended, 55 Stat. 88, as amended, 52 Stat. 66, as amended; 
7 U.S.C. 1312, 1314c, 1336, 1343, 1344b, 1354, 1356, 1375)

[Amdt. 2, 36 FR 12730, July 7, 1971, as amended by Amdt. 4, 49 FR 24371, 
June 13, 1984]



Sec. 717.20  Receiving and tabulating voted ballots.

    Ballots received at the county FSA office during the referendum 
period shall be placed immediately in a ballot box provided by the 
county executive director and so arranged that ballots cannot be read or 
removed without breaking the seal on the container. Voted ballots 
received by the county committee of the county in which the voter is 
eligible to vote during the period established for holding a particular 
referendum, shall be tabulated by the county committee. A ballot shall 
be considered to have been received during the referendum period if (a) 
in the case of a ballot delivered to the county committee, it was 
received in the office prior to the close of the work day on the final 
day of the referendum period, or (b) in the case of a mailed ballot, it 
was postmarked not later than midnight of the final day of the 
referendum period and was received in the county office prior to the 
start of canvassing the ballots. However, no such ballot shall be 
counted unless the voter signs the certification or his mark is 
witnessed on the returned envelope, and it is determined that he is 
eligible to vote in the particular referendum.

(Secs. 312, 317, 336, 343, 344, 354, 358, 375, 52 Stat. 46, as amended, 
79 Stat. 66, 52 Stat. 55, as amended, 56, as amended, 79 Stat. 1197, 52 
Stat. 61, as amended, 55 Stat. 88, as amended, 52 Stat. 66, as amended; 
7 U.S.C. 1312, 1314c, 1336, 1343, 1344b, 1354, 1356, 1375)

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 4, 49 FR 24371, June 
13, 1984]

[[Page 76]]



Sec. 717.21  Canvassing voted ballots.

    (a) Time of canvassing. The canvassing of voted ballots shall take 
place at the opening of the county office on the fifth day after the 
close of the referendum period. Ballots received after the start of 
tabulation, even though contained in envelopes that were post-marked 
prior to midnight of the final day of the referendum period, shall not 
be counted.
    (b) Canvassing by county committee. The canvassing shall be in the 
presence of at least two members of the county committee and open to the 
public: Provided, That if two or more counties have been combined and 
are served by one county office, the canvassing of ballots shall be 
conducted by at least one member of the county committee from each 
county served by the county office: Provided further, That the State 
committee, or the State executive director if authorized by the State 
committee, may (1) designate the county executive director and a county 
or State FSA office employee to canvass the ballots and report the 
results, as provided in paragraph (c) and Sec. 717.22, instead of two 
members of the county committee, when it is determined that the number 
of eligible voters for the commodity for which the referendum is being 
conducted is so limited that having two members of the county committee 
present for this function is impractical and (2) designate the county 
Executive Director and/or another county or State FSA office employee to 
canvass ballots in any emergency situation precluding at least two 
members of the county committee from being present to carry out the 
functions required in this section.
    (c) Manner of canvassing. The canvassing of ballots shall follow the 
following procedure:
    (1) The ballot box shall be opened;
    (2) The envelopes from the ballot box shall be separated into three 
groups consisting of (i) unopened certification envelopes which do not 
have a proper signed certification, (ii) unopened certification 
envelopes from ineligible voters, and (iii) unopened certification 
envelopes from eligible voters;
    (3) The unopened certification envelopes from eligible voters shall 
be opened and plain envelopes removed and then shuffled to preserve the 
secrecy of the ballots contained in such plain envelopes;
    (4) The ballots shall be removed from such plain envelopes and 
tabulated. A ballot shall be considered as a spoiled ballot if it is 
mutilated or marked in such a way that it is not possible to determine 
with certainty how the ballot was intended to be counted on a particular 
question. The spoiled ballots shall not be considered in favor of or 
against the question.
    (5) The unopened certification envelopes which do not have a proper 
signed certification shall not be opened and shall not be considered in 
favor of or against the question.
    (6) The unopened certification envelopes from ineligible voters 
shall be considered as challenged ballots. The county committee shall 
determine the eligibility of the person to vote in the referendum. If 
determined to be eligible such envelopes shall be handled as provided 
under paragraphs (c)(3) and (4) of this section. If determined not to be 
eligible, such envelopes shall not be opened and shall not be considered 
in favor of or against the question.
    (d) Dispute or challenge. A dispute or challenge with respect to any 
referendum held by mail ballot shall not be considered unless 
notification of such dispute or challenge is filed in writing with the 
county executive director of the county in which the alleged 
irregularity occurred within 3 days after the date of the canvassing of 
voted ballots. Such written notification of a dispute or challenge must 
identify each alleged instance in which the county committee erred when 
canvassing the ballots or tabulating the referendum results. The county 
committee shall determine the validity of the dispute or challenge and 
report its findings to the State committee within 3 working days after 
the final date for filing a dispute or challenge.

[33 FR 18345, Dec. 11, 1968, as amended by Amdt. 2, 36 FR 12730, July 7, 
1971; Amdt. 3, 38 FR 12891, May 17, 1973; 51 FR 10609, Mar. 28, 1986; 52 
FR 10727, Apr. 3, 1987]

[[Page 77]]



Sec. 717.22  Reporting and record of result of the referendum.

    (a) County committee. The county committee shall notify the State 
committee by telephone, telegraph, or messenger (who may be a member of 
the county committee), as to the preliminary count of the votes on each 
question and the number of challenged ballots as soon as possible. The 
county committee shall, as soon as may be reasonably possible, but in no 
event later than 4 calendar days after canvassing of the ballots, have 
prepared and certified the county summary of ballots. Such summary shall 
be prepared and certified in triplicate, one copy of which shall be sent 
to the State committee, one copy posted for 30 calendar days in a 
conspicuous place accessible to the public in or near the office of the 
county committee, and one copy filed in the office of the county 
committee and kept available for public inspection.
    (b) State committee. The State committee for each State shall notify 
the Deputy Administrator by telephone or telegraph as to the preliminary 
count of the votes in the State as soon as the preliminary results of 
the referendum are made known to the State committee. The county 
summaries of ballots shall be summarized on the State summary of ballots 
as soon as possible, but in no event later than 7 calendar days after 
canvassing of the ballots, unless there is a dispute or challenge 
regarding the correctness of the summary for any county, in which case 
the State committee shall complete its investigation thereof, decide the 
dispute or challenge, and prepare the State summary accordingly within 
14 calendar days after canvassing of the ballots. The State summary 
shall be prepared in triplicate and certified to by the State executive 
director. The original and one copy of the State summary shall be 
forwarded to the Director of the FSA Division having the responsibility 
for the commodity for which the referendum was held. One copy of the 
State summary shall be filed for a period of 5 years in the office of 
State committee available for public inspection.

[Amdt. 1, 34 FR 12940, Aug. 9, 1969]

                              Miscellaneous



Sec. 717.23  Applicability of this part to Puerto Rico.

    The Caribbean Area Agricultural Stabilization and Conservation 
Committee shall be in charge of and responsible for conducting in Puerto 
Rico each referendum required by the Act. Insofar as applicable, the 
Caribbean Area ASC Committee shall perform all the duties and assume all 
the responsibilities otherwise required of State and county committees 
as provided in this part, except that (a) the Director, Agricultural 
Stabilization and Conservation Caribbean Area Office shall nominate for 
appointment by the Caribbean Area ASC Committee the members and 
alternates to serve on community referendum committees and shall 
establish the boundaries of referendum communities in such a manner that 
polling places therein will be conveniently located for the farmers 
eligible to vote in the referendum, and (b) following the canvass of the 
ballots, results of the referendum shall be reported to the Caribbean 
Area ASC Committee.



Sec. 717.24  Result of referendum.

    (a) Proclamation of result. The final and official tabulation of the 
votes cast in the referendum shall be made by the Deputy Administrator 
and the result of the referendum will be publicly proclaimed and 
published in the Federal Register. The State summaries and related 
papers shall be filed with such tabulation for a period of 5 years 
available for public inspection in the Department of Agriculture.
    (b) Unofficial announcements of result. Each county committee is 
authorized to issue unofficial reports of the total ``Yes'' and ``No'' 
votes in its county to the press and the public. Each State committee is 
authorized to issue to the press and the public the unofficial result of 
the referendum in its State by counties as rapidly as the votes in the 
various counties are reported to it.
    (c) Investigations. If the Deputy Administrator or the Secretary 
deems it necessary, the report of any community referendum committee, 
county committee, or State committee shall be reexamined and checked by 
such

[[Page 78]]

persons or agents as may be designated.



Sec. 717.25  Disposition of ballots and records.

    The county committee shall seal the voted ballots, challenged 
ballots found to be ineligible, spoiled ballots, unopened certification 
envelopes, register sheets, and community summaries for the county in 
one or more envelopes or packages, plainly marked with the 
identification of the referendum, the date, and the names of the county 
and State, and place them under lock in a safe place under the custody 
of the county office manager for a period of 30 calendar days after the 
date of the referendum. If no notice to the contrary is received by the 
end of such time, the voted ballots, challenged ballots, spoiled 
ballots, and unopened certification envelopes shall be destroyed, but 
the registers and community and county summary sheets and the register 
of absentee ballots shall be filed for a period of 5 years in the office 
of the county committee.



Sec. 717.26  Applicability.

    The regulations contained in this part shall be applicable to all 
referenda held pursuant to the Agricultural Adjustment Act of 1938, as 
amended.



PART 718--PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS--Table of Contents




                      Subpart A--General Provisions

Sec.
718.1  Applicability.
718.2  Definitions.
718.3  State committee responsibilities.
718.4  Authority for farm entry and providing information.
718.5  Delegations of authority.
718.6  Signature requirements and time limitations.
718.7  Failure to fully comply.
718.8  Incomplete performance based upon action or advice of an 
          authorized representative of the Secretary.
718.9  Finality rule.
718.10  Rule of fractions.
718.11  Denial of benefits.
718.12  Furnishing maps.

           Subpart B--Determination of Acreage and Compliance

718.101  Measurements.
718.102  Acreage reports.
718.103  Late-filed reports.
718.104  Revised reports.
718.105  Tolerances, variances, and adjustments for tobacco and peanuts.
718.106  Acreages.
718.107  Skip rows and strip crops.
718.108  Deductions.
718.109  Adjustments.
718.110  Notice of measured acreage.
718.111  Redetermination.

  Subpart C--Reconstitution of Farms, Allotments, Quotas, and Acreages

718.201  Farm constitution.
718.202  Determining the land constituting a farm.
718.203  County committee action to reconstitute a farm.
718.204  Reconstitution of allotments, quotas, and acreages.
718.205  Rules for determining farms, allotments, quotas, and acreages 
          when reconstitution is made by division.
718.206  Rules for determining allotments, quotas, and acreages when 
          reconstitution is made by combination.
718.207  Eminent domain acquisitions.
718.208  Exempting Federal prison farms and Federal wildlife refuges.
718.209  Transfer of allotments and quotas--State public lands.

    Authority: 7 U.S.C. 1373, 1374, 7201 et seq.; 15 U.S.C. 714b.

    Source: 61 FR 37552, July 18, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 718.1  Applicability.

    (a) This part is applicable to all programs set forth in chapters 
VII and XIV of this title which are administered by the Farm Service 
Agency (FSA).
    (b) The provisions of this part will be administered under the 
general supervision of the Administrator, FSA, and shall be carried out 
in the field by State and county FSA committees (State and county 
committees).
    (c) State and county committees, and representatives and employees 
thereof, do not have authority to modify or waive any of the provisions 
of the regulations of this part.
    (d) 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:

[[Page 79]]

    (1) Correct, or require a county committee to correct, any action 
taken by such county committee which is not in accordance with the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this part.
    (e) No provisions or delegation herein to a State or county 
committee shall preclude 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.
    (f) The Deputy Administrator may authorize State and county 
committees to waive or modify deadlines and other requirements in cases 
where lateness or failure to meet such other requirements does not 
adversely affect the operation of the program.



Sec. 718.2  Definitions.

    Except as provided in individual parts of chapters VII and XIV of 
this title, the following terms shall be as defined herein:
    Administrative variance (AV) means the amount by which the 
determined acreage may exceed the effective allotment and be considered 
in compliance with program regulations.
    Agricultural Use means devoting the land to annual or perennial 
crops, including conserving uses, pasture, aquaculture or plantings of 
trees for any purpose. Land may be left fallow, but weeds must be 
controlled.
    Allotment means an acreage for a commodity allocated to a farm in 
accordance with the Agricultural Adjustment Act of 1938, as amended.
    Allotment crop means any crop for which acreage allotments are 
established pursuant to parts 723 and 729 of this chapter.
    Combination means consolidation of two or more farms or parts of 
farms into one farm.
    Contract acreage means the quantity of acres enrolled in a contract 
in accordance with part 1412 of this title.
    Contract commodity means a crop of wheat, corn, grain sorghum, oats, 
barley, upland cotton, or rice.
    Controlled substances means the term as set forth in accordance with 
21 CFR part 1308.
    County means the County or parish of a State. For Alaska, Puerto 
Rico and the Virgin Islands, a county shall be an area designated by the 
State committee with the concurrence of the Deputy Administrator.
    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.
    Crop reporting date means date established by the Administrator, 
FSA, representing the final date by which the farm operator, farm owner, 
or properly authorized agent must report applicable crop acreage for the 
report to be considered timely filed.
    Cropland. (1) Means land which the county committee determines meets 
any of the following conditions:
    (i) Is currently being tilled for the production of a crop for 
harvest;
    (ii) Is not currently tilled, but it can be established that such 
land has been tilled in a prior year and is suitable for crop 
production;
    (iii) Is currently devoted to a one- or two-row shelterbelt 
planting, orchard, or vineyard;
    (iv) Is in terraces, that, were cropped in the past, even though 
they are no longer capable of being cropped;
    (v) Is in sod waterways or filter strips planted to a perennial 
cover; or
    (vi) Is preserved as cropland in accordance with part 704 or 1410 of 
this title.
    (2) Land classified as cropland shall be removed from such 
classification upon a determination by the county committee that the 
land is:
    (i) No longer used for agricultural production;
    (ii) No longer suitable for production of crops;
    (iii) Subject to a restrictive easement or contract that prohibits 
its use for

[[Page 80]]

the production of crops unless otherwise authorized by the regulation of 
this chapter;
    (iv) No longer preserved as cropland in accordance with the 
provisions of part 704 or 1410 of this title and does not meet the 
conditions in paragraphs (1)(i) through (1)(vi) of this definition; or
    (v) Devoted to trees (other than those set forth in accordance with 
part 704 or 1410 of this title, one- or two-row shelterbelt plantings, 
orchards, or vineyards) which were planted in the preceding year except 
that land planted to trees or devoted to ponds, lakes, or tanks from 
September 1 through December 31 of the preceding year shall retain its 
cropland classification for the succeeding year, and in the current year 
shall retain its cropland classification for the current year.
    Current year means the year for which applicable allotments, quotas, 
and acreages, or other program determinations are established for that 
program. For controlled substance violations, the year that contains the 
date of actual conviction.
    Deputy Administrator means Deputy Administrator for Farm Programs, 
Farm Service Agency, U.S. Department of Agriculture or a designee.
    Determination means a decision issued by a State, county or area FSA 
committee or the employees of such a committee that affects a 
participant's participation in a program administered by FSA.
    Determined acreage means that acreage established by a 
representative of the Department of Agriculture by use of official 
acreage, digitizing or planimetering areas on the photograph or other 
photographic image, or computations from scaled dimensions or ground 
measurements.
    Division means the division of a farm into two or more farms or 
parts of farms.
    Entity means a corporation, joint stock company, association limited 
partnership, irrevocable 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.
    Family member means an individual to whom a person is related as 
spouse, lineal ancestor, lineal descendant, or sibling, including:
    (1) Great grandparent;
    (2) Grandparent;
    (3) Parent;
    (4) Child, including legally adopted children;
    (5) Great grandchildren;
    (6) Sibling of the family member in the farming operation; and
    (7) Spouse of a person listed in paragraphs (1) through (6) of this 
definition.
    Farm means land that is being operated by one producer with 
equipment, labor, accounting system and management substantially 
separate from that of any other unit. Land on which tenants provide 
their own labor and equipment shall not be considered a separate farm.
    Farm inspection (spot-check) means an inspection by an authorized 
FSA representative using aerial or ground compliance to determine the 
extent of producer adherence to program requirements.
    Farm number means serial number assigned to a farm by the county 
committee for the purpose of identification.
    Farm program payment yield means the yield for a crop which is 
determined in accordance with part 1413 of this title as in effect on 
January 2, 1996.
    Farmland means the sum of the cropland, forest, and other land on 
the farm.
    Field means a part of a farm which is separated from the balance of 
the farm by permanent boundaries such as fences, permanent waterways, 
woodlands, and croplines in cases where farming practices make it 
probable that such cropline is not subject to change, or other similar 
features.
    Ground measurement means the distance between 2 points on the 
ground, obtained by actual use of a chain tape, or other measuring 
device, that is expressed in chains and links.
    Joint operation means a general partnership, joint venture, or other 
similar business organization.

[[Page 81]]

    Landlord means one who rents or leases farmland to another.
    Measurement service means a measurement of acreage or farm-stored 
commodities performed by a representative of FSA and paid for by the 
producer requesting the measurement.
    Measurement service guarantee means a guarantee provided when a 
producer requests and pays for an authorized FSA representative to 
measure acreage for FSA and CCC program participation unless the 
producer takes action to adjust the measured acreage. If the producer 
has taken no such action, and the measured acreage is later discovered 
to be incorrect, the acreage determined pursuant to the measurement 
service will be used for program purposes for that program year.
    Measurement service after planting means determining a crop or 
designated acreage after planting but before the farm operator files a 
report of acreage for the crop.
    Minor child means an individual who is under 18 years of age. Court 
proceedings conferring majority on an individual under 18 years of age 
will not change such an individual's status as a minor.
    Nonagricultural commercial or industrial use means land that is no 
longer suitable for producing annual or perennial crops, including 
conserving uses, or forestry products.
    Normal planting period means that period during which the crop is 
normally planted in the county, or area within the county, with the 
expectation of producing a normal crop.
    Normal row width means the normal distance between rows of the crop 
in the field, but not less than 30 inches for all crops.
    Operator means an individual, entity, or joint operation who is 
determined by the county committee as being in general control of the 
farming operations on the farm during the current year.
    Owner means one who has legal ownership of farmland, including one:
    (1) Who is buying farmland under a contract for deed;
    (2) Who has a life-estate in the property; or
    (3) (i) For purposes of enrolling a farm in a program authorized by 
chapters VII and XIV of this title one who has purchased a farm in a 
foreclosure proceeding and:
    (A) The redemption period has not passed; and
    (B) The original owner has not redeemed the property.
    (ii) One who meets the provisions of paragraph (3)(i) of this 
definition shall be entitled to receive benefits in accordance with such 
a program only to the extent the owner complies with all program 
requirements.
    Partial reconstitution means a reconstitution that is made effective 
in the current year for some crops, but is not made effective in the 
current year for other crops, which results in having two or more farm 
numbers for the same farm.
    Participant means one who participates in, or receives payments or 
benefits in accordance with any of the programs administered by FSA.
    Pasture means land that is used to, or has the potential to, produce 
food for grazing animals.
    Person means an individual, or an individual participating as a 
member of a joint operation or similar operation, a corporation, joint 
stock company, association, limited stock company, limited partnership, 
irrevocable trust, revocable trust together with the grantor of the 
trust, estate, or charitable organization including any entity 
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 a participant in a similar entity, or a State, political 
subdivision or agency thereof. To be considered a separate person for 
the purpose of this part, the individual or other legal entity must:
    (1) Have a separate and distinct interest in the land or the crop 
involved;
    (2) Exercise separate responsibility for such interest; and
    (3) Be responsible for the cost of farming related to such interest 
from a fund or account separate from that of any other individual or 
entity.
    Producer means an owner, operator, landlord, tenant, or 
sharecropper, who shares in the risk of producing a crop and who is 
entitled to share in the crop available for marketing from the farm, or 
would have shared had the crop been

[[Page 82]]

produced. A producer includes a grower of hybrid seed.
    Production flexibility contract means a contract entered in 
accordance with part 1412 of this title.
    Prohibited plants means marijuana (cannabis sativa), opium poppies 
(papaver somniferum), coca bushes (erythroxylum coca), cacti of the 
genus lophophora and other drug producing plants, the planting or 
harvesting of which is prohibited by Federal or State law.
    Random inspection means an examination of a farm by an authorized 
representative of FSA selected as a part of an impartial sample to 
determine the adherence to program requirements.
    Quota means the pounds allocated to a farm for a commodity in 
accordance with the Agricultural Adjustment Act of 1938, as amended.
    Reconstitution means a change in the land constituting a farm as a 
result of combination or division.
    Reported acreage means the acreage reported by the farm operator, 
farm owner, or a properly authorized agent on form FSA-578, Report of 
Acreage, or other form designated by the Deputy Administrator.
    Required inspection means an examination by an authorized 
representative of FSA of a farm specifically selected by application of 
prescribed rules to determine the producer's adherence to program 
requirements or to verify the farm operator's, farm owner's, or properly 
authorized agent's report.
    Secretary means the Secretary of Agriculture of the United States, 
or a designee.
    Sharecropper means one who performs work in connection with the 
production of a crop under the supervision of the operator and who 
receives a share of such crop for its labor.
    Skip-row or strip-crop planting means a cultural practice in which 
strips or rows of the crop are alternated with strips of idle land or 
another crop.
    Staking and referencing means determining an acreage before planting 
by:
    (1) Measuring a delineated area on photography or computing the 
chains and links from ground measurement and sketching the field or 
subdivision of a field; and,
    (2) Staking and referencing the area on the ground.
    Standard deduction means an acreage that is excluded from the gross 
acreage in a field because such acreage is considered as being used for 
farm equipment turn-areas. Such acreage is established by application of 
a prescribed percentage of the area planted to the crop in lieu of 
measuring the turn area.
    State means each 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, or the Trust Territory of the Pacific Islands.
    Subdivision means a part of a field that is separated from the 
balance of the field by temporary boundary, such as a cropline which 
could be easily moved or will likely disappear.
    Tenant means:
    (1) One who rents land from another in consideration of the payment 
of a specified amount of cash or amount of a commodity; or
    (2) One (other than a sharecropper) who rents land from another 
person in consideration of the payment of a share of the crops or 
proceeds therefrom.
    Tolerance means for marketing quota crops, and peanuts, a prescribed 
amount within which the reported acreage may differ from the determined 
acreage and still be considered as correctly reported.
    Tract means a unit of contiguous land under one ownership which is 
operated as a farm or part of a farm.
    Tract combination means the combining of two or more tracts if the 
tracts have common ownership and are contiguous.
    Tract division means the dividing of a tract into two or more tracts 
because of a change in ownership or operation.
    Turn-area means the area across the ends of crop rows which is used 
for operating equipment necessary to the production of a row crop (also 
called turnrow, headland, or endrow).



Sec. 718.3  State committee responsibilities.

    (a) The State committee shall, with respect to county committees:

[[Page 83]]

    (1) Take any action required of the county committee which the 
county committee fails to take in accordance with this part;
    (2) Correct or require the county committee to correct any action 
taken by such committee which is not in accordance with this part;
    (3) Require the county committee to withhold taking any action which 
is not in accordance with this part;
    (4) Review county office rates for producer services to determine 
equity between counties;
    (5) Determine, based on cost effectiveness, which counties will use 
aerial compliance methods and which counties will use ground measurement 
compliance methods; or
    (6) Adjust the per acre rate for acreage in excess of 25 acres to 
reflect the actual cost involved when performing measurement service 
from aerial slides.
    (b) The State committee shall submit to the Deputy Administrator for 
Farm Programs, requests to deviate from deductions prescribed in 
Sec. 718.108 of this part, or the error amount or percentage for refunds 
of redetermination costs as prescribed in Sec. 718.111.



Sec. 718.4  Authority for farm entry and providing information.

    (a) The provisions of this section are applicable to any farm 
enrolled in a program authorized by chapter XIV of this title, all farms 
on which peanuts are planted for harvest (part 729 of this chapter), and 
all farms that have an effective tobacco allotment or quota (part 723 of 
this chapter).
    (b) To ascertain compliance by producers to the regulations 
specified in paragraph (a), a representative of FSA may enter any farm 
specified in such paragraph. An owner, operator or producer on a farm 
may refuse the FSA representative entry to the farm and request FSA to 
provide written authorization for the entry. If entry is not allowed 
within 30 days of such written notification:
    (1) All program benefits otherwise available with respect to such 
farm in accordance with such regulations shall be denied;
    (2) The person objecting to the entry shall pay all costs associated 
with cost of the inspection by FSA of the farm;
    (3) The entire crop production on the farm will be considered to be 
in excess of the quota established for the farm; and
    (4) With respect to tobacco produced on such farm, the farm operator 
must furnish proof of disposition of:
    (i) Burley and flue-cured tobacco which is in addition to the 
production shown on the marketing card issued with respect to such farm; 
and
    (ii) Other kinds of tobacco produced on the farm and no credit will 
be given for disposing of any excess tobacco other than properly 
identified by a marketing card unless such tobacco is disposed of in the 
presence of a representative of FSA in accordance with Sec. 718.109.
    (c) If an owner or operator of a farm refuses to furnish reports or 
data which are necessary to determine benefits in accordance with the 
regulations specified in paragraph (a) or FSA determines that the report 
or data was erroneously provided through the lack of good faith by the 
operator or owner, all benefits will be denied with respect to the farm 
which would otherwise be available in accordance with the program under 
which the report or data is requested.



Sec. 718.5  Delegations of authority.

    The State committee or State Executive Director, as authorized by 
the Deputy Administrator may, in accordance with instructions issued, 
exercise the authority provided in this part in cases where the total of 
any payments and benefits extended under chapters VII and XIV of this 
title does not exceed:
    (a) $5,000 for cases subject to Sec. 718.8; or
    (b) $25,000 for cases subject to Sec. 718.9.



Sec. 718.6  Signature requirements and time limitations.

    (a) When a program authorized by this chapter and parts 1410 and 
1412 of this title requires the signature of a producer; landowner; 
landlord; or tenant, a husband or wife may sign all such FSA or CCC 
documents on behalf of the other spouse, unless such other

[[Page 84]]

spouse has provided written notification to FSA and CCC that such action 
is not authorized. The notification must be provided to the county FSA 
office which administers FSA and CCC programs with respect to each farm.
    (b) Except a husband or wife may not sign a document on behalf of a 
spouse with respect to:
    (1) Program documents required to be executed in accordance with 
part 3 of this title and part 704 of this chapter;
    (2) Easements entered into under part 1410 of this title;
    (3) Form FSA-211, Power of Attorney and Form FSA-211-1, Power of 
Attorney for Husband and Wife; and
    (4) Such other program documents as determined by FSA or CCC.
    (c) Whenever the final date prescribed in any of the regulations in 
this title for the performance of any act falls on a Saturday, Sunday, 
national holiday, State holiday on which the office of the county or 
State Farm Service Agency committee having primary cognizance of the 
action required to be taken is closed, or any other day on which the 
cognizant office is not open for the transaction of business during 
normal working hours, the time for taking required action shall be 
extended to the close of business on the next working day. Or in case 
the action required to be taken may be performed by mailing, the action 
shall be considered to be taken within the prescribed period if the 
mailing is postmarked by midnight of such next working day. Where the 
action required to be taken is within a prescribed number of days after 
the mailing of notice, the day of mailing shall be excluded in computing 
such period of time.



Sec. 718.7  Failure to fully comply.

    In any case in which the failure of a producer to fully comply with 
the terms and conditions of a program authorized by this chapter 
precludes the making of price support to such producer, the Deputy 
Administrator for Farm Programs may authorize the making of such price 
support in such amounts as determined to be equitable in relation to the 
seriousness of the failure if the regulations of this title authorizing 
the program specifically authorize such action. The provisions of this 
part shall only be applicable to producers who are determined to have 
made a good faith effort to comply fully with the terms and conditions 
of the program and rendered substantial performance.



Sec. 718.8  Incomplete performance based upon action or advice of an authorized representative of the Secretary.

    (a) Notwithstanding any other provision of the law, performance 
rendered in good faith based upon action of, or information provided by, 
any authorized representative of a County or State Farm Service Agency 
Committee, may be accepted by the Administrator, FSA (Executive Vice 
President, CCC), the Associate Administrator, FSA (Vice President, CCC), 
or the Deputy Administrator for Farm Programs, FSA (Vice President, 
CCC), as meeting the requirements of the applicable program, and 
benefits may be extended or payments may be made therefor in accordance 
with such action or advice to the extent it is deemed desirable in order 
to provide fair and equitable treatment.
    (b) The provisions of this section shall be applicable only if a 
producer relied upon the action of a county or State committee or an 
authorized representative of such committee or took action based on 
information provided by such representative. The authority provided in 
this part does not extend to cases where the producer knew or had 
sufficient reason to know that the action or advice of the committee or 
its authorized representative upon which they relied was improper or 
erroneous, or where the producer acted in reliance on their own 
misunderstanding or misinterpretation of program provisions, notices, or 
advice.



Sec. 718.9  Finality rule.

    (a) A determination by a State or county committee made on or after 
October 13, 1994, becomes final and binding 90 days from the date the 
application for benefits has been filed, and supporting documentation 
required to be supplied by the producer as a condition for eligibility 
for the particular program has been filed unless one of the following 
conditions exist:

[[Page 85]]

    (1) The participant has requested an administrative review of the 
determination in accordance with the provisions of part 780 of this 
chapter;
    (2) The determination was based on misrepresentation, false 
statement, fraud, or willful misconduct by or on behalf of the 
participant;
    (3) The determination was modified by the Administrator, FSA, or the 
Executive Vice President, CCC; or
    (4) The participant had reason to know that the determination was 
erroneous.
    (b) Should an erroneous determination become final under the 
provisions of this section, it shall only be effective through the year 
in which the error was found and communicated to the participant.



Sec. 718.10  Rule of fractions.

    (a) Rounding of fractions shall be done after the completion of the 
entire computation which is being made. In making mathematical 
determinations all computations shall be carried to two decimal places 
beyond the required number of decimal places as specified in the 
regulations governing each program. In rounding, fractional digits of 49 
or less beyond the required number of decimal places shall be dropped; 
if the fractional digits beyond the required number of decimal places 
are 50 or more, the figure sat the last required decimal place shall be 
increased by ``1'' as follows:

------------------------------------------------------------------------
          Required decimal                Computation          Result
------------------------------------------------------------------------
Whole numbers......................  6.49 (or less).......        6
                                     6.50 (or more).......        7
Tenths.............................  7.649 (or less)......        7.6
                                     7.650 (or more)......        7.7
Hundredths.........................  8.8449 (or less).....        8.84
                                     8.8450 (or more).....        8.85
Thousandths........................  9.63449 (or less)....        9.634
                                     9.63450 (or more)....        9.635
10 thousandths.....................  10.993149 (or less)..       10.9931
                                     10.993150 (or more)..       10.9932
------------------------------------------------------------------------

    (b) The acreage of each field or subdivision computed for tobacco 
and CCC disaster assistance programs shall be recorded in acres and 
hundredths of an acre, dropping all thousandths of an acre. The acreage 
of each field or subdivision computed for crops, except tobacco, shall 
be recorded in acres and tenths of an acre, rounding all hundredths of 
an acre to the nearest tenth.



Sec. 718.11  Denial of benefits.

    (a) For the purposes of this section, a person means an individual.
    (b) Any person convicted under Federal or State law of planting, 
cultivating, growing, producing, harvesting, or storing a controlled 
substance, as defined in 21 CFR part 1308, shall be ineligible for, with 
respect to any commodity produced during the same year and the next 
succeeding four years:
    (1) Any price support loan available in accordance with parts 1446 
and 1464 of this title;
    (2) Any price support or payment made under the Commodity Credit 
Corporation Charter Act;
    (3) A farm storage facility loan made under section 4(h) of the 
Commodity Credit Corporation Charter Act;
    (4) Crop Insurance under the Federal Crop Insurance Act;
    (5) A loan made, insured or guaranteed under the Consolidated farm 
and Rural Development Act or any other provision of law formerly 
administered by the Farmers Home Administration; or
    (6) Any payment made under any Act.
    (c) If any person denied benefits under this part is a beneficiary 
of a trust, benefits for which the trust is eligible shall be reduced, 
for the appropriate period, by a percentage equal to the total interest 
of the beneficiary in the trust.

[61 FR 37552, July 18, 1996, as amended at 62 FR 25437, May 9, 1997]



Sec. 718.12  Furnishing maps.

    The cost of furnishing reproductions of photographs, mosaics and 
maps is free upon request to the farm operator, owner, Federal Crop 
Insurance Corporation (FCIC) and reinsured companies, Natural Resources 
Conservation Service (NRCS) and other Federal or State Agencies 
performing their official duties in making FSA and related program 
determinations. To all others, reproductions shall be made available at 
the rate FSA determines will cover the cost of making such items 
available.

[[Page 86]]



           Subpart B--Determination Of Acreage and Compliance



Sec. 718.101  Measurements.

    (a) Measurement services include, but are not limited to, measuring 
land and crop areas, quantities of farm-stored commodities, and 
appraising the yields of crops when required for program administration 
purposes. The county committee shall provide measurement service if the 
producer requests such service and pays the cost, except that service 
shall not be provided to determine total acreage of a crop when the 
request is made:
    (1) After the established final reporting date for the applicable 
crop except as provided in Sec. 718.103;.
    (2) After the farm operator has furnished the county office 
production evidence when required for program administration purposes 
except as provided in this subpart; or
    (3) In connection with a late-filed report of acreage, unless there 
is evidence of the existence and use made of the crop, the lack of the 
crop or a disaster condition affecting the crop.
    (b) The acreage requested to be measured by staking and referencing 
shall not exceed the effective farm allotment for marketing quota crops 
or acreage of a crop that is limited to a specific number of acres to 
meet any program requirement.
    (c) When a producer requests, pays for, and receives written notice 
that measurement services have been furnished, the measured acreage 
shall be guaranteed to be correct and used for all program purposes for 
the current year even though an error is later discovered in the 
measurement thereof, if the producer has taken action with an economic 
significance based on the measurement service, and the entire crop 
required for the farm was measured. If the producer has not taken action 
with an economic significance based on the measurement service, the 
producer shall be notified in writing that an error was discovered and 
the nature and extent of such error. In such cases, the corrected 
acreage will be used for determining program compliance for the current 
year.
    (d) When a measurement service reveals acreage in excess of the 
permitted acreage by more than the allowable tolerance, the producer 
must destroy the excess acreage and pay for an authorized employee of 
FSA to verify destruction, in order to keep the measurement service 
guarantee.



Sec. 718.102  Acreage reports.

    (a) In order to be eligible for benefits, participants in the 
programs specified in paragraph (b)(1) through (3) of this section and 
those who are subject to the regulations cited in paragraph (b)(4) and 
(5) of this section must submit accurate information as required by 
these provisions.
    (b)(1) Participants in the program authorized by part 1412 of this 
title must report the acreage of fruits and vegetables planted for 
harvest on a farm enrolled in such program;
    (2) Participants in the programs authorized by parts 1421 and 1427 
of this title must report the acreage planted to a commodity for harvest 
for which a marketing assistance loan or loan deficiency payment is 
requested; and
    (3) Participants in the programs authorized by parts 704 and 1410 of 
this title must report the use of the land enrolled in such programs;
    (4) Participants in the programs authorized by parts 723 and 1464 of 
this title (except burley tobacco producers) must report the acreage 
planted to tobacco by kind (except burley tobacco) on all farms that 
have an effective allotment or quota greater than zero; and
    (5) Participants in the programs authorized by parts 729 and 1446 of 
this title must report the acreage planted to peanuts by type.
    (c) The reports required under paragraph (a) of this section shall 
be timely filed by the farm operator, farm owner, or a duly authorized 
representative with the county committee by the final reporting date 
applicable to the crop as established by the county committee and State 
committee.
    (d) Peanut producers shall provide the county office evidence of 
disposition of any peanuts that are kept on the farm, including:
    (1) Type and quantity for use for seed on any farm in which the 
producer has an interest; and

[[Page 87]]

    (2) Type, quantity, names, and addresses of purchases for peanuts 
sold or given to others.
    (e) Peanut producers shall provide the county office information for 
acquisition of seed peanuts from other sources, including:
    (1) Name and address of person who sold or gave producer the 
peanuts;
    (2) Type, farmer's stock or shelled basis, and quantity; and
    (3) Acquisition date.



Sec. 718.103  Late-filed reports.

    (a) A farm operator's report may be accepted after the established 
date for reporting if evidence is still available for inspection which 
may be used to make a determination with respect to the existence and 
use made of the crop, the lack of the crop or a disaster condition 
affecting the crop.
    (b) The farm operator shall pay the cost of a farm visit by an 
authorized FSA employee unless the County Committee has determined that 
failure to report in a timely manner was beyond the producer's control.



Sec. 718.104  Revised reports.

    (a) The farm operator may revise a report of acreage with respect to 
1996 and subsequent years to change the acreage reported if the county 
committee determines that the revision does not have an adverse impact 
on the program and the acreage has not already been determined by FSA.
    (b) Revised reports shall be filed and accepted:
    (1) At any time for all crops if evidence exists for inspection and 
determination of the existence and use made of the crop, the lack of the 
crop, or a disaster condition affecting the crop; and
    (2) If the requirements of paragraph (a) have been met and the 
producer was in compliance with all other program requirements by the 
applicable established crop reporting date.



Sec. 718.105  Tolerances, variances, and adjustments for tobacco and peanuts.

    (a) Tolerance or variance for tobacco and peanuts is the amount by 
which the determined acreage may differ from the reported acreage or 
allotment and still be considered in compliance with program 
requirements. Tolerance or variance for tobacco is the amount by which 
the determined acreage may differ from the reported acreage or allotment 
and still be considered in compliance with program requirements.
    (b) Tolerance rules apply to those fields for which a staking and 
referencing was performed but such acreage was not planted according to 
those measurements or when a measurement service is not requested for 
acreage destroyed to meet program requirements. Tolerance rules do not 
apply to:
    (1) Official fields when the entire field is devoted to one crop;
    (2) Those fields for which staking and referencing was performed and 
such acreage was planted according to those measurements; or
    (3) The adjusted acreage for farms using measurement after planting 
which have a determined acreage greater than the marketing quota crop 
allotment.
    (c) An administrative variance is applicable to all marketing quota 
crop acreages. Marketing quota crop acreages as determined in accordance 
with this part shall be deemed in compliance with the effective farm 
allotment or program requirement when the determined acreage does not 
exceed the effective farm allotment by more than an administrative 
variance determined as follows:
    (1) For all kinds of tobacco subject to marketing quotas, except 
dark air-cured and fire-cured the larger of 0.1 acre or 2 percent of the 
allotment; and
    (2) For dark air-cured and fire-cured tobacco, an acreage based on 
the effective acreage allotment as provided in the table as follows:

------------------------------------------------------------------------
                                                          Administrative
    Effective acreage allotment is within this range         variance
------------------------------------------------------------------------
0.01 to 0.99............................................           0.01
1.00 to 1.49............................................           0.02
1.50 to 1.99............................................           0.03
2.00 to 2.49............................................           0.04
2.50 to 2.99............................................           0.05
3.00 to 3.49............................................           0.06
3.50 to 3.99............................................           0.07
4.00 to 4.49............................................           0.08
4.50 and up.............................................           0.09
------------------------------------------------------------------------

    (d) A tolerance applies to tobacco other than flue-cured or burley, 
if the

[[Page 88]]

determined acreage exceeds the allotment by more than the administrative 
variance but by not more than the tolerance. Such excess acreage of 
tobacco may be adjusted to the effective farm acreage allotment to avoid 
marketing quota penalties or receive price support.
    (e) Tolerance for peanuts is the larger of 1.0 acre or 5 percent of 
the reported acreage, not to exceed 10.0 acres.

[61 FR 37552, July 18, 1996, as amended at 65 FR 8246, Feb. 18, 2000]



Sec. 718.106  Acreages.

    (a) If an acreage has been established by a representative of FSA 
for an area delineated on an aerial photograph, such acreage will be 
recognized by the county committee as the official acreage for the area 
until such time as the boundaries of such area are changed. When 
boundaries not visible on the aerial photograph are established from 
data furnished by the producer, such acreage shall not be recognized as 
official acreage until the boundaries are verified by an authorized 
representative of FSA.
    (b) Measurements of any row crop shall extend beyond the planted 
area by the larger of 15 inches or one-half the distance between the 
rows.
    (c) The entire acreage of a field or subdivision of a field devoted 
to a crop shall be considered as devoted to the crop subject to any 
allowable deduction or adjustment credit except as otherwise provided in 
this part.



Sec. 718.107  Skip rows and strip crops.

    (a) To be considered under the skip row provisions of this section 
the field must be planted in a uniform planting pattern and the number 
of rows planted between skips cannot exceed 36 rows. If more than one 
pattern is used within a field, the area planted to each pattern will be 
considered a subdivision.
    (b) The entire acreage of the field or subdivision shall be 
considered as devoted to the crop where the crop is planted in strips of 
two or more rows and the strips of idle land are less than 64 inches 
wide, except where cotton is planted in skip row patterns:
    (1) If the distance between the rows is 30 inches the strips of the 
idle land are less than 60 inches wide; or
    (2) If the distance between the rows is 32 inches or wider and the 
strips of idle land are at least 60 inches but less than 64 inches, the 
producer has the option to consider the crop as either solid planted or 
skip row if the producer has a history of planting 32-inch or wider 
rows.
    (c) The county committee shall determine if the producer has a 
history of 32-inch or wider rows by verifying that cotton acreage has 
been planted in 32-inch or wider rows in past years and reported on the 
acreage report, or reported to other State or Federal Agencies.
    (d) If the strips of idle land are too wide to be classified as 
solid planted in accordance with paragraph (b) of this section the 
acreage of the strips planted to the crop, including one-half the 
distance between the rows of the crop but not less than 15 inches beyond 
the outside rows of the crop in each strip, shall be considered as 
devoted to the crop.
    (e) When one crop is alternating with another crop, the entire 
acreage of the field or subdivision shall be considered as devoted to 
the crop being measured where such crop is planted in strips of one or 
more rows and the strips of the other crop are less than 64 inches.
    (f) If strips of the alternating crop are too wide to be considered 
solid planted in accordance with paragraph (b) of this section and if 
the alternating crop:
    (1) Has substantially the same growing season as the crop being 
measured, only the acreage planted to the crop being measured, including 
the smaller of one-half the distance between the strips of the crop 
being measured or 30 inches shall be considered as being devoted to the 
crop being measured; or
    (2) Does not have substantially the same growing season as the crop 
being measured, then the acreage of the crop being measured shall be 
determined in accordance with paragraph (b) or (c) of this section.
    (g) When the crops are planted in single wide rows, the entire 
acreage of the field or subdivision shall be considered

[[Page 89]]

as devoted to the crop where the distance between the rows of such crop 
is less than 64 inches. If the distance between the rows of the crop is 
at least 64 inches, only 64 inches in width for each row shall be 
considered as being devoted to the crop.



Sec. 718.108  Deductions.

    (a) Any contiguous area which is not devoted to the crop being 
measured and which is not part of a skip-row pattern under Sec. 718.107 
shall be deducted from the acreage of the crop if such area meets the 
following minimum national standards or requirements:
    (1) A minimum width of 30 inches;
    (2) For tobacco, three-hundredths acre, except that turn areas, 
terraces, permanent irrigation and drainage ditches, sod waterways, 
noncropland, and subdivision boundaries each of which is at least 30 
inches in width may be combined to meet the 0.03-acre minimum 
requirement; or
    (3) For all other crops and land uses, one-tenth acre. Turn areas, 
terraces, permanent irrigation and drainage ditches, sod waterways, 
noncropland, and subdivision boundaries each of which is at least 30 
inches in width and each of which contain 0.1 acre or more may be 
combined to meet any larger minimum prescribed for a State in accordance 
with this subpart.
    (b) If the area not devoted to the crop is located within the 
planted area, the part of any perimeter area that is more than 33 links 
in width will be considered to be an internal deduction if the standard 
deduction is used.
    (c) A standard deduction of 3 percent of the area devoted to a row 
crop and zero percent of the area devoted to a close-sown crop may be 
used in lieu of measuring the acreage of turn areas.



Sec. 718.109  Adjustments.

    (a) The farm operator or other interested producer having excess 
tobacco acreage (other than flue-cured or burley) may adjust an acreage 
of the crop in order to avoid a marketing quota penalty if such person:
    (1) Notifies the county committee of such election within 15 
calendar days after the date of mailing of notice of excess acreage by 
the county committee; and
    (2) Pays the cost of a farm visit to determine the adjusted acreage 
prior to the date the farm visit is made.
    (b) The farm operator may adjust an acreage of tobacco (except flue-
cured and burley) by disposing of such excess tobacco prior to the 
marketing of any of the same kind of tobacco from the farm. The 
disposition shall be witnessed by a representative of FSA and may take 
place before, during, or after the harvesting of the same kind of 
tobacco grown on the farm. However, no credit will be allowed toward the 
disposition of excess acreage after the tobacco is harvested but prior 
to marketing, unless the county committee determines that such tobacco 
is representative of the entire crop from the farm of the kind of 
tobacco involved.



Sec. 718.110  Notice of measured acreage.

    Written notice of measured acreage shall be on Form FSA-468, Notice 
of Determined Acreage, when mailed to the farm operator and shall 
constitute notice to all interested producers on the farm.



Sec. 718.111  Redetermination.

    (a) A redetermination of crop acreage, appraised yield, or farm-
stored production for a farm may be initiated by the county committee, 
State committee, or Deputy Administrator at any time. Such 
redeterminations may also be initiated by a producer who has an interest 
in the farm upon filing a request within 15 calendar days after the date 
of the notice furnished the farm operator in accordance with 
Sec. 718.109 or Sec. 718.110 or within 5 calendar days after the initial 
appraisal of the yield of a crop or before any of the farm-stored 
production is removed from storage and upon payment of the cost of 
making such redetermination. A redetermination shall be undertaken in 
the manner prescribed by the Deputy Administrator. Such redetermination 
shall be used in lieu of any prior determination.
    (b) The county committee shall refund the payment of the cost for a 
redetermination when, because of an error in the initial determination:
    (1) The appraised yield is changed by at least the larger of:

[[Page 90]]

    (i) Five percent or 5 pounds for cotton;
    (ii) Five percent or 1 bushel for wheat, barley, oats, and rye; or
    (iii) Five percent or 2 bushels for corn and grain sorghum; or
    (2) The farm stored production is changed by at least the smaller of 
3 percent or 600 bushels; or
    (3) The acreage of the crop is:
    (i) Changed by at least the larger of 3 percent or 0.5 acre; or
    (ii) Considered to be within program requirements.



  Subpart C--Reconstitution of Farms, Allotments, Quotas, and Acreages



Sec. 718.201  Farm constitution.

    (a) Land which has been properly constituted under prior regulations 
shall remain so constituted until a reconstitution is required under 
paragraph (c) of this section. The constitution and identification of 
land as a farm for the first time and the subsequent reconstitution of a 
farm made hereafter, shall include all land operated by one person as a 
single farming unit except that it shall not include:
    (1) After August 1, 1996, land subject to a production flexibility 
contract with land not subject to a production flexibility contract;
    (2) Land under separate ownership unless the owners agree in 
writing;
    (3) Land under a lease agreement of less than 1 year duration;
    (4) Land in different counties when the tobacco allotments or quotas 
established for the land involved cannot be transferred from one county 
to another county by lease, sale, or owner. However, this paragraph 
shall not apply if:
    (i) All of the land is owned by one person and operated by one 
person and all such land is contiguous;
    (ii) Two or more tracts are located in counties that are contiguous 
in the same State and are owned by the same person if:
    (A) A burley or flue-cured tobacco quota is established for one or 
more of the tracts; and
    (B) The county committee determines that the tracts will be operated 
as a single farming unit as set forth in Sec. 718.202; or
    (iii) Because of a change in operation, tracts or parts of tracts 
will be divided from the parent farm that currently has land in more 
than one county, and there is no change in operation and ownership of 
the remainder of the farm, or if there is a change in ownership, the new 
owner agrees in writing to the constitution of the farm.
    (5) Federally owned land;
    (6) State-owned wildlife land unless the former owner has possession 
of the land under a leasing agreement;
    (7) Land constituting a farm which is declared ineligible to be 
enrolled in a program under the regulations governing the program;
    (8) For land subject to production flexibility contracts, land 
located in counties that are not contiguous. However, this subparagraph 
shall not apply if:
    (i) Counties are divided by a river;
    (ii) Counties do not touch because of a correction line adjustment; 
or
    (iii) The land is within 20 miles, by road, of other land that will 
be a part of the farming unit; and
    (9) With respect to peanut poundage quotas, land across:
    (i) County lines when the quotas established for the land involved 
cannot be transferred; or
    (ii) State lines.
    (b)(1) If all land on the farm is physically located in one county, 
the farm records shall be administratively located in such county. If 
there is no FSA office in the county or the county offices have been 
consolidated, the farm shall be administratively located in the 
contiguous county most convenient for the farm operator.
    (2) If the land on the farm is located in more than one county, the 
farm shall be administratively located in either of such counties as the 
county committees and the farm operator agree. If no agreement can be 
reached, the farm shall be administratively located in the county where 
the principal dwelling is situated, or where the major portion of the 
farm is located if there is no dwelling.
    (c) A reconstitution of a farm either by division or by combination 
shall be required whenever:

[[Page 91]]

    (1) A change has occurred in the operation of the land after the 
last constitution or reconstitution and as a result of such change the 
farm does not meet the conditions for constitution of a farm as set 
forth in paragraph (b) except that no reconstitution shall be made if 
the county committee determines that the primary purpose of the change 
in operation is to establish eligibility to transfer allotments subject 
to sale or lease;
    (2) The farm was not properly constituted under the applicable 
regulations in effect at the time of the last constitution or 
reconstitution;
    (3) An owner requests in writing that the owner's land no longer be 
included in a farm which is composed of tracts under separate ownership;
    (4) The county committee determines that the farm was reconstituted 
on the basis of false information furnished by the owner or farm 
operator;
    (5) The county committee determines that the tracts of land included 
in a farm are not being operated as a single farming unit;
    (6) An owner of a farm, constituted as a single farming unit prior 
to 1978, which is comprised of land located in two or more counties for 
which there is a quota or allotment established for such farm and such 
quota or allotment is subject to lease and transfer restrictions across 
county lines, requests in writing that the farm be reconstituted by 
dividing the tracts. The resulting farms shall be administratively 
serviced by the county office serving the county in which the land is 
geographically located; or
    (7) Land is sold for or devoted to nonagricultural commercial or 
industrial uses; however, a reconstitution is not required and 
allotments, quotas and acreages may remain with the farm if either of 
the following apply:
    (i) The land is already devoted to residential, recreational, 
industrial or commercial buildings; or
    (ii) The owner would qualify to use the landowner designation method 
of division in accordance with Sec. 718.205 or the allotments and quotas 
can be transferred by sale or owner in accordance with this part and 
parts 723 or 729 of this chapter and the owner of the parent farm and 
the purchaser file a signed written memorandum of understanding before 
Form FSA-476 or Form MQ-24 is issued, stating that the land will be 
devoted immediately or within 3 years to:
    (1) Nonagricultural commercial uses; or
    (2) Recreational, residential, industrial or non-farm commercial 
uses.
    (d) Notwithstanding the provisions of paragraphs (c)(1) through 
(c)(7), a reconstitution shall not be approved if the county committee 
determines that the primary purpose of the reconstitution is to:
    (1) Circumvent the provisions of part 12 of this title; or
    (2) Circumvent any other chapter of this title.

[61 FR 37552, July 18, 1996, as amended at 65 FR 7953, Feb. 16, 2000]



Sec. 718.202  Determining the land constituting a farm.

    (a) In determining the constitution of a farm, consideration shall 
be given to provisions such as ownership and operation. For purposes of 
this part, the following rules shall be applicable to determining what 
land is to be included in a farm.
    (b) A minor shall be considered to be the same owner or operator as 
the parent or court-appointed guardian (or other person responsible for 
the minor child) unless:
    (1) The minor child is a producer on a farm;
    (2) Neither the minor's parents nor guardian has any interest in the 
minor's farm or production from the farm;
    (3) The minor establishes and maintains a separate household from 
the parent or guardian;
    (4) Personally carries out the farming activities in the operation; 
and
    (5) Maintains a separate accounting for the farming operation.
    (c) Notwithstanding paragraph (b) of this section, a minor shall not 
be considered to be the same owner or operator as the parent or court-
appointed guardian if the minor's interest in the farming operation 
results from being the beneficiary of an irrevocable trust and ownership 
of the property is vested in the trust or the minor.

[[Page 92]]

    (d) A life estate tenant shall be considered to be the owner of the 
property for their life.
    (e) A trust shall be considered to be an owner with the beneficiary 
of the trust; except a trust can be considered a separate owner or 
operator from the beneficiary, if the trust:
    (1) Has a separate and distinct interest in the land or crop 
involved;
    (2) Exercises separate responsibility for the separate and distinct 
interest; and
    (3) Maintains funds and accounts separate from that of any other 
individual or entity for the interest.



Sec. 718.203  County committee action to reconstitute a farm.

    Action to reconstitute a farm may be initiated by the county 
committee, the farm owner, or the operator with the concurrence of the 
owner of the farm. Any request for a farm reconstitution shall be filed 
with the county committee.



Sec. 718.204  Reconstitution of allotments, quotas, and acreages.

    (a) Farms shall be reconstituted in accordance with this subpart 
when it is determined that the land areas are not properly constituted 
and, to the extent practicable, shall be based on the facts and 
conditions existing at the time the change requiring the reconstitution 
occurred.
    (b) Reconstitutions of farms subject to a production flexibility 
contract in accordance with part 1412 of this title will be effective 
for the current year if initiated on or before July 1 of the fiscal 
year.
    (c) For tobacco and peanut farms, a reconstitution will be effective 
for the current year for each crop for which the reconstitution is 
initiated before the planting of such crop begins or would have begun.
    (d) Notwithstanding the provisions of paragraph (b) and (c) of this 
section, a reconstitution may be effective for the current year if the 
county committee, with the concurrence of the State committee, 
determines that the purpose of the request for reconstitution is not to 
perpetrate a scheme or device the effect of which is to avoid the 
statutes and regulations governing commodity programs found in this 
title.



Sec. 718.205  Rules for determining farms, allotments, quotas, and acreages when reconstitution is made by division.

    (a) The methods for dividing farms, allotments, quotas, and acreages 
in order of precedence, when applicable, are estate, designation by 
landowner, contribution, agricultural use, cropland, and history. The 
proper method shall be determined on a crop by crop basis.
    (b)(1) The estate method is the proration of allotments, quotas, and 
acreages for a parent farm among the heirs in settling an estate. If the 
estate sells a tract of land before the farm is divided among the heirs, 
the allotments, quotas, and acreages for that tract shall be determined 
by using one of the methods provided in paragraphs (c) through (g) of 
this section.
    (2) Allotments, quotas, and acreages shall be divided in accordance 
with a will, but only if the county committee determines that the terms 
of the will are such that a division can reasonably be made by the 
estate method.
    (3) If there is no will or the county committee determines that the 
terms of a will are not clear as to the division of allotments, quotas, 
and acreages, such allotments, quotas, and acreages shall be apportioned 
in the manner agreed to in writing by all interested heirs or devisees 
who acquire an interest in the property for which such allotments, 
quotas, and acreages have been established. An agreement by the 
administrator or executor shall not be accepted in lieu of an agreement 
by the heirs or devisees.
    (4) If allotments, quotas, and acreages are not apportioned in 
accordance with the provisions of paragraph (b)(2) or (3) of this 
section, the allotments, quotas, and acreages shall be divided pursuant 
to paragraphs (d) through (g) of this section, as applicable.
    (c)(1) If the ownership of a tract of land is transferred from a 
parent farm, the transferring owner may request that the county 
committee divide the allotments, quotas, and acreages, including 
historical acreage that has

[[Page 93]]

been doublecropped, between the parent farm and the transferred tract, 
or between the various tracts if the entire farm is sold to two or more 
purchasers, in a manner designated by the owner of the parent farm 
subject to the conditions set forth in paragraph (c)(4) of this section. 
In the case of land subject to a Wetlands Reserve Program easement or 
Emergency Wetlands Reserve Program easement, the parent farm shall 
retain the allotments, quotas, and acreages.
    (2) If the county committee determines that allotments, quotas, and 
acreages cannot be divided in the manner designated by the owner because 
of the conditions set forth in paragraph (c)(4) of this section, the 
owner shall be notified and permitted to revise the designation so as to 
meet the conditions in paragraph (c)(4) of this section. If the owner 
does not furnish a revised designation of allotments, quotas, and 
acreages within a reasonable time after such notification, or if the 
revised designation does not meet the conditions of paragraph (c)(4) of 
this section, the county committee will prorate the allotments, quotas, 
and acreages in accordance with paragraphs (d) through (g) of this 
section.
    (3) If a parent farm is composed of tracts, under separate 
ownership, each separately owned tract being transferred in part shall 
be considered a separate farm and shall be constituted separately from 
the parent farm using the rules in paragraphs (d) through (g) of this 
section, as applicable, prior to application of the provisions of this 
paragraph.
    (4) A landowner may designate, as provided in this paragraph, the 
manner in which allotments, quotas, and acreages are divided.
    (i) The transferring owner and transferee shall file a signed 
written memorandum of understanding of the designation with the county 
committee before the farm is reconstituted and before a subsequent 
transfer of ownership of the land. The landowner shall designate the 
allotments, quotas, and acreage that shall be permanently reduced when 
the sum of the allotments, quotas, and acreages exceeds the cropland for 
the farm.
    (ii) Where the part of the farm from which the ownership is being 
transferred was owned for a period of less than 3 years, the designation 
by landowner method shall not be available with respect to the transfer 
unless the county committee determines that the primary purpose of the 
ownership transfer was other than to retain or to sell allotments or 
quotas. In the absence of such a determination, and if the farm contains 
land which has been owned for less than 3 years, that part of the farm 
which has been owned for less than 3 years shall be considered as a 
separate farm and the allotments or quotas, shall be assigned to that 
part in accordance with paragraphs (d) through (g) of this section. Such 
apportionment shall be made prior to any designation of allotments and 
quotas, with respect to the part which has been owned for 3 years or 
more.
    (5) The designation by landowner method is not applicable to crop 
allotments or quotas which are restricted to transfer within the county 
by lease, sale, or by owner, when the land on which the farm is located 
is in two or more counties.
    (6) The designation by landowner method may be applied at the 
owner's request to land owned by any Indian Tribal Council which is 
leased to two or more producers for the production of any crop of a 
commodity for which an allotment, quota, or acreage has been 
established. If the land is leased to two or more producers, an Indian 
Tribal Council may request that the county committee divide the 
allotments, quotas, and acreages between the applicable tracts in the 
manner designated by the Council. The use of this method shall not be 
subject to the conditions of paragraph (c)(4).
    (d)(1) The contribution method is the proration of a parent farm's 
allotments, quotas, and acreages to each tract as the tract contributed 
to the allotments, quotas, or acreages at the time of combination and 
may be used when the provisions of paragraphs (b) and (c) of this 
section do not apply. The contribution method shall be used to divide 
allotments and quotas for a farm that resulted from a combination which 
became effective during the 6-year period before the crop year for

[[Page 94]]

which the reconstitution is effective. This method for dividing 
allotments and quotas shall be used beyond the 6-year period if FSA 
records are available to show the amount of contribution.
    (2) The county committee determines with the concurrence of the 
State committee or representative thereof, that the use of the 
contribution method would not result in an equitable distribution of 
allotments and quotas, considering available land, cultural operations, 
and changes in type of farming. The contribution method shall not be 
used in cases involving the division of allotment or quota for any 
commodity for which there was no allotment or quota established at the 
time of the combination.
    (e) The agricultural use method is the proration of contract acreage 
to the tracts being separated from the parent farm in the same 
proportion that the agricultural and related activity land for each 
tract bears to the agricultural and related activity land for the parent 
farm. This method of division shall be used if the provisions of 
paragraphs (b) through (d) of this section do not apply.
    (f)(1) The cropland method is the proration of allotments and quotas 
to the tracts being separated from the parent farm in the same 
proportion that the cropland for each tract bears to the cropland for 
the parent farm. This method shall be used if the provisions of 
paragraphs (b) through (d) of this section do not apply unless the 
county committee determines that a division by the history method would 
result in allotments and quotas which are more representative than if 
the cropland method is used after taking into consideration the 
operation normally carried out on each tract for the commodities 
produced on the farm.
    (2) The cropland method shall not be used to divide contract 
acreage.
    (g)(1) The history method is the proration of allotments and quotas 
to the tracts being separated from the farm on the basis of the 
allotments and quotas determined to be representative of the operations 
normally carried out on each tract. The county committee may use the 
history method of dividing allotments and quotas when it:
    (i) Determines that this method would result in the proration of 
allotments and quotas, more representative than the cropland method of 
division of the operation normally carried out on each tract; and
    (ii) Obtains written consent of all owners to use the history 
method.
    (2) Notwithstanding any other provision of this section, the county 
committee may waive the requirement for written consent of the owners 
for dividing allotments and quotas if the county committee determines 
that the use of the cropland method would result in an inequitable 
division of the parent farm's allotments and quotas and the use of the 
history method would provide more favorable results for all owners.
    (3) The history method shall not be used to divide contract acreage.
    (h)(1) Allotments, quotas, and acreages apportioned among the 
divided tracts pursuant to paragraphs (d), (e), (f) and (g) of this 
section may be increased or decreased with respect to a tract by as much 
as 10 percent of the allotment, quota, or acreage determined under such 
subsections for the parent farm if:
    (i) The owners agree in writing; and
    (ii) The county committee determines the method used did not provide 
an equitable distribution considering available land, cultural 
operations, and changes in the type of farming conducted on the farm. 
Any increase in an allotment, quota, or acreage with respect to a tract 
pursuant to this paragraph shall be offset by a corresponding decrease 
for such allotments, quotas or acreages established with respect to the 
other tracts which constitute the farm.
    (2) Farm program payment yields calculated for the resulting farms 
of a division performed according to paragraphs (d) through (g) may be 
increased or decreased if the county committee determines the method 
used did not provide an equitable distribution considering available 
land, cultural operations, and changes in the type of farming conducted 
on the farm. Any increase in a farm program payment yield on a resulting 
farm shall be offset by a corresponding decrease on another resulting 
farm of the division.

[[Page 95]]

    (i) If a farm with burley tobacco quota is divided through 
reconstitution and one or more of the farms resulting from the division 
are apportioned less than 1,000 pounds of burley tobacco quota, the 
owners of such farms shall take action as provided in part 723 of this 
chapter to comply with the 1,000 pound minimum by July 1 of the current 
year or the quota shall be dropped. Exceptions to this are farms 
divided:
    (1) Among family members;
    (2) By the estate method; and
    (3) When no sale or change in ownership of land occurs.

[61 FR 37552, July 18, 1996, as amended at 65 FR 65722, Nov. 2, 2000]



Sec. 718.206  Rules for determining allotments, quotas, and acreages when reconstitution is made by combination.

    When two or more farms or tracts are combined for a year, that 
year's allotments, quotas, and acreages, with respect to the combined 
farm or tract, as required by applicable commodity regulations, shall 
not be greater than the sum of the allotments, quotas, and acreages for 
each of the farms or tracts comprising the combination, subject to the 
provisions of Sec. 718.204.

[61 FR 37552, July 18, 1996; 61 FR 49049, Sept. 18, 1996]



Sec. 718.207  Eminent domain acquisitions.

    (a) This section provides a uniform method for reallocating 
allotments and quotas, with respect to land involved in eminent domain 
acquisitions. Such allotments and quotas, in accordance with this 
section, may be pooled for the benefit of the owner who is displaced 
from the acquired farm by eminent domain acquisition. Such pooling shall 
be for a 3-year period from the date of displacement or during such 
other period as the displaced owner may request for the transfer of 
allotments and quotas, from the pool to other farms owned by such 
person.
    (b) An eminent domain acquisition is a taking of title to land, or 
the taking of an impoundment easement to impound water on the land, or 
the taking of a flowage easement to intermittently flood the land, 
consummated with respect to land which is, or could be, so taken under 
the power of eminent domain by a Federal, State, or other agency. Such 
acquisition may be by court proceedings to condemn the land or by 
negotiation between the agency and the owner. An acquisition by an 
agency with respect to land not subject to the agency's power of eminent 
domain shall not be an eminent domain acquisition for purposes of this 
section. All land acquired by an agency for the intended project, 
including surrounding land not needed for the project but acquired as a 
package acquisition, shall be considered to be in the eminent domain 
acquisition if the agency expended funds for the package acquisition on 
the basis of its power of eminent domain.
    (c) For purposes of this section, owner means the person, or persons 
in a joint ownership, having title to the land for a period of at least 
12 months immediately prior to the date of transfer of title or grant of 
the impoundment or flowage easement under the eminent domain 
acquisition. If such person or persons have owned the land for less than 
such 12-month period, they may, nevertheless, be considered the owner if 
the State committee determines that such person or persons acquired the 
land for the purpose of carrying out farming operations and not for the 
purpose of obtaining status as an owner under this section. However, no 
person shall be considered the owner if he acquired the land subject to 
an eminent domain acquisition under an outstanding contract to an agency 
or an option by an agency or subject to pending condemnation 
proceedings. In any case where the current titleholders cannot be 
considered the owner for the purpose of this section, the State 
committee shall determine the person or persons who previously had title 
to the land and who qualify for status as the owner under the criteria 
in this paragraph.
    (d) The owner shall be considered displaced from a farm which is 
subject to an eminent domain acquisition on the date:
    (1) The owner loses possession of the land;
    (2) The owner is voluntarily displaced if a binding contract for 
acquisition has been executed;

[[Page 96]]

    (3) The owner, in the case of a flowage easement, determines it is 
no longer practical to conduct farming operations on the land; or
    (4) The owner loses possession of the land as lessee under a lease 
from the agency or its designee if the lease provided uninterrupted 
possession to the owner from the date of acquisition to the end of the 
lease or extensions of the lease.
    (e) The owner shall notify the county committee in writing of the 
eminent domain acquisition and furnish the date of displacement within 
30 days so that allotments and quotas may be pooled in accordance with 
this section. Failure to so notify the county committee shall result in 
the loss of the ability of the owner to extend the 3-year period of the 
pool.
    (f) Whenever the county committee determines, by notice from the 
owner or otherwise, that an owner has been displaced from the farm, the 
county committee shall establish a pool for the allotments and quotas 
eligible for pooling under this section for a 3-year period beginning on 
the date of displacement. Pooled allotments and quotas shall be 
considered fully planted and, for each year in the pool, shall be 
established in accordance with applicable commodity regulations.
    (g) Pooling is not permitted or required:
    (1) If the county committee determines that an agency has authority 
under its eminent domain powers to acquire a farm for the continued 
production of an allotment or quota and does so acquire a farm only for 
such purpose and files a written notice with the county committee of the 
county in which the farm is located at the time of acquisition 
designating the allotment and quota to be produced on the farm, there 
shall be no pooling of such allotment and quota. Such farm allotments 
and quotas shall be established for the farm in accordance with 
applicable commodity regulations. For acreages, there shall be no 
pooling of the acreage under any circumstances if an agency acquires 
land and retains the land in an agricultural or related activity;
    (2) If the displaced owner files written notice with the county 
committee of an intention to waive the right to have all the allotments 
and quotas or any part thereof pooled and the county committee 
determines that the displaced owner has not been coerced to waive such 
right, the allotments and quotas shall be retained on the agency 
acquired land;
    (3) If an agency acquires part of a farm for non-farming purposes 
and the cropland on the land so acquired represents less than 15 percent 
of the total cropland on the farm, the allotments and quotas shall be 
retained on the portion of the farm not acquired by the agency and shall 
not be pooled;
    (4) If an agency acquires part of a farm for non-farming purposes 
and the cropland on the land so acquired represents 15 percent or more 
of the total cropland on a farm, the allotments and quotas attributable 
to the acquired land shall be retained on the portion of the farm not 
acquired by the agency if the owner files a written request with the 
county committee for such retention. The amount of an allotment and 
quota which may be retained on the farm cannot exceed the land devoted 
to an agricultural or related activity. Allotments and quotas which are 
not retained shall be pooled; or
    (5) If, prior to pooling, an owner files a request to transfer the 
allotments and quotas to other farms in the same county which are owned 
by such owner, the county committee may approve a direct transfer 
without the formal establishment of a pool. Such transfer shall be 
subject to the requirements of paragraph (j) of this section. This 
paragraph shall govern the release and reapportionment of pooled 
allotments and quotas notwithstanding other provisions of applicable 
commodity regulations.
    (h) Pooled allotments and quotas may be released on an annual basis 
by the owner to a county committee during any year for which allotments 
and quotas are pooled and not otherwise transferred from the pool. The 
county committee may reapportion the released allotments and quotas to 
other farms in the same county that have allotments or quotas for the 
same commodity. Pooled allotments and quotas shall not be released on a 
permanent basis or surrendered after release to

[[Page 97]]

the State committee for reapportionment in other counties. 
Reapportionment shall be on the basis of past acreage of the commodity, 
land, labor, and equipment available for the production of the 
commodity, crop rotation practices, and other physical factors affecting 
the production of the commodity. Pooled allotments and quotas which are 
released shall be considered to have been fully planted in the pool and 
not on the farm to which such allotments and quotas are reapportioned.
    (i) Pooled allotments and quotas that may be transferred on a 
permanent or temporary basis by sale, lease, or by owner designation may 
be transferred permanently from the pool by the owner or temporarily for 
the duration of the pooled allotment or quota, subject to the terms and 
conditions for such transfers in the applicable commodity regulations. 
The transfer of tobacco acreage allotment or marketing quota shall be 
approved acre for acre.
    (j) (1) The displaced owners may request a transfer of all or part 
of the pooled allotments and quotas to any other farm in the United 
States which is owned by the displaced owner, but only if there are 
farms in the receiving county with allotments and quotas, for the 
particular commodity or, if there are no such farms, the county 
committee determines that farms in the receiving county are suited for 
the production of the commodity. For purposes of this paragraph:
    (i) Receiving farm means the farm to which transfer from the pool is 
to be made;
    (ii) Receiving State and county committee mean those committees for 
the State and county in which the receiving farm is located; and
    (iii) Transferring State and county committees mean those committees 
for the State and county in which the agency acquired farm is located.
    (2) The displaced owner shall file with the receiving county 
committee written application for transfer of an allotment and quota 
from the pool within 3 years after the date of displacement. The 
application shall contain a certification from the owner that no 
agreement has been made with any person for the purpose of obtaining an 
allotment or quota from the pool for a person other than for the 
displaced owner. The owner shall attach to the application all pertinent 
documents pertaining to the current ownership or purchase of land and 
any leasing arrangements, such as the deed of trust or mortgage, a 
warranty deed, a note, sales agreement, and lease.
    (3) The receiving county committee shall consider each application 
and determine whether the transfer from the pool shall be approved. 
Before an application is acted upon by the receiving county committee, 
the owner shall personally appear before the receiving county committee 
after reasonable notice, bring any additional pertinent documents as may 
be requested for examination by the receiving county committee, and 
answer all pertinent questions bearing on the proposed transfer. Such 
personal appearance requirement may be waived if the receiving county 
committee determines from facts presented to it on behalf of the owner 
that such personal appearance would unduly inconvenience the owner on 
account of illness or other good cause and such personal appearance 
would serve no useful purpose. Any action by the receiving county 
committee shall be subject to the approval required under paragraph 
(j)(5) of this section.
    (4) The transfer from the pool will be approved by the receiving 
county committee only if the county committee determines that the owner 
has made a normal acquisition of the receiving farm for the purpose of 
bona fide ownership to reestablish farming operations. The elements of 
such an acquisition shall include, but are not limited to, the 
following:
    (i) Appropriate legal documents must establish title to the 
receiving farm;
    (ii) If the displaced owner was the operator of the acquired farm at 
the date of displacement, such owner must personally operate and be the 
operator of the receiving farm for the first year that the allotment and 
quota is transferred;
    (iii) If the displaced owner was not the operator of the acquired 
farm at the date of displacement and was not a producer on that farm 
because the leasing or rental agreement provided for

[[Page 98]]

cash, fixed rent, or standing rent payment, such owner shall not be 
required to operate personally and be the operator of the receiving 
farm, but at least 75 percent of the allotments for the receiving farm 
must be planted on the receiving farm during the first year of the 
transfer. With respect to a commodity for which a quota is applicable 
but for which there is no acreage allotment, an acreage which is equal 
to the result of dividing the quota transferred to the receiving farms 
by the receiving farm's yield, multiplied by 75 percent must be planted 
during the first year of the transfer;
    (iv) If the displaced owner was not the operator of the acquired 
farm at the date of displacement but was a producer on that farm at the 
date of displacement as the result of having received a share of the 
crops produced on the acquired farm, such displaced owner shall not be 
required to be the operator of the receiving farm but must be a producer 
on the receiving farm during the first year that an allotment or quota 
is transferred;
    (v) The contractual arrangements between the displaced owner and the 
seller of the receiving farm must not contain a requirement that the 
receiving farm be leased to the seller or a person designated by or 
subject to the control of the seller. The seller or a person designated 
by or subject to the control of the seller may not lease the receiving 
farm for the first year the allotment or quota is transferred; and
    (vi) The contractual arrangements under which the receiving farm was 
purchased or leased must be customary in the community where the 
receiving farm is located with respect to purchase price and timing and 
amount of purchase or rental payments.
    (5) The approval by the receiving county committee of a transfer 
from the pool under this paragraph shall be effective upon concurrence 
by the State committee of the State where the receiving farm is located 
(the receiving State committee). Notwithstanding any other provision of 
this section, the receiving State committee may authorize a transfer 
from the pool in any case where the owner presents evidence satisfactory 
to the receiving State committee that:
    (i) The eligibility requirements of paragraph (j)(4) (ii), (iii) and 
(iv) of this section cannot be met without substantial hardship because 
of illness, old age, multiple farm ownership, or lack of a dwelling on 
the farm to which an allotment or quota is to be transferred; or
    (ii) The owner has made a normal acquisition of the receiving farm 
for the purpose of bona fide ownership to reestablish farming operations 
for the displaced owner, even if the farm is leased to the seller of the 
farm for the first year for which the allotment or quota is transferred.
    (6) Upon completion of all necessary approvals under this paragraph, 
the receiving county committee shall issue an appropriate notice of 
allotment and quota under the applicable commodity regulations, taking 
into consideration the land, labor, and equipment available for the 
production of the commodity, crop rotation practices, and the soil and 
other physical factors affecting the production of the commodity. For 
purposes of determining the amount of the allotment and quota available 
for transfer, the receiving county committee shall consider the 
receiving tract as a separate ownership. The acreage transferred from 
the pool shall not exceed the allotments and quotas, most recently 
established for the acquired farm placed in the pool. When all or a part 
of the allotment and quota placed in the pool is transferred and used to 
establish or increase the allotment and quota for other farms owned or 
purchased by the owner, all of the proportionate part of the past 
acreage history for the acquired farm shall be transferred to and 
considered for purposes of future allotments and quotas to have been 
planted on the receiving farm for which an allotment and quota, are 
established or increased under this section. If only a part of the 
available allotment and quota is transferred from the pool, the 
remaining part of the allotment and quota, shall remain in the pool for 
transfer to other farms of the owner until all such allotments and 
quotas have been transferred or until the period of eligibility for 
establishing or increasing allotments and quotas under this section has 
expired.

[[Page 99]]

    (7) If any allotment or quota is transferred under this section and 
it is later determined by the receiving county or State committee, or by 
the Deputy Administrator, that the transfer was obtained by 
misrepresentation by or on behalf of the owner, or that the conditions 
of paragraph (j)(4) of this section are not met, the allotment and quota 
for the receiving farm shall be reduced for each year the transfer 
purportedly was in effect by the amount attributable to the allotment or 
quota transferred from the pool. If the time period for the transfer of 
the allotment or quota from the pool has not expired, the amount of 
allotment or quota initially transferred from the pool shall be returned 
to the pool after the period of time has expired in which the displaced 
owner could exercise the right of administrative review. Any 
cancellation of the transfer of an allotment or quota by the receiving 
county committee shall be subject to approval by the receiving State 
committee. The receiving county committee shall issue a notice of any 
marketing quota and penalty as may be required in accordance with 
applicable commodity regulations.
    (8) If the displaced owner files a request for transfer of pooled 
allotments or quotas, within the prescribed period for filing such 
request, but the request for transfer is filed during a year in which 
all or a part of the pooled allotments or quotas were released to the 
transferring county committee pursuant to paragraph (h), the application 
for transfer will be processed in the usual manner but the amount of the 
commodity released shall not be effective on the receiving farm until 
the succeeding year. When a request for transfer of pooled allotment or 
quota involves a transfer from one State to another, the receiving State 
committee shall obtain information from the transferring State committee 
as to whether any part of the allotment or quota for which the transfer 
is requested has been released to the transferring county committee for 
the current year.
    (k)(1) When the displaced owner leases part but not all of the 
agency acquired land, such part shall be constituted as a separate farm 
on the date of the displacement of the owner from the land not so 
leased.
    (2) If a parent farm consists of separate ownership tracts, each 
such tract being acquired in whole or in part shall be considered as a 
separate farm for purposes of paragraphs (g) (3) and (4) of this 
section.
    (3) If a portion of a farm is acquired by an agency and the owner is 
displaced therefrom, the acquired portion shall be constituted as a 
separate farm on the date of displacement unless the allotments and 
quotas are retained on the portion not acquired as provided in 
paragraphs (g) (3) and (4) of this section, in which case the farm shall 
not be reconstituted but the farmland and cropland data shall be 
corrected on all appropriate records for the parent farm.
    (l)(1) The displaced owner may file with the county committee a 
written designation of beneficiary of the rights in the allotments and 
quotas attributable to the acquired land in the event of the death of 
the displaced owner, and may revise such designation from time to time. 
The beneficiary of a deceased owner may exercise the right to continue a 
lease or negotiate a lease with the agency or its designee, the regular 
transfer rights with respect to farms owned by such beneficiary, and the 
release, sale, lease, and owner transfer rights under this section.
    (2) If the displaced owner does not file a designation of 
beneficiary under paragraph (l)(1) and the displaced owner dies before 
displacement or after pooling occurs, the following persons shall be 
considered the beneficiary with the rights provided under paragraph 
(l)(1) of this section:
    (i) The surviving joint owner of the farm where two persons own the 
farm as joint tenants with right of survivorship; and
    (ii) The persons who succeed to the deceased displaced owner's 
interest under a will or by intestate succession. However, in the case 
of intestate succession, the person shall be limited to the surviving 
spouse, parent, sibling or child of the deceased displaced owner. In the 
settlement of the estate of the deceased displaced owner, the heirs may 
file a written agreement with the

[[Page 100]]

county committee for the division of the deceased displaced owner's 
rights under this section.
    (m)(1) No transfer from the pool under paragraph (h), (i), or (j) of 
this section shall be approved if there remains any unpaid marketing 
quota penalty due with respect to the marketing of the commodity from 
the acquired farm by the displaced owner, or if any of the commodity 
produced on the agency acquired farm has not been accounted for as 
required under applicable commodity regulations.
    (2) If an allotment or quota for an acquired farm next established 
after the data of displacement would have been reduced because of false 
or improper identification of the commodity produced on or marketed from 
the farm, or as the result of a false acreage report, the allotment or 
quota shall be reduced in the pool in accordance with the applicable 
commodity regulations.



Sec. 718.208  Exempting Federal prison farms and Federal wildlife refuges.

    A marketing penalty shall not be assessed with respect to any 
commodity which is produced on a Federal prison farm or Federal wildlife 
refuge. This exception does not apply to penalties incurred by an 
individual who has a separate interest in a crop which is subject to 
marketing quotas and was produced on a Federal prison farm or Federal 
wildlife refuge.



Sec. 718.209  Transfer of allotments and quotas--State public lands.

    (a) Transfers of allotments and quotas between farms in the same 
county may be permitted where both farms are lands owned by the State.
    (b) An application requesting the transfer of one or more of the 
allotments and quotas on a farm entirely comprised of lands owned by a 
State shall be filed with the county committee by the State. The 
application shall identify the farms as being within the same county, 
show that each farm is entirely comprised of lands owned by the State, 
and list the allotments and quotas requested to be transferred. 
Additional information with respect to the present operations on the 
farms, including all leasing arrangements, shall also be set forth in 
the application.
    (c) The State committee shall establish the closing date for filing 
applications under paragraph (b) of this section for each year which 
shall be no later than the general planting date in the county for the 
commodity involved in the transfer.
    (d)(1) Each transfer of an allotment and quota under this section 
shall be adjusted for differences in farm productivity if the yield 
projected for the year the transfer is to take effect for the farm to 
which transfer is made exceeds by more than ten percent the yield 
projected for the year the transfer is to take effect for the farm from 
which transfer is made. The county committee shall determine the amount 
of the allotment and quota to be transferred where a productivity 
adjustment is required to be made by dividing:
    (i) The product of the yield for the farm from which the transfer is 
made and the acreage to be transferred from such farm, by
    (ii) The yield for the farm to which the transfer is made.
    (2) Acreage for the farm receiving the allotment or quota shall be 
adjusted by the same percentage as the allotment or quota being 
transferred is adjusted. The amount of the allotment and quota and 
related acreage transferred from the farm from which the transfer is 
made shall be the full amount, but the amount of all allotment or quota 
and related acreage for the farm to which the transfer is made shall be 
the adjusted amount.
    (e) The amount of allotment and quota on a farm after a transfer 
under this section is made shall not exceed the average amount of 
allotment or quota of at least three farms with acreage of cropland 
similar to the farm receiving the transfer in the community having the 
applicable allotment acreage and quota on these farms.
    (f) Each transfer of any allotment and quota shall be subject to the 
condition that an acreage equal to the allotment and quota transferred, 
before any productivity adjustment, shall be devoted to and maintained 
in permanent vegetative cover on the farm from which the transfer is 
made. The acreage to be devoted to and maintained in

[[Page 101]]

permanent vegetative cover with respect to quota crops shall be 
determined by dividing the quota transferred by the yield of the farm 
from which the quota is transferred.
    (g) Transfer of an allotment and quota under this section shall only 
be approved if:
    (1) The county committee determines that a timely filed application 
has been received and that the provisions of this section have been met; 
and
    (2) A representative of the State committee also determines that the 
provisions of this section have been met. If such a transfer is 
approved, the county committee shall issue revised notices of the 
allotment or quota for each farm affected by the transfer. If a county 
committee obtains evidence that the conditions applicable to any 
transfer under this section have not been met, a report of the facts 
shall be made to the State committee. If the State committee determines 
that such conditions have not been met, the transfer will be canceled, 
and the allotment and quota shall be retransferred to the original farm. 
Where cancellation and retransfer is required, the county committee 
shall issue revised notices of the allotment or quota showing the 
reasons for the cancellation of the transfer.



PART 723--TOBACCO--Table of Contents




                      Subpart A--General Provisions

Sec.
723.101  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.
723.102  Applicability.
723.103  Administration.
723.104  Definitions.
723.105  Extent of determinations, computations, and rule for rounding 
          fractions.
723.106  Location of farm for administrative purposes.
723.107-723.110  [Reserved]
723.111  Flue-cured (types 11-14) tobacco.
723.112  Burley (type 31) tobacco.
723.113  Fire-cured (type 21) tobacco.
723.114  Fire-cured (types 22-23) tobacco.
723.115  Dark air-cured (types 35-36) tobacco.
723.116  Sun-cured (type 37) tobacco.
723.117  Cigar-filler and binder (types 42-44 and 53-55) tobacco.
723.118  Cigar-filler (type 46) tobacco.
723.119-723.121  [Reserved]

     Subpart B--Allotments, Quotas, Yields, Transfers, Release and 
           Reapportionment, History Acreages, and Forfeitures

723.201  Determination of preliminary farm acreage allotments and 
          preliminary farm marketing quotas.
723.202  Determining farm acreage allotment, except for flue-cured 
          tobacco.
723.203  Determination of flue-cured tobacco preliminary farm yields.
723.204  Determination of farm yields and normal yields.
723.205  Determination of farm acreage allotments and effective farm 
          acreage allotments for flue-cured tobacco.
723.206  Determining farm marketing quotas and effective farm marketing 
          quotas.
723.207  Determination of acreage allotments or burley marketing quotas 
          for new farms.
723.208  Determination of acreage allotments, marketing quotas, and 
          yields for divided farms.
723.209  Determination of acreage allotments, marketing quotas, yields 
          for combined farms; and special tobacco combinations.
723.210  Corrections of errors and adjusting inequities in acreage 
          allotments and marketing quotas for old farms.
723.211  Allotments, quotas, and yields for farms acquired under right 
          of eminent domain.
723.212  Time for making reduction of farm marketing quotas or acreage 
          allotments for violation of the marketing quota or acreage 
          allotment regulations for a prior marketing year.
723.213  Approval of acreage allotments and marketing quotas and notices 
          to farm operators.
723.214  Application for review.
723.215  Transfer of tobacco farm acreage allotment or farm marketing 
          quota that cannot be planted or replanted due to a natural 
          disaster.
723.216  Transfer of tobacco acreage allotment or marketing quota by 
          sale, lease, or owner.
723.217  Release and reapportionment of old farm acreage allotments for 
          Cigar-filler and Binder (types 42, 43, 44, 54, and 55) 
          tobacco.
723.218  Determining tobacco history acreage.
723.219  Forfeiture of burley tobacco marketing quota.
723.220  Forfeiture of flue-cured tobacco acreage allotment and 
          marketing quota.

 Subpart C--Tobacco Subject to Quota, Exemptions From Quotas, Marketing 
                  Cards, and General Penalty Provisions

723.301  Identification of tobacco subject to quota.

[[Page 102]]

723.302  Tobacco for experimental purposes.
723.303  Production of registered or certified flue-cured tobacco seed.
723.304  Determination of discount varieties.
723.305  Issuance of marketing cards.
723.306  Claim stamping and replacing marketing cards.
723.307  Invalid cards.
723.308  Rate of penalty.
723.309  Persons to pay penalty.
723.310  Date penalty is due.
723.311  Lien for penalty; liability of persons who are affiliated with 
          indebted person or who permit the indebted person to use their 
          identification card.
723.312  Request for refund of penalty.
723.313  Identification of marketings.

 Subpart D--Recordkeeping, Reporting Requirements, Marketing Penalties, 
                           and Other Penalties

723.401  Registration of burley and flue-cured warehouse operators and 
          dealers.
723.402  Warehouse authorized to retain producer marketing cards between 
          sales.
723.403  Auction warehouse operators' records and reports.
723.404  Dealer's records and reports, excluding cigar tobacco buyers.
723.405  Dealers exempt from regular records and reports on MQ-79; and 
          season report for dealers.
723.406  Provisions applicable to damaged tobacco or to purchases of 
          tobacco from processors or manufacturers.
723.407  Cigar tobacco buyer's records and reports.
723.408  Producer's records and reports.
723.409  Producer violations, penalties, false identification 
          collections and remittances by dealers, buyers, handlers, 
          warehouses, and other parties; related issues.
723.410  Penalties considered to be due from warehouse operators, 
          dealers, buyers, and others excluding the producer.
723.411  Records and reports regarding hauling, processing, and storage 
          of tobacco.
723.412  Separate records and reports from persons engaged in tobacco 
          related businesses.
723.413  Length of time records and reports are to be kept.
723.414  Failure to keep records and make reports or making false report 
          or record.
723.415  Examination of records and reports.
723.416  Information confidential.

Subpart E--Establishing Burley and Flue-Cured Tobacco National Marketing 
                                 Quotas

723.501  Scope.
723.502  Definitions.
723.503  Establishing the quotas.
723.504  Manufacturer's intentions; penalties.

    Authority: 7 U.S.C. 1301, 1311-1314, 1314-1, 1314b, 1314b-1, 1314b-
2, 1314c, 1314d, 1314e, 1314f, 1314i, 1315, 1316, 1362, 1363, 1372-75, 
1421, 1445-1, and 1445-2.

    Source: 55 FR 39914, Oct. 1, 1990, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 723 appear at 62 FR 
15600, Apr. 2, 1997, and at 63 FR 11585, Mar. 10, 1998.



                      Subpart A--General Provisions



Sec. 723.101  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR part 723) have been approved by the Office of 
Management and Budget (OMB) in accordance with the provisions of U.S.C. 
chapter 35 and have been assigned OMB control numbers 0560-0058 and 
0560-0006.



Sec. 723.102  Applicability.

    The regulations contained in this subpart are applicable to the 1990 
and subsequent crops of burley; flue-cured; fire-cured; dark air-cured; 
Virginia sun-cured; cigar-filler and binder (types 42, 43, 44, 54, and 
55); and Cigar filler (type 46) tobacco. These regulations govern the 
establishment of farm marketing quotas and acreage allotments, the 
issuance of marketing cards, the identification of marketings of 
tobacco, the collection and refund of penalties and the keeping of 
records and making of reports. All of the provisions of these 
regulations apply to each kind of tobacco for which marketing quotas are 
in effect unless the wording of the text indicates otherwise.



Sec. 723.103  Administration.

    (a) The regulations in this part will be administered under the 
general supervision of the Administrator, Farm Service Agency (``FSA'') 
and shall be carried out in the field by State and county Agricultural 
Stabilization and Conservation committees (``State and county FSA 
committees'').
    (b) State and county FSA committees, and representatives and 
employees thereof do not have the authority

[[Page 103]]

to modify or waive any of the provisions of the regulations of this 
part.
    (c) The State FSA committee shall take any action required by these 
regulations which has not been taken by the county FSA committee. The 
State FSA committee shall also:
    (1) Correct, or require a county FSA committee to correct any action 
taken by such county FSA committee which is not in accordance with the 
regulations of this part, or
    (2) Require a county FSA committee to withhold taking any action 
which is not in accordance with the regulations of this part.
    (d) No provision or delegation herein to a State or county FSA 
committee shall preclude the Administrator, FSA, or a designee, from 
determining any question arising under the regulations of this part or 
from reversing or modifying any determination made by a State or county 
FSA committee. Further, the Administrator or the Administrator's 
designee may modify any deadline or other provisions of this part to the 
extent that doing so is determined by such person to be appropriate and 
not inconsistent with the purposes of the program administered under 
this part.

[55 FR 39914, Oct. 1, 1990, as amended at 63 FR 9128, Feb. 24, 1998]



Sec. 723.104  Definitions.

    (a) Applicability. The definitions set forth in this section shall 
be applicable for all purposes of program administration for all kinds 
of tobacco except as may otherwise be indicated. The definitions in and 
provisions of parts 718 and 720 of this chapter are hereby incorporated 
by reference in these regulations unless the context or subject matter 
or the provisions of these regulations require otherwise.
    (b) Terms. The following terms shall be defined as set forth in this 
paragraph.
    Act. The Agricultural Adjustment Act of 1938, as amended.
    Active burley and flue-cured tobacco producer. (1) Any person who 
shared in the risk of producing a crop of burley or flue-cured tobacco 
in at least one of the three years preceding the current year, or
    (2) Any person who intends to become a burley or flue-cured tobacco 
producer in the current year by sharing in the risk of producing the 
crop and who provides a certification of such intentions on a form 
approved by the Deputy Administrator.
    Allowable floor sweepings. The quantity of floor sweepings 
determined by multiplying 0.0024 times the total producer first sales of 
the respective kind of tobacco at auction for the season for the 
warehouse involved.
    Auction sale. A marketing of tobacco by a sale at public auction 
through a warehouse in the regular course of business including sale of 
all lots of tobacco at public auction in sequence at a given time.
    Base Period. The 5 calendar years immediately preceding the year for 
which farm acreage allotments or marketing quotas are currently being 
established. For burley tobacco marketing quotas established effective 
for the 1994 and subsequent crop years, the base period shall be the 3 
calendar years immediately preceding the year for which farm marketing 
quotas are currently being established. For all other kinds of tobacco 
the five year base period shall remain in effect.
    Buyer. A person who engages to any extent in acquiring or marketing 
tobacco in the form normally marketed by producers.
    Buyers corrections account. The warehouse account of tobacco 
purchased at auction by the buyer but not delivered to the buyer, or any 
tobacco returned by the buyer, lost ticket, or any other valid reason, 
which is turned back to the warehouse operator and supported by an 
adjustment invoice from the buyer. This account shall include the pounds 
deducted resulting from returned lots, short lots, and short weights, 
and pounds added resulting from long lots and long weights, which buyers 
debit or credit to the warehouse operator and support with adjustment 
invoices.
    Carryover tobacco. Tobacco produced prior to the current calendar 
year which has not been marketed or otherwise disposed of prior to the 
beginning of the marketing year for the current crop.

[[Page 104]]

    Common ownership unit. A common ownership unit is a distinguishable 
part of a farm, consisting of one or more tracts of land with the same 
owners, as determined by FSA.
    Considered planted acreage. An acreage that is used for determining 
an old farm's history acreage for a kind of tobacco when the acreage 
planted on the farm to the kind of tobacco in the current year is less 
than the farm acreage allotment established for such farm in the current 
year. With respect to:
    (1) Flue-cured tobacco. If flue-cured tobacco was marketed from the 
farm during the current year, the considered planted acreage is an 
acreage determined by subtracting the planted acres from the farm 
acreage allotment. If flue-cured tobacco was not marketed from the farm 
in the current year, the considered planted acreage is an acreage, not 
to exceed the farm's acreage allotment, that is equal to the sum of the 
acreage:
    (i) That could not be planted to flue-cured tobacco because of a 
natural disaster,
    (ii) Computed for pounds leased from the farm,
    (iii) In the eminent domain pool,
    (iv) Reduced for overmarketing,
    (v) Reduced for violation of marketing quota regulations, and
    (vi) Converted from the production of flue-cured tobacco during the 
respective crop year in accordance with part 704 of this chapter.
    (2) A kind of tobacco other than burley or flue-cured tobacco. The 
considered planted acreage for a farm is an acreage, not to exceed the 
farm's acreage allotment, that is equal to the sum of the acreage:
    (i) That could not be planted to the kind of tobacco because of a 
natural disaster.
    (ii) Temporarily transferred from the farm.
    (iii) Temporarily released.
    (iv) Converted from production of the kind of tobacco in accordance 
with part 704 of this chapter.
    (v) In the eminent domain pool.
    (vi) Reduced for violation of the regulations set forth in this 
part.
    Container. A package in which tobacco is marketed, packed, and 
stored.
    Current crop. The crop planted in the current year.
    Current year. The calendar year for which acreage allotments are 
being established, or tobacco history acreage and yields are being 
determined, or the farm is being considered under the provisions of the 
marketing quota program.
    Damaged tobacco. Any tobacco that has suffered a loss of value due 
to deterioration resulting from a cause such as rot, separation of 
leaves from stems, fire, smoke, water, or other conditions that would 
cause such tobacco to be distinguishably different from that normally 
marketed in trade channels.
    Dealer. A person who engages to any extent in acquiring or marketing 
tobacco in the form normally marketed by producers.
    Director. The Director, or Acting Director, Tobacco and Peanuts 
Division, Farm Service Agency, U.S. Department of Agriculture.
    Effective farm acreage allotment. The effective farm acreage 
allotment for flue-cured tobacco is the allotment determined under 
Sec. 723.205 of this part.
    Effective farm marketing quota. The effective farm marketing quota 
is the current year farm marketing quota plus or minus any temporary 
quota adjustments.
    Excess tobacco for a farm. (1) For burley and flue-cured tobacco. 
The quantity of tobacco marketed above 103 percent of the effective farm 
marketing quota.
    (2) For kinds of tobacco other than burley or flue-cured. That 
quantity of tobacco which is equal to the average yield per acre of the 
entire acreage of tobacco harvested on the farm times the number of 
acres harvested in excess of the farm acreage allotment, plus any 
carryover excess tobacco.
    Experimental tobacco. Tobacco grown by or under the direction of a 
publicly owned agricultural experiment station for experimental purposes 
only.
    False identification. False identification occurs if:
    (1) Tobacco was marketed or was permitted to be marketed in any 
marketing year as having been produced on any farm when, in fact, it was 
produced on another farm; or

[[Page 105]]

    (2) Tobacco was marketed or was permitted to be marketed in any 
marketing year from a farm and was not identified by a tobacco marketing 
card for the farm; or
    (3) The farm operator or any other producer on a farm permits the 
use of the tobacco marketing card for the farm to record a marketing of 
tobacco when, in fact, no tobacco was marketed from the farm.
    (4) A tobacco marketing card issued to market a kind of tobacco is 
used to market another kind of tobacco produced on the same farm.
    Family farm corporation. A corporation for which:
    (1) Not less than 50 percent of the stock is owned by:
    (i) An individual or;
    (ii) An individual in combination with:
    (A) The spouse of such individual; or
    (B) The parent, aunt, uncle, child, grandchild, or cousin of such 
individual; or
    (C) A spouse of any individual specified in paragraph (1)(ii)(B) 
and;
    (2) One or more of the individuals specified in paragraph (1) 
participates in the direct management of the day to day operations of 
the corporation.
    Farm acreage allotment. For flue-cured tobacco, the allotment 
established in accordance with Sec. 723.205 of this chapter.
    Farm marketing quota. (1) For burley tobacco, old farms. The pounds 
determined by multiplying the preliminary farm marketing quota by the 
national factor and adjusting the result for any permanent quota 
adjustment.
    (2) For burley tobacco, new farms. The pounds for the farm 
determined by the county FSA committee with the approval of the State 
FSA committee.
    (3) For flue-cured tobacco. The pounds determined by multiplying the 
farm acreage allotment by the farm yield.
    (4) For kinds of tobacco other than burley or flue-cured. The actual 
production of tobacco on the farm acreage allotment, which shall be the 
average yield per acre for the entire acreage of tobacco harvested on 
the farm times the farm acreage allotment.
    Farm Service Agency. An agency within the U.S. Department of 
Agriculture.
    Farm yield. The yield determined as provided in Sec. 723.204 of this 
part.
    Floor sweepings. The scraps or leaves of tobacco which accumulate on 
the warehouse floor in the regular course of business.
    FSA. The Farm Service Agency.
    Green weight. The weight of tobacco which is in the form normally 
marketed by farmers prior to being redried, or processed.
    Leaf account tobacco. The quantity of tobacco purchased or otherwise 
acquired by or for the account of a warehouse operator, including floor 
sweepings purchased from another warehouse operator or dealer, as 
adjusted by the debits and credits to the buyers correction account. 
Such quantity shall not include tobacco in the form not normally 
marketed by producers, including tobacco pickings, and floor sweepings 
which accumulate on the warehouse floor.
    Market. The disposition of tobacco in raw or processed form by 
voluntary or involuntary sale, barter, or exchange, or by gift between 
living persons. ``Marketing'' and ``marketed'' shall have corresponding 
meaning to the term ``market.''
    Marketing recorder. Any employee of the U.S. Department of 
Agriculture, or any employee of an Farm Service Agency county (FSA) 
office, whose duties involve the preparation and handling of the records 
and reports pertaining to the identification of marketing of tobacco.
    Marketing year. (1) For flue-cured tobacco, the period beginning 
July 1 of the current year and ending June 30 of the following year.
    (2) For kinds of tobacco other than flue cured. The period beginning 
October 1 of the current year and ending September 30 of the following 
year.
    New farm. A farm for which an acreage allotment or marketing quota 
is established for the current year from the national reserve that is 
set aside for such purpose from the national acreage allotment or 
marketing quota established for the kind of tobacco.
    Nonauction sale. Any marketing of tobacco other than at an auction 
sale.
    Old farm. (1) For burley tobacco. A farm which had burley tobacco 
planted

[[Page 106]]

or considered planted in one or more years of the base period.
    (2) For tobacco other than burley. A farm on which there is tobacco 
history acreage in one or more years of the base period.
    Overmarketings. The pounds by which the pounds marketed exceed the 
effective farm marketing quota.
    Planted or considered planted credit. For burley tobacco, credit 
that is assigned in the current year for a farm with an established farm 
marketing quota when:
    (1) Burley tobacco is planted on the farm.
    (2) Burley tobacco could not be planted because of a natural 
disaster.
    (3) Quota is:
    (i) Leased and transferred from the farm, or
    (ii) In the eminent domain pool.
    (4) A restrictive lease on federally owned land is in effect 
prohibiting tobacco production.
    (5) Effective quota is zero because of overmarketings or a violation 
of regulations, or
    (6) Acreage is converted from production of burley tobacco in 
accordance with part 704 of this chapter.
    Pound. The amount of tobacco which, if weighed in its unstemmed form 
and in the condition in which it is normally marketed by a producer, 
would equal 1 pound standard weight.
    Preceding year. The calendar year immediately preceding the year for 
which the allotments and quotas are established, or the marketing year 
preceding the marketing year for which the allotments and quotas are 
established.
    Preliminary farm marketing quota. For burley tobacco, the farm 
marketing quota for the preceding year.
    Preliminary farm yield. For flue-cured tobacco, the yield determined 
for a farm as provided in Sec. 723.203 of this part.
    Processed, Processing. A method of preparing green weight tobacco 
for storage in which the tobacco may be redried, stemmed, tipped or 
threshed and the resulting product packed in a container.
    Production record. A record prepared by a processor to account for 
the processing of tobacco.
    Quota adjustments. For burley tobacco:
    (1) Temporary. Adjustments for:
    (i) Effective undermarketings,
    (ii) Overmarketings from any prior year,
    (iii) Reapportioned quota from quota released from farms in the 
eminent domain pool,
    (iv) Quota transferred by lease or by owner,
    (v) Pounds in violation of the regulations for a prior year, and
    (vi) Pounds reduced from the burley tobacco quota during the current 
year in accordance with part 704 of this chapter.
    (2) Permanent. Adjustments for:
    (i) Old farm adjustment from reserve,
    (ii) Pounds of quota transferred to the farm from the eminent domain 
pool,
    (iii) Pounds of quota transferred to or from the farm by sale,
    (iv) Pounds of quota transferred to the farm from the forfeiture 
pool, or
    (v) Pounds of forfeited quota.
    Resale. The disposition by sale, barter, exchange, or gift between 
living persons, of tobacco which has been marketed previously.
    Sale. The first marketing of tobacco on which the gross amount of 
the sale price therefore has been or could be readily determined.
    Sale date. The date on which the gross amount of the sale price of 
tobacco is determined.
    Sale day. The period at the end of which the warehouse operator 
bills to buyers the tobacco purchased by them during such period.
    Scrap tobacco. The residue which accumulates in the course of 
preparing tobacco for market, consisting chiefly of portions of tobacco 
leaves and leaves of poor quality.
    Shared in the risk of production. For burley or flue-cured tobacco, 
involvement in the production of the respective kind of tobacco by a 
person who:
    (1) Invests in the production of a crop of the respective kind of 
tobacco in an amount which is not less than 20 percent of the proceeds 
of the sale of the crop;
    (2) Depends solely on a share of the proceeds from the marketing of 
the tobacco for the return on the investment;

[[Page 107]]

    (3) Waits until such crop of tobacco is marketed to receive any 
return on the investment; and
    (4) Maintains records, for a period of 3 years after the end of the 
marketing year in which the tobacco is sold, which may be used to verify 
that the provisions of this definition have been met.
    Strip, scrap, stem. Types of products resulting from processing of 
tobacco.
    Suspended sale. Any marketing of tobacco at auction for which the 
sale is not identified by a producer marketing card or a dealer's 
identification card by the end of the sale day on which such marketing 
occurred.
    Tillable cropland. With respect to flue-cured tobacco only, cropland 
(excluding orchards, vineyards, land devoted to trees, and land being 
prepared for non-agricultural uses) which the county FSA committee 
determines can be planted to crops without unusual preparation or 
cultivation.
    Tobacco. Kinds of tobacco that are subject to marketing quotas as 
follows: Burley tobacco, (type 31); Flue-cured tobacco, (types 11, 12, 
13, and 14); Fire-cured tobacco (types 21, 22, and 23); Dark air-cured 
tobacco (types 35 and 36); Virginia sun-cured tobacco (type 37); Cigar 
filler (type 46); and Cigar-filler and binder tobacco (types 42, 43, 44, 
54, and 55) as classified by the Agricultural Marketing Service at part 
30 of this title.
    Tobacco available for marketing. All tobacco produced on a farm 
which has not been marketed and which has not been disposed of so that 
it cannot be marketed.
    Tobacco in the form not normally marketed by producers. Tobacco 
leaves, stems, strips, scrap or parts thereof that are the result of 
green tobacco having been redried, stemmed, tipped, threshed or 
otherwise processed.
    Tobacco pickings. The residue which accumulates in the course of 
processing tobacco prior to the redrying of such tobacco, consisting of 
scrap, stems, portions of leaves, and leaves of poor quality shall be 
considered to be tobacco in the form not normally marketed by producers.
    Trucker. A person who trucks, or who otherwise hauls tobacco for a 
producer, or for any other person.
    Undermarketings. For burley or flue-cured tobacco, the actual 
undermarketings are the pounds by which the effective farm marketing 
quota is more than the pounds of the respective kind of tobacco 
marketed, and the effective undermarketings are the smaller of actual 
undermarketings or the sum of the previous year's farm marketing quota 
plus pounds of quota temporarily transferred to the farm for the 
previous year. However, with respect to the 1989 crop, actual 
undermarketings are the number of pounds by which the effective farm 
marketing quota is more than the sum of the number of pounds of tobacco 
marketed and number of pounds for which a disaster payment was made on 
the 1989 crop of tobacco under part 1477 of this title.
    Warehouse operator. A person who engages in the business of 
conducting a sale of tobacco at public auction.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21441, May 9, 1991; 57 
FR 43581, Sept. 21, 1992; 63 FR 11582, Mar. 10, 1998]

    Editorial Note: At 65 FR 7953, Sec. 723.104(h) was amended by 
removing the definition of Tillable cropland. However, there is no 
paragraph (h) in Sec. 723.104.



Sec. 723.105  Extent of determinations, computations, and rule for rounding fractions.

    (a) General. All rounding herein shall be in accordance with the 
provisions of part 793 of this chapter.
    (b) Allotments. Farm acreage allotments shall be determined in 
hundredths of acres.
    (c) Percent excess. The percentage of excess tobacco available for 
marketing from a farm, hereinafter referred to as the ``percent 
excess,'' shall be determined in tenths of a percent.
    (d) Converted rate of penalty. For tobacco other than burley or 
flue-cured, the amount of penalty per pound upon marketings of tobacco 
subject to penalty, hereinafter referred to as the ``converted rate of 
penalty,'' shall be determined in tenths of a cent.
    (e) Percentage reduction for violation. A percentage of reduction in 
an allotment due to a violation shall be determined in tenths of a 
percent.
    (f) Yields and quotas. Yields and quotas shall be determined in 
whole pounds.

[[Page 108]]



Sec. 723.106  Location of farm for administrative purposes.

    The location of a farm in a county for administrative purposes shall 
be as provided in part 718 of this chapter.



Secs. 723.107-723.110  [Reserved]



Sec. 723.111  Flue-cured (types 11-14) tobacco.

    (a) The 1993-crop national marketing quota is 891.8 million pounds.
    (b) The 1994-crop national marketing quota is 802.6 million pounds.
    (c) The 1995-crop national marketing quota is 934.6 million pounds.
    (d) The 1996-crop national marketing quota is 873.6 million pounds.
    (e) The 1997-crop national marketing quota is 973.8 million pounds.
    (f) The 1998-crop national marketing quota is 807.6 million pounds.
    (g) The 1999-crop national marketing quota is 666.2 million pounds.

[58 FR 11962, Mar. 2, 1993, as amended at 59 FR 6866, 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; 64 FR 66718, Nov. 30, 1999]



Sec. 723.112  Burley (type 31) tobacco.

    (a) The 1993-crop national marketing quota is 603.0 million pounds.
    (b) The 1994-crop national marketing quota is 542.7 million pounds.
    (c) The 1995-crop national marketing quota is 549.0 million pounds.
    (d) The 1996-crop national marketing quota is 633.8 million pounds.
    (e) The 1997-crop national marketing quota is 704.5 million pounds.
    (f) The 1998-crop national marketing quota is 637.8 million pounds.
    (g) [Reserved]
    (h) The 2000-crop national marketing quota is 247.4 million pounds.

[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; 65 78407, Dec. 15, 2000]



Sec. 723.113  Fire-cured (type 21) tobacco.

    (a) The 1993-crop national marketing quota is 1.975 million pounds.
    (b) The 1994-crop national marketing quota is 2.15 million pounds.
    (c) The 1995-crop national marketing quota is 1.95 million pounds.
    (d) The 1996-crop national marketing quota is 1.97 million pounds.
    (e) The 1997-crop national marketing quota is 2.395 million pounds.
    (f) The 1998-crop national marketing quota is 2.725 million pounds.
    (g) The 1999-crop national marketing quota is 2.6 million pounds.
    (h) The 2000-crop national marketing quota is 2.138 million pounds.

[58 FR 36857, 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; 64 FR 15295, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec. 723.114  Fire-cured (types 22-23) tobacco.

    (a) The 1993-crop national marketing quota is 38.2 million pounds.
    (b) The 1994-crop national marketing quota is 40.4 million pounds.
    (c) The 1995-crop national marketing quota is 39.8 million pounds.
    (d) The 1996-crop national marketing quota is 40.6 million pounds.
    (e) The 1997-crop national marketing quota is 43.4 million pounds.
    (f) The 1998-crop national marketing quota is 44.6 million pounds.
    (g) The 1999-crop national marketing quota is 41.4 million pounds.
    (h) The 2000-crop national marketing quota is 42.9 million pounds.

[58 FR 36857, 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; 64 FR 15295, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec. 723.115  Dark air-cured (types 35-36) tobacco.

    (a) The 1993-crop national marketing quota is 11.16 million pounds.
    (b) The 1994-crop national marketing quota is 10.6 million pounds.
    (c) The 1995-crop national marketing quota is 9.6 million pounds.
    (d) The 1996-crop national marketing quota is 9.2 million pounds.
    (e) The 1997-crop national marketing quota is 9.88 million pounds.
    (f) The 1998-crop national marketing quota is 11.15 million pounds.
    (g) The 1999-crop national marketing quota is 12.8 million pounds.

[[Page 109]]

    (h) The 2000-crop national marketing quota is 12.75 million pounds.

[58 FR 36857, 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; 64 FR 15295, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec. 723.116  Sun-cured (type 37) tobacco.

    (a) The 1993-crop national marketing factor is 128,000 pounds.
    (b) The 1994-crop national marketing quota is 131,000 pounds.
    (c) The 1995-crop national marketing quota is 130,000 pounds.
    (d) The 1996-crop national marketing quota is 148,000 pounds.
    (e) The 1997-crop national marketing quota is 156,400 pounds.
    (f) The 1998-crop national marketing quota is 163,000 pounds.
    (g) The 1999-crop national marketing quota is 171,000 pounds.
    (h) The 2000-crop national marketing quota is 171,000 pounds.

[58 FR 36857, 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; 64 FR 15295, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec. 723.117  Cigar-filler and binder (types 42-44 and 53-55) tobacco.

    (a) The 1993-crop national marketing quota is 14 million pounds.
    (b) The 1994-crop national marketing quota is 9.3 million pounds.
    (c) The 1995-crop national marketing quota is 9.0 million pounds.
    (d) The 1996-crop national marketing quota is 8.9 million pounds.
    (e) The 1997-crop national marketing quota is 8.4 million pounds.
    (f) The 1998-crop national marketing quota is 6.63 million pounds.
    (g) The 1999-crop national marketing quota is 4.5 million pounds.
    (h) The 2000-crop national marketing quota is 3.64 million pounds.

[58 FR 36857, 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; 64 FR 15295, Mar. 31, 1999; 65 FR 41556, July 6, 2000; 65 FR 
64594, Oct. 30, 2000]



Sec. 723.118  Cigar-filler (type 46) tobacco.

    (a) The 1993-crop national marketing quota is zero pounds.
    (b) The 1994-crop national marketing quota is zero pounds.
    (c) The 1995-crop national marketing quota is 0.0 million pounds.
    (d) There shall be no national or individual marketing quotas for 
the 1996 and subsequent marketing years for this type (46).

[58 FR 36857, July 9, 1993, as amended at 59 FR 27220, May 26, 1994; 60 
FR 38234, July 26, 1995; 61 FR 63702, Dec. 2, 1996]



Secs. 723.119-723.121  [Reserved]



     Subpart B--Allotments, Quotas, Yields, Transfers, Release and 
           Reapportionment, History Acreages, and Forfeitures



Sec. 723.201  Determination of preliminary farm acreage allotments and preliminary farm marketing quotas.

    (a) Flue-cured tobacco. A preliminary farm acreage allotment shall 
be determined for the current year for each farm which has flue-cured 
tobacco history acreage for the base period. The preliminary farm 
acreage allotment shall be the same as the farm acreage allotment 
established for the preceding year.
    (b) Burley tobacco. The preceding year's farm marketing quota shall 
be the current year's preliminary farm marketing quota for each old farm 
except that the preliminary farm marketing quota shall be zero if:
    (1) The farm or all of cropland has gone out of agricultural 
production and eminent domain procedure of part 718 of this chapter does 
not apply.
    (2) Quota that was pooled under the provisions of part 718 of this 
chapter has been canceled.
    (3) A new farm quota that was established in a prior year is 
canceled.
    (4) There was no acreage of burley tobacco planted or considered 
planted for any year of the base period.
    (5) All the cropland on the farm has been determined by the county 
FSA committee to be no longer suitable for the production of a crop and 
provisions of part 704 of this chapter do not apply.
    (6) Beginning with the 1994 crop year there was no acreage of burley 
tobacco planted or considered planted in 2 out of the 3 immediate 
preceding years.

[[Page 110]]

    (c) Kinds of tobacco other than flue-cured and burley. A preliminary 
farm acreage allotment shall be determined for each farm which has 
tobacco history acreage, as established under paragraph Sec. 723.218 of 
this part in the base period. If the history acreage for the previous 
year is the same as the basic allotment, the preliminary allotment shall 
be the same as the previous year's basic allotment. Otherwise, the 
preliminary allotment shall be the simple average of the sum of the 
basic allotment and history acreage for the preceding year.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21441, May 9, 1991]



Sec. 723.202  Determining farm acreage allotment, except for flue-cured tobacco.

    With respect to each kind of tobacco, the preliminary allotments 
determined for all old farms shall be adjusted uniformly so that the 
total of such allotments for old farms plus the reserve acreage 
available for establishing new farm allotments, adjusting inequities in 
acreage allotments for old farms, and for correcting errors in old farm 
allotments shall not exceed the national acreage allotment established 
for such kind of tobacco.



Sec. 723.203  Determination of flue-cured tobacco preliminary farm yields.

    (a) Old farms. The preliminary farm yield for a flue-cured tobacco 
old farm for the current year shall be determined as follows:
    (1) Farm having preliminary farm acreage allotment. The preliminary 
farm yield established for the farm shall be the same preliminary farm 
yield as was in effect for the preceding year.
    (2) Farm not having preliminary farm acreage allotment. The 
preliminary farm yield shall be determined by dividing the farm yield by 
the national yield factor.
    (b) New Farms. The preliminary farm yield for a new farm shall be 
determined by dividing the farm yield determined in accordance with 
Sec. 723.204 of this part for such farm by the national yield factor 
applicable for the year in which the new farm allotment was established.



Sec. 723.204  Determination of farm yields and normal yields.

    (a) Flue-cured tobacco. The farm yield for an old farm shall be 
determined by multiplying the preliminary farm yield, if the farm has 
such a yield, by the national yield factor for the current year. The 
farm yield for new farms and old farms that do not have a preliminary 
yield shall be that yield, which the county FSA committee determines for 
the farm taking into consideration:
    (1) The soil and other physical factors affecting the production of 
tobacco on the farm, and
    (2) The farm yields determined for other farms on which the soil and 
other physical factors affecting the production of tobacco are similar.
    (b) Burley tobacco. The farm yield for a farm on which a farm yield 
has been established shall be the same in the current year as the farm 
yield previously established for the farm. For any farm not having a 
previously established yield, the county FSA committee shall establish a 
yield based on similar farms having a farm yield; however, such yield 
shall not exceed 3500 pounds.
    (c) All kinds of tobacco except burley and flue-cured. The normal 
yield for a farm shall be that yield which the county FSA committee 
determines is normal for the farm taking into consideration the yields 
obtained on the farm during any of the years of the base period for 
which data are available, the soil and other physical factors affecting 
the production of tobacco on the farm, and the yields obtained on other 
farms in the locality which are similar with respect to such factors. 
The normal yield first determined for a farm for any year in accordance 
with the foregoing provision shall serve as the normal yield for the 
farm for all purposes in connection with the tobacco marketing program 
for the year for which such normal yield is determined.



Sec. 723.205  Determination of farm acreage allotments and effective farm acreage allotments for flue-cured tobacco.

    (a) Farm acreage allotments. The farm acreage allotment shall be 
determined by multiplying the national acreage

[[Page 111]]

factor as determined by the Secretary for the current year by the 
preliminary farm acreage allotment for the current year and adjusting 
the result by:
    (1) Upward adjustment. Adding the:
    (i) Acreage approved in accordance with the provisions of 
Sec. 723.210 of this part in order to adjust for an inequity or to 
correct an error;
    (ii) Acreage determined by dividing the pounds of quota which are 
purchased in the current year by the farm yield; and
    (iii) Acreage determined by dividing the pounds of forfeited quota 
which are approved for adjustment from the forfeiture pool by the farm 
yield.
    (2) Downward Adjustment. Subtracting the:
    (i) Acreage determined by dividing the pounds of quota sold in the 
current year by the farm yield; and
    (ii) Acreage of forfeited allotment.
    (b) Effective farm acreage allotment. The effective farm acreage 
allotment for the current year shall be determined by dividing by the 
effective farm marketing quota by the farm yield.



Sec. 723.206  Determining farm marketing quotas and effective farm marketing quotas.

    (a) Burley tobacco. The burley farm marketing quota shall be 
determined by multiplying the national factor as determined by the 
Secretary for the current year by the preliminary farm marketing quota 
for the current year and adjusting the result for permanent quota 
adjustments.
    (b) Flue-cured tobacco. The flue-cured farm marketing quota shall be 
determined by multiplying the farm acreage allotment by the farm yield.
    (c) Burley or flue-cured tobacco. The effective farm marketing quota 
shall be the farm marketing quota adjusted by:
    (1) Upward adjustments. Adding the:
    (i) Effective undermarketings from the preceding marketing year,
    (ii) The pounds of quota which are temporarily transferred to the 
farm in the current year.
    (2) Downward adjustments. Subtracting the pounds of quota that are:
    (i) Overmarketed from the preceding marketing year,
    (ii) Overmarketed from any year before the preceding year but have 
not been subtracted when determining the effective farm marketing quota 
in a prior year.
    (iii) Temporarily transferred from the farm in the current year.
    (iv) Reduced in the current year as a result of a violation in a 
prior year as provided for in Sec. 723.408 of this part.
    (v)  [Reserved]
    (vi) Determined, for flue-cured tobacco only, by multiplying the 
farm yield by the acres reduced from the flue-cured tobacco acreage 
allotment during the current year in accordance with part 704 of this 
chapter.
    (vii) For burley tobacco only, designated for reduction under a 
Conservation Reserve Program contract in accordance with part 704 of 
this chapter.



Sec. 723.207  Determination of acreage allotments or burley marketing quotas for new farms.

    (a)(1) All kinds of tobacco. The acreage allotment or burley 
marketing quota established in any crop year for all new farms shall not 
exceed the national acreage or poundage, as applicable, reserved for new 
farms for the respective kind of tobacco. The acreage allotment or 
burley marketing quota for a new farm shall be that acreage or burley 
marketing quota which the county FSA committee, with the approval of the 
State FSA committee, determines is fair and reasonable for the farm, 
taking into consideration the past tobacco experience of the farm 
operator; the land, labor, and equipment available for the production of 
tobacco; crop rotation practices; and the soil and other physical 
factors affecting the production of tobacco. Such acreage allotments or 
burley marketing quota shall not exceed 50 percent (75 percent for 
Cigar-filler and Binder tobacco) of the average of the applicable 
acreage allotments or burley marketing quotas established for at least 
two but not more than five old farms which are similar with respect to 
land, labor; and equipment available for the production of tobacco; crop 
rotation practices; and the soil and other physical factors affecting 
the production of tobacco; and with respect to flue-cured tobacco

[[Page 112]]

acreage allotments, shall not exceed one acre.
    (2) Kinds of tobacco, except burley and flue-cured. If the acreage 
planted to tobacco on a new tobacco farm is less than 75 percent of the 
tobacco acreage allotment otherwise established for the farm pursuant to 
this section, such allotment shall be automatically reduced to the sum 
of the tobacco planted acreage and the prevented planted tobacco acreage 
as determined under part 718 of this chapter for the farm.
    (b)(1) Written application. The farm operator must file an 
application for a new farm acreage allotment or marketing quota at the 
office of the county FSA committee where the farm is administratively 
located on or before February 15 of the year for which the new farm 
acreage allotment or marketing quota is requested.
    (2) Operator requirements. The operator requesting a new farm 
acreage allotment or marketing quota must be the sole owner of the farm, 
except for Cigar-filler and Binder tobacco, the operator need not own 
the farm. The farm operator shall not own or have an ownership interest 
in or operate any other farm in the United States for which a tobacco 
allotment or quota for any kind of tobacco is established for the 
current year.
    (3) Availability of equipment and facilities. The operator must own, 
or have readily available, adequate equipment and any other facilities 
of production necessary to the production of tobacco on the farm.
    (4)(i) Income from farming. The operator must expect to obtain 
during the current year more than 50 percent of the producer's income 
from the production of agricultural commodities or products. The 
following shall be considered in computing the operator's income:
    (A) Farm income. Income from farming shall include the estimated 
return from home gardens, livestock and livestock products, poultry, or 
other agricultural products produced for home consumption or other use 
on the farm(s). The estimated return from the production of the 
requested new farm allotment or quota shall not be included.
    (B) Non-farm income. Non-farming income shall include but not 
limited to salaries, commissions, pensions, social security payments, 
and unemployment compensation.
    (C) Spousal income. The spouse's farm and non-farm income shall be 
included in the computation.
    (ii) Operator a partnership. If the operator is a partnership, each 
partner must expect to obtain more than 50 percent of their current year 
income from farming.
    (iii) Operator a corporation. If the operator is a corporation, it 
must have no other major corporate purpose other than ownership or 
operation of the farm(s). Farming must provide its officers and general 
manager with more than 50 percent of their expected income. Salaries and 
dividends from the corporation shall be considered as income from 
farming.
    (iv) Special provisions for low-income farmers. The county FSA 
committee may waive the income provisions in this section provided they 
determine that the farm operator's income, from both farm and non-farm 
sources is so low that it will not provide a reasonable standard of 
living for the operator and the operator's family, and a State FSA 
committee representative approves such action. In making their 
determination, the county FSA committee shall consider such factors as 
size and type of farming operations, estimated net worth, estimated 
gross family income, estimated family off-farm income, number of 
dependents, and other factors affecting the individual's ability to 
provide a reasonable standard of living.
    (5) Experience. The operator must have had experience in producing, 
harvesting, and marketing the kind of tobacco requested. Such experience 
must have been gained by being a sharecropper, tenant, or farm operator 
(bona fide tobacco production experience gained by a person as a member 
of a partnership shall be accepted as experience gained in meeting this 
requirement) during at least 2 of the 5 years immediately preceding the 
year for which the new farm allotment is requested. The experience must 
have been gained on a farm having a tobacco allotment for such years for 
the kind of

[[Page 113]]

tobacco requested in the application. However, for Cigar-filler and 
binder tobacco only, the operator must have experience in any prior year 
in the production of tobacco as a farm owner, farm operator, 
sharecropper, tenant, warehouse operator, or laborer on a farm which 
produced Cigar-filler and binder tobacco.
    (6) Operator has not sold or forfeited allotment. For flue-cured 
tobacco only, during the current or the 4 preceding years, the operator 
must not have sold or forfeited any flue-cured tobacco allotment from 
any farm.
    (c) Eligibility requirements for the farm. A new farm acreage 
allotment or marketing quota may be established if each of the following 
conditions is met:
    (1) Current allotment or quota. The farm must not have on the date 
of approval of a new farm acreage allotment, an allotment or quota for 
any kind of tobacco.
    (2) Availability of land, type of soil, and topography. The 
available land, type of soil, and topography of the land on the farm 
must be suitable for tobacco production. Also, continuous production of 
tobacco must not result in an undue erosion hazard.
    (3) Eminent domain acquisition. A farm which includes land acquired 
by an agency having the right of eminent domain for which the entire 
tobacco allotment was pooled pursuant to part 718 of this chapter, which 
is subsequently returned to agricultural production shall not be 
eligible for a new farm allotment or marketing quota for a period of 5 
years from the date the former owner was displaced.
    (4) Farm includes land previously having a tobacco acreage 
allotment. A farm which includes land which has no tobacco allotment 
because the owner did not designate an allotment for such land when the 
parent farm was reconstituted pursuant to part 718 of this chapter shall 
not be eligible for a new farm acreage allotment for a period of 5 years 
beginning with the year in which the reconstitution became effective.
    (5) Entire quota sold. A new farm tobacco acreage allotment may not 
be established for a farm if, during the current year or the 4 preceding 
years, the farm was constituted as any part of a farm for which an 
acreage allotment or marketing quota had been established and for which 
the current or a former owner sold or permanently transferred all of the 
tobacco acreage allotment or marketing quota.
    (d) False information. Any new farm acreage allotment or marketing 
quota which was determined by the county FSA committee on the basis of 
incomplete or inaccurate information knowingly furnished by the 
applicant, shall be canceled by the county FSA committee as of the date 
the allotment or quota was established. When incomplete or inaccurate 
information was unknowingly furnished by the applicant, the allotment or 
quota shall be canceled effective for the current crop year.
    (e) Failure to plant. A new farm acreage allotment or marketing 
quota shall be reduced to zero if no tobacco is planted on the farm the 
first year.



Sec. 723.208  Determination of acreage allotments, marketing quotas, and yields for divided farms.

    (a) Flue-cured tobacco. The farm acreage allotment for the divided 
farm shall be divided pursuant to the provisions of part 718 of this 
chapter. History acreages and other basic data shall be apportioned 
among the divided tracts as provided in part 718 of this chapter.
    (b) Burley tobacco. (1) Division of farm marketing quota. The farm 
marketing quota for the divided farm shall be divided according to part 
718 of this chapter. Other basic data shall be apportioned among the 
resulting farms in the same proportion as the farm marketing quota.
    (2) Divided burley tobacco farms with less than 1,000 pounds of 
quota. If a farm is divided through reconstitution and the burley 
tobacco poundage quota which transfers with the resulting farms receive 
less than 1,000 pounds of quota, the owners of such farms shall take 
action by July 1 of the current crop year to increase the quota to a 
minimum of 1,000 pounds or the quota shall be reduced to zero. The quota 
on the divided farms may be increased by:
    (i) Combining the farm having less than 1,000 pounds with other land 
owned by the same person so that the

[[Page 114]]

combined farm has a minimum of 1,000 pounds of farm marketing quota, or
    (ii) Purchasing a sufficient amount of quota so that the farm has at 
least 1,000 pounds of quota.
    (3) Sale of Quota. If the owners of the divided farms fail to 
increase the quota on such farms to a minimum of 1,000 pounds as 
provided in paragraph (b)(2), the owner must sell the quota by July 1 of 
the current crop year.
    (4) Effective Quota. For the current crop year, the effective farm 
marketing quota on the divided farms shall be considered to be zero for 
leasing and planting purposes until the farm complies with the 1,000 
pound minimum quota.
    (5) Reduction of Quota. The county FSA committee shall reduce the 
quota to zero on the divided farms if the owners of such farms fail to 
take action as provided in paragraph (b)(2) and (3) of this section.
    (6) Farm Exemptions. Farms exempt from the 1,000 pound minimum quota 
limitation are farm divisions:
    (i) among immediate family members,
    (ii) through probate or,
    (iii) when no sale or change in ownership of land occurs or,
    (iv) when the buyer and purchaser can furnish proof acceptable to 
the county FSA committee, in accordance with guidelines provided by the 
Deputy Administrator, that the transaction was finalized prior to 
November 15, 1990.
    (v) when the individual tract or farm with less than 1,000 pounds of 
quota could be combined with another tract or farm with sufficient quota 
to reach 1,000 pounds but for the existence of a production flexibility 
contract on one of the farms.
    (c) Burley and flue-cured tobacco. (1) Tract yield. The tract yield 
for the tracts divided from a parent farm shall be the same as the tract 
yield established for the tracts before the division of the parent farm. 
If a tract is divided, the tract yields for the resulting tracts shall 
be the same as the tract yield established for the tract before it was 
divided.
    (2) Single tract farm. If a tract that is divided from a parent farm 
becomes a single tract farm, the tract yield shall become the 
preliminary farm yield and the farm yield for the farm shall be 
determined by multiplying the preliminary farm yield by the national 
yield factor for the current year.
    (3) Carryover tobacco. Where carryover tobacco produced on a parent 
farm is marketed after the effective date of a reconstitution, such 
marketings shall be charged to the divided tracts in the same ratio as 
the marketing quotas are established for the divided tracts or as the 
county FSA committee determines that:
    (i) The proceeds from such marketings are received by the owner or 
operator of one or more of the divided tracts, or
    (ii) The owners of the divided tracts agree.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21441, May 9, 1991; 62 
FR 15600, Apr. 2, 1997]



Sec. 723.209  Determination of acreage allotments, marketing quotas, yields for combined farms; and special tobacco combinations.

    (a) Burley tobacco. The farm yield for a combined burley farm shall 
be the weighted average of the tract yields for the tracts being 
combined. The weighted average shall be the summation of the extensions 
of each respective tract's contribution percentage times the tract's 
yield.
    (b) Flue-cured tobacco. Flue-cured farm acreage allotments, history 
acreages, and other basic data for combined farms shall be computed for 
the base period in accordance with part 718 of this chapter, except that 
the preliminary farm yield for a combined farm shall be the weighted 
average of the tract yields for the tracts that comprise the 
combination. The weighted average shall be the summation of the 
extensions of each respective tract's contribution percentage times the 
tract's yield. The farm yield for the combined farm shall be determined 
by multiplying the preliminary farm yield for the combined farm by the 
national yield factor for the current year.
    (c) Special tobacco combinations. Notwithstanding other provision of 
this title, the Deputy Administrator may, upon proper application and to 
the extent deemed consistent with other obligations, permit farms, with 
respect to

[[Page 115]]

tobacco allotments and tobacco quotas, to be considered combined for 
purposes of this part and part 1464 of this title only without being 
combined for other purposes. This allowance shall apply for tobacco of 
all kinds and types and with respect to all farms even if one or more of 
the farms to be combined is the subject of a production flexibility 
contract (PFC) executed in connection with the program operated under 
the provisions of 7 CFR part 1412. Such special, limited combinations 
must otherwise meet the requirements of 7 CFR part 718 for combinations, 
except the signature (consent) requirements of Sec. 718.201(a)(2) of 
that part. The Deputy Administrator may set such consent requirements 
for special farm combinations under this section as the Deputy 
Administrator believes necessary or appropriate. Further, in any case in 
which one of the farms is a PFC farm, none of the land on any PFC farm 
that would have been used for the production of tobacco can be used for 
the production of a ``PFC commodity'' as defined in this section. Such 
permission shall be conditioned upon the agreement of all interested 
parties that land on the PFC allotment or quota farm that would have 
been used for the production of tobacco shall not be used for the 
production of any PFC commodity. In the event that such production 
nonetheless occurs, the special tobacco combination may be made void, 
retroactive to the date of original approval. Such curative action will 
likely result in a finding of excess tobacco plantings and sanctions and 
remedies, which would likely include liability for penalties and other 
sanctions for excess marketings of tobacco. The Deputy Administrator may 
set such other conditions on the combinations as needed or deemed 
appropriate to serve the goals of the tobacco program and the goals of 
the PFC. The term PFC commodity for purposes of this section means 
wheat, corn, grain sorghum, barley, oats, upland cotton, and rice.

[55 FR 39914, Oct. 1, 1990, as amended at 62 FR 15600, Apr. 2, 1997; 63 
FR 9128, Feb. 24, 1998; 63 FR 26714, May 14, 1998]



Sec. 723.210  Corrections of errors and adjusting inequities in acreage allotments and marketing quotas for old farms.

    (a)(1) General. The allotment or quota for a farm under a long-term 
land use program agreement shall be given the same consideration under 
this section as the allotment or quota for any other old farm. 
Notwithstanding the limitations contained in any other section of this 
part, the farm acreage allotment or marketing quota for each kind of 
tobacco established for an old farm may be increased to correct an error 
or adjust an inequity if the county FSA committee determines, with the 
approval of a representative of the State FSA committee, that the 
increase is necessary to establish an allotment or quota for such farm 
which is fair and equitable in relation to the allotment or quota for 
other old farms in the county in which the farm is located. Correction 
of errors shall be made out of that portion of the national reserve held 
at the national level.
    (2) Burley tobacco. The reserve for adjusting inequities under this 
paragraph will be prorated to States based on the relationship of the 
total of the preliminary farm marketing quotas in each State to the 
national total of preliminary farm marketing quotas.
    (3) All kinds of tobacco except burley tobacco. The reserve for 
adjusting inequities under this paragraph will be prorated to States 
based on the relationship of the total preliminary farm acreage 
allotments in each State to the national total of preliminary farm 
acreage allotments.
    (b) Basis for adjustment. Increases to adjust inequities in acreage 
allotments or marketing quotas shall be made on the basis of the past 
farm acreage, yields, and farm acreage allotments of tobacco, making due 
allowances for failed acreage and acreage prevented from being planted 
because of a natural disaster as determined under part 718 of this 
chapter; land, labor, and equipment available for the production of 
tobacco; crop rotation practices; and the soil and other physical 
factors affecting the production of tobacco. The

[[Page 116]]

total of all adjustments in old farm allotments or quotas under this 
paragraph shall not exceed the pounds apportioned to the county for such 
purpose.
    (c)(1) Burley tobacco. Adjustments in a farm marketing quota under 
this paragraph shall become a part of the farm marketing quota.
    (2) Flue-cured tobacco. Acreage apportioned to a farm under this 
section becomes a part of the farm acreage allotment. The farm marketing 
quota for such a farm shall be adjusted by multiplying the adjusted farm 
acreage allotment by the farm yield.
    (3) All other kinds of tobacco. For all other kinds of tobacco, 
acreage approved for a farm under this section becomes a part of the 
farm acreage allotment.
    (d) Making certain adjustments on a common ownership unit basis. 
Notwithstanding other provisions of this section, inequity adjustments 
may be allotted by common ownership unit rather than by farm when it is 
determined by the county FSA committee that the making of the allocation 
on that basis provides greater equity.

[55 FR 39914, Oct. 1, 1990, as amended at 63 FR 11582, Mar. 10, 1998]



Sec. 723.211  Allotments, quotas, and yields for farms acquired under right of eminent domain.

    (a) Determination of acreage allotments and marketing quotas. The 
determination of farm acreage allotments and marketing quotas for farms 
acquired by an agency having the right of eminent domain, the transfer 
of such allotments or quotas to a pool, and reallocation from the pool 
shall be administered as provided in part 718 of this chapter. Where all 
or a part of an allotment or quota is pooled, all or a proportionate 
part of the farm acreage allotment or marketing quota shall be pooled.
    (b) Closing dates. The State FSA committee shall establish, in 
accordance with instructions issued by the Deputy Administrator, a final 
date for:
    (1) Release. Releasing pooled farm acreage allotment or farm 
marketing quota to the county FSA committee for reapportionment to other 
farms in the county having allotments or quotas for the same kinds of 
tobacco.
    (2) Request for reapportionment. Filing a request to receive 
reapportioned acreage or quota from the county FSA committee for the 
current year.
    (c) Displaced owner release. The displaced owner of a farm may, not 
later than the final release date established by the State FSA committee 
for the current year, release in writing to the county FSA committee for 
the current year, all or any part of the acreage allotment or burley 
tobacco marketing quota for the farm in a pool under part 718 of this 
chapter for reapportionment for the current year by the county committee 
to other farms in the county having allotments or marketing quotas for 
the same kind of tobacco.
    (d) Reapportionment. The county FSA committee may reapportion, not 
later than 30 days after the final date established by the State FSA 
committee for requesting reapportioned acreage or marketing quota for 
the current year, the released acreage or quota or any part thereof to 
other farms in the county on the basis of the past farm acreage or 
marketings and the past farm acreage allotments or quotas for the same 
kind of tobacco; land, labor, and equipment available for the production 
of such kind of tobacco; crop rotation practices; and soil and other 
physical factors affecting the production of such kind of tobacco.
    (e) Effect of reapportionment. For purposes of establishing future 
farm allotments or quotas, any reapportioned allotment or quota shall 
not be considered as planted on the farm to which the allotment or quota 
was reapportioned.
    (f) Burley or flue-cured tobacco provisions. For burley or flue-
cured tobacco:
    (1) Farm yield. The farm yield for a farm to which a pooled 
marketing quota is transferred shall be determined in accordance with 
instructions issued by the Deputy Administrator.
    (2) Undermarketings or overmarketings. The undermarketings of a farm 
acquired by eminent domain shall be added to the marketing quota for the 
receiving farm and the overmarketings of the acquired farm shall be 
subtracted from the marketing quota of the receiving farm.

[[Page 117]]

    (3) Undermarketings while in eminent domain pool. The pooled quota 
is considered planted while in the pool. Therefore, for the purpose of 
determining undermarketings during the time the quota is pooled, the 
effective quota is considered to be zero.



Sec. 723.212  Time for making reduction of farm marketing quotas or acreage allotments for violation of the marketing quota or acreage allotment regulations for a prior marketing year.

    Any reduction made in a farm acreage allotment or farm marketing 
quota for the current year for any of the reasons provided for in 
Sec. 723.408 of this part, shall be made no later than April 1 of the 
current year in the States of Alabama, Florida, Georgia, North Carolina, 
South Carolina, and Virginia; or May 1 in all other States. If the 
reduction cannot be made by such dates for the current year, the 
reduction shall be made in the farm acreage allotment or farm marketing 
quota next established for the farm, but no later than by corresponding 
dates in a later year. No reduction shall be made in the farm acreage 
allotment or farm marketing quota for any farm for a violation if the 
farm acreage allotment or marketing quota for such farm for any prior 
year was reduced because of the same violation.



Sec. 723.213  Approval of acreage allotments and marketing quotas and notices to farm operators.

    (a) Review by State FSA committee. All farm yields, acreage 
allotments, and marketing quotas shall be determined by the county FSA 
committee of the county in which the farm is located and shall be 
reviewed by a representative of the State FSA committee.
    (b) Notice to farm operator. An official notice of the effective 
farm acreage allotment or farm marketing quota shall be mailed to the 
operator of each farm shown by the records of the county FSA committee 
to be entitled to an allotment or quota. The notice to the operator of 
the farm shall constitute notice to all persons who as operator, 
landlord, tenant, or sharecropper are interested in the farm for which 
the allotment or quota is established. Insofar as practicable, all 
notices shall be mailed in time to be received prior to the date of any 
tobacco marketing quota or acreage allotment referendum. A copy of such 
notice containing the date of mailing or a printout summary of such data 
shall be maintained for not less than 30 days in a conspicuous place in 
the county FSA office and shall thereafter be kept available for public 
inspection in the office of the county FSA committee. A copy of the 
notice of acreage allotment or marketing quota certified as true and 
correct shall be furnished to any person interested in the farm for 
which the allotment or quota is established.
    (c) Marketing quota erroneous notice. (1) If the official written 
notice of the farm acreage allotment and marketing quota issued for any 
farm erroneously stated an acreage allotment or marketing quota larger 
than the correct effective farm acreage allotment or marketing quota, 
the acreage allotment or marketing quota shown on the erroneous notice 
shall be deemed to be the tobacco acreage allotment or marketing quota 
for the farm for the current year only, if the county FSA committee 
determines (with the approval of the State Executive Director) that the:
    (i) Error was not so gross as to place the operator on notice 
thereof, and
    (ii) Operator, relying upon such notice and acting in good faith, 
materially changes the operator's position with respect to the 
production of the crop.
    (2) Undermarketings and overmarketings for farms for which the 
erroneous notice of marketing quota is applied shall be determined based 
on the correct effective farm marketing quota.
    (3) For purposes of determining history acreage the correct acreage 
allotment shall be used, in determining whether or not 75 percent of the 
allotment has been planted.

[55 FR 39914, Oct. 1, 1990, as amended at 63 FR 11582, Mar. 10, 1998]



Sec. 723.214  Application for review.

    Any producer who is dissatisfied with the farm acreage allotment and 
marketing quota established for the producer's farm may, within 15 days 
after mailing of the official notice of the

[[Page 118]]

farm acreage allotment and marketing quota, file application in writing 
with the county FSA office to have such allotment and marketing quota 
reviewed by a review committee in accordance with part 711 of this 
chapter.



Sec. 723.215  Transfer of tobacco farm acreage allotment or farm marketing quota that cannot be planted or replanted due to a natural disaster.

    (a) Designation of counties affected by a natural disaster. The 
State FSA committee shall determine those counties affected by a natural 
disaster (including but not limited to hurricane, rain, flash flood, 
hail, drought, and any other severe weather) which prevents the timely 
planting or replanting of any of the tobacco acreage allotment or 
marketing quota for any farm in the county. The county FSA committee of 
each county affected by the determination shall publicize the 
determination.
    (b) Application for transfer. The owner or operator of a farm in a 
county designated for any year under paragraph (a) of this section may 
file a written application for transfer of tobacco acreage with the farm 
acreage allotment or marketing quota for such year to another farm or 
farms in the same county or in any other nearby county in the same or 
another State if such acreage cannot be planted or replanted because of 
the natural disaster determined for such year. The application shall be 
filed with the county FSA committee for the county in which the farm 
affected by such disaster is located. If the application involves a 
transfer to a nearby county, the county FSA committee for the nearby 
county shall be consulted before action is taken by the county FSA 
committee receiving the application.
    (c)(1) Amount of burley tobacco transfer. The burley quota to be 
transferred shall not exceed the smaller of:
    (i) The effective farm quota established under this part less such 
quota planted to tobacco and not destroyed by the natural disaster, or
    (ii) The quota requested to be transferred.
    (2) Amount of transfer for other than burley tobacco. The allotment 
to be transferred shall not exceed the smaller of:
    (i) The farm allotment established under this part less such acreage 
planted to tobacco and not destroyed by the natural disaster, or
    (ii) The allotment requested to be transferred.
    (d) County FSA committee approval. The county FSA committee shall 
approve the transfer if it finds that:
    (1) All or part of the farm acreage allotment or marketing quota for 
the transferring farm could not be timely planted or replanted because 
of the natural disaster.
    (2) One or more of the producers of tobacco on the transferring farm 
will be a bona fide producer engaged in the production of tobacco on the 
receiving farm and will share in the proceeds of the tobacco.
    (e) Cancellation of transfer. If a transfer is approved under this 
section and it is later determined that the conditions in paragraph (d) 
of this section have not been met, the county FSA committee, or the 
Deputy Administrator may cancel such transfer. Action by the county FSA 
committee to cancel a transfer shall be subject to the approval of the 
State FSA committee or its representative.
    (f) Acreage history credits. Any acreage transferred under this 
paragraph shall be considered for the purpose of determining future 
allotments or quotas to have been planted to tobacco on the farm from 
which such allotment or quota is transferred.
    (g) Closing dates. The closing date for filing applications for 
transfers with the county FSA committee shall be July 15 of the current 
year. Notwithstanding such closing date requirement, the county FSA 
committee may accept applications filed after the closing date upon a 
determination by the county FSA committee that the failure to timely 
file an application was the result of conditions beyond the control of 
the applicant and a representative of the State FSA committee approves 
such determination.



Sec. 723.216  Transfer of tobacco acreage allotment or marketing quota by sale, lease, or owner.

    (a) General. The allotment or quota established for a farm may be 
transferred to another farm to the extent

[[Page 119]]

provided for in this section. For transfers by sale, common ownership 
units on a farm may be considered to be separate farms. Transfers are 
not permitted for cigar binder (types 54 and 55) tobacco allotments.
    (1) Types of transfers. With respect to:
    (i) Cigar-filler (type 46) and cigar-filler (types 42, 43, and 44), 
tobacco transfers may be by lease only.
    (ii) Flue-cured tobacco, transfers may be by:
    (A) Sale, or
    (B) Lease under certain natural disaster conditions provided in this 
section.
    (iii) Burley tobacco, transfers may be by:
    (A) Lease
    (B) Owner, or
    (C) Sale.
    (iv) Fire-cured, dark air-cured, and Virginia sun-cured tobacco, 
transfers may be by:
    (A) Lease,
    (B) Owner, or
    (C) Sale.
    (2) Transfer agreement. In order to transfer a marketing quota or 
allotment between two eligible farms, including a marketing quota or 
allotment that is pooled in accordance with part 718 of this chapter, 
the transfer must be recorded on Form FSA-375 and:
    (i) Where to file. Filed in the county FSA office which serves the 
county in which the transferring farm is located for administrative 
purposes.
    (ii) Signature-burley tobacco. Signed by, for burley tobacco only:
    (A) Leases. The owner and operator of the transferring farm and the 
owner or operator of the receiving farm. For leases made under the 
disaster provisions of this section, the signature of the owner of the 
transferring farm will not be required if the FSA determines that the 
farm is cash leased for the current crop year and that the owner does 
not share in the crop.
    (B) Sales. The owner of the selling farm and an active burley 
tobacco producer who is the buyer. If the buyer is neither owner nor 
operator of the farm to which the quota will be assigned, the owner or 
operator of the farm must give written consent for the quota to be 
assigned to the farm.
    (C) Owner transfers. The owner of the transferring farm, who also 
must be the owner or operator of the receiving farm.
    (iii) Signature-flue-cured tobacco. Signed by, for flue-cured 
tobacco only:
    (A) Leases. The owner of the transferring farm and the owner or 
operator of the receiving farm. For leases made under the disaster 
provisions of this section, the signature of the owner of the 
transferring farm will not be required if the FSA determines that the 
farm is cash leased for the current crop year and that the owner does 
not share in the crop.
    (B) Sales. The owner of the selling farm and an active flue-cured 
tobacco producer who is the buyer. If the buyer is neither owner nor 
operator of the farm to which allotment and quota will be assigned, the 
owner or operator of the farm must be given written consent for the 
allotment and quota to be assigned to the farm.
    (iv) Signatures--except burley and flue-cured tobacco. Signed by, 
for all kinds of tobacco other than burley and flue-cured tobacco, the 
owner and operator of the transferring farm and the owner or operator of 
the receiving farm.
    (v) Witness. Each person whose signature is required by paragraphs 
(a)(2)(ii), (iii), or (iv) of this section must sign Form FSA-375 in the 
presence of a State or county FSA committee member or employee who shall 
sign Form FSA-375 as a witness, except that when both the owner and the 
operator of a transferring farm must sign, such witness is required for 
the signature of either the owner or operator, but not both. If such 
signatures cannot be witnessed in the county FSA office where the farm 
is administratively located, they may be witnessed in any State or 
county FSA office convenient to the owner or operator's residence. The 
requirement that signatures be witnessed for producers that are ill, 
infirm, reside in distant areas, or are in similar hardship situations 
or may be unduly inconvenienced may be waived provided the county FSA 
office mails Form FSA-375 for the required signatures;
    (b) Effective date. In order for the transfer to be effective for 
the current year, the Form FSA-375 shall be filed:

[[Page 120]]

    (1) When to file--burley tobacco. For burley tobacco:
    (i) On or before July 1 of the current year, except as provided in 
paragraph (b)(1)(ii) of this section. An agreement to transfer quota by 
lease may be considered to have been filed on July 1 of the current year 
if such transfer agreement is filed not later than the end of the 
marketing year that begins during the current year and the county FSA 
committee, with the concurrence of the State FSA committee, determines 
that on or before July 1 of the current year the lessee and lessor 
agreed to such lease and transfer of quota and the failure to file such 
transfer agreement did not result from gross negligence on the part of 
any party to such lease and transfer.
    (ii) After July 1 of the current crop year and before February 16 of 
the following calendar year when the transfer is by lease and the 
transferring farm has suffered a loss of production of burley tobacco 
due to hail, drought, excessive rain, wind, tornado, or other natural 
disasters as determined by the Deputy Administrator.
    (2) When to file--flue-cured tobacco. For flue-cured tobacco:
    (i) On or before June 15 if the transfer is by sale.
    (ii) After June 30 and on or before November 15 for a transfer by 
lease when the transferring farm has suffered a loss of production of 
flue-cured tobacco due to drought, excessive rain, hail, wind, tornado, 
or other natural disasters as determined by the Deputy Administrator.
    (3) When to file--except burley and flue-cured tobacco. For all 
other kinds of tobacco, by the date established by the State FSA 
committee, except that a lease shall be effective if the county FSA 
committee, with the approval of a State FSA committee representative, 
finds that the producer was prevented from timely filing the transfer 
agreement due to reasons beyond the control of the producer.
    (c) Approval or disapproval. A transfer agreement shall not be 
approved before the period for filing an application for review of the 
initial notice of allotment or quota has expired. The county FSA 
committee or its designee shall approve each transfer agreement that 
meets the eligibility requirements of this section. The county FSA 
committee shall disapprove any transfer agreement that does not meet the 
eligibility requirement of this section. Any approval or disapproval of 
a transfer agreement shall to the extent possible be made within 30 days 
after the transfer agreement is filed with the county FSA committee 
unless additional time is required as the result of conditions beyond 
the control of the county FSA committee. However;
    (1) Burley tobacco. If an agreement is filed after July 1 which 
provides for the sale of quota, a transfer agreement shall not be 
approved until the next year's quota is computed for the selling farm. 
In addition, if marketing quota referendum will be conducted to 
determine whether or not quotas will be in effect for the crop, a 
transfer agreement shall not be approved until the Secretary announces 
that quotas have been approved by referendum.
    (2) Flue-cured tobacco. If an agreement is filed after June 15 which 
provides for the sale of an allotment and quota, a transfer agreement 
shall not be approved until next year's allotment and quota is computed 
for the selling farm. In addition, if a marketing quota referendum will 
be conducted to determine whether or not quotas will be in effect for 
the crop, a transfer agreement shall not be approved until the Secretary 
announces that quotas have been approved by referendum.
    (d) Time of determination. An approved transfer agreement shall 
become effective for the then current crop year, except that if an 
agreement that is filed after June 15 for the sale of flue-cured tobacco 
quota or after July 1 for the sale of burley tobacco quota, such 
approved agreement shall become effective for the next crop year.
    (e) Burley tobacco. For burley tobacco only:
    (1) Basis for transfer by sale. If the transfer of a quota is by 
sale, the transfer shall be based on part or all of the farm poundage 
quota.
    (2) Basis for transfer by lease or owner. If the transfer of a quota 
is by lease or by the owner, transfer shall be based on a part of or all 
of the effective farm poundage quota.

[[Page 121]]

    (3) Accumulation of quota. A transfer by lease or by owner shall not 
be approved if the county FSA committee determines that the primary 
purpose of the transfer is to accumulate the quota on the farm (i.e., 
alternately transferring to and from the farm for 2 or more years to 
maintain the quota without satisfactory evidence of plans for producing 
the quota on the receiving farm).
    (4) Subleasing. In order to determine whether there is any 
subleasing of a burley farm marketing quota, the current year is divided 
into two periods, the period up to and including July 1, and the period 
after July 1. The county FSA committee shall not approve a transfer 
during either period if the effect would be both a transfer to and from 
the farm during the same period. However, a transfer may be approved 
within any crop year if quota is transferred from a farm for one or more 
years and the farm subsequently is combined with another farm that 
otherwise is eligible to receive quota by lease or by the owner.
    (5) Transferring farm restrictions. An agreement to transfer quota 
from a farm by lease or by the owner shall not be approved:
    (i) Limitation. If the pounds of quota being transferred exceed the 
difference obtained by subtracting from the effective farm marketing 
quota the total pounds of quota purchased and/or reallocated from 
forfeited quota in the current and two preceding years, as adjusted to 
reflect changes in national quota factors which have occurred since each 
respective purchase and/or reallocation of quota. However, this 
provision shall not be applicable to transfer agreements that are filed 
after July 1.
    (ii) New farm. If the farm is a new farm.
    (iii) Reduction pending. If consideration of a marketing quota 
violation is pending which may result in a quota reduction for the farm 
for the current year. However, if the county FSA committee determines 
that a decision will not be made on the pending case on or before the 
date specified in Sec. 723.212 of this part, a   1-year transfer will be 
approved if otherwise eligible.
    (iv) Filed on or before July 1. Unless the receiving farm is 
administratively located in the same county as the transferring farm. 
However, for 1991 and subsequent crops, burley tobacco producers in the 
State of Tennessee shall be permitted to lease and transfer burley 
tobacco quota to any other farm in the State. In addition, such 
transfers outside the county but within the same state may be allowed 
for burley tobacco producers in Virginia, Kentucky, Ohio, or Indiana, if 
the burley tobacco producers in that state approve such transfers in a 
referendum conducted by the Secretary.
    (v) Filed after July 1. If the transfer agreement is filed after 
July 1, unless the county FSA committee in the county in which the farm 
is located for administrative purposes determines that the:
    (A) Farm's expected production of burley tobacco is less than 80 
percent of the farm's effective marketing quota as a result of a flood, 
hail, wind, drought, excessive rain, tornado, or other natural disaster.
    (B) Acreage planted to burley tobacco on the farm was sufficient to 
produce, under average conditions, an amount of tobacco which, when 
added to any carryover tobacco from the previous marketing year, would 
equal the farm's effective farm marketing quota.
    (C) Lessor made reasonable and customary efforts to produce the 
effective farm marketing quota;
    (D) Producers on the farm qualify for price support in accordance 
with the provisions of part 1464 of this title; and
    (E) Receiving farm is administratively located in the same State as 
the transferring farm.
    (vi) Consent of lien holder. For a multiple year transfer, if the 
farm is subject to lien, unless the lien holder agrees in writing to the 
transfer; and
    (vii) Claim for marketing quota penalty. If a claim has been filed 
against the lessor for a tobacco marketing quota penalty and the claim 
remains unpaid; However, this provision shall not apply if the claim is 
paid or the entire proceeds of the lease of the quota are applied 
against the claim and the county FSA committee determines that the 
amount paid for the lease represents a

[[Page 122]]

reasonable price for the pounds of quota being leased.
    (viii) Forfeiture pending. To the extent that forfeiture of such 
quota is expected to become final before July 1.
    (ix) Divided farms with less than 1,000 pounds of quota. If the farm 
has been divided by reconstitution and the divided farm has a farm 
marketing quota of less than 1,000 pounds subject to being reduced to 
zero pursuant to section 723.208(b).
    (6) Receiving farm restrictions. An agreement to transfer quota to a 
farm by lease or by owner shall not be approved:
    (i) Filed on or before July 1. If the transfer agreement is filed on 
or before July 1:
    (A) Unless the receiving farm is administratively located in the 
same county as the transferring farm and the provisions of paragraph 
(e)(5)(iv) of this section are not applicable.
    (B) If the pounds of quota being transferred to the farm exceed the 
smaller of 30,000 pounds or the difference between the farm marketing 
quota and one-half the result obtained by multiplying the acres of 
cropland on the farm by the farm yield.
    (ii) Filed after July 1. If the transfer agreement is filed after 
July 1, unless the:
    (A) Producers on the farm qualify for price support in accordance 
with the provisions of part 1464 of this title; and
    (B) Pounds of quota to be transferred to the lessee farm do not 
exceed the difference obtained by subtracting the effective farm 
marketing quota (before the filing of the transfer agreement) for the 
lessee farm from the total pounds of tobacco marketed and/or available 
for marketing (based on estimated pounds of tobacco on hand and/or in 
the process of being produced) from the farm in the current year.
    (C) Transferring farm is administratively located in the same State 
as the receiving farm.
    (7) Selling farm restrictions. A transfer of quota from a farm by 
sale shall not be approved:
    (i) Previously purchased and/or reallocated quota. If the farm 
marketing quota was bought and/or reallocated from quota previously 
forfeited as provided in Sec. 723.219(i)(1), and the purchase and/or 
reallocation became effective within the current or any of the three 
preceding years; if the purchased and/or reallocated quota was obtained 
from quota purchased and/or reallocated as provided in paragraph (b) of 
this section within the four preceding years. However, this provision 
shall not be applicable if:
    (A) The quota was purchased and/or reallocated to the farm during 
four preceding years; and
    (B) The county FSA committee, with the concurrence of a 
representative of the State FSA committee, determines that the failure 
to permit the sale of quota, to the extent otherwise permitted by this 
section, would cause an undue hardship on the seller and the:
    (1) Sale is in connection with the settlement of an estate which 
includes the farm for which the quota was established;
    (2) Owner of the quota is experiencing financial distress to the 
extent that current year financing is unlikely;
    (3) Owner of the quota is disabled due to health reasons to the 
extent that such person can no longer continue to share in the risk of 
production of the purchased and/or reallocated quota; or
    (4) Owner of the quota is sharing in the risk of production as an 
investing producer and loses resources necessary to produce the crop due 
to reasons beyond such owner's control such as the loss of a tenant or 
sharecropper and a replacement cannot be obtained.
    (ii) Location of farms. Unless both the selling farm and the buying 
farm are administratively located in the same county.
    (iii) Pounds for sale. The pounds transferred by sale shall be based 
on part of all of the farm poundage quota.
    (iv) Reduction pending. If consideration of an indicated marketing 
quota violation is pending which may result in quota reduction for the 
farm for the current year. However, if the county FSA committee 
determines that a decision will not be made on the pending case on or 
before the date specified in Sec. 723.212 of this part, a transfer will 
be approved if otherwise eligible.

[[Page 123]]

    (v) Forfeiture pending. If the agreement for transfer by sale is 
filed subsequent to the final date which is permitted for the sale of 
the quota in order to prevent forfeiture.
    (vi) Claim for marketing quota penalty. If a claim has been filed 
against the seller for a tobacco marketing quota penalty and the claim 
remains unpaid: However, this provision shall not be applicable if the 
claim for such penalty is paid or the entire proceeds of the sale of the 
quota are applied against the claim and the county FSA committee 
determines that the amount paid represents a reasonable selling price 
for the pounds of quota being sold.
    (vii) Consent of lien holder. Requires consent of the lien holder, 
if the farm is subject to a lien, unless the lien holder agrees in 
writing to the transfer. However, consent of a lien holder is not 
required for a transfer of the pounds of quota from a farm for which 
forfeiture is required in accordance with the provisions of 
Sec. 723.219.
    (viii) Quota is subject to an approved Conservation Reserve Program 
Contract. If the quota has been reduced because of an approved 
Conservation Reserve Program contract according to part 704 of this 
chapter unless forfeiture is otherwise required.
    (8) Restrictions on buying farm. A transfer of quota to a farm by 
purchase shall not be approved:
    (i) Active producers. Unless the buyer is an active burley tobacco 
producer.
    (ii) Cropland limitation. If the sum of the pounds of quota being 
transferred exceeds the difference between the farm marketing quota and 
one-half the result obtained by multiplying the acres of cropland on the 
farm by the farm yield.
    (iii) Quota previously sold. If quota was sold from the farm in the 
current or either of the two preceding years.
    (iv) Unless both the buying farm and the selling farm are 
administratively located in the same county.
    (v) Quota limitation. If the sum of the pounds of quota being 
transferred in the current year exceeds the larger of: (A) 30 percent of 
the receiving farm's existing quota, or (B) 20,000 pounds.
    (9) Period of transfer. A transfer by lease or by owner may be for a 
period of one to five years: However, an agreement to transfer quota by 
lease shall be limited to the current crop year if the transfer is filed 
after July 1 in accordance with the natural disaster provisions of this 
section.
    (10) Redetermination of quota after transfer by lease or by the 
owner. After a transfer by lease or by the owner, the effective farm 
marketing quota shall be redetermined for both the transferring farm and 
the receiving farm.
    (11) Apportionment of data-selling farm. The pounds of farm 
marketing quota retained on the selling farm after the sale of quota 
shall be divided by the farm marketing quota established for the selling 
farm before the sale to determine a factor for apportioning farm data. 
The data to be retained on the selling farm shall be determined by 
multiplying the factor by the following data:
    (i) The amount of any overmarketings which have not been subtracted 
when a determination is made of the effective farm marketing quota of 
the selling farm;
    (ii) The pounds of quota which have been transferred from the 
selling farm by lease or by the owner in the current year;
    (iii) The pounds of quota which have been reduced in the current 
year as the result of a marketing quota violation in a prior year;
    (iv) The pounds of quota transferred to the farm by lease or by 
owner in the previous year;
    (v) The previous year's farm marketing quota; and
    (vi) The previous year's effective farm marketing quota.
    (12) Apportionment of data-buying farm. The buying farm's share of 
each respective item of farm data shall be determined by subtracting the 
pounds which are retained on the selling farm for the respective item 
from the pounds which were established for the selling farm for the 
respective item before the current sale of quota. However, the pounds of 
quota transferred from the selling farm by lease or by the owner and/or 
the pounds of quota reduction resulting from a marketing quota violation 
on the selling farm may be apportioned between the farms in accordance 
with a written agreement between the buyer and the seller if the farm

[[Page 124]]

marketing quota retained on the selling farm is sufficient to satisfy 
the pounds of quota which were transferred by lease or by the owner, the 
pounds of quota which have been reduced as the result of a marketing 
quota violation, and the overmarketings for the farm, if any. The data 
determined in accordance with this paragraph shall he added to any 
previous data for the buying farm.
    (13) Redetermination quota after sale or purchase of quota. After 
adjusting the data in accordance with the provisions of this section, 
the effective farm marketing quota shall be determined for both the 
buying and selling farm.
    (14) Farm division after transfer by lease. If a farm is divided 
after there has been a transfer of a marketing quota to the farm by 
lease, the transferred quota shall be divided in the manner which is 
designated in writing by the lessee. In the absence of a written 
designation, the leased quota shall be apportioned in the same manner as 
the farm marketing quota of the parent farm.
    (15) Multiple year transfer by lease or by owner. The effective farm 
marketing quota on a receiving farm having a multiple-year transfer 
agreement in effect shall be adjusted for each year for which such 
transfer agreement is in effect to reflect any decrease in the national 
quota factor which causes the farm marketing quota established for the 
transferring farm to be less than the pounds of quota which have been 
transferred to the receiving farm.
    (16) Considered planted credit. Considered planted credit shall be 
given to the transferring farm when tobacco quota is transferred from 
the farm by lease or by owner.
    (f) Flue-cured tobacco. For flue-cured tobacco only:
    (1) Location of buying and selling farms. Marketing quota for flue 
cured tobacco transferred by sale must be to a farm administratively 
located within the same county, except that if 25 percent of the active 
flue-cured tobacco producers within a State petition the Secretary and 
the Secretary determines that a majority of the active flue-cured 
tobacco producers voting in the referendum approve, the sale of a flue-
cured tobacco allotment or quota from a farm in the State to any other 
farm in the State shall be permitted if all other conditions for such 
transfers are met. Further, the Secretary may permit flue-cured farms 
with the same owner that are located in contiguous counties to be 
combined for administrative purposes as one farm, notwithstanding 
provisions in part 718 of this chapter that might not otherwise permit 
that kind of combination.
    (2) Maximum quota to be transferred by sale. If the transfer is by 
sale, the transfer shall be based on part or all of the farm poundage 
quota. the maximum quota that may be transferred by sale is the farm 
poundage quota.
    (3) Transfer by lease-involvement of outside parties. If the 
transfer is by lease, only the lessor and lessee (or any attorney, 
trustee, bank, or other agent who regularly represents either the lessor 
or lessee in business transactions unrelated to the production or 
marketing of tobacco) may be parties to, or involved in the arrangements 
for such transfer. The transfer shall be based on a portion or all of 
the effective farm poundage quota. The maximum quota that may be 
transferred by lease is the effective farm poundage quota.
    (4) Lessor farm restrictions. A transfer of quota from a farm by 
lease shall not be approved:
    (i) New farm. If the farm is a new farm.
    (ii) Natural disaster. Unless the county FSA committee in the county 
in which the farm is located for administrative purposes determines that 
the:
    (A)(1) The farm has planted an acreage equal to or more than 90 
percent of the effective farm acreage allotment, or
    (2) In accordance with guidelines issued by the Deputy 
Administrator, the planted acreage of flue-cured tobacco on the farm is 
sufficient to produce, under average conditions, an amount of tobacco 
which, when added to any carryover tobacco from the previous marketing 
year, would equal the farm's effective farm marketing quota;
    (B) Lessor made reasonable and customary efforts to produce the 
effective farm marketing quota;
    (C) Producers on the farm qualify for price support in accordance 
with the provisions of part 1464 of this title; and

[[Page 125]]

    (D) Farm's expected production of flue-cured tobacco is less than 80 
percent of the farm's effective marketing quota as a result of a 
drought, excessive rain, hail, wind, tornado, or other natural disaster 
as determined by the Deputy Administrator.
    (iii) Claim for tobacco marketing quota penalty. If a claim has been 
filed against the lessor for tobacco marketing quota penalty and the 
claim remains unpaid unless the claim is paid or the entire proceeds of 
the lease of the allotment and quota are applied against the claim and 
the county FSA committee determines that the amount of the lease 
represents a reasonable price for the pounds of quota being leased.
    (iv) Located in the same State. Unless the lessor farm is 
administratively located in the same State as the lessee farm.
    (5) Lessee farm restrictions. A transfer of quota to a farm by lease 
shall not be approved:
    (i) Price support eligibility. Unless the producers on the farm 
qualify for price support under the provisions of part 1464 of this 
title; and
    (ii) Limitation. If the pounds of quota to be transferred to the 
lessee farm exceed the difference obtained by subtracting the effective 
farm marketing quota (before the filing of the transfer agreement) for 
the lessee farm from the total pounds of tobacco marketed and/or 
available for marketing (based on estimated pounds of tobacco on hand 
and/or in the process of being produced) from the farm in the current 
year.
    (iii) Located in same State. Unless the lessee farm is 
administratively located in the same State as the lessor farm.
    (6) Selling farm restrictions. A transfer of quota from a farm by 
sale shall not be approved:
    (i) Previously purchased and/or reallocated quota. If a farm 
marketing quota includes quota that was purchased and/or reallocated 
from the quota which has been forfeited and the purchase and/or 
reallocation became effective in the current or any of the three 
preceding years. However, this provision shall not be applicable if:
    (A)(1) The quota being sold was purchased in such period, if 
forfeiture of such quota is required by Sec. 723.220 of this part, and 
the amount of quota being transferred does not exceed the amount of 
quota for which forfeiture otherwise is required in accordance with the 
provisions of Sec. 723.220 of this part; or
    (2) The county FSA committee, with the concurrence of a 
representative of the State FSA committee, determines that the failure 
to approve the sale would cause an undue hardship on the seller and:
    (B) The sale is in connection with the settlement of an estate which 
includes the farm for which the quota was established;
    (C) The owner of the quota is experiencing financial distress to the 
extent that current year financing is unlikely;
    (D) The owner of the quota is disabled due to health reasons to the 
extent that such person can no longer continue to share in the risk of 
production of the purchased and/or reallocated quota; or
    (E) The owner of the quota is sharing in the risk of production as 
an investing producer and loses resources necessary to produce the crop 
due to reasons beyond such owner's control such as the loss of a tenant 
or share cropper and a replacement cannot be obtained.
    (ii) Reduction pending. If consideration of an indicated violation 
is pending which may result in an allotment and quota reduction for the 
farm for the current year. However, if the county FSA committee 
determines that a decision will not be made on the pending case on or 
before April 1, a transfer may be approved.
    (iii) Forfeiture pending. If the agreement for transfer by sale is 
filed subsequent to the final date which is permitted for the sale of 
the allotment and quota in order to prevent forfeiture.
    (iv) Consent of lien holder. If the farm is subject to a lien unless 
the lien holder agrees in writing to the transfer: However, consent of a 
lien holder is not required for a transfer of the pounds of quota for 
which forfeiture is required in accordance with the provisions of 
Sec. 723.220 of this part.
    (v) Claim for marketing quota penalty. If a claim has been filed 
against the seller for a tobacco marketing quota

[[Page 126]]

penalty and the claim remains unpaid: However, this provision shall not 
be applicable if the claim for such penalty is paid or the entire 
proceeds of the sale of the allotment and quota are applied against the 
claim and the county FSA committee determines that the amount paid 
represents a reasonable selling price for the pounds of quota being 
sold.
    (vi) Allotment and quota subject to an approved Conservation Reserve 
Program contract. If the allotment and quota is subject to an approved 
Conservation Reserve Program contract, unless forfeiture otherwise would 
be required in accordance with the provisions of Sec. 723.220 of this 
part.
    (7) Buying farm restrictions. A transfer of quota to a farm by 
purchase shall not be approved:
    (i) Active producer. Unless the buyer is an active flue-cured 
tobacco producer.
    (ii)  [Reserved]
    (iii) Quota previously sold. If the farm owner sold quota from a 
farm during the current or any of two preceding years.
    (iv) Installment payment option. Unless the buyer of the flue-cured 
tobacco acreage allotment and marketing quota has been afforded an 
option to pay for such allotment and quota in two to five equal annual 
installments payable each fall beginning with the fall of the crop year 
in which the transfer becomes effective and such buyer certifies on a 
form prescribed by the Deputy Administrator that such option has been 
made available to the buyer.
    (8) Allotment and quota after transfer by lease. The effective farm 
acreage allotment and the effective farm marketing quota shall be 
determined for both the lessee farm and the lessor farm in accordance 
with the provisions of Secs. 723.205 and 723.206 of this part, 
respectively.
    (9) Apportionment of data after transfer of quota by sale-selling 
farm. The pounds of farm marketing quota retained on the selling farm 
after the sale of quota shall be divided by the farm marketing quota 
established for the selling farm before the sale to determine a factor 
for apportioning farm data for the current year and for the base period. 
The data to be retained on the selling farm shall be determined by 
multiplying the factor by the following data:
    (i) The planted and considered planted acres for the base period;
    (ii) The history acres for the base period;
    (iii) The farm acreage allotment for the current year and for the 
base period;
    (iv) The amount of any overmarketings which have not been subtracted 
when a determination is made of the effective farm marketing quota of 
the selling farm;
    (v) The pounds of quota which have been transferred from the selling 
farm by lease in the current year;
    (vi) The acres of allotment which have been reduced in the current 
year as the result of a marketing quota violation in a prior year;
    (vii) The pounds of quota transferred to the farm by lease in the 
previous year;
    (viii) The previous year's farm marketing quota;
    (ix) The previous year's effective farm marketing quota; and
    (x) The previous year's marketings.
    (10) Apportionment of data-buying farm. The pounds of farm marketing 
quota which have been purchased shall be divided by the farm yield for 
the buying farm in order to determine the farm acreage allotment for the 
buying farm. The buying farm's share of other farm data shall be 
determined by subtracting the acres or pounds, as applicable, which are 
retained on the selling farm from the acres or pounds which were 
established for the selling farm before the current sale of quota: 
However, the acres computed for the acres of reduction resulting from a 
marketing quota violation for the buying farm shall be multiplied by a 
factor determined by dividing the farm yield of the selling farm by the 
farm yield of the buying farm in order to determine the acres of 
reduction from the buying farm for the current year. The pounds of quota 
transferred from the selling farm by lease and/or the acres of allotment 
reduction resulting from a marketing quota violation on the selling farm 
may be apportioned between the farms in accordance with a written 
agreement between the buyer and the

[[Page 127]]

seller if the farm marketing quota retained on the selling farm is 
sufficient to satisfy the pounds of quota which are leased, the pounds 
of quota which have been reduced as the result of a marketing quota 
violation, and the overmarketings for the farm, if any. The data 
determined in accordance with this paragraph shall be added to any 
previous data for the buying farm.
    (11) Allotment and quota. After adjusting the data in accordance 
with the provisions of this section, the farm acreage allotment, the 
effective farm acreage allotment, and the effective farm marketing quota 
shall be determined for both the buying and the selling farm.
    (12) Effect of price support eligibility. If a lease agreement is 
filed after the farm operator reports the acreage of tobacco on the farm 
in the current year, the effective farm acreage allotment which has been 
determined prior to the approval of the transfer will be used in 
determining price support eligibility for the farm.
    (13) Violation of lease provisions. (i) If, after a lease agreement 
is approved, information is brought to the attention of the county FSA 
committee which indicates that either the lessor or the lessee, or both, 
knowingly filed a false certification with respect to a transfer of 
quota by lease, the county FSA committee shall schedule a hearing, 
notify such person of the time and place of the hearing, and present 
evidence at the hearing with respect to the allegation of false 
certification. If, as a result of the evidence presented, the county FSA 
committee determines that such person knowingly made a false 
certification, the county FSA committee shall notify the person of the 
determination and afford such person 15 days after the mailing of the 
notice to request a review of the determination by a review committee as 
provided for by part 711 of this chapter.
    (ii) If it is determined that the lessor knowingly made a false 
certification, the next flue-cured tobacco acreage allotment and 
marketing quota established for the lessor's farm shall be reduced by 
that percentage which the leased quota was of the total flue-cured 
tobacco farm marketing quota established for the farm in the year of the 
lease.
    (iii) If it is determined that the lessee knowingly made a false 
certification, the lease agreement for purposes of the flue-cured 
tobacco marketing quota program with respect to the lessee's farm shall 
be considered to be null and void as of the date approved by the county 
FSA committee.
    (14) Considered planted credit. Considered planted credit shall be 
given to the lessor farm for the tobacco acreage allotment which is 
deducted as the result of the transfer of quota from the farm by lease.
    (15) Sale of quota with installment payment option. Notwithstanding 
any other provision of this section the owner of a farm who sells any 
flue-cured tobacco acreage allotment and marketing quota may:
    (i) Negotiate with more than one prospective buyer before selling 
such allotment and quota; or
    (ii) Sell such allotment and quota to any eligible buyer whom such 
owner may select; or
    (iii) Sell such allotment and quota for a single payment; or
    (iv) Include provisions in the agreement of sale to protect the 
seller's interest if the buyer fails to make full payment. Such 
provisions may not include the use of such allotment and quota as 
collateral for purposes of protecting the seller's interest in the 
allotment and quota.
    (v) Flue-cured tobacco acreage allotment and marketing quota 
purchased in accordance with this subparagraph shall not revert to the 
seller's farm but shall remain with the farm to which assigned at the 
time of purchase even though the buyer fails to make full payment to the 
seller for such allotment and quota.
    (g) Burley and flue-cured tobacco. For burley or flue-cured tobacco:
    (1) Carryover tobacco. If tobacco is marketed after the entire farm 
marketing quota of the producing farm has been transferred by sale, the 
tobacco shall be considered as having been marketed on each farm to 
which farm marketing quota was transferred by sale in accordance with a 
transfer agreement filed after June 15 for flue-cured tobacco, or July 1 
for burley tobacco, of

[[Page 128]]

the last year in which a farm marketing quota was established for the 
producing farm. Such marketing shall be prorated to each farm in 
proportion to the pounds of farm poundage quota purchased by each farm. 
If there was more than one farm to which a farm marketing quota was 
transferred by sale, the marketing may be assigned to the farms in the 
manner agreed to in writing by each of the buyers of such farm marketing 
quota.
    (2) Cancellation of transfer. A transfer of flue-cured allotment and 
quota, or burley quota, under this section which was approved in error 
or on the basis of incorrect information furnished by the parties to the 
agreement shall be canceled by the county FSA committee. For the purpose 
of determining any overmarketings and undermarketings from the farms, 
and for the purpose of determining eligibility for price support and 
marketing quota penalties, the cancellation shall be effective as of the 
date of approval. However, such cancellation shall not be effective for 
the current marketing year for price support and marketing quota penalty 
purposes if the:
    (i) Transfer approval was made in error or on the basis of incorrect 
information which had been unknowingly furnished by the parties to the 
agreement; and
    (ii) Parties to the transfer agreement were not notified of the 
cancellation before the marketing for the receiving farm exceeded the 
correct effective farm marketing quota.
    (3) Canceled because of fraud. If a transfer of a flue-cured 
allotment and quota, or burley quota, is canceled because of fraud on 
the part of the owner of the transferring farm but no fraud is 
attributable to either the owner or operator of the receiving farm, such 
cancellation shall be effective as of the date of approval of the 
transfer except for purposes of determining eligibility for price 
support and marketing quota penalties for the receiving farm. In such 
case, the overmarketings shall be charged against the farm from which 
the transfer was made if the farm, after any reconstitution which may be 
necessary as a result of fraud, is assigned a flue-cured allotment and 
quota, or burley quota, against which the overmarketings could be 
charged. Otherwise, the overmarketings shall be charged against any 
other farm involved in the fraud having a flue-cured allotment and 
quota, or burley quota, after any reconstitution required by such fraud. 
Notwithstanding the foregoing, any overmarketings on the receiving farm 
which are in excess of the amount of quota involved in the canceled 
transfer shall be charged against the receiving farm.
    (4) Dissolution or revision of a transfer agreement. A transfer 
agreement may be dissolved or minor revisions made with respect to such 
agreement if a written request by all parties to the agreement is made 
to the county FSA committee by November 15 of the current marketing year 
for flue-cured tobacco, or by February 15 of the current marketing year 
for burley tobacco. After any such dissolution or revision of a transfer 
agreement, an official notice of the flue-cured acreage allotment and 
marketing quota, or burley quota, shall be issued by the county FSA 
committee to each of the operators involved in the transfer agreement.
    (h) Cigar tobacco. For cigar-filler (type 46) and cigar-filler 
(types 42, 43, and 44) tobacco only, the provisions of paragraph (j) of 
this section are applicable in addition to the following:
    (1) Farm eligible. The owner and operator (acting together if 
different person) of any farm for which an old farm tobacco acreage 
allotment is established for the current year may lease and transfer all 
or any part of the farm acreage allotment established for such farm to 
any other owner or operator of a farm in the same county with a current 
year's allotment (old or new farm) for the same kind of tobacco for use 
on such farm. Transfer of allotments by lease shall not exceed 5 years.
    (2) Transfer approved acre per acre. The lease and transfer shall be 
approved acre per acre.
    (3) Considered planted credit. The amount of allotment acreage which 
is leased from a farm shall be considered for the purpose of determining 
future allotments (and tobacco history acreage) to have been planted to 
tobacco on such farm. The amount of allotment acreage which is leased 
and transferred

[[Page 129]]

to a farm shall not be taken into account in establishing allotments for 
subsequent years for such farms.
    (4) Limitation on acreage transferred. The total acreage allotted to 
any farm after the transfer by lease of tobacco acreage allotment to the 
farm shall not exceed 50 percent of the acreage of cropland in the farm, 
except that in the case of cigar-filler (types 42, 43, 44, and 46) 
transfers, such transfers shall be limited to a total of 10 acres.
    (5) Transfer from the pool. Allotments in a pool pursuant to part 
718 of this chapter may be eligible for lease and transfer during the 3-
year life of the pooled allotment. An agreement to lease and transfer 
shall not serve to extend the life of such pooled allotment.
    (i) Fire-cured, Dark air-cured, and Virginia sun-cured tobacco. For 
Fire-cured, Dark air-cured, and Virginia sun-cured tobacco, only, the 
provisions of this section are applicable in addition to the following:
    (1) Persons eligible to file a record of transfer (FSA-375)--sale or 
lease. The owner and operator of any old farm for which a Fire-cured, 
Dark air-cured, or Virginia sun-cured tobacco allotment is established 
for the current year may sell or lease all or any part of such allotment 
to any other owner or operator of a farm in the same county, and in the 
same State for Virginia fire-cured (type 21) or Virginia sun-cured (type 
37) tobaccos. The receiving farm need not be an old farm. In the case of 
a permanent transfer, a statement signed by all parties to the 
transaction confirming that the sale has been made shall be filed with 
the county FSA committee.
    (2) By owner. The owner of any old tobacco farm for which a Fire-
cured, Dark air-cured, or Virginia sun-cured tobacco allotment is 
established for the current year may transfer any or all of such 
allotment permanently, or for a term of years designated by the owner, 
to another farm in the same county (within the same State for Virginia 
fire-cured and Virginia sun-cured tobacco) owned or controlled by such 
owner.
    (3) Maximum period of transfer by lease. Transfer of allotments by 
lease shall not exceed 5 years.
    (4) Basis for transfer. The transfer shall be approved acre for 
acre.
    (5) Adjustments in farm history acreage. The farm history acreage 
for the immediately preceding 5 years on farms from which and to which 
permanent transfer of allotment is made shall be adjusted by the county 
FSA committee for each of the base years to correspond with the amount 
of allotment transferred between the farms. In the case of temporary 
transfers of allotment for 1 or more years by lease or by owner, the 
farm history acreage shall not be reduced on the farm from which the 
transfer is made and farm history acreage shall not be transferred to 
the receiving farm.
    (6) Limitation on acreage transferred. The total of the Fire-cured, 
Dark air-cured, or Virginia sun-cured tobacco allotment which may be 
transferred for each kind of tobacco, by sale, lease, or by owner, to a 
farm shall not exceed 10 acres of allotment. However, the total of each 
acreage for each kind of tobacco allotted to any farm after such 
transfer (the sum of its own allotment and the acreage transferred after 
any adjustment in normal yields for the current year) shall not exceed 
50 percent of the acreage of cropland on the farm. The cropland in the 
farm for the current year for purposes of such transfers shall be the 
total cropland as defined in part 718 of this chapter.
    (7) Prohibition on permanent transfer. A permanent transfer by sale 
or by owner shall not be approved from any farm to which an allotment 
was permanently transferred by sale or by owner within the 3 immediately 
preceding crop years.
    (8) Temporary transfer to non-owned farm. A transfer requested on a 
temporary basis to a farm controlled but not owned by the applicant 
shall be approved only if the applicant will be the operator of the farm 
to which the transfer is to be made for each year of the period for 
which the transfer is requested. When the applicant for whom such 
transfer has been approved no longer is the operator of the receiving 
farm due to conditions beyond such operator's control, the transfer 
shall remain in effect unless the transfer is terminated under the 
provisions of

[[Page 130]]

paragraph (j) of this section. Conditions beyond the operator's control 
shall include, but not be limited to, death, illness, incompetence, or 
bankruptcy of such person.
    (9) Transfer of pooled allotment. Allotments established for a farm 
as pooled allotment under part 718 of this chapter may be transferred on 
a:
    (i) Permanent basis during the 3-year life of a pooled allotment, or
    (ii) Temporary basis for a term of years not to exceed the remaining 
number of crop years of such 3-year period. A temporary agreement to 
transfer shall not serve to extend the life of such pooled allotment.
    (10) New farm eligibility. Any farm from which the entire farm 
allotment is sold or permanently transferred by the owner shall not be 
eligible for a new farm tobacco allotment for the kind transferred 
during the 5 years following the year in which such transfer is made.
    (11) Transfer of history acreage. Permanent transfer of allotment 
shall have the effect of transferring history acreage, farm base, and 
marketing quota attributable to such allotment. In the case of a 
transfer by lease, the transferred allotment shall be considered for 
purposes of establishing future allotments to have been planted on the 
farm from which such allotment was transferred.
    (j) Tobacco except burley, flue-cured, and cigar (types 54 and 55). 
For tobacco that may be transferred in accordance with the provisions of 
paragraph (h) or (i) of this section, the following provisions shall 
also apply:
    (1) New farm allotment. A new farm allotment shall not be 
transferred.
    (2) Tobacco allotment subject to an approved Conservation Reserve 
Program contract. A transfer of allotment designated for reduction under 
a Conservation Reserve Program contract shall not be approved.
    (3) Subleasing prohibited. A transfer of allotment from a farm shall 
not be approved during the period for which a current temporary transfer 
agreement is in effect that transferred quota to the same farm.
    (4) Limitation on transfer to and from a farm in the same year. If a 
transfer agreement is in effect for the current crop year for a farm, a 
transfer of allotment shall not be approved during the same crop year:
    (i) From such farm receiving allotment by transfer for such year, or
    (ii) To such farm which had allotment transferred from it for such 
year.
    (5) Farm in violation. If consideration of a violation is pending 
which may result in an allotment reduction for a farm for the current 
year, the county FSA committee shall delay approval of any transfer of 
allotment from or to the farm until the violation is cleared or the 
allotment reduction is made. However, if the allotment reduction in such 
case cannot be made effective for the current crop year before the final 
date for reducing allotments for violations, the transfer may be 
approved by the county FSA committee. In any case, if, after a transfer 
of a tobacco acreage allotment has been approved by the county FSA 
committee, it is determined that the allotment for the farm from which 
or to which such acreage is transferred is to be reduced for a 
violation, the allotment reduction for such farm shall be delayed until 
the following year.
    (6) Claim for tobacco marketing quota penalty. A transfer of acreage 
allotment from a farm shall not be approved if a claim has been filed 
against the lessor, seller, or transferring owner for a tobacco 
marketing quota penalty and the claim remains unpaid. However, this 
provision shall not apply if the claim is paid or the entire proceeds of 
the lease or sale of the allotment are applied against the claim and the 
county FSA committee determines that the amount paid for the lease or 
sale represents a reasonable price for the acres of allotment being 
transferred.
    (7) Approval after review period. A transfer of allotment shall not 
be approved by the county FSA committee for any farm before the time of 
filing an application for review, as shown on the original allotment 
notice for the farm, has expired. If an application for review is filed 
for a farm involved in a transfer agreement, such agreement shall not be 
approved by the county FSA committee until the allotment for such farm 
is finally determined pursuant to part 711 of this chapter.

[[Page 131]]

    (8) Acreage allotment after lease and transfer. The acreage 
allotment determined after a temporary transfer for a farm under the 
provisions of this section shall be the allotment of such farm for the 
current year only for the purpose of determining:
    (i) Excess acreage,
    (ii) The amount of penalty to be collected on marketings of excess 
tobacco including absorption of carryover penalty tobacco,
    (iii) Eligibility for price support, and
    (iv) The farm marketing quota and the percentage reduction for a 
violation in the allotment for the farm.
    (9) Cancellation of transfer. Any transfer of allotment under this 
section which was approved by the county FSA committee in error or on 
the basis of incorrect information furnished by the parties to the 
agreement shall be canceled by the county FSA committee. Such 
cancellation shall be effective as of the date of approval for purposes 
of determining eligibility for price support and marketing quota 
penalties except that such cancellation shall not be effective for the 
current marketing year for price support and marketing quota penalty 
purposes, if:
    (i) The transfer approval was made in error or on the basis of 
incorrect information unknowingly furnished by the parties to the 
transfer agreement; and
    (ii) The parties to the transfer agreement were not notified of the 
cancellation before the tobacco was planted.
    (10) Dissolution or revision. A transfer agreement may be dissolved 
or minor revisions made where a request by all parties to the agreement 
is made in writing to the county FSA committee. Such written 
notification shall be filed prior to planting the tobacco. A late filed 
request to dissolve or revise the transfer may be effective for the 
current year if the county FSA committee with approval of a 
representative of the State FSA committee determines that the producer 
was prevented from timely filing for reasons beyond such producer's 
control.
    (11) Reconstituted farm. The allotment for a farm being divided or 
combined in the current year shall be the allotment after the transfer 
has been approved. Notwithstanding the above, in the case of a division, 
the county FSA committee shall allocate the acreage that was transferred 
by lease to the tracts involved in the division as the parent farm 
owners and operators designate in writing. In the absence of such 
designation, the county FSA committee shall apportion the leased 
acreage.
    (12) Consent of lien holder. A transfer of allotment other than by 
annual lease shall not be approved from a farm subject to a mortgage or 
other lien unless the transfer is agreed to in writing by the lien 
holder.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21441, May 9, 1991; 58 
FR 11960, Mar. 2, 1993; 63 FR 11582, Mar. 10, 1998; 65 FR 7953, Feb. 16, 
2000]



Sec. 723.217  Release and reapportionment of old farm acreage allotments for Cigar-filler and Binder (types 42, 43, 44, 54, and 55) tobacco.

    (a) Annual or permanent release of acreage allotments to State 
committee. Except as provided in this paragraph, all or any part of a 
farm acreage allotment on which Cigar-filler and Binder (types 42, 43, 
44, 54, and 55) tobacco will not be produced and which the operator of 
the farm voluntarily releases on an annual basis, or both the owner and 
operator voluntarily releases on a permanent basis, in writing to the 
State FSA committee by not later than the final date for filing releases 
established by the State FSA committee for the current year shall be 
deducted from the allotment of such farm.
    (1) For the farm voluntarily releasing tobacco farm acreage 
allotment on an annual basis, such acreage will be considered as having 
been planted on the releasing farm for the purpose of establishing 
allotments for subsequent years. For the farm receiving such annual 
released acreage, such acreage shall not be taken into account in 
establishing future allotments for the farm. The tobacco history acreage 
for a farm releasing on a permanent basis shall not be taken into 
account in establishing future allotments for the farm. The tobacco 
history acreage for a farm releasing on a permanent basis shall be 
adjusted to reflect the acreage permanently released.
    (2) An acreage allotment shall not be released either annually or 
permanently:

[[Page 132]]

    (i) From the eminent domain allotment pool if an application for 
transfer from the pool has been filed in accordance with part 718 of 
this chapter;
    (ii) From a new farm; or
    (iii) To the extent such acreage is designated for reduction under a 
Conservation Reserve Program contract.
    (b) Reapportionment of released acreage allotment. The acreage 
voluntarily released on an annual or permanent basis for the current 
year may be reapportioned by the State FSA committee to any farm in any 
county in the State including a farm receiving a new farm allotment. The 
State FSA committee shall select the counties to which the released 
acreage will be reapportioned. The county FSA committee shall select the 
farms to which the released acreage will be reapportioned. The State FSA 
committee shall keep records on both an annual and permanent basis of 
the source of acreage released. Any acreage released for the current 
year on a permanent basis which is not reapportioned by the State FSA 
committee in the current year may be reapportioned in the following 
year. The county FSA committee for the county receiving released acreage 
may reapportion the tobacco allotment acreage on an annual or permanent 
basis to other farms in the county in amounts determined by the county 
FSA committee to be fair and reasonable on the basis of land, labor, and 
equipment available for production of Cigarfiller and binder (types 42, 
43, 44, 54, and 55) tobacco; crop rotation practices; and the soil and 
other physical factors affecting the production of tobacco. Released 
acreage should not be reapportioned on a temporary or permanent basis to 
any farm unless there is assurance from the operator to the county FSA 
committee that the released acreage being received will be produced. 
Allotment reapportioned to a farm on an annual basis can only be used by 
the receiving farm for increased production during the current year. 
Allotment reapportioned to a farm on a permanent basis shall be added to 
the current year allotment or shall serve to establish an allotment for 
a farm without a current allotment. A farm shall be eligible to receive 
reapportionment of released acreage on either or both an annual or 
permanent basis only if a written request is filed by the farm owner or 
operator at the office of the county FSA committee not later than the 
final date for filing such requests established by the State FSA 
committee for the current year.



Sec. 723.218  Determining tobacco history acreage.

    With respect to each respective kind of tobacco, the tobacco history 
acreage shall be determined for each farm for which a tobacco acreage 
allotment was established for such kind of tobacco for the current year.
    (a) The history acreage shall be the same as the farm acreage 
allotment for the respective kind of tobacco if in the current year, or 
either of the two preceding years, the sum of the planted and considered 
planted acreage of such kind of tobacco was as much as 75 percent of the 
farm acreage allotment. Otherwise, the history acreage shall be the sum 
of the planted and considered planted acreage of such kind of tobacco.
    (b) Notwithstanding any other provision of this section, for the 
respective kind of tobacco, the history acres for the current year and 
for each year of the base period shall be reduced to zero if:
    (1) A new farm allotment was canceled;
    (2) The allotment was in a pool established in accordance with the 
eminent domain provision of part 718 of this chapter and the period of 
eligibility has expired for transferring the allotment from the pool; or
    (3) The county FSA committee determines that the farm has been 
retired from agricultural production and the allotment is not eligible 
for pooling in accordance with the eminent domain provisions of part 718 
of this chapter.



Sec. 723.219  Forfeiture of burley tobacco marketing quota.

    (a) Determination of quota subject to forfeiture. (1) For purposes 
of paragraph (b) of this section, the phrase ``owns a farm'' means 
ownership of:
    (i) A farm as constituted under part 718 of this chapter, if the 
entire farm shares a common ownership; or

[[Page 133]]

    (ii) All of the land within a farm which shares a common ownership 
if the parent farm consists of tracts of land having separate 
ownerships.
    (2) For purposes of paragraph (b) of this section, the county FSA 
committee shall apportion, in accordance with the provisions of part 718 
of this chapter, the burley tobacco quota assigned to a farm between the 
various tracts of land which are separately owned by:
    (i) A person not using the land on the farm for which a burley 
tobacco marketing quota is established for agricultural purposes.
    (ii) A person who uses the land on the farm for which the burley 
tobacco marketing quota is established for agricultural purposes or for 
educational, instructional, or demonstrational purposes.
    (3) The farm marketing quota determined under this section for each 
farm or tract, as applicable, shall be the amount of quota subject to 
forfeiture under this section.
    (b) Person who does not use the land on the farm for which the 
marketing quota is established for agricultural purposes or does not use 
such marketing quota for educational, instructional, or demonstrational 
purposes. For purposes of this paragraph, the term ``person'' means a 
person as defined in part 718 of this chapter, including any 
governmental entity, public utility, educational institution, religious 
institution or joint venture (but not including any farming operation 
involving only spouses), but excluding any individual.
    (1) Required forfeiture. With respect to any person owning a farm 
for which a burley tobacco marketing quota is established, if the county 
FSA committee determines that such person does not use the land on such 
farm for agricultural purposes, or does not use such burley tobacco 
marketing quota for educational, instructional, or demonstrational 
purposes, such person shall forfeit such quota which is not sold on or 
before December 1 of the year after any year for which the county FSA 
committee makes such determination.
    (2) Agricultural purposes. Land on the farm for which a burley 
tobacco marketing quota is established shall be considered to be used 
for agricultural purposes if the county FSA committee determines that:
    (i) In the current year or either of the 2 preceding years such land 
is used for the production of:
    (A) Row crops of any type;
    (B) Livestock or poultry (including pasture and forage for 
livestock);
    (C) Trees (including orchards and vineyards); or
    (D) Hay or native grasses on open land; or
    (ii) In the current year such farm is owned by an educational 
institution which uses such burley tobacco marketing quota solely for 
educational, instructional, or demonstrational purposes.
    (3) Documentation. Within 30 days after a written request is made by 
the county FSA committee, or within such extended time as may be granted 
by the county FSA committee, a person must submit such documentation as 
may be requested to support a determination that the provisions of 
paragraph (b)(1) of this section have been met with respect to such 
person. Upon failure of such person to timely respond to this request, 
the county FSA committee shall determine that the person does not use 
the land on the farm for agricultural purposes, or does not use the 
burley tobacco marketing quota for educational, instructional, or 
demonstrational purposes.
    (c) Buyers of quota fail to share in the risk of production.
    (1) Forfeiture required. If any person buys burley tobacco quota and 
such person fails to share in the risk of producing the tobacco which 
was planted subject to such quota during any of the 3 crop years 
beginning with the crop year for which the purchase became effective, 
such person shall forfeit the purchased quota if it is not sold on or 
before December 31 of the year after the crop year in which such crop 
was planted. However, any purchaser or subsequent purchaser of quota 
required to be sold under the mandatory sale to prevent forfeiture, 
provisions of paragraph (b) of this section shall be required to share 
in the risk of production of such quota for five crop years beginning 
with the crop year for which the purchase became effective.

[[Page 134]]

    (2) Failure to utilize purchased quota for the production of tobacco 
shall not result in the forfeiture of such quota, but the three year 
period and the five year period which is specified in paragraph (c)(1) 
of this section shall be extended 1 year for each year for which the 
quota is not utilized.
    (3) Reduction for failure to share in the risk of production. The 
effective quota shall be reduced, but not below zero pounds, for leasing 
and marketing quota purposes only, to the extent of the purchased quota 
for each crop after the crop year in which the buyer of such quota fails 
to share in the risk of producing a crop of tobacco which is subject to 
such quota.
    (4) Determining forfeited amount. If only part of the quota on a 
farm is attributable to a purchased quota, the amount of the farm 
marketing quota which must be forfeited under paragraph (c) of this 
section shall be determined by increasing or decreasing each respective 
purchase of farm marketing quota for the farm to reflect changes in 
national quota factors since the purchase occurred and subtracting the 
pounds of quota which have been sold to prevent forfeiture.
    (d) Hearing. Before any forfeiture of quota becomes effective under 
the provisions of this section, the county FSA committee shall:
    (1) Schedule a hearing for the affected person.
    (2) Notify the affected person of the hearing at least 10 days in 
advance of the hearing.
    (3) Make a determination, on the basis of the evidence presented at 
the hearing by or on behalf of the affected person and by or on behalf 
of the county FSA committee as to whether or not:
    (i) Any of the conditions for forfeiture specified in this section 
exist; and
    (ii) The affected person knowingly failed to take steps to prevent 
forfeiture of allotment and quota when such forfeiture conditions have 
been determined to exist with respect to the provisions of paragraph (b) 
of this section.
    (iii) The affected person knowingly failed to take steps to prevent 
forfeiture of burley tobacco quota.
    (4) Notify the affected persons of the county FSA committee 
determination and, if forfeiture of quota is to be required, afford such 
person an opportunity to appeal to a review committee in accordance with 
the provision of part 711 of this chapter.
    (e) Apportionment of data and determination of quota after 
forfeiture. (1) Apportionment of data. The pounds of farm marketing 
quota retained on the forfeiting farm after the forfeiture shall be 
divided by the farm marketing quota established for the farm before the 
forfeiture to determine a factor for apportioning farm data. The data to 
be retained on the forfeiting farm shall be determined by multiplying 
the factor by the following data for the forfeiting farm:
    (i) Overmarketings which have been subtracted when determining the 
effective farm marketing quota of the forfeiting farm.
    (ii) Pounds of quota transferred from the forfeiting farm by lease 
or by the owner in the current year.
    (iii) Pounds of quota reduced in the current year for a marketing 
quota violation in a prior year.
    (iv) Previous year's effective farm marketing quota.
    (v) Previous year's marketings.
    (vi) Previous year's farm marketing quota.
    (vii) Pounds of quota transferred to the farm by lease or by owner 
in the previous year.

The portion of the forfeiting farm data which shall be included in a 
forfeiture pool for the county shall be determined by subtracting the 
pounds of each respective item of farm data which are retained on the 
forfeiting farm from the pounds of the respective item of data which 
were established for the forfeiting farm before forfeiture.
    (2) Forfeiture pool. The data for the forfeiture pool shall be added 
to any previous data in the forfeiture pool.
    (3) Quota after forfeiture. After adjustment of data, the effective 
farm marketing quota shall be determined in accordance with the 
provisions of Sec. 723.206 of this part for the forfeiting farm.
    (f) Forfeiture pool. (1) Establishing forfeiture pool. A forfeiture 
pool shall be established in each county in which a

[[Page 135]]

forfeiture of quota occurs. The forfeiture pool shall be increased to 
include data for each forfeiture and shall be decreased for each 
reallocation in order to reflect any forfeited or reallocated amounts 
of:
    (i) Farm marketing quota for the current year.
    (ii) Quota reduced for marketing quota violations.
    (iii) Quota transferred from the forfeiting farm by lease or by the 
owner.
    (iv) Previous year's effective farm marketing quota.
    (v) Previous year's marketings.
    (2) Adjustment of data in forfeiture pool. At the beginning of the 
current year, the data in the forfeiture pool shall be adjusted by the 
factor used in determining quotas for old farms. Quota data in the 
forfeiture pool shall be decreased each time any burley tobacco quota is 
reallocated from the forfeiture pool. Such decrease in the quota data 
will be made in the same proportion as the pounds of quota which are 
reallocated from the pool are to the pounds of quota which were in the 
pool before the reallocation.
    (g) Reallocation of quota from forfeiture pool. (1) Application. In 
order to establish eligibility to receive quota from the forfeiture pool 
in the current year, an application must be made on a form approved by 
the Deputy Administrator. Such application must be filed:
    (i) Who may file. By an active producer.
    (ii) When to file. On or before April 30. The State FSA committee 
may establish an earlier date if notice of such earlier date is given in 
time for interested applicants to file an application by the earlier 
date.
    (iii) Where to file. At the county FSA office which serves the farm 
for which the application is filed.
    (2) Eligibility of applicant. In order for an applicant to be 
eligible for quota from the forfeiture pool, the county FSA committee 
must determine that:
    (i) The application was filed timely.
    (ii) The applicant is an active tobacco producer.
    (iii) During the current year or during the 4 years preceding the 
current year, the applicant has not sold or forfeited quota from any 
farm.
    (3) Time to reallocate. The county FSA committee shall:
    (i) Not reallocate any quota from the forfeiture pool until the time 
has passed for filing an application for forfeited quota for the current 
year.
    (ii) Reallocate any quota from the forfeiture pool only during the 
30-day period beginning on the day after the final day for filing an 
application for quota from the forfeiture pool.
    (4) Reallocation by county FSA committee. Reallocation of any burley 
tobacco quota shall be made by the county FSA committee. In making its 
determination of the amounts of quota to reallocate, the county FSA 
committee may consider the size of the current quotas on the farms of 
the eligible applicants, the length of time the applicants have been 
farming tobacco, the type of farming done by the applicants (i.e., 
livestock, grain, or other commodities), previous leasing history of the 
applicants, and such other factors which in the judgment of the county 
FSA committee should be considered. A burley tobacco quota may be 
reallocated to a farm which currently does not have a burley tobacco 
quota. A factor shall not be used to reallocate quota between all 
eligible applicants.
    (5) Basis for reallocation from forfeiture pool. Reallocation from 
the forfeiture pool shall be on the basis of pounds of farm marketing 
quota.
    (6) Amount of quota to be reallocated. The county FSA committee may 
reallocate all or part of the quota in the forfeiture pool. The minimum 
amount of quota which may be reallocated to an eligible applicant is the 
total amount of quota in the pool or 100 pounds, whichever is less. The 
maximum amount is 500 pounds. However, up to 1,500 pounds may be 
allocated with State FSA committee concurrence.
    (7) Data for receiving farm. All data for the forfeiture pool shall 
be apportioned to the receiving farm in the proportion that the 
reallocated farm marketing quota is to the total farm marketing quota in 
the forfeiture pool before the reallocation. The data determined for the 
receiving farm in accordance with the provisions of this paragraph shall 
be added to any previous data for the receiving farm.

[[Page 136]]

    (8) Quota for receiving farm. After any adjustments which are made 
in accordance with the provisions of this section, the effective farm 
marketing quota shall be determined for the receiving farm.
    (h) Forfeiture of reallocated quota. Any burley tobacco quota which 
is reallocated in accordance with the provisions of this section shall 
be forfeited if the applicant to whom the quota is reallocated fails to 
share in the risk of producing a crop of tobacco which is subject to 
such quota during any of the 3 years beginning with the crop year during 
which the quota is reallocated. The amount of farm marketing quota which 
must be forfeited shall be determined in the same manner which is 
specified in paragraph (c)(4) of this section with respect to the 
forfeiture of purchased quota. Any forfeiture of quota shall occur on 
December 1 of the year in which the applicant fails to share in the risk 
of production of tobacco which is produced subject to such quota. While 
the failure to utilize a quota shall not subject the quota to 
forfeiture, the 3 year period which is specified in this paragraph shall 
be extended by 1 year for each year in which the quota is not utilized.
    (i) Successor-in-interest. A successor-in-interest shall be subject 
to the provisions of this section in the same manner and to the same 
extent as would be applicable to the person whose interest has been 
assumed by such successor-in-interest.
    (1) New owner of farm. The new owner of a farm on which a portion or 
all of the farm marketing quota for such farm was either purchased and/
or was reallocated from forfeited quota shall become the successor-in-
interest to the previous owner of the farm. However, if a farm is 
acquired by a new owner on or before June 30 of the current crop year 
and such owner would otherwise be required to sell or forfeit the farm 
marketing quota because in the preceding crop year the owner of such 
quota did not share in the risk of producing a crop of tobacco which was 
subject to such purchased or reallocated quota, the new owner may be 
considered the buyer of the quota instead of being considered as a 
successor-in-interest to the previous owner of the farm. However, the 
new owner must furnish to the county FSA committee on or before June 30 
of the current year a certification that such owner intends to become an 
active burley tobacco producer. Any purchased or reallocated quota, 
which is acquired by a new owner who is not considered to be the buyer 
of the quota in accordance with the provisions of this paragraph, shall 
be subject to the same terms and conditions with respect to forfeiture 
which would be applicable if the new owner actually had purchased the 
quota at the time the farm was acquired.
    (2) Buyer no longer shares in risk of production. The owner of a 
farm shall become the successor-in-interest to the buyer of burley 
tobacco quota which was transferred to a farm but which was not owned by 
such buyer if the buyer ceases to share in the risk of production of 
burley tobacco produced on the farm.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21442, May 9, 1991]



Sec. 723.220  Forfeiture of flue-cured tobacco acreage allotment and marketing quota.

    (a) Determination of allotment and quota subject to forfeiture. (1) 
For purposes of paragraphs (b) and (c) of this section, the phrase 
``owns a farm'' means ownership of:
    (i) A farm as constituted under part 718 of the chapter if the 
entire farm shares a common ownership; or
    (ii) All of the land within a common ownership if the parent farm 
consists of separate ownership tracts of land.
    (2) For purposes of paragraphs (b) and (c) of this section, the 
county FSA committee shall, in accordance with the provisions of part 
718 of this chapter, apportion the flue-cured tobacco acreage allotment 
and marketing quota assigned to a farm between:
    (i) All land which is owned by any person which is not significantly 
involved in the management or use of land for agricultural purposes, as 
described in paragraph (b) of this section; and
    (ii) Each common ownership tract of land in the farm other than that 
described in paragraph (a)(2)(i) of this section.

[[Page 137]]

    (3) With respect to the provisions of paragraph (c) of this section, 
an acreage allotment and marketing quota shall be determined for a tract 
in accordance with paragraph (a)(2)(ii) of this section only to the 
extent that records are available to show the contribution which the 
tract made to the flue-cured tobacco acreage allotment of the parent 
farm.
    (4) The farm acreage allotment and farm marketing quota determined 
under this section for each farm or tract, as applicable, will be the 
amount of allotment and quota subject to forfeiture under this section.
    (b) Persons not significantly involved in management or use of land 
for agricultural purposes. For purposes of this paragraph, the term 
``person'' means a person as defined in part 718 of this chapter, 
including any: Governmental entity, public utility, educational 
institution, or religious institution, but not including any: 
Individual, partnership, joint venture, family farm corporation, trust, 
estate, or similar fiduciary account with respect to which 50 percent or 
more of the beneficial interest is in one or more individuals; or 
educational institution that uses a flue-cured tobacco acreage allotment 
and marketing quota for instruction or demonstrational purposes.
    (1) Required forfeiture. If at any time the county FSA committee 
determines that any person which owns farm for which a flue-cured 
tobacco acreage allotment and marketing quota are established is not 
significantly involved in the management or use of land for agricultural 
purposes, such person shall forfeit such allotment and quota which is 
not sold on or before December 1 of the year for which the county FSA 
committee makes such a determination.
    (2) Owner ceases to be significantly involved. A person shall be 
considered to be significantly involved in the management or use of land 
for agricultural purposes if the county FSA committee determines that:
    (i) For the 3 preceding years, more than 20 percent of the gross 
income of the person has been derived from the management or use of land 
for the production of crops which are planted and harvested annually, 
and/or livestock, including pasture and forage for livestock; and
    (ii) Any other person or all other persons which in combination own 
more than 50 percent of the assets of the owner of the flue-cured 
tobacco allotment and marketing quota also meet the criteria specified 
in paragraph (b)(2)(i) of this section.
    (3) Documentation. Within 30 days after a written request is made by 
the county FSA committee, or within such extended time as may be granted 
by the county FSA committee, a person must submit such documentation as 
may be requested to support a determination that the provisions of 
paragraph (b)(2) of this section have been met with respect to such 
person. Upon failure of such person to timely respond to such request, 
the county FSA committee shall determine that the person is not 
significantly involved in the management or use of land for agricultural 
purposes.
    (c)-(d)  [Reserved]
    (e) Buyers of allotment fail to share in the risk of production.
    (1) Forfeiture required. If any person buys flue-cured acreage 
allotment and quota and such person fails to share in the risk of 
producing the tobacco which was planted subject to such quota during any 
of the three crop years beginning with the crop year for which the 
purchase became effective such person shall forfeit the purchased quota 
if it is not sold on or before December 31 of the year after the crop 
year in which such crop was planted.
    (2) Failure to utilize purchased allotment and quota. Failure to 
utilize purchased allotment and quota for the production of tobacco 
shall not result in the forfeiture of such quota, but the 3 year period 
which is specified in paragraph (e)(1) of this section shall be extended 
1 year for each year for which the quota is not utilized.
    (3) Reduction for failure to share in risk of production. The 
effective allotment and quota shall be reduced, but not below zero acres 
or pounds, for planting, leasing, and marketing quota purposes only, to 
the extent of purchased allotment and quota for each crop year after the 
crop year in which the buyer of such allotment and quota fails to share 
in the risk of producing a crop of

[[Page 138]]

tobacco planted under such allotment and quota.
    (4) Determining forfeited amount. If only part of the allotment and 
quota on a farm resulted from purchased allotment or quota, the amount 
of farm marketing quota which must be forfeited under paragraph (e) of 
this section shall be determined by:
    (i) Increasing or decreasing each respective purchase of farm 
marketing quota for the farm to reflect any annual changes in national 
acreage and national yield factors subsequent to the year of purchase.
    (ii) Adding the amounts determined in paragraph (e)(4)(i) of this 
section, multiplying the result by the farm yield for the farm, and 
subtracting the pounds of quota which have been sold to prevent 
forfeiture.
    (f) Tobacco not planted nor considered planted. Notwithstanding any 
other provision of this part, any person who owns a farm for which a 
flue-cured tobacco acreage allotment and marketing quota are 
established, shall forfeit such allotment and quota after February 15 of 
any year immediately following the 1st year of the 3-year period 
immediately preceding the year for which the county FSA committee 
determines that flue-cured tobacco was not planted nor considered 
planted on such farm during at least 2 years of such 3-year period.
    (g) Hearing. Before any forfeiture of allotment and quota becomes 
effective under the provisions of this section, the county FSA committee 
shall:
    (1) Schedule a hearing for the affected person.
    (2) Notify the affected person of the hearing at least 10 days in 
advance of the hearing.
    (3) Make a determination, on the basis of evidence presented at the 
hearing by or on behalf of the affected person and by or on behalf of 
the county FSA committee as to whether:
    (i) Any of the conditions of requiring forfeiture as specified in 
this section exist; and
    (ii) The affected person knowingly failed to take steps to prevent 
forfeiture of a flue-cured tobacco acreage allotment and marketing 
quota.
    (4) Notify the affected person of the county FSA committee 
determination and, if forfeiture of allotment and quota is to be 
required, afford such person an opportunity to appeal to a review 
committee under the provision of part 711 of this chapter.
    (5) Wait until the period has passed for the affected person to 
appeal the county FSA committee or review committee determination that 
allotment and quota must be forfeited under the provisions of this 
section.
    (h) Apportionment of data and determination of allotment and quota 
after forfeiture. (1) Apportionment of data. The pounds of farm 
marketing quota retained on the forfeiting farm after the forfeiture 
shall be divided by the farm marketing quota established for the 
forfeiting farm before the forfeiture to determine a factor for 
apportioning farm data for the current year and for the base period. The 
data to be retained on the forfeiting farm shall be determined by 
multiplying the factor by the following data of the forfeiting farm, 
the:
    (i) Planted and considered planted acres for the base period.
    (ii) History acres for the base period.
    (iii) Farm acreage allotment for the base period.
    (iv) Overmarketings which have not been subtracted when determining 
the effective farm marketing quota of the forfeiting farm.
    (v) Acres of allotment reduced in the current year for a marketing 
quota violation in a prior year.
    (vi) Previous year's effective farm marketing quota.
    (vii) Previous year's marketings.
    (viii) Previous year's farm marketing quota.
    (ix) Pounds of quota transferred from the forfeiting farm by lease 
in the current year.
    (x) Pounds of quota transferred to the farm by lease in the previous 
year.

The portion of the forfeiting farm data which shall be included in a 
forfeiture pool for the county shall be determined by subtracting the 
acres or pounds which are retained on the forfeiting farm from the acres 
or pounds established for the forfeiting farm before forfeiture.
    (2) Forfeiture pool. The data for the forfeiture pool shall be added 
to any previous data in the forfeiture pool.

[[Page 139]]

    (3) Allotment and quota after forfeiture. After adjustment of data, 
the effective farm acreage allotment and the effective farm marketing 
quota shall be determined in accordance with Sec. 723.205 and 723.206 of 
this part, respectively, for the forfeiting farm.
    (i) Forfeiture pool. (1) Establishing forfeiture pool. A forfeiture 
pool shall be established in each county in which a forfeiture of 
allotment and quota occurs. The forfeiture pool shall be increased to 
include data for each forfeiture and shall be decreased for each 
reallocation in order to reflect any forfeited or reallocated amounts of 
the:
    (i) Farm acreage allotment for the current year and for the base 
period.
    (ii) Farm marketing quota for the current year and for the base 
period.
    (iii) Acres reduced for violation.
    (iv) Planted and considered planted acres for the base period.
    (v) History acres for the base period.
    (vi) Previous year's effective farm marketing quota.
    (vii) Previous year's marketing.
    (viii) Quota transferred from the forfeiting farm by lease.
    (2) Yield for forfeiture pool. The farm yield for the forfeiture 
pool shall be determined by dividing the farm marketing quota in the 
forfeiture pool by the farm acreage allotment in the forfeiture pool. 
The preliminary farm yield for the forfeiture pool shall be determined 
by dividing the farm yield by the national yield factor.
    (3) Adjustment of data in forfeiture pool. At the beginning of the 
current year, the data in the forfeiture pool shall be adjusted by the 
factors used in determining yields, allotments, and quotas for old 
farms. Acreage and quota data in the forfeiture pool shall be decreased 
each time quota is reallocated from the forfeiture pool, such decrease 
to be made in the same proportion as the pounds of quota which are 
reallocated from the pool are to the pounds of quota which were in the 
pool before the reallocation.
    (j) Reallocation of allotment and quota from forfeiture pool. (1) 
Application. In order to establish eligibility to receive allotment and 
quota from the forfeiture pool in the current year, an application must 
be made on a form approved by the Deputy Administrator. Such application 
must be filed:
    (i) Who may file. By an active producer.
    (ii) When to file. On or before March 31. The State FSA committee 
may establish an earlier date if notice of such earlier date is given in 
time for interested applicants to file an application by the earlier 
date.
    (iii) Where to file. At the county FSA office which serves the farm 
for which the application is filed.
    (2) Eligibility of applicant. In order for an applicant to be 
eligible for allotment and quota from the forfeiture pool, the county 
FSA committee must determine that:
    (i) The application was filed timely.
    (ii) The applicant is an active producer.
    (iii) During the current year or during the 4 years preceding the 
current year, the applicant has not:
    (A) Sold or forfeited allotment and quota from any farm.
    (B) Used the designation method of division to retain less allotment 
than the farm would have retained by another method of division.
    (3) Time to reallocate. The county FSA committee shall:
    (i) Not reallocate any allotment and quota from the forfeiture pool 
until the time has passed for filing an application for forfeited 
allotment and quota for the current year.
    (ii) Reallocate any allotment and quota from the forfeiture pool 
only during the 30-day period beginning on the day after the final day 
for filing an application for allotment and quota from the forfeiture 
pool.
    (4) Reallocation by county FSA committee. Reallocation of any 
allotment and quota shall be made by the county FSA committee. In making 
its determination of the amounts to reallocate, the county FSA committee 
may consider the size of the current allotments on the farms of the 
eligible applicants, the length of time the applicants have been farming 
tobacco, the type of farming done by the applicants (i.e., livestock, 
grain, or other commodities), and other factors which in the judgment of 
the county FSA committee should be considered. Allotment and quota may 
be reallocated to a farm

[[Page 140]]

which currently does not have a flue-cured tobacco allotment. A factor 
shall not be used to reallocate allotment and quota between all eligible 
applicants.
    (5) Basis for reallocation from forfeiture pool. Reallocation from 
the forfeiture pool shall be on the basis of pounds of farm marketing 
quota.
    (6) Amount of quota to reallocate. The county FSA committee may 
reallocate all or part of the quota in the forfeiture pool.
    (i) Minimum. The minimum amount of quota which may be reallocated to 
an eligible applicant is the total amount of quota in the pool or 200 
pounds, whichever is less.
    (ii) Maximum. The maximum amount of quota which may be reallocated 
to an eligible applicant is 1,000 pounds. However, with State FSA 
committee approval, up to 2,500 pounds may be allocated.
    (7) Data for receiving farm. All data for the forfeiture pool shall 
be apportioned to the receiving farm in the proportion that the 
reallocated farm marketing quota is to the total farm marketing quota in 
the forfeiture pool before the reallocation. The pounds of farm 
marketing quota reallocated to a farm shall be divided by the farm yield 
for the farm to determine the amount of reallocated farm acreage 
allotment. The data determined for the receiving farm in accordance with 
the provisions of this paragraph shall be added to any previous data for 
the receiving farm.
    (8) Allotment and quota for receiving farm. After any adjustments 
which are made in accordance with the provisions of this section, the 
farm acreage allotment, the effective farm acreage allotment, and the 
effective farm marketing quota shall be determined for the receiving 
farm according to Secs. 723.205 and 723.206, respectively, of this part.
    (k) Forfeiture of reallocated allotment and quota. Allotment and 
quota which is reallocated in accordance with the provisions of this 
section shall be forfeited if the applicant to whom the quota is 
reallocated fails to share in the risk of producing a crop of tobacco 
which is subject to such quota during any of the 3 years beginning with 
the crop year during which the quota is reallocated. The amount of farm 
marketing quota which must be forfeited shall be determined in the same 
manner which is specified in paragraph (e)(4) of this section with 
respect to the forfeiture of purchased quota. Any forfeiture of quota 
shall occur on December 1 of the year in which the applicant fails to 
share in the risk of production of tobacco which is produced subject to 
such quota. While the failure to utilize a quota shall not subject the 
quota to forfeiture, the 3 year period which is specified in this 
paragraph shall be extended by 1 year for each year in which the quota 
is not utilized.
    (l) Successor-in-interest. The successor-in-interest shall be 
subject to the provisions of this section in the same manner and to the 
same extent as would be applicable to the person whose interest was 
assumed.
    (1) New owner. The new owner of a farm on which a portion or all of 
the farm acreage allotment and farm marketing quota for such farm was 
either purchased and/or was reallocated from forfeited allotment and 
quota shall become the successor-in-interest to the previous owner of 
the farm. However, if a farm is acquired by a new owner on or before 
June 15 of the current crop year and such owner would otherwise be 
required to sell or forfeit the farm acreage allotment and farm 
marketing quota because in the preceding crop year the owner of such 
allotment and quota did not share in the risk of producing a crop of 
tobacco which was subject to such purchased or reallocated allotment and 
quota, the new owner may be considered the buyer of the allotment and 
quota instead of being considered as a successor-in-interest to the 
previous owner of the farm. However, the new owner must furnish to the 
county FSA committee on or before June 15 of the current year a 
certification that such owner intends to become an active flue-cured 
tobacco producer. Any purchased or reallocated allotment and quota, 
which is acquired by a new owner who is considered to be the buyer of 
the allotment and quota in accordance with the provisions of this 
paragraph, shall be subject to the same terms and conditions with 
respect to forfeiture which would be applicable if the new owner 
actually had

[[Page 141]]

purchased the allotment and quota at the time the farm was acquired.
    (2) Buyer no longer shares in risk of production. The owner of a 
farm shall become the successor-in-interest to the buyer of allotment 
and quota which was transferred to a farm but which was not owned by 
such buyer if the buyer ceases to share in the risk of the production of 
tobacco produced on the farm.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21442, May 9, 1991; 65 
FR 7953, Feb. 16, 2000]



 Subpart C--Tobacco Subject to Quota, Exemptions From Quotas, Marketing 
                  Cards, and General Penalty Provisions



Sec. 723.301  Identification of tobacco subject to quota.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
any tobacco which is determined by a representative of the State FSA 
committee or county FSA committee to have the same appearance and 
characteristics as a kind of tobacco for which marketing quotas are in 
effect shall be deemed to be a quota kind of tobacco. Such tobacco shall 
continue to be deemed a quota kind of tobacco unless it has been 
certified by the Agricultural Marketing Service, U.S. Department of 
Agriculture, under the Tobacco Inspection Act (7 U.S.C. 511) and 
implementing regulations (7 CFR part 30), prior to removal of the 
tobacco from the State where it was produced, as a kind of tobacco not 
subject to marketing quotas.
    (b) Any kind of tobacco for which marketing quotas are not in effect 
that is produced in a State where marketing quotas are in effect for any 
kind of tobacco shall be subject to the quota for the kind of tobacco 
for which marketing quotas are in effect in that State. If marketing 
quotas are in effect in a State for more than one kind of tobacco, 
nonquota tobacco produced in the State shall be subject to the quota for 
the kind of quota tobacco produced in the State having the highest price 
support under the Agricultural Act of 1949.
    (c) Paragraph (b) of this section shall not apply to:
    (1) Maryland (type 32) tobacco when it is nonquota tobacco and 
produced on a farm for which a marketing quota for Maryland (type 32) 
tobacco was established when marketing quotas for such kind of tobacco 
were last in effect (1965);
    (2) Cigar-filler (type 41) tobacco when it is nonquota tobacco and 
produced in Pennsylvania;
    (3) Cigar-wrapper (types 61 and 62) tobacco when it is nonquota 
tobacco and produced in Connecticut, Massachusetts, Georgia or Florida;
    (4) Tobacco produced in a quota State that is represented to be 
nonquota tobacco and that is readily and distinguishably different from 
all kinds of quota tobacco, as determined by the Agricultural Marketing 
Service, U.S. Department of Agriculture, through application of the 
standards issued by the Secretary for the inspection and identification 
of tobacco. Such inspection and identification shall be made prior to 
removal of the tobacco from the State where it was produced; and
    (5) Tobacco which is nonquota tobacco and produced in a quota area 
in which the total of the acreage allotments for quota tobacco 
established for farms is less than twenty acres.



Sec. 723.302  Tobacco for experimental purposes.

    For farms on which tobacco is being grown for experimental purposes 
by or under the direction of a publicly owned agricultural experiment 
station, such tobacco shall be exempt from any penalties otherwise 
required by this part if, before the beginning of the harvesting of 
tobacco from any farm on which experimental tobacco is being grown, the 
director of such publicly owned agricultural experimental station 
furnishes a report, to the State Executive Director for the State in 
which the farm is located, that includes the following information:
    (a) Name and address of the publicly owned agricultural experiment 
station.
    (b) Name of the owner, and name of the operator if different from 
the owner, and the farm number of each farm on which tobacco is grown 
for experimental purposes only.

[[Page 142]]

    (c) The acreage or poundage of tobacco that is to be grown on each 
farm for experimental purposes only.
    (d) A certification signed by the director of the publicly owned 
agricultural experiment station to the effect that such acreage or 
poundage of tobacco is being grown for each farm for experimental 
purposes only, the tobacco is being grown under the auspices of such 
director, and the acreage of each plot was considered necessary for 
carrying out the experiment.



Sec. 723.303  Production of registered or certified flue-cured tobacco seed.

    Producers of registered or certified flue-cured tobacco seed may 
devote flue-cured tobacco acreage in excess of the effective allotment 
to seed production without such acreage of tobacco causing a ``No Price 
Support'' entry on the marketing card issued for the farm if an 
agreement is signed by the farm operator, and the producer, if different 
from the operator, which provides:
    (a) Destruction prior to harvest. For the destruction prior to 
harvest of all tobacco produced on the acreage designated for seed 
production.
    (b) Producer payment of compliance costs. That the producers shall 
pay the cost of compliance visits to a farm by representatives of the 
county FSA committee for the purposes of:
    (1) Designating and determining the acreage of seed production, and
    (2) Determining that no tobacco has been harvested from the acreage 
designated for seed production and to witness destruction of tobacco 
leaves.
    (c) Agreement. That the producer(s) signing the agreement shall 
agree to timely notify the county FSA office when the tobacco seed has 
been harvested.
    (d) No history credit. That the planting of the tobacco acreage for 
seed production will not create history acreage for the purpose of 
establishing future farm allotments.
    (e) Cancellation of marketing cards. That if the county FSA 
committee determines that any of the terms and conditions of the 
agreement have been violated or any material misrepresentation has been 
made, any marketing card issued for the farm in recognition of the 
agreement shall be recalled and canceled, and a marketing card shall be 
issued to reflect that tobacco produced on the farm is not eligible for 
price support.



Sec. 723.304  Determination of discount varieties.

    (a) Definition. Discount variety means any of the flue-cured tobacco 
seed varieties designated as Coker 139, Coker 140, Coker 316, Reams 64, 
Reams 266, or 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, Mortgage Lifter, Super 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. 
However, where there is growing in a field offtype plants of not more 
than 2 percent, such offtype plants shall not be considered in 
certifying the flue-cured tobacco variety being produced. Flue-cured 
tobacco variety which is not certified to be discount variety shall be 
considered as ``acceptable variety.''
    (b) Producer report. The operator, or any producer, on each farm 
producing flue-cured tobacco shall file with the county FSA office a 
report on MQ-32 showing whether or not discount variety tobacco was 
planted on the farm.
    (c) Failure to file report. If the operator of a farm on which flue-
cured tobacco is being produced in the current year fails or refuses, 
within 7 days after a request of the county FSA committee on MQ-34-1, 
Notice of Action Required Regarding Determination of Seed Varieties of 
Flue-Cured Tobacco, to file a report on MQ-32, showing whether or not 
there was planted any of the discount varieties of flue-cured tobacco on 
such farm, all flue-cured tobacco produced on such farm shall be 
considered by the county FSA committee to be discount variety tobacco 
unless the county FSA committee finds that failure to comply with the 
request was due to circumstances beyond the control of the farm 
operator.
    (d) Notice to farm operator. The farm operator having discount 
variety tobacco shall be given written notice by certified mail on MQ-
34-2, Notice of

[[Page 143]]

Determination of Discount Variety of Flue-Cured Tobacco. This notice to 
the farm operator shall constitute notice to all persons who, as owner, 
operator, landlord, tenant, or sharecropper, are interested in the 
tobacco grown on the farm.
    (e) Producer's right to recertify. Any producer on a farm who 
received a Form MQ-34-2 notifying such producer that the farm has 
discount variety tobacco when in fact an acceptable variety is being 
produced may recertify on Form MQ-32.
    (f) Issuance of marketing cards. (1) If a farm is considered to have 
discount variety tobacco available for marketing and the farm is 
eligible for price support, the county FSA executive director shall 
issue MQ-76, bearing the notation ``Discount Variety-Limited Price 
Support.'' If the farm is considered to have discount variety tobacco 
but it is not eligible for price support, the county FSA executive 
director shall issue MQ-76, bearing the notation ``Discount Variety-No 
Price Support.''
    (2)(i) Where an MQ-76, bearing the notation, ``Discount Variety-
Limited Price Support'' is issued for a farm, the card may be exchanged 
at the county FSA office for an MQ-76, without the notation, or
    (ii) Where an MQ-76, bearing the notation ``Discount Variety-No 
Price Support'' is issued for a farm the card may be exchanged at the 
county FSA office for MQ-76 with the notation ``No Price Support.'' 
However, the farm operator shall establish to the satisfaction of the 
county FSA committee that there has been no commingling or substitution 
of discount variety tobacco produced on the farm or on any other farm 
operated by such operator, and that all discount variety tobacco has 
been marketed or satisfactorily disposed of, or accounted for.
    (3) MQ-76 issued to identify marketings of tobacco grown for 
experimental purposes by or for publicly owned experiment stations shall 
bear the notation ``Discount Variety-Limited Price Support'' if such 
tobacco is discount variety tobacco.
    (g) Identification of flue-cured leaf account tobacco as acceptable 
variety--(1) Whenever the Director determines there is a significant 
amount of discount variety tobacco available for marketing in any 
marketing year, the Director may cause to be initiated the provisions of 
this paragraph. In addition, the Director may terminate any action 
initiated hereunder when it is determined that no discount variety of 
flue-cured tobacco remains available for sale during the remainder of 
the current marketing season. Notification to warehouse operators of 
action required under this paragraph shall be by the State FSA executive 
director.
    (2)(i) Each warehouse operator who offers for auction sale any leaf 
account flue-cured tobacco on a warehouse floor other than such 
operator's own floor, and who requests the other warehouse operator to 
identify such tobacco as being ``acceptable variety'' shall execute MQ-
79-1 (Flue-Cured), Dealer's Certification-Resale Tobacco.
    (ii) Each warehouse operator who is participating in the Commodity 
Credit Corporation price support program, and who identifies resale 
tobacco indicating that such tobacco with a ``certified'' lot ticket 
indicating that such tobacco is covered by an executed MQ-79-1.
    (iii) Each executed MQ-79-1 (Flue-Cured) shall show the following 
information with respect to each lot of resale tobacco:
    (A) Crop year.
    (B) Name and address of warehouse where the tobacco is being offered 
for sale.
    (C) Tobacco sale bill number and date.
    (D) Date, signature of dealer and current address, and dealer 
identification number.
    (3)(i) Each dealer or any other person who offers for auction sale 
any resale flue-cured tobacco on a warehouse floor which is 
participating in the Commodity Credit Corporation price support program 
and on which floor eligible resale flue-cured tobacco is identified with 
a ``certified'' lot ticket, and who requests the warehouse operator to 
identify such operator's tobacco as being an ``acceptable variety,'' 
shall execute MQ-79-1 (Flue-Cured), Dealer's Certification-Resale 
Tobacco.
    (ii) Each executed MQ-79-1 (Flue-Cured) shall show the following 
information with respect to resale tobacco:

[[Page 144]]

    (A) Crop year.
    (B) Name and address of warehouse where the tobacco is being offered 
for sale.
    (C) Date, signature of dealer and current address and dealer 
identification number.
    (D) Tobacco sale bill number and date.
    (iii) Each dealer or any person who acquires acceptable variety 
tobacco in a manner which would make it eligible for certification on 
MQ-79-1, or who has on hand both discount variety tobacco and acceptable 
variety tobacco, and desires to dispose of acceptable variety tobacco 
prior to disposing of the discount variety tobacco, may apply in writing 
to the State FSA executive director for a special authorization to have 
the acceptable variety tobacco certified when offered for auction sale.
    (h) Estimate of production. For any farm on which discount variety 
tobacco is being grown, a Form MQ-92, Estimate of Production, shall be 
obtained.



Sec. 723.305  Issuance of marketing cards.

    (a) General. Each marketing of tobacco from a farm in a quota area 
shall be identified by a valid marketing card unless prior to marketing 
an AMS certification is issued for such tobacco to indicate that such 
tobacco is a nonquota kind of tobacco.
    (1) A marketing card (MQ-76 or MQ-77) shall be issued for the 
current marketing year for each farm having quota tobacco available for 
marketing. Cards shall be issued in the name of the farm operator except 
that:
    (i) Cards issued for tobacco grown for experimental purposes only 
shall be issued in the name of the experiment station,
    (ii) Cards issued to a successor-in-interest shall be issued in the 
name of the successor-in-interest,
    (iii) For kinds of tobacco other than flue-cured and burley, if a 
part of a farm which includes the tobacco acreage on the farm is cash 
leased to such producer, cards shall be issued in the name of such 
producer. The face of the marketing card may show the name of other 
interested producers. A marketing card may be issued in the name of a 
producer who is not the farm operator if the county FSA committee 
determines pursuant to the procedure in paragraph (a)(2) of this section 
that such producer has been or likely will be deprived of the right to 
use the marketing card issued for the farm to market such producer's 
proportionate share of the crop.
    (2) If the county FSA committee has reason to believe that one or 
more producers on the farm have been or likely will be deprived of the 
right to use such marketing card to market such producer's proportionate 
share of the crop, a hearing shall be scheduled by the county FSA 
committee and the operator of the farm and the producer or producers 
involved shall be invited to be present, or to be represented, at which 
time they shall be given the opportunity to substantiate their claims 
concerning the use of the farm marketing card to market each such 
producer's proportionate share of the effective farm marketing quota for 
such crop. At least two members of the county FSA committee shall be 
present at the hearing. The hearing shall be held at the time and place 
named in the notice. A summary of the evidence presented at the hearing 
shall be prepared for use of the county FSA committee. If the farm 
operator or other producer(s) on the farm do not attend the hearing, or 
are not represented, the county FSA committee shall make its decision on 
the basis of information available to such committee. If the county FSA 
committee finds that any producer on the farm has been or likely will be 
deprived of the right to use the marketing card issued for the farm to 
market such producer's proportionate share of the crop, a separate 
marketing card shall be issued to such producer. With respect to burley 
and flue-cured tobacco, the marketing card issued for the farm shall be 
recalled and a separate marketing card, showing 103 percent of the 
producer's proportionate share of the effective farm marketing quota 
shall be issued to each such producer who it is determined has been or 
likely will be deprived of the opportunity to market such producer's 
proportionate share of the crop and another card (or other cards if 
considered preferable by the county FSA committee) shall be issued

[[Page 145]]

showing 103 percent of the effective farm marketing quota to enable the 
other producers on the farm to market their proportionate shares. The 
marketing cards issued pursuant to this subparagraph shall reflect the 
proportionate pounds, if any, already marketed by each producer.
    (3) The procedure in paragraph (a)(2) of this section shall not 
apply to a person who was a producer on the farm in a prior year but who 
is not a producer in the current crop year.
    (b) Person authorized to issue marketing cards. The county FSA 
executive director shall be responsible for the issuance of marketing 
cards. For kinds of tobacco other than burley and flue-cured tobacco, 
each marketing card shall bear the actual or facsimile signature of the 
county FSA executive director who issued the card.
    (c) Rights of producers and successors-in-interest. (1) Each 
producer having a share in tobacco available for marketing from a farm 
shall be entitled to the use of the marketing card for marketing such 
producer's proportionate share.
    (2) Any person who succeeds, other than a dealer, in whole or in 
part to the share of a producer in the tobacco available for marketing 
from a farm, shall, to the extent of such succession, have the same 
right to the use of the marketing card and bear the same liability for 
penalties as the original producer.
    (d) No price support-burley and flue-cured tobacco. For burley and 
flue-cured tobacco, the notation ``No Price Support'' shall be entered 
on each marketing card issued for the use of:
    (1) Farm. The farm if any producer on the farm is ineligible for 
price support under the provisions of part 1464 of this title.
    (2) Producer. The producer on a farm if the producer is ineligible 
for price support under the provisions of part 1464 of this title.
    (e) Farm quota data entered on marketing card and supplemental card 
for burley or flue-cured tobacco:
    (1) Any marketing card issued to market burley or flue-cured tobacco 
shall show when issued, in the space provided on the reverse side, the 
pounds computed by multiplying 103 percent times the effective farm 
marketing quota.
    (2) Notwithstanding paragraph (e)(1) of this section, if the tobacco 
available for marketing from the farm is determined by the county FSA 
committee or the county FSA executive director to be less than the 
effective farm marketing quota, for purposes of issuing a marketing card 
and showing thereon the farm's 103 percent of the effective quota, the 
effective farm marketing quota for the farm shall be considered to be 
the pounds determined to be available for marketing from the farm. If 
any producer on the farm satisfies the county FSA committee or county 
FSA executive director that the quantity of tobacco produced on the farm 
in the current year, plus any carryover tobacco from a prior year, is 
greater than the previously determined pounds of tobacco available for 
marketing from the farm, the pounds shown on the marketing card shall be 
increased accordingly, but not to exceed an amount which would cause the 
total pounds shown on the marketing card to equal 103 percent of the 
effective farm marketing quota.
    (3) Upon request by the farm operator, a supplemental marketing card 
bearing the same name and identification as shown on the original 
marketing card may be issued for a farm upon return to the county FSA 
office of an original marketing card or a supplemental marketing card. 
The pounds computed as the balance of 103 percent of quota from a prior 
marketing card shall be shown in the first space on the reverse side of 
the marketing card.
    (4) Upon written request of the farm operator two or more marketing 
cards may be issued for a farm if the farm operator specifies the number 
of pounds of quota to be assigned to each marketing card. In such case, 
the total pounds of quota specified in the entry, ``103 percent of 
quota,'' on all marketing cards issued for the farm may not exceed 103 
percent of the effective farm marketing quota.
    (f) Farm quota data entered on marketing card and supplemental card 
for any kind of tobacco other than burley or flue-cured: (1) Within 
quota marketing card. A within quota marketing card,

[[Page 146]]

MQ-76, indicating the tobacco is eligible for price support shall be 
issued for use in identifying the kind of tobacco that is available for 
marketing from a farm when such tobacco:
    (i) Is eligible for price support according to the provisions of 
part 1464 of this title.
    (ii) Was grown for experimental purposes by a publicly owned 
agricultural experiment station.
    (2) Excess marketing card. An excess marketing card (MQ-77) shall be 
issued for a farm for marketing a kind of tobacco that is ineligible for 
price support. Before the MQ-77 is issued the county FSA executive 
director shall enter on such marketing card the rate of any penalty that 
is to be deducted from the proceeds from any marketing of tobacco 
identified by such marketing card. An MQ-77 shall be issued for each 
farm for each kind of tobacco for which:
    (i) There is excess tobacco available for marketing from the farm; 
or
    (ii) The producer is not an eligible producer or the tobacco is not 
eligible tobacco as determined in accordance with part 1464 of this 
title.
    (3) Full penalty rate. The full penalty rate shall be entered on 
each MQ-77 issued to identify tobacco produced on a farm for which:
    (i) An acreage allotment was not established;
    (ii) The farm operator or another producer on the farm prevents the 
county FSA committee from obtaining information necessary to determine 
the correct acreage of tobacco on the farm;
    (iii) The farm operator fails in accordance with part 718 of this 
chapter to provide a certification of acreage planted to tobacco, or
    (iv) The farm operator or another producer on the farm has not 
agreed to make contributions to the No Net Cost Fund or pay assessments 
to the No Net Cost Account, as applicable, in accordance with part 1464 
of this title.
    (4) Converted penalty rate. Except as provided in paragraph (f)(3) 
of this section, a converted penalty rate shall be entered on each MQ-77 
issued to identify tobacco produced on a farm from which there is excess 
tobacco available for marketing and the percentage of excess is less 
than 100 percent. For the purpose of determining the penalty due on each 
marketing by a producer of tobacco subject to penalty, the converted 
rate of penalty per pound shall be determined by multiplying the 
applicable rate of penalty for the current crop by the percent excess 
determined according to this paragraph. For a farm without carryover 
tobacco from a prior year, the percent excess shall be determined by 
dividing the excess acreage of tobacco by the harvested acreage of 
tobacco for the farm. For a farm having carryover tobacco from a prior 
year, the percent excess shall be determined as follows:
    (i) Determine the number of ``carryover'' acres by dividing the 
number of pounds of carryover tobacco from the prior year by the normal 
yield for the farm for that year. Reduce such ``carryover'' acres by the 
amount determined by subtracting the harvested acreage from the 
allotment in the current year. If the ``carryover'' acres are entirely 
offset by the underharvested acreage, the percent excess will be zero 
and a MQ-76 may be issued if the farm otherwise is eligible for price 
support and the remainder of this paragraph (f)(4) of this section are 
inapplicable.
    (ii) Determine the number of ``within quota carryover acres'' by 
multiplying the ``carryover acres'' by the ``percent within quota'' 
(i.e., 100 percent minus the percent excess) for the year in which the 
carryover tobacco was produced.
    (iii) Determine the ``total acres'' of tobacco by adding the 
``carryover acres'' and the acreage of tobacco harvested in the current 
year.
    (iv) Determine the ``excess acres'' by subtracting from the ``total 
acres'' the sum of the current year's allotment and the ``within quota 
carryover acres.''
    (v) Determine the percent excess by dividing the ``excess acres'' by 
the ``total acres.''
    (5) Except as provided in paragraphs (f)(3) and (4) of this section, 
a zero penalty rate shall be entered on any MQ-77 issued in accordance 
with this section.
    (g) Other marketing card data. Other data specified in instructions 
issued by the Deputy Administrator shall be entered on the marketing 
card.

[[Page 147]]



Sec. 723.306  Claim stamping and replacing marketing cards.

    (a) Claim stamping. If a person is indebted to the United States and 
such indebtedness has been recorded on the county debt record, any 
marketing card issued for the farm on which the person has a producer 
interest shall bear the notation ``U.S. Claim'' followed by the amount 
of the indebtedness. The name of the debtor-producer, if different from 
the farm operator, shall be recorded directly under the claim notation. 
The notation ``TMQ'' indicating tobacco marketing quota as the type of 
indebtedness shall constitute notice to any buyer that until the amount 
of penalty is paid, the United States has a lien with respect to any 
crop of tobacco in which the debtor-producer has an interest. A claim 
notation other than ``TMQ'' shall constitute notice to any buyer that 
subject to prior liens, the net proceeds from any tobacco pledged as 
collateral for a price support loan shall be paid to the ``Farm Service 
Agency, USDA'' to the extent of the indebtedness shown. The acceptance 
and use of a marketing card bearing a notation and information 
concerning an indebtedness to the United States shall not constitute a 
waiver by the debtor-producer of any right to contest the validity of 
such indebtedness by appropriate appeal. As claim collections are made, 
the amount of the claim shown on the card shall be revised to show the 
claim balance. If requested by the producer, the county FSA executive 
director who issued the marketing card shall issue a claim-free 
marketing card when the claim has been paid.
    (b) Replacing, exchanging, or issuing additional marketing cards. 
Subject to the approval of the county FSA executive director, two or 
more marketing cards may be issued for any farm. Upon the return to the 
county FSA office of a marketing card which had been used in its 
entirety and before the marketing of tobacco from the farm has been 
completed, a new marketing card bearing the same name, information, and 
identification as the used card shall be issued for the farm. A new 
marketing card shall be issued to replace a card which has been 
determined by the county FSA executive director who issued the card to 
have been lost, destroyed, or stolen.



Sec. 723.307  Invalid cards.

    (a) Reasons for being invalid. A marketing card shall be invalid if:
    (1) It is not issued or delivered in the manner prescribed;
    (2) An entry is omitted or is incorrect;
    (3) It is lost, destroyed, stolen, or becomes illegible; or,
    (4) Any erasure or alteration has been made and not properly 
initialed by the county FSA executive director.
    (b) Validating invalid cards. If any entry is not made on a 
marketing card as required, either through omission or incorrect entry, 
and the proper entry is made and initialed by the county FSA executive 
director who issued the card, or by a marketing recorder, then such card 
shall become valid.
    (c) Returning invalid cards. In the event any marketing card becomes 
invalid (other than by loss, destruction or theft, or by omission, 
alteration, or incorrect entry, which has not been corrected by the 
county FSA executive director who issued the card, or by a marketing 
recorder), the farm operator, or the person in possession of the card, 
shall return it to the county FSA office at which it was issued.



Sec. 723.308  Rate of penalty.

    The rate of penalty for a marketing year shall be equal to seventy-
five (75) percent of the average market price for the kind of tobacco 
for the immediately preceding marketing year as determined and announced 
annually by the U.S. Department of Agriculture.

[55 FR 39914, Oct. 1, 1990, as amended at 63 FR 11582, Mar. 10, 1998]



Sec. 723.309  Persons to pay penalty.

    Subject to any additional requirements or provisions for remittances 
which are contained in Sec. 723.409 of this part, the persons to pay the 
penalty due on any marketing of tobacco subject to penalty shall be 
determined as follows:
    (a) Auction sale. The penalty due on marketings by a producer or 
dealer through an auction sale shall be paid by the warehouse operator 
who may deduct an amount equivalent to the

[[Page 148]]

penalty from the price paid to the producer or dealer.
    (b) Nonauction sale. The penalty due on tobacco acquired directly 
from a producer or dealer, other than at an auction sale, shall be paid 
by the person acquiring the tobacco who may deduct an amount equivalent 
to the penalty from the price paid to the producer or dealer in the case 
of a sale.
    (c) Marketing outside the United States. The penalty due on 
marketings by a producer or dealer directly to any person outside the 
United States shall be paid by the producer or dealer making the sale.

[55 FR 39914, Oct. 1, 1990, as amended at 63 FR 11582, Mar. 10, 1998]



Sec. 723.310  Date penalty is due.

    (a) Payment of penalty. Penalties shall become due at the time the 
tobacco is marketed, except that in the case of false identification or 
failure to account for disposition, the penalty shall be due on the date 
of such false identification or failure to account for disposition. The 
penalty shall be paid by remitting the amount due to the State FSA 
office not later than the end of the calendar week in which the tobacco 
becomes subject to penalty. A draft, money order, or check drawn payable 
to the Farm Service Agency may be used to pay any penalty, but any such 
draft or check shall be received subject to payment at par.
    (b) Auction sale net proceeds. If the penalty due on any auction 
sale of tobacco by a producer is in excess of the net proceeds of such 
sale (gross amount for all lots included in the sale less usual 
warehouse charges), the amount of the net proceeds accompanied by a copy 
of the tobacco sale bill covering such sale may be remitted as the full 
penalty due. Usual warehouse charges shall not include the following:
    (1) Advances to producers,
    (2) Charges for hauling, or
    (3) Any other charges not usually incurred by producers in marketing 
tobacco through a warehouse.
    (c) Nonauction sales. Nonauction sales of excess tobacco shall be 
subject to the full rate of penalty and shall be paid in full even 
though the penalty may exceed the proceeds for the sale of tobacco.



Sec. 723.311  Lien for penalty; liability of persons who are affiliated with indebted person or who permit the indebted person to use their identification card.

    (a) Lien on tobacco. Until the amount of any marketing quota penalty 
imposed under this part is paid, a lien shall exist in favor of the 
United States for the amount of the penalty on:
    (1) The tobacco with respect to which such penalty is incurred; and
    (2) Any other tobacco subject to marketing quotas in which the 
person liable for payment of the penalty has an interest and which is 
marketed in the same or a subsequent marketing year.
    (b) Lien precedence. The lien, described in paragraph (a) of this 
section, attaches at the time that the penalty is assessed. As to third 
parties, in the event of a lack of actual notice of the lien, then 
notice shall be deemed to occur when:
    (1) In the case of indebted producers, the debt is entered on the 
debt record maintained by the county FSA office of the county in which 
the tobacco was grown;
    (2) In the case of an indebted warehouse operator, the debt is 
entered on the debt record of the State FSA office for the State in 
which the warehouse is located; and
    (3) In the case of an indebted dealer, the debt is entered on the 
debt record of the State FSA office for the State in which the dealer is 
required to file reports.
    (c) Availability of list of marketing quota penalty debts. Each 
county and State FSA office shall maintain a list of tobacco marketing 
penalty debts which have been entered on the debt record in their 
office. The list shall be available for examination upon request by any 
interested person.
    (d) Liability for penalty owed by another person. (1) When a penalty 
in excess of $10,000 is incurred under this part by an entity, all 
persons who have a substantial ownership interest in the entity shall be 
jointly and severally liable with the entity for the payment of such 
penalty, unless it is demonstrated to the satisfaction of the Deputy 
Administrator that the violation was inadvertent. Substantial ownership 
interest shall be deemed to be

[[Page 149]]

any ownership interest greater than ten percent.
    (2) A dealer or warehouse operator who permits an indebted person to 
use such dealer's or warehouse operator's identification card to market 
tobacco shall be liable for the amounts due by the indebted person to 
the United States under this part up to the amount of the value of the 
tobacco so marketed. In addition, unless the Deputy Administrator 
determines otherwise, any persons or person, who as a warehouse operator 
or dealer becomes affiliated with any person who at the time of 
affiliation is indebted under this part to the United States, shall be 
liable for the amount of the debt owed to the United States by the 
person with whom such person or persons become affiliated up to the 
amount of the value of any tobacco which is marketed by such affiliated 
warehouse operator or dealer during the time of the affiliation with the 
indebted person. Affiliation may include any relationship in which the 
parties have a common interest in tobacco, or in an enterprise or entity 
involved in the marketing, processing, or handling of tobacco, or where 
the parties both hold a position of responsibility or ownership in such 
an enterprise or entity, or where there is common ownership of a 
business involved in the transaction. A warehouse operator or dealer may 
also be considered to be affiliated with an indebted person when such 
warehouse operator or dealer is associated with a person who is both:
    (i) An employee or otherwise authorized to buy and sell tobacco for 
such warehouse operator or dealer; and
    (ii) An indebted person or at the time of indebtedness incurred by 
an entity was a substantial owner or an officer of the indebted entity.

Affiliation may also be deemed to occur where parties have traded in 
tobacco under circumstances which indicate that there may be a lack of 
arm's length trading between the parties such as where the parties 
engage in casual or undocumented transactions in significant quantities 
of tobacco, or where the parties have traded in tobacco with each other 
without a movement of the tobacco, or where there is a trading in 
tobacco without documentation of a significant exchange of money, or 
other circumstances which indicate an affiliation. Where questions of 
affiliation arise, it shall be the burden on the parties involved to 
show that trading in such tobacco was conducted in accordance with 
normal trade practices and was not part of a scheme or device to avoid 
payments of sums due the United States or the CCC.
    (e) TMQ lien notation. Upon notification that a TMQ lien has been 
established, the producer marketing card (MQ-76) or dealer 
identification card (MQ-79-2) shall be returned immediately to the 
issuing office for recording the TMQ lien. Failure to immediately return 
the applicable card will result in FSA notifying all registered 
warehouse operators and dealers of the TMQ lien information and of their 
responsibilities for collecting the TMQ lien. The card shall be promptly 
returned to the producer or dealer after it is annotated with the TMQ 
lien.

[57 FR 43581, Sept. 21, 1992]



Sec. 723.312  Request for refund of penalty.

    Any person who paid any penalty may request the return of the amount 
of any such payment which is in excess of the amount required to be 
paid. Such request shall be filed on Form MQ-85, Farm Record and 
Account, with the county FSA office within 2 years after the payment of 
the penalty. Approval of return shall be by the county FSA committee, 
subject to the approval of the State FSA executive director.



Sec. 723.313  Identification of marketings.

    (a) Burley or flue-cured tobacco. With respect to:
    (1) Identification of producer marketings. Each auction and 
nonauction marketing of burley or flue-cured tobacco shall be identified 
by a valid marketing card, Form MQ-76, issued for the farm. The reverse 
side of the marketing card shall show in pounds:
    (i) 103 percent of quota,
    (ii) Balance of 103 percent of quota after each sale, and
    (iii) Date of each sale.
    (2) Cross-references of tobacco sale bill number to prior sale bill. 
Each warehouse operator, for each lot of tobacco

[[Page 150]]

weighed in on the warehouse floor for sale the same day, shall cross-
reference the tobacco sale bill to each prior tobacco sale bill for 
tobacco identified by the same marketing card. To accomplish the cross-
reference, each other tobacco sale bill number shall be entered by the 
warehouse operator in the ``Remarks'' space on the tobacco sale bill, on 
all copies, at the time such tobacco is weighed at the warehouse.
    (3) Recording producer sale. Each producer sale at auction shall be 
recorded on Form MQ-72-1, Report of Tobacco Auction Sale, and each 
producer sale at nonauction shall be recorded on a Form MQ-72-2, Report 
of Tobacco Nonauction Purchase. For producer sales at nonauction, the 
dealer purchaser shall execute Form MQ-72-2 and shall enter the data on 
Form MQ-76. For producer sales at auction, Form 72-1 and Form MQ-76 
shall be executed only by the FSA marketing recorder.
    (4) Identification of dealer marketings of resale tobacco. Each 
auction and nonauction marketing of resale tobacco in the current year, 
such tobacco shall be identified by a dealer identification card, Form 
MQ-79-2, issued to the dealer for use in the current marketing year.
    (b) Dark air-cured, fire-cured, or Virginia sun-cured tobacco. With 
respect to dark air-cured, fire-cured, or Virginia sun-cured tobacco:
    (1) Identification of producer marketings. Each marketing of such 
kind of tobacco from a farm shall be identified by a valid marketing 
card issued for the farm for the respective kind of a tobacco, either an 
MQ-76 or MQ-77 (including sale memo). With respect to each nonauction 
sale from:
    (i) A within quota farm a check mark shall be entered on the inside 
of MQ-76, and
    (ii) An excess farm for which an MQ-77 is issued, an executed bill 
of nonauction sale shall be prepared, and such bill of nonauction sale 
shall be delivered to a marketing recorder or other person who is 
authorized to issue sale memos.
    (2) Suspended sale and sales without marketing cards. Any suspended 
sale, which is not identified by an MQ-76 or MQ-77 (including a sale 
memo) on or before the last warehouse sale day of the marketing season, 
or within 4 weeks after the date of marketing, whichever comes first, 
shall be identified by MQ-82, Sale Without Marketing Card, as a 
marketing of excess tobacco. Form MQ-82 shall be executed only by a 
marketing recorder or other representative of the State FSA executive 
director.
    (3) Other persons authorized to execute MQ-76 or MQ-77 (including 
sale memo). (i) A warehouse operator who has been authorized during the 
current marketing year on MQ-78, Tobacco Warehouse Organization, may 
record a sale on MQ-76 or MQ-77 (including the issuance of a sale memo) 
to identify a sale for a farm if a marketing recorder is not available 
at the warehouse when the marketing card is presented.
    (ii) Any warehouse operator, or dealer, who engages in the business 
of acquiring scrap tobacco from farmers, and who has been authorized on 
MQ-78, may for each purchase of scrap tobacco execute an MQ-76, or MQ-77 
(including a sale memo if the bill of nonauction sale has been 
executed).
    (4) Verification of sales processed during the absence of marketing 
recorder. Any person authorized on MQ-78 to act as a marketing recorder 
shall promptly present to a marketing recorder for verification each 
warehouse bill (floor sheet) processed and identified by an MQ-76 or MQ-
77 (including any sale memos) executed in the absence of a marketing 
recorder.
    (5) Withdrawal of approval to act as marketing recorder. The 
authorization on MQ-78 for persons may be withdrawn by the State FSA 
executive director if such action is determined to be necessary to 
properly enforce the regulations in this part.
    (c) Separate display on auction warehouse floor. Any warehouse 
operator upon whose floor more than one kind of tobacco is offered for 
sale at public auction shall for each respective kind of tobacco:
    (1) Display it in separate areas on the auction warehouse floor.
    (2) Use a lot ticket that is distinguishably different from the lot 
ticket used to identify any other kind of tobacco.
    (3) Identify each lot by a lot ticket clearly showing the kind of 
tobacco.

[[Page 151]]

However, if where the tobacco is represented to be a nonquota kind the 
lot ticket shall have imprinted thereon the type designation for the 
kind of quota tobacco normally marketed in the area.
    (4) Make and keep records that will ensure a separate accounting and 
reporting of each of such kinds of tobacco (quota and nonquota) sold at 
auction over the warehouse floor.
    (d) Identification of returned first sale (producer) tobacco. When 
resold at auction, tobacco which has been previously sold and returned 
to the warehouse by the buyer is resale tobacco. When such tobacco is 
resold by the warehouse operator, it shall be identified as leaf account 
resale tobacco.
    (e) Verification of penalties by warehouse operators or dealers. 
Each sale of tobacco by a producer which is subject to penalty and which 
has been recorded by a marketing recorder shall be verified by a 
warehouse operator or dealer to determine whether the amount of penalty 
shown to be due has been correctly computed. Such warehouse operator 
shall not be relieved of any liability for the amount of penalty due 
because of any error which may occur in computing the penalty and 
recording the sale.
    (f) Check register. The serial number of the tobacco sale bill(s) 
shall be recorded by the warehouse operator on the check register or 
check stub for the check written covering the auction sale of tobacco by 
a producer.
    (g) Marketing card and sale memo for cigar tobacco. With respect to 
cigar tobacco:
    (1) If a sale of producer's cigar tobacco to a buyer is not 
identified with a marketing card (MQ-76 or MQ-77) issued for the farm, 
including a sale memo from MQ-77, by the end of the sale day and 
recorded and reported on MQ-79 (CF&B), Buyers Record, by the tenth day 
of the calendar month next following the month during which the sale 
occurred, the marketing shall be identified on MQ-79 (CF&B) as a 
marketing of excess tobacco and reported not later than the tenth day of 
the calendar month next following the month during which the sale date 
occurred, the marketing shall be identified on MQ-79 (CF&B) as a 
marketing of excess tobacco, and reported not later than the tenth day 
of the calendar month next following the month during which the sale day 
occurred.
    (2) Verification of penalty by buyer. Each excess sale memo issued 
by a buyer shall be verified by the buyer to determine whether the 
amount of penalty shown to be due has been correctly computed and such 
buyer shall not be relieved of any liability with respect to the amount 
of penalty due because of any error which may occur in issuing the sale 
memo.



 Subpart D--Recordkeeping, Reporting Requirements, Marketing Penalties, 
                           and Other Penalties



Sec. 723.401  Registration of burley and flue-cured tobacco warehouse operators and dealers.

    (a) Warehouse registration. For burley and flue-cured tobacco, any 
warehouse operator dealing in either flue-cured or burley tobacco shall 
be registered with the U.S. Department of Agriculture. Such registration 
will be handled by the North Carolina State FSA Office, Raleigh, North 
Carolina.
    (b) Dealer registration. Each person who expects to deal in burley 
or flue-cured tobacco during a marketing year shall complete a Dealer 
Application and Agreement (MQ-79-2-A) annually, except dealers who are 
exempt from maintaining or filing records and reports as provided in 
Sec. 723.405. The application must be filed after March 1 of the 
calendar year in which the marketing year begins, and shall be filed 
with the State FSA office or, if designated by the State Executive 
Director, the county FSA office for the county where the dealer resides 
or where the dealer's principal business is located. The applicant shall 
provide the names, and such other information as required by the Deputy 
Administrator, of all other persons who will be authorized to use the 
dealer identification card (MQ-79-2). A dealer entity is limited to one 
dealer registration number. Persons affiliated with another dealer of 
the same household shall not be eligible for a dealer registration 
number unless the Deputy Administrator determines that the entities or

[[Page 152]]

individuals are separate and independent.
    (c) Approval of application and agreement. The State Executive 
Director of the State FSA office shall, under the direction of the 
Deputy Administrator, be the approving official for the Dealer 
Application and Agreement. If the approving official has reason to doubt 
that the applicant is a bona fide dealer or intends to become a bona 
fide dealer, the application may be disapproved until such time as the 
applicant furnishes information satisfactory to the State FSA committee 
that the application is bona fide. An application shall also be 
disapproved for any person who has failed to file reports or permit 
inspections required in Sec. 723.404(d)(9). A person whose application 
is disapproved shall be provided with the opportunity to appeal the 
disapproval and to furnish information to substantiate the application 
or to comply with other requirements in Sec. 723.404.
    (d) Letter of credit or bond--(1) General requirements. Effective 
with the beginning of the 1992 marketing year for burley tobacco and 
with the 1993 marketing year for flue-cured tobacco, in order to secure 
the payment of penalties as may be incurred by a dealer during the 
marketing year for which approval as a dealer is sought, each dealer, as 
a condition for final approval to handle tobacco, must present a letter 
of credit or bond which is determined by the Deputy Administrator to be 
acceptable security and which meets the dollar requirements of this 
section. The letter of credit or bond shall be submitted to the State 
FSA office where the dealer is registered. A letter of credit must have 
been issued by a commercial bank insured by the Federal Deposit 
Insurance Corporation. A bond must be a surety bond insured by a bonding 
company or agent licensed in the State where the dealer is registered. 
The letter of credit or bond must be in the form and have the content 
specified by the Deputy Administrator. A letter of credit or bond shall 
be furnished annually after initial approval of the dealer's application 
and notification of the amount required. The dealer identification card 
shall not be issued until it is determined that acceptable security has 
been presented.
    (2) Amount required. The base amount of the letter of credit or bond 
shall be the larger of:
    (i) $25,000 or
    (ii) the sum of the amounts determined by multiplying the respective 
pounds of burley and flue-cured tobacco purchased by the dealer during 
the preceding marketing year by 10 percent of the marketing year penalty 
rate for the respective kind of tobacco involved for the relevant year 
with the resulting amount not to exceed $100,000.

A dealer shall submit the letter of credit or bond for the base amount 
plus an amount equal to the amount of any unpaid tobacco marketing quota 
penalty owed by such dealer. The amount shall also be increased by 
$5,000 for each 10,000 pounds of tobacco for which the dealer has failed 
to file reports or filed false reports in violation of Sec. 723.404 for 
the 3 previous marketing years. The Deputy Administrator may reduce the 
amount of security required in order to avoid undue hardship and shall 
make provision for release of the letter of credit or bond at the 
appropriate time.
    (e) Suspension and surrender of dealer card. The dealer 
identification card shall be surrendered upon demand of the FSA. Failure 
to comply with the provisions of Secs. 723.404 or 723.414 or with other 
material provisions of this part shall be cause for suspension of the 
dealer identification card and the dealer shall be given 15 days to 
complete all necessary compliance measures or to show cause why the card 
should not remain suspended.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21443, May 9, 1991; 57 
FR 43581, Sept. 21, 1992]



Sec. 723.402  Warehouse authorized to retain producer marketing cards between sales.

    (a) General. Notwithstanding any other provisions of this part, to 
facilitate the scheduling of farmer's tobacco to the warehouse, 
marketing cards, with the permission of the producer, may be retained at 
the warehouse between sales even though no producer on the farm for 
which the card is issued has tobacco on the floor for sale or to be 
settled for, as provided in this section.

[[Page 153]]

    (b) Warehouse eligible to retain producers marketing cards between 
sales. A warehouse shall be eligible to retain producer marketing cards 
between sales if the operator thereof shall:
    (1) Execute and file on a form approved by FSA a written request 
with the State FSA committee (or county FSA committee if designated by 
the State FSA committee).
    (2) Agree to be responsible to FSA for an amount of money equal to 
that amount that may be assessed against any producer as marketing quota 
penalties, if the marketing that is the basis of assessment of penalty 
occurred while the warehouse was authorized to have custody of the 
marketing card, for:
    (i) Burley or flue-cured tobacco for any overmarketing resulting 
from errors made at the warehouse in entering ``balance after sale'' 
pounds on the producer's marketing card or failure to deduct pounds sold 
on producer's marketing card.
    (ii) Tobacco falsely identified for marketing by use of the 
producer's marketing card.
    (iii) Producer's failure to account for any tobacco marketed by use 
of the producer's marketing card.
    (iv) Any burley or flue-cured tobacco marketed at the warehouse in 
excess of 103 percent of quota as shown on the producer's marketing 
card.
    (3) Agree to maintain an accurate and up-to-date journal containing 
a listing of all producer marketing cards retained by the warehouse to 
facilitate the scheduling of farmer's tobacco. The journal shall show 
for each card retained the:
    (i) Name of the operator;
    (ii) Serial number of farm;
    (iii) Marketing card number, if applicable;
    (iv) Date marketing card obtained from producer; and
    (v) Date marketing card returned to producer.

Such journals shall be maintained for the length of time and under the 
conditions required for other warehouse records.
    (4) Agree to return the marketing card to the producer at any time 
the producer may so request, or in the absence of a request, return it 
to the producer within 7 days after the close of the warehouse for the 
season.
    (5) Agree that this authorization may be terminated by FSA for 
failure to comply with provisions of this agreement.
    (c) Penalties considered to be the responsibility of warehouse 
operators. Notwithstanding any other provision of this part, a warehouse 
operator who executes and files a written request with the State FSA 
committee (or county FSA committee if designated by the State FSA 
committee) for authorization to retain producer's marketing cards at the 
warehouse, with grower permission, shall be responsible to FSA for an 
amount of money equal to the amount that may be assessed against the 
producer as marketing quota penalties if the marketing that is the basis 
of such assessment occurred while the warehouse was authorized to have 
custody of the marketing card, for:
    (1) Any burley or flue-cured tobacco overmarketings resulting from 
errors made at the warehouse in entering ``balance after sale'' pounds 
on the burley or flue-cured producer's marketing card or failure to 
deduct pounds sold on the producer's marketing card. However, the 
warehouse operator shall not be responsible for any penalty under this 
subparagraph, if such penalty would not have been assessed against the 
producer in accordance with Sec. 723.409(e) of this part.
    (2) Tobacco falsely identified for marketing by use of the 
producer's marketing card.
    (3) Producer's failure to account for any tobacco marketed by use of 
such producer's marketing card.
    (4) With respect to burley or flue-cured producers, tobacco marketed 
at the warehouse in excess of 103 percent of quota as shown on the 
producer's marketing card.



Sec. 723.403  Auction warehouse operators' records and reports.

    (a) Report on Form MQ-78, Tobacco Warehouse organization. Each 
warehouse operator shall annually, prior to opening of auction markets, 
furnish FSA an executed Form MQ-78 showing:
    (1) Form of business organization.

[[Page 154]]

    (2) Names and addresses of warehouse officials and bookkeeper.
    (3) Names and addresses of other warehouses in which the officials 
and bookkeepers have a financial interest.
    (4) Names and addresses of custodians of warehouse records, 
including their location.
    (b) Separate records and reports. Each auction warehouse operator 
shall keep the records and make the reports separately for each quota or 
nonquota kind of tobacco as provided in this section.
    (c) Record of marketing. Each warehouse operator shall:
    (1) Auction or nonauction sale. Keep such records as will enable the 
warehouse operator to furnish the following information to State FSA 
office with respect to each sale of tobacco made at such person's 
warehouse:
    (i) The name of the operator of the farm on which the tobacco was 
produced and the name of the producer, in the case of a sale by a 
producer.
    (ii) The name of the seller in the case of a resale.
    (iii) Date of sale.
    (iv) Number of pounds sold.
    (v) Amount of any penalty and the amount of any deduction for such 
penalty from the price paid the producer.
    (vi) With respect to each individual lot of tobacco constituting an 
auction sale, the:
    (A) Name of purchaser.
    (B) Number of pounds sold.
    (C) Gross sale price.
    (2) Separate account records. Maintain records of all purchases and 
resales of tobacco by the warehouse operator to show a separate account 
for:
    (i) Nonauction purchases by or on behalf of the warehouse operator 
of farmer-owned tobacco.
    (ii) Purchases and resales of:
    (A) Leaf account tobacco.
    (B) Floor sweeping tobacco.
    (d) Tobacco sale bill for burley and flue-cured tobacco. (1) Each 
burley or flue-cured tobacco warehouse operator shall use tobacco sales 
bills furnished at the warehouse operator's expense showing, as a 
minimum, the following information:
    (i) Tobacco sale bill number;
    (ii) For flue-cured tobacco only, registration number assigned the 
warehouse by the Department;
    (iii) Name and address of warehouse where sale is held;
    (iv) For flue-cured tobacco only, the identification of other 
producers having an interest in the tobacco;
    (v) Date of sale;
    (vi) Number of pounds in each lot;
    (vii) Name and address of seller; and
    (A) Farm number (including State and county codes) for producer 
tobacco, and
    (B) Dealer registration number for resale tobacco;
    (viii) Identification number, if available, for each lot of tobacco 
to be offered for sale;
    (ix) Poundage balance before sale for producer tobacco based on 103 
percent of farm quota;
    (x) Name or symbol of purchaser of each lot which is sold;
    (xi) Gross number of pounds sold;
    (xii) Sale price for each lot and gross sale price for all lots 
sold;
    (xiii) Nonauction purchases by the warehouse holding the sale;
    (xiv) Tobacco grade for tobacco consigned to price support;
    (xv) The buyer's grade symbol for tobacco bought by private buyers.
    (xvi) The letters ``N/A'' in the buyer and grade space for 
nonauction purchases by the warehouse.
    (xvii) Marketing quota penalty collected; and
    (xviii) Amount withheld from sale to cover claims due the United 
States.
    (2) At the end of each sale day, the tobacco sale bills shall be 
sorted and filed in numerical order by sale dates, and lot tickets shall 
be filed in an orderly manner by sale dates or by numerical order.
    (e) Identification of tobacco for marketing--(1) Marketing card. 
Each marketing of tobacco from a farm in any State for which a farm 
marketing quota has been established for any kind of tobacco shall be 
identified by a marketing card issued for the farm on which such tobacco 
was produced (unless prior to the marketing of such tobacco an AMS 
inspection certificate is obtained showing that the tobacco offered for 
sale is a kind of tobacco not subject to marketing quotas).
    (2) Recording farm identification. For burley or flue-cured tobacco, 
at the time the tobacco is weighed in, the

[[Page 155]]

warehouse operator shall record on the tobacco sale bill, the State and 
county codes and the farm serial number from the marketing card issued 
for the farm from which the tobacco is to be marketed.
    (3) Return of marketing card. For tobacco that is to be sold at 
auction, the warehouse operator shall retain the marketing card until 
the producer has been paid for the sale of the tobacco or the tobacco is 
removed from the warehouse by the producer at which time the marketing 
card shall be returned to the producer. In any case where a producer's 
marketing card is found in the possession of a warehouse operator, and 
no producer on the farm for which the card is issued has tobacco on the 
floor for sale, or tobacco for which settlement is not yet completed, 
such card will be picked up by an FSA representative for return to the 
producer. The warehouse operator shall be responsible for the 
safekeeping and proper use of the marketing card during such person's 
retention of the marketing card.
    (4) No price support. For burley or flue-cured tobacco, if tobacco 
is to be marketed at auction from a farm for which a marketing card is 
issued bearing the notation ``No Price Support'', the warehouse operator 
shall enter the same notation on the tobacco sale bill at the time the 
tobacco is weighed in for sale. The warehouse operator shall prepare a 
separate tobacco sale bill to cover any tobacco which represents more 
than 103 percent of the effective farm marketing quota and the notation 
``No Price Support'' shall be shown on such tobacco sale bill. The sale 
of such tobacco shall be considered a separate sale.
    (5) Nonauction purchase. The warehouse operator shall enter the 
letters ``NA'' on each line of a tobacco sale bill on which there is 
recorded tobacco purchased by or for the warehouse at nonauction sale 
and shall record on all such tobacco sale bills:
    (i) For burley or flue-cured tobacco, the farm serial number from 
the marketing card that is used to identify the tobacco at the time of 
the nonauction purchase.
    (ii) For tobacco other than burley or flue-cured, the serial number 
of the marketing card that is used to identify the tobacco at the time 
of the nonauction purchase.
    (6) Copy of sale bill. The warehouse operator shall furnish to the 
producer a copy of the tobacco sale bill bearing the letters ``NA'' for 
any lot of such tobacco purchased by the warehouse operator.
    (7) Lot ticket. At the time tobacco is weighed for marketing, the 
warehouse operator shall record the weight of the lot of tobacco on the 
tobacco sale bill and on the lot ticket. The sale bill number on which 
the lot of tobacco is recorded shall be recorded on the lot ticket. If 
the marketing card which is presented to identify the tobacco at weigh-
in bears the notation ``No Price Support,'' the same notation shall be 
entered by the warehouse operator on the lot ticket for each lot of 
tobacco which is identified with the same marketing card.
    (8) Recording serial number of marketing card. For tobacco other 
than burley or flue-cured, before the tobacco is offered for sale, the 
warehouse operator shall record, on the sale bill, the serial number of 
the Form MQ-76 or MQ-77 issued for the farm from which the tobacco is to 
be marketed at auction.
    (9) Recording sale bill number. For tobacco other than burley or 
flue-cured, the serial number of the sale bill shall be recorded:
    (i) By the warehouse operator on the check register or check stub 
from the check written to cover an auction sale of tobacco by a 
producer.
    (ii) On the inside of the marketing card by the marketing recorder 
or warehouse operator for each sale of tobacco by a producer.
    (10) Burley or flue-cured marketings. A marketing card used to cover 
a sale of burley or flue-cured tobacco shall show on the reverse side 
the poundage balance of the ``103 percent of quota.''
    (i) Auction sale. At the time of weigh-in the tobacco sale bill 
shall show the poundage balance of 103 percent of the farm's quota. The 
tobacco sale bill shall show the pounds on which penalty is due, and the 
amount of penalty.
    (ii) Nonauction sale to a warehouse operator at the warehouse. If 
the tobacco sale bill includes both an auction sale

[[Page 156]]

and a nonauction sale such combined pounds shall be used to compute and 
reflect the balance of the ``103 percent of quota.'' The tobacco sale 
bill shall show the pounds on which penalty is due and the amount of the 
penalty.
    (iii) Nonauction country purchase by a warehouse operator. The 
warehouse operator shall deduct, from the balance of the ``103 percent 
of quota'' entry on the marketing card, the pounds of tobacco purchased 
as a nonauction country purchase. In addition, each warehouse operator 
shall record on Form MQ-79 and on Form MQ-72-2, Report of Tobacco 
Nonauction Purchase, each nonauction country purchase of tobacco made by 
such warehouse operator. The data to be reported on Form MQ-72-2 is set 
forth in Sec. 723.404 of this part.
    (11) Sale memo and bill of nonauction sales. For tobacco other than 
burley or flue-cured, a record of sales on Forms MQ-76, MQ-77, or MQ-82, 
Sale Without Marketing Card (including sale memo from MQ-77 or MQ-82), 
shall be obtained by a warehouse operator to cover each marketing of 
tobacco from a farm through a warehouse and each nonauction sale of 
tobacco purchased by or for the warehouse operator including scrap 
tobacco obtained as a result of providing curing space or stripping 
space for farmers. Each MQ-76 and MQ-77 (including sale memo) shall be 
executed as follows:
    (i) Auction sale. An auction sale identified by MQ-76 shall show in 
the spaces provided thereon, the sale bill number, check-mark to show 
the sale was by auction, a check-mark to show nonauction for purchases 
identified ``NA'' on the sale bill, pounds sold, name and address of 
warehouse, and date of sale. In addition, each sale memo issued from MQ-
77 to cover an auction sale shall show on the first page thereof in all 
of the spaces provided therefor, the warehouse bill number, pounds sold, 
amount of penalty due, name and address of warehouse, and date of sale.
    (ii) Nonauction sale to a warehouse operator who does not prepare a 
sale bill. An MQ-76 used to cover a nonauction sale of tobacco to a 
warehouse operator who does not prepare a sale bill to cover the sale 
shall show, a check-mark to indicate sale was by nonauction, pounds 
sold, name and address of the warehouse, and date of sale. When an MQ-77 
is used under this paragraph, a sale memo shall be executed, including 
the signature of the producer on the reverse side.
    (iii) Nonauction sale to a warehouse operator who prepares a sale 
bill. When a warehouse operator purchases:
    (A) All the delivery of a producer's tobacco at a nonauction sale 
and prepares a sale bill to cover the purchase, on MQ-76 there shall be 
shown the bill number, check-mark to show nonauction purchases, pounds 
sold, name and address of warehouse, and date of sale. When an MQ-77 is 
used a sale memo shall be executed, including the signature of the 
producer on the reverse side.
    (B) Part of a delivery of a producer's tobacco as a nonauction 
purchase and the remainder of the tobacco is sold at auction, if such 
tobacco is identified by an MQ-76 the Record of Sales shall be completed 
to show the name and address of the warehouse, the date of sale, the 
sale bill number, check-mark under both auction and nonauction, and, 
under ``Lbs. Sold,'' the total number of pounds covered by the entire 
delivery. If the sale is identified by an MQ-77, the sale memo (front) 
shall be completed to show the sale bill number, the total number of 
pounds covered by the entire delivery under ``Lbs. Sold,'' the amount of 
penalty due, name and address of the warehouse, and the date of sale. In 
addition, the reverse side of the sale memo shall show the number of 
pounds sold at nonauction.
    (f) Nonquota tobacco or quota tobacco of a different kind. If 
tobacco is presented for sale that is represented to be nonquota tobacco 
or should there be a question as to what kind of quota tobacco is being 
offered for sale, an inspection shall be obtained from the Agricultural 
Marketing Service of this Department (AMS) after the tobacco is weighed 
and in line for sale. The lot ticket for the tobacco shall be cross-
referenced to the sale bill by sale bill number and date. The sale bill 
shall show the producer's name and address and the State and county code 
and farm number of the farm on which the

[[Page 157]]

tobacco was produced. If an AMS inspection shows that a lot of tobacco 
is of a different kind than that identified by the lot ticket, such 
tobacco shall be deleted from the original sale bill and a revised sale 
bill prepared. Copies of the lot ticket and sale bill shall be furnished 
to the State FSA office at the end of the sale day.
    (g) Labeling tobacco sale bill for resale tobacco. In the case of 
resales, each sale bill shall show ``resale'' and;
    (1) For dealers, the name of the dealer making each resale; and
    (2) For the warehouse, the name of the warehouse and either ``floor 
sweepings'' or ``leaf account'' tobacco.
    (h) Suspended sale record. (1) Any tobacco sale bill covering sale 
of tobacco for which a valid marketing card or dealer identification 
card was not presented at the end of the sale day shall be given to a 
marketing recorder who shall stamp such bills, ``Suspended'', and shall 
handle according to instructions provided by the Deputy Administrator.
    (2) When cleared, such suspended sale shall show ``suspended-
cleared'' and date cleared. If a suspended sale is not cleared from 
suspension by the last auction sale day for the warehouse for the season 
(or for burley tobacco only, within 7 days of the sale if such date is 
earlier), it shall be considered a sale of excess tobacco and penalty at 
the full rate shall be remitted by the warehouse operator.
    (i) Payee to be shown on auction warehouse check. Any auction 
warehouse which issues a check to cover the auction or nonauction sale 
of tobacco shall issue such check only in the name of the payee. A 
warehouse check shall not be issued in the name of the seller and 
bearer, for example ``John Doe or Bearer.''
    (j) Warehouse entries on other dealer's reports. Each warehouse 
operator shall record, or have the dealer record, on a Form MQ-79 the 
total purchases and resales made by each such dealer or other warehouse 
operator during each sale day at the warehouse. Warehouse operators 
shall sign the Form MQ-79 on the same line as the transaction is 
recorded when a dealer resells tobacco at the warehouse. If any tobacco 
resold by the dealer and carried over by the dealer from a crop produced 
prior to the current crop, an entry shall be made on the MQ-79 to 
clearly show such fact.
    (k) Warehouse data for burley or flue-cured tobacco. (1) Each 
operator of a burley or flue-cured tobacco auction warehouse shall 
prepare at the end of each sale day a report on MQ-80, Daily Warehouse 
Sales Summary, showing for each sale day:
    (i) For each manufacturer, buyer, order buyer, and any tobacco 
cooperative, pounds of tobacco purchased at auction (consigned in the 
case of tobacco cooperatives).
    (ii) The sum of the items for paragraph (k)(1)(i) of this section.
    (iii) Resales at auction for each person listed under paragraph 
(k)(1)(i) of this section.
    (iv) For each dealer subject to reporting purchases and resales on 
MQ-79, as originally billed, the total pounds of tobacco purchased at 
auction, and resales at auction.
    (v) The total pounds purchased at auction at the warehouse for the 
leaf account.
    (vi) The total pounds purchased at nonauction at the warehouse for 
the leaf account.
    (vii) The sum of the total pounds for paragraphs (k)(v) and (vi) of 
this section.
    (viii) The total leaf account resales.
    (ix) The total floor sweeping resales.
    (x) The sum of the total purchases for paragraphs (k)(1)(ii), (iv), 
and (vii) of this section.
    (xi) The sum of the total resales for paragraphs (k)(1)(ii), (iv), 
(viii) and (ix) of this section.
    (xii) The totals of the purchases column on the Form MQ-79 
representing the nonauction purchases for the warehouse leaf account.
    (xiii) The totals of the resales column on Form MQ-79 representing 
the nonauction resales (including floor sweepings nonauction sales) by 
the warehouse.
    (xiv) For each warehouse sale of excess tobacco from a farm, the 
applicable farm number with daily remittance of the penalty due to 
accompany Form MQ-72-1.

[[Page 158]]

    (xv) For each dealer, at the time of settlement having excess resale 
tobacco, the applicable dealer identification number with daily 
remittance of the penalty due.
    (2) As to the information required to be entered on MQ-80, Daily 
Warehouse Sales Summary, by the marketing recorder, the warehouse 
operator shall keep and make available such records as will enable the 
marketing recorder to enter thereon:
    (i) The total number of Forms MQ-72-1 for the sale day and the sum 
of pounds sold, and
    (ii) The total number of suspended sale bills and the sum of such 
pounds sold.
    (3) At the end of the season, each warehouse operator shall:
    (i) Report on the final MQ-80 for the season the quantity of leaf 
account tobacco and floor sweepings, if any, on hand and its location, 
provided further that if on inspection it is determined that there is 
damaged tobacco in the warehouse or otherwise on hand, no carryover 
credit for the next marketing year shall be allowed for the damaged 
tobacco and the amount of pounds of damaged tobacco shall be deducted 
from the operator's purchase credit for the current year,
    (ii) Permit its inspection by a representative of FSA, and
    (iii) Provide for the weighing of such tobacco, to be witnessed by 
an FSA representative, and furnish to such representative a 
certification as to the actual weight of such tobacco. After the weight 
of such tobacco has been obtained, it shall be considered as the 
official weight for comparing purchases and resales for the purpose of 
determining the amount of penalty, if penalty is due.
    (4) The warehouse operator shall furnish to the marketing recorder a 
copy of each executed MQ-80.
    (5) Before the next marketing season begins, carryover tobacco 
reported by the warehouse operator as provided in paragraph (k)(3) of 
this section shall be reinspected by a representative of FSA.
    (i) If the reinspection indicates an amount of carryover tobacco 
different from that amount determined by the initial inspection, the 
warehouse operator shall:
    (A) Provide for the weighing of such tobacco which shall be 
witnessed by a representative of FSA.
    (B) Furnish to such representative at the time of weighing a 
certification as to the actual weight of the tobacco.
    (ii) If the FSA representative determines that the weight of the 
tobacco is different, by reweighing, than the amount reported on the 
initial certification, the initial weight, together with the reweighed 
quantity after taking into consideration any purchases and resales that 
occurred subsequent to the initial certification as provided in 
paragraph (k)(3) of this section, shall be used for the purpose of 
determining the amount of penalty, if penalty is due.
    (iii) The reweighed quantity shall be the official pounds to be 
credited to the account as carryover tobacco.
    (iv) If upon reinspection by a representative of FSA, there is an 
amount of tobacco determined to be damaged tobacco, the pounds of 
damaged tobacco shall be deducted from the purchase credit, if not done 
so previously, and no carryover credit shall be allowed for such damaged 
tobacco for the next marketing year.
    (l) Warehouse data for tobacco other than burley or flue-cured. (1) 
Each operator of a tobacco auction warehouse, other than the operator of 
a burley or flue-cured auction warehouse, shall prepare and promptly 
forward at the end of each sale day to the State FSA office a report on 
MQ-80, Daily Auction Warehouse Report, showing for each sale day, unless 
otherwise stated below:
    (i) For each dealer or buyer as originally billed, the total pounds 
of tobacco purchased at auction and resales at auction on the warehouse 
floor.
    (ii) For any association as originally billed, the total pounds and 
gross amount of loan tobacco acquired at auction, and resales at 
auction, if any, on the warehouse floor.
    (iii) The total pounds of:
    (A) Leaf account purchases at auction on the warehouse operator's 
own floor,
    (B) Leaf account purchases at nonauction sale for which a floor 
sheet is prepared,

[[Page 159]]

    (C) All leaf account resales at auction on the warehouse operator's 
own floor, including resales of tobacco from the warehouse operator's 
buyers corrections account, and
    (D) All resales at auction on the warehouse operator's own floor of 
floor sweepings which accumulated on the warehouse operator's own floor.
    (iv) The respective sums of the purchases, including loan tobacco, 
and resales for paragraphs (l)(1)(i), (ii), and (iii) of this section.
    (v) The computed total of first sales at auction on the warehouse 
floor.
    (vi) The warehouse gross sale pounds for the day as billed to 
buyers.
    (vii) The pounds on warehouse check register if shown thereon, and
    (viii) The total pounds of the resales,
    (ix) On the report for the last sale day for the season, the pounds 
of all tobacco on hand whether such tobacco represents leaf account 
tobacco or floor sweepings which accumulated on the warehouse operator's 
own floor.
    (x) For each warehouse sale of excess tobacco from a farm, the 
applicable sale memo and numbers thereof with remittance of the penalty 
due as shown thereon.
    (2) As to information required to be entered on MQ-80, Daily Auction 
Warehouse Report, by the marketing recorder, the warehouse operator 
shall keep and make available such records as will enable the marketing 
recorder to enter thereon:
    (i) For each sale identified by an MQ-76, MQ-77 (including sale 
memo), or MQ-82, Sale Without Marketing Card, the pounds sold;
    (ii) For each sale suspended, the warehouse bill(s) number and 
pounds sold;
    (iii) For each sale cleared from suspension, the MQ-76 number or, 
for MQ-77 or MQ-82, the sale memo number and the date of clearance.
    (3) When a producer rejects the sale of a lot of tobacco, and the 
tobacco has been billed out and the bills presented to the buyer, the 
warehouse operator shall not change the marketing card, or Form MQ-80 on 
which the sale was reported. If the warehouse operator gains possession 
of the tobacco and it is resold by such warehouse operator, it shall be 
identified as resale tobacco.
    (4) In balancing first sales (represented by marketing recorder's 
total) with computed first sales (bill-out total minus resales as 
reported by the warehouse operator) the State FSA executive director is 
authorized to approve reports with variance not to exceed one-half of 1 
percent of such pounds.
    (5) At the end of the season, each warehouse operator shall:
    (i) Report on the final MQ-80 for the season the quantity of leaf 
account tobacco and floor sweepings, if any, on hand and its location,
    (ii) Permit its inspection by a representative of FSA, and
    (iii) Provide for the weighing of such tobacco (to be witnessed by a 
representative of FSA) and furnish to such representative a 
certification as to the actual weight of such tobacco. After the weight 
of such tobacco has been obtained, it shall be considered as the 
official weight for comparing purchases and resales for the purpose of 
determining the amount of penalty, if penalty is due. Separate data 
shall be reported for floor sweeping tobacco.
    (m) Bill-out invoice. For flue-cured tobacco when the tobacco has 
been sold at auction, the bill-out invoice to the buyer shall include 
the warehouse registration number (warehouse code), sale bill number, 
and line number on which the lot of tobacco was recorded on the sale 
bill.
    (n) Maintaining copies of bill-out invoices to purchaser or daily 
summary journal sheet to reflect daily transactions. For each marketing 
year, the warehouse operator shall maintain copies of the bill-out 
invoice to the purchaser by grades showing the pounds purchased. In lieu 
of this requirement, the warehouse operator may prepare and maintain for 
each sale day on a current basis a daily summary journal sheet to 
reflect for each purchaser (including warehouse leaf account or other 
similar account) pounds and dollar amounts for:
    (1) Tobacco originally billed to the purchaser.
    (2) Mathematical billing errors and corrections (added and deducted) 
from purchaser's adjustment invoices.

[[Page 160]]

    (3) Short (deducted) and long (added) weights from purchaser's 
adjustment invoices.
    (4) Short (deducted) and long (added) lots from purchaser's 
adjustment invoices.
    (5) Net tobacco received and paid for by purchase.
    (o) Handling rejected (producer) sale after bill-out. Where a 
producer rejects the sale of a lot of tobacco, and the tobacco has been 
billed-out and bills presented to the buyer, the warehouse operator 
shall not change the MQ-76 or MQ-80 on which the sale was reported. If 
the warehouse operator gains possession of the tobacco, and it is resold 
by such warehouse operator, it shall be identified as resale tobacco.
    (p) Report to county FSA office of long weights and long lots. Each 
warehouse operator shall report to the county FSA office or marketing 
recorder long weights and long lots of producer tobacco (first sales) 
for which the farmer has been paid.
    (q) Record and report of warehouse operator's leaf account purchases 
and resales not on such warehouse operator's floor. (1) Each warehouse 
operator shall keep a record and make reports on MQ-79, Dealer's Report, 
showing:
    (i) All nonauction purchases of tobacco, except nonauction purchases 
at such warehouse operator's warehouse which are reported on MQ-80.
    (ii) All purchases and resales of tobacco at public auction through 
warehouses other than such operator's own warehouse.
    (iii) All nonauction resales of tobacco.
    (2) Form MQ-79 shall be prepared and a copy, including copies of 
Form MQ-72-2 for all nonauction purchases of burley or flue-cured 
tobacco, forwarded to the State FSA office not later than the end of the 
calendar week (at the end of each sale day during the auction season for 
such warehouse) in which such tobacco was purchased or resold.
    (3) If tobacco is purchased prior to the opening of the local 
auction market, an MQ-79 shall be prepared and a copy, together with 
copies of MQ-72-2 for all nonauction purchases of burley or flue-cured 
tobacco, forwarded to the State FSA office not later than the end of the 
calendar week which would include the first sale day of the local 
auction markets.
    (4) A remittance for all penalties shown by the entries on Form MQ-
79 and Form MQ-72-2 to be due shall be forwarded to the State FSA office 
with the original copy of MQ-79.
    (5) Resales of floor sweepings shall be reported separately from 
leaf account tobacco.
    (r) Buyers corrections account. Each warehouse operator shall keep 
such records including negative adjustment invoices as will enable the 
warehouse operator to furnish a weekly report on Form MQ-71 to the State 
FSA office showing the total pounds of the debits (for returned lots, 
short lots, and short weights of tobacco) and the credits (for long lots 
and long weights of tobacco) to the buyers corrections account. Where 
the warehouse operator returns to the seller tobacco debited to the 
buyers corrections account, the warehouse operator shall prepare an 
adjustment invoice to the seller. This invoice shall be the basis for a 
credit entry for the warehouse in the buyers corrections account and a 
corresponding purchase (debit entry) in the case of a dealer on such 
dealer's MQ-79, Dealer's Report. Any balancing figure reflected on the 
warehouse operator's summary of bill-outs shall not be included in the 
buyers corrections account.
    (s) Reporting of processed leaf account tobacco. Any warehouse 
operator who delivers tobacco to a firm for the purpose of redrying, 
processing, or stemming of such tobacco shall, by the end of the week in 
which such tobacco was delivered, report to the State FSA office on MQ-
79, Dealer's Report:
    (1) The date delivered;
    (2) Name and address of the firm to which the tobacco was delivered, 
and
    (3) The pounds of tobacco (green weight) delivered which shall be 
entered in the resales pounds column. Such tobacco shall be considered a 
resale on the date of delivery for the purpose of balancing the 
warehouse account and collection of penalties where penalties are due.
    (t) Report of farm scrap resulting from grading tobacco for farmers. 
Any warehouse operator or any other person who grades tobacco for 
farmers shall maintain records which will enable such

[[Page 161]]

person to furnish the State FSA office the name of the farm operator and 
the approximate amount of scrap tobacco obtained from the grading of 
tobacco from each farm.
    (u) Report of farm scrap resulting from furnishing stripping space 
for farmers. Any warehouse operator or any other person who provides 
tobacco curing space or stripping space for farmers shall maintain 
records which will enable such person to furnish the State FSA office 
the name of the farm operator and the approximate amount of scrap 
tobacco obtained from each farm resulting from providing such space.
    (v) Producer tobacco. Producer tobacco (first sale) in possession of 
a warehouse operator, resulting from long weights and long lots, which 
has not previously been identified by a sale shall be recorded and 
reported in the same manner as a nonauction sale to a warehouse operator 
who does not prepare a warehouse bill (floor sheet) and shall be 
reported on MQ-79, Dealer's Record. Penalty shall be due on this tobacco 
at the full penalty rate for the respective kind of tobacco or, if the 
kind is not known, at the penalty rate for the kind of tobacco generally 
marketed through the warehouse.

[55 FR 39914, Oct. 1, 1990, as amended at 57 FR 43582, Sept. 21, 1992]



Sec. 723.404  Dealer's records and reports, excluding cigar tobacco buyers.

    (a) General. This section is applicable to all kinds of tobacco 
except cigar tobacco.
    (1) Each dealer, except as provided in Sec. 723.405 of this part 
shall keep by kinds of tobacco the records and make the reports 
separately for each kind (quota and nonquota) of tobacco as provided in 
this section. Adjustment invoices, including the adjustment invoices for 
any sale day for which there is no adjustment to be made, required to be 
furnished to an auction warehouse shall be identified by the warehouse 
identification number (if applicable) and the reporting dealer's 
identification number (if applicable) as well as the names of the 
warehouse and dealers involved in the transaction.
    (2) Each dealer shall properly execute the ``Receipt for Dealer's 
Record'' contained in MQ-79, which is issued to the dealer, and shall 
transmit such receipt to the applicable State FSA office.
    (b) Record of marketings. A dealer shall keep records which provide 
the following information for each lot of tobacco, including scrap 
tobacco, purchased or sold by the dealer:
    (1) Purchases. (i) The name of:
    (A) The warehouse through which the tobacco was purchased, if 
purchased at a warehouse auction; or
    (B) The operator of the farm on which the tobacco was produced, if 
purchased from a producer as a nonauction purchase, and the name of the 
producer of the tobacco, if different from the operator; or
    (C) The seller if purchased as a nonauction purchase from a 
warehouse operator or dealer.
    (ii) The identification number of the warehouse, farm, or dealer, as 
applicable, at/from which the tobacco was purchased.
    (iii) The address, the producer association number, if applicable, 
and percentage share of the proceeds of the farm operator and any other 
producer from whom tobacco was purchased as a nonauction purchase.
    (iv) The date of purchase.
    (v) The pounds of tobacco purchased.
    (vi) The gross purchase price.
    (vii) The amount of penalty.
    (viii) The amounts remitted for the No Net Cost and the Tobacco 
Marketing Assessments.
    (ix) The quantity of tobacco purchased from a prior crop and carried 
over for marketing in a subsequent crop year.
    (2) Sales. (i) The name and identification number of the:
    (A) Warehouse through which the tobacco was sold, if sold at a 
warehouse auction, or
    (B) Buyer if the tobacco was sold at a nonauction sale.
    (ii) The date of sale.
    (iii) The pounds of tobacco sold.
    (iv) The gross sale price.
    (c) Nonauction purchase. (1) Each purchase of tobacco from a 
producer from a quota producing area shall be identified by a marketing 
card, issued for the farm on which the tobacco was produced unless an 
AMS inspection is obtained prior to purchase which shows

[[Page 162]]

that tobacco being offered for sale is a kind not subject to marketing 
quotas.
    (2) For burley and flue-cured tobacco:
    (i) After each nonauction purchase, the dealer shall enter a 
declining balance of ``103 percent of quota'' on the reverse side of the 
marketing card. The declining balance shall be determined by reducing 
the previous ``103 percent of quota'' entry on the marketing card by the 
number of pounds of tobacco purchased. The date the tobacco was 
purchased also shall be entered on the marketing card at the time each 
lot of tobacco is purchased.
    (ii) After each nonauction purchase, the dealer shall prepare a form 
MQ-72-2 which shall set forth the following:
    (A) The date of the purchase.
    (B) The registration number of the dealer.
    (C) The name and address of the person selling the tobacco.
    (D) The identification number (farm number, warehouse code, or 
dealer number, as applicable) of the person selling the tobacco.
    (E) The pounds of tobacco purchased.
    (F) The amount of penalty collected.
    (G) The method (estimating or weighing) of determining the pounds of 
tobacco marketed.
    (H) The signature of the seller and the date signed.
    (iii) For nonauction purchases which are made by the dealer from 
producers, the dealer shall remit the producer's and the dealer's share 
of the No Net Cost and Tobacco Marketing Assessments as provided in part 
1464 of this title. The dealer may deduct the producer's share of each 
assessment from the price paid for the tobacco. However, the No Net Cost 
Assessment shall not be remitted from a producer who identifies the 
tobacco for marketing with a marketing card which has zero pounds as the 
103 percent entry on the marketing card. A marketing penalty at the full 
rate shall be collected on the marketings identified by such card. The 
amount of the No Net Cost and the Tobacco Marketing Assessments which is 
applicable to tobacco marketed during each marketing year will be the 
amount per pound which is approved and announced by the Secretary.
    (3) For all other kinds of tobacco:
    (i) When a Form MQ-77 Marketing Card is used to identify a 
nonauction sale, the producer's signature shall be obtained on the 
reverse side of a sale memo which is a part of the Form MQ-77. A 
nonauction sale not identified by a marketing card shall be identified 
by a Form MQ-82 executed by a marketing recorder or other representative 
of the State FSA committee. The dealer shall record each nonauction 
purchase of tobacco on Form MQ-79, Dealer's Record.
    (ii) For nonauction purchases which are made by the dealer from 
producers, the dealer shall remit the producer's and the dealer's share 
of the No Net Cost and Tobacco Marketing Assessments as provided in part 
1464 of this title. The dealer may deduct the producer's share of each 
assessment from the price paid for the tobacco. However, the No Net Cost 
Assessment shall not be remitted from a producer if the marketing card 
used to identify a kind of tobacco shows a converted penalty rate of 100 
percent. A marketing penalty at the full rate shall be collected on the 
marketings identified by such card. The amount of the No Net Cost and 
the Tobacco Marketing Assessments which is applicable for each kind of 
tobacco marketed during each marketing year will be the amount per pound 
which is approved and announced by the Secretary.
    (d) Record and report of purchases and resales. (1) For burley and 
flue-cured tobacco, each dealer shall keep a record and make reports on 
Form MQ-79 showing all purchases and resales, excluding tobacco not in 
the form normally marketed by producers. After each transaction is 
entered on the Form MQ-79, each dealer shall enter a balance to reflect 
the pounds of tobacco remaining that may be sold without causing prior 
resales to exceed prior purchases. Any tobacco sold in excess of such 
balance shall be considered excess tobacco and subject to a marketing 
quota penalty at the full penalty rate. The purchaser shall sign the 
Form MQ-79 on the same line as the transaction is recorded by the dealer 
who is offering such tobacco for resale. In the event of a purchase or 
resale of tobacco which is purchased by the dealer from a crop of 
tobacco produced prior to the current crop, the

[[Page 163]]

Form MQ-79 shall be annotated to indicate that such tobacco was so 
purchased and carried over from a crop produced prior to the current 
crop.
    (2) For all other kinds of tobacco, each dealer shall keep a record 
and make reports on Form MQ-79 showing all purchases and resales of 
tobacco made by or for the dealer and, in the event of a purchase or 
resale of tobacco which is purchased prior to the current crop, the fact 
that such tobacco was so purchased and carried over from a crop produced 
prior to the current crop.
    (3) A Form MQ-79 shall be prepared and a copy (together with 
executed copies of Form MQ-72-2 for all nonauction purchases of burley 
and flue-cured tobacco) shall be forwarded to the State FSA office not 
later than the end of the calendar week in which such tobacco was 
purchased or resold. However, if tobacco is purchased prior to the 
opening of the local auction market, a Form MQ-79 shall be prepared and 
a copy, together with executed copies of Form MQ-72-2 for all nonauction 
purchases, shall be forwarded to the State FSA office not later than the 
end of the calendar week which would include the first sale date of the 
local auction markets. In addition, if tobacco is resold in a State 
other than where the tobacco is produced and the auction markets at such 
location open earlier than the auction market where the tobacco normally 
would be sold at auction by farmers, reports together with executed 
copies of Form MQ-72-2 for all nonauction purchases shall be prepared 
and forwarded to the State FSA office not later than the end of the 
calendar week which would include the first day of the local auction 
market where the resale takes place.
    (4) The data to be entered on Form MQ-72-2 for nonauction purchases 
from a producer shall be the data which is enumerated in accordance with 
the provisions of paragraph (c)(2) of this section.
    (5) At the end of the dealer's marketing operation, but not later 
than April 1 for tobacco other than flue-cured and January 15 for flue-
cured tobacco, such dealer shall for each kind of tobacco:
    (i) Show the word ``final'' on the Dealer's Report, MQ-79, for the 
season,
    (ii) Report on such ``final'' MQ-79 for the season the quantity of 
tobacco on hand and its location,
    (iii) Permit its inspection by a representative of FSA, and
    (iv) Provide for weighing of such tobacco (to be witnessed by a 
representative of FSA) and furnish a certification as to the actual 
weight of such tobacco. After the weight of such tobacco has been 
determined as provided in this section, it shall be considered as the 
official weight for comparing purchases and resales for the purpose of 
determining the amount of penalty, if penalty is due.
    (v) If upon inspection by a representative of FSA, there is an 
amount of tobacco determined to be damaged tobacco according to 
Sec. 723.104, such amount of pounds shall be deducted from the purchase 
credit and no carryover credit shall be allowed for such damaged tobacco 
for the next marketing year.
    (6) Notwithstanding the provisions of paragraph (d)(5) of this 
section, any dealer having tobacco transactions after January 15 for 
flue-cured and April 1 for other than flue-cured shall make reports on 
Form MQ-79 at the end of each week, as provided in paragraph (d)(3) of 
this section.
    (7) For burley and flue-cured tobacco, before the next marketing 
season begins, carryover tobacco reported by the dealer as provided in 
paragraph (d)(5) of this section shall be reinspected by a 
representative of FSA. When the reinspection indicates an amount of 
carryover tobacco different from that amount determined by the initial 
inspection, the dealer shall provide for the weighing of such tobacco 
which shall be witnessed by an FSA representative. The dealer shall 
furnish to such representative at the time of weighing a certification 
as to the actual weight of such tobacco. If an FSA representative 
determines that the weight of the tobacco is different, by reweighing, 
than the amount reported on the initial weight together with the 
reweighed quantity after taking into consideration any purchases and 
resales that occurred subsequent to the initial certification as 
provided in paragraph (d)(5) of this section shall be used for the 
purpose of determining

[[Page 164]]

penalty, if penalty is due. Penalty shall be assessed, after the initial 
certification and reconciliation, when the redetermined pounds exceed 
the amount determined by taking the initial pounds of carryover tobacco 
plus purchases, minus resales. The redetermined pounds shall be the 
official pounds to be credited to the account as carryover. If upon 
reinspection by a representative of FSA, there is an amount of tobacco 
determined to be damaged tobacco under Sec. 723.104, such amount of 
pounds shall be deducted from the purchase credit and no carryover 
credit shall be allowed for such damaged tobacco for the next marketing 
year.
    (8) In addition to forms MQ-79 and MQ-72-2, if applicable, form MQ-
79 (Supplemental) shall be executed to record information relating to 
each nonauction purchase of tobacco for which the No Net Cost and 
Tobacco Marketing Assessments are due from producers and dealers. The 
form MQ-79 (Supplemental) shall be forwarded to the State FSA office at 
the same time as the purchase is reported on the MQ-79. A check, draft, 
or money order in the amount of the collections recorded on form MQ-79 
(Supplemental) and made payable to Commodity Credit Corporation shall be 
submitted to the State FSA office along with the forms MQ-79 and MQ-79 
(Supplemental).
    (9) Any flue-cured or burley dealer who fails to comply with all 
provisions of paragraph (d)(5) of this section by January 15 for flue-
cured and April 1 for burley tobacco will be issued a notice of 
noncompliance and the dealer shall be given 15 days to either comply or 
show cause why compliance is not feasible. Failure to complete all 
required actions within 15 days from date of such notice shall result in 
such dealer not being issued a MQ-79-2 for the marketing year 
immediately following the marketing year in which the dealer failed to 
conform with the deadline of January 15 for flue-cured and April 1 for 
burley tobacco.
    (e) Daily report to warehouse operator for buyers correction 
account. Notwithstanding the provisions of Sec. 723.405 of this part, 
reports shall be made as follows:
    (1) Any dealer, buyer, or any other person receiving tobacco from or 
through a warehouse operator at an auction sale or otherwise, which is 
not invoiced to such person or which is incorrectly invoiced to such 
person by the warehouse operator, shall furnish to the warehouse 
operator on a daily sales basis an adjustment invoice or buyers 
settlement sheet.
    (2) Each dealer who purchases tobacco on a warehouse floor for any 
sale day in which there is no adjustment required in the account as 
shown on the warehouse bill-out invoice for that sale day, shall file a 
negative report with the warehouse operator for that sale day.
    (3) Such reports as required under paragraphs (d)(1) and (2) of this 
section shall be furnished daily, if practicable (otherwise, they shall 
be furnished at the end of each week), and shall show the identification 
number of the warehouse where the purchase was made.
    (f) Reporting of processed tobacco. Any dealer who delivers tobacco 
to a firm for the purpose of redrying, processing or stemming of such 
tobacco shall, by the end of the week in which such tobacco was 
delivered, report to the State FSA office on MQ-79, Dealer's Report:
    (1) The date delivered;
    (2) Name and address of the firm to which the tobacco was delivered; 
and
    (3) Pounds of tobacco (green weight) delivered which shall be 
entered in the resales pounds column. Such tobacco shall be considered 
as a resale on the date of delivery for the purpose of balancing the 
dealer account and collection of penalties where penalties are due.
    (g) Tobacco represented to be a nonquota kind. Any dealer who plans 
to purchase tobacco that was produced on a farm in a quota area shall 
treat such tobacco as a quota kind of tobacco according to the 
provisions of this part 723 unless prior to the purchase a certification 
is obtained from an AMS inspector to indicate that such tobacco is a 
nonquota kind of tobacco. In such case, the dealer shall mail or 
otherwise deliver to the State FSA office, on the date of the purchase, 
a copy of the AMS certification and a statement

[[Page 165]]

signed by the AMS inspector, the producer, and the dealer to indicate 
the:
    (1) State and county code and farm number of the farm on which the 
tobacco was produced.
    (2) Name and address of the producer.
    (3) Name and address of the dealer.
    (4) Weight of the tobacco.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21443, May 9, 1991; 57 
FR 43582, Sept. 21, 1992]



Sec. 723.405  Dealers exempt from regular records and reports on MQ-79; and season report for dealers.

    (a) Any dealer or buyer who acquires tobacco in the form in which 
tobacco ordinarily is sold by farmers and resells 5 percent or less of 
any such tobacco shall not be subject to the requirements of 
Sec. 723.404 of this part except for the requirements which relate to 
the reporting of nonauction purchases from producers and the 
requirements of Sec. 723.404(e) of this part. A dealer or buyer whose 
resales in the form normally marketed by producers farmers exceed 5 
percent of their purchases as a direct result of order buying for 
another dealer for a service fee may report under paragraph (b) of this 
section in lieu of Sec. 723.404 of this part (except for requirements 
which relate to nonauction purchases from producers and requirements of 
Sec. 723.404(e) of this part.
    (b)(1) This paragraph is applicable only to burley and flue-cured 
tobacco. Each dealer or buyer shall make a report to the Director, not 
later than February 1 of each year for flue-cured and April 1 for burley 
tobacco, showing by States where acquired, source and pounds of all 
tobacco, in the form normally marketed by producers, purchased at 
auction or nonauction including tobacco received which was not billed to 
the dealer or buyer. Any acquisition of tobacco in the form normally 
marketed by producers by the dealer or buyer during the marketing year 
(October 1 through September 30 for burley tobacco and July 1 through 
June 30 for flue-cured tobacco) which is not included in the initial 
report shall be reported in like manner no later than the end of the 
calendar week following the week in which the tobacco was acquired. The 
report shall show:
    (2) For purchases at auction for each warehouse;
    (i) USDA registration number (warehouse code),
    (ii) Name and address of warehouse,
    (iii) Gross pounds originally billed to the buyer,
    (iv) Gross pounds billed to the buyer for which payment was made,
    (v) Gross pounds from the company correction account deducted for 
short lots and short weights and returned lots, and
    (vi) Gross pounds from the company correction account added for long 
lots and long weights.
    (3) For purchases at nonauction;
    (i) Name and address of seller (dealer or farmer),
    (ii) Seller's number (dealer's registration number or farm number, 
including State and county code), and
    (iii) Pounds purchased.



Sec. 723.406  Provisions applicable to damaged tobacco or to purchases of tobacco from processors or manufacturers.

    (a) Damaged tobacco. Any dealer, warehouse operator, or other person 
who intends to purchase damaged tobacco shall notify the State FSA 
office where the warehouse operator or dealer is registered or should be 
registered. Such report must be made at least 2 business days in advance 
of the purchase so as to allow for inspection arrangements to be made. 
The inspection shall be conducted by an FSA representative and no 
purchase credit shall be allowed the buyer for the quantity determined 
to be damaged tobacco. Damaged tobacco may be disposed of without 
incurring a penalty only if the tobacco is destroyed and the destruction 
is witnessed by an FSA representative or the tobacco is sold directly to 
a processor or manufacturer and such sale is reported to the same State 
FSA office. Any tobacco not disposed of in that manner shall be deemed 
to have been a marketing of excess tobacco and will be subject to a 
penalty at the full penalty rate for the quantity of tobacco involved.
    (b) Purchase from processor or manufacturer. Any tobacco purchased 
by a dealer, warehouse operator, or other person from a processor or 
manufacturer shall be considered to be tobacco in the form not normally 
marketed by producers unless the purchaser obtains

[[Page 166]]

from the processor or manufacturer a certification stating that such 
purchased tobacco is in the form normally marketed by producers. The 
certification by the processor or manufacturer shall be on a form 
prescribed by the Deputy Administrator certifying to FSA that the 
tobacco involved in the transfer of ownership is in the form normally 
marketed by producers. No purchase credit shall be given to a dealer, 
warehouse operator, or other person on MQ-79, Dealer's Record Book, for 
any purchase of tobacco which is not in the form normally marketed by 
producers. Tobacco which meets the definition of pickings as defined in 
this part shall be considered tobacco in the form not normally marketed 
by producers.
    (c) Report by dealer or warehouse operator. Any dealer, warehouse 
operator or other person who plans to purchase tobacco in the form 
normally marketed by producers from a processor or manufacturer shall, 
prior to purchase, report such plans to the State FSA office issuing 
form MQ-79, Dealer's Record Book, to such person. Such report shall be 
made timely so that a representative of FSA may inspect the tobacco to 
determine its marketable value and whether the tobacco is in the form 
normally marketed by producers. Any tobacco purchased from processors or 
manufacturers before such plans are reported to the state FSA office and 
before the tobacco is inspected by an FSA representative or an 
inspection is declined by an FSA representative shall be deemed excess 
tobacco and the penalty at the full rate shall be due.
    (d) Report by processor or manufacturer. Each processor or 
manufacturer shall make a report to the Director, showing the quantity 
of tobacco sold in the form not normally marketed by producers to 
dealers and buyers other than processor or manufacturers. The report 
shall be filed no later than the end of the calendar week following the 
week in which such tobacco was sold and shall show the name of the 
purchaser, the date of the sale and the pounds sold.
    (e) Dealer records and reports. (1) Any dealer, warehouse operator 
or other persons who purchased tobacco classified as not in the form 
normally marketed by producers shall keep such records as will enable 
such person to report to the State FSA office the following:
    (i) Name of seller, pounds purchased, and date of purchase.
    (ii) The disposition of such tobacco including name of buyer, pounds 
sold, date of sale,
    (2) Upon request by the State FSA office such person shall provide 
for the inspection and weighting of the tobacco to be witnessed by an 
FSA representative.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21443, May 9, 1991; 57 
FR 43582, Sept. 21, 1992]



Sec. 723.407  Cigar tobacco buyer's records and reports.

    (a) This section is applicable to buyers of cigar tobacco--(1) 
Definition of cigar buyer. With respect to this section, a buyer is any 
person who buys cigar tobacco including an association or cooperation 
that receives tobacco from producers for the purpose of:
    (i) Selling it for the producers, or
    (ii) Placing it under price-support loan through Commodity Credit 
Corporation.
    (2) Report of buyer's name and address. Each buyer shall properly 
execute, detach, and promptly forward to the State FSA office, ``Receipt 
for Buyer's Record'' contained in MQ-79 (CF&B), which is issued to the 
buyer.
    (b) Record of purchases. A buyer shall keep records which provide 
the following information for each lot of each kind of tobacco purchased 
or sold by the buyer, including tobacco obtained from grading tobacco 
for producers or furnishing curing space, or stripping space:
    (1) The name of:
    (i) The operator of the farm on which the tobacco was produced; or
    (ii) The name and address of the seller, in the case of a sale by a 
person other than the farm operator.
    (2) The identification number of the farm at/from which the tobacco 
was purchased.
    (3) The date of purchase.
    (4) The pounds of tobacco purchased.
    (5) The gross purchase price.
    (6) The amount of penalty.

[[Page 167]]

    (7) The amounts remitted for the No Net Cost and Tobacco Marketing 
Assessments.
    (c) Report of sales. Each buyer shall maintain records which will 
show, by kind of tobacco, the disposition of tobacco purchased under 
paragraph (b) of this section.
    (d) The dealer shall remit the producer's and the dealer's share of 
the No Net Cost and Tobacco Marketing Assessments as provided in part 
1464 of this title. The dealer may deduct the producer's share of each 
assessment from the price paid for the tobacco. The No Net Cost 
Assessment shall not be collected from a producer who identifies the 
tobacco for marketing with a marketing card which has a converted 
penalty rate of 100 percent on the marketing card. A marketing penalty 
at the full rate shall be collected on the marketings identified by such 
card. The amount of the No Net Cost and the Tobacco Marketing 
Assessments which is applicable to tobacco marketed during each 
marketing year will be the amount per pound which is approved and 
announced by the Secretary.
    (e) Identification of sale or marketing card memo and buyers 
records. Each MQ-76 and each sale memo from an MQ-77 used to identify 
each sale of tobacco by a producer shall be properly executed by the 
buyer. The serial number of the MQ-76 marketing card or sale memo from 
an HQ-77 to identify such tobacco, shall be recorded on the buyer's copy 
of the MQ-79 (CF&B) and on the check register or check stub for the 
check written with respect to such tobacco.
    (f) Record and report of purchases of tobacco from producers. (1) 
Each buyer shall keep a record and make reports on MQ-79 (CF&B), Buyer's 
Record, showing by kinds of tobacco purchased by or for such buyer from 
producers. Such record and report shall show for each sale the sale 
date, the name of the farm operator, (and the name and address of the 
person selling the tobacco if other than the operator), the serial 
number of the within quota marketing card (MQ-76), and from each excess 
card (MQ-77), the sale memo number used to identify the sale, the pounds 
of tobacco represented in the sale, the rate of penalty shown on the 
sale memo (MQ-77), and the amount of penalty. If a marketing card is not 
presented by the producer, the buyer shall record and report the 
purchase as provided above except that the buyer shall enter the word 
``None'' in the space for the serial number of the marketing card (MQ-
76) or sale memo (MQ-77), the applicable rate of penalty per pound in 
the space for rate of penalty, and shall show the name and address of 
the seller in the space for the seller's name.
    (2) The original of MQ-79 (CF&B), excess sale memos (MQ-77), and a 
remittance for all penalties shown by entries on MQ-79 (CF&B) and on the 
excess sale memos (MQ-77) to be due shall be forwarded to the State FSA 
office not later than the 10th day of the calendar month next following 
the month during which the sale date occurred.
    (3) In addition to forms MQ-79 and MQ-72-2, if applicable, form MQ-
79 (Supplemental) shall be executed to record information relating to 
each nonauction purchase of tobacco for which the No Net Cost and 
Tobacco Marketing Assessments are due from producers and dealers. The 
form MQ-79 (Supplemental) shall be forwarded to the State FSA office at 
the same time as the purchase is reported on the MQ-79. A check, draft, 
or money order in the amount of the collections recorded on form MQ-79 
(Supplemental) and made payable to Commodity Credit Corporation shall be 
submitted to the State FSA office along with the forms MQ-79 and MQ-79 
(Supplemental).

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21443, May 9, 1991]



Sec. 723.408  Producer's records and reports.

    (a) Failure to file reports or filing false reports. (1) With 
respect to any kind of tobacco, if the producer on a farm files an 
incomplete or incorrect report, fails to file a report, or files or aids 
or acquiesces in the filing of any false report with respect to the 
amount of such kind of tobacco produced on or marketed from the farm, 
applicable tobacco acreage allotment or burley farm marketing quota next 
established for such farm shall be reduced, unless the county and State 
FSA committees determine, according to instructions

[[Page 168]]

issued by the Deputy Administrator, that such reduction is not required.
    (2) For all kinds of tobacco except burley tobacco, if a farm 
operator files a report of acreage of the applicable kind of tobacco on 
the farm and, after a determination of the acreage, it is determined by 
the county FSA committee (with approval of the State FSA committee) that 
the report was false (either significantly under reported or 
significantly over reported by more than the tolerance for reporting as 
provided in part 718 of this chapter) in what amounts to a scheme or 
device to defeat the purpose of the program, the allotment next 
established for the farm shall be reduced by an amount determined by 
multiplying the acreage falsely reported (difference between reported 
and determined acreage) by:
    (i) With respect to flue-cured tobacco, the farm yield established 
for the farm for the year in which the false report was filed, or
    (ii) For any other kind of tobacco, the actual yield per acre for 
the year in which the false report was filed.
    (3) Any report of a marketing of tobacco by a producer or any use of 
producer's marketing card to sell the tobacco or the pledge the tobacco 
for a price support loan shall be considered the filing of a false 
report by the producer and, in addition to other remedies as may apply, 
the remedies provided in paragraph (a)(1) of this section shall apply, 
if, under the provisions of part 1464 of this title, the producer was 
not considered to have been an ``eligible producer'' with respect to 
such marketing or other disposition of tobacco.
    (b) Harvesting second crop tobacco from the same farm. For all kinds 
of tobacco except burley, if in the same calendar year more than one 
crop of tobacco was grown from:
    (1) The same tobacco plants, or
    (2) Different tobacco plants, and is harvested for marketing from 
the same acreage of a farm, the acreage allotment next established for 
such farm shall be reduced by an amount equivalent to the acreage from 
which more than one crop of tobacco was so grown and harvested.
    (c) False identification. If there is false identification of any 
kind of tobacco, the applicable farm acreage allotment or farm marketing 
quota next established for the farm and kind of tobacco involved shall 
be reduced, except that such reduction for any such farm shall not be 
made if the county and State FSA committees determine, according to 
instructions issued by the Deputy Administrator, that such reduction is 
not required.
    (d) Report on marketing card. (1) The operator of each farm on which 
tobacco is produced shall return to the county FSA office each marketing 
card issued for the farm whenever marketings from the farm are completed 
and, in no event, later than,
    (i) June 1 of the marketing year in the case of cigar tobacco, and
    (ii) For all other kinds of tobacco, not later than 20 days after 
the close of the tobacco auction markets for the marketing year for the 
locality in which the farm is located. Failure to return the marketing 
card within 15 days after written request by certified mail from the 
county FSA executive director shall constitute failure to account for 
disposition of all tobacco marketed from the farm unless disposition of 
tobacco marketed from the farm is otherwise accounted for to the 
satisfaction of the county FSA committee.
    (2) For all kinds of tobacco except burley and flue-cured:
    (i) At the time the marketing card is returned to the county FSA 
office, the farm operator must certify with respect to each:
    (A) MQ-77, to the quantity of tobacco on hand and its location.
    (B) MQ-76, to the accuracy of the Record of Sales recorded on the 
card.
    (ii) Failure of the farm operator to make the applicable 
certification shall constitute failure to satisfactorily account for the 
disposition of tobacco marketed from the farm.
    (3) Upon failure to satisfactorily account to the county FSA 
committee for disposition of tobacco marketed from the farm the 
allotment or quota next established for such farm and such kind of 
tobacco shall be reduced, except that such reduction for any such farm 
shall not be made if it is established to the satisfaction of the county 
FSA committee and a representative of

[[Page 169]]

the State FSA committee that the failure to furnish such proof of 
disposition was unintentional and no producer on such farm could 
reasonably have been expected to furnish such proof of disposition. 
However, such failure will be construed as intentional unless such proof 
of disposition is furnished and payment of all additional penalty is 
made, or no person connected with such farm for the year for which the 
acreage allotment or quota is being established caused, aided, or 
acquiesced in the failure to furnish such proof.
    (e) Report of production and disposition. (1) In addition to any 
other reports which may be required by this subpart, the operator or any 
producer on a farm (even though the harvested acreage does not exceed 
the acreage allotment or even though no farm acreage allotment or farm 
marketing quota was established for the farm) shall, upon written 
request by certified mail from the State or county FSA committee, 
furnish on MQ-108, Report of Production and Disposition, a written 
report of the acreage, production and disposition of all tobacco 
produced on the farm by sending the same to the State or county FSA 
committee within 15 days after the request was mailed showing as to the 
farm at the time of filing such report with respect to the applicable 
kind of tobacco the:
    (i) Total harvested acres,
    (ii) Total amount of tobacco on hand and its location,
    (iii) Total pounds of tobacco produced,
    (iv) Name and address of the warehouse operator, dealer, or other 
person to or through whom tobacco was marketed, and the number of pounds 
marketed, the gross price paid and the date of the marketings, and
    (v) Complete details as to any tobacco disposed of other than by 
sale.
    (2) With respect to any farm on which burley or flue-cured tobacco 
was produced or available for marketing from carryover tobacco, the 
operator or any producer on the farm (even though the harvested acreage 
does not exceed the flue cured farm acreage allotment or even though no 
farm acreage allotment or farm marketing quota was established for the 
farm) shall, upon written request from the county FSA committee, furnish 
on Form MQ-108-1, Report of Unmarketed Tobacco, a written report of the 
amount and location of the applicable kind of tobacco produced on the 
farm which is unmarketed at the end of the marketing season and the 
amount the applicable kind of tobacco produced by such operator or 
producer on any other farm, which is unmarketed at the end of the 
marketing season and which is stored on the farm, by sending the report 
to the county FSA committee within 15 days after the request was mailed 
to such person at such person's last known address.
    (3) Failure to file the MQ-108 or MQ-108-1 as requested, or the 
filing of MQ-108 or MQ-108-1 which is found by the State or county FSA 
committee to be incomplete or incorrect shall, to the extent that it 
involves tobacco produced on the farm, constitute failure to account for 
the disposition of tobacco produced on the farm and the allotment or 
quota next established for such farm shall be reduced, except that such 
reduction shall not be made if it is established to the satisfaction of 
the county or State FSA committee that failure to furnish such proof of 
disposition was unintentional and no producer on such farm could 
reasonably have been expected to furnish such proof of disposition: 
However, such failure will be construed as intentional unless such proof 
of disposition is furnished and payment of all additional penalty is 
made, or no person connected with such farm for the year for which the 
farm acreage allotment or farm marketing quota is being established 
caused, aided, acquiesced in the failure to furnish such proof.
    (f) Reports by producer-manufacturers. (1) For all kinds of tobacco 
except burley and flue-cured tobacco, each producer who manufactures 
tobacco products from tobacco produced by or for such person as a 
producer, shall report to the State FSA office with respect to each farm 
on which such tobacco is produced and as soon as all tobacco from the 
farm has been weighed as follows:
    (i) If the harvested acreage is within the allotment, the producer-
manufacturer shall report the total pounds of tobacco produced, the 
date(s) on which

[[Page 170]]

such tobacco was weighed, the farm serial number of the farm on which it 
was produced, and the estimated value of such tobacco.
    (ii) If the harvested acreage is in excess of the allotment, the 
producer-manufacturer shall report the total pounds of tobacco produced 
on the farm, the date(s) on which the tobacco was weighed, the farm 
serial number of the farm on which it was produced, the estimated value 
of the tobacco, and the location of the tobacco. If the required reports 
are not made, penalty shall be paid on the tobacco by the producer-
manufacturer, at the converted rate of penalty shown on the marketing 
card issued for the farm, when it is moved from the place where it can 
be conveniently inspected by the county FSA committee at any time 
separate and apart from any other tobacco.
    (2) If the producer-manufacturer has excess tobacco and does not pay 
the penalty thereon at the converted rate of penalty shown on the 
marketing card, such producer-manufacturer shall notify in writing the 
buyer of the manufactured product or the buyer of any residue resulting 
from processing the tobacco, at time of sale of such product or residue, 
of the precise amount of penalty due on such manufactured product or 
residue. In such event, the producer-manufacturer shall immediately 
notify the State FSA executive director and shall account for the 
disposition of such tobacco by furnishing the State FSA executive 
director a report on a form to be furnished by such State FSA executive 
director, showing the name and address of the buyer of the manufactured 
products or residue, a detailed account of the disposition of such 
tobacco and the exact amounts of penalty due with respect to each such 
sale of such products or residue to indicate, together with copies of 
the written notice that was given to the buyer of such products or 
residue to indicate the exact amount of the penalty due.
    (3) Failure to file the report required in paragraph (f)(2) of this 
section, or the filing of a report which is found by the State FSA 
committee to be incomplete or incorrect, shall be considered failure of 
the producer-manufacturer to account for the disposition of tobacco 
produced on the farm and the allotment next established for the farm 
shall be reduced for such failure, except that such reduction for any 
such farm shall not be made if it is established to the satisfaction of 
the county and State FSA committees, that:
    (i) The failure to furnish such report of disposition was 
unintentional and the producer-manufacturer on such farm could not 
reasonably have been expected to furnish such report of disposition. 
However such failure will be construed as intentional unless such report 
of disposition is furnished and payment of all additional penalty is 
made, or
    (ii) No person connected with such farm for the year for which the 
allotment is being established caused, aided, or acquiesced in the 
failure to furnish such report. The producer-manufacturer shall be 
liable for the payment of penalty.
    (g) Amount of allotment or quota reductions--(1) Burley tobacco. For 
burley tobacco, the farm marketing quota determined for a farm for the 
current year shall be reduced by that amount of tobacco which is 
involved in a marketing quota violation as described in paragraphs (a), 
(b), (c), (d), or (e), of this section which occurred in any prior year. 
However, the amount of such reduction shall not exceed the current year 
farm marketing quota. The county FSA committee shall determine the 
amount of tobacco involved in the marketing quota violation. If the 
actual quantity of tobacco involved in such violation is unknown, the 
county FSA committee shall determine the quantity by considering both 
the condition of the crop during production, if known, and such other 
information as is available.
    (2) Kinds of tobacco except burley tobacco. The amount of reduction 
in the allotment for the current year for a violation described in 
paragraphs (a), (c), (d), (e), or (f) of this section shall be that 
percentage, but not to exceed 100 percent, which the amount of the 
tobacco involved in the violation is of the respective farm marketing 
quota for the farm for the year in which the violation occurred times 
the current year farm acreage allotment. The quantity of tobacco in 
violation shall

[[Page 171]]

be determined by the county FSA committee. If known, the actual quantity 
shall be determined by the county FSA committee to be the amount of 
tobacco involved in the violation. If the actual quantity is unknown, 
determine the quantity by taking into consideration the condition of the 
crop during production, if known, and such other information that is 
available.
    (h) Allotment or quota reduction for combined farms. If the farm 
involved in the violation is combined with another farm prior to the 
reduction, the allotment or quota reduction shall be applied as 
heretofore provided in this section to that portion of the farm acreage 
allotment or farm marketing quota for which a reduction is required.
    (i) Allotment or quota reduction for divided farms. If the farm 
involved in the violation has been divided prior to the reduction, the 
reduction shall be applied as heretofore provided in this section to the 
allotments or quota for the divided farms required to be reduced.
    (j) Quota reductions for flue-cured tobacco. For flue-cured tobacco 
only, if an acreage allotment reduction is made under this section, the 
marketing quota shall be reduced to reflect such reduction in an amount 
determined by multiplying the acreage reduction by the farm yield.
    (k) County administrative hearing in connection with violations. 
Except for the failure to return a marketing card, the allotment or 
quota for any farm shall not be reduced for a violation under this 
section until the operator of the farm has been afforded an opportunity 
to discuss the nature and extent of the violation with the county FSA 
committee. If after having been afforded an opportunity to discuss a 
violation with the county FSA committee the farm operator fails or 
refused to discuss the violation, the county FSA committee shall take 
action as required by this part.
    (l) Sequence of allotment or quota reductions. For burley and flue-
cured tobacco, if the tobacco farm acreage allotment or farm marketing 
quota for a farm is to be reduced in the current year because of both:
    (1) A violation, and
    (2) Overmarketings in a prior year, the reduction in the farm 
acreage allotment or farm marketing quota for the violation shall be 
made before making the reduction for overmarketings.
    (m) Correction of farm records. For burley and flue-cured tobacco, 
where farm data for actual marketings are determined to be incorrect 
because of a violation, the records shall be corrected for each farm on 
which the tobacco was produced, and for each farm whose card was used to 
identify marketings.
    (n) Report on Form MQ-92, Estimate of Production. An estimate of 
production, Form MQ-92, shall be prepared immediately prior to harvest 
for each farm for which the county or State FSA committee or a 
representative of the county or State FSA committee believes than an MQ-
92 for the farm would be in the best interests of the program. The 
county FSA committee shall have the authority to visit any farm for the 
purposes of making an estimate of production or determination of planted 
acreage needed to complete an estimate of production.
    (o) Effect of false identification on establishing future farm 
marketing quotas. Notwithstanding any other provision of this section, 
with respect to burley or flue-cured tobacco, if a producer falsely 
identifies such tobacco as having been produced on or marketed from a 
farm, the quantity of the tobacco which is falsely identified shall be 
considered, for the purpose of establishing future farm marketing 
quotas, as having been produced on both the farm for which it was 
identified as having been produced, and the farm of actual production, 
if known, or, as the case may be, such quantity of tobacco shall be 
considered as actually marketed from the farm.

[55 FR 39914, Oct. 1, 1990, as amended at 57 FR 43582, Sept. 21, 1992]



Sec. 723.409  Producer violations, penalties, false identification collections and remittances by dealers, buyers, handlers, warehouses, and other parties;           related issues.

    (a) Generally--(1) Circumstances in which penalties are due. A 
penalty shall be due on all marketings from a farm which are:
    (i) In excess of the applicable quota or allotment;

[[Page 172]]

    (ii) Made without a valid marketing card;
    (iii) Made under circumstances where a buyer or dealer, or their 
agents, know, or have reason to know, that the tobacco was, or is, 
marketed in a manner which by itself or in combination with other 
marketings is designed to, or has the effect of, defeating the purposes 
of the tobacco price support and production adjustment program, avoiding 
marketing quota limitations, or otherwise avoiding provisions of this 
part or part 1464 of this title;
    (iv) Falsely identified; or,
    (v) Marketings for which the producer or other party fails to make a 
proper account as required by the provisions of this part.
    (2) Amount of the penalty. The amount of the penalty shall be the 
amount computed by multiplying the penalty rate by the penalty quantity.
    (3) Penalty rate. The penalty rate for purposes of this section is 
that rate which is computed as the penalty rate per pound for the 
applicable kind of tobacco under Sec. 723.308, except to the extent that 
a converted penalty rate may be used as provided for in this section.
    (4) Penalty quantity. The penalty quantity for purposes of this 
section is the quantity of tobacco that is determined by the county FSA 
committee subject to the Director's review to be subject to penalty, 
provided further that:
    (i) For burley and flue-cured tobacco, the penalty quantity for 
purposes of this section shall be the amount of marketings from the farm 
in excess of 103 percent of the farm's effective marketing quota for 
that year, except that if the violation involves false identification or 
a failure to account for tobacco, the FSA may, in its discretion, 
depending on the nature of the violations, use as the penalty quantity 
an amount up to 25 percent of the farm's effective marketing quota plus 
100 percent of the farm yield on any excess acreage for the farm 
(acreage planted in excess of the allotted acres, as estimated or 
determined).
    (ii) For tobacco other than burley and flue-cured tobacco, the 
penalty quantity shall be the amount of marketings from the farm in 
excess of the farm's marketing quota provided further, that in order to 
aid in the collection of the penalty the FSA may endeavor, to the extent 
practicable, to apply the penalty to all of the farm's marketing by 
converting the full penalty rate to a converted proportionate penalty 
rate which rate may be identified on the producer's marketing card and 
collected and remitted accordingly. In making the calculation of the 
converted penalty rate, the agency shall take into account any carryover 
tobacco applicable for the farm. If an erroneous penalty rate is shown 
on the marketing card, then the producer of the tobacco and the producer 
who marketed the tobacco shall be liable for any balance due.
    (5) Limitations on reduced penalty quantities. No penalty shall be 
assessed at less than the maximum amount unless it is determined by the 
county FSA committee, with the concurrence of the State FSA committee, 
that all of the following exist with respect to such violation:
    (i) The violation was inadvertent and unintentional;
    (ii) All of the farm's production has been accounted for and there 
are no excess marketings for which there are penalties outstanding;
    (iii) The records for all involved farms have been corrected to show 
the marketings involved; and
    (iv) The false identification or failure to account did not give the 
producer an advantage under the program.
    (6) Effect of improper, invalid, deceptive or unaccounted for 
marketings on penalty quantity calculation. Any marketing made without a 
valid marketing card, falsely identified, or unaccounted for in 
accordance with the requirements of this part, or made under 
circumstances which are designed to, or have the effect of, defeating 
the purpose of the tobacco marketing quota and price support program, 
avoiding any limitation on marketings, avoiding a penalty, or avoiding 
compliance with, or the requirements of, any regulation under this part 
or under part 1464 of this title, shall be considered an excess 
marketing of tobacco. Further, such marketings shall, unless shown to 
the satisfaction of the county FSA committee to be otherwise, be 
considered, where relevant, to be in excess of 103

[[Page 173]]

percent of the applicable marketing quota for the farm, and shall be 
subject to a penalty at the full penalty rate for each pound so 
marketed.
    (7) Pledging of tobacco by an ineligible producer. In addition to 
any other circumstances in which a penalty may be assessed under this 
part, the marketing or pledging for a price support loan of any tobacco 
when the producer is not considered to be an ``eligible producer'' under 
the provisions of part 1464 of this title, shall be considered to be a 
false identification of tobacco and shall be dealt with accordingly. 
This remedy shall be in addition to all others as may apply.
    (8) Failures to make certain reports. If any producer who 
manufactures tobacco products from tobacco produced by such person or 
another fails to make the report required by Sec. 723.408(f) or 
otherwise required by this part, or makes a false report, such producer 
shall be deemed to have failed to account for the disposition of tobacco 
produced on the farm(s) involved. The filing of a report by a producer 
under Sec. 723.408 of this part which the State FSA committee finds to 
be incomplete or incorrect shall constitute a failure to account for the 
disposition of tobacco produced on the farm.
    (b) Special provisions for tobacco buyers, dealers, handlers, 
warehouse operators and others who acquire, handle, or facilitate the 
marketing of tobacco. Notwithstanding the provisions of paragraph (a) of 
this section and other provisions of this part:
    (1) Unless such amount has been remitted by another in accord with 
the provisions of this part, a dealer, buyer, warehouse operator or 
other person handling tobacco shall collect, and remit to FSA, an amount 
equal to the full penalty rate provided for in Sec. 723.208 times the 
quantity of tobacco involved where the tobacco is not identified with a 
valid producer or dealer card, the tobacco is sold under suspicious 
circumstances, or when there is reason to suspect that the tobacco may 
be subject to a penalty for any reason or may be marketed in derogation 
of the goals and purposes of the tobacco support program. For purposes 
of the preceding sentence ``handling'' shall include any services 
provided with respect to the tobacco, and any facilitation of the 
marketing of tobacco regardless of the level or amount of contact, if 
any, that the party may actually have with the tobacco.
    (2) The amount of the penalty required to be collected may be 
deducted from the proceeds due a seller and all parties chargeable under 
paragraph (b)(1) of this section shall be jointly and severally liable 
for insuring that the monies are remitted to FSA except to the extent 
that the Director shall allow for an exemption to facilitate the 
marketing of tobacco, or for some other reason.
    (3) The collection and remittance of penalty shall be in addition to 
any other obligations that such person may have to collect other 
amounts, including other penalties or assessments due on such 
marketings.
    (4) If a penalty is collected and remitted by a buyer, dealer, or 
warehouse operator that is shown not to be due or only partially due, 
then the overpayment shall be refunded to the appropriate party. It is 
the responsibility of the person that collected the penalty and the 
person that sold the tobacco involved to show to the satisfaction of the 
FSA that such penalty is not due in the full amount collected.
    (c) Canceled allotment or quota. If part or all of the tobacco 
produced on a farm has been marketed and the farm acreage allotment or 
farm marketing quota for the farm is canceled, any penalty due on the 
marketings shall be paid by the producers.
    (d) Overmarketing proportionate share of effective farm marketing 
quota-burley or flue-cured tobacco. With respect to burley or flue cured 
tobacco, if the county FSA committee determines that the farm operator 
or another producer on the farm has marketed more than 103 percent of 
such operator's or producer's share of the effective farm marketing 
quota with intent to deprive some other producer on the farm from 
marketing such producer's proportionate share of the same crop of 
tobacco, such operator or other producer shall be liable for marketing 
penalties at the full rate per pound for each pound of tobacco marketed 
above 103 percent of such producer's share of the

[[Page 174]]

effective farm marketing quota. However, the sum of such penalties shall 
not exceed the total penalties due on total marketings above 103 percent 
of the effective farm marketing quota for the farm on which such tobacco 
was produced. Before assessment of penalty pursuant to this paragraph, a 
hearing shall be scheduled by the county FSA committee and the operator 
and affected producers shall be invited to be present, or to be 
represented, to determine whether the operator or another producer on 
the farm has marketed more than 103 percent of such person's 
proportionate share of the effective farm marketing quota. The notice of 
the hearing shall request the farm operator and affected producers to 
bring to the hearing floor sheets and other relevant supporting 
documents. At least two members of the county FSA committee shall be 
present at the hearing. The hearing shall be held at the time and place 
named in the notice and any action taken to impose penalty shall be 
taken after the hearing. If the farm operator or other affected producer 
does not attend the hearing, or is not represented, the county FSA 
committee shall make a determination on the basis of available records 
and shall assess any penalties that may be required against the 
applicable person.
    (e) Penalties not to be assessed-burley or flue-cured tobacco. With 
respect to burley or flue-cured tobacco, if the operator or another 
producer on the farm markets a quantity of tobacco above 103 percent of 
the effective farm marketing quota for the farm and such overage is 
found to have been caused by the failure to record or improper recording 
of tobacco poundage data on the marketing card, that amount of the 
penalty as was due to such failure to record or improper recording will 
not be required to be paid by the farm operator or other producer if:
    (1) For amounts of $100 or less, the county FSA committee, and
    (2) For amounts over $100, the county FSA committee with approval of 
the State FSA committee determines that each of the following conditions 
is applicable:
    (i) The failure to record or incorrect recording resulted from 
action or inaction of a marketing recorder or another FSA employee, and
    (ii) The farm operator or another producer on the farm had no 
knowledge of such failure or error. Overmarketings for a farm for which 
the marketing penalty will not be paid pursuant to the provisions of 
this paragraph shall be determined based upon the correct effective farm 
marketing quota and correct actual marketings of tobacco from the farm.
    (f) Refusal to contribute required assessments. A marketing penalty 
at the full rate per pound is due on each pound of tobacco marketed from 
a farm when the farm operator or producers refuse to pay no-net-cost or 
marketing assessments as provided in part 1464 of this title. In all 
such cases, the farm from which the tobacco has been produced shall be 
considered to have a marketing quota of zero pounds and an allotment of 
zero acres.

[55 FR 39914, Oct. 1, 1990, as amended at 57 FR 43583, Sept. 21, 1992; 
63 FR 11582, Mar. 10, 1998]



Sec. 723.410  Penalties considered to be due from warehouse operators, dealers, buyers, and others excluding the producer.

    Subject to any additional requirements or provisions for remittances 
which are contained in Sec. 723.409 of this part, any marketing of 
tobacco under one of the following conditions shall be considered to be 
a marketing of excess tobacco.
    (a) Auction sale without burley or flue-cured tobacco marketing 
card. For burley and flue-cured tobacco, any first marketing of tobacco 
at an auction sale by a producer which is not identified by a valid 
marketing card at the time of marketing shall be considered to be a 
marketing of excess tobacco and the penalty thereon shall be collected 
and remitted by the warehouse operator unless prior to marketing, an AMS 
inspection certificate is obtained showing that the tobacco is of a kind 
not subject to marketing quotas.
    (b) Auction sale without dark air-cured, fire-cured, or Virginia 
sun-cured tobacco marketing card. For dark air-cured, fire-cured, or 
Virginia sun-cured tobacco, any first marketing of tobacco at an auction 
sale by a producer which is not identified by a valid marketing card

[[Page 175]]

(MQ-76 or MQ-77 (including sale memo)) on or before the last warehouse 
sale day of the marketing season, or within 4 weeks following the date 
of marketing, whichever comes first, shall be identified by an MQ-82, 
and shall be presumed, subject to rebuttal, to be a marketing of excess 
tobacco. The penalty thereon shall be paid by the warehouse operator.
    (c) Burley or flue-cured tobacco nonauction sale. For burley and 
flue-cured tobacco, any nonauction marketing of tobacco which:
    (1) Is not identified by a valid marketing card and recorded at the 
time of marketing on MQ-79, Dealer's Report, the marketing card, and MQ-
72-2, Report of Tobacco Nonauction Purchase; or,
    (2) If purchased prior to the opening of the local auction market 
for the current year, it is not identified by a valid marketing card and 
recorded on MQ-79, the marketing card, and MQ-72-2, Report of Tobacco 
Nonauction Purchase not later than the end of the calendar week which 
includes the first sale day of the local auction markets, shall be 
considered a marketing of excess tobacco. The penalty thereon shall be 
collected by the purchaser of such tobacco, and remitted with MQ-79, 
unless prior to marketing an AMS inspection certificate is obtained 
showing that the tobacco is of a kind not subject to marketing quotas.
    (d) Nonauction sale, except burley, flue-cured, and cigar tobacco. 
For dark air-cured, fire-cured, or Virginia sun-cured tobacco, any 
nonauction sale of tobacco which:
    (1) Is not identified by an MQ-76 or MQ-77 (including a valid sale 
memo); and
    (2) Recorded on MQ-79, Dealer's Record, not later than the end of 
the calendar week in which the tobacco was purchased; or
    (3) If purchased prior to the opening of the local auction market 
for the current year, is not identified by an MQ-76 or MQ-77 (including 
a valid sale memo) and recorded on MQ-79 not later than the end of the 
calendar week which includes the first day of the local auction markets, 
shall be presumed, subject to rebuttal, to be a marketing of excess 
tobacco. The penalty thereon shall be paid by the purchaser of such 
tobacco.
    (e) Failure to obtain an MQ-76 and sale memo, and failure to record 
a sale on MQ-76-cigar tobacco. Any sale of cigar tobacco for which a 
dealer:
    (1) If within quota, fails to record the sale on the marketing card 
issued for the farm, or
    (2) If the tobacco was produced on a farm for which an excess 
marketing card was issued, fails to obtain a valid sale memo by the end 
of the sale date, shall be presumed, subject to rebuttal, to be a 
marketing of excess tobacco. The penalty thereon shall be paid by the 
buyer who fails to make the required record.
    (f) Leaf account tobacco. If warehouse resales exceed prior leaf 
account purchases, such marketings shall be considered to be a marketing 
of excess tobacco unless such warehouse operator furnishes evidence 
acceptable to the State FSA committee showing that such marketing is not 
a marketing of excess tobacco. However, evidence acceptable to the State 
FSA committee shall not be based on the warehouse operator's proof of 
purchase of tobacco that is not in the form normally marketed by 
producers even though such evidence indicates that resales exceed prior 
leaf account purchases as a result of the blending of tobacco, which was 
not in the form normally marketed by producers, with the warehouse 
operator's prior purchases of leaf account tobacco.
    (g) Dealer tobacco--burley and flue-cured. The burley or flue-cured 
tobacco resales by a dealer (as shown or due to be shown on Form MQ-79), 
which are in excess of such dealer's total prior purchases of the 
respective kind of tobacco shall be considered to be a marketing of 
excess tobacco and penalty thereon shall be due at the time the 
marketing takes place which results in the excess. If the resale which 
results in penalty being due is made at auction, the warehouse shall 
deduct the penalty from the proceeds of the sale and shall remit the 
penalty to the marketing recorder. If the resale which results in 
penalty being due is made at nonauction, the purchaser shall deduct the 
penalty from the proceeds of the

[[Page 176]]

sale and shall remit the penalty to the applicable State FSA office.
    (h) Resales not reported. Any resale of tobacco which is required to 
be reported by a warehouse operator or dealer, but which is not reported 
within the time and in the manner required, shall be considered to be a 
marketing of excess tobacco, unless and until such warehouse operator or 
dealer furnishes proof of such resale which is acceptable to the State 
FSA executive director. The penalty thereon shall be paid by the 
warehouse operator or dealer who fails to make the report as required.
    (i) Marketing falsely identified by a person other than the producer 
of the tobacco. If any marketing of tobacco by a person other than the 
producer is identified by a marketing card other than the marketing card 
issued for the farm on which the tobacco was produced, and the source of 
production of the tobacco is unknown, such marketing shall be presumed, 
subject to rebuttal, to be a marketing of excess tobacco. The marketing 
quota penalty shall be paid by the person who marketed the tobacco.
    (j) Carryover tobacco, except cigar tobacco. Any tobacco on hand, 
except for cigar tobacco, and reported or due to be reported under 
Sec. 723.403 of this part for warehouse operators and Sec. 723.404 of 
this part for dealers shall be included as a resale in determining 
whether an account for a kind of tobacco has excess resales. Unless the 
warehouse operator furnishes proof acceptable to the State FSA committee 
and unless the dealer furnishes proof acceptable to the State FSA 
executive director, showing that such account does not represent excess 
tobacco, penalty at the full rate for the respective kind of tobacco 
shall be paid thereon by such warehouse operator or dealer.
    (k) Unrecorded sale of cigar tobacco. Any sale of cigar tobacco 
which is not recorded on MQ-79 (CF&B), Buyer's Record Book, by the 10th 
day of the month following the month during which the sale dated 
occurred shall be presumed, subject to rebuttal, to be a marketing of 
excess tobacco. The penalty thereon shall be paid by the buyer who fails 
to make the record.
    (l) Floor sweepings. Any person who markets floor sweepings in 
excess of allowable floor sweepings shall be subject to a civil penalty 
of 150 percent of the average market price for the immediately preceding 
marketing year, as determined by the U.S. Department of Agriculture. The 
calculated penalty rate shall be rounded to the nearest whole cent. Any 
floor sweepings on hand more than 30 days (15 days with respect to flue-
cured tobacco) after the warehouse closes for the auction season shall 
be considered marketed. The floor sweepings on hand shall be weighed by 
the warehouse operator and the weight shall be certified by the 
warehouse operator, such weighing to be done in the presence of a 
representative of either the county FSA committee or State FSA 
committee. Floor sweepings which are destroyed in the presence of a 
representative of the county FSA committee, within 30 days (15 days with 
respect to flue-cured tobacco) after the warehouse closes shall not be 
considered as marketed when determining the quantity of floor sweepings 
marketed. If the county FSA committee determines, after the warehouse 
has been closed for the auction season for more than 30 days (15 days 
with respect to flue-cured tobacco), that the cumulative quantity of 
floor sweepings marketed and considered marketed in the current 
marketing year is in excess of the allowable floor sweepings, the person 
responsible for such marketings shall be given notice of the 
determination and shall be afforded an opportunity to request 
reconsideration of such determination in accordance with the provisions 
of part 780 of this chapter. A determination that a civil penalty is due 
for marketing floor sweepings in excess of the allowable floor sweepings 
shall not become final and shall not be assessed until such person has 
been afforded an opportunity for a hearing and such person has exhausted 
the applicable administrative remedies. The notice of assessment shall 
require such person to pay the civil penalty to the ``Farm Service 
Agency, USDA'' within 15 days after the mailing of the notice.
    (m) Blending tobacco not in the form normally marketed by 
producers--burley

[[Page 177]]

and flue-cured tobacco. Tobacco purchased from processors or 
manufacturers that is considered not in the form normally marketed by 
producers that is blended with tobacco in the form normally marketed by 
producers shall not be credited as a purchase to the dealer's or 
warehouse operator's account by the State FSA committee when reconciling 
the warehouse operator's leaf account or the dealer's purchases and 
resales. Tobacco not in the form normally marketed by producers that is 
blended with other tobacco shall be deemed to be excess tobacco and 
penalty shall be due on the pounds of tobacco by which a warehouse 
operator's or dealer's resales exceed prior purchases.
    (n) Advances and other cases in which the producer's marketing card 
is used improperly. For tobacco of any kind to which this part applies, 
if tobacco is marketed by a person by using the producer's marketing 
card or the tobacco is pledged for a price support loan by using that 
card, but under the provisions of part 1464 of this title, the producer 
is deemed to have not been an ``eligible producer'' with respect to the 
disposition of that tobacco at the time because of an advance or other 
preauction arrangement, such disposition of the tobacco shall be 
considered a false identification of the tobacco and may be considered 
to be a marketing of excess tobacco. In such cases, the person who paid 
the advance, took possession of the tobacco, or made the agreement with 
the producer which made the producer no longer an ``eligible producer'' 
with respect to the tobacco, shall be jointly and severally liable with 
the producer for any penalty with respect to such disposition which is 
levied against the producer under the provisions of this part and 
additionally, if such disposition is determined to be a marketing of 
excess tobacco, shall be liable for a penalty calculated by using the 
penalty rate for the tobacco involved multiplied by the pounds of 
tobacco involved. These remedies shall be in addition to any other 
remedies which may apply, including but not limited to, any liability 
for a refund of any price support loan advances which were paid in the 
name of, or for the account of, the producer of the tobacco.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21444, May 9, 1991; 57 
FR 43583, Sept. 21, 1992; 63 FR 11583, Mar. 10, 1998]



Sec. 723.411  Records and reports regarding hauling, processing, and storage of tobacco.

    (a) Trucker records. Each trucker shall keep such records as will 
enable such trucker to furnish the State FSA office a report with 
respect to each lot of tobacco received by such trucker showing.
    (1) The name and address of the producer;
    (2) The date of receipt of the tobacco;
    (3) The number of pounds received;
    (4) The location where received; and
    (5) The name and address of the person to whom it was delivered.
    (b) Processor records. Each firm engaged in the business of 
processing tobacco shall keep records with respect to each lot of 
tobacco received by such firm showing:
    (1) The name and address of producer, dealer, warehouse operator, or 
other person for whom the tobacco was received.
    (2) The date of receipt of tobacco.
    (3) The number of pounds (green weight) received.
    (4) The purpose for which tobacco was received (redrying or 
stemming).
    (5) The amount of any advance or loan made by such person on the 
tobacco.
    (6) The disposition of the tobacco including the net weight of the 
tobacco processed and the number of containers by classification 
(strips, stems, scrap or leaf).
    (7) Person to whom delivered and pounds involved.
    Any such firm shall report this information to the State FSA office 
of the State in which the business is located within 15 days of the end 
of the marketing year, except for tobacco handled for an association 
operating the price support program and tobacco purchased at auction or 
tobacco which was previously reported on Form MQ-79. Where such firm 
qualifies for the exemption in Sec. 723.405 of this part, such

[[Page 178]]

firm is required to report only such tobacco received that does not 
belong to such firm.
    (c) Records for stored tobacco. Each firm engaged in storing 
unprocessed tobacco shall keep records with respect to each lot of 
unprocessed tobacco received by such firm showing:
    (1) The name and address of producer, dealer, warehouse operator, 
marketing agent or other person for whom the tobacco was received;
    (2) The date and receipt of the tobacco;
    (3) The number of pounds received;
    (4) The amount of any advance or loan made by such firm;
    (5) The disposition of the tobacco; and
    (6) The person to whom delivered and the pounds involved.
    Any such firm shall report this information to the State FSA office 
of the State in which the business is located within 15 days of the end 
of the marketing year, except for tobacco handled for an association 
operating the price support program and tobacco purchased by such firm 
at auction or for which such firm had previously reported on Form MQ-79. 
Where such firm qualifies for the exemption in Sec. 723.405 of this 
part, the firm is only required to report such tobacco received for 
storage that does not belong to such firm.



Sec. 723.412  Separate records and reports from persons engaged in tobacco related businesses.

    Any person who is required to keep any record or make any report as 
a warehouse operator, dealer, buyer, trucker, or as a person engaged in 
the hauling, processing, or storage of tobacco, and who is engaged in 
more than one such business, shall keep such records as will enable such 
person to make separate reports for each such business in which such 
person is engaged to the same extent for each such business as if the 
person were engaged in no other business.



Sec. 723.413  Length of time records and reports are to be kept.

    Records to be kept and copies of the reports required to be made by 
any person under this subpart shall be on a marketing year basis and 
shall be retained for 3 years after the end of the marketing year. 
Records shall be kept for such longer period of time as may be requested 
in writing by the State FSA executive director, or the Director.



Sec. 723.414  Failure to keep records and make reports or making false report or record.

    (a)(1) Failure to keep records and make reports. Under the 
provisions of section 373(a) of the Act, any warehouse operator, 
processor, buyer, dealer, trucker, or person engaged in the business of 
sorting, redrying, stemming, packing, or otherwise processing tobacco 
who fails to make any report or keep any record as required, or who 
makes any false report or record, is guilty of a misdemeanor, and upon 
conviction shall be subject to a fine of not more than $500 for each 
offense. In addition, any tobacco warehouse operator, dealer, or buyer 
who fails, upon being requested to do so, to remedy a violation by 
submitting complete reports and keeping accurate records shall be 
subject to an additional fine, not to exceed $5,000.
    (2) Failure to obtain producer marketing card or sale memo. The 
failure of any dealer or warehouse operator to obtain a:
    (i) Producer's marketing card, MQ-76 and MQ-77, to identify a sale 
of producer tobacco, or
    (ii) Dealer identification card, MQ-79-2, to cover a resale of 
tobacco, shall constitute a failure to make a report.
    (b) False representation--warehouse operators, dealers, and 
processors. The monetary penalties described in this part are in 
addition to penalties prescribed by other criminal statutes including 18 
U.S.C. 231 which provides for a fine of not more than $10,000 or 
imprisonment for not more than 5 years, or both, for a person convicted 
of knowingly and willingly committing such acts as making a false 
acreage report, altering a marketing card, falsely identifying tobacco 
or buying and selling unused ``103 percent of quota poundage'' on 
marketing cards.
    (c) Misrepresentation and scheme or device. A warehouse operator or 
dealer

[[Page 179]]

who is determined by FSA to have knowingly:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of the tobacco program.
    (2) Made any fraudulent representation,
    (3) Misused a MQ-76 or MQ-79-2, or
    (4) Sold excess tobacco, shall pay a marketing quota penalty as 
prescribed in this part.

[55 FR 39914, Oct. 1, 1990, as amended at 56 FR 21444, May 9, 1991]



Sec. 723.415  Examination of records and reports.

    For the purpose of ascertaining the correctness of any report made 
or record kept, or of obtaining the information required to be 
furnished, in any report, but not so furnished, any warehouse operator, 
processor, dealer, buyer, trucker, or person engaged in the business of 
sorting, redrying, stemming, picking, or otherwise processing tobacco 
for producers, shall make available at one place for examination by 
representatives of the State FSA executive director and by employees of 
the Office of Investigation and Office of Audit, and of the Tobacco and 
Peanuts Division of the Farm Service Agency, U.S. Department of 
Agriculture upon written request by the State FSA executive director, 
all such books, papers, records, lot tickets, tobacco sale bills, buyer 
adjustment invoices, accounts, canceled checks, check register, check 
stubs, correspondence, contracts, documents, warehouse bill-out invoices 
or daily summary journal sheet, the tissue copy of Form MQ-72-l, Report 
of Tobacco Auction Sale, journal of producer marketing cards retained at 
warehouse and memoranda as the State FSA executive director has reason 
to believe are relevant and are within the control of such person.



Sec. 723.416  Information confidential.

    All data reported to or acquired by the Secretary pursuant to the 
provisions of this subpart shall be kept confidential by all officers 
and community committees, and all county FSA office employees. Only such 
data so reported or acquired as the Deputy Administrator deems relevant 
shall be disclosed by them, and then only in a suit or administrative 
hearing under title III of the Act. The provisions of this section shall 
not be deemed to prohibit the issuance of general statements based upon 
the report of a number of parties which statements do not identify the 
information furnished by any person.



Subpart E--Establishing Burley and Flue-Cured Tobacco National Marketing 
                                 Quotas

    Source: 63 FR 11583, Mar. 10, 1998, unless otherwise noted.



Sec. 723.501  Scope.

    This subpart sets out regulations for setting annual national 
marketing quotas for burley and flue-cured tobacco based on the purchase 
intentions of certain manufacturers of cigarettes and on other factors. 
It also sets out penalty provisions for manufacturers who fail to 
purchase, within the tolerances set in this part, the amount of domestic 
tobacco, by kind, reflected in the stated intention as accounted for in 
accordance with this subpart.



Sec. 723.502  Definitions.

    In addition to the definitions set forth at Sec. 723.104, the 
definitions set forth in this section shall be applicable for purposes 
of administering the provisions of this subpart.
    CCC. The Commodity Credit Corporation, an instrumentality of the 
USDA.
    Domestic manufacturer. A domestic manufacturer of cigarettes.
    Domestic manufacturer of cigarettes. A manufacturer, who as 
determined by the Director, produces and sells more than 1 percent of 
the cigarettes produced and sold in the United States annually.
    Price support inventory. The inventory of tobacco which, with 
respect to a particular kind of tobacco, has been pledged as collateral 
for a price support loan made by CCC through a producer-owned 
cooperative marketing association.
    Producer owned cooperative marketing associations. Those 
associations or their successors, which by law act as agents for 
producers for price support loans

[[Page 180]]

for tobacco, and which were, as of January 1, 1996, for burley and flue-
cured tobacco, the Burley Tobacco Growers Cooperative Association, the 
Burley Stabilization Corporation, and the Flue-Cured Tobacco Cooperative 
Stabilization Corporation.
    Unmanufactured tobacco. Stemmed and unstemmed leaf tobacco, stems, 
trimmings, and scrap tobacco.



Sec. 723.503  Establishing the quotas.

    (a) General. Subject to the 3-percent adjustment provided for in 
paragraph (b) of this section, the annual marketing quotas for burley 
and flue-cured tobacco shall be calculated for each marketing year for 
each kind separately as follows:
    (1) Domestic manufacturer purchase intentions. First, for each kind 
and year, the Director shall calculate the aggregate relevant purchaser 
intentions as declared or set under this section.
    (2) Exports. Next, the Director shall add to the total determined 
under paragraph (a)(1) of this section the amount which is equal to the 
Director's determination of the average quantity of exported domestic 
leaf tobacco of the applicable kind for the past 3 marketing years. For 
this purpose, exports include unmanufactured tobacco only, including, 
but not limited to, stemmed and unstemmed leaf tobacco, stems, 
trimmings, and scrap tobacco, and excludes tobacco contained in 
manufactured products including, but not limited to, cigarettes, cigars, 
smoking tobacco, chewing tobacco, snuff and semi-processed bulk smoking 
tobacco. The quantity of exports for the most recent year, as needed, 
may be estimated.
    (3) Reserve stock level adjustment. The Director may then adjust the 
total calculated by adding the sums of paragraphs (a)(1) and (a)(2) of 
this section, by making such adjustment which the Director, in his 
discretion, determines necessary to maintain inventory levels held by 
producer loan associations for burley and flue-cured tobacco at the 
reserve stock level. For burley tobacco, the reserve stock level for 
these purposes is the larger of 50 million pounds farm sales weight or 
15 percent of the previous year's national marketing quota. For flue-
cured tobacco, the reserve stock level for these purposes is the larger 
of 100 million pounds farm sales weight or 15 percent of the previous 
year's national marketing quota. Any adjustment under this clause shall 
be discretionary taking into account supply conditions; however, for 
burley tobacco no downward adjustment under this clause may exceed the 
larger of 35 million pounds (farm sales weight) or 50 percent of the 
amount by which loan inventories exceed the reserve stock level.
    (b) Additional 3-percent adjustment. The amount otherwise calculated 
under paragraph (a) of this section may be adjusted by the Director by 3 
percent of the total. This adjustment is discretionary and may be made 
irrespective of whether any adjustment has been made under paragraph 
(a)(3) of this section and may be made to the extent the Director deems 
such an adjustment is in the best interest of the program.
    (c) Dates of announcement. For flue-cured tobacco, the quota 
determination should be announced by December 15 preceding the marketing 
year. For burley, the announcement should be made by February 1 
preceding the marketing year.



Sec. 723.504  Manufacturers' intentions; penalties.

    (a) Generally. Each domestic manufacturer shall, for each marketing 
year, for burley and flue-cured tobacco separately, submit a statement 
of its intended purchases of eligible tobacco by the date prescribed in 
paragraph (d) of this section; further, at the end of the marketing 
year, each such manufacturer shall submit a statement of its actual 
countable purchases of eligible tobacco for that marketing year, by 
kind, for burley and flue-cured tobacco. For these purposes, countable 
purchases of eligible tobacco shall be as defined in, and determined 
under, paragraph (b) of this section. If a domestic manufacturer fails 
to file a statement of intentions, the Director shall declare the amount 
which will be considered that manufacturer's intentions for the 
marketing year. That declaration by the Director shall be based on the 
domestic manufacturer's previous reports, or such other information as 
is

[[Page 181]]

deemed appropriate by the Director in the Director's discretion. Notice 
of the amount so declared shall be forwarded to the domestic 
manufacturer. If the domestic manufacturer fails to file a year-end 
report or files an inaccurate or incomplete report, then the Director 
may deem that the manufacturer has no purchases to report or take such 
other action as the Director believes is appropriate to fulfill the 
goals of this section. Intentions and purchases of countable tobacco 
will be compared for purposes of determining whether a penalty is due 
from the domestic manufacturer.
    (b) Eligible tobacco for statements of intentions and countable 
purchases toward those intentions. For reports and determinations under 
this section, eligible tobacco for purposes of determining the countable 
purchases under paragraph (a) of this section will be unmanufactured 
domestic tobacco of the relevant kind for use to manufacture, for 
domestic or foreign consumption, cigarettes, semi-processed bulk smoking 
tobacco and other tobacco products. Eligible tobacco for these purposes 
does not include tobacco purchased for export as leaf tobacco, stems, 
trimmings, or scrap. Countable purchases of eligible tobacco shall 
include purchases of eligible tobacco made by domestic manufacturers 
directly from the producers, from a regular auction market, or from the 
price support loan inventory, and shall also include purchases by the 
manufacturer where the manufacturer purchases or acquires the tobacco 
from dealers or buyers who purchased the tobacco for the domestic 
manufacturer during the relevant marketing year directly from a 
producer, at a regular auction market, or from the price support loan 
inventory.
    (c) Weight basis and nature of reports. The weight basis used for 
all reports and comparisons shall be a farm sales weight basis unless 
the Director permits otherwise and all reports will be considered to 
have been made on that basis unless the report clearly states otherwise. 
Submitted reports shall be assumed to cover countable purchases of 
eligible tobacco only, absent indications to the contrary.
    (d) Due dates and addresses for reports. For flue-cured tobacco, the 
domestic manufacturer's statement of intentions shall be submitted by 
December 1 before the marketing year and the year-end report shall be 
submitted by August 20 following the end of the marketing year. Those 
respective dates for burley tobacco shall be January 15 before the 
burley tobacco marketing year and November 20 after the burley tobacco 
marketing year. Reports shall be mailed or delivered to the Director, 
Tobacco and Peanuts Division, STOP 0514, 1400 Independence Avenue, SW, 
Washington, DC 20250-0514.
    (e) Penalties. A domestic manufacturer shall be liable for a penalty 
equal to twice the purchaser's no-net-cost assessment rate per pound for 
the applicable kind of tobacco for the relevant marketing year, if the 
manufacturer's purchases of either burley or flue-cured tobacco for the 
marketing year do not equal or exceed, as determined by the Director, 90 
percent of their stated purchase intentions for that kind of tobacco for 
the relevant marketing year. The Director shall adjust the domestic 
manufacturer's intentions, however, to the extent, that producers have 
not produced the full amount of the national quota for the relevant 
marketing year for the particular kind of tobacco. The burden of 
establishing all purchases shall be with the domestic manufacturer and 
the Director may, in the case of indirect purchases for the 
manufacturer, require that the manufacturer obtain verification of the 
purchases by the dealer who made the purchase from the producer, at a 
regular auction market, or from the price support loan inventory, in 
order to assure that the tobacco is, to the manufacturer, a countable 
purchase. The Director may require such additional information as 
determined needed to enforce this subpart.
    (f) Penalty notice and penalty remittance. Penalties will be 
assessed after notice and an opportunity for hearing before the 
Director. Remittances are to be made to the CCC and will be credited to 
the applicable producer loan association's no-net-cost fund or account 
as provided for in part 1464 of this title.
    (g) Maintenance and examination of records. Each domestic 
manufacturer

[[Page 182]]

shall keep all relevant records of purchases, by kind, of burley and 
flue-cured tobacco for a period of at least 3 years. The Director, 
Office of Inspector General, or other duly authorized representative of 
the United States may examine such records, receipts, computer files, or 
other information held by a domestic manufacturer that may be used to 
verify or audit such manufacturer's reports. The reasonable cost of such 
examination or audit may be charged to the domestic manufacturer who is 
the subject of the examination or audit. All records examined or 
received under this part by officials of the Department of Agriculture 
shall be kept confidential to the extent required by law.



PART 729--PEANUTS--Table of Contents




                      Subpart A--General Provisions

Sec.
729.101  Paperwork Reduction Act assigned number.
729.102  Applicability.
729.103  Definitions.
729.104  Administration.
729.105  Types of peanuts.
729.106  Extent of calculations and rule of fractions.
729.107  Location of farms for administrative purposes.
729.108  Request for reconsideration or appeal.
729.109  Instructions and forms.

 Subpart B--Poundage Quotas, Notices of Quotas, Transfers, and Release 
                           and Reapportionment

729.201  Apportionment of National poundage quota to States.
729.202  Reserve for corrections.
729.203  Quota not produced.
729.204  Temporary seed quota allocation.
729.205  Farms ineligible for farm poundage quota.
729.206  Determining a farm's basic quota.
729.207  Tenants sharing in increased quota.
729.208  Allocation of quota for experimental and research programs.
729.209  Tillable cropland limitation.
729.210  Determining a farm's effective quota.
729.211  Determination of farm yields.
729.212  Approval of farm yield and farm poundage quota and notice to 
          farm operator.
729.213  Erroneous notice of effective farm poundage quota.
729.214  Transfer of quota by sale, lease, owner, or operator.
729.215  Release and reapportionment of quota.
729.216  National poundage quota.

   Subpart C--Marketing Cards, Marketings, Penalties, and Assessments

729.301  Issuance of cards.
729.302  Identification of producer marketings.
729.303  Designation of category for marketing peanuts.
729.304  Marketing card entries.
729.305  Peanuts on which penalties are due and refund of excess penalty 
          collected.
729.306  Farms with one acre or less of peanuts.
729.307  Assessment of penalties; joint and several liability.
729.308  Lien for penalty.
729.309  Persons to pay penalty or collect debts.
729.310  Payment of penalty or other debt.
729.311  Peanuts on which penalties are not to be assessed.
729.312  Reduction or waiver of penalty.
729.313  Failure to comply with program.
729.314  Schemes and devices.
729.315  Handling Segregation 3 peanuts.
729.316  Marketing assessments.
729.317  Increased marketing assessments.

           Subpart D--Recordkeeping and Reporting Requirements

729.401  Peanuts marketed to persons who are not registered handlers.
729.402  Report on marketing card.
729.403  Report of marketing green peanuts.
729.404  Report of acquisition of seed peanuts.
729.405  Report of production and disposition.
729.406  Persons engaged in more than one business.
729.407  Penalty for failure to keep records and make reports.
729.408  Examination of records and reports.
729.409  Length of time records and reports are to be kept.

    Authority: 7 U.S.C. 1301,1357 et. seq., 1372, 1373, 1375; 7 U.S.C. 
7271; and 15 U.S.C. 714b and 714c.

    Source: 56 FR 16211, Apr. 19, 1991, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 729.101  Paperwork Reduction Act assigned number.

    The information collection requirements contained in 7 CFR part 729 
have

[[Page 183]]

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 0560-0006.



Sec. 729.102  Applicability.

    The regulations contained in 7 CFR part 729 are issued in accordance 
with the Agricultural Adjustment Act of 1938, as amended, and are 
applicable to the 1996 through 2002 crops of peanuts. They govern the 
establishment of farm poundage quotas, the issuance of marketing cards, 
the identification of marketings of peanuts, the collection and refund 
of penalties, the keeping of records, and the making of reports incident 
thereto. The peanut marketing quota and disposition requirements for 
peanuts for the 1991 through 1995 crops shall, as applicable, continue 
to be governed by the regulations codified at 7 CFR part 729, as of 
April 1, 1996.

[56 FR 16211, Apr. 19. 1991, as amended at 61 FR 36999, July 16, 1996]



Sec. 729.103  Definitions.

    (a) Applicability. The definitions set forth in this section shall 
be applicable for all purposes of program administration for peanuts 
except as may otherwise be indicated. The definitions in, and provisions 
of, parts 718, 719, and 720 of this chapter and 1446 of this title are 
hereby made applicable to these regulations unless the context or 
subject matter or the provisions of these regulations require otherwise.
    (b) Terms. The following terms shall be defined as set forth in this 
paragraph.
    Act. The Agricultural Adjustment Act of 1938, as amended.
    Additional peanuts. Any peanuts which are marketed from a farm other 
than peanuts marketed or considered marketed as quota peanuts.
    Base period. The 3 crop years immediately preceding the current year 
for which a basic quota is being established.
    Basic penalty rate. The per pound amount determined by multiplying 
the national support level per ton for quota peanuts, as announced by 
the Secretary for the applicable marketing year, by 1.4 and dividing the 
result by 2000.
    Basic quota. A farm's share of the peanut poundage quota allocated 
to a State. The basic quota for the current year is the preliminary 
quota as adjusted pursuant to this part for any:
    (i) Increase or decrease in the State poundage quota from the 
poundage quota allocated to the State for the preceding year;
    (ii) Reduction in the quota due to nonproduction;
    (iii) Reduction for permanent release of quota from the farm in the 
current year;
    (iv) Permanent transfers of quota to or from the farm for the 
current year; and
    (v) Reallocation of quota to the farm from quotas;
    (A) Reduced for nonproduction.
    (B) Permanently released.
    Buyer. A person, who also may be known as a handler, who:
    (i) Buys or otherwise acquires peanuts in any form;
    (ii) Markets, as a commission merchant, broker, cooperative, agent, 
or in any other capacity, any peanuts for the account of a producer and 
is responsible to the producer for the amount received for the peanuts; 
or
    (iii) Receives peanuts as collateral for, or in settlement of, a 
price support loan.
    CCC. The Commodity Credit Corporation, a financial instrumentality 
within the United States Department of Agriculture.
    Commingled peanuts. Peanuts that were produced on 2 or more farms 
and loaded into a single conveyance in such manner that the peanuts 
become, or can become, intermingled and as a result making it impossible 
to divide the peanuts into separate lots in such manner that the peanuts 
may be identified accurately as to the farm of production at the time of 
marketing.
    Considered produced credit. If the marketings of peanuts from a farm 
in the current year are less than such farm's basic quota, the credit 
granted in the current year (but not to exceed the basic quota 
established for the farm for the current year less the pounds of peanuts 
which were produced and marketed from the farm during the current 
marketing year) for the amount of one or more of the following as may 
apply:

[[Page 184]]

    (i) Peanuts that the county committee determines, according to 
instructions provided by the Deputy Administrator, were not produced 
because of drought, flood or any other natural disaster or any other 
condition beyond the control of the producer. Conditions beyond the 
control of the producer are for this purpose:
    (A) Unavailability of an adequate supply of seed to plant an acreage 
of peanuts that is sufficient to produce the basic quota.
    (B) A court order that prevents access to the farm or otherwise 
prevents the release or transfer of the peanut quota in a manner in 
which considered produced credit could be earned.
    (ii) A peanut poundage quota that was leased and transferred by a 
transfer agreement that was filed before August 1 of the current year to 
the extent the quota was produced or considered produced on the 
receiving farm; provided further, that to the extent that for any base 
period a farm receives credit under this paragraph, such farm may not 
receive credit under paragraph (iii) of this definition.
    (iii) Peanut poundage quota that was voluntarily released for the 
current year, or was leased and transferred by a transfer agreement that 
was filed before August 1 of the current year, if neither of the 
following are applicable:
    (A) Part, or all, of the quota was voluntarily released during any 2 
or more years of the base period, or
    (B) Part, or all, of the quota was leased and transferred to another 
farm within the same county during any 2 or more years of the base 
period.
    (iv) A farm's basic quota that was not produced if the Farmers Home 
Administration or the Farm Service Agency had control of, or title to, 
such farm.
    (v) Peanut quota converted from the production of peanuts in 
accordance with part 1410 of this title.
    (vi) Quota in an eminent domain pool.
    Converted penalty rate. The per pound amount determined by 
multiplying the basic penalty rate by the result obtained when the 
absolute value (positive or negative) of the difference between the 
acreage of peanuts reported by the farm operator and the acreage of 
peanuts determined to have been planted on the farm as determined in 
accordance with part 718 of this chapter is divided by the acreage of 
peanuts determined for such farm.
    Deputy Administrator. The Deputy Administrator for Farm Programs, 
Farm Service Agency.
    Director. The Director, or Acting Director, Tobacco and Peanuts 
Division, Farm Service Agency, U.S. Department of Agriculture.
    Effective quota. The basic quota as adjusted for the applicable crop 
year for:
    (i) Temporary transfers of quota to or from the farm;
    (ii) Temporary releases of quota from the farm;
    (iii) Temporary reapportionment of quota to the farm;
    (iv) Quota converted and reduced in the current year from the 
production of peanuts pursuant to regulations in part 704 of this 
chapter for the Conservation Reserve Program, or in any other 
regulations for that program or similar program; and
    (v) Temporary seed quota allocated to the farm.
    Electronic (smart) marketing card. A CCC approved standard card for 
use in identifying peanuts when marketed, and which contain a micro 
computer chip on which applicable:
    (i) Farm data is recorded by the county FSA office before the 
marketing card is issued to the farm operator.
    (ii) Marketing data is recorded at the buying point when the peanuts 
are marketed.
    Excess peanuts. The quantity of peanuts:
    (i) Marketed or considered marketed as quota peanuts from the farm 
in the current marketing year in excess of the farm's effective quota, 
or
    (ii) Marketed as contract additional peanuts from the farm in the 
current marketing year in excess of the amount contracted in accordance 
with part 1446 of this title.
    False identification. The deliberate or inadvertent identification 
of peanuts at the time of marketing as being produced on a farm when the 
peanuts were not produced on such farm.
    Farm production history. The sum of the produced and considered 
produced

[[Page 185]]

quantity of peanuts for a farm during the base period.
    Farm yield. The yield established for a farm for the immediately 
preceding year on the basis of peanut production on the farm or on 
similar farms during the years 1973 through 1977 or, if a farm yield was 
not established for the preceding year, the yield appraised by the 
county committee that is fair and reasonable on the basis of farm yields 
established on other farms in the locality on which the soil and other 
physical factors affecting production are similar.
    Farmers stock peanuts. Picked or threshed peanuts produced in the 
United States which have not been changed (except for removal of foreign 
material, loose shelled kernels, and excess moisture) from the condition 
in which picked or threshed peanuts are customarily marketed by 
producers, plus any loose shelled kernels that are removed from farmers 
stock peanuts before such farmers stock peanuts are marketed.
    Final acreage. The acreage devoted to peanuts on a farm, excluding 
any acreage devoted to green peanuts, as determined in accordance with 
part 718 of this chapter.
    First purchaser. Any person acquiring peanuts from a producer except 
that in the case of peanuts forfeited by a producer to CCC or brought 
from the price support loan inventory, the term means the person 
acquiring the peanuts from CCC or the inventory.
    FSA. The Farm Service Agency of the Department of Agriculture.
    Green peanuts. Peanuts which, before drying or removal of moisture 
from the peanuts either by natural or artificial means, are marketed by 
the producer for consumption exclusively as boiled peanuts.
    Inspector. A Federal or Federal-State inspector authorized or 
licensed by the Secretary, U.S. Department of Agriculture to grade 
peanuts.
    Loan additional peanuts. Peanuts which are pledged as collateral for 
a price support loan at the applicable additional loan rate established 
by or for CCC.
    Market. To dispose of peanuts (including farmers stock peanuts, 
shelled peanuts, cleaned peanuts, or peanuts in processed form) by 
voluntary or involuntary sale, barter, or exchange, or by gift inter 
vivos. The terms ``marketed'', ``marketing'', and ``for market'' shall 
have corresponding meanings to the term ``market'' in the connection in 
which they are used. The terms ``barter'' and ``exchange'' shall include 
the use of any quantity of peanuts by the producer as payment to another 
for any reason including payment for the harvesting, picking, threshing, 
cleaning, crushing, or shelling of peanuts, or for any other service 
rendered to the producer. Any lot of farmers stock peanuts will be 
considered as marketed when acquired from the producer. Peanuts which 
are delivered by the producer as collateral for, or in settlement of, a 
price support loan will be considered as marketed at the time of 
delivery. Delivery shall be deemed to have occurred when the peanuts are 
unloaded at the delivery point. Any peanuts produced on a farm which are 
retained on the farm after January 31, or such later date as may be 
established by the Executive Vice President, CCC, of the year following 
the year in which the peanuts were produced shall be considered as 
marketed for domestic edible use as of January 31, or such later date.
    Marketing year. The 12 month period beginning on August 1 of a 
current year in which the peanuts are grown and ending July 31 of the 
following year.
    National poundage quota. The poundage quota announced by the 
Secretary for the relevant crop year.
    Nonquota farm. A farm that does not have a basic quota greater than 
zero for the current year.
    Peanut quantity marketed or considered marketed. With respect to a 
lot of farmers stock peanuts, the quantity of such peanuts that is 
marketed or considered marketed shall be:
    (i) Inspected peanuts. For peanuts inspected by the Federal-State 
Inspection Service at the time of marketing, the gross weight of the lot 
less foreign material in the lot and less moisture in excess of 7 
percent of gross weight for the lot.
    (ii) Noninspected peanuts. For peanuts not inspected by the Federal-
State Inspection Service at the time of marketing, the gross weight of 
the lot.

[[Page 186]]

    (iii) Shelled peanuts. For shelled peanuts marketed by a producer, 
the poundage of the shelled peanuts in the lot multiplied by a factor of 
1.5.
    Peanuts. All peanuts produced, excluding:
    (i) Any peanuts which were not dug;
    (ii) Any dug peanuts not picked or threshed which are disposed of 
under the direction and supervision of FSA personnel; and
    (iii) Green peanuts.
    Planted acreage. The acreage on which peanuts were planted in a 
workmanlike manner determined in accordance with the provisions of part 
718 of this chapter.
    Preliminary quota. For the current year and an eligible farm, the 
basic quota established for the farm for the preceding year to the 
extent that the farm is not subject to a reduction in quota.
    Quota farm. A farm having a basic quota greater than zero in the 
current year.
    Quota peanuts. Peanuts (except green peanuts) which are marketed or 
considered marketed from a farm for domestic edible use. Quota peanuts 
shall be considered to be all peanuts which are dug on a farm except the 
following:
    (i) Green peanuts;
    (ii) Peanuts which are placed under loan at the additional loan rate 
and not redeemed by the producer;
    (iii) Peanuts which are marketed in accordance with the requirements 
of this part as contract additional peanuts.
    (iv) Peanuts considered marketed but because of conditions beyond 
the control of the producer had no commercial value as determined by the 
FSA at the time the peanuts were marketed.
    Seed sheller. A person who in the course of such person's usual 
business operations shells peanuts for use as seed for the subsequent 
year's crop.
    Temporary seed quota. Quota temporarily allocated for the current 
crop year only and in an amount determined by FSA to account for the 
amount of seed peanuts planted on the farm for production of peanuts, 
excluding green peanuts and peanuts produced under the one-acre 
exemption set forth in Sec. 729.306 of this part.
    Tillable cropland. Cropland (excluding orchards, vineyards, land 
devoted to trees, and land being prepared for nonagricultural uses) 
which the county committee determines can be planted to crops without 
unusual preparation or cultivation.
    Yield per acre or actual yield. The yield of peanuts for a farm for 
a crop year computed by dividing the total production of peanuts for the 
farm by the final acreage of peanuts for the farm.

[56 FR 16211, Apr. 19, 1991, as amended at 56 FR 38327, Aug. 13, 1991; 
57 FR 27144, June 18, 1992; 61 FR 36999, July 16, 1996; 62 FR 25438, May 
9, 1997; 65 FR 8247, Feb. 18, 2000]



Sec. 729.104  Administration.

    (a) The regulations in this part will be administered under the 
general supervision of the Administrator, FSA, and shall be carried out 
in the field by State and county FSA 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 of this part.
    (c) The State committee:
    (1) Shall instruct a county committee to:
    (i) Correct any action taken by such committee which is not in 
accordance with the regulations of this part, or
    (ii) Withhold taking any action which such committee is known to be 
contemplating if such action is not in accordance with the regulations 
of this part.
    (iii) Take any action required in accordance with the regulations of 
this part if such county committee has knowingly failed to take such 
action.
    (2) May, after duly instructing a county committee in accordance 
with paragraph (c)(1) of this section, correct or modify any action 
required by these regulations that such committee has failed or refused 
to take.
    (d) The Deputy Administrator:
    (1) Shall instruct a State committee to:
    (i) Correct any action taken by such committee which is not in 
accordance with the regulations of this part, or
    (ii) Withhold taking any action which such committee is known to be

[[Page 187]]

contemplating if such action is not in accordance with this part.
    (iii) Take any action required in accordance with regulations of 
this part if such State committee has knowingly failed to take such 
action.
    (2) Shall after duly instructing the State committee in accordance 
with paragraph (d)(1) of this section, correct or modify any action 
required by these regulations that such committee has failed or refused 
to take.
    (3) May waive or modify deadlines and other program requirements in 
cases for which the Deputy Administrator determines that lateness, or 
failure to meet such other requirements, as applicable, does not affect 
adversely the operation of the peanut program. Such authority shall 
include, but not be limited to, the delegation of the authority to the 
State FSA committee to, acting in accordance with such instructions as 
the Deputy Administrator may issue, modify deadlines for the filing of 
transfer of peanut quotas.
    (e) Notwithstanding any provisions in the regulations of this part, 
the Administrator, FSA, or a designee, may determine any question 
arising under the regulations of this part or may reverse or modify any 
determination made by a State or county committee.

[56 FR 16211, Apr. 19, 1991, as amended at 61 FR 36999, July 16, 1996; 
62 FR 25438, May 9, 1997]



Sec. 729.105  Types of peanuts.

    Peanuts shall be classified by type into one of the following types 
as identified and determined by the Federal-State Inspection Service:
    (a) Runner;
    (b) Spanish;
    (c) Valencia; or
    (d) Virginia.



Sec. 729.106  Extent of calculations and rule of fractions.

    (a) Computations made pursuant to this part shall be rounded in 
accordance with the provisions of part 793 of this chapter.
    (b) Acreages shall be determined in tenths of an acre.
    (c) Per pound penalties and liquidated damages shall be determined 
in tenths of a cent.
    (d) The following calculations shall be determined in whole pounds:
    (1) Peanuts produced;
    (2) Considered produced;
    (3) Marketed;
    (4) Preliminary quotas;
    (5) Basic quotas;
    (6) Effective quotas;
    (7) Farm yields; and
    (8) Actual yields per acre.



Sec. 729.107  Location of farms for administrative purposes.

    The location of a farm in a county for administrative purposes shall 
be as provided in part 719 of this chapter.



Sec. 729.108  Request for reconsideration or appeal.

    Any producer who is dissatisfied with a determination rendered by 
the county FSA committee under this part may file a request for 
reconsideration or appeal in accordance with part 780 of this chapter.

[56 FR 16211, Apr. 19, 1991, as amended at 61 FR 36999, July 16, 1996]



Sec. 729.109  Instructions and forms.

    The Director shall cause to be prepared and issued such forms and 
instructions as are necessary for carrying out this subpart. The forms 
and instructions shall be approved by, and the instructions shall be 
issued by, the Deputy Administrator.



 Subpart B--Poundage Quotas, Notices of Quotas, Transfers, and Release 
                           and Reapportionment



Sec. 729.201  Apportionment of National poundage quota to States.

    The national poundage quota for peanuts for each of the 1996 through 
2002 crops less a reserve for the correction of errors shall be 
apportioned to States in the same proportion that the national poundage 
quota was allocated to farms in the State for the 1995 crop year. 
Accordingly, based on the poundage quota allocated to farms in the State 
for the 1995 crop year, 16 States shall share in the 1996 through 2002 
national poundage quotas for peanuts and the following factors shall be 
used to allocate such quota to the respective

[[Page 188]]

States: Alabama--0.13445344, Arizona--0.00062508, Arkansas--0.00208329, 
California--0.00043493, Florida--0.04275200, Georgia--0.41291226, 
Louisiana--0.00091430, Mississippi--0.00379765, Missouri--0.00015357, 
New Mexico--0.00580694, North Carolina--0.11052130, Oklahoma--
0.06677613, South Carolina--0.00735223, Tennessee--0.00042788. Texas--
0.13183290, and Virginia--0.07915610.

[56 FR 16211, Apr. 19, 1991, as amended at 56 FR 38328, Aug. 13, 1991; 
61 FR 36999, July 16, 1996]



Sec. 729.202  Reserve for corrections.

    The Director, TPD, will hold a national reserve for purposes of 
correcting errors that are made in determining farm quotas. The Director 
will determine the reserve annually by multiplying the national quota 
announced by the Secretary by 0.0025. To the extent determined 
appropriate, the Director may authorize a State committee to correct any 
error in a farm's quota.

[65 FR 8247, Feb. 18, 2000]



Sec. 729.203  Quota not produced.

    (a) Determining nonproduced quota. For purposes of making a 
reduction in a farm's basic quota when the quantity of peanuts produced 
and considered produced on such farm during any 2 or more years of the 
base period is less than the basic quota established for such farm for 
the respective year, the nonproduced quota shall be determined, for any 
year of the base period for which the sum of the farm's produced and 
considered produced quota is less than such farm's basic quota 
established for such year. The nonproduced quota shall be determined by 
subtracting the sum of the farm's produced and considered produced quota 
for such year from the basic quota established for the farm for such 
year.
    (b) Adjustment to nonproduced quota. For purposes of determining 
basic quota for subsequent crop years, if the basic quota for a farm is 
reduced for nonproduction in accordance with this subpart, the 
nonproduced quota for the base period of the year of the reduction, as 
determined in accordance with paragraph (a) of this section, shall be 
adjusted downward by the amount that the basic quota was reduced. The 
adjustment shall be made in the nonproduced quota by starting with the 
year in which the nonproduced quantity was smallest during the most 
recent 2 years of that base period. If the nonproduced quota was equal 
in each of the most recent 2 years of that base period the adjustment 
shall begin with the most recent year of such 2 year period. If the 
nonproduced quota for the year the adjustment begins is less than the 
amount by which the farm's basic quota was reduced for nonproduction, 
the adjustment to the nonproduced quota shall continue in the remaining 
year of the most recent 2 years of that base period until the 
nonproduced quota has been adjusted by an amount equal to the amount 
that the basic quota was reduced for nonproduction or until the 
nonproduced quota in each of the most recent 2 years of that base period 
has been reduced to zero.



Sec. 729.204  Temporary seed quota allocation.

    (a) Applicability. The temporary allocation of quota pounds, as 
provided in this section shall be determined:
    (1) For the marketing year only in which the crop is planted;
    (2) For eligible producers for each of the 1996 through 2002 
marketing years; and
    (3) To exclude the production of green peanuts and peanuts produced 
under the one-acre exemption provided for in 7 CFR 729.306.
    (b) Quantity of allocation. The temporary quota allocated to a 
producer shall be the farmers stock equivalent pounds of qualifying seed 
peanuts considered planted on the farm as determined by FSA by 
multiplying the acres determined planted to qualifying peanuts times the 
per-acre planting rates of:
    (1) 95 pounds for Runner-type peanuts;
    (2) 110 pounds for Virginia peanuts;
    (3) 80 pounds for Spanish peanuts; and
    (4) 80 pounds for Valencia peanuts.
    (c) Conversion factor. For the purpose of determining the farmers 
stock basis for temporary seed quota allocations under this section, the 
amount of seed planted as determined in accord with

[[Page 189]]

paragraph (b) of this section shall be multiplied by a factor of 1.5.
    (d) Time of notification. The notice of determination for temporary 
seed quota allocations shall be made by the Deputy Administrator as soon 
as practicable following the deadline for filing certifications of 
planted acres.
    (e) Penalty for erroneous certification. If the certified acreage on 
which the temporary seed quota allocation is made is greater than the 
determined acreage, by more than the larger of 1 acre or 5 percent of 
the certified acreage not to exceed 10 acres, and the producer marketed 
the production for the acreage based upon an allocation of temporary 
seed quota on certified acres not determined, a penalty will be 
determined by multiplying the difference between the certified and 
determined acreage times the applicable per acre seeding rate times 140 
percent of the per pound quota support rate for the applicable crop 
year. The penalty amount shall be calculated by multiplying the 
difference between the certified and determined peanut acreage by the 
applicable per acre seeding rate used in the calculation of the 
temporary seed quota by 140 percent of the applicable per pound quota 
support rate for the crop year involved. In addition, a commensurate 
penalty at the same rate may be assessed in cases within the tolerance 
allowed by the previous sentence in any instance in which the variance 
is determined to be due to a scheme or device to defeat the purposes of 
the program, or is repeated. Further, all errors may in all cases result 
in a commensurate diminution of the quota allowed the farm for the 
following year.

[61 FR 36999, July 16, 1996, as amended at 62 FR 25438, May 9, 1997; 65 
FR 8247, Feb. 18, 2000]



Sec. 729.205  Farms ineligible for farm poundage quota.

    (a) Ineligible farms. Except for quota allocated under the 
provisions of Sec. 729.208 for experimental and research programs, 
effective beginning with the 1998 crop year, farm poundage quotas shall 
not be established for farms which are determined by FSA to be owned or 
controlled by:
    (1) Municipalities, airport authorities, schools, colleges, refuges, 
and other public entities (other than a university used for research 
purposes).
    (2) A person:
    (i) Who is not a peanut producer; and
    (ii) Whose primary domicile, as determined by FSA, in the case of 
any individual is in a State outside the State in which the quota is 
allocated or, in the case of an entity, does not qualify under this 
section to be considered to be a resident of the State in which the 
quota is allocated.
    (b) Determination of residency and related rules. (1) For purposes 
of administering paragraph (a) of this section, an entity may be 
considered a resident of the State in which the quota is located if:
    (i) It is determined that a person or persons with at least a 
cumulative 20-percent interest in any such entity are individuals whose 
primary residence is in the State in which the quota is allocated; or
    (ii) As determined appropriate by the Deputy Administrator, the 
corporation or other entity, but not a general partnership or an entity 
not recognized as a separate and distinct legal entity from its members, 
has been created under the laws of the State in which the quota is 
allocated.
    (2) For purposes of the provisions of (a)(2)(i) of this section, a 
person shall not be considered to be a producer of a crop of peanuts 
unless such person is at risk for at least 15 percent of the proceeds 
from the marketing of the production of the quota at issue.
    (c) Exemption for involuntary acquisition. Paragraph (a)(2) of this 
section shall not apply to any involuntary acquisition of a farm by 
foreclosure, or otherwise, resulting directly from the conduct of a 
public business in the State in which the quota is allocated, or an 
acquisition resulting directly by reason of a death. The exemption for 
involuntary farm acquisitions allowed under the preceding sentence shall 
only apply to the establishment of quota in the three crop years 
immediately following the date of the involuntary acquisition of the 
quota farm.
    (d) Applicable crop year. For purposes of applying the rules in 
paragraph (a)

[[Page 190]]

of this section as they regard production, the determination of whether 
paragraph (a)(2) of this section applies shall be made based on the crop 
last planted before the date on which the determination is to be made.
    (e) Allocating forfeited quota and sales of quotas subject to 
paragraph (a). Except for the exemption for involuntary acquisition in 
Sec. 729.205(c), beginning in 1997 any farm poundage quota held on or 
after August 1 of 1997 by an ineligible person as determined under 
paragraph (a) of this section shall be allocated from the quota farm to 
other farms in the same State in accordance with Sec. 729.206 of this 
part; provided, however, that if the ineligibility arises solely because 
of a purchase of a farm after August 1, 1997, or involves a quota which 
is acquired because of the expiration of a CRP contract after August 1, 
1997, the quota shall not be forfeited but may not be used to market 
peanuts until the ineligibility is determined by the county committee to 
have been removed or the quota is sold to an eligible farm. Such 
reallocations shall be made to the extent practicable but shall take 
into account those instances in which the regulations call for an 
ineligibility for quota allocation rather than forfeiture of the quota.

[61 FR 37000, July 16, 1996, as amended at 62 FR 25438, May 9, 1997]



Sec. 729.206  Determining a farm's basic quota.

    (a) No change in State poundage quota. If the poundage quotas 
allocated to the State for the current year is the same as the State's 
poundage quota for the preceding year, the current year's basic quota 
for each quota farm in the State shall be the same as such farm's 
preliminary quota for the current year.
    (b) Increase in State poundage quota--(1) Eligible farms. If the 
poundage quota allocated to a State for the current year is greater than 
the poundage quota allocated to such State for the preceding year, the 
amount of increase in the poundage quota shall be allocated 
proportionately, on the basis of each farm's production history as 
determined under this part, among:
    (i) All quota farms in the State.
    (ii) All other farms in the State that were nonquota farms in the 
preceding year and on which peanuts were produced and marketed in at 
least 2 years of the base period.
    (2) Factor. A factor shall be determined to apportion, to eligible 
farms, the increase in the State's poundage quota. The factor shall be 
determined by dividing the amount of increase in the State poundage 
quota by the total of the farm production history for all eligible farms 
determined in accordance with paragraph (b)(1) of this section.
    (3) Basic quota. The current year basic quota for each:
    (i) Quota farm in the State shall be the preliminary quota plus an 
amount determined by multiplying the farm's production history by the 
factor determined in accordance with paragraph (b)(2) of this section.
    (ii) Eligible farm that was a nonquota farm in the preceding year 
shall be the result obtained by multiplying such farm's production 
history by the factor determined in accordance with paragraph (b)(2) of 
this section.
    (c) Decrease in State poundage quota. If the poundage quota 
allocated to a State for the current year is less than the poundage 
quota allocated to such State for the preceding year, the current year's 
basic quota for each quota farm in the State shall be determined by 
multiplying the current year's preliminary quota by a factor determined 
by dividing the State quota by the total of the current year's 
preliminary quotas on all farms in the State.
    (d) Reduction for nonproduction of quota--(1) Reconstitutions. If 
the farm resulted from a farm reconstitution during the base period, any 
reduction determined according to this paragraph for nonproduction of 
the basic quota shall be made separately for the individual tracts in 
the farm in such manner as the Deputy Administrator determines to be 
appropriate.
    (2) Reduction amount. The current year's basic quota otherwise 
determined for a farm in accordance with paragraph (a), (b), or (c) of 
this section shall be reduced if, with respect to any 2 years of the 
base period, the county committee determines that part, or all, of the 
basic quota for such farm was not produced or considered produced on the 
farm. The amount of the reduction

[[Page 191]]

shall be the sum of the two smallest quantities, including zero pounds 
if applicable, of nonproduced quota determined in accordance with this 
subpart for such farm during the base period.
    (e) Reallocation of quota reduced or permanently released--(1) 
Eligible farms. The total of quotas permanently released and quotas 
reduced for nonproduction according to paragraph (d) of this section, 
hereinafter referred to as the State quota available for reallocation, 
shall be reallocated to farms on which peanuts were produced and 
marketed in at least 2 years of the base period.
    (2) Factor for reallocation of quotas. The factor(s) for 
reallocating the State quota available for reallocation shall be 
determined as follows:
    (i) Determine State totals of farm production history separately for 
eligible:
    (A) Quota farms.
    (B) Nonquota farms.
    (ii) If the totals of the farm production history from eligible 
quota farms is equal to or greater than 3 times the total of the farm 
production history from eligible nonquota farms, determine a factor by 
dividing the State quota available for reallocation by the sum of the 
separate State totals of farm production history from eligible quota and 
nonquota farms.
    (iii) If paragraph (e)(2)(ii) of this section is not applicable, 
determine separate factors for eligible quota and nonquota farms as 
follows:
    (A) For eligible quota farms, determine the factor by multiplying 
the State quota available for reallocation by .75 and dividing the 
result by the State total of the farm production history from eligible 
quota farms.
    (B) For eligible nonquota farms, determine the factor by multiplying 
the State quota available for reallocation by .25 and dividing the 
result by the State total of farm production history from eligible 
nonquota farms.
    (iv) Notwithstanding paragraphs (e)(2)(ii) and (iii) of this 
section, if the factor determined for a nonquota farm is greater than 
0.3333 a factor of 0.3333 shall be used to reallocate to the nonquota 
farm such nonquota farm's share of the State quota available for 
reallocation.
    (3) Application of factor. The current year's basic quota for each 
eligible farm determined according to paragraph (e)(1) of the section 
shall be determined by multiplying such farm's production history by the 
applicable factor determined in accordance with paragraph (e)(2) of this 
section. If a current year's basic quota otherwise has been determined 
for the farm in accordance with this section, the basic quota determined 
in accordance with this paragraph shall be added to any basic quota 
otherwise determined for such farm in accordance with this section.
    (f) Reallocation in Texas of quota reduced for nonproduction and 
permanently released quota--(1) Special provisions for certain Texas 
Counties. Notwithstanding the provisions in paragraphs (b) and (e) of 
this section, all of the quota reduced for nonproduction on all Texas 
farms, except that portion reallocated to nonquota farms in accordance 
with paragraph (e) of this section, shall be reallocated to farms having 
1990-crop basic quotas in any Texas county in which the production of 
additional peanuts in 1989 exceeded the total of 1989-crop basic quotas 
on all farms in such county. The production of additional peanuts in 
1989 exceeded the total of 1989-crop basic quotas on all farms in each 
of the following Texas counties: Andrews, Bailey, Briscoe, Childress, 
Collingsworth, Dickens, Donley, Gaines, Hale, Hall, Hardeman, Haskell, 
Hidalgo, Hockley, Knox, Lamb, Terry, Wheeler, Wilbarger, and Yoakum 
counties.
    (2) Allocation to counties. Any quota to be allocated to eligible 
Texas counties in accordance with paragraph (f)(1) of this section shall 
be apportioned to the eligible counties on the basis of the total 
production of additional peanuts in the respective counties for the 1988 
crop. Accordingly, based on the production of additional peanuts in 
1988, such quota shall be apportioned to eligible counties according to 
the following factors: Andrews--0.005342, Bailey--0.003007, Briscoe-- 
0.016039, Childress--0.008190, Collingsworth--0.184498, Dickens--
0.000000, Donley--0.03 1981, Gaines--0.413627, Hale--0.000647, Hall--
0.063101, Hardeman--0.010278, Haskell--0.137459, Hidalgo--0.026700, 
Hockley--

[[Page 192]]

0.000679, Knox--0.002818, Lamb--0.026475, Terry--0.009885, Wheeler--
0.003102, Wilbarger--0.000000, and Yoakum--0.056172.
    (3) Exception to allocation to counties. In that Gaines county is 
the only county listed in paragraph (f)(1) of this section for which the 
total of farm basic quotas exceeded 20,000,000 pounds for the 1989 crop 
of peanuts and the total of farm basic quotas in Gaines County for the 
1989 crop was 22,853,615 pounds, if the cumulative increase in the basic 
quota for Gaines County, granted under any special rules for Texas under 
this section and its predecessor for the 1991 and subsequent crops 
exceeds 22,853,615 pounds, the amount in excess of 22,853,615 pounds 
shall, in accordance with the provisions of the authorizing legislation, 
be apportioned to the remainder of the counties listed in paragraph 
(f)(1) of this section on the basis of the total production of 
additional peanuts in the respective counties for the 1988 crop.
    (4) Determining factor for reallocation of quota--(i) To receive a 
share of any quota allocated to eligible Texas counties under paragraph 
(f)(2) of this section, a farm must have had a basic quota greater than 
zero for the 1990 crop of peanuts. If a farm that had a basic quota 
greater than zero in 1990 is reconstituted subsequent to 1990:
    (A) By division, the resulting farms will be considered to have had 
a basic quota greater than zero in 1990 for purposes of determining 
eligibility to receive a share of any quota allocated to eligible Texas 
counties under paragraph (f)(2) of this section.
    (B) By combination, the resulting farm will not be considered to 
have had a basic quota greater than zero in 1990 for purposes of 
determining eligibility to receive a share of any quota allocated to 
eligible Texas counties under paragraph (f)(2) of this section unless, 
prior to the combination, each farm that is involved in the combination 
was considered to have had a basic quota greater than zero in 1990 for 
purposes of determining eligibility to receive an increased quota under 
paragraph (f)(2) of this section.
    (ii) A farm allocation factor shall be determined for each eligible 
farm as follows:
    (A) Using data from the year preceding the year for which the 
reallocation is being made, determine a factor by dividing the quantity 
of contract additional peanuts delivered to handlers from the farm by 
the total remaining peanuts marketed from the farm.
    (B) Total all factors determined in accordance with paragraph 
(f)(4)(ii)(A) of this section.
    (C) Except as may be determined by the Deputy Administrator to avoid 
schemes and devices in contravention of the purposes of this part to 
avoid inequities, the farm allocation factor shall be determined by 
dividing the factor determined in accordance with paragraph 
(f)(4)(ii)(A) of this section by the total determined in accordance with 
paragraph (f)(4)(ii)(B) of this section.
    (5) Increase in basic quota. The basic quota otherwise determined 
for a farm in accordance with the provisions of this section shall be 
increased by an amount determined by multiplying any quota allocated to 
the county in accordance with paragraph (f)(2) of this section by the 
farm allocation factor determined in accordance with paragraph 
(f)(4)(ii)(C) of this section.
    (6) Quotas for eligible nonquota farms. Quotas for eligible nonquota 
farms in any Texas county shall be determined in the same manner as 
provided for other States in paragraph (e) of this section.
    (7) Allocation of increase in State poundage quota. Any increase in 
the State poundage quota for Texas, shall be reallocated to eligible 
farms in any Texas county, including the counties in paragraph (f)(1) of 
this section, in accordance with paragraph (b) of this section.

[56 FR 16211, Apr. 19, 1991, as amended at 56 FR 38328, Aug. 13, 1991; 
57 FR 27144, June 18, 1992. Redesignated and amended at 61 FR 36999, 
37000, July 16, 1996]



Sec. 729.207  Tenants sharing in increased quota.

    (a) General. If the poundage quota allocated to a State is greater 
than the poundage quota allocated to such State for the preceding year, 
an eligible tenant who leased a part or all of a farm in any county in 
such State for the

[[Page 193]]

production of peanuts shall share equally with the farm owner, in 
accordance with the provisions in this section, in that quantity of 
basic quota that is allocated, as a result of the tenants production of 
additional peanuts on the farm during the base period to such farm, from 
the State's increased poundage quota. Farms ineligible for quota 
allocation under Sec. 729.205 do not receive a quota increase; 
therefore, the provisions of this section with respect to tenant share 
are not applicable to such farms.
    (b) Eligible tenant. If a person leased part or all of a farm, and 
had a 100 percent producer interest in one or more fields of peanuts 
that were produced on such farm during the base period, and such farm's 
basic quota is increased as a result of an increase in a State's 
poundage quota, such person shall be considered as an eligible tenant on 
such farm and shall share in such increase in the farm's basic quota if 
such person:
    (1) Qwnership interest. Does not have any ownership interest in such 
farm;
    (2) Shared in previous year's production of peanuts. Shared in the 
production of any peanuts produced on the farm in the crop year 
immediately preceding the crop year for which such increase in basic 
quota is granted;
    (3) Application for share of increase. Files an application at the 
county FSA office of the county in which such farm is located for 
administrative purposes, by February 15 of the crop year for which such 
increase in basic quota is granted, for a share of such increase;
    (4) Supporting proof. Provides supporting proof, that is acceptable 
to the county committee, of the quantity of additional peanuts produced 
on such farm by such person during each year of the base period.
    (c) Tenant's share of increase. An eligible tenant's share of the 
increase in a farm's basic quota shall be one half of an amount 
determined by multiplying the quantity of additional peanuts produced by 
such tenant and for which acceptable proof was provided in accordance 
with paragraph (b)(4) of this section by the factor determined in 
accordance with Sec. 729.206(b)(2) of this part.
    (d) Disposition of tenant's share of increase-(1) By tenant. An 
eligible tenant may dispose of any basic quota determined for such 
tenant in accordance with paragraph (c) of this section. Such 
disposition must take place by:
    (i) Time for disposition. The later of April 1 of the current year 
or 30 days after the date of notification of the amount of such basic 
quota.
    (ii) Manner of disposition. Filing an application at the county FSA 
office to transfer such basic quota:
    (A) Farm owned by tenant. To a farm within the county that is owned 
by such tenant.
    (B) Sale of quota. By sale to the owner of any farm within the 
county in accordance with Sec. 729.214 of this part.
    (2) Allocation to other farms. Any basic quota determined for an 
eligible tenant in accordance with paragraph (c) of this section that is 
not disposed of by such eligible tenant in accordance with paragraph 
(d)(1) of this section shall, to the extent practicable, be reallocated 
to other farms within the State in accordance with Sec. 729.206(e) of 
this part.
    (e) Other provisions. Any increase in a farm's basic quota that 
results from a tenant's production of additional peanuts on such farm 
during the base period shall remain on such farm if the:
    (1) Tenant who otherwise might have qualified to receive a share of 
such increase in basic quota does not file an application for a share of 
such quota in accordance with paragraph (b) of this section; or
    (2) Additional peanuts were produced by a person who was a tenant on 
such farm only during the beginning year of the base period or the 
second year of the base period.

[56 FR 16211, Apr. 19, 1991. Redesignated and amended at 61 FR 36999, 
37000, July 16, 1996; 65 FR 8247, Feb. 18, 2000]



Sec. 729.208  Allocation of quota for experimental and research programs.

    (a) General. A basic quota shall be established for the 1991 crop 
for each land-grant institution identified in the Act of May 8, 1914 (38 
stat. 372, chapter 79; 7 U.S.C. 341 et seq.), colleges eligible to 
receive funds under the Act of August 30, 1890 (26 stat. 419 chapter 
841; 7 U.S.C. 321 et seq), including Tuskegee

[[Page 194]]

Institute and, as appropriate, the Agricultural Research Service of the 
Department of Agriculture if such institution possessed basic quota for 
the 1985 crop year or was authorized under this part at that time to 
market peanuts from the 1985 crop for quota purposes without incurring 
marketing penalties.
    (b) Amount of allocation. The amount of quota allocated from the 
national reserve to an eligible institution shall not exceed the 
poundage quota allocated to the institution for the 1985 crop year and 
shall not exceed the quantity of peanuts that was exempted from payment 
of marketing penalties by such institution for the 1985 crop year, as 
applicable, except that the total pounds allocated for the 1991 crop to 
all institutions in the State shall be allocated so as not to exceed 
one-tenth of one percent of the poundage quota allocated to the State in 
which the respective institutions are located.
    (c) Limitation. The quantity of peanuts marketed by such institution 
by use of the quota granted in accordance with paragraph (b) of this 
section shall not exceed the quantity needed for experimental and 
research purposes. The director of each such institution shall be 
responsible for providing information as needed to determine compliance 
with this section.
    (d) Quota for 1996 through 2002 crops. For each institution with 
continuing eligibility for which a 1995 basic quota was determined in 
accordance with this section or its predecessor, a basic quota shall be 
established for the 1996 through 2002 crops in the same manner as for 
other farms within the State.

[56 FR 16211, Apr. 19, 1991. Redesignated and amended at 61 FR 36999, 
37000, July 16, 1996; 65 FR 8247, Feb. 18, 2000]



Sec. 729.209  Tillable cropland limitation.

    If any person owns a farm for which the basic quota exceeds an 
amount determined by multiplying the larger of the farm yield or the 
highest actual yield for the farm during the base period by the tillable 
cropland on the farm, the person shall take steps, such as the sale of 
quota, the purchase of tillable cropland, the permanent transfer of 
quota, or other similar means that will result in elimination of the 
excess. If such person fails to take such action, the farm's preliminary 
quota for the next year, and the basic quota permanently shall be 
reduced by the amount of the excess.

[56 FR 16211, Apr. 19, 1991. Redesignated at 61 FR 36999, July 16, 1996]



Sec. 729.210  Determining a farm's effective quota.

    The effective quota for a farm shall be the basic quota adjusted by:
    (a) Upward adjustment. Adding the:
    (1) The temporary seed quota allocated to the farm;
    (2) Quota temporarily reapportioned to the farm; or
    (3) Quota temporarily transferred to the farm by either lease, 
owner, or operator.
    (b) Downward adjustment. Subtracting the quota:
    (1) Temporarily transferred from the farm by either lease, owner or 
operator;
    (2) Temporarily released; or
    (3) Converted in the current year from the production of peanuts in 
accordance with part 704 of this chapter or similar program as 
determined by the Deputy Administrator.

[56 FR 16211, Apr. 19, 1991. Redesignated and amended at 61 FR 36999, 
37000, July 16, 1996]



Sec. 729.211  Determination of farm yields.

    (a) Farm yield--(1) Quota farm in previous year. The farm yield for 
the current year for a farm that was a quota farm in the previous year 
shall be the same as the farm yield established for the farm in the 
previous year.
    (2) Nonquota farm. If a farm was a nonquota farm in the year 
preceding the current year and such farm becomes a quota farm in the 
current year, a farm yield shall be determined by the county committee 
if a farm yield has not been established previously for such farm. Such 
farm yield shall be determined on a fair and reasonable basis by the 
county committee after considering the farm yields that have been 
established on other similar farms in the same locality.
    (b) Reconstituted farms. For reconstituted farms, the farm yield for 
such farm shall be:
    (1) Combination of quota farms. For combined quota farms, the 
weighted

[[Page 195]]

average of the farm yields for the tracts being combined.
    (2) Combinations of quota and nonquota farms. For a combination of a 
quota and nonquota farm, the farm yield of the tract(s) with an 
established quota, even though a farm yield had been previously 
established for such nonquota tract(s).
    (3) Combination of nonquota farms. For a combination of a nonquota 
farm, established by the county committee in the same manner as for 
farms under paragraph (a)(2) of this section, even though a farm yield 
had been previously established for the individual tracts.
    (4) Divisions. For tracts resulting from the division of a farm, the 
same farm for each tract that results from the division as the farm 
yield for the parent farm, except that should one or more tracts within 
the divided farm have a previously established farm yield, the farm 
yield for such tract(s) shall be that previously established for such 
tract(s).

[56 FR 16211, Apr. 19, 1991. Redesignated at 61 FR 36999, July 16, 1996]



Sec. 729.212  Approval of farm yield and farm poundage quota and notice to farm operator.

    (a) Approval. Each farm yield, basic quota, and effective quota 
shall be determined under the supervision of, and approved by, the 
county committee of the county in which the farm is administratively 
located, subject to the concurrence of the State committee or a 
representative of the State committee.
    (b) Notice to farm operator. (1) As soon as practicable after the 
basic quota or the effective quota is approved, an official notice of 
such quota shall be mailed to the farm operator.
    (2) If the basic quota is reduced to zero for the current year, the 
county committee shall mail to the farm operator a notice of such 
determination.
    (3) A revised notice of basic quota or effective quota shall be 
mailed to the farm operator as soon as possible after the county 
committee determines that an incorrect notice has been mailed, or the 
county committee takes an action which requires a revision of the 
previously determined quota.
    (4) The notice to the operator shall constitute notice to all 
persons, including, but not limited to, any person who as operator, 
landlord, tenant, or sharecropper has an interest in the farm for which 
the quota is established.
    (c) A failure to provide the notice provided for in paragraph (b) of 
this section shall not entitle any person to a quota to which they are 
otherwise entitled, unless otherwise provided in this part.

[56 FR 16211, Apr. 19, 1991. Redesignated at 61 FR 36999, July 16, 1996]



Sec. 729.213  Erroneous notice of effective farm poundage quota.

    If the official notice of effective quota issued for a farm 
erroneously stated a quota larger than the correct effective quota, the 
quota shown on the erroneous notice shall serve as the basis for 
marketing penalty computations for the farm for the current marketing 
year only if the county committee determines and the State Executive 
Director concurs that:
    (a) Extent of error. The error was not so substantial as to place 
the operator on notice that such notice of quota was incorrect; and
    (b) Response to notice. The operator, relying upon such notice and 
acting in good faith:
    (1) Has made plans, or is engaged in activities, to produce the 
quota in the amount set forth on the erroneous notice (for example, land 
preparation; purchase of seed, fertilizer, and other production 
materials; or reducing the acreage of other crops); or
    (2) Has planted the acreage of peanuts needed to produce the 
erroneous farm poundage quota.

[61 FR 37000, July 16, 1996]



Sec. 729.214  Transfer of quota by sale, lease, owner, or operator.

    Peanut quota may be transferred between eligible farms, or between 
separately owned tracts within a farm, in accordance with the provisions 
of this section.
    (a) Basis of transfers. A transfer of quota may be either permanent 
or temporary to the extent provided for in this section.

[[Page 196]]

    (1) Permanent. A permanent transfer shall be based on a part or all 
of the farm's basic quota. The maximum quota that may be permanently 
transferred from a farm in the current year is the farm's basic quota. A 
permanent transfer may be by:
    (i) Sale. The sale of a farm's basic quota.
    (ii) Owner. The owner transfering basic quota between two farms when 
such farms have identical ownership as determined by FSA under 
instructions of the Deputy Administrator.
    (2) Temporary. A temporary transfer is for one year and shall be 
based on a part or all of the farm's effective quota. The maximum quota 
that may be temporarily transferred from a farm in the current year is 
the farm's effective quota. A temporary transfer, to the extent 
permitted by this section, may be by:
    (i) Lease. The lease and transfer of a farm's effective quota.
    (ii) Owner. The owner transferring effective quota to another farm 
owned or operated by such owner.
    (iii) Operator. The operator transferring effective quota to another 
farm owned or operated by such operator.
    (b) Transfer agreement. In order to transfer poundage quota in the 
current year between two eligible farms, the transfer agreement must be:
    (1) Form. Recorded on Form FSA-375.
    (2) Where to file. Filed in the county FSA office which serves the 
county in which the transferring farm is located for administrative 
purposes.
    (3) Signatures. Agreed upon and signed by:
    (i) Sale or lease. In the case of a sale or lease, the owner(s) and 
operator of the transferring farm and the owner(s) or operator of the 
receiving farm. However, if a lease is filed after July 31 by a farm 
operator who cash leased the farm the signature of the owner(s) of such 
farm is not required.
    (ii) Owner transfer. In the case of an owner transfer, the owner of 
the transferring farm who also must be the owner or operator of the 
receiving farm.
    (iii) Operator transfer. In the case of an operator transfer, the 
operator of the transferring farm who also must be the owner or operator 
of the receiving farm.
    (iv) Lienholder. In all cases, any person who holds a mortgage or 
other lien against the transferring farm.
    (4) Witness. Signed on Form FSA-375, by each person whose signature 
is required by paragraph (b)(3) of this section, in the presence of a 
State or county committee member or an FSA employee who shall sign Form 
FSA-375 as a witness. If such signatures cannot be witnessed in the 
county FSA office where the farm is administratively located, they may 
be witnessed in any State or county FSA office convenient to the owner 
or operator's residence. The requirement that signatures be witnessed 
for producers that are ill, infirm, reside in distant areas, or are in 
similar hardship situations or may be unduly inconvenienced may be 
waived provided the county FSA office mails Form FSA-375 for the 
required signatures.
    (5) When to file. Filed at any time after all required signatures 
have been recorded.
    (i) Permanent transfer. If filed:
    (A) Before August 1, the transfer shall be effective for the current 
year.
    (B) After July 31, the transfer agreement shall not be approved 
until the next year's quota is determined for the transferring farm.
    (ii) Temporary transfer. If filed after July 31 and before February 
1, the transfer agreement shall not be approved unless both the 
transferring farm and the receiving farm meet applicable provisions in 
paragraph (f) of this section that apply to transfers filed during such 
period.
    (c) Location of farms. In order to transfer poundage quota between 
two farms, such farms must be located within the same State and, to the 
extent required by paragraph (d) of this section, in the same county. It 
is not necessary for the receiving farm to have had a basic quota in the 
current or prior year, except as provided in paragraph (d)(4) of this 
section.
    (d) Limitations on transfer by sale or lease. Subject to the 
provisions of paragraph (m) of this section:
    (1) States with less than 10,000 tons of quota. With respect to 
farms in any State for which the State's poundage

[[Page 197]]

quota for the year preceding the current year was less than 10,000 tons, 
transfers of peanut quota by sale or lease may be made to any other farm 
in any county within the State.
    (2) States with 10,000 tons or more of quota. For farms in States 
with 10,000 tons or more of quota:
    (i) Poundage quota may be transferred to any other farm within the 
same county.
    (ii) If the farm is in a county with less than a total of 50 tons of 
quota, the poundage quota may be transferred to any other farm within 
the same State without regard to the limitations set forth in paragraph 
(d)(2)(iii) of this section.
    (iii) If the farm is in a county with a total of 50 tons or more of 
quota, poundage quota transferred out of county shall be limited to 40 
percent of the quota in the transferring county as of January 1, 1996. 
Further, the cumulative unexpired out-of-county transfers for a crop 
year may not exceed the following percentages of the quota in the 
transferring county as of January 1, 1996:
    (A) 15 percent for the 1996 crop;
    (B) 25 percent for the 1997 crop;
    (C) 30 percent for the 1998 crop;
    (D) 35 percent for the 1999 crop; and
    (E) 40 percent for the 2000 and subsequent crops.
    (iv) Selecting approved transfers. For purposes of administering the 
limitations on the amount of transfers, the Director shall establish a 
method for selecting, by lot or other method, those applications which 
are to be approved. The Director may give preference to permanent 
transfers.
    (3) Fall transfers. The limitations in paragraph (d)(2)(iii) of this 
section do not apply to 1-year fall transfers, which may, in all cases, 
be made to any farm in the same State, subject to such restrictions as 
otherwise apply for fall transfers.
    (4) Owner or operator transfer. Owner or operator transfers of 
poundage quota are permitted to contiguous counties within the same 
State without regard to the percentage limitations of paragraph 
(d)(2)(iii) of this section; provided that, the receiving farm had a 
basic quota established for the preceding year's crop and has the same 
owner, in an owner transfer, or the same operator, in an operator 
transfer.
    (e) Transfers to and from the same farm (subleasing)--
    (1) Transfer agreement filed after January 31 and before August 1. 
The county committee shall not approve a transfer agreement which is 
filed after January 31 of any year and before August 1 of the same year, 
if the approval would result in a temporary transfer both to and from 
either the transferring or receiving farm during such period, except 
that such transfer agreement may be approved if the farm that otherwise 
would be eligible to transfer or receive such quota resulted from a farm 
reconstitution that was approved subsequent to a transfer of quota.
    (2) Record of transfer filed after July 31 and before February 1. 
The county committee shall not approve a temporary transfer of effective 
quota if the transfer agreement is filed after July 31 of any year and 
before February 1 of the following year and approval would result in a 
temporary transfer both to and from either the receiving farm or 
transferring farm during such period.
    (f) Other transfer provisions--(1) Temporary transfer of quota from 
a farm. A temporary transfer of quota from a farm by lease, owner, or 
operator shall not be approved:
    (i) Effective quota includes reapportioned quota. If the transfer 
agreement was filed before August 1 of a crop year and the effective 
quota for the farm includes temporarily reapportioned quota from quota 
released from other farms of that crop year.
    (ii) Peanut poundage quota penalty. If any person whose signature is 
required to perfect the transfer is known to owe a peanut poundage quota 
penalty. However, this provision shall not apply if the penalty is paid 
or, in the case of a transfer by lease, the entire proceeds of the lease 
are applied to the penalty and the county committee determines that the 
amount paid for the lease represents a reasonable price for the pounds 
of quota being leased.
    (iii) Filed after July 31 and before February 1 (``Fall 
transfers''). If filed after July 31 of the crop year and before 
February 1 of the following year, unless:
    (A) The reported or determined acreage of peanuts plus prevented 
planted

[[Page 198]]

credit for the transferring farm for the current year, when multiplied 
by the larger of the farm yield or the highest actual yield during the 
base period, is equal to or greater than 90 percent of the farm's 
effective quota prior to adjustment for temporary seed quota allocated 
to the farm;
    (B) The county committee determines that the producers on the farm 
made a good faith effort to produce a normal crop of peanuts on the 
acreage devoted to peanuts.
    (C) The quantity to be transferred does not exceed the quota balance 
remaining on the farm's marketing card(s); and
    (D) For a lessee, such lessee provides satisfactory evidence that 
the lease is a cash lease or the owner signs the transfer agreement.
    (2) Temporary transfer of quota to a farm. A temporary transfer of 
quota to a farm by lease, owner, or operator shall not be approved:
    (i) Tillable cropland limitation. If the transfer agreement was 
filed before August 1 of the crop year and the effective quota after the 
transfer would exceed an amount determined by multiplying the acreage of 
tillable cropland on the farm by the larger of the farm yield or the 
highest actual yield per acre during the base period.
    (ii) Filed after July 31 and before February 1. If the transfer 
agreement is filed after July 31 of the crop year and before February 1 
of the following year unless the quantity being transferred:
    (A) Is needed in order to market all eligible peanuts from the 
receiving farm as quota peanuts, and
    (B) Does not exceed an amount by which the receiving farm's 
effective quota before the transfer is less than the entire production 
of peanuts from the farm exclusive of any peanuts that have been graded 
as Segregation 2 or Segregation 3 peanuts.
    (3) Permanent transfer of quota from a farm. A permanent transfer of 
quota from a farm by sale or by owner shall not be approved:
    (i) Permanent transfer of quota by sale to the farm. For the amount 
of quota purchased and permanently transferred to the farm in the 
current year and during the base period, as adjusted for any increase or 
decrease in such quota due to adjustment in the national quota during 
the base period, except that a transfer of a tenant's share of any 
peanut quota increase shall not be considered for purposes of 
determinations made under the provisions of this paragraph.
    (ii) Peanut poundage quota penalty. If the owner is known to owe a 
peanut poundage quota penalty. However, this provision shall not apply 
if the penalty is paid, or in the case of a sale of quota, the entire 
proceeds from the sale of quota are applied to the penalty and the 
county committee determines that the amount paid for the quota 
represents a reasonable price for the pounds of quota being sold.
    (iii) Conservation Reserve contract. If the peanut quota is subject 
to an approved Conservation Reserve Program contract.
    (4) Permanent transfer of quota to a farm. A permanent transfer of 
quota to a farm by sale or by owner shall not be approved if the basic 
quota after transfer would exceed an amount determined by multiplying 
the acreage of tillable cropland on the farm by the larger of the farm 
yield or the highest actual yield per acre during the base period.
    (g) Approval or disapproval of a transfer agreement. The county 
committee shall approve or disapprove each transfer agreement. The 
county committee shall approve each transfer agreement which meets the 
eligibility conditions as set forth in this section or in this part. 
However, the county committee may delegate authority to the county 
executive director or other county FSA employee to act on behalf of the 
county committee and approve a transfer agreement which meets the 
eligibility conditions as set forth in this section. Such delegation may 
authorize the approval of any eligible transfer agreement or the 
delegation of authority may be restrictive as to the type of transfer 
agreements that may be approved. Only the county committee shall 
disapprove a transfer agreement.
    (1) Time for determination. Any approval or disapproval of a 
transfer agreement should be made within 30 days after the transfer 
agreement is filed with the county committee unless

[[Page 199]]

additional time is required as the result of conditions beyond the 
control of the county committee. However, if a transfer agreement is 
filed after July 31 of the crop year that provides for a permanent 
transfer of poundage quota, the transfer agreement shall not be approved 
until the next year's quota is determined for the transferring farm.
    (2) Effective date. An approved transfer agreement shall become 
effective during the current crop year, except that if an agreement to 
permanently transfer quota is filed after July 31 of the crop year, such 
agreement shall become effective for the next crop year.
    (h) Effect of permanent transfer of quota. In the event of a 
permanent transfer of a quota, applicable farm data for each year of the 
base period shall be transferred to the receiving farm from the 
transferring farm in proportion to the quantity of basic quota which has 
been transferred from the transferring farm.
    (i) Notice of revised quotas. A revised notice of farm poundage 
quota shall be issued for each farm affected by the transfer of farm 
poundage quota.
    (j) Cancellation of transfer--(1) A transfer approved on the basis 
of incorrect information furnished by the parties to the transfer 
agreement, or approved due to error by the county committee, shall be 
void and canceled effective as of the date of approval except as may be 
provided by the Deputy Administrator to accomplish the purposes of this 
part. The cancellation shall not be effective for the current marketing 
year if:
    (i) The transfer approval was made on the basis of incorrect 
information unknowingly furnished in good faith by the parties to the 
transfer agreement or the transfer approval was made in error by the 
county committee, and
    (ii) The parties to the transfer agreement were not notified of the 
cancellation prior to the marketing of quota peanuts in excess of the 
revised effective farm poundage quota.
    (2) If cancellation of a transfer is required, the county committee 
shall issue revised notices of poundage quota showing the reasons for, 
and effect of, the cancellation.
    (k) Withdrawal or minor revision. The county committee may permit 
withdrawal or minor revisions of a transfer upon a:
    (1) Written request by all parties to the transfer, and
    (2) County committee determination that such withdrawal or revision 
is clearly in the best interest of all the producers and will not impair 
the effective operation of the peanut program.
    (l) Adjustment of marketings. For the purpose of computing 
production history for quota increase based on production, in the case 
of temporary transfers by owner to the same owner or operator to the 
same operator, if the current year's produced or considered-produced 
credit from the receiving farm exceeds such farm's basic quota, such 
produced or considered-produced credit on the receiving farm shall be 
reduced by the amount of such excess, to the extent of the quota 
temporarily transferred to such farm by owner or operator, and such 
reduced amount shall be added to the current year produced or 
considered-produced credit for the transferring farm.
    (m) Considered produced credit. Quota that is leased and transferred 
from a farm shall be considered produced on such farm to the extent of 
considered produced credit set forth in the definition of ``Considered 
produced credit'' in Sec. 729.103 of this part.

[56 FR 16211, Apr. 19, 1991, as amended at 57 FR 27144, June 18, 1992. 
Redesignated and amended at 61 FR 36999, 37001, July 16, 1996; 62 FR 
2719, Jan. 17, 1997; 62 FR 25438, May 9, 1997; 65 FR 8247, Feb. 18, 
2000]



Sec. 729.215  Release and reapportionment of quota.

    (a) Release. By filing Form FSA-278 with the county FSA office that 
serves the county in which the farm is located for administrative 
purposes, part or all of the farm's:
    (1) Temporary release. Effective quota may be temporarily released 
to the county committee for the current year.
    (2) Permanent release. Basic quota may be permanently released to 
the county committee. If the farm consists of separately identifiable 
tracts having different ownership, the owner(s) of any tract may 
permanently release part or all of the basic quota contributed to the 
farm by such tract.

[[Page 200]]

    (b) Request for released quota. Permanently released quota shall be 
reallocated without a request from the farm's owner or operator to 
eligible farms as determined in accordance with Sec. 729.204 of this 
part. Temporarily released quota, may be reapportioned to farms for 
which a request for released quota has been filed, on Form FSA-278, in 
the county FSA office that serves the county in which the farm is 
located for administrative purposes. Temporarily released quota shall be 
reapportioned in accordance with the provisions of this section.
    (c) Time for filing. The final date for filing a release of quota or 
for requesting reapportionment of temporary released quota shall be:
    (1) Permanent release. For quota to be permanently released, thirty 
days after the date of mailing of the notice of the farm's quota.
    (2) Temporary release or request for released quota. For a temporary 
release or a request for released quota, the date established by the 
State committee for the county in which the farm is located for 
administrative purposes.
    (d) Signature requirement. The FSA-278 shall be signed by:
    (1) Temporary releases. In the case of a temporary release, the farm 
operator. In addition, if quota was either leased and transferred from 
the farm, or released from the farm, in more than one year of the base 
period, the FSA-278 shall be signed by the farm's owner(s).
    (2) Permanent releases. In the case of a permanent release, both the 
owner(s) and operator of the farm.
    (e) Reapportionment of temporarily released quota--(1) Time to 
reapportion. The county committee shall reapportion, within 10 days 
after the final date for temporary release of quota in the county, any 
quota that will be reapportioned to farms in the county. In addition, if 
the county committee receives released quota from the State committee, 
such quota shall be reapportioned within 10 days after receipt of the 
notice of the availability of the quota.
    (2) Basis of reapportionment. The county committee:
    (i) When reapportioning temporarily released quota, shall give 
priority to producers on nonquota farms and to producers on farms having 
basic quotas that are significantly below the average basic quota in the 
county. Otherwise, the county committee shall reapportion the released 
quota in amounts determined by the county committee to be fair and 
reasonable on the basis of:
    (A) Experience by the applicant in producing peanuts;
    (B) Soil and other physical factors affecting the production of 
peanuts on the applicant's farm; and
    (C) Tillable cropland available for the production of peanuts on the 
applicant's farm.
    (ii) Shall not reapportion released quota to a farm that has 
transferred quota from the farm in the current year.
    (iii) Shall not reapportion quota to a farm to the extent that the 
farm's effective quota after the reapportionment will exceed an amount 
determined by multiplying the farm's tillable cropland by the larger of 
the farm yield or the highest actual yield for peanuts during the base 
period.
    (f) Release to State committee. (1) Temporarily released quota that 
is not reapportioned by the county committee to farms in the county 
shall be released to the State committee for reallocating to other 
county committees that have requested additional quota for 
reapportionment to eligible producers.
    (2) Permanently released quota shall be released to the State 
committee for reallocation to eligible farms in accordance with 
Sec. 729.206 of this part.
    (g) Considered produced credit. Quota that is temporarily released 
shall be considered produced on the releasing farm if neither of the 
following are applicable:
    (1) Part, or all, of the farm's quota was released during any 2 or 
more years of the base period, or
    (2) Part, or all, of the farm's quota was leased and transferred to 
another farm in the same county during any 2 or more years of the base 
period.
    (h) Withdrawal or minor revision of released quota. A withdrawal or 
minor revision in the pounds temporarily or permanently released may be 
approved upon a written request filed with the

[[Page 201]]

county committee if, at the time the request is filed, the county 
committee has not transmitted permanently released quota to the State 
committee or, with respect to temporarily released quota, has not 
reapportioned such released quota to farms in the county or released 
such quota to the State committee for reallocation to requesting county 
committees.

[56 FR 16211, Apr. 19, 1991. Redesignated and amended at 61 FR 36999, 
37001, July 16, 1996]



Sec. 729.216  National poundage quota.

    (a) National poundage quota for 1996 and subsequent crop years. The 
national poundage quota for the 1996 and subsequent crop years shall be 
established by the Secretary at a level that is equal to the quantity of 
peanuts that the Secretary estimates will be devoted in each marketing 
year to domestic edible use (except seed), and related uses as may be 
set out in paragraph (c) of this section.
    (b) Disapproval of quotas. No loan for quota peanuts may be made 
available for any crop of peanuts with respect to which it is determined 
by the Deputy Administrator that poundage quotas have been disapproved 
by producers pursuant to a referendum conducted in accordance with 
section 358-1(d) of the Agricultural Adjustment Act of 1938, as amended.
    (c) Quota determination for individual marketing years (excluding 
seed):
    (1) The national poundage quota for quota peanuts for marketing year 
1996 is 1,100,000 short tons.
    (2) The national poundage quota for quota peanuts for marketing year 
1997 is 1,133,000 short tons.
    (3) The national poundage quota for quota peanuts for marketing year 
1998 is 1,167,000 short tons.
    (4) The national poundage quota for quota peanuts for marketing year 
1999 is 1,180,000 short tons.

[61 FR 37001, July 16, 1996, as amended at 61 FR 60510, Nov. 29, 1996; 
62 FR 62692, Nov. 25, 1997; 64 FR 48942, Sept. 9, 1999; 65 FR 16118, 
Mar. 27, 2000]



   Subpart C--Marketing Cards, Marketings, Penalties, and Assessments



Sec. 729.301  Issuance of cards.

    (a) General. As used in this part, peanut marketing card, Form FSA-
1002, means a paper marketing card on which data is manually recorded or 
a plastic marketing card in which data is recorded electronically into a 
micro computer chip by a computer.
    (b) Issuance of marketing cards. A marketing card shall be issued in 
the name of the farm operator for each farm on which peanuts are 
produced in the United States in the current year for use by each 
producer on the farm for marketing such producer's share of the peanuts 
produced except that:
    (1) A marketing card issued for experimental peanuts shall be issued 
in the name of the experiment station, and
    (2) A marketing card issued to a successor-in-interest shall be 
issued in the name of the successor-in-interest.
    (c) Issuance of producer identification cards. A producer 
identification card shall be issued in the same name that is entered on 
the marketing card(s) for each eligible farm. The producer 
identification card will be used to identify the farm on which the 
peanuts were produced and the card must accompany each lot of peanuts 
when offered for sale. Producer identification cards shall be issued at 
the time the marketing cards are issued.
    (d) Person authorized to issue cards. The county executive director 
shall be responsible for the issuance of marketing cards and producer 
identification cards.
    (e) Rights of producers and successors-in-interest. (1) Each 
producer having a share in the peanuts available for marketing from a 
farm shall be entitled to the use of the marketing and identification 
cards for marketing such producer's proportionate share of the peanuts 
produced on the farm, as determined by the county committee.
    (2) Any person who the county committee determines has succeeded, in 
whole or in part, to the share of a producer in the peanuts available 
for marketing from a farm shall, to the extent

[[Page 202]]

of such succession, have the same rights to the use of the marketing and 
identification cards and bear the same liability for penalties as the 
original producer would with respect to the disposition of the peanuts.
    (f) Data on marketing card and supplemental card--(1) Before 
issuance, the following data and information must be recorded on the 
marketing card:
    (i) The name of each producer and the producer's share of the crop 
of peanuts;
    (ii) The effective farm poundage quota;
    (iii) The pounds of any additional peanuts contracted and the 
handler number of the contracting handler;
    (iv) The converted penalty rate, if applicable;
    (v) The name of any producer on the farm against whom a peanut 
poundage quota lien has been established and the unpaid balance of such 
lien;
    (vi) The name of any producer on the farm against whom a U.S. claim 
has been established and the unpaid amount of such claim;
    (vii) With respect to any farm with a producer that is ineligible 
for price support, an indication of such ineligibility; and
    (viii) An indication that the peanuts marketed from the farm are 
``Eligible for Buyback'' if the farm operator authorizes the handler to 
purchase peanuts under the ``Immediate Buyback'' purchase in accordance 
with part 1446 of this title.
    (2) A supplemental marketing card bearing the same name 
identification as shown on the original marketing card may be issued for 
a farm if an original or supplemental marketing card is returned to the 
county office. The balance of the poundage quota for the farm from the 
returned marketing card shall be recorded as the effective farm poundage 
quota on the supplemental card.
    (3) Two or more marketing cards may be issued for a farm if the farm 
operator specifies in writing the amount of the effective quota (not to 
exceed the balance of effective quota available) which is to be assigned 
to each card.
    (g) Issuance of producer identification cards--(1) Before issuance, 
the following information shall be recorded on the producer 
identification card:
    (i) Name and address of the farm operator, and
    (ii) State, county code, and farm serial number.
    (2) A farm operator may receive as many identification cards as may 
be needed at any one time to accompany each lot of peanuts until such 
lot of peanuts has been marketed.
    (h) Replacing a lost, stolen, or destroyed marketing card. A new 
marketing card shall be issued to replace a card which has been 
determined by the county executive director who issued the card to have 
been lost, destroyed, or stolen, if the farm operator gives immediate 
written notice of such fact to the appropriate county FSA office and 
furnishes a satisfactory report of the quantity of peanuts which was 
marketed by use of such marketing card before such card was lost, 
stolen, or destroyed.
    (i) Invalid cards. A marketing card shall be invalid under any one 
of the following conditions:
    (1) It is not issued or delivered in the form and manner prescribed.
    (2) Any entry is omitted or is incorrect.
    (3) It is lost, destroyed, or stolen.
    (4) An alteration has been made without the approval of the county 
executive director.
    (5) For a paper card, the card becomes illegible.
    (j) Validating invalid cards. If a marketing card is known to be 
invalid, the farm operator or other producer shall return the marketing 
card to the county office. The county executive director shall issue a 
replacement marketing card or the marketing card may be made valid by 
entering data previously omitted or by correcting any incorrect data 
previously entered.



Sec. 729.302  Identification of producer marketings.

    The producer must identify each lot of peanuts offered for marketing 
through a handler by furnishing to the handler the farm operator 
identification card FSA-1003, and the peanut marketing card FSA-1002, 
which was issued for the farm on which the peanuts were produced. The 
producer may

[[Page 203]]

at the producer's risk leave the peanut marketing card in the custody of 
the handler during the period between marketing lots of peanuts to the 
same handler; however, the marketing card shall not be left in the 
possession of the handler after the producer has completed marketings 
for the season.



Sec. 729.303  Designation of category for marketing peanuts.

    Any marketings of peanuts which are not inspected by the Federal-
State Inspection Service prior to marketing shall be deemed to be a 
marketing of quota peanuts. If a lot of peanuts is inspected by the 
Federal-State Inspection Service, the producer shall designate to the 
handler whether the lot of peanuts is to be marketed as quota loan, 
quota commercial, loan additional, or contract additional peanuts as 
defined in part 1446 of this title. The designation must be made within 
the time allowed by the handler but not later than the close of 
inspection of the third workday (excluding Saturday, Sunday, or legal 
holiday) after the peanuts are inspected and graded. In the absence of a 
designation, any Segregation 1 peanuts shall be marketed and deemed to 
be marketed in the following order of priority:
    (a) As quota loan or quota commercial peanuts, at the option of the 
buying point operator, to the extent of the unused poundage quota on the 
peanut marketing card which is used to identify the peanuts for 
marketing;
    (b) As contract additional peanuts to the extent of the unused 
contract poundage balance on the peanut marketing card which is used to 
identify the peanuts for marketing if the peanuts are being marketed 
through the contracting handler; or
    (c) As loan additional peanuts.



Sec. 729.304  Marketing card entries.

    (a) Immediately after each lot of peanuts is marketed the buyer, or 
the buyer's representative, shall make the following entries on the 
marketing card from the FSA-1007:
    (1) The FSA-1007 serial number which identifies the lot of peanuts;
    (2) The net pounds marketed;
    (3) The unused poundage quota balance remaining after the marketing;
    (4) The unused contract additional poundage balance remaining after 
the marketing;
    (5) The handler's number, or for loan peanuts, the association 
number;
    (6) The buying point number;
    (7) The type of peanuts marketed; and
    (8) Any penalties or claims collected.
    (b) If noninspected peanuts are purchased at a buying point, the 
buyer, or the buyer's representative, shall make the following entries 
on the paper marketing card from the FSA-1030, Report of Purchase of 
Noninspected Peanuts;
    (1) The date of marketing;
    (2) The pounds purchased;
    (3) The unused poundage quota balance remaining after the marketing;
    (4) The unused contract additional poundage balance remaining after 
the marketing;
    (5) The handler's number;
    (6) The type of peanuts marketed; and
    (7) Any penalties or claims collected.



Sec. 729.305  Peanuts on which penalties are due and refund of excess penalty collected.

    (a) In addition to other remedies as may apply, a penalty is due 
from the person involved in a violation of this part and shall be 
assessed against such person at the basic penalty rate on:
    (1) The quantity of peanuts which is marketed or considered to be 
marketed from a farm for domestic edible use in excess of the effective 
farm poundage quota for the farm.
    (2) All peanuts produced on a farm for which the producer:
    (i) Failed to report the peanut acreage as provided in accordance 
with part 718 of this chapter; or
    (ii) Is responsible, if entry on the farm to authorized 
representatives of the Secretary for the purpose of determining the 
acreage of peanuts on the farm is refused or denied.
    (3) The quantity of peanuts falsely identified, as determined by the 
county committee with the concurrence of the State committee. The 
quantity of peanuts subject to penalty under this provision shall be the 
quantity of peanuts determined by the county committee to have been 
falsely identified. Acts

[[Page 204]]

considered to be false identification shall include the following:
    (i) Identifying or permitting the identification of peanuts at time 
of marketing as having been produced on a farm other than the farm of 
actual production;
    (ii) Marketing or permitting the marketing of peanuts to a 
registered handler without identifying the peanuts with a peanut 
marketing card issued for the farm on which such peanuts were produced;
    (iii) Permitting the use of the peanut marketing card for the farm 
to record a marketing of peanuts when, in fact, peanuts were not 
marketed from the farm; or
    (iv) Marketing peanuts that have been commingled with those of 
another farm.
    (4) All peanuts, the disposition of which the producer has failed to 
account for to the satisfaction of the county committee. The quantity of 
peanuts subject to penalty under this provision shall be the amount of 
peanuts determined by the county committee to have been marketed or 
considered marketed from the farm in excess of the quantity for which 
the producer has satisfactorily accounted.
    (5) All additional peanuts marketed as contract additional peanuts 
in excess of the pounds contracted between the producer and handler as 
provided in part 1446 of this title.
    (6) The quantity of farmers stock peanuts the county committee 
determines was necessary to plant the reported acreage for the crop year 
if the producer fails or refuses to file an accurate seed peanut report 
of seed purchases; and
    (7) All peanuts marketed in violation of this subpart for reasons 
not otherwise enumerated in paragraph (a) of this section.
    (b) If the reported acreage of peanuts on a farm differs from the 
determined acreage by more than the tolerance provided in part 718 of 
this chapter, a penalty at the converted rate shall be due from all 
producers on the farm on all peanuts marketed from the farm. In 
addition, in the case of a false certification, the sanctions provided 
for in Sec. 729.204(e) shall apply except to the extent that it may be 
determined by the Deputy Administrator that a second assessment would be 
unduly redundant.
    (c) Any penalty collected in excess of the correct amount as 
determined pursuant to this section may be refunded upon a finding by 
the county committee that an excess amount was collected.

[56 FR 16211, Apr. 19, 1991, as amended at 65 FR 8247, Feb. 18, 2000]



Sec. 729.306  Farms with one acre or less of peanuts.

    All peanuts produced on a farm on which the acreage of peanuts is 
one acre or less may be marketed for domestic edible use without 
incurring a marketing penalty if the producer who shares in the peanuts 
produced on any such farm does not share in the peanuts produced on any 
other farm.



Sec. 729.307  Assessment of penalties; joint and several liability.

    Any person against whom a penalty is assessed in accordance with 
this subpart, shall be notified of the penalty assessment in writing by 
the appropriate county committee. Such notice shall state the amount of 
the penalty and the basis upon which the penalty is being assessed. The 
notice shall also state that the person against whom the penalty is 
being assessed may request reconsideration of the assessment of the 
penalty in accordance with part 780 of this chapter. If more than one 
person is liable for a penalty, the liability of all persons involved 
shall be joint and several liability.



Sec. 729.308  Lien for penalty.

    (a) Lien on peanuts. Until the amount of any penalty provided by 
this part is paid, a lien on the crop of peanuts with respect to which 
such penalty is incurred, and on any subsequent crops of peanuts subject 
to poundage quotas in which the person liable for payment of the penalty 
has an interest, shall be in effect in favor of the United States.
    (b) Lien precedence. The lien on the peanuts takes precedence over 
all claims and attaches at the time the debt is entered on a county 
claim record in the county FSA office for the county in which the 
subsequent crop is grown.

[[Page 205]]

    (c) List of peanut marketing penalty debts. Each county FSA office 
shall maintain a list of peanut marketing penalties for which a claim 
has been established and recorded in such office. The list shall be made 
available for examination upon written request by any interested person.



Sec. 729.309  Persons to pay penalty or collect debts.

    (a) Marketings to handlers. The buyer shall be liable for the full 
penalty due on marketings of excess quota peanuts that such handler buys 
or otherwise acquires from a producer. Also, the buyer shall be liable 
with the producer for the full penalty due on peanuts purchased from a 
producer as additional peanuts in excess of the amount contracted with 
the producer as contract additional peanuts in accordance with part 1446 
of this title. The buyer may deduct the penalty from the price paid to 
the producer for the peanuts. If the net value of a lot of peanuts is 
less than the penalty due on such lot, or if the handler fails to 
collect the penalty due on any marketing of a lot of peanuts from a 
farm, the buyer and each of the producers on the farm shall be held 
jointly and severally liable for the amount of any unpaid penalty due on 
such lot of peanuts.
    (b) Other marketings. The producer is liable for the penalty due on 
any marketings of excess quota peanuts to persons who are not 
established peanut buyers.
    (c) Penalty for error on marketing card. The producer and the buyer 
are jointly and severally liable for any penalties which may be due if 
the buyer made an error or failed to properly record the pounds of 
peanuts marketed on the producer's marketing card and such error 
resulted in marketings in excess of the effective poundage quota or the 
pounds contracted as additional peanuts in accordance with part 1446 of 
this title.
    (d) Notice to affected parties. All affected parties shall be deemed 
to be on notice that penalties are due when the marketings of peanuts 
for domestic edible use exceed the effective poundage quota indicated on 
the marketing card or the marketing of peanuts as contract additional 
peanuts exceeds the amount contracted by the producer as additional 
peanuts in accordance with part 1446 of this title. In addition:
    (1) PPQ lien. If a peanut poundage quota (PPQ) lien is recorded on a 
claim record maintained in a county FSA office in accordance with 
Sec. 729.308 of this part or recorded on the peanut marketing card such 
recordation shall constitute notice to any peanut buyer that until the 
amount of the penalty involved plus accrued interest is paid, the United 
States has a lien on any peanuts, from any crop year that are subject to 
farm poundage quotas in which the person liable for payment of the 
penalty has an interest. Peanut poundage quota (PPQ) lien amounts shall 
be collected by the buyer and paid to the Farm Service Agency prior to 
making collection for any other liens or claims, except for a lien that 
was perfected before the PPQ lien became attached, as provided in 
Sec. 729.308 of this part. Such buyer shall be liable for payment of 
such amount that was, or should have been, collected by the buyer.
    (2) U.S. claim. If a U.S. claim, other than for a PPQ lien, is 
recorded on a marketing card, such recordation shall constitute notice 
to any peanut buyer that, to the extent of the indebtedness shown, and 
subject to prior liens, the net proceeds from any price support loan due 
the debtor must be withheld from the producer and paid to the Farm 
Service Agency. Such buyer shall be liable for payment of such amount 
that was, or should have been, withheld.
    (3) Converted penalty rate. If a converted penalty rate is entered 
on the marketing card by the county FSA office, the buyer shall collect 
penalty at such converted penalty rate on each pound of peanuts acquired 
from the producers of the peanuts. Any penalty that is collected must be 
paid to the Farm Service Agency. Such buyer shall be liable for payment 
of such amount that was, or should have been, collected by the buyer.



Sec. 729.310  Payment of penalty or other debt.

    (a) Method of payment. A draft, money order, or check made payable 
to the Farm Service Agency may be used to

[[Page 206]]

pay any penalty, other indebtedness collected in accordance with this 
subpart, or interest thereon. All methods of payment shall be received 
subject to collection and payment at face value.
    (b) Due date. The penalty becomes due on the date of marketing, or 
in the case of false identification or failure to account for the 
disposition of peanuts, the date the producer is notified of the false 
identification or the failure to account, as applicable.
    (c) Interest. The person liable for payment or collection of the 
penalty shall be liable also for interest thereon at the rate of 
interest charged CCC for its borrowings by the United States Treasury on 
the date such penalty became due. If the rate charged CCC by the 
Treasury is increased, the interest due on the penalty may be, to the 
extent permitted by law, increased commensurately for the period of such 
increase. Interest shall accrue from the date the penalty was due if the 
penalty is not remitted within 30 days after the date the penalty was 
assessed. Nothing in paragraph (c) of this section, shall limit the 
liability of a person for pre-penalty interest where otherwise provided 
for in this part or otherwise provided for by law.



Sec. 729.311  Peanuts on which penalties are not to be assessed.

    Notwithstanding other provisions in this subpart:
    (a) Error in weight. A penalty shall not be collected if such 
penalty results from an error in net weight of a lot of peanuts 
marketed, as reported on Form FSA-1007, Inspection Certificate and Sales 
Memorandum, and the error does not exceed one-tenth of one percent of 
the correct net weight of such lot of peanuts. However, notwithstanding 
the preceding sentence, in the case of fraud or conspiracy, a penalty 
shall be due for any error in the net weight, regardless of the size or 
amount of the error.
    (b) Peanuts grown on State prison farms. A penalty shall not be 
collected on peanuts grown on State prison farms for consumption within 
such State prison system, and so consumed.
    (c) Peanuts grown for experimental or research purposes. (1) A 
penalty shall not be collected on the marketing of any peanuts that are:
    (i) Grown only for experimental or research purposes, which shall 
include seed determined by the Deputy Administrator to be breeder or 
foundation seed;
    (ii) Grown on land owned or leased by a publicly-owned agricultural 
experiment station, which shall include a State-operated seed 
organization;
    (iii) Produced at public expense by employees of entities described 
in paragraph (c)(1)(ii) of this section, or are produced by farmers for 
seed determined by the Deputy Administrator to be breeder or foundation 
seed peanuts for experimental or research purposes pursuant to an 
agreement with a publicly-owned agricultural experiment station, which 
shall include such State-operated seed organizations.
    (2) The exemption from penalty, as provided in paragraph (c)(1) of 
this section shall not apply unless:
    (i) Such peanuts are used for purposes other than for:
    (A) Food or feed, or
    (B) Seed to produce peanuts for food.
    (ii) The director of the applicable publicly-owned agricultural 
experiment station, including State-operated seed organizations, 
furnishes to the State FSA Executive Director:
    (A) A list, by county, showing for each farm on which such peanuts 
are grown for experimental or research purposes, the name and address of 
the entity that supplies information; the name of the owner, and 
operator, if different from the owner, of the farm on which such peanuts 
are grown; and the acreage of peanuts grown for such experimental or 
research purposes;
    (B) A signed statement that such acreage of peanuts will be grown 
for experimental and research purposes including breeder and foundation 
seed; such production of peanuts is necessary for the State-operated 
program conducted for such purposes by the entity; and such peanuts will 
be produced under the direction of representatives of such entity; and
    (C) Such additional reports, if any, as the Deputy Administrator may 
require.
    (d) Unique strains used to plant green peanut acreage. Seed peanuts 
used to plant peanuts for use as green peanuts shall not be subject to 
penalty if the

[[Page 207]]

county committee determines that such seed peanuts:
    (1) Are unique strains of peanuts used for green peanuts.
    (2) Are not commercially available, and,
    (3) Are used exclusively to plant peanuts for harvest as green 
peanuts.



Sec. 729.312  Reduction or waiver of penalty.

    (a) Reduction or waiver of penalty. The county committee may reduce 
or waive any penalty required to be assessed by this subpart in cases in 
which the county committee, with concurrence of the State committee, 
determines that the violations upon which the penalties were based were 
unintentional or without knowledge on the part of the parties concerned.
    (b) Time of reduction or waiver. A penalty may be reduced or waived 
by an authorized official or committee either before or after it has 
been formally assessed. If the reduction or waiver is made before formal 
assessment, the notice of assessment shall state the amount of reduction 
or waiver and the basis upon which the reduction or waiver was made.
    (c) Reconsideration or appeal. Any person against whom a penalty is 
assessed under this subpart may, through a request for reconsideration 
or through an appeal, as applicable, request that the penalty be reduced 
or waived.



Sec. 729.313  Failure to comply with program.

    Any person who has failed to comply with the provisions in this part 
because such person was misinformed or relied on the advice of an 
authorized representative of the Secretary in rendering performance 
under this part, and such person believed in good faith that such 
misinformation or advice met the requirements of the program as set 
forth in these regulations, may file a request with the State committee 
for review of an adverse county committee ruling with respect to such 
failure to comply. After review of the case, the State committee shall 
submit the case to the Deputy Administrator with its recommendation. The 
Deputy Administrator may grant relief as deemed appropriate in such 
case. This authority, however, does not extend to cases where such 
person knew or had sufficient reason to know that the action or advice 
of the representative of the Secretary upon which the person relied was 
improper or erroneous, or where the adverse action is based on changes 
made in the statutory authority of the program or changes in regulations 
issued for the program.



Sec. 729.314  Schemes and devices.

    (a) Penalties shall be assessed in such manner as will correct for 
and nullify any action in which a person has knowingly, whether 
passively or actively:
    (1) Engaged in, acquiesced in, or adopted any scheme or device which 
tends to defeat the purpose of the regulations in this part,
    (2) Made any fraudulent representation, or
    (3) Misrepresented any fact affecting a program determination.
    (b) Such penalties as are provided for in this part shall be in 
addition to all other remedies and sanctions provided for, or permitted, 
by law.



Sec. 729.315  Handling Segregation 3 peanuts.

    (a) Disposition of Segregation 3 peanuts. Any producer who has a lot 
of farmers stock peanuts classified by the inspector as Segregation 3 
peanuts shall retain such lot of peanuts for seed in accordance with 
paragraph (c) of this section or shall deliver such lot of peanuts:
    (1) To the area association for a price support loan subject to such 
conditions as apply to eligibility for such loans including those in 
part 1446 of this title.
    (2) As contract additional peanuts subject to provisions of part 
1446 of this title;
    (3) As quota peanuts, subject to the conditions set forth in this 
part to a handler who has signed the peanut marketing agreement provided 
the peanuts were produced for seed under an agreement with a State 
agency; or
    (4) To a handler as quota peanuts if:
    (i) The peanuts were produced for seed under an agreement with a 
State agency.
    (ii) The handler to whom the peanuts are sold has, for that purpose, 
signed a supervision supplement to a

[[Page 208]]

warehousing contract with the area marketing association.
    (b) Failure to properly dispose of Segregation 3 peanuts--(1) Loss 
of price support. If the producer does not, within the time allowed in 
this part for designation of the category for marketing such peanuts, 
dispose of Segregation 3 peanuts in the manner specified in this 
section, such producer shall be ineligible for continued quota price 
support for the remainder of the marketing year.
    (2) Liquidated damages. Any peanut producer participating in the 
price support loan program shall be deemed to have agreed that:
    (i) CCC will incur serious and substantial damage to its program to 
support the price of peanuts if Segregation 3 peanuts are disposed of 
other than in the manner prescribed by this subpart or by the CCC;
    (ii) The amount of such damages will be difficult, it not 
impossible, to ascertain;
    (iii) With respect to any lot of peanuts which is pledged as 
collateral for a quota price support loan but which is ineligible for 
such loan, or any lot of peanuts which is pledged as collateral for a 
quota price support loan by a producer after the producer has disposed 
of any lot of Segregation 3 peanuts in any manner other than in the 
manner prescribed in this section, liquidated damages shall be due to 
CCC, not as a penalty, based on the difference between the quota loan 
rate and the additional loan rate (on a per pound basis) per net pound 
of such peanuts,
    (iv) Such liquidated damages are a reasonable estimate of the 
probable actual damages which CCC would suffer because of such action by 
the producer; and,
    (v) This remedy shall be in addition to any other remedy or sanction 
available against the producer, including penalties under this part.
    (c) Retention of Segregation 3 peanuts for seed. If the producer 
elects to retain a lot of Segregation 3 peanuts for seed, the buying 
point operator shall give a copy of the FSA-1007 to the producer as a 
record showing the quantity and quality factors of the peanuts. The 
producer:
    (1) Shall designate such peanuts as quota peanuts.
    (2) Shall have the net weight of such peanuts determined and 
deducted from the farm marketing card.
    (3) Shall advise the inspector that the peanuts are being retained 
for seed.
    (4) Must store such peanuts separate from other peanuts on the farm.
    (5) Shall notify the county executive director when such peanuts are 
used and otherwise account for the disposition of such peanuts.
    (6) Shall not sell such peanuts to a handler for seed; however, the 
peanuts may be sold to another producer for seed.
    (7) May, if it is later determined that such peanuts are unfit for 
seed use and after receiving prior approval from the county office, sell 
such peanuts as quota peanuts for crushing without benefit of price 
support.



Sec. 729.316  Marketing assessments.

    (a) Subject to adjustments in accordance with Sec. 729.317, a 
nonrefundable marketing assessment shall, in the amount provided for in 
this section, be due on each pound of farmers stock peanuts marketed or 
considered marketed by a producer, including marketings by pledging 
peanuts as collateral for a price support loan. The per pound assessment 
as a percentage of the applicable national average quota or additional 
peanut loan rate, shall be an amount equal to:
    (1) 1.15 percent for the 1996 crop; and
    (2) 1.2 percent for the 1997 through 2002 crops.
    (b) Collections and payment of marketing assessments. The first 
purchaser of peanuts shall:
    (1) Collect from the producer a marketing assessment equal to the 
quantity of peanuts acquired multiplied by:
    (i) In the case of the 1996 crop, a per pound amount equal to .6 
percent of the national average loan rate; and
    (ii) In the case of each of the 1997 through 2002 crops, a per pound 
amount equal to .65 percent of the applicable national average loan 
rate.
    (2) In addition to the amount collected under paragraph (1) of this 
section, pay a marketing assessment in an amount equal to the quantity 
of peanuts acquired multiplied by .55 percent

[[Page 209]]

of the applicable national average loan rate.
    (c) Private marketings. For all peanuts retained on the farm for 
seed or other uses or marketed by such producer to any person outside 
the United States or marketed in private marketings through a retail or 
wholesale outlet to any person who is not required to register as a 
handler in accordance with part 1446 of this title, the producer shall 
pay a marketing assessment equal to the full amount determined by 
multiplying the per pound amount provided in paragraph (a) of this 
section by the gross weight of the peanuts if they are uninspected 
farmers stock peanuts or, if inspected, the net weight of such peanuts. 
If such peanuts are shelled before they are marketed, the quantity 
marketed shall be converted to a farmers stock equivalent as consistent 
with this part, for purposes of determining the amount of assessment 
that is due.
    (d) Loan collateral peanuts. With respect to peanuts that are 
pledged as collateral for a price support loan through an approved 
warehouse, an assessment shall be:
    (1) Determined and paid by multiplying the net weight of such 
peanuts by the applicable per pound amount provided in paragraph (b)(1) 
of this section for private sales and deducting the total from the loan 
value of such peanuts before other deductions may be made for any other 
reason; and
    (2) Further determined and paid by multiplying the net weight of 
such peanuts, when sold from the price support inventory, by the 
applicable per pound amount provided in paragraph (b)(2) of this section 
for private sales and collecting that amount from the person who 
acquires such peanuts from the applicable association or from the CCC.
    (e) Remittance of marketing assessments. With respect to marketing 
assessments as provided in:
    (1) Paragraph (b) of this section, such assessments shall be 
remitted in a manner prescribed by the Deputy Administrator. To avoid a 
penalty, as prescribed in this section, the marketing assessments due 
with respect to any lot of peanuts acquired directly from a producer 
must be remitted during the 15 days that follow the week in which the 
data from the applicable Form FSA-1007 is due to be transmitted to FSA 
in accordance with the provisions in part 1446 of this title. For 
purposes of this section a week shall be the 168 hour period that begins 
at 12:01 a.m. local time on any Sunday and the postmark on the envelope 
in which such marketing assessment is remitted may be the basis for 
determining whether the marketing assessment was remitted timely;
    (2) Paragraph (c) of this section, such assessments shall be 
remitted, within 10 days after the date such peanuts are marketed, and 
shall be remitted to the county FSA office that serves the county in 
which the farm is administratively located. Peanuts that are retained on 
the farm for seed or other use, shall be considered marketed at the time 
the certification of marketings is filed or due to be filed at the 
county FSA office, whichever is earlier;
    (3) Paragraph (d)(1) of this section, such assessments shall be 
credited by the association to the appropriate account of the CCC and in 
accordance with instructions issued by the Executive Vice President, 
CCC; and
    (4) Paragraph (d)(2) of this section, such assessment shall be paid 
at the time and in the manner prescribed in the applicable:
    (i) Sales announcements for sales of farmers stock peanuts by CCC;
    (ii) Sales announcement or other similar document issued by the 
association for association sales of loan stocks of farmers stock 
peanuts; and
    (iii) Storage contract for farmers stock peanuts purchased by a 
handler when peanuts are purchased by such handler in accordance with 
the ``immediate buyback'' provisions set forth in Sec. 1446.309.
    (f) Penalties. If any person fails to collect, pay or timely remit 
the assessment required by this section, the person shall be liable in 
addition to principal and interest, for a penalty determined by 
multiplying the quantity of peanuts involved by 10 percent of the per 
pound national average quota support rate for the applicable crop year.

[61 FR 37565, July 18, 1996]

[[Page 210]]



Sec. 729.317  Increased marketing assessments.

    (a) Applicability. If area quota pool losses are not otherwise 
covered by the offsets prescribed by part 1446 of this title, and the 
transfer of marketing assessments collected in accordance with 
provisions of this part, the marketing assessment for quota peanut 
producers shall be:
    (1) Increased by an amount needed by CCC to cover such losses; and
    (2) Collected as determined by CCC on all quota peanuts marketed in 
the next marketing year in the area covered by the quota pool which had 
the loss.
    (b) Insufficient collections. If the amount of such increased 
assessments collected on the marketing of quota peanuts in any year is 
less than the amount needed to cover the accumulated net pool losses for 
any crop, there shall be an increased assessment in subsequent years 
until the amount needed is collected.
    (c) Excess collections. If the increased amount of assessments, as 
provided in this section, collected on the marketing of quota peanuts 
for any year is greater than the amount needed for the purpose for which 
the collection is made, the excess amount shall be retained to offset 
any losses which may occur in quota pools within that marketing area in 
subsequent years.
    (d) Collection procedures. Unless otherwise specified by CCC, the 
collection procedures for the increased assessments shall be as provided 
for in Sec. 729.316 and the assessment rates of Sec. 729.316 shall be 
increased accordingly.

[61 FR 37566, July 18, 1996]



           Subpart D--Recordkeeping and Reporting Requirements



Sec. 729.401  Peanuts marketed to persons who are not registered handlers.

    (a) If peanuts are marketed to persons other than registered peanut 
handlers, the operator of the farm on which the peanuts were produced 
shall file a report of the marketings by executing Form FSA-1011, Report 
of Acreage and Marketing of Peanuts to Nonestablished Buyers. The FSA-
1011 must be mailed or delivered to the county executive director of the 
county in which the farm is administratively located within 15 days 
after the marketing of peanuts from the farm has been completed. If 
peanuts are marketed by the producer in small lots directly to 
consumers, such as in the case of local street sales, a daily or weekly 
summary of the quantity marketed and the place of marketing may be 
reported in lieu of the name and address of each buyer.
    (b) Failure to file an FSA-1011 as required or the filing of a 
report which the county committee finds to be incomplete or inaccurate 
shall constitute failure to account for the disposition of the peanuts 
on the farm and may result in the assessment of marketing penalties, as 
provided in this part.
    (c) All peanuts marketed to persons other than registered handlers 
shall be considered as marketings of quota peanuts.



Sec. 729.402  Report on marketing card.

    The farm operator shall return each peanut marketing card to the 
issuing county FSA office as soon as marketings from the farm are 
completed or at such earlier time as the county executive director may 
request. At the time the last marketing card for a farm is returned, the 
farm operator shall execute a certification of the pounds of peanuts 
retained for seed or other use. Failure to return a marketing card or 
failure to execute the certification of the quantity of peanuts retained 
for seed or other uses shall constitute failure to account for the 
disposition of peanuts marketed from the farm. Marketing penalties may 
be assessed for such failure as provided in this part, unless a 
satisfactory report of disposition is furnished to the county committee.



Sec. 729.403  Report of marketing green peanuts.

    (a) Farm operator report. The operator of each farm from which green 
peanuts are marketed shall report the marketing of green peanuts. The 
operator shall make the report by filing Form FSA-1011 at the FSA office 
of the county in which the farm is administratively located. The report 
shall show for the farm:

[[Page 211]]

    (1) The acreage on the farm from which peanuts were marketed solely 
as green peanuts; and
    (2) The name and address of the buyer to, or through whom, each lot 
of green peanuts was marketed and the quantity in each lot marketed and 
the date marketed. However, if green peanuts are marketed by the 
producer in small lots directly to consumers, such as in the case of 
local street sales, the report may be made as either a daily or weekly 
summary of the quantity so marketed and the place of marketing may be 
reported in lieu of the name and address of each buyer.
    (b) Buyer report. Each buyer of green peanuts shall report purchases 
of green peanuts from producers on FSA-1011 to the county FSA office in 
the county in which the farm is administratively located. Small lot 
purchases not in commercial quantities including, but not limited to, 
street sales, local market sales, and grocery store sales shall not be 
subject to this reporting requirement. This report shall subject the 
buyer to a review of those purchase and sales records as required in 
this part. Each buyer shall keep records of green peanuts purchased 
including the following information:
    (1) Date of purchase;
    (2) Name and address of producer selling green peanuts;
    (3) Name and address of farm operator and farm number (including 
State and county codes) of the farm on which the green peanuts were 
produced; and
    (4) Pounds of green peanuts purchased.
    (c) Failure to file green peanut report. Failure to file any report 
of the marketing of green peanuts as required by this section or the 
filing of a report which the county committee finds to be incomplete or 
inaccurate shall, subject the farm operator or buyer, as applicable, to 
marketing penalties as set forth in this part.



Sec. 729.404  Report of acquisition of seed peanuts.

    (a) If peanuts are planted on a farm in the current year and the 
seed peanuts were acquired by purchase or gift, the farm operator shall 
file a report with the county FSA office of the acquisition of the seed 
peanuts. The report must be filed by the farm operator at the time a 
report of planted acreage of peanuts is made in accordance with 
provisions of part 718 of this chapter. The report shall include:
    (1) The name and address of the handler or person from whom peanuts 
were purchased or obtained as a gift for the purpose of planting the 
peanut acreage on the farm in the current year;
    (2) The pounds of peanuts acquired for seed;
    (3) The basis (farmers stock or shelled) of determining the quantity 
acquired;
    (4) The type of peanuts acquired; and
    (5) The date of acquisition.
    (b) Unique strains of peanuts that are not commercially available 
and are retained on a farm to plant green peanuts shall also be reported 
to the county FSA office.



Sec. 729.405  Report of production and disposition.

    (a) In addition to any other reports which may be required under 
this subpart, the farm operator or any producer on the farm shall 
furnish, upon written request by certified mail from the State Executive 
Director, a report to the State committee of production and disposition 
of the peanuts grown on the farm. The report must be filed on FSA-1010, 
Report of Production and Disposition, within 15 days after the request 
is mailed. The report shall show the:
    (1) Final acreage of peanuts on the farm;
    (2) Total production of peanuts on the farm;
    (3) Name and address of the buyer to or through whom each lot of 
peanuts was marketed, the number of pounds in each lot, and the date 
marketed:
    (4) Quantity and disposition of peanuts not marketed; and
    (5) Type of peanuts.
    (b) Notwithstanding paragraph (a) of this section, if peanuts are 
marketed in small lots to persons who are not established buyers, the 
report otherwise required in paragraph (a) of this section, may be made 
as either a daily or weekly summary of the number of pounds marketed and 
the place of marketing may be reported in lieu of the name and address 
of each buyer.

[[Page 212]]

    (c) Failure to file the FSA-1010 as requested or the filing of an 
FSA-1010 which is found by the State committee to be incomplete, 
incorrect, or in violation of the requirements of paragraphs (a) or (b) 
of this section, shall constitute failure of the producer to account for 
the production and disposition of peanuts produced on the farm and will 
subject the producer to marketing penalties as set forth in this part.



Sec. 729.406  Persons engaged in more than one business.

    Any person who is required under this subpart to keep any record or 
make any report as a buyer, processor, or other person engaged in the 
business of shelling or crushing peanuts, and who is engaged in more 
than one such business, shall keep such records for each such business.



Sec. 729.407  Penalty for failure to keep records and make reports.

    Any person, who dries farmers stock peanuts by artificial means for 
a producer, any buyer, warehouseman, processor, common carrier of 
peanuts, any broker or dealer in peanuts, any agency marketing peanuts 
for a buyer or dealer, any peanut growers' cooperative association, any 
person engaged in the business of cleaning, shelling, crushing, or 
salting peanuts, or manufacturing peanut products, or any person owning 
or operating a peanut combine, or any farmer engaged in the production 
of peanuts, who fails to make any report or keep any record, including 
electronic records, as required under this part or who makes any false 
report or record shall be deemed to have improperly handled peanuts for 
the quantity of peanuts to which such failure applies for which a 
penalty may be assessed under the provisions of this part or part 1446 
of this title, as applicable. Such liability is in addition to criminal 
penalties or other remedies permitted by law.



Sec. 729.408  Examination of records and reports.

    The Deputy Administrator, the Director of the Tobacco and Peanuts 
Division, the FSA State Executive Director, or their designees, and all 
auditors and agents of the Office of Inspector General, United States 
Department of Agriculture (USDA) or the General Accounting Office are 
authorized to examine any records of any producer, or handler, or person 
buying or processing peanuts as deemed necessary to enforce the peanut 
poundage quota program and shall be allowed access to such records. Upon 
a request for such examination, any person who dries farmers stock 
peanuts by artificial means for a producer, any buyer, warehouseman, 
processor, or common carrier of peanuts, any broker or dealer in 
peanuts, any farmer engaged in the production of peanuts, any agent 
marketing peanuts for a producer or acquiring peanuts for a buyer or 
association, any person engaged in the business of cleaning, shelling, 
crushing, or salting peanuts or manufacturing peanut products, or any 
person owning or operating a peanut combine, shall make available for 
examination such books, papers, automated records, electronic records, 
accounts, correspondence, contracts, documents, and memoranda as are 
under the control of the person receiving the request which any person 
hereby authorized to examine records has reason to believe are relevant 
to any matter which relates to the provisions of this part. Any person 
who fails to provide such access shall be subject to a penalty payable 
to CCC in amount up to, as determined by the Deputy Administrator, the 
amount calculated by multiplying the amount of peanuts involved by the 
quota support rate for the applicable crop year.



Sec. 729.409  Length of time records and reports are to be kept.

    Records required to be kept and copies of the reports required to be 
made by any person under this subpart shall be on a marketing year basis 
and shall be retained for a period of 3 years after the end of the 
marketing year. Records shall be kept for such longer periods of time as 
may be required in writing by the State Executive Director, or the 
Director of the Tobacco and Peanuts Division.

[[Page 213]]





                SUBCHAPTER C--REGULATIONS FOR WAREHOUSES



PART 735--COTTON WAREHOUSES--Table of Contents




                               Definitions

Sec.
735.1  Meaning of words.
735.2  Terms defined.

                           Warehouse Licenses

735.3  Application forms.
735.3a  All facilities to be licensed or exempted.
735.4  Grounds for not issuing a license.
735.5  Financial requirements.
735.6  License shall be posted.
735.7  Suspension or revocation of warehouse licenses.
735.8  Return of suspended or revoked warehouse license.
735.9  Lost or destroyed warehouse license.
735.10  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

735.11  Bond required; time of filing.
735.12  Amount of bond; additional amounts.
735.13  Amendment to license.
735.14  Bond required each year.
735.15  Approval of bond.

                           Warehouse Receipts

735.16  Form.
735.17  Copies of receipts.
735.18  Lost or destroyed receipts; bond.
735.19  Printing of receipts.
735.20  Partial delivery of cotton.
735.21  Return of receipts before delivery of cotton.
735.22  Omission of grade; no compulsion by warehouseman.

                     Duties of Licensed Warehouseman

735.23  Insurance; requirements.
735.24  Premiums; inspections; reports.
735.25  Warehouseman to collect and pay over insurance.
735.26  Care of cotton in licensed warehouse.
735.27  Care of other cotton and other commodities.
735.28  Records to be kept in safe place.
735.29  Warehouse charges.
735.30  Business hours.
735.31  Tags to be attached to bales.
735.32  Arrangement of stored cotton.
735.33  System of accounts.
735.34  Reports.
735.35  Canceled receipts; auditing.
735.36  Copies of reports to be kept.
735.37  Inspections and examinations of warehouses.
735.38  Weighing of cotton; weighing apparatus.
735.39  Loose cotton.
735.40  Excess storage.
735.41  Removal of cotton from storage.
735.42    Storage of wet and fire-damaged cotton.
735.43  Cotton handling; storage; injuries.
735.44  Fire loss to be reported.
735.45  Signatures on receipts to be filed with Department.
735.46  [Reserved]
735.47  Certificates to be filed with warehouseman.
735.48  Drawing of samples.
735.49  Methods for drawing and marking samples.

                                  Fees

735.50  License fees.
735.51  Warehouse annual and inspection fees.
735.52  Advance deposit.
735.53  Return of excess deposit.

               Licensed Classifiers and Licensed Weighers

735.54  Sampler's, classifier's, and weigher's applications.
735.55  Examination of applicant.
735.56  Posting of license.
735.57  Duties of sampler, classifier, and weigher.
735.58  Class certificates; form.
735.59  Weight certificates; form.
735.60  Combined class and weight certificates.
735.61  Copies of certificates to be kept.
735.62  Licensees to permit and assist in inspection.
735.63  Reports.
735.64  Licenses; suspension or revocation.
735.65  Suspended or revoked licenses; return; termination of license.
735.66  Lost or destroyed licenses.
735.67  Unlicensed classifiers and weighers.

                          Cotton Classification

735.68  Statement of class.
735.69  Official cotton standards of the United States.
735.70  Defective cotton; designation; terms defined.
735.71  Class based on inspection and sample.
735.72  Samples.
735.73  Lower grade (of two samples) to determine classification.
735.74  Access to official cotton standards.

                             Cotton Appeals

735.75  Who may appeal.
735.76  Complaint.
735.77  Contents of complaint.
735.78  Proof of agent's authority.

[[Page 214]]

735.79  Determination of appeals; samples.
735.80  Dismissal of appeals.
735.81  Cotton appeal certificate.
735.82  Expenses paid by complainant.
735.83  Advance deposit by complainant.
735.84  New warehouse receipt.
735.85  Disposition of samples.

                              Miscellaneous

735.86  Bonds required.
735.87  Publications.
735.88  Information of violations.
735.89  Procedure in hearings.
735.90  One document and one license to cover several products.
735.91  Assets and bond; combination warehouses.
735.92  Amendments.
735.93  OMB control number assigned pursuant to Paperwork Reduction Act.
735.94--735.99  [Reserved]

                      Electronic Warehouse Receipts

735.100  General statement.
735.101  Electronic warehouse receipts.
735.102  Provider requirements and standards for applicants.
735.103  Audits.
735.104  Provider-user relationship.
735.105  Security.
735.106-735.199  [Reserved]

                          Delivery and Shipping

735.200  Applicability.
735.201  Cotton shipping standard.
735.202  Compliance and dispute resolution.

    Authority: 7 U.S.C. 241 et seq.

    Source: 29 FR 15720, Nov. 24, 1964, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 735 appear at 62 FR 
33540, June 20, 1997.

                               Definitions



Sec. 735.1  Meaning of words.

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



Sec. 735.2  Terms defined.

    For the purpose of this part, unless the context otherwise requires, 
the following terms shall be construed, respectively, to mean:
    (a) The act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486; 7 U.S.C. 241-273), as amended.
    (b) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (c) Secretary. 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.
    (d) Administrator. The Administrator of the Service or any other 
officer or employee of the Service to whom authority has heretofore 
lawfully been delegated, or may hereafter lawfully be delegated, to act 
in his stead.
    (e) Designated representative. The Administrator.
    (f) Regulations. Rules and regulations made under the act by the 
Secretary.
    (g) Department. The United States Department of Agriculture.
    (h) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (i) Linters. As far as applicable the regulations in this part shall 
include linters.
    (j) Warehouse. Any building, structure, or other protected inclosure 
in which cotton is or may be stored for interstate or foreign commerce, 
or, if located within any place under the exclusive jurisdiction of the 
United States, in which cotton is or may be stored.
    (k) Warehouseman. A person lawfully engaged in the business of 
storing cotton.
    (l) License. A license issued under the act by the Secretary.
    (m) Licensed warehouseman. A warehouseman licensed as such under the 
act.
    (n) Licensed warehouse. A warehouse for the conduct of which a 
license has been issued.
    (o) Licensed warehouseman's bond. A bond required to be given under 
the act by a licensed warehouseman.
    (p) Licensed classifier. A person licensed under the act to classify 
according to grade or otherwise and certificate the grade or other class 
of cotton.
    (q) Licensed weigher. A person licensed under the act to weigh and 
certificate the weight of cotton.
    (r) Cotton examiner. An officer of the Department of Agriculture 
designated by the Administrator for the purpose of

[[Page 215]]

hearing cotton appeals under Secs. 735.75 through 735.85.
    (s) Receipt. A warehouse receipt.
    (t) Bale. A bale or other package.
    (u) State. A State, Territory, or district of the United States.
    (v) Licensed sampler. A person, employed by a licensed warehouseman, 
licensed under the act to draw samples from cotton stored in the 
licensed warehouse at which such person is employed.
    (w) Board of cotton examiners. A board of cotton examiners properly 
qualified and designated as such under the regulations (part 28 of this 
chapter) under the United States Cotton Standards Act.
    (x) Net assets. The difference remaining when liabilities are 
subtracted from allowable assets. In determining allowable assets, 
credit may be given for appraisal of real property less improvements and 
for the appraisal of insurable property such as buildings, machinery, 
equipment, and merchandise inventory only to the extent that such 
property is protected by insurance against loss or damage by fire, 
lightning, and tornado. Such insurance must be in the form of lawful 
insurance policies issued by insurance companies authorized to do such 
business and subject to service of process in the State in which the 
warehouse is located. The Secretary shall, at his discretion, determine 
what assets are allowable and under what conditions appraisals may be 
used.
    (y) Warehouse capacity. Warehouse capacity is the maximum number of 
bales of cotton that the warehouse will accommodate when stored in the 
manner customary to the warehouse and as required by the Secretary.
    (z) Current assets. Assets, including cash, that are reasonably 
expected to be realized in cash or sold or consumed during the normal 
operating cycle of the business or within one year if the operating 
cycle is shorter than one year.
    (aa) Current liabilities. Those financial obligations which are 
expected to be satisfied during the normal operating cycle of the 
business or within one year if the operating cycle is shorter than one 
year.
    (bb) Access. The ability when authorized, to read, change, and 
transfer warehouse receipt information retained in the central filing 
system.
    (cc) Central filing system (CFS). An electronic computer system 
operated and maintained by an approved provider where the information 
relating to warehouse receipts is recorded.
    (dd) Electronic warehouse receipt (EWR). An electronic file in the 
CFS that contains at the least information required to be included in a 
warehouse receipt by section 18 of the Act, and Sec. 735.16, regarding a 
bale of cotton and has been identified to a holder.
    (ee) Holder. An individual or entity in possession, in fact, or by 
operation of law, of a receipt and by extension, of the cotton 
represented thereby.
    (ff) Issue. EWRs are considered issued when a licensed warehouseman 
has transmitted all necessary information to an approved provider, and 
when such information is entered into the provider's CFS.
    (gg) Provider. An individual or entity that maintains EWRs in a CFS, 
meets the requirements of this part, and has a Provider Agreement with 
the Service.
    (hh) Provider Agreement. An agreement entered into between the 
Secretary and a provider that delineates the provider's responsibilities 
and defines the relationship between the provider and the Service 
regarding the provider's maintenance and security of EWRs in the CFS and 
other requirements of this part.
    (ii) User. An individual or entity that uses the provider's CFS but 
shall not include the Service in its regulatory capacity.
    (jj) Force majeure. Severe weather conditions, fire, explosion, 
flood, earthquake, insurrection, riot, strike, labor dispute, act of 
civil or military authority, non-availability of transportation 
facilities, or any other cause beyond the control of the warehouseman 
that renders performance impossible.

[29 FR 15720, Nov. 24, 1964. Redesignated and amended at 50 FR 1814, 
Jan. 14, 1985; Amdt. 2, 53 FR 27148, July 19, 1988; 59 FR 15038, Mar. 
31, 1994; 62 FR 33540, June 20, 1997; 65 FR 63767, Oct. 25, 2000]

[[Page 216]]

                           Warehouse Licenses



Sec. 735.3  Application forms.

    Applications for licenses under sections 4 and 9 of the act and for 
amendments of licenses under section 5 of the act shall be made to the 
Secretary upon forms prescribed for the purpose and furnished by the 
Service, shall be in English, shall truly state the information therein 
contained, and shall be signed by the applicant. The applicant shall at 
any time furnish such additional information as the Secretary or the 
Administrator shall find to be necessary to the consideration of his 
application.



Sec. 735.3a  All facilities to be licensed or exempted.

    All facilities within the same city or town used for the storage of 
cotton by an applicant for a warehouse license must qualify for a 
license and be licensed under the act if the applicant is to be licensed 
to operate as a cotton warehouseman in such city or town, unless the 
facilities which are not to be covered by a license are exempted by the 
Secretary or his designated representative upon a finding that, due to 
the exercise of adequate controls by some independent agency over the 
operation of nonfederally licensed facilities, there would be no 
likelihood of interchange or substitution of cotton stored in such 
facilities with cotton stored in the federally licensed facilities. If 
all such facilities do not qualify for a license or for an exemption 
under this section, the applicant shall not be licensed under the act as 
a cotton warehouseman in the city or town in which the facilities in 
question are located. Each applicant for a warehouse license must apply 
for a license covering all facilities operated by him for the storage of 
cotton within the same city or town or for exemption as provided in this 
section. If a licensed cotton warehouseman acquires any additional 
cotton storage facilities within the same city or town in which his 
licensed warehouse is located, he shall file promptly an application for 
a license or an exemption of the additional facilities. No cotton 
storage facility acquired by a licensed cotton warehouseman, subsequent 
to the issuance of his license, in the same city or town as his licensed 
facilities, shall be used for the storage of cotton until it qualifies 
for license and is licensed or is exempted as provided in this section. 
If any one of the licensed cotton storage facilities operated by a 
warehouseman in the same city or town becomes ineligible for a license 
at any time for any reason, it shall not thereafter be used for the 
storage of cotton until the condition making it ineligible is removed or 
an exemption is granted as provided in this section. The use for the 
storage of cotton by a licensed warehouseman of a facility which is in 
the same city or town as his licensed facilities and is neither licensed 
nor exempted, or other violation of the provisions of this section, 
shall be cause for suspension or revocation of any license issued to the 
warehouseman for the storage of cotton.



Sec. 735.4  Grounds for not issuing a license.

    A license for the conduct of a warehouse, or any amendment to a 
license, under the regulations in this part, shall not be issued if it 
is found by the Secretary, or his designated representative, that the 
warehouse is not suitable for the proper storage of cotton; that the 
warehouseman does not possess a good reputation, or does not have a net 
worth of at least $25,000, or is incompetent to conduct such warehouse 
in accordance with the act and the regulations in this part; or that 
there is any other sufficient reason within the intent of the act for 
not issuing such license. If all the facilities operated for the storage 
of cotton by the applicant within the same city or town are not to be 
licensed under the act, the applicant shall not be licensed as a cotton 
warehouseman with respect to any of such facilities, unless an exemption 
of the facilities which are not to be licensed is granted as provided in 
Sec. 735.3a.

[29 FR 15720, Nov. 24, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985, 
and amended at Amdt. 2, 53 FR 27148, July 19, 1988]



Sec. 735.5  Financial requirements.

    (a) Each warehouseman conducting a warehouse licensed under the Act 
or for which application for a license

[[Page 217]]

under the Act has been made must maintain complete, accurate, and 
current financial records which shall be available to the Secretary for 
review or audit at the Secretary's request.
    (b) Each warehouseman conducting a warehouse for which application 
for license under the Act is made shall provide with the application and 
each licensed warehouseman: shall annually, or more frequently if 
required, furnish to the Secretary, financial statements from the 
records required in paragraph (a) of this section, prepared according to 
generally accepted accounting principles. Such statements shall include 
but not be limited to: (1) Balance sheet, (2) statement of income 
(profit and loss), (3) statement of retained earnings, and (4) statement 
of changes in financial position. The chief executive officer for the 
warehouseman shall certify under penalty of perjury that the statements, 
as prepared, accurately reflect the financial condition of the 
warehouseman as of the date designated and fairly represent the results 
of operations for the period designated.
    (c) Each warehouseman conducting a warehouse licensed under these 
regulations shall have the financial statements required in paragraph 
(b) of this section audited or reviewed by an independent public 
accountant. The Secretary may, at his discretion, require an audited 
financial statement prepared by an independent certified public 
accountant. He may also, at his discretion, require an on-site 
examination and an audit by USDA personnel. Audits and reviews by 
independent certified public accountants and independent public 
accountants specified in this section must be made in accordance with 
standards established by the American Institute of Certified Public 
Accountants. The accountant's certification, assurances, opinion, 
comments, and notes on such statements, if any, must be furnished along 
with the financial statements. Licensees who cannot immediately meet 
these requirements may apply to the Secretary for a temporary waiver of 
this provision. The Secretary may grant such waiver for a period not to 
exceed 180 days if the licensee can furnish evidence of good and 
substantial reasons therefor.
    (d) Each warehouseman conducting a warehouse which is licensed under 
this part, or for which application for such a license has been made, 
must have and maintain:
    (1) Total net assets liable and available for the payment of any 
indebtedness arising from the conduct of the warehouse of at least the 
amount obtained by multiplying $10.00 by the warehouse capacity in bales 
to a maximum of $250,000 in each State; however, no person may be 
licensed or remain licensed as a warehouseman under this part unless 
that person has allowable net assets of at least $25,000 in each State, 
(Any deficiency in net assets above the $25,000 minimum may be supplied 
by an increase in the amount of the warehouseman's bond in accordance 
with Sec. 735.12(c) of this part); and
    (2) Total current assets equal to or exceeding total current 
liabilities or evidence acceptable to the Secretary that funds will be 
and remain available to meet current obligations.
    (e) If a warehouseman is licensed or is applying for licenses to 
operate two or more warehouses under this part, the maximum number of 
bales which all such warehouses will accommodate when stored in the 
manner customary to the warehouses, as determined by the Secretary, 
shall be considered in determining whether the warehouseman meets the 
net asset requirements specified in paragraph (d) of this section.
    (f) Subject to such terms and conditions as the Secretary may 
prescribe and for the purposes of determining allowable assets and 
liabilities under paragraphs (d) and (e) of this section:
    (1) Capital stock will not be considered a liability;
    (2) Appraisals of the value of fixed assets in excess of the book 
value claimed in the financial statement submitted by a warehouseman to 
conform with paragraphs (b) and (c) of this section may be allowed if 
(i) prepared by independent appraisers acceptable to the Secretary and 
(ii) the assets are fully insured against casualty loss;
    (3) Financial statements of a parent company which separately 
identifies the financial position of the warehouse as a wholly owned 
subsidiary and

[[Page 218]]

which meets the requirements of paragraphs (b), (c), and (d) of this 
section may be accepted by the Secretary in lieu of the warehouseman 
meeting such requirements; and
    (4) Guaranty agreements from a parent company submitted on behalf of 
a wholly owned subsidiary may be accepted by the Secretary as meeting 
the requirements of paragraphs (b), (c), and (d) of this section, if the 
parent company submits a financial statement which qualifies under this 
section.
    (g) If a State agency is licensed or applying for a license as 
provided in section 9 of the Act has funds of not less than $500,000 
guaranteeing the performance of obligations of the agency as a 
warehouseman, such funds shall be considered sufficient to meet the net 
asset requirements of this section.
    (h) If a warehouseman files a bond in the form of a certification of 
participation in an indemnity or insurance fund as provided for in 
Sec. 735.11(b), the certification may only be used to satisfy any 
deficiencies in assets above $25,000.
    (i) When a warehouseman files a bond in the form of either a deposit 
of public debt obligations of the United States or other obligations 
which are unconditionally guaranteed as to both interest and principal 
by the United States as provided for in Sec. 735.11(c):
    (1) The obligation deposited shall not be considered a part of the 
warehouseman's assets for purposes of Sec. 735.5(d), (1) and (2);
    (2) A deficiency in total allowable net and current assets as 
computed for Sec. 735.5(d), (1) and (2) may be offset by the licensed 
warehouseman furnishing a corporate surety bond for the difference;
    (3) The deposit may be replaced or continued in the required amount 
from year to year; and
    (4) The deposit shall not be released until one year after 
termination (cancellation or revocation) of the license which it 
supports or until satisfaction of any claim against the deposit, 
whichever is later.

Nothing in these regulations shall prohibit a person other than the 
licensed warehouseman from furnishing such bond or additions thereto on 
behalf of and in the name of the licensed warehouseman subject to 
provisions of Sec. 735.11(c).

[Amdt. 2, 53 FR 27148, July 19, 1988]



Sec. 735.6  License shall be posted.

    Immediately upon receipt of his license or of any modification or 
extension thereof under the act, the warehouseman shall post the same, 
and thereafter, except as otherwise provided in the regulations in this 
part, keep it posted until suspended or terminated, in a conspicuous 
place in the principal office where receipts issued by the warehouseman 
are delivered to depositors.



Sec. 735.7  Suspension or revocation of warehouse licenses.

    Pending investigation, the Secretary, or his designated 
representative, whenever he deems necessary, may suspend a 
warehouseman's license temporarily without hearing. Upon written request 
and a satisfactory statement of reasons therefor, submitted by a 
warehouseman, the Secretary, or his designated representative, may, 
without hearing, suspend or cancel the license issued to such 
warehouseman. The Secretary, or his designated representative, may, 
after opportunity for hearing has been afforded in the manner prescribed 
in this section, suspend or revoke a license issued to a warehouseman 
when such warehouseman:
    (a) Does not have a net worth of at least $25,000;
    (b) Has parted, in whole or in part, with his control over the 
licensed warehouse;
    (c) Is in process of dissolution or has been dissolved;
    (d) Has ceased to conduct such licensed warehouse;
    (e) Has in any other manner become nonexistent or incompetent or 
incapacitated to conduct the business of the warehouse;
    (f) Has made unreasonable or exorbitant charges for services 
rendered;
    (g) Is operating in the same city or town in which his licensed 
warehouse facilities are located, any facility for storage of cotton 
which is not covered by a license or an exemption as provided in 
Sec. 735.3a; or
    (h) Has in any other manner violated or failed to comply with any 
provision

[[Page 219]]

of the act or the regulations in this part. Whenever any of the 
conditions mentioned in paragraphs (a) through (h) of this section shall 
come into existence, it shall be the duty of the warehouseman to notify 
the Administrator immediately of the existing condition. Before a 
license is revoked or suspended (other than temporarily pending 
investigation) for any violation of, or failure to comply with, any 
provision of the act or of the regulations in this part, or upon the 
ground that unreasonable or exorbitant charges have been made for 
services rendered, the warehouseman involved shall be furnished by the 
Secretary, or his designated representative, a written statement 
specifying the charges and shall be allowed a reasonable time within 
which he may answer the same in writing and apply for a hearing, an 
opportunity for which shall be afforded in accordance with Sec. 735.89.

[29 FR 15720, Nov. 24, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985; 
Amdt. 2, 53 FR 27149, July 19, 1988]



Sec. 735.8  Return of suspended or revoked warehouse license.

    In case a license issued to a warehouseman terminates or is 
suspended or revoked by the Secretary, or his designated representative, 
such license shall be returned to the Secretary. At the expiration of 
any period of suspension of such license, unless it be in the meantime 
revoked, the dates of the beginning and termination of the suspension 
shall be indorsed thereon, it shall be returned to the warehouseman to 
whom it was originally issued, and it shall be posted as prescribed in 
Sec. 735.6; or in the discretion of the Administrator a new license may 
be issued.



Sec. 735.9  Lost or destroyed warehouse license.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof may be issued under the 
same number.



Sec. 735.10  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the act and no name or description conveying the impression that 
it or he is so licensed shall be used, either in a receipt or otherwise, 
unless such warehouseman holds an unsuspended and unrevoked license for 
the conduct of such warehouse.

                             Warehouse Bonds



Sec. 735.11  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the Act 
shall, before such license is granted, file with the Secretary or his 
designated representative a bond either:
    (a) In the form of a bond containing the following conditions and 
such other terms as the Secretary or his designated representative may 
prescribe in the approved bond forms, with such changes as may be 
necessary to adapt the forms to the type of legal entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall faithfully perform during the period of this 
bond all obligations of a licensed warehouseman under the terms of [the 
United States Warehouse Act] and regulations thereunder relating to the 
above-named products.
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act, regulations, and contracts include 
obligations under any and all modifications of the Act, the regulations, 
and the contracts that may hereafter be made, notice of which 
modifications to the surety being hereby waived.
    This bond shall remain in force and effect for a minimum term of one 
year beginning with the effective date of this bond and thereafter shall 
be considered as a continuous bond, subject to termination as herein 
provided.
    Regardless of the number of years this bond remains in force, or the 
number of premiums paid, and regardless of the number or amount of 
claims or claimants, in no event shall the aggregate liability of the 
surety under this bond exceed the amount of this bond.
    This bond may be terminated at the end of the initial one year term 
by providing at least 120 days advance written notice of cancellation to 
the Secretary. This bond may be canceled at any time after the initial 
one year term beginning with the bond effective date by providing 120 
days advance written notice of cancellation to the Secretary. If said 
notice is given by the surety, a copy of the notice shall be mailed on 
the same day

[[Page 220]]

to the principal. Cancellation of this bond shall not affect any 
liability that shall have accrued under this bond prior to the effective 
date of cancellation.
    This bond shall be effective on and after ______.
    A bond in this form shall be subject to 7 CFR 735.5 and 735.12 
through 735.15, and 31 CFR part 225; or
    (b) In the form of a certificate of participation in and coverage by 
an indemnity or insurance fund as approved by the Secretary, established 
and maintained by a State, backed by the full faith and credit of the 
applicable State, and which guarantees depositors of the licensed 
warehouse full indemnification for the breach of any obligation of the 
licensed warehouseman under the terms of the Act and regulations. A 
certificate of participation and coverage in such fund shall be 
furnished to the Secretary annually. If administration or application of 
the fund shall change after being approved by the Secretary, the 
Secretary may revoke his approval. Such revocation shall not affect a 
depositor's rights which have arisen prior to such revocation. Upon such 
revocation the licensed warehouseman then must comply with paragraphs 
(a) or (c) of this section. Such certificate of participation shall not 
be subject to Secs. 735.12 and 735.13; or
    (c) In the form of a deposit with the Secretary as security, United 
States bonds, Treasury notes, or other public debt obligations of the 
United States or obligations which are unconditionally guaranteed as to 
both interest and principal by the United States, in a sum equal at 
their par value to the amount of the penal bond required to be 
furnished, together with an irrevocable power of attorney and agreement 
in the form prescribed, authorizing the Secretary to collect or sell, 
assign and transfer such bonds or notes so deposited in case of any 
default in the performance of any of the conditions or stipulations of 
such penal bond. Obligations posted in accordance with this paragraph 
may not be withdrawn by the warehouseman until one year after license 
termination or until satisfaction of any claims against the obligations 
whichever is later. A bond in this form shall be subject to 7 CFR 735.5 
and 735.12 through 735.15, and 31 CFR part 225.

[Amdt. 2, 53 FR 27149, July 19, 1988]



Sec. 735.12  Amount of bond; additional amounts.

    (a) The amount of bond to be furnished by each warehouseman under 
the regulations in this part, shall be the rate of ten dollars ($10.00) 
per bale for the maximum number of bales that the warehouse accommodates 
when stored in the manner customary to the warehouse as determined by 
the Secretary, but not less than twenty thousand dollars ($20,000) nor 
more than two hundred fifty thousand dollars ($250,000); except as 
provided in paragraphs (b) and (c) of this section.
    (b) In case a warehouseman is licensed or applying for licenses to 
operate two or more warehouses in the same State, he may give a single 
bond meeting the requirements of the Act and the regulations in this 
part to cover all his warehouses within the State and shall be deemed to 
be one warehouse only for purposes of determining the amount of bond 
required under paragraph (a) of this section.
    (c) In case of a deficiency in net assets above the twenty-five 
thousand dollars ($25,000) minimum required by Sec. 735.5(d)(1), there 
shall be added to the amount of bond determined in accordance with 
paragraph (a) of this section an amount equal to such deficiency or a 
letter of credit in the amount of the deficiency issued to the Secretary 
for a period of not less than two years to coincide with the period of 
any deposit of obligations under 7 CFR 735.11(c). Any letter of credit 
must be clean, irrevocable, issued by a commercial bank payable to the 
Secretary by sight draft and insured as a deposit by the Federal Deposit 
Insurance Corporation.
    (d) If the Secretary, or his designated representative, finds that 
conditions exist which warrant requiring additional bond, there shall be 
added to the amount of bond as determined under the other provisions of 
this section, a further amount to meet such conditions.

[Amdt. 2, 53 FR 27150, July 19, 1988]

[[Page 221]]



Sec. 735.13  Amendment to license.

    In case an application is made under Sec. 735.3 for an amendment to 
a license and no bond previously filed by the warehouseman covers 
obligations arising under such amendment, the warehouseman shall, when 
notice has been given by the Secretary, or his designated 
representative, that such amendment will be granted upon compliance by 
such warehouseman with the act, file with the Secretary, within the 
time, if any, fixed in such notice, a bond complying with the act. In 
the discretion of the Secretary, a properly executed instrument in form 
approved by him, amending, extending, or continuing in force and effect 
the obligations of a valid bond previously filed by the warehouseman and 
otherwise complying with the act and the regulations in this part may be 
filed in lieu of a new bond.



Sec. 735.14  Bond required each year.

    A continuous form of license shall remain in force for more than one 
year from its effective date or any subsequent extension thereof, 
provided that the warehouseman has on file with the Secretary a bond 
meeting the terms and conditions as outlined in 7 CFR 735.11. Such bond 
must be in the amount required by the Secretary and approved by him or 
his designated representative. Failure to provide for or renew a bond 
shall result in immediate and automatic termination of the 
warehouseman's license.

[Amdt. 2, 53 FR 27150, July 19, 1988]



Sec. 735.15  Approval of bond.

    No bond, amendment, or continuation thereof shall be accepted for 
the purposes of the act and the regulations in this part until it has 
been approved by the Secretary, or his designated representative.

                           Warehouse Receipts



Sec. 735.16  Form.

    (a) Every receipt, whether negotiable or non-negotiable, issued for 
cotton stored in a licensed warehouse shall, in addition to complying 
with the requirements of section 18 of the act, embody within its 
written or printed terms the following:
    (1) The name of the licensed warehouseman and the designation, if 
any, of the warehouse;
    (2) The license number of the warehouse;
    (3) A statement whether the warehouseman is incorporated or 
unincorporated, and, if incorporated, under what laws;
    (4) In the event the relationship existing between the warehouseman 
and any depositor is not that of strictly disinterested custodianship, a 
statement setting forth the actual relationship;
    (5) The tag identifier given to each bale of cotton in accordance 
with Sec. 735.31;
    (6) A statement conspicuously placed, whether or not the cotton is 
insured, and if insured, to what extent, by the warehouseman, against 
loss or damage by fire, lightning and other risks;
    (7) The words ``Not Negotiable,'' or ``Negotiable,'' according to 
the nature of the receipt, clearly and conspicuously printed or stamped 
thereon;
    (8) A blank space designated for the purpose in which the grade and/
or other classification may be stated; and
    (9) A statement indicating that the weight was determined by a 
weigher licensed under the U.S. Warehouse Act, except that if at the 
request of the depositor, the weight is not so determined or if the 
point of origin weight was determined as permitted in Sec. 735.38, the 
receipt shall contain a statement to that effect.
    (b) Except when an expiration date authorized by the Department is 
shown on the face of the receipt, every negotiable receipt issued for 
cotton stored in a licensed warehouse shall be effective until 
surrendered for delivery of the cotton, and every non-negotiable receipt 
shall be effective until surrendered for delivery of the cotton or until 
all cotton covered by the receipt has been delivered in response to 
proper delivery orders of the person rightfully entitled to the cotton: 
Provided, that nothing contained in this section shall prohibit a 
warehouseman from legally selling the cotton when the accrued storage 
and other charges approach the current market value of the cotton.

[[Page 222]]

    (c) In addition to complying with paragraphs (a) and (b) of this 
section, every negotiable receipt issued for cotton stored in a licensed 
warehouse shall embody within its written or printed terms a statement 
that the cotton covered by such receipt was classified by a licensed 
classifier or a board of cotton examiners when such cotton is so 
classified.
    (d) Whenever the grade or other class of the cotton is stated in a 
receipt issued for cotton stored in a licensed warehouse, such grade or 
other class shall be determined by a licensed classifier or a board of 
cotton examiners upon the basis of a sample drawn in accordance with 
Sec. 735.71, and shall be stated in the receipt in accordance with 
Secs. 735.68 through 735.74.
    (e) If, at the request of the depositor, a warehouseman issues a 
receipt omitting the statement of grade and/or weight, such receipt 
shall have clearly and conspicuously stamped or written on the face 
thereof, or included as part of the electronic warehouse receipt record, 
either one or both of the following: ``Not graded on request of the 
depositor'' or ``Not weighed on request of the depositor,'' as 
applicable.
    (f) Licensed receipts issued to cover linters shall be clearly and 
conspicuously marked ``Linters''.
    (g) If a warehouseman issue a receipt under the act omitting any 
information not required to be stated, for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made by the warehouseman.
    (h) A warehouse receipt may contain additional information; Provided 
that such information does not interfere with the information required 
by this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15720, Nov. 24, 1964, as amended at 33 FR 14699, Oct. 2, 1968; 37 
FR 12920, June 30, 1972; 47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 
1814, Jan. 14, 1985; 59 FR 15038, Mar. 31, 1994; 64 FR 54510, Oct. 7, 
1999]



Sec. 735.17  Copies of receipts.

    (a) At least one actual, skeleton, or microfilm copy of all receipts 
shall be made, and all copies, except skeleton and microfilm copies, 
shall have clearly and conspicuously printed or stamped thereon the 
words ``Copy--Not Negotiable.''
    (b) A copy of each receipt issued shall be retained by the 
warehouseman for a period of 1 year after December 31 of the year in 
which the corresponding original receipt is canceled.
    (c) If copies are retained on microfilm, the warehouseman shall:
    (1) Have available at all times facilities for immediate, easily 
readable projection of the microfilm and for producing easily readable 
facsimile enlargements;
    (2) Arrange, index, and file the films in such a manner as to permit 
the immediate location of any particular microfilm record; and
    (3) Be ready at all times to provide, and immediately provide, at 
the expense of the warehouseman, any facsimile enlargement of such 
microfilm copies which any authorized officers or agents of the 
Department of Agriculture may request.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[37 FR 12920, June 30, 1972, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 735.18  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, a new receipt upon 
the same terms, subject to the same conditions, and bearing on its face 
the number and the date of the receipt in lieu of which it is issued and 
a plain and conspicuous statement that it is a duplicate issued in lieu 
of a lost or destroyed receipt, may be issued upon compliance with the 
conditions set out in paragraph (b) of this section.
    (b) Before issuing such new or duplicate receipt the warehouseman 
shall require the depositor or other person applying therefor to make 
and file with the warehouseman (1) an affidavit showing that he is 
lawfully entitled to the possession of the original receipt, that he has 
not negotiated or assigned it, how the original receipt was lost or 
destroyed, and, if lost, that diligent effort has been made to find the 
receipt without success, and (2) a bond in an amount double the value, 
at the time

[[Page 223]]

the bond is given, of the cotton represented by the lost or destroyed 
receipt. Such bond shall be in a form approved for the purpose by the 
Secretary, or his designated representative, shall be conditioned to 
indemnify the warehouseman against any loss sustained by reason of the 
issuance of such receipt, and shall have as surety thereon preferably a 
surety company which is authorized to do business, and is subject to 
service of process in a suit on the bond, in the State in which the 
warehouse is located, or at least two individuals who are residents of 
such State and each of whom owns real property therein having a value, 
in excess of all exemptions and encumbrances, equal to the amount of the 
bond.



Sec. 735.19  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator;
    (b) Upon distinctive paper or card stock specified by the 
Administrator;
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing; and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.

[64 FR 54510, Oct. 7, 1999]



Sec. 735.20  Partial delivery of cotton.

    If a warehouseman delivers a part only of a lot of cotton for which 
he has issued a negotiable receipt under the act, he shall take up and 
cancel such receipt and issue a new receipt in accordance with the 
regulations in this part for the undelivered portion of the cotton.



Sec. 735.21  Return of receipts before delivery of cotton.

    Except as permitted by law or by the regulations in this part, a 
warehouseman shall not deliver cotton for which a negotiable receipt has 
been issued under the Act until such receipt has been returned and 
canceled; and shall not deliver cotton for which a non-negotiable 
receipt has been issued until such receipt has been returned or until 
the warehouseman has obtained from the person lawfully entitled to such 
delivery or their authorized agent, a written delivery order that is 
properly signed, specifying by bale or tag number, mark, or identifier 
each bale to be delivered from any receipt or receipts.

[64 FR 54510, Oct. 7, 1999]



Sec. 735.22  Omission of grade; no compulsion by warehouseman.

    No licensed warehouseman shall, directly or indirectly by any means 
whatever, compel or attempt to compel the depositor of any cotton in his 
warehouse to request the issuance of a receipt omitting the statement of 
grade.

                     Duties of Licensed Warehouseman



Sec. 735.23  Insurance; requirements.

    (a) When requested in writing by the depositor of cotton in a 
licensed warehouse, or by the holder of the receipt covering such 
cotton, to insure such cotton against loss or damage by fire, lightning, 
and other risks, each licensed warehouseman shall secure in his own name 
such insurance under reporting forms of policies which automatically 
attach for the full value of such cotton, including daily changes of 
value through market fluctuations and changes in the quantity of such 
product from day to day, as soon as such cotton is placed in his legal 
custody, and he shall continue such insurance in effect so long as the 
cotton remains in his legal custody. Such insurance shall be covered by 
lawful policies issued by one or more insurance companies. Each 
warehouseman insuring cotton under the provisions of this section shall 
submit such reports to underwriters as may be required under the terms 
of such policies, and copies of such reports shall be submitted to the 
Department as it may require. If the warehouseman is unable to procure 
insurance to the extent requested, he shall, orally or by telegraph or 
by telephone, and at his own expense, immediately notify the person 
making the request of such fact. When insurance is not carried in the 
warehouseman's name, the receipt shall show that the cotton is not 
insured by the warehouseman.

[[Page 224]]

Nothing in this section shall be construed to prevent a licensed 
warehouseman from adopting a rule that he will insure all cotton stored 
in his warehouse, but if he elects to insure he shall accomplish such 
insurance through policies as above specified.
    (b) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 735.6, and at such other place as the Administrator 
or his representative may from time to time designate, a notice, stating 
briefly the conditions under which the cotton will be insured against 
loss or damage by fire, lightning, and other risks.



Sec. 735.24  Premiums; inspections; reports.

    Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of the regulations in this part, pay such 
premiums, permit such reasonable inspections and examinations, and make 
such reasonable reports as may be provided for in such contracts.



Sec. 735.25  Warehouseman to collect and pay over insurance.

    Each warehouseman shall promptly take such steps as may be necessary 
and proper to collect any moneys which may become due under contracts of 
insurance entered into by him for the purpose of meeting the 
requirements of the regulations in this part, and shall, as soon as 
collected, promptly pay over to the persons concerned any portion of 
such moneys which they may be entitled to receive from him.



Sec. 735.26  Care of cotton in licensed warehouse.

    Each warehouseman shall at all times exercise such care in regard to 
cotton in his custody as a reasonably careful owner would exercise under 
the same circumstances and conditions.



Sec. 735.27  Care of other cotton and other commodities.

    If, at any time, a warehouseman shall handle or store cotton 
otherwise than as a licensed warehouseman, or shall handle or store any 
other commodity, he shall so protect the same, and otherwise exercise 
such care with respect to it, as not to endanger the cotton in his 
custody as a licensed warehouseman or impair his ability to meet his 
obligations and perform his duties under the act and the regulations in 
this part. Nonlicensed cotton shall be kept separate from licensed 
cotton.



Sec. 735.28  Records to be kept in safe place.

    (a) Each warehouseman shall provide a metal fireproof safe, a 
fireproof vault, or fireproof compartment in which he shall keep, when 
not in actual use, all records, books, and papers pertaining to the 
licensed warehouse, including his current receipt book, copies of 
receipts issued, and canceled receipts or microfilm copies of canceled 
receipts except that with the written consent of the Administrator or 
his representative, upon a showing by such warehouseman that it is not 
practicable to provide such fireproof safe, vault, or compartment he may 
keep such records, books, and papers in some other place of safety, 
approved by the Administrator or his representative.
    (b) Each canceled receipt or microfilm copy of each canceled receipt 
shall be retained by the warehouseman for a period of 6 years after 
December 31 of the year in which the receipt is canceled and for such 
longer period as may be necessary for the purposes of any litigation 
which the warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.
    (c) Canceled receipts shall be arranged by the warehouseman in 
numerical order and otherwise in such manner as shall be directed, for 
purposes of audit, by authorized officers or agents of the Department of 
Agriculture.
    (d) If microfilm copies of canceled receipts are to be retained in 
lieu of canceled receipts, the warehouseman shall:
    (1) Have available at all times facilities for immediate, easily 
readable projection of the microfilm and for producing easily readable 
facsimile enlargements;

[[Page 225]]

    (2) Arrange, index, and file the films in such a manner as to permit 
the immediate location of any particular microfilm copy; and,
    (3) Be ready at all times to provide, and immediately provide, at 
the expense of the warehouseman, any facsimile enlargement of such 
microfilm copies which any authorized officers or agents of the 
Department of Agriculture may request.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[37 FR 12920, June 30, 1972, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 735.29  Warehouse charges.

    A licensed warehouseman shall not make any unreasonable, exorbitant, 
or discriminatory charge for services rendered. Before a license to 
conduct a warehouse is granted under the act, the warehousemen shall 
file with the Department a copy of his rules, if any, and a schedule of 
the charges to be made by him if licensed. Effective at the beginning of 
any cotton season, a licensed warehouseman may change his rate of 
charges for storage and other services, and the new rates may apply to 
all cotton then in storage as well as cotton received thereafter. At or 
before the beginning of each season every licensed warehouseman shall 
file with the Department a copy of his rules, if any, and of his 
schedule of charges for the ensuing season. Should a licensed 
warehouseman wish to make changes in his rates to become effective at 
any time other than at the beginning of a season, he shall file with the 
Department an amended schedule showing the contemplated changes, 
accompanied by a statement setting forth the reasons therefor. No 
increase in the storage rate shown in such an amended schedule shall 
apply to cotton in storage at the time the changes become effective. A 
licensed warehouseman may demand payment of all accrued charges at the 
close of each cotton season. If, upon demand, the owner of the cotton 
refuses to pay such charges at the end of a season, the warehouseman may 
take such action to enforce collection of his charges as is permitted by 
the laws of the State in which the warehouse is located. Each licensed 
warehouseman shall keep a copy of his current rules and schedule of 
charges exposed conspicuously in the place prescribed by Sec. 735.6 and 
at such other place accessible to the public as the Secretary or his 
designated representative may from time to time designate. For the 
purposes of this section the cotton season shall commence, with respect 
to each warehouse, at such time not later than September 1 of each year, 
as the operator of the warehouse shall select, and he shall notify the 
Department in writing not less than five days next preceding the date 
selected.

[29 FR 15720, Nov. 24, 1964, as amended at 47 FR 35751, Aug. 17, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 735.30  Business hours.

    (a) Each licensed warehouse shall be kept open for the purpose of 
receiving cotton for storage and delivering cotton out of storage every 
business day for a period of not less than six hours between the hours 
of 8 a.m. and 6 p.m., except as provided in paragraph (b) of this 
section. The warehouseman shall keep conspicuously posted on the door of 
the public entrance to his office and to his warehouse a notice showing 
the hours during which the warehouse will be kept open, except when such 
warehouse is kept open continuously from 8 a.m. to 6 p.m.
    (b) In case the warehouse is not to be kept open as required by 
paragraph (a) of this section, the notice posted as prescribed in that 
paragraph shall state the period during which the warehouse is to be 
closed and the name of an accessible person, with the address where he 
is to be found, who shall be authorized to deliver cotton stored in such 
warehouse, upon lawful demand by the depositor thereof or the holder of 
the receipt therefor, as the case may be.



Sec. 735.31  Tags to be attached to bales.

    Except as provided in Sec. 735.32, each warehouseman shall, upon 
acceptance of any bale of cotton for storage, immediately attach thereto 
an identification tag of good quality which shall identify the bale. 
Such tag either shall be made of reasonably heavy waterproof paper or 
linen, with reinforced eyelet or eyelets, and be attached to

[[Page 226]]

the bale with a flexible, rustproof wire, or shall be made of such other 
material and attached by such other means as shall be approved by the 
Administrator. These tags will contain a number, mark, or identifier and 
shall be attached in an orderly systematic sequence, clearly 
distinguishable from each other.

[64 FR 54510, Oct. 7, 1999]



Sec. 735.32  Arrangement of stored cotton.

    (a) Each warehouseman shall store each bale of cotton for which a 
receipt under the act has been issued so that the tag thereon, required 
by Sec. 735.31 is visible and readily accessible, except as provided in 
paragraph (b) of this section, and shall arrange all other cotton in his 
licensed warehouse so as to permit an accurate check thereof.
    (b) If cotton is tendered to a licensed warehouseman for storage and 
the cotton is of the same grade and staple and is tendered in such 
quantity by any one depositor that efficiency of operation dictates that 
such cotton should be stored in a lot or lots without regard to 
visibility of all tags on all bales within any lot, the warehouseman may 
store such cotton if each lot originally contained two or more bales: 
Provided, however, that each bale entering into a lot must bear an 
individual bale identification, and must be stored so that the number of 
bales within the lot may be accurately determined.
    (c) An individual lot identification tag showing the lot number and 
the number of bales in the lot shall be affixed by the warehouseman to 
each lot of cotton. The warehouseman shall also maintain an office 
record showing the bale or tag number, mark, or identifier of each bale 
in the lot and the location of the lot in the warehouse. Each lot shall 
be so arranged as to be readily distinguishable from each and every 
other lot. When requested by a proper representative of the Department 
of Agriculture engaged in making an examination of the warehouse, the 
warehouseman shall tear or break down at his own expense such stacks or 
lots of cotton as the examiner deems necessary to a proper examination. 
Before any warehouseman undertakes to store in accordance with this 
section he shall submit a statement setting forth: (1) His reasons for 
desiring to avail himself of this section and (2) the plan of storage he 
proposes to follow, and he shall secure prior permission from the 
Secretary or his designated representative to practice such method of 
storage.

[29 FR 15720, Nov. 24, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 64 FR 65510, Oct. 7, 1999]



Sec. 735.33  System of accounts.

    Each warehouseman shall use a system of accounts which is approved 
by the Service. The system of accounts shall show the following for each 
bale of cotton: the tag number, mark, or identifier as specified in 
Sec. 735.31; its weight; its class when required or ascertained; its 
location; the dates received for, and delivered out of, storage; and the 
receipts issued and canceled. All systems of accounts shall include a 
detailed record of all moneys received and disbursed and of all 
effective insurance policies.

[64 FR 54510, Oct. 7, 1999]



Sec. 735.34  Reports.

    Each licensed warehouseman shall, from time to time, when requested 
by the Administrator, or his representative, make such reports, on forms 
prescribed and furnished for the purpose by the Service, concerning the 
condition, contents, operation, and business of the warehouse as the 
Administrator may require.



Sec. 735.35  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33540, June 20, 1997]



Sec. 735.36  Copies of reports to be kept.

    Each warehouseman shall keep on file, as a part of the records of 
the warehouse, for a period of three years after December 31 of the year 
in which submitted, an exact copy of each report

[[Page 227]]

submitted by such warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15720, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 735.37  Inspections and examinations of warehouses.

    Each licensed warehouseman shall permit any officer or agent of the 
Department, authorized by the Secretary for the purpose, to enter and 
inspect or examine, on any business day during the usual hours of 
business, any warehouse for the conduct of which such warehouseman holds 
a license, the office thereof, the books, records, papers, and accounts 
relating thereto, and the contents thereof, and such warehouseman shall 
furnish such officer or agent, when he so requests, the assistance 
necessary to enable him to make any inspection or examination under this 
section.



Sec. 735.38  Weighing of cotton; weighing apparatus.

    (a) Before being stored in a licensed warehouse, all cotton shall be 
weighed at the warehouse by a licensed weigher, and the weight so 
determined shall be stated on the warehouse receipt. Point of origin 
weights may be used for single bale or lot stored cotton by agreement 
with the depositor. Any point of origin weights shown on a warehouse 
receipt will be the official warehouse bale or lot weight. Lot cotton 
tendered for storage on which a multiple bale warehouse receipt is 
issued must be maintained so as to preserve its individual and 
collective identity during storage and shipment, provided that if such 
lot is broken at the warehouse, for the issuance of new receipts, each 
bale shall be weighed at the warehouse by a licensed weigher before 
single bale warehouse receipts are issued.
    (b) Each licensed warehouse shall be equipped with scales acceptable 
to the Department for weighing cotton into and out of the warehouse. The 
weighing apparatus used for ascertaining the weight stated in a receipt 
or certificate, issued for cotton stored in a licensed warehouse, shall 
be subject to examination by an officer or agent of the Department 
designated by the Administrator for the purpose. If the Department shall 
disapprove such weighing apparatus, it shall not thereafter, unless such 
disapproval be withdrawn, be used in ascertaining the weight of any 
cotton for the purposes of the act and the regulations in this part.

[33 FR 14699, Oct. 2, 1968. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 64 FR 54511, Oct. 7, 1999]



Sec. 735.39  Loose cotton.

    Each warehouseman shall keep his warehouse reasonably free of loose 
cotton, except in a space or container separate and apart from other 
cotton.



Sec. 735.40  Excess storage.

    (a) If at any time a warehouseman shall store cotton in his licensed 
warehouse in excess of the capacity thereof as determined in accordance 
with 7 CFR 735.12, such warehouseman shall so arrange the cotton as not 
to obstruct free access thereto and the proper operation of the 
sprinkler or other fire protection equipment provided for such 
warehouse, and shall immediately notify the Secretary of such excess 
storage, the reason therefor and the location thereof.
    (b) A warehouseman who lacks space and desires to transfer at his 
own expense, identity preserved depositor stored cotton, for which 
receipts have been issued to another licensed warehouse may physically 
do so subject to the following terms and conditions:
    (1) The transferring (shipping) warehouseman's accepted rules or 
schedule of charges must contain notice that the warehouseman may 
forward cotton deposited on an identity preserved bases with the written 
permission of the depositor under such terms and conditions as the 
Secretary may prescribe;
    (2) For purposes of this section, a licensed warehouse means; (i) a 
warehouse operated by a warehouseman who holds an unsuspended, unrevoked 
license under the U.S. Warehouse Act for cotton; or (ii) a warehouse 
operated by a warehouseman who holds an effective warehouse license for 
the public storage of cotton issued by a State that has financial, 
bonding and examination requirements for the benefit of

[[Page 228]]

all depositors at least equal to the requirements of this section;
    (3) The shipping warehouseman must transfer all identity-preserved 
cotton in lots and must list on a Bill of Lading all forwarded bales by 
receipt number and weight. The receiving warehouseman shall promptly 
issue a non-negotiable warehouse receipt for each lot of cotton stored 
and shall attach a copy of the corresponding Bill of Lading to each 
receipt and return the receipt promptly to the shipping warehouseman. 
The receiving warehouseman will store each such lot intact, and will 
attach a header card to the lot showing the receipt number, number of 
bales, and a copy of the Bill of Lading with the individual tag numbers, 
marks, or identifiers to the stored lot. Such non-negotiable warehouse 
receipts issued for forwarded cotton shall have printed or stamped 
diagonally in large bold outline letters across the face of the receipt 
the words: ``NOT NEGOTIABLE.''
    (4) The shipping warehouseman's bond shall be increased to consider 
the addition of the transferred cotton to the licensed capacity of the 
warehouse with the net asset requirements based on the total of the 
licensed capacity and the forwarded cotton (The bond amount need not be 
more than $250,000 unless necessary to cover a deficiency in net assets 
to meet requirements. The receiving warehouseman must not incur storage 
obligations that exceed the licensed capacity of the receiving 
warehouse);
    (5) The shipping warehouseman continues to retain storage 
obligations to the owners of all cotton deposited in the warehouse for 
storage whether forwarded or retained and is, except as otherwise agreed 
upon under paragraph (b)(6) of this section, required to redeliver the 
cotton, upon demand, to the depositor or the depositor's transferee at 
the warehouse where the cotton was first deposited for storage;
    (6) The owner of cotton deposited for storage at the warehouse must 
make settlement and take delivery at the warehouse where the cotton was 
first deposited for storage, unless the owner of the cotton, with the 
consent of both the shipping warehouseman and the receiving 
warehouseman, elects to take delivery at the warehouse to which cotton 
was transferred under this section;
    (7) Nothing in this section diminishes the right of the owner of the 
cotton to receive or the obligation of the warehouseman of a licensed 
warehouse from which the product is transferred, to deliver to the owner 
the same cotton, identity preserved, called for by the warehouse receipt 
or other evidence of storage;
    (8) Recording and retention of non-negotiable warehouse receipts 
received as a result of forwarding cotton under this section shall be 
subject to the requirements for warehouse receipts specified elsewhere 
in these regulations; and
    (9) If it is the shipping warehouseman's obligation by terms of the 
warehouse receipt or otherwise to insure the cotton subject to the 
transfer, he must in accordance with 7 CFR 735.23 keep such cotton 
insured in his own name or transfer the cotton only to a warehouse where 
the cotton is fully insured.

[Amdt. 2, 53 FR 27150, July 19, 1988, as amended at 64 FR 54511, Oct. 7, 
1999]



Sec. 735.41  Removal of cotton from storage.

    Except as may be permitted by law or the regulations in this part, a 
warehouseman shall not remove any cotton, for storage, from the licensed 
warehouse or a part thereof designated in the receipt for such cotton, 
if by such removal the insurance thereon will be impaired, without first 
obtaining the consent in writing of the holder of the receipt, and 
indorsing on such receipt the fact of such removal. Under no other 
circumstances, unless it becomes absolutely necessary to protect the 
interests of holders of receipts, shall cotton be removed from the 
warehouse, and immediately upon any such removal the warehouseman shall 
notify the Administrator of such removal and the necessity therefor.



Sec. 735.42  Storage of wet and fire-damaged cotton.

    A warehouseman shall not place any bale of cotton that is 
excessively wet in contact with any other cotton in the licensed 
warehouse. A warehouseman

[[Page 229]]

shall not store in the same compartment with cotton that has not been 
damaged by fire any cotton that has been damaged by fire until the risk 
of fire therein has passed and the fire-damaged cotton has been removed 
from the bale, and then he shall not store it in contact with cotton 
that has not been so damaged.



Sec. 735.43  Cotton handling; storage; injuries.

    A warehouseman shall not handle or store cotton in such manner as 
will injure or damage it, or in any part of the warehouse in which it is 
likely to be injured or damaged by excessive moisture, or otherwise.



Sec. 735.44  Fire loss to be reported.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[64 FR 54511, Oct. 7, 1999]



Sec. 735.45  Signatures on receipts to be filed with Department.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to sign warehouse receipts 
for the licensed warehouseman, and shall promptly notify the Department 
of any changes as to persons authorized to sign, and shall file 
signatures of such persons.



Sec. 735.46  [Reserved]



Sec. 735.47  Certificates to be filed with warehouseman.

    When a grade or weight certificate has been issued by a licensed 
grader or weigher, a copy of such certificate shall be filed with the 
warehouseman in whose warehouse the cotton covered by such certificate 
is stored, and such certificates shall become a part of the records of 
the licensed warehouseman. All certificates and supporting documentation 
that form the basis for any receipt issued by the warehouseman shall be 
retained in the records of the warehouseman for a period of 1 year after 
December 31 of the year in which the receipt based on such certificates 
or supporting documentation is canceled.

[64 FR 54511, Oct. 7, 1999]



Sec. 735.48  Drawing of samples.

    Each warehouseman shall have in his employ at all times one or more 
licensed samplers whose duty it shall be to draw samples from any cotton 
stored or to be stored in the licensed warehouse if the owner of such 
cotton or any person having a legal right to have such cotton sampled 
requests that samples be drawn. When directed by the Administrator such 
requests shall be in writing. Such samplers shall perform their duties 
under the supervision and at the direction of the licensed warehouseman 
and the samples shall be drawn in accordance with Sec. 735.72.



Sec. 735.49  Methods for drawing and marking samples.

    Each sample shall be appropriately marked to show the tag number, 
mark, or identifier of the bale of cotton from which it was drawn and 
the date of sampling.

[64 FR 54511, Oct. 7, 1999]

    Cross Reference: For regulations under the Cotton Futures Act and 
the Cotton Standards Act, see 7 CFR parts 27 and 28 of this chapter.

                                  Fees



Sec. 735.50  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 735.51  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The

[[Page 230]]

fee will be assessed and payable when the warehouse bond is furnished in 
accordance with these regulations, for acceptance by the Secretary and 
annually thereafter on the bond renewal date. The capacity for each 
identifiable location will be determined by the Secretary. The total 
capacity of all locations may not exceed the capacity stated in the 
current license. An identifiable location is a fully functional public 
warehouse as determined by the Secretary. The annual fee a licensed 
warehouseman is assessed may be adjusted by the amount Commodity Credit 
Corporation (CCC) pays, if CCC has a storage contract or agreement with 
the warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 735.52  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, pursuant to the regulation in this part, 
the applicant or licensee shall deposit with the service the amount of 
the fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[49 FR 3640, Jan. 30, 1984. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33540, June 20, 1997]



Sec. 735.53  Return of excess deposit.

    The Service shall hold in its custody each advance deposit made 
under Sec. 735.52 until the fee, if any, is assessed. Any part of such 
advance deposit which is not required for the payment of any fee 
assessed shall be returned to the party depositing the same.

[49 FR 3640, Jan. 30, 1984. Redesignated at 50 FR 1814, Jan. 14, 1985]

               Licensed Classifiers and Licensed Weighers



Sec. 735.54  Sampler's, classifier's, and weigher's applications.

    (a) Applications for licenses to sample, classify and/or weigh 
cotton under section 11 of the act shall be made to the Administrator on 
forms furnished for the purpose by him.
    (b) Each such application shall be in English, shall be signed by 
the applicant, shall be verified by him, under oath or affirmation 
administered by a duly authorized officer, and shall contain or be 
accompanied by--
    (1) The name and location of a warehouse or warehouses licensed, or 
for which application for license has been made, under the act, in which 
cotton sought to be sampled, classified and/or weighed under such 
license is or may be stored;
    (2) A statement from the warehouseman conducting such warehouse 
showing whether or not the applicant is competent and is acceptable to 
such warehouseman for the purpose;
    (3) Satisfactory evidence that he is competent to sample, classify 
and/or weigh cotton;
    (4) A statement by the applicant that he agrees to comply with and 
abide by the terms of the act and the regulations in this part so far as 
the same may relate to him; and
    (5) Such other information as the Administrator may deem necessary:

Provided, That when an application for a license to classify cotton is 
filed by a person who does not intend to classify cotton for any 
particular licensed warehouseman but who does intend to classify cotton 
stored or to be stored in a licensed warehouse and to issue class 
certificates therefor, as provided for by the act and the regulations in 
this part, independent of the warehouse receipts issued to cover such 
cotton, it shall not be necessary to furnish such statement as is 
required in this paragraph.

[[Page 231]]

    (c) For the purpose of classifying cotton under the regulations in 
this part, each licensed classifier who holds an unsuspended or 
unrevoked license under the Cotton Standards Act of March 4, 1923, and 
regulations thereunder to classify cotton and certificate the grade 
thereof shall be deemed competent and a license may be issued to him 
under the United States Warehouse Act upon furnishing the information 
required by paragraph (b) of this section except as specified in 
paragraph (c)(3) of this section.
    (d) The applicant shall at any time furnish such additional 
information as the Secretary, or his designated representative, shall 
find to be necessary to the consideration of his application.
    (e) A single application may be made by any person for a license as 
a sampler, classifier and weigher upon complying with all the 
requirements of this section.



Sec. 735.55  Examination of applicant.

    Each applicant for a license as a sampler, classifier and/or weigher 
and each licensed sampler, classifier and/or weigher shall, whenever 
requested by an authorized agent of the Department designated by the 
Administrator, for the purpose, submit to an examination or test to show 
his ability to properly sample, classify or weigh cotton, as the case 
may be, and shall also make available for inspection copies of the 
standards of classification or the weighing apparatus as the case may 
be, used or to be used by him.



Sec. 735.56  Posting of license.

    Each licensed classifier shall keep his license conspicuously posted 
in the office where all or most of the classifying is done, and each 
licensed sampler and/or weigher shall keep his license conspicuously 
posted in the warehouse office or in such place as may be designated for 
the purpose by a representative of the Service.



Sec. 735.57  Duties of sampler, classifier and weigher.

    Each licensed classifier or weigher whose license remains in effect 
shall, without discrimination, as soon as practicable, and upon 
reasonable terms, classify or weigh and certificate the class or weight, 
respectively, of cotton stored or to be stored in a licensed warehouse 
to which his license applies, if such cotton is offered to him under 
such conditions as permit the proper performance of such functions; 
except that no class or weight certificate need be issued when the class 
or weight so determined is entered on a receipt by the licensed 
classifier or weigher making the determination thereof. Each licensed 
sampler shall sample cotton stored or to be stored in a licensed 
warehouse for which he holds a license, in accordance with Sec. 735.48. 
Each licensed sampler, classifier, and weigher shall give preference to 
persons who request his services as such over persons who request his 
services in any other capacity. No class or weight certificate shall be 
issued under the act for cotton not in the custody of a licensed 
warehouseman for purposes of storage in a licensed warehouse, nor shall 
cotton not in the custody of such a warehouseman for such purpose be 
sampled by a licensed sampler acting as such.



Sec. 735.58  Class certificates; form.

    (a) Each class certificate issued under the act by a licensed 
classifier shall be in a form approved for the purpose by the 
Administrator, and shall embody within its written or printed terms:
    (1) The caption ``Cotton class certificate'';
    (2) Whether it is an original, a duplicate, or other copy;
    (3) The name and location of the licensed warehouse in which the 
cotton is or is to be stored;
    (4) The date of the certificate;
    (5) The location of the cotton at the time of classification;
    (6) The identification of each bale of cotton by the tag number 
given to the bale in accordance with Sec. 735.31 or if there be no such 
tag number by other marks or numbers;
    (7) The grade or other class, except length of staple, of each bale 
of cotton covered by the certificate, in accordance with Secs. 735.68 
through 735.73, as far as applicable, and the standard or description in 
accordance with which the classification is made;

[[Page 232]]

    (8) A blank space designated for the purpose in which the length of 
staple may be stated;
    (9) That the certificate is issued by a licensed classifier under 
the United States Warehouse Act and regulations thereunder; and
    (10) The signature of the licensed classifier.

In addition, the class certificate may include any other matter not 
inconsistent with the act or the regulations in this part, provided the 
approval of the Service is first secured.
    (b) Form A memorandums and Form C certificates issued by a board of 
cotton examiners and class certificates issued by licensed classers 
under the United States Cotton Standards Act (7 U.S.C. 51 et seq.) shall 
be deemed sufficient for the purposes of the United States Warehouse Act 
and the regulations in this part, if the samples on which they are based 
were drawn in accordance with applicable requirements of Sec. 735.71, 
and, in case of a class certificate issued by such a licensed classer, 
if the classer holds an unsuspended and unrevoked license under each of 
said acts.



Sec. 735.59  Weight certificates; form.

    Each weight certificate issued under the act by a licensed weigher 
shall be in a form approved for the purpose by the Administrator, and 
shall embody within its written or printed terms:
    (a) The caption ``Cotton weight certificate'';
    (b) Whether it is an original, a duplicate, or other copy;
    (c) The name and location of the licensed warehouse in which the 
cotton is or is to be stored;
    (d) The date of the certificate;
    (e) The location of the cotton at the time of weighing;
    (f) The identification of each bale of cotton by the tag number 
given to the bale in accordance with Sec. 735.31 or if there be no such 
tag number by other marks or numbers;
    (g) The gross, or net and tare, weight of the cotton and, if the 
cotton be excessively wet or otherwise of a condition materially 
affecting its weight, a statement of such fact to which may be added the 
weigher's estimate of the number of pounds which should be allowed for 
such condition;
    (h) That the certificate is issued by a licensed weigher under the 
United States Warehouse Act and the regulations thereunder; and
    (i) The signature of such licensed weigher.

In addition, the weight certificate may include any other matter not 
inconsistent with the act or the regulations in this part, provided the 
approval of the Service is first secured.

[29 FR 15720, Nov. 24, 1964, as amended at 37 FR 12920, June 30, 1972. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 735.60  Combined class and weight certificates.

    The class and weight of any cotton, ascertained by a licensed 
classifier and a licensed weigher, may be stated on a certificate 
meeting the combined requirements of Secs. 735.58 and 735.59 if the form 
of such certificate shall have been approved for the purpose by the 
Administrator.



Sec. 735.61  Copies of certificates to be kept.

    Each licensed classifier and each licensed weigher shall keep for a 
period of one year in a place accessible to interested persons a copy of 
each certificate issued by him under the regulations in this part and 
shall file a copy of each such certificate with the warehouse in which 
the cotton covered by the certificate is stored.



Sec. 735.62  Licensees to permit and assist in inspection.

    Each licensed sampler, classifier, and/or weigher shall permit any 
officer or agent of the Department authorized by the Secretary for the 
purpose, to inspect or examine, on any business day during the usual 
hours of business, his books, papers, records, and accounts relating to 
the performance of his duties under the act and the regulations in this 
part, and shall, with the consent of the licensed warehouseman 
concerned, assist any such officer or agent in the inspection or 
examination mentioned in Sec. 735.37 as far as any such inspection or 
examination relates to the

[[Page 233]]

performance of the duties of such licensed sampler, classifier, and/or 
weigher under the act and this part.



Sec. 735.63  Reports.

    Each licensed sampler, classifier, and/or weigher shall, from time 
to time, when requested by the Administrator, make reports, on forms 
furnished for the purpose by the Service, bearing upon his activities as 
such licensed sampler, classifier, and/or weigher.



Sec. 735.64  Licenses; suspension or revocation.

    Pending investigation, the Secretary, or his designated 
representative, may, whenever he deems necessary, suspend the license of 
a sampler, classifier and/or weigher temporarily without hearing. Upon a 
written request and a satisfactory statement of reasons therefor, 
submitted by a licensed sampler, classifier, and/or weigher, the 
Secretary, or his designated representative, may, without hearing, 
suspend or revoke the license issued to such licensed sampler, 
classifier, and/or weigher. The Secretary, or his designated 
representative, may, after opportunity for hearing has been afforded in 
the manner prescribed in this section, suspend or revoke a license 
issued to a licensed sampler, classifier, and/or weigher when such 
licensed sampler, classifier, and/or weigher (a) has ceased to perform 
services as such sampler, classifier, and/or weigher, or (b) has in any 
other manner become incompetent or incapacitated to perform the duties 
of such licensed sampler, classifier, and/or weigher. As soon as it 
shall come to the attention of a licensed warehouseman that any of the 
conditions mentioned under (a) or (b) of this section exist, it shall be 
the duty of such warehouseman to notify, in writing, the Administrator. 
Before the license of any licensed sampler, classifier, and/or weigher 
is permanently suspended or revoked pursuant to section 12 of the act, 
such licensed sampler, classifier, and/or weigher shall be furnished by 
the Secretary or by his designated representative, a written statement 
specifying the charges and shall be allowed a reasonable time within 
which he may answer the same in writing and apply for a hearing, an 
opportunity for which shall be afforded in accordance with Sec. 735.89.



Sec. 735.65  Suspended or revoked licenses; return; termination of license.

    (a) In case a license issued to a sampler, classifier, and/or 
weigher is suspended or revoked by the Secretary, or his designated 
representative, such license shall be returned to the Secretary. At the 
expiration of any period of suspension of such license, unless in the 
meantime it be revoked, the dates of the beginning and termination of 
the suspension shall be endorsed thereon, and it shall be returned to 
the licensed sampler, classifier, and/or weigher to whom it was 
originally issued, and it shall be posted as prescribed in Sec. 735.56.
    (b) Any license issued, under the act and the regulations in this 
part, to a sampler, classifier, and/or weigher shall automatically 
terminate as to any warehouse whenever the license of such warehouse 
shall be revoked or canceled. Thereupon the license of such sampler, 
classifier, and/or weigher shall be returned to the Secretary. In case 
such license shall apply to other warehouses, the Secretary, or his 
designated representative, shall issue to him a new license, omitting 
the names of the warehouses covering which licenses have been revoked. 
Such new license shall be posted as prescribed in Sec. 735.56.



Sec. 735.66  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a licensed sampler, classifier, and/or weigher, a duplicate 
thereof may be issued under the same number.



Sec. 735.67  Unlicensed classifiers and weighers.

    No person shall in any way represent himself to be a sampler, 
classifier, and/or weigher licensed under the act unless he holds an 
unsuspended and unrevoked license issued under the act.

                          Cotton Classification



Sec. 735.68  Statement of class.

    Whenever the grade or other class of cotton is required to be, or 
is, stated

[[Page 234]]

for the purpose of the act or the regulations in this part it shall be 
stated in accordance with Secs. 735.68 through 735.73 as far as 
applicable.



Sec. 735.69  Official cotton standards of the United States.

    The official cotton standards of the United States, established and 
promulgated under the United States Cotton Standards Act of March 4, 
1923 (42 Stat. 1517; 7 U.S.C. 51-56), within their scope, are hereby 
adopted as the official cotton standards for the purposes of the act and 
the regulations in this part.



Sec. 735.70  Defective cotton; designation; terms defined.

    (a) Cotton that,
    (1) Because of the presence of extraneous matter of any character or 
irregularities or defects, is reduced in value below that of Good 
Ordinary,
    (2) Is below the grade of Good Ordinary,
    (3) Is below the grade of Low Middling, if tinged,
    (4) Is below the grade of Middling, if stained,
    (5) Is linters,
    (6) Is less than seven-eighths of an inch in length of staple,
    (7) Is of perished staple,
    (8) Is of immature staple,
    (9) Is gin cut,
    (10) Is reginned,
    (11) Is repacked,
    (12) Is false packed,
    (13) Is mixed packed, or
    (14) Is water packed, shall be designated as such.
In the case of paragraph (a)(1) of this section the particular 
extraneous matter or irregularities or defects shall be stated.
    (b) If cotton be reduced in value, by reason of the presence of 
extraneous matter of any character or irregularities or defects, below 
its grade or below its apparent length of staple according to the 
official cotton standards of the United States, the grade or length of 
staple from which it is so reduced, and the grade or length of staple to 
which it is so reduced, and the quality or condition which so reduces 
its value shall be determined and stated.
    (c) For the purposes of this section, the following terms shall be 
construed, respectively, to mean:
    (1) Cotton of perished staple. Cotton that has had the strength of 
fiber as ordinarily found in cotton destroyed or unduly reduced through 
exposure to the weather either before picking or after baling, or 
through heating by fire, or on account of water packing, or by other 
causes.
    (2) Cotton of immature staple. Cotton that has been picked and baled 
before the fiber has reached a normal state of maturity, resulting in a 
weakened staple of inferior value.
    (3) Gin-cut cotton. Cotton that shows damage in ginning through 
cutting by the saws, to an extent that reduces its value more than two 
grades.
    (4) Reginned cotton. Cotton that has passed through the ginning 
process more than once and cotton that, after having been ginned, has 
been subjected to a cleaning process and then baled.
    (5) Repacked cotton. Cotton that is composed of factors', brokers', 
or other samples, or of loose or miscellaneous lots collected and 
rebaled, or cotton in a bale which is composed of cotton from two or 
more smaller bales or parts of bales.
    (6) False packed cotton. Cotton in a bale (i) containing substances 
entirely foreign to cotton, (ii) containing damaged cotton in the 
interior with or without any indication of such damage upon the 
exterior, (iii) composed of good cotton upon the exterior and decidedly 
inferior cotton in the interior in such manner as not to be detected by 
customary examination--that is, a plated bale, or (iv) containing 
pickings or linters worked into the bale.
    (7) Mixed packed cotton. Cotton in a bale which, in the samples 
drawn therefrom, shows (i) a difference of three or more grades, or (ii) 
a difference of three or more color gradations, or (iii) a difference of 
two or more grades and two or more color graduations, or (iv) a 
difference in length of staple of one-eighth inch or more.
    (8) Water packed cotton. Cotton in a bale that has been penetrated 
by water during the baling process, causing damage to the fiber, or a 
bale that through exposure to the weather or by other means, while 
apparently dry on the exterior, has been damaged by water in the 
interior.

[[Page 235]]



Sec. 735.71  Class based on inspection and sample.

    Whenever the grade or other class of cotton is required to be, or 
is, stated by a warehouseman or a classifier or board of cotton 
examiners for the purposes of the act or the regulations in this part, 
it shall be based upon a careful inspection of and a sample properly 
drawn from the cotton. Samples submitted to a board of cotton examiners 
for issuance of Form A memorandums and samples from which classification 
is to be determined by licensed classifiers for purposes of the Act and 
the regulations in this part shall be drawn by samplers licensed under 
the Act and said regulations and in accordance with Sec. 735.72.



Sec. 735.72  Samples.

    Each sample shall be approximately 6 ounces in weight, not less than 
3 ounces of which are to be drawn from each side of the bale. Each 
sample must be representative of the bale from which drawn. Samples 
shall not be dressed or trimmed and shall be carefully handled in such 
manner as not to cause loss of leaf, sand, or other material, or 
otherwise change their representative character. Any sample which does 
not meet these requirements may be rejected.



Sec. 735.73  Lower grade (of two samples) to determine classification.

    If a sample drawn from one portion of a bale is lower in grade or 
shorter in length than one drawn from another portion of such bale, the 
classification of the bale shall be that of the sample showing the lower 
grade or shorter length.



Sec. 735.74  Access to official cotton standards.

    Each licensed warehouseman and each licensed classifier shall keep 
himself provided with, or have access to, a set of practical forms of 
the official cotton standards of the United States, or such parts 
thereof as the Administrator may deem necessary for use in the locality 
in which the licensed warehouse is located.

                             Cotton Appeals



Sec. 735.75  Who may appeal.

    Whenever the grade or other class of cotton, for which official 
cotton standards of the United States are in effect, is stated on a 
receipt or a cotton class certificate issued under the act and the 
regulations in this part, and a question arises as to the true grade or 
other class of such cotton, any person having an interest in the cotton 
may take an appeal for the determination of such question.



Sec. 735.76  Complaint.

    In order to take such an appeal a complaint in writing in accordance 
with Sec. 735.77 shall be filed with a duly authorized cotton examiner 
or a board of cotton examiners, or with the Administrator, who shall 
designate a cotton examiner or a board of cotton examiners for the 
purpose of disposing of such complaint.



Sec. 735.77  Contents of complaint.

    (a) Complaints shall be in English and shall state:
    (1) The name and post office address of the complainant;
    (2) The nature of the complainant's interest in the cotton;
    (3) The name and post office address of the holder of the receipt, 
if someone other than the complainant;
    (4) The name and post office address of any other interested party;
    (5) The name and location of the licensed warehouse in which the 
cotton is stored, and the tag number, mark, or identifier assigned to 
each bale of cotton involved in the appeal, the grade or other class 
assigned to such cotton by the licensed warehouseman, and the date of 
the receipt issued therefor;
    (6) The grade or other class assigned by the licensed classifier, if 
any;
    (7 ) The grade or other class, different from that assigned by the 
licensed warehouseman, which is contended for by any interested party;
    (8) Whether, within complainant's knowledge, any appeal involving 
the same cotton previously has been taken, and if so, an appropriate 
identification of such other appeal; and

[[Page 236]]

    (9) If samples have been agreed upon and submitted in accordance 
with Sec. 735.79(b).
    (b) When practicable, the complainant shall file with the complaint, 
the warehouse receipt or class certificate, if any, covering the cotton 
involved in the appeal. When such receipt or certificate is not filed 
before the issuance of the cotton appeal certificate, a definite 
statement indicating why such papers are not produced shall be filed 
with the complaint.

[64 FR 54511, Oct. 7, 1999]



Sec. 735.78  Proof of agent's authority.

    In case a complaint is filed under Secs. 735.75 through 735.77 by a 
person purporting to act in behalf of another person, the Administrator, 
or the cotton examiner or the board of cotton examiners with whom it was 
filed, may, if considered necessary, require proof of the authority of 
such person to file the complaint.



Sec. 735.79  Determination of appeals; samples.

    (a) Appeals taken hereunder shall be determined upon the basis of 
samples of the cotton involved which have been drawn and submitted in 
accordance with this section.
    (b) The complainant may submit samples of the cotton involved which 
have been agreed upon by the licensed warehouseman in whose warehouse 
the cotton is stored and the interested parties other than such 
warehouseman, or have been drawn by a disinterested person selected for 
the purpose by the warehouseman and such parties. Such samples shall be 
drawn in accordance with Sec. 735.72.
    (c) If samples which have been submitted pursuant to paragraph (b) 
of this section be deemed unsatisfactory, the cotton examiner or board 
of cotton examiners by whom the appeal is heard or the Administrator may 
require the submission of new samples in accordance with paragraph (b) 
of this section.
    (d) In case samples are not submitted in accordance with paragraph 
(b) or (c) of this section, the Administrator, the cotton examiner, or 
board of cotton examiners by whom the appeal is heard may dismiss the 
appeal as provided in Sec. 735.80, or samples may be drawn from the 
cotton involved by a cotton examiner or by a disinterested person 
designated for the purpose by the cotton examiner or the board of cotton 
examiners by whom the appeal is heard or by the Administrator, and the 
complainant shall cause the cotton to be made accessible for the purpose 
of drawing such samples.



Sec. 735.80  Dismissal of appeals.

    The Administrator or the cotton examiner or board of cotton 
examiners by whom an appeal is heard may dismiss such appeal upon 
request of the complainant, or for noncompliance with the regulations in 
this part, or if it be found that the appeal was not taken in good 
faith. In case of an appeal filed in the first instance with a cotton 
examiner, a dismissal upon request of the complainant shall be made only 
before notice of grade or other class as provided in Sec. 735.81 is 
issued.



Sec. 735.81  Cotton appeal certificate.

    When an appeal filed with a board of cotton examiners has been 
determined, it shall immediately issue a cotton appeal certificate. When 
an appeal has been determined by a cotton examiner he shall issue a 
notice, a copy of which shall be sent by him to all parties shown by the 
record of the appeal to have an interest therein. In such notice the 
grade or other class assigned by him to the cotton involved in the 
appeal shall be stated, and any such interested party shall have a 
reasonable time, fixed in such notice, within which he may request of 
the Administrator a review of the appeal by a board of cotton examiners. 
In case such request is not filed with such cotton examiner in the time 
fixed therefor, or in case within such time every such interested party 
waives in writing a review by a board of cotton examiners, the cotton 
examiner shall immediately issue a cotton appeal certificate showing the 
grade or other class assigned to the cotton by him. In case a request 
under this section for a review of an appeal is filed within the time 
fixed for the filing of such request, the cotton examiner shall note in 
his records the time of such filing and shall immediately notify the 
Administrator, who shall cause the appeal to be reviewed

[[Page 237]]

and a cotton appeal certificate issued showing the grade or other class 
assigned upon such review. Immediately upon the issuance of a cotton 
appeal certificate under this section, the original thereof, together 
with any receipt covering such cotton filed in the appeal, shall be sent 
to the licensed warehouseman concerned, and a copy shall be sent to each 
other person shown by the record of the appeal to be interested therein.



Sec. 735.82  Expenses paid by complainant.

    All expenses for the transmission of communications from the 
complainant, for telegraph and telephone toll charges on messages 
addressed to him, and for drawing and submitting samples required by 
Sec. 735.79, including such traveling expenses, if any, incurred in 
accordance with the fiscal regulations of the Department as the 
Administrator may deem proper, shall be borne by the complainant in the 
appeal in connection with which such expenses were incurred.



Sec. 735.83  Advance deposit by complainant.

    If required by the cotton examiner or board of cotton examiners by 
whom the appeal is heard, the complainant shall make an advance deposit 
to cover the expenses payable by him under Sec. 735.82. Such deposit 
shall be in an amount fixed by the cotton examiner or board of cotton 
examiners, and shall be in the form of a check, certified if required by 
the Administrator or a post office or express money order, payable to 
the order of ``Treasurer of the United States.'' As soon as possible 
after the determination of an appeal in connection with which any such 
advance deposit shall have been made, the Administrator shall furnish 
the Treasurer of the United States with a statement of the expenses, if 
any, chargeable against such advance deposit. Thereupon the Treasurer of 
the United States shall return to the person making the advance deposit 
as much thereof as shall not be required for the payment of such 
expenses.



Sec. 735.84  New warehouse receipt.

    Upon demand by the lawful holder of a receipt for cotton involved in 
an appeal under Secs. 735.75 through 735.85, the licensed warehouseman 
shall surrender to such holder the original cotton appeal certificate 
issued in such appeal, and, if the grade or other class shown by such 
certificate be different from that shown by the receipt, shall, upon the 
return of the old receipt, issue a new receipt stating the grade or 
other class shown by such cotton appeal certificate.



Sec. 735.85  Disposition of samples.

    Samples submitted in appeals under this part may be used for the 
purposes of the Department or disposed of in accordance with the 
property regulations of the Department, and the proceeds, if any, 
covered into the Treasury of the United States as miscellaneous 
receipts, or may, at any time, in the discretion of the Administrator, 
be returned to the complainant at his expense.

                              Miscellaneous



Sec. 735.86  Bonds required.

    Every person applying for a license, or licensed, under section 9 of 
the act, shall, as such, be subject to all portions of these regulations 
so far as they may relate to warehousemen. In case there is a law of any 
State providing for a system of warehouses owned, operated, or leased by 
such State, a person applying for a license under section 9 of the act, 
to accept the custody of cotton and to store the same in any of said 
warehouses may, in lieu of a bond or bonds, complying with Secs. 735.11 
and 735.12, file with the Secretary a single bond meeting the 
requirements of the act and regulations in such form, and in such amount 
not less than $5,000, as he shall prescribe, to insure the performance 
by such person, with respect to the acceptance of the custody of cotton 
and its storage in the warehouses in such system for which licenses are 
or may be issued, of his obligations arising during the periods of such 
licenses, and in addition, if desired by the applicant, during the 
periods of any

[[Page 238]]

renewals or extensions thereof. In fixing the amount of such bond, 
consideration shall be given, among other appropriate factors, to the 
character of the warehouses involved, their actual or contemplated 
capacity, the bonding requirements of the State, and its liability with 
respect to such warehouses. If the Secretary, or his designated 
representative, shall find the existence of conditions warranting such 
action, there shall be added to the amount of the bond so fixed, a 
further amount, fixed by him, to meet such conditions.



Sec. 735.87  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.

[62 FR 33540, June 20, 1997]



Sec. 735.88  Information of violations.

    Every person licensed under the act shall immediately furnish the 
Service any information which comes to the knowledge of such person 
tending to show that any provision of the act or the regulations in this 
part has been violated.



Sec. 735.89  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130 through 1.151).

[45 FR 6775, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 735.90  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report or other paper, 
document or proceeding relating to such warehouse, shall be sufficient 
unless otherwise directed by the Administrator.



Sec. 735.91  Assets and bond; combination warehouses.

    Where such license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the regulations applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse was used for its storage.



Sec. 735.92  Amendments.

    Any amendment to, or revision of this part, unless otherwise stated 
therein, shall apply in the same manner to persons holding licenses at 
the time it becomes effective as it applies to persons thereafter 
licensed under the act.



Sec. 735.93  OMB control number assigned pursuant to Paperwork Reduction Act.

    The information collection requirements contained in these 
regulations (7 CFR part 735) 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 0560-0120.

[53 FR 27151, July 19, 1988]



Secs. 735.94-735.99  [Reserved]

                      Electronic Warehouse Receipts



Sec. 735.100  General statement.

    The regulations in Secs. 735.100 through 735.105 give a USWA 
licensed warehouseman the option of issuing EWRs instead of paper 
warehouse receipts for the cotton stored in its facility. EWRs may only 
be created through a provider who is approved by the Service.

[59 FR 15038, Mar. 31, 1994, as amended at 62 FR 33540, June 20, 1997]



Sec. 735.101  Electronic warehouse receipts.

    (a) EWRs issued pursuant to this part establish the same rights and 
obligations with respect to a bale of cotton as a paper receipt. With 
the exception of the requirement that warehouse receipts be issued on 
paper (Sec. 735.19), all other requirements applicable to paper

[[Page 239]]

warehouse receipts shall apply to EWRs, unless otherwise specified. The 
person identified as the ``holder'' of an EWR shall be entitled to the 
same rights and privileges as the holder of a paper warehouse receipt.
    (b) EWRs may only be issued through a provider.
    (c) Warehousemen must notify all holders of cotton receipted by 
inclusion in the CFS at least 30 calendar days before changing 
providers, unless otherwise required or allowed by the Secretary.
    (d) Licensed warehousemen may cancel EWRs only when they are the 
holder of such receipts.
    (e) Licensed warehousemen, only as holder, may correct information 
on the EWR.
    (f) Only the holder of the receipt may transfer the receipt to a new 
holder.
    (g) The identity of the holder must be included as additional 
information for every EWR.
    (h) An EWR shall only designate one entity as a holder at any one 
time.
    (i) An EWR shall not be issued for a bale of cotton if another 
receipt, paper or electronic, on such bale is outstanding. No two 
warehouse receipts issued by a licensed warehouse may have the same 
receipt number.
    (j) Prior to issuing EWRs, each warehouseman shall request and 
receive from the Service a range of consecutive warehouse receipt 
numbers which the warehouseman shall use for the EWRs it issues.
    (k) If a warehouseman has a contract with a provider, all warehouse 
receipts issued by the warehouseman shall initially be issued as EWRs.
    (l) An EWR may only be issued to replace a paper receipt if the 
current holder of the warehouse receipt agrees.
    (m) Licensed warehousemen must inform the Secretary of the identity 
of their approved provider 60 calendar days in advance of issuing 
warehouse receipts through that provider. The Secretary may waive or 
modify this 60 day requirement.
    (n) Holders and licensed warehousemen may authorize any other user 
of a provider to act on their behalf with respect to their activities 
with such provider. Such authorization must be in writing, acknowledged, 
and retained by the provider.
    (o) Provisions of Sec. 735.18 shall be applicable to lost or 
destroyed EWRs.

[59 FR 15038, Mar. 31, 1994, as amended at 62 FR 33540, June 20, 1997; 
64 FR 54511, Oct. 7, 1999]



Sec. 735.102  Provider requirements and standards for applicants.

    (a) Financial requirements. All providers to be approved under this 
part must meet the following requirements:
    (1) Have a net worth of at least $25,000, and
    (2) Maintain two insurance policies; one for ``errors and 
omissions'' and another for ``fraud and dishonesty''. Each policy must 
have a minimum coverage of $2 million.
    (b) User fee charges. Providers shall pay to the Service user fees 
set by the Service and announced annually prior to April of each 
calendar year.
    (c) Provider agreement. The provider agreement shall contain, but 
not be limited to, the following basic elements:
    (1) Records. The retention period for records.
    (2) Liability. The liability of the provider.
    (3) Transfer of records. The requirements for transferring EWRs to 
another provider.
    (d) Suspension and termination. (1) The Secretary may suspend or 
terminate a provider's agreement for cause at any time.
    (2) Hearings and appeals will be conducted in accordance with 
procedures that are contained in Secs. 735.7 and 735.89.
    (3) Without specific written authority by the Secretary, suspended 
or terminated providers may not accept, transfer, or execute any other 
function pertaining to EWRs during the pendency of any appeal or 
subsequent to such appeal if the appeal is denied.
    (4) The provider or the Service may terminate the provider agreement 
without cause solely by giving the other party written notice 60 
calendar days prior to termination.
    (e) Renewal. Each provider agreement will be automatically renewed 
annually on April 30th as long as the provider complies with the terms 
contained in the provider agreement, the

[[Page 240]]

regulations in Secs. 735.100 through 735.105 and the Act.
    (f) Application form. Application for a provider agreement shall be 
made to the Secretary on forms prescribed and furnished by the Service.

[59 FR 15039, Mar. 31, 1994, as amended at 62 FR 33540, June 20, 1997; 
64 FR 54511, Oct. 7, 1999]



Sec. 735.103  Audits.

    (a) The provider must submit to the Secretary an annual audit level 
financial statement that meets the requirements of Sec. 735.5 with the 
exception of Secs. 735.5(d)(1), (e), (g), and (h); and an electronic 
data processing audit. These audits shall encompass the provider's 
fiscal year. The completed audits shall be submitted to the Secretary no 
later than four calendar months following the end of the provider's 
fiscal year. The electronic data processing audit shall result in an 
evaluation as to current computer operations, security, disaster 
recovery capabilities of the system, and other systems.
    (b) The provider will grant the Secretary or his designees 
unlimited, free access at any time to all records under the provider's 
control relating to activities conducted under this part and as 
specified in the provider agreement.

[59 FR 15039, Mar. 31, 1994]



Sec. 735.104  Provider-user relationship.

    (a) The provider shall not discriminate among its users regarding 
use of and access to its CFS and must charge fees on an equal basis to 
all users for its services.
    (b) The provider must furnish the Secretary with copies of its 
current schedule of fees for all services and charges as they become 
effective.
    (c) Fees charged any user by the provider must be in effect for a 
minimum period of one year.
    (d) Providers must furnish the Secretary and all users a 60 calendar 
day advance notice of their intent to change any fee.

[59 FR 15039, Mar. 31, 1994]



Sec. 735.105  Security.

    (a) Security must be in accordance with the standards set out in the 
provider agreement.
    (b) Security copies of the system are to be maintained off-site. 
Both on-site and off-site record security must be maintained.

[59 FR 15039, Mar. 31, 1994]



Secs. 735.106-735.199  [Reserved]

                          Delivery and Shipping

    Source: 65 FR 63767, Oct. 25, 2000, unless otherwise noted.



Sec. 735.200  Applicability.

    The cotton shipping standard set forth in Sec. 735.201 is applicable 
to all cotton warehousemen licensed under the Act and to all 
warehousemen that issue electronic warehouse receipts through an 
authorized electronic warehouse receipt provider in accordance with part 
735 regardless of whether the warehouse is licensed under the Act.



Sec. 735.201  Cotton shipping standard.

    Unless prevented from doing so by force majeure, a warehouseman 
identified in Sec. 735.200 shall deliver stored cotton without 
unnecessary delay. A warehouseman shall be considered to have delivered 
cotton without unnecessary delay, if for the week in question, the 
warehouseman has delivered or staged for scheduled delivery at least 4.5 
percent of either their licensed storage capacity or Commodity Credit 
Corporation-approved storage capacity or other storage capacity as 
determined by the Secretary to be in effect during the relevant week of 
shipment.



Sec. 735.202  Compliance and dispute resolution.

    (a) Any claim for noncompliance with the cotton shipping standard 
may be resolved by the parties involved through established industry, 
professional, or mutually agreed upon arbitration procedures. The 
arbitration procedures shall be nondiscriminatory and provide each 
person equal access and protection relating to the cotton shipping 
standard.
    (b) No arbitration determination or award resulting from 
noncompliance with the shipping standard shall affect, obligate, or 
restrict the Service's authority to provide, administer, and regulate 
the issuance of a license, receipt,

[[Page 241]]

contractual agreement, or authorized electronic warehouse receipt 
provider system in accordance with the Act.
    (c) The Service shall not settle unresolved disputes involving the 
cotton shipping standard or associated damages.
    (d) In the event a party requests assistance from or initiates the 
involvement of the Service in a matter relating to the cotton shipping 
standard, the initiating party shall be responsible for all costs 
incurred by the Service. Before any such assistance is provided, the 
initiating party shall make payment to the Service in an amount equal to 
the Service's good faith estimate of costs and expenses that will be 
incurred in fulfilling the request. Costs incurred that exceed the 
Service's good faith estimate will be the responsibility of the 
initiating party.



PART 736--GRAIN WAREHOUSES--Table of Contents




                               Definitions

Sec.
736.1  Meaning of words.
736.2  Terms defined.

                           Warehouse Licenses

736.3  Application form.
736.3a  All facilities to be licensed or exempted.
736.4  Scales; bin numbers.
736.5  [Reserved]
736.6  Financial requirements.
736.7  Grounds for not issuing license.
736.8  Posting of license.
736.9  Warehouse license; suspension; revocation.
736.10  Return of suspended or revoked license.
736.11  Lost or destroyed warehouse license.
736.12  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

736.13  Bond required; time of filing.
736.14  Amount of bond; additional amounts.
736.15  Amendment to license.
736.16  New bond required each year.
736.17  Approval of bond.

                           Warehouse Receipts

736.18  Form.
736.19  Grain must be inspected and weighed.
736.20  Copies of receipts.
736.21  Lost or destroyed receipts; bond.
736.22  Printing of receipts.
736.23  Partial delivery of grain.
736.24  Return of receipts before delivery of grain.
736.25  Nonnegotiable receipts.
736.26  Omission of grade; no compulsion by warehouseman.
736.27  Loading out without weighing.
736.28  Persons authorized to sign receipts.
736.29  Receipts; basis for issuance.
736.30  Receipts for stored grain.
736.31  No receipts for screenings.
736.32  Canceled receipts; auditing.

                         Duties of Warehouseman

736.33  Insurance; requirements.
736.34  Records; safe keeping.
736.35  Warehouse charges.
736.36  Business hours.
736.37  System of accounts.
736.38  Reports required.
736.39  Inspections; examination of warehouse.
736.40  Care of grain in licensed warehouses.
736.41  Care of other grain and other commodities.
736.42  Excess storage.
736.43  Removal of specially stored grain.
736.44  Grades and weights; bulk grain.
736.45  Storage of identity-preserved grain.
736.46  Sacked grain.
736.47  Warehouses to be kept clean.
736.48  Delivery of fungible grain.
736.49  Cleaning of grain.
736.50  Grades; separate in storage.
736.51  Stocks to be in balance by grades.
736.52  Out-of-condition and damaged grain.
736.53  Reconditioning grain.
736.54  Notice of condition of grain.
736.55  Sale of grain at public auction.
736.56  Identity-preserved grain; acceptance.

                                  Fees

736.57  License fees.
736.58  Warehouse annual and inspection fees.
736.59  Advance deposit.
736.60  Return of excess deposit.

                         Inspectors and Weighers

736.61  Inspectors' and weighers' applications.
736.62  Examination.
736.63  Posting of license.
736.64  Duties of inspector and weigher.
736.65  Inspection certificate; form.
736.66  Copies of certificate to be accessible.
736.67  Weight certificate.
736.68  Certificate; grade and weight.
736.69  Copies of certificates to be kept.
736.70  Inspections.
736.71  Reports.
736.72  Licenses; suspension or revocation.
736.73  Suspended or revoked license; termination of license.
736.74  Lost or destroyed licenses.
736.75  Unlicensed inspectors and weighers.

[[Page 242]]

                              Grain Grading

736.76  Grade; statement.
736.77  Official Standards of the United States.
736.78  Standards of grades for other grain.
736.79  Grades based on inspection and sample.

                              Grain Appeals

736.80  Appeal procedure.
736.81  Request for appeal.
736.82  Appeal sample--obtaining, preservation, delivery and 
          examination.
736.83  Dismissal of appeal.
736.84  Freedom of appeal.
736.85  Owner not compelled to store.
736.86-736.95  [Reserved]

                              Miscellaneous

736.96  Bonds required; re State warehouses.
736.97  Publications.
736.98  Information of violations.
736.99  Procedure in hearings.
736.100  One document and one license to cover several products.
736.101  Assets and bond; combination warehouses.
736.102  Amendments.

                  Terminal and Futures Contract Markets

736.103  Futures contract markets defined.
736.104  Licenses to weigh grain; futures markets.
736.105  Registrar of warehouse receipts; futures contract market.
736.106-736.107  [Reserved]
736.108  Additional bonding required.
736.109  Examination of warehouses; board of trade interest.
736.110  Registration of public warehouse receipts; protection.
736.111  Terminal markets.

    Authority: 7 U.S.C. 241 et seq.

    Source: 29 FR 15730, Nov. 24, 1964, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 736 appear at 62 FR 
33540, June 20, 1997.

    Cross Reference: For official grain standards of the United States, 
see chapter VIII, part 810 of this title.

                               Definitions



Sec. 736.1  Meaning of words.

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



Sec. 736.2  Terms defined.

    For the purposes of this part, unless the context otherwise 
requires, the following terms shall be construed, respectively, to mean:
    (a) The act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486; 7 U.S.C. 241-273), as amended.
    (b) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (c) Department. The United States Department of Agriculture.
    (d) Secretary. 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.
    (e) Designated representative. The Administrator.
    (f) Administrator. The Administrator of the Service or any other 
officer or employee to whom authority has heretofore lawfully been 
delegated, or may hereafter lawfully be delegated, to act in his stead.
    (g) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (h) Regulations. Rules and regulations made under the act by the 
Secretary.
    (i) Dockage. Dockage in grain as defined by the official grain 
standards of the United States.
    (j) Grain. All products commonly classed as grain such as wheat, 
corn, oats, barley, rye, flaxseed, rough, brown, and milled rice, 
sunflower seeds, field peas, soybeans, emmer, sorghum, safflower seed, 
triticale, millet and such other products as are ordinarily stored in 
grain warehouses, subject to the disapproval of the Administrator.
    (k) Nonstorage grain. Grain received temporarily into a warehouse 
for conditioning, transferring, assembling for shipment, or lots of 
grain moving through a warehouse for current merchandising or milling 
use, against which no receipts are issued and no storage charges 
assessed: Provided, That merchandising or milling stocks held in storage 
as reserve stocks, or stored for use at an indefinite future date, may 
not be treated as nonstorage grain.

[[Page 243]]

    (l) Warehouse. Unless the context otherwise clearly indicates, any 
building, structure, or other protected inclosure licensed or to be 
licensed under the act, in which grain is or may be stored for 
interstate or foreign commerce, or, if located within any place under 
the exclusive jurisdiction of the United States, in which grain is or 
may be stored.
    (m) Bin. A bin, tank, interstice, or other container in a warehouse 
in which bulk grain may be stored.
    (n) Warehouseman. Any person lawfully engaged in the business of 
storing grain, who holds an effective warehouseman's license under the 
act, or who has applied for such a license.
    (o) License. A license issued under the act by the Secretary, or his 
designated representative.
    (p) Warehouseman's bond. The bond required by the act to be given by 
a warehouseman.
    (q) Inspector. (1) A person licensed under the provisions of section 
11 of the U.S. Warehouse Act, section 8 of the U.S. Grain Standards Act, 
or the provisions of the Agricultural Marketing Act of 1946 and (2) a 
Federal employee authorized under section 8 of the U.S. Grain Standards 
Act, or under the provisions of the Agricultural Marketing Act of 1946 
to inspect, grade and/or certificate the grade of grain stored or to be 
stored in a warehouse licensed under the U.S. Warehouse Act (the terms 
``duly licensed to inspect'' and ``licensed inspector'' shall be defined 
accordingly).
    (r) Weigher. (1) A person licensed under the provisions of section 
11 of the U.S. Warehouse Act, section 8 of the U.S. Grain Standards Act, 
or the provisions of the Agricultural Marketing Act of 1946 and (2) a 
Federal employee authorized under section 8 of the U.S. Grain Standards 
Act, or under the provisions of the Agricultural Marketing Act of 1946, 
to weigh and/or certificate the weight of grain stored or to be stored 
in a warehouse licensed under the U.S. Warehouse Act (the terms ``duly 
licensed to weigh'' and ``licensed weigher'' shall be defined 
accordingly).
    (s) Grain Standards Act. The United States Grain Standards Act, 
approved August 11, 1916 (39 Stat. 482; 7 U.S.C. 71-87) as amended.
    (t) Agricultural Marketing Act of 1946. The Agricultural Marketing 
Act of 1946 (7 U.S.C. 1621-1627) as amended.
    (u) Official Standards of the United States. The standards of the 
quality or condition for grain, fixed and established under the U.S. 
Grain Standards Act or the Agricultural Marketing Act of 1946.
    (v) Receipt. A licensed warehouse receipt issued under the act.
    (w) Net assets. The difference remaining when liabilities are 
subtracted from allowable assets as determined by the Secretary after 
review of the warehouseman's financial statement. In determining total 
net assets, credit may be given for insurable property such as 
buildings, machinery, equipment, and merchandise inventory only to the 
extent that such property is protected by insurance against loss or 
damage by fire, lightning, and tornado. Such insurance shall be in the 
form of lawful insurance policies issued by insurance companies 
authorized to do such business and subject to service of process in 
suits brought in the State in which the warehouse is located.
    (x) Warehouse capacity. Warehouse capacity is defined as the maximum 
number of bushels of grain that the warehouse could accommodate when 
stored in the manner customary to the grain for the warehouse, as 
determined by the Secretary.
    (y) Current assets. Assets, including cash, that are reasonably 
expected to be realized in cash or sold or consumed during the normal 
operating cycle of the business or within one year if the operating 
cycle is shorter than one year.
    (z) Current liabilities. Those financial obligations which are 
expected to be satisfied during the normal operating cycle of the 
business or within one year if the operating cycle is shorter than one 
year.
    (aa) Storage grain. All grain received into, stored in, or delivered 
out of the warehouse which is not classified as

[[Page 244]]

nonstorage grain under Sec. 736.19(c) of this part.

[29 FR 15730, Nov. 24, 1964, as amended at 41 FR 7751, Feb. 20, 1976; 42 
FR 12143, Mar. 3, 1977; 43 FR 14006, Apr. 4, 1978; 45 FR 5661, Jan. 24, 
1980. Redesignated and amended at 50 FR 1814, Jan. 14, 1985; further 
amended at 52 FR 37126, Oct. 5, 1987; 56 FR 40220, Aug. 14, 1991]

                           Warehouse Licenses



Sec. 736.3  Application form.

    Applications for licenses and for amendments of licenses under the 
act shall be made to the Secretary upon prescribed forms furnished by 
the Service, shall be in English, shall truly state the information 
therein contained, and shall be signed by the applicant. The applicant 
shall at any time furnish such additional information as the Secretary, 
or his designated representative, shall find to be necessary to the 
consideration of his application.



Sec. 736.3a  All facilities to be licensed or exempted.

    All facilities within the same city or town used for the storage of 
grain by an applicant for a warehouse license must qualify for a license 
and be licensed under the act if the applicant is to be licensed to 
operate as a grain warehouseman in such city or town, unless the 
facilities which are not to be covered by a license are exempted by the 
Secretary or his designated representative upon a finding that, due to 
the exercise of adequate controls by some independent agency over the 
operation of the nonfederally licensed facilities, there would be no 
likelihood of interchange, substitution, or commingling of grain stored 
in such facilities with grain stored in the federally licensed 
facilities. If all such facilities do not qualify for a license or for 
an exemption under this section, the applicant shall not be licensed 
under the act as a grain warehouseman in the city or town in which the 
facilities in question are located. Each applicant for a grain warehouse 
license must apply for a license covering all facilities operated by him 
for the storage of grain within the same city or town or for exemption 
as provided in this section. If a licensed grain warehouseman acquires 
any additional grain storage facilities within the same city or town in 
which his licensed warehouse is located, he shall file promptly an 
application for a license or an exemption of the additional facilities. 
No grain storage facility acquired by a licensed grain warehouseman, 
subsequent to the issuance of his license, in the same city or town as 
his licensed facilities, shall be used for the storage of grain until it 
qualifies for license and is licensed or is exempted as provided in this 
section. If any one of the licensed grain storage facilities operated by 
a warehouseman in the same city or town becomes ineligible for a license 
at any time for any reason, it shall not thereafter be used for the 
storage of grain until the condition making it ineligible is removed or 
an exemption is granted as provided in this section. The use for the 
storage of grain by a licensed warehouseman of a facility which is in 
the same city or town as his licensed facilities and is neither licensed 
nor exempted, or other violation of the provisions of this section, 
shall be cause for suspension or revocation of any license issued to the 
warehouseman for the storage of grain.



Sec. 736.4  Scales; bin numbers.

    (a) Each warehouse must be equipped with suitable scales in good 
order, and so arranged that all grain, whether for storage or for 
nonstorage purposes, can be weighed in and out of the warehouse. The 
scales in any warehouse shall be subject to examination by 
representatives of the Department and to disapproval by the 
Administrator. If he disapproves any weighing apparatus, it shall not 
thereafter be used in ascertaining the weight of grain for the purposes 
of this act, until such disapproval be withdrawn.
    (b) Both bulk grain bins and compartments for sacked grain of all 
warehouses licensed under the act shall be identified by means of 
clearly discernible numbers securely affixed thereto. The series of 
numbers to be used shall be approved by the Service. Bulk grain bins 
shall be numbered so as to be easily identified at the openings on top 
and also on or near the outlet valves underneath. Compartments shall be

[[Page 245]]

numbered in such a manner as to clearly show the space covered by each 
number.



Sec. 736.5  [Reserved]



Sec. 736.6  Financial requirements.

    (a) Each warehouseman conducting a warehouse licensed, or for which 
application for a license has been made under the regulations in this 
part, shall maintain complete, accurate and current financial records.
    (b) Each warehouseman conducting a warehouse for which application 
for license is made shall provide with this application and each 
warehouseman licensed under these regulations annually, or more 
frequently if required, shall furnish to the Secretary financial 
statements from the records required in paragraph (a) of this section 
prepared according to generally accepted accounting principles. Such 
statements shall include but not be limited to: (1) Balance sheet, (2) 
statement of income (profit and loss), (3) statement of retained 
earnings, and (4) statement of changes in financial position. The chief 
executive officer for the warehouseman shall certify under penalties of 
perjury that the statements as prepared accurately reflect the financial 
condition of the warehouseman as of the date named and fairly represent 
the results of operations for the period named.
    (c) Each warehouseman conducting a warehouse licensed under these 
regulations shall have the financial statements required in paragraph 
(b) of this section audited by an independent certified public 
accountant. Alternatively, financial statements audited or reviewed by 
an independent public accountant will be accepted with the understanding 
that the warehouseman will be subject to an additional on-site 
examination by the Secretary and to an audit by the Secretary. Audits 
and reviews by independent certified public accountants and independent 
public accountants specified in this section shall be made in accordance 
with standards established by the American Institute of Certified Public 
Accountants. The accountant's certification, assurances, opinion, 
comments, and notes on such statements, if any, shall be furnished along 
with the statements. Licensees who cannot immediately meet these 
requirements may apply to the Secretary for a temporary waiver of this 
provision. The Secretary may grant such waiver for a temporary period 
not to exceed 180 days if the licensee can furnish evidence of good and 
substantial reasons therefor.
    (d) Each warehouseman conducting a warehouse which is licensed under 
the regulations in this part, or for which application for such a 
license has been made, shall have and maintain:
    (1) Total net assets liable and available for the payment of any 
indebtedness arising from the conduct of the warehouse of at least 25 
cents multiplied by the warehouse capacity in bushels, however, no 
person may be licensed or remain licensed as a warehouseman under this 
part unless that person has allowable net assets of at least $50,000, 
(Any deficiency in net assets above the $50,000 minimum may be supplied 
by an increase in the amount of the warehouseman's bond in accordance 
with Sec. 736.14(c) of this part); and
    (2) Total current assets equal to or exceeding total current 
liabilities or assurance that funds will be available to meet current 
obligations.
    (e) In case a warehouseman is licensed or is applying for licenses 
to operate two or more warehouses under the regulations in this part, 
the maximum number of bushels which all such warehouses will accommodate 
when stored in the manner customary to the warehouses, as determined by 
the Administrator, shall be considered in determining whether the 
warehouseman meets the net assets requirements specified in paragraph 
(d) of this section.
    (f) Subject to such terms and conditions as the Secretary may 
prescribe and for the purposes of determining allowable assets and 
liabilities under paragraphs (d) and (e) of this section:
    (1) Capital stock shall not be considered a liability;
    (2) Appraisals of the value of fixed assets in excess of the book 
value claimed in the financial statement submitted by warehousemen to 
conform with paragraphs (b) and (c) of this section may be allowed by 
the Secretary if prepared by independent appraisers acceptable to the 
Secretary;

[[Page 246]]

    (3) Financial statements of a parent company which separately 
identifies the financial position of a wholly owned subsidiary and which 
meets the requirements of paragraphs (b), (c), and (d) of this section 
may be accepted by the Secretary in lieu of the warehouseman meeting 
such requirements; and
    (4) Guaranty agreements from a parent company submitted on behalf of 
a wholly owned subsidiary may be accepted by the Secretary as meeting 
the requirements of paragraphs (b), (c), and (d) of this section, if the 
parent company submits a financial statement which qualifies under this 
section.
    (g) In case a State agency licensed or applying for a license as 
provided in Section 9 of the Act has funds of not less than $500,000 
guaranteeing the performance of obligations of the agency as a 
warehouseman, such funds shall be considered sufficient to meet the net 
assets requirements of this section.
    (h) In case a warehouseman files a bond in the form of a 
certification of participation in an indemnity or insurance fund as 
provided for in Sec. 736.13(b), the licensed warehouseman shall have and 
maintain a minimum of $25,000 in allowable net assets and any deficiency 
in assets above the $25,000 minimum shall be covered by an acceptable 
and valid certificate.
    (i) When a warehouseman files a bond in the form of either a deposit 
of public debt obligations of the United States or other obligations 
which are unconditionally guaranteed as to both interest and principal 
by the United States as provided for in Sec. 736.13(c):
    (1) The obligation deposited shall not be considered a part of the 
warehouseman's assets for purposes of Sec. 736.6(d), (1) and (2);
    (2) A deficiency in total allowable net and current assets as 
computed for Sec. 736.6(d), (1) and (2) may be offset by the licensed 
warehouseman furnishing a corporate surety bond for the difference;
    (3) The deposit may be replaced or continued in the required amount 
from year to year; and
    (4) The deposit shall not be released until one year after 
termination (cancellation or revocation) of the license whch it supports 
or until satisfaction of any claim against the deposit, whichever is 
later.

Nothing in these regulations shall prohibit a person other than the 
licensed warehouseman from furnishing such bond or additions thereto on 
behalf of and in the name of the licensed warehouseman subject to 
provisions of Sec. 736.13(c).

[29 FR 15730, Nov. 24, 1964, as amended at 39 FR 41824, Dec. 3, 1974; 47 
FR 23910, June 1, 1982; 49 FR 12667, Mar. 30, 1984. Redesignated at 50 
FR 1814, Jan. 14, 1985; further amended at 52 FR 37126, Oct. 5, 1987]



Sec. 736.7  Grounds for not issuing license.

    A license for the conduct of a warehouse, or any amendment to a 
license, under the regulations in this part, shall not be issued if it 
is found by the Secretary, or his designated representative, that the 
warehouse is not suitable for the proper storage of grain; that the 
warehouseman does not possess a good reputation, or does not have a net 
worth of at least $50,000.00, or is incompetent to conduct such 
warehouse in accordance with the act and the regulations in this part; 
or that there is any other sufficient reason within the intent of the 
act for not issuing such license. If all the facilities operated for the 
storage of grain by the applicant within the same city or town are not 
to be licensed under the act, the applicant shall not be licensed as a 
grain warehouseman with respect to any of such facilities, unless an 
exemption of the facilities which are not to be licensed is granted as 
provided in Sec. 736.3a.

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 23911, June 1, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985 and further amended at 52 FR 
37127, Oct. 5, 1987]



Sec. 736.8  Posting of license.

    Immediately upon receipt of his license or of any modification or 
extension thereof under the act, the warehouseman shall post same, and 
thereafter, except as otherwise provided in the regulations in this 
part, keep it posted until suspended or terminated, in a conspicuous 
place in the principal office where receipts issued by such warehouseman 
are delivered to depositors.

[[Page 247]]



Sec. 736.9  Warehouse license; suspension; revocation.

    Pending investigation, the Secretary, or his designated 
representative, whenever he deems necessary, may suspend a 
warehouseman's license temporarily without hearing. Upon written request 
and a satisfactory statement of reasons therefor, submitted by a 
warehouseman, the Secretary, or his designated representative, may, 
without hearing, suspend or revoke the license issued to such 
warehouseman. The Secretary, or his designated representative, may, 
after opportunity for hearing has been afforded in the manner prescribed 
in this section, suspend or revoke a license issued to a warehouseman 
when such warehouseman--
    (a) Does not have a net worth of at least $50,000;
    (b) Has parted, in whole or in part, with his control over the 
licensed warehouse;
    (c) Is in process of dissolution or has been dissolved;
    (d) Has ceased to operate such licensed warehouse;
    (e) Has in any other manner become nonexistent or incompetent or 
incapacitated to conduct the business of the warehouse;
    (f) Has made unreasonable or exorbitant charges for services 
rendered;
    (g) Is operating in the same city or town in which his licensed 
warehouse facilities are located, any facility for storage of grain 
which is not covered by a license or an exemption as provided in 
Sec. 736.3a; or
    (h) Has in any other manner violated or failed to comply with any 
provision of the act or the regulations in this part. Whenever any of 
the conditions mentioned in paragraphs (a) through (h) of this section 
shall come into existence, it shall be the duty of the warehouseman to 
notify the Administrator immediately of the existing condition. Before a 
license is revoked or suspended (other than temporarily pending 
investigation) for any violation of, or failure to comply with, any 
provision of the act or of the regulations in this part, or upon the 
ground that unreasonable or exorbitant charges have been made for 
services rendered, the warehouseman involved shall be furnished by the 
Secretary, or his designated representative, a written statement, 
specifying the charges and shall be allowed a reasonable time within 
which he may answer the same in writing and apply for a hearing, an 
opportunity for which shall be afforded in accordance with Sec. 736.99.

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 23911, June 1, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985 and further amended at 52 FR 
37127, Oct. 5, 1987; 53 FR 2477, Jan. 28, 1988]



Sec. 736.10  Return of suspended or revoked license.

    In case a license issued to a warehouseman terminates or is 
suspended or revoked by the Secretary or his designated representative, 
such license shall be immediately returned to the Secretary. At the 
expiration of any period of suspension of such license, unless it be in 
the meantime revoked, the dates of the beginning and termination of the 
suspension shall be indorsed thereon, it shall be returned to the 
warehouseman to whom it was originally issued and it shall be posted as 
prescribed in Sec. 736.8: Provided, That in the discretion of the 
Secretary, or his designated representative, a new license may be issued 
without reference to the suspension.



Sec. 736.11  Lost or destroyed warehouse license.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof, or a new license may be 
issued under the same number.



Sec. 736.12  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the act, and no name or description conveying the impression that 
it or he is so licensed shall be used, either in a receipt or otherwise, 
unless such warehouseman holds an unsuspended and unrevoked license for 
the conduct of such warehouse.

[[Page 248]]

                             Warehouse Bonds



Sec. 736.13  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the Act 
shall, before such license is granted, file with the Secretary or his 
designated representative a bond either:
    (a) In the form of a bond containing the following conditions and 
such other terms as the Secretary or his designated representative may 
prescribe in the approved bond forms, with such changes as may be 
necessary to adapt the forms to the type of legal entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall faithfully perform during the period of this 
bond all obligations of a licensed warehouseman under the terms of the 
Act and regulations thereunder relating to the above-named products;
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act and regulations and contracts 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.
    This obligation shall be and remain in full force and effect for a 
minimum of one year beginning with the effective date and shall be 
considered a continuous bond thereafter until terminated as herein 
provided. The total liability of the surety is limited to the penal 
amount hereof, for liabilities that accrue during the term hereof.
    This obligation shall be and remain in full force and effect from 
date of issue until one hundred twenty (120) days after notice in 
writing of cancellation shall have been received by the Secretary from 
the principal or surety. If said notice shall be given by the surety, a 
copy thereof shall be mailed on the same day to the principal. 
Cancellation of this bond and cancellation of any of its provisions 
shall not affect any liability accrued thereon at the time of said 
notice or which may accrue thereon during the one hundred twenty (120) 
days after such notice.

A bond in this form shall be subject to 7 CFR 736.6, and 736.14 through 
736.17, and 31 CFR part 225, or
    (b) In the form of a certificate of participation in and coverage by 
an indemnity or insurance fund as approved by the Secretary, established 
and maintained by a State, backed by the full faith and credit of the 
applicable State, and which guarantees depositors of the licensed 
warehouse full indemnification for the breach of any obligation of the 
licensed warehouseman under the terms of the Act and regulations. A 
certificate of participation and coverage in such fund shall be 
furnished to the Secretary annually. If administration or application of 
the fund shall change after being approved by the Secretary, the 
Secretary may revoke his approval. Such revocation shall not affect a 
depositor's rights which have arisen prior to such revocation. Upon such 
revocation the licensed warehouseman then must comply with paragraph 
(a). Such certificate of participation shall not be subject to 
Secs. 736.14 and 736.15, or
    (c) In the form of a deposit with the Secretary as security, United 
States, bonds, Treasury notes, or other public debt obligations of the 
United States or obligations which are unconditionally guaranteed as to 
both interest and principal by the United States, in a sum equal at 
their par value to the amount of the penal bond required to be 
furnished, together with an irrevocable power of attorney and agreement 
in the form prescribed, authorizing the Secretary to collect or sell, 
assign and transfer such bonds or notes so deposited in case of any 
default in the performance of any of the conditions or stipulations of 
such penal bond. Obligations posted in accordance with this paragraph 
may not be withdrawn by the warehouseman until one year after license 
termination or until satisfaction of any claims against the obligations 
whichever is later. A bond in this form shall be subject to 7 CFR 736.6 
and 736.14 through 736.17 and 31 CFR part 225.

[52 FR 37127, Oct. 5, 1987]



Sec. 736.14  Amount of bond; additional amounts.

    (a) The amount of bond to be furnished for each warehouse under the 
regulations in this part shall be fixed at a rate of 20 cents per bushel 
for the first 1,000,000 bushels of licensed capacity; 15 cents per 
bushel for the next 1,000,000 bushels of licensed capacity; and 10 cents 
per bushel for all licensed capacity over 2,000,000 bushels: Provided, 
That in any case the amount of

[[Page 249]]

bond shall not be less than $20,000 nor more than $500,000, except as 
prescribed in paragraph (c) of this section. The licensed capacity shall 
be the maximum number of bushels of grain that the warehouse could 
accommodate as determined under Sec. 736.6(d).
    (b) In case a warehouseman is licensed or is applying for licenses 
to operate two or more warehouses in the same State he may give a single 
bond meeting the requirements of the Act and the regulations in this 
part to cover all his warehouses within the State. In such case the 
warehouses to be covered by the bond shall be deemed to be one warehouse 
only for purposes of determining the amount of bond required under 
paragraph (a) of this section.
    (c) In case of a deficiency in net assets above the $50,000 minimum 
required under Sec. 736.6(d)(1), there shall be added to the amount of 
bond determined in accordance with paragraph (a) of this section an 
amount equal to such deficiency or a letter of credit in the amount of 
the deficiency issued to the Secretary for a period of not less than two 
years to coincide with the period of any deposit of obligation under 7 
CFR 736.13(c). Any letter of credit must be clean, irrevocable, issued 
by a commerical bank, payable to the Secretary by sight draft and 
insured as a deposit by the Federal Deposit Insurance Corporation. If 
the Secretary, or his designated representative, finds that conditions 
exist which warrant requiring additional bond, there shall be added to 
the amount of bond as determined under the other provisions of this 
section, a further amount to meet such conditions.

[29 FR 15730, Nov. 24, 1964, as amended at 39 FR 41824, Dec. 3, 1974; 47 
FR 23911, June 1, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985, and 
further amended at 52 FR 37127, Oct. 5, 1987]



Sec. 736.15  Amendment to license.

    In case an application is made for an amendment to a license and no 
bond previously filed by the warehouseman under Secs. 736.13 through 
736.17 covers obligations arising during the period covered by such 
amendment, the warehouseman shall, when notice has been given by the 
Secretary, or his designated representative, that his application for 
such amendment will be granted upon compliance by such warehouseman with 
the act, file with the Secretary, within a time, if any, fixed in such 
notice, a bond complying with the act. In the discretion of the 
Secretary, or his designated representative, a properly executed 
instrument in form approved by him, amending, extending, or continuing 
in force and effect the obligations of a valid bond previously filed by 
the warehouseman and otherwise complying with the act and the 
regulations in this part, may be filed in lieu of a new bond.



Sec. 736.16  New bond required each year.

    A continuous form of license shall remain in force for more than one 
year from its effective date or any subsequent extension thereof, 
provided that the warehouseman has on file with the Secretary a bond 
meeting the terms and conditions as outlined in 7 CFR 736.13. Such bond 
must be in the amount required by the Secretary and approved by him or 
his designated representative. Failure to provide or renew a bond shall 
result in immediate and automatic termination of the warehouseman's 
license.

[52 FR 37127, Oct. 5, 1987]



Sec. 736.17  Approval of bond.

    No bond, amendment, or continuation thereof shall be accepted for 
the purposes of the act and the regulations in this part until it has 
been approved by the Secretary, or his designated representative.

                           Warehouse Receipts



Sec. 736.18  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
grain stored in a licensed warehouse shall, in addition to complying 
with the requirements of section 18 of the act, embody within its 
written or printed terms the following:
    (1) The name of the warehouseman and the designation, if any, of the 
warehouse,
    (2) A statement whether the warehouseman is incorporated or 
unincorporated, and if incorporated, under what laws,

[[Page 250]]

    (3) In event the relationship existing between the warehouseman and 
any depositor is not that of strictly disinterested custodianship, a 
statement setting forth the actual relationship,
    (4) A statement conspicuously placed, whether or not the grain is 
insured, and, if insured, to what extent, by the warehouseman against 
loss by fire, lightning, tornado, or otherwise,
    (5) The net weight, including dockage, if any, of the grain,
    (6) In the case of grain the identity of which is to be preserved, 
its identification or location in accordance with Sec. 736.45,
    (7) The words ``Not Negotiable,'' or ``Negotiable,'' according to 
the nature of the receipt, clearly and conspicuously printed or stamped 
thereon, and
    (8) That the holder of the receipt or the depositor of the grain 
shall demand the delivery of the grain not later than the expiration of 
one year from the date of the receipt.
    (b) Every receipt, whether negotiable or nonnegotiable, issued for 
grain stored in a warehouse shall specify a period, not exceeding one 
year, for which the grain is accepted for storage under the Act and the 
regulations in this part. Upon demand for issuance of a new receipt, 
surrender of the old receipt by the lawful holder thereof at or before 
the expiration of the period specified therein and an offer to satisfy 
the warehouseman's lien, the warehouseman, upon such lawful terms and 
conditions as may be granted by him to other depositors of grain in his 
warehouse, shall, in the absence of some lawful excuse, issue a new 
receipt for a further specified period, not exceeding one year.
    (c) Every negotiable receipt issued shall, in addition to conforming 
with the requirements of paragraph (a) of this section, embody within 
its written or printed terms, a form of indorsement which may be used by 
the depositor, or his authorized agent, for showing the ownership of, 
and liens, mortgages, or other encumbrances on the grain covered by the 
receipt.
    (d) The grade stated in a receipt shall be stated in accordance with 
Sec. 736.76 as determined by the inspector who last inspected and graded 
the grain or if an appeal has been taken, the grade shall be stated on 
such receipt in accordance with the grade as finally determined in such 
appeal.
    (e) If a warehouseman issues a receipt omitting the statement of 
grade on request of the depositor as permitted by section 18 of the act, 
such receipt shall have clearly and conspicuously stamped or written in 
the space provided for the statement of grade the words ``Not graded on 
request of depositor.''
    (f) If a warehouseman issues a receipt under the act omitting any 
information not required to be stated, for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made purposely by the 
warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 45 FR 5661, Jan. 24, 1980; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.19  Grain must be inspected and weighed.

    (a) Except in case of identity-preserved grain, when the grading is 
omitted at request of depositor, all storage and nonstorage grain 
received into the warehouse shall be inspected, graded and weighed by a 
licensed inspector and/or weigher--and no receipt may be issued under 
the Act or the regulations in this part until the grain covered by such 
receipt has been so inspected, graded and weighed.
    (b) When requested by the depositor of grain the identity of which 
is to be preserved, a receipt omitting statement of grade but not weight 
may be issued.
    (c) Except as provided in Sec. 736.27 of this part, all storage 
grain delivered out of a warehouse must be inspected, graded, and 
weighed by a licensed inspector or weigher, as applicable.

[40 FR 19011, May 1, 1975. Redesignated at 50 FR 1814, Jan. 14, 1985; 
amended at 56 FR 40220, Aug. 14, 1991]



Sec. 736.20  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed

[[Page 251]]

or stamped thereon the words ``Copy--Not Negotiable.'' A copy of each 
receipt issued shall be retained by the warehouseman for a period of one 
year after December 31 of the year in which the corresponding original 
receipt is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.21  Lost or destroyed receipts; bond.

    (a) In the case of lost or destroyed receipts, if there be no 
statute of the United States or law of a State applicable thereto a new 
receipt upon the same terms, subject to the same conditions, and bearing 
on its face the number and the date of the receipt in lieu of which it 
is issued and a plain and conspicuous statement that it is a duplicate 
receipt issued in lieu of a lost or destroyed receipt, may be issued 
upon compliance with the conditions set out in paragraph (b) of this 
section.
    (b) Before issuing such new or duplicate negotiable receipt the 
warehouseman shall require the depositor or other person applying 
therefor to make and file with him (1) an affidavit showing that the 
applicant is lawfully entitled to the possession of the original 
receipt, that he has not negotiated or assigned it, how the original 
receipt was lost or destroyed, and if lost, that diligent effort has 
been made to find the receipt without success, and (2) a bond in an 
amount double the value, at the time the bond is given, of the grain 
represented by the lost or destroyed receipt. Such bond shall be in a 
form approved for the purpose by the Secretary, or his designated 
representative, shall be conditioned to indemnify the warehouseman 
against any loss sustained by reason of the issuance of such receipt, 
and shall have a surety thereon a surety company which is authorized to 
do business, and is subject to service of process in a suit on the bond, 
in the state in which the warehouse is located or at least two 
individuals who are residents of such state and each of whom owns real 
property therein having a value, in excess of all exemptions and 
encumbrances, equal to the amount of the bond.
    (c) Before issuing such new or duplicate non-negotiable receipt, 
obtain a written statement from the holder that the original non-
negotiable receipt is lost and requires the issuance of a duplicate non-
negotiable receipt.

[29 FR 15730, Nov. 24, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985, 
and amended at 57 FR 57648, Dec. 7, 1992]



Sec. 736.22  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.

[62 FR 33540, June 20, 1997]



Sec. 736.23  Partial delivery of grain.

    If a warehouseman delivers a part only of a lot of grain for which 
he has issued a negotiable receipt under the act, he shall take up and 
cancel such receipt and issue a new receipt in accordance with the 
regulations in this part for the undelivered portion of the grain. The 
new receipt shall show the date of issuance and also indicate the number 
and date of the receipt first issued.



Sec. 736.24  Return of receipts before delivery of grain.

    Except as permitted by law or by the regulations in this part, a 
warehouseman shall not deliver any grain for which he has issued a 
negotiable receipt until the receipt has been returned to him and 
canceled; and shall not deliver grain for which he has issued a non-
negotiable receipt until such receipt has been returned, or he has 
obtained from the depositor or the depositor's agent, a written order 
therefore and a receipt upon delivery.

[57 FR 57649, Dec. 7, 1992]

[[Page 252]]



Sec. 736.25  Nonnegotiable receipts.

    Each person to whom a nonnegotiable receipt is issued shall furnish 
the warehouseman with a statement in writing indicating the person or 
persons having power to authorize delivery of grain covered by such 
receipt, together with the bona fide signature of such person or 
persons. No licensed warehouseman shall honor an order for the release 
of grain covered by a nonnegotiable receipt until he has first 
ascertained that the person issuing the order has authority to order 
such release, and that the signature of the releasing party is genuine.



Sec. 736.26  Omission of grade; no compulsion by warehouseman.

    No warehouseman shall, directly or indirectly by any means 
whatsoever, compel or attempt to compel the depositor of any grain 
stored or offered for storage in his warehouse to request the issuance 
of a receipt omitting the statement of grade.



Sec. 736.27  Loading out without weighing.

    (a) When the lawful owner of an entire lot of identity preserved 
grain or a mass of grain stored in a single bin requests the 
warehouseman to deliver said lot or mass without reweighing said grain, 
the warehouseman may make such delivery if there is an accurate record 
of the weight of such grain when received. Such deliveries shall be made 
only when the lawful owner agrees to assume all shortages and other 
risks incidental thereto, and after the warehouse receipts covering all 
of the grain in the container have been surrendered to the warehouseman 
and canceled. After the receipts covering such grain have been 
surrendered for cancellation no other grain shall be placed in the bin 
until the entire lot has been delivered.
    (b)(1) When the lawful owner of fungible grain requests the 
warehouseman to deliver grain out of the warehouse without weighing, the 
warehouseman may, but is not compelled to, make such delivery provided 
the grain is to be moved into another warehouse in the United States 
where weights can be established. The weights established at the 
receiving warehouse must be supervised by an independent weighing agency 
unless the shipping warehouse and the receiving warehouse are operated 
by the same warehouseman, or unless destination weights are available 
within 24 hours of shipment. Whenever a warehouseman delivers fungible 
grain out of a warehouse without weighing, the weight of the grain 
unloaded at the receiving warehouse shall be the weight used to 
determine fulfillment of the shipping warehouseman's delivery 
obligations.
    (2) When fungible grain is delivered out of the warehouse without 
weighing, the warehouseman shall estimate as accurately as possible the 
weight of the grain delivered out and shall promptly obtain destination 
weights from the receiving warehouse. Should the Administrator determine 
that such estimated weights are not reasonably accurate, or that 
destination weights are not promptly obtained, or that destination 
weights are not supervised by an independent weighing agency when 
required, he may thereafter require the warehouseman to weigh all 
fungible grain delivered out of the warehouse.
    (3) Any weight certificate issued covering grain delivered out of 
the warehouse without being weighed must state in bold letters on the 
face of the certificate the fact that the weight is an estimated weight.

[40 FR 19011, May 1, 1975. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.28  Persons authorized to sign receipts.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to sign warehouse receipts 
for the warehouseman, and shall promptly notify the Department of any 
changes as to persons authorized to sign and shall file the signatures 
of such persons, and each warehouseman shall be bound by such signatures 
the same as if he had personally signed the receipt.



Sec. 736.29  Receipts; basis for issuance.

    Before issuing any receipt under the Act each warehouseman shall, 
unless he personally weighed, inspected, and graded, if graded, a lot of 
grain, first obtain either a copy of, or the original weight 
certificate, and inspection certificate, if any, covering said lot of

[[Page 253]]

grain. The warehouse records shall clearly identify the certificate(s) 
used as a basis for issuance of each warehouse receipt, and said weight 
and grade certificates shall be kept on file as a record in the 
warehouseman's office; provided that said filing requirements shall be 
deemed satisfied if copies of the certificates upon which warehouse 
receipts are based are filed in the office of a U.S. Registrar or in the 
office of an independent inspection or weighing agency which issued 
them, and are readily accessible for examination purposes. Such 
certificates shall be retained for a period of three years after 
December 31 of the year in which issued.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.30  Receipts for stored grain.

    Receipts must be issued for all grain stored in a warehouse. 
Receipts need not be issued against nonstorage grain, but each 
warehouseman shall keep accurate records of the weights, kinds, and 
grades of all lots of nonstorage grain received into and delivered from 
his warehouse. Whenever the purpose for which any lot of nonstorage 
grain was received into a warehouse is changed so that its approximate 
delivery period from the warehouse becomes indeterminate, receipts shall 
be issued to cover such grain. Records required under this section with 
respect to nonstorage grain shall be retained, as a part of the records 
of the warehouse, for a period of one year after December 31 of the year 
in which the lot of nonstorage grain is delivered from the warehouse.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.31  No receipts for screenings.

    No receipt shall be issued for any product or byproduct which would 
fall under the term ``screenings.''



Sec. 736.32  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33540, June 20, 1997]

                         Duties of Warehouseman



Sec. 736.33  Insurance; requirements.

    (a) Each warehouseman, when so requested in writing as to any grain 
by the depositor thereof or lawful holder of the receipt covering such 
grain, shall, to the extent to which, in the exercise of due diligence, 
he is able to procure such insurance, keep such grain while in his 
custody as a warehouseman insured in his own name or arrange for its 
insurance otherwise to the extent so requested, against loss or damage 
by fire, lightning, and/or tornado. When insurance is not carried in the 
warehouseman's name, the receipts shall show that the grain is not 
insured by the warehouseman. Such insurance shall be covered by lawful 
policies issued by one or more insurance companies authorized to do such 
business, and subject to service of process in suits brought in the 
State where the warehouse is located. If the warehouseman is unable to 
procure such insurance to the extent requested, he shall, orally or by 
telegraph or by telephone immediately notify the person making the 
request of the fact. Nothing in this section shall be construed to 
prevent the warehouseman from adopting a rule that he will insure all 
grain stored in his warehouse.
    (b) Each warehouseman shall comply fully with the terms of insurance 
policies or contracts covering his licensed warehouse and all products 
stored therein, and shall not commit any acts, nor permit his employees 
to do anything, which might impair or invalidate such insurance.
    (c) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 736.8, and at such other place as the Administrator 
or his representative may from time to time designate, a notice stating 
briefly the conditions under which the grain will be

[[Page 254]]

insured against loss or damage by fire, lightning, and tornado.
    (d) Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of the regulations in this part, pay such 
premiums, permit such reasonable inspections and examinations, and make 
such reasonable reports as may be provided for in such contracts.
    (e) Each warehouseman shall promptly take such steps as may be 
necessary and proper to collect any moneys which may become due under 
contracts of insurance entered into by him for the purpose of meeting 
the requirements of the regulations in this part, and shall, as soon as 
collected, promptly pay to the persons concerned any portion of such 
moneys which they may be entitled to receive from him.
    (f) If at any time a fire occurs at or within any licensed 
warehouse, it shall be the duty of the warehouseman to report 
immediately the occurrence of such fire and the extent of damage to the 
Administrator.

[29 FR 15730, Nov. 24, 1964, as amended at 62 FR 33540, June 20, 1997]



Sec. 736.34  Records; safe keeping.

    Each warehouseman shall provide a fireproof safe, vault, or 
compartment in which he shall keep, when not in actual use, all records, 
books, and papers pertaining to the licensed warehouse, including his 
current receipt book, copies of issued and canceled receipts, except 
that with the written consent of the Service, upon a showing by such 
warehouseman that it is not practicable to provide such fireproof safe, 
vault, or compartment, he may keep such records, books and papers in 
some other place of safety, approved by the Service. Each canceled 
receipt shall be retained by warehouseman for a period of six years 
after December 31 of the year in which the receipt is canceled and for 
such longer period as may be necessary for the purposes of any 
litigation which the warehouseman knows to be pending, or as may be 
required by the Administrator in particular cases to carry out the 
purposes of the act. Canceled receipts shall be arranged by the 
warehouseman in numerical order and otherwise in such manner as shall be 
directed, for purposes of audit, by authorized officers or agents of the 
Department of Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.35  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for services rendered. Before a license to conduct a warehouse is 
granted under the act the warehouseman shall file with the Department a 
copy of his rules and a schedule of charges to be made by him if 
licensed. Before making any change in such rules or schedule of charges 
he shall file with the Department a statement in writing showing the 
proposed change and the reasons therefor. Each warehouseman shall keep 
exposed conspicuously in the place prescribed by Sec. 736.8, and at such 
other place, accessible to the public, as the Service may from time to 
time designate, a copy of his current rules and schedule of charges.



Sec. 736.36  Business hours.

    (a) Each warehouse shall be kept open for the purpose of receiving 
grain for storage and delivering grain out of storage every business day 
for a period of not less than six hours between the hours of 8 a.m. and 
6 p.m. except as provided in paragraph (b) of this section. The 
warehouseman shall keep conspicuously posted on the door of the public 
entrance to his office and to his licensed warehouse a notice showing 
the hours during which the warehouse will be kept open, except when such 
warehouse is kept open continuously from 8 a.m. to 6 p.m.
    (b) In case the warehouse is not to be kept open as required by 
paragraph (a) of this section, the notice posted as prescribed in that 
paragraph shall state the period during which the warehouse is to be 
closed and the name of an accessible person, with the address where he 
is to be found, and the telephone number, if any, who shall be 
authorized to deliver grain stored in such warehouse, upon lawful demand 
by the

[[Page 255]]

depositor thereof or the holder of the receipt therefor, as the case may 
be.



Sec. 736.37  System of accounts.

    Each warehouseman shall have and maintain a system of accounts, 
approved for the purpose by the Service. This shall include a stock 
record showing for each lot of grain received for storage its net weight 
including dockage, if any, its grade when its grade is required to be, 
or is, ascertained, its location, the dates received for and delivered 
out of storage, the receipts issued and canceled, also a separate record 
for each depositor of his grain, which shall include a detailed record 
of all moneys received and disbursed and of all insurance policies taken 
out and canceled on request of each depositor. The warehouseman shall 
further keep a general insurance account showing the policy number, 
issuing company, amount, binding, and expiration dates of all fire, 
tornado, and other insurance policies taken out by him and in each 
instance show the property covered by such policies. These records shall 
also show similar information concerning any nonstorage grain handled 
through the warehouse. Such records shall be retained by the 
warehouseman for a period of six years after December 31 of the year in 
which created, and for such longer period as may be necessary for the 
purposes of any litigation which the warehouseman knows to be pending, 
or as may be required by the Administrator in particular cases to carry 
out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.38  Reports required.

    (a) Each warehouseman shall, from time to time, if requested by the 
Service, make such reports, on forms prescribed and furnished for the 
purpose by the Service, concerning the condition, contents, operation, 
and business of the warehouse.
    (b) Each warehouseman shall keep on file, as a part of the records 
of the warehouse, for a period of three years after December 31 of the 
year in which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.39  Inspections; examination of warehouse.

    Each warehouseman shall permit any officer or agent of the 
Department, authorized by the Secretary, or his designated 
representative, for the purpose, to enter and inspect or examine on any 
business day during the usual hours of business, any warehouse for the 
conduct of which such warehouseman holds a license, the office thereof, 
the books, records, papers, and accounts relating thereto, and the 
contents thereof and such warehouseman shall furnish such officer or 
agent the assistance necessary to enable him to make any inspection or 
examination under this section.



Sec. 736.40  Care of grain in licensed warehouses.

    Each warehouseman shall at all times, including any period of 
suspension of his license, exercise such care in regard to grain in his 
custody as a reasonably careful owner would exercise under the same 
circumstances and conditions.



Sec. 736.41  Care of other grain and other commodities.

    If, at any time, a warehouseman shall handle or store grain 
otherwise than as a licensed warehouseman, or shall handle or store any 
other commodity, he shall so protect the same, and otherwise exercise 
care with respect to it, as not to endanger the grain in his custody as 
a warehouseman or impair the insurance thereof or his ability to meet 
his obligations and perform his duties under the act and the regulations 
in this part.



Sec. 736.42  Excess storage.

    (a) If at any time a warehouseman shall store grain in his warehouse 
in excess of the capacity for which it is licensed, such warehouseman 
shall immediately notify the Secretary of such

[[Page 256]]

excess storage, the reason therefor, and the location thereof.
    (b) A warehouseman who lacks sufficient space and desires to 
transfer stored grain for which receipts have been issued to another 
licensed warehouse may do so either by physical movement or by other 
methods accepted as standard industry practice subject to the following 
terms and conditions:
    (1) The transferring (shipping) warehouseman's accepted rules or 
schedule of charges must contain notice that the warehouseman may 
forward grain deposited on a commingled basis under such terms and 
conditions as the Secretary may prescribe.
    (2) For purposes of this section of the regulations a licensed 
warehouse means a warehouse operated by a warehouseman who holds an 
unsuspended, unrevoked license under the U.S. Warehouse Act for grain, 
or a warehouse operated by a warehouseman who holds an effective 
warehouse license for the public storage of grain and/or rice issued by 
a State that has financial, bonding and examination requirements for the 
benefit of all depositors.
    (3) Non-negotiable warehouse receipts shall be obtained promptly by 
the shipping warehouseman from the receiving warehouseman for all 
transferred grain. Such recipts shall have printed or stamped in large 
bold or outline letters diagonally across the face and covering the face 
from corner to corner the words ``NOT NEGOTIABLE''. Receipts are not 
valid for collateral purposes. They shall be retained by the shipping 
warehouseman to be presented to and used by Department examiners in lieu 
of an on-site inventory. The grain covered by such receipts is not the 
property of either the receiving or shipping warehouseman but held in 
trust by both solely for the benefit of the depositors whose bailed 
grain was transferred individually or collectively and the depositor or 
the depositor's transferee retains title thereto.
    (4) The shipping warehouseman's bond shall be increased to consider 
the addition of the transferred grain to the licensed capacity of the 
warehouse with the net asset requirements based on the total of the 
licensed capacity and the forwarded grain. The bond amount need not be 
more than $500,000 unless necessary to cover a deficiency in net assets 
to meet requirements. The receiving warehouseman shall not incur storage 
obligations that exceed the licensed capacity of his warehouse.
    (5) The shipping warehouseman continues to retain storage obligation 
to the owners of all grain deposited in the warehouse for a storage 
whether forwarded or retained and is, except as otherwise agreed upon 
under paragraph (b)(6) of this section, required to redeliver the grain 
upon demand to the depositor or the depositor's transferee at the 
warehouse where the grain was first deposited for storage.
    (6) The owner of grain deposited for storage at the warehouse must 
make settlement and take delivery at the warehouse where the grain was 
first deposited for storage, unless the owner of the commodity, with the 
consent of both the shipping warehouseman and the receiving 
warehouseman, elects to take delivery at the warehouse to which grain 
was transferred under this section.
    (7) Nothing in this section shall in any way diminish the right of 
the owner of the grain to receive on delivery, or the obligation of the 
warehouseman of a licensed warehouse from which the product is 
transferred, to deliver to the owner, grain in the amount, and of the 
kind, quality, and grade, called for by the warehouse receipts or other 
evidence of storage.
    (8) Recording and retention of non-negotiable warehouse receipts 
received as a result of forwarding a commodity under this section shall 
be subject to the requirements for warehouse receipts specified 
elsewhere in these regulations.
    (9) If it is the shipping warehouseman's obligation by terms of the 
warehouse receipt or otherwise to insure the grain subject to the 
transfer, he must in accordance with 7 CFR 736.33 keep such grain 
insured in his own name or transfer the grain only to a warehouse where 
the grain is fully insured.
    (c) A warehouseman may transfer stored grain for which receipts have 
not and are not to be issued to another

[[Page 257]]

licensed warehouse for continued storage by complying with the 
provisions of paragraphs (b)(1), (2), (5), (6), (7), and (9) of this 
section. However, in no event shall the warehouseman's total storage 
obligations to others (not including stored receipted grain shipped 
under provisions of paragraph (b) of this section) exceed the shipping 
warehouseman's licensed capacity.

[52 FR 8057, Mar. 16, 1987]



Sec. 736.43  Removal of specially stored grain.

    Except as may be required by law or the regulations in this part, a 
warehouseman shall not remove any grain for storage from the licensed 
warehouse or a part thereof in which it may be specially binned or 
stored for insurance purposes, and transfer the grain to another bin 
without first obtaining the receipt, canceling the same and issuing a 
new receipt for said grain following its transfer.



Sec. 736.44  Grades and weights; bulk grain.

    Except as provided in Sec. 736.27 each warehouseman shall accept all 
storage and nonstorage grain and shall deliver out all storage and 
nonstorage grain, other than specially binned grain, in accordance with 
the grades of such grain as determined by a person duly licensed to 
inspect and grade such grain and to certificate the grade thereof and in 
accordance with the weights of such grain as determined by a person duly 
licensed to weigh such grain and to certificate the weight thereof, 
under the Act, and the regulations in this part; or if an appeal from 
the determination of an inspector has been taken, such grain shall be 
accepted for and delivered out of storage in accordance with the grades 
as finally determined in such appeal.

[45 FR 5661, Jan. 24, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.45  Storage of identity-preserved grain.

    Upon acceptance for storage of bulk grain the identity of which is 
to be preserved, the warehouseman shall store such grain in a bin or 
bins, a compartment or compartments, or other container or containers 
identified by clearly distinguishable identification insignia 
permanently and securely affixed thereto, subject to such control by the 
Department as may seem administratively necessary to protect depositors 
or holders of receipts. If the grain is received in bags or other 
suitable containers, such bags or containers shall be so marked and so 
placed in the warehouse that the identity of the grain will not be lost 
while in storage. The warehouseman's records shall at all times clearly 
show the location of all identity-preserved grain stored in the 
warehouse.



Sec. 736.46  Sacked grain.

    Each warehouseman shall keep sacked grain stored in an orderly 
manner so as to permit easy access to all lots and to facilitate 
inspecting, sampling, counting, and identification of each lot.



Sec. 736.47  Warehouses to be kept clean.

    Each warehouseman shall keep his warehouse reasonably clean at all 
times and free from straw, rubbish, or accumulations of materials that 
will increase the fire hazard or interfere with the handling of grain.



Sec. 736.48  Delivery of fungible grain.

    Except as may be provided by law or the regulations in this part, 
each warehouseman: (a) Upon proper presentation of a receipt for any 
grain other than identity-stored grain, and which grain has not at the 
request of the depositor or lawful holder of the receipt covering such 
grain or otherwise as permitted by law or the regulations in this part, 
been dried or otherwise conditioned by such warehouseman, and upon 
payment or tender of all advances and legal charges, shall deliver to 
such depositor or lawful holder of such receipt grain of the grade and 
quantity named in such receipt; and (b) upon proper presentation of a 
receipt for any grain the identity of which was to have been preserved 
during the storage period, and upon payment or tender of all advances 
and legal charges, shall deliver to the person lawfully entitled 
thereto, the identical grain so stored in his warehouse.

[[Page 258]]



Sec. 736.49  Cleaning of grain.

    Each warehouseman whose warehouse is equipped with machinery 
suitable for the purpose, shall clean all bulk grain, received for 
storage in such warehouse, on which the inspector at the request of the 
depositor or lawful holder of the receipt covering such grain has set 
dockage for cleaning.



Sec. 736.50  Grades; separate in storage.

    A warehouseman may not mix lots of different grades of grain stored 
or received for storage except when the identity of the grain to be 
stored is to be preserved or when a depositor surrenders receipts 
covering two or more lots and requests the warehouseman to deliver the 
amount of grain represented by the canceled receipts in such a manner 
that they will become one lot. The balance, if any, of grain resulting 
from this operation, after weighing and inspecting, is to be stored with 
grain of like grade or its identity preserved.



Sec. 736.51  Stocks to be in balance by grades.

    Warehousemen must keep stocks of grain in storage by grades in 
balance with the grades of grain represented by outstanding storage 
obligations for which receipts have been or are to be issued, except 
when the grain has unavoidably improved or deteriorated through natural 
causes. In case the grades of stored grain should get out of balance 
with grades represented by outstanding storage obligations for which 
receipts have been or are to be issued, the warehouseman shall effect 
proper adjustments.



Sec. 736.52  Out-of-condition and damaged grain.

    (a) If the condition of any grain offered for storage is such that 
it probably will affect the condition of grain in the licensed 
warehouse, the warehouseman shall not receive such grain for storage or 
store such grain in his licensed warehouse, but, if the warehouse has 
separate bins or is equipped with proper conditioning apparatus, he may 
receive such grain for storage in such separate bins or he may condition 
it and then store it in such manner as will not lower the grade of other 
grain.
    (b) In case the warehouseman or the Department shall find that 
storage of grain in direct contact with any part of the structure of the 
warehouse results, or is likely to result, in damage to the grain, the 
warehouseman shall not store grain in such part of the warehouse except 
in such manner and by the use of such material as will keep the grain in 
the same condition as when stored.



Sec. 736.53  Reconditioning grain.

    In case the warehouseman considers that any portion of the grain in 
his warehouse is out of condition, or becoming so, he shall direct the 
inspector to examine the grain in question. If the inspector finds such 
grain to be out of condition or becoming so and he is of the opinion 
that by re-elevating, screening, blowing, cooling, or drying the grain 
can be brought back into condition or that further deterioration can be 
prevented, such warehouseman shall give immediate notice of the fact to 
the persons and in the manner specified in Sec. 736.54. If, within 24 
hours after the giving of such notice, the owners of such grain have not 
otherwise directed as to the disposition of same, such warehouseman, 
with the approval of the inspector, shall, in his warehouse to the 
extent to which it is equipped with machinery suitable for the purpose, 
or may in another warehouse or elevator so equipped to the extent to 
which his warehouse is not equipped with suitable machinery, subject the 
grain to any or all of the above-mentioned processes.



Sec. 736.54  Notice of condition of grain.

    (a) If the warehouseman with the approval of the inspector, shall 
determine that the further deterioration of any grain can not be 
prevented by reconditioning, or after treating it in accordance with 
Sec. 736.53, it is still out of condition, the warehouseman shall give 
immediate notice of the fact, in accordance with paragraphs (b) and (c) 
of this section.
    (b) Such notice shall state:
    (1) The warehouse in which the grain is stored,
    (2) The quantity, kind, and grade, if determined, of the grain at 
the time the notice is given,

[[Page 259]]

    (3) The actual condition of the grain as nearly as can be 
ascertained, and the reason, if known, for such condition,
    (4) The oldest outstanding receipts covering the amount of grain out 
of condition, other than sacked or specially binned grain, upon which 
the grain will be delivered, giving the number and date of each such 
receipt and the quantity, the kind, and grade of the grain as stated in 
such receipts, or
    (5) The outstanding receipts covering the grain out of condition the 
identity of which was to have been preserved, giving the number and date 
of each such receipt and the designation of the bin, container or 
location of such grain as stated in the receipt therefor, and
    (6) That such grain will be delivered upon the return and 
cancellation of the receipts therefor.
    (c) A copy of such notice shall be delivered in person or shall be 
sent by mail:
    (1) To the persons holding the oldest receipts covering the grain in 
question mentioned in paragraphs (b)(4) and (5) of this section if known 
to the warehouseman,
    (2) To any other person, including the persons mentioned in 
paragraph (d) of this section, known by the warehouseman to be 
interested in the grain,
    (3) To the grain exchange, board of trade, or chamber of commerce, 
if any, in the city or town in or nearest to which the warehouse is 
located, and
    (4) To the Administrator.

If the holders of the receipts and the owners of the grain are known to 
the warehouseman and cannot, in the regular course of the mails, be 
reached within 12 hours, the warehouseman shall, whether or not 
requested so to do in accordance with paragraph (d) of this section, 
also immediately notify such persons by telegraph or telephone at their 
expense. Public notice shall also be given by posting a copy of such 
notice in a conspicuous place in the main office of the warehouse where 
receipts are issued. A copy of such notice shall be kept as a record of 
the warehouse.
    (d) Any person, interested in any grain or the receipt covering such 
grain stored in a warehouse, may, in writing, notify the warehouseman 
conducting such warehouse, of the fact and nature of his interest, and 
such warehouseman shall keep a record of the fact. If such person 
requests, in writing, that he be notified regarding the condition of any 
such grain and agrees to pay the cost of any telegraph or telephone toll 
charge, such warehouseman shall notify such person in accordance with 
such request.
    (e) Nothing contained in this section shall be construed as 
relieving the warehouseman from properly caring for any grain after 
notification of its condition in accordance with this section.
    (f) Records required to be kept by this section shall be retained, 
as a part of the records of the warehouse, for a period of six years 
after December 31 of the year in which created, and for such longer 
period as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 15730, Nov. 24, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.55  Sale of grain at public auction.

    If the grain, advertised in accordance with the requirements of 
Sec. 736.54 has not been removed from storage by the owner thereof, 
within 10 days from the date of notice of its being out of condition, 
the warehouseman in whose warehouse such grain is stored may sell the 
same at public auction at the expense and for the account of the owner 
after giving 10 days' notice in the manner specified in Sec. 736.54(c).



Sec. 736.56  Identity-preserved grain; acceptance.

    Subject to the provisions of section 13 of the act (39 Stat. 488; 7 
U.S.C. 254), a licensed warehouseman may elect not to receive grain for 
storage the identity of which is to be preserved while in storage.

[[Page 260]]

                                  Fees



Sec. 736.57  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 736.58  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The fee will be assessed 
and payable when the warehouse bond is furnished in accordance with 
these regulations, for acceptance by the Secretary and annually 
thereafter on the bond renewal date. The capacity for each identifiable 
location will be determined by the Secretary. The total capacity of all 
locations may not exceed the capacity stated in the current license. An 
identifiable location is a fully functional public warehouse as 
determined by the Secretary. The annual fee a licensed warehouseman is 
assessed may be adjusted by the amount Commodity Credit Corporation 
(CCC) pays, if CCC has a storage contract or agreement with the 
warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 736.59  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[46 FR 63199, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33540, June 20, 1997]



Sec. 736.60  Return of excess deposit.

    The Treasurer of the United States shall hold in his custody each 
advance deposit made under Sec. 736.59 until the fee, if any, is 
assessed and he is furnished by the Service with a statement showing the 
amount thereof and against whom assessed. Any part of such advance 
deposit which is not required for the payment of any fee assessed shall 
be returned to the party depositing same.

                         Inspectors and Weighers



Sec. 736.61  Inspectors' and weighers' applications.

    (a) Application for licenses to inspect and grade or to weigh grain 
under section 11 of the act (46 Stat. 1464; 7 U.S.C. 252) shall be made 
to the Administrator on forms furnished for the purpose by him. Each 
application shall be in English, shall be signed by the applicant, and 
shall contain or be accompanied by a statement from the warehouseman for 
whom the applicant will inspect, grade, or weigh grain under the act, 
showing whether the applicant is competent and is acceptable to such 
warehouseman for the purpose.
    (b) Each inspectors' application shall contain:
    (1) Evidence that he can correctly grade grain in accordance with 
the official standards of the United States, or

[[Page 261]]

in the absence of such standards in accordance with any standards 
approved by the Administrator, and
    (2) Satisfactory evidence that he will be provided with such means 
or facilities for inspecting and grading grain as may be deemed 
necessary, for use in the locality in which the applicant expects to 
perform services as a licensed inspector.
    (c) Applications for licenses to weigh grain shall be on forms 
furnished for the purpose by the Administrator and shall give such 
information as will show the applicant's experience in weighing grain.
    (d) A single application may be made by any person for a license as 
both inspector and weigher upon complying with the requirements of this 
section.
    (e) An applicant shall at any time furnish such additional 
information as the Department shall find to be necessary to the 
consideration of his application.

[29 FR 15730, Nov. 24, 1964, as amended at 34 FR 12426, July 30, 1969; 
40 FR 5347, Feb. 5, 1975; 43 FR 14006, Apr. 4, 1978. Redesignated at 50 
FR 1814, Jan. 14, 1985]



Sec. 736.62  Examination.

    Each applicant for license as an inspector or weigher and each 
inspector or weigher shall, whenever requested by an authorized agent of 
the Department, submit to an examination or test to show his ability 
properly to inspect and grade or to weigh grain.



Sec. 736.63  Posting of license.

    Each inspector or weigher shall keep his license conspicuously 
posted in a place designated for the purpose by the Service unless 
authorized by the Service not to do so.

[43 FR 14006, Apr. 4, 1978. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.64  Duties of inspector and weigher.

    Each inspector and each weigher whose license remains in effect 
shall, without discrimination, as soon as practicable, and upon 
reasonable terms, inspect and grade or weigh and certificate the grade 
or weight of grain, stored or to be stored in a warehouse, for which he 
holds a license, if such grain be offered to him under such conditions 
as permit proper inspection and weighing and the determination of the 
grade or weight thereof. No inspector shall issue a certificate of grade 
for any grain unless the inspection and grading thereof be based upon a 
correct and representative sample of the grain.



Sec. 736.65  Inspection certificate; form.

    (a) Except as provided in paragraph (b) of this section, each 
inspection certificate issued under the act by an inspector shall be in 
a form approved for the purpose by the Department, and shall embody the 
following information within its written or printed terms:
    (1) The caption ``United States Warehouse Act, Grain Inspection 
Certificate'',
    (2) Whether it is an original, a duplicate, or other copy, and that 
it is not negotiable,
    (3) The name and location of the warehouse in which the grain is or 
is to be stored,
    (4) A statement showing whether the inspection covers grain moving 
into or out of the warehouse,
    (5) The date of the certificate,
    (6) The consecutive number of the certificate,
    (7) The approximate amount of grain covered by the certificate,
    (8) The kind of grain covered by the certificate,
    (9) The grade of the grain, as determined by such duly licensed 
inspector, in accordance with Sec. 736.76, and, in the case of grain for 
which no official standards of the United States are in effect, the 
standards or description in accordance with which such grain is graded.
    (10) A statement that the certificate is issued by an inspector 
licensed under the United States Warehouse Act and the regulations 
thereunder,
    (11) A statement conspicuously placed to the effect that the 
certificate is not valid for the purposes of the United States Grain 
Standards Act, and
    (12) The signature of the inspector who inspected and graded the 
grain.

[[Page 262]]


In addition, the inspection certificate may include any other matter not 
inconsistent with the Act or the regulations in this part, provided the 
approval of the Service is first secured.
    (b) In lieu of an inspection certificate in the form prescribed in 
paragraph (a) of this section an official inspection certificate issued 
pursuant to the provisions of the United States Grain Standards Act, as 
amended (7 U.S.C. 71 et seq.) or the Agricultural Marketing Act of 1946 
(7 U.S.C. 1621 et seq.) on grain which is stored or to be stored in a 
warehouse licensed under the U.S. Warehouse Act will be acceptable for 
purposes of the Act and the regulations in this part.

[29 FR 15730, Nov. 24, 1964, as amended at 42 FR 12143, Mar. 3, 1977; 45 
FR 5662, Jan. 24, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.66  Copies of certificate to be accessible.

    Each inspector shall, as soon as possible after grading any grain 
and not later than the close of business on the next following business 
day, make accessible to the parties interested in a transaction in which 
the grain is involved at the place designated in Sec. 736.63 a true copy 
of the inspection certificate issued by him for such grain, or a record 
of each lot or parcel of grain inspected and graded by such licensed 
inspector showing the information contained on such inspection 
certificate.



Sec. 736.67  Weight certificate.

    (a) Each weight certificate issued under the Act by a weigher shall 
be in a form approved for the purpose by the Service, and shall embody 
the following information within its written or printed terms:
    (1) The caption ``United States Warehouse Act, Grain Weight 
Certificate'',
    (2) Whether it is an original, a duplicate, or other copy, and that 
it is not negotiable,
    (3) The name and location of the warehouse in which the grain is or 
is to be stored,
    (4) Whether the grain is weighed into or out of the warehouse,
    (5) The date of the certificate,
    (6) The consecutive number of the certificate,
    (7) The net weight, including dockage, if any, of the grain except 
as provided in Sec. 736.27(b).
    (8) A statement that the certificate is issued by a weigher licensed 
under the United States Warehouse Act and the regulations thereunder, 
and
    (9) The signature of the weigher.

In addition, the weight certificate may include any other matter not 
inconsistent with the Act or the regulations in this part provided the 
approval of the Service is first secured.
    (b) In lieu of a weight certificate in the form prescribed in 
paragraph (a) of this section, an official weight certificate issued 
pursuant to the provisions of the U. S. Grain Standards Act, or an 
official weight certificate issued pursuant to the Agricultural 
Marketing Act of 1946 on grain which is stored or to be stored in a 
warehouse licensed under the U.S. Warehouse Act is acceptable for 
purposes of the Act and the regulations in this part.

[42 FR 12143, Mar. 3, 1977, as amended at 43 FR 14006, Apr. 4, 1978. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.68  Certificate; grade and weight.

    The grade and weight of any grain, ascertained by an inspector and a 
weigher, may be stated on a certificate meeting the combined 
requirements of Secs. 736.65, 736.67, if the form of such certificate 
shall have been approved for the purpose by the Service.



Sec. 736.69  Copies of certificates to be kept.

    Each inspector and each weigher shall keep for a period of 1 year in 
a place accessible to interested parties a copy of each certificate 
issued by him under the regulations in this part, and shall file a copy 
of each such certificate with the warehouse in which the grain covered 
by the certificates is stored.



Sec. 736.70  Inspections.

    Each inspector and each weigher shall permit any authorized officer 
or agent of the Department to inspect or examine, on any business day 
during the usual hours of business, his books, papers, records, and 
accounts relating

[[Page 263]]

to the performance of his duties under the act and this part, and shall, 
with the consent of the warehouseman concerned, assist any such officer 
or agent in the inspection or examination mentioned in Sec. 736.39 as 
far as any such inspection or examination relates to the performance of 
the duties of such inspector or weigher under the Act and the 
regulations in this part.



Sec. 736.71  Reports.

    Each inspector and each weigher shall, from time to time, if 
requested by the Service, make reports, on forms approved for the 
purpose by the Service, bearing upon his activities as such inspector or 
weigher.



Sec. 736.72  Licenses; suspension or revocation.

    Pending investigation, the Secretary, or his designated 
representative, may, whenever he deems necessary, suspend the license of 
an inspector or weigher temporarily without hearing. Upon a written 
request or a satisfactory statement of reasons therefor, submitted by 
the inspector or weigher, the Secretary, or his designated 
representative, may, without hearing, suspend or revoke the license 
issued to such inspector or weigher. The Secretary, or his designated 
representative, may, after opportunity for hearing has been afforded in 
the manner prescribed in this section, suspend or revoke a license 
issued to an inspector or a weigher when such licensee: (a) Has ceased 
to perform services as such inspector or weigher, or (b) has in any 
other manner become incompetent or incapacitated to perform the duties 
of such inspector or weigher. As soon as it shall come to the attention 
of a warehouseman that either of the conditions mentioned under 
paragraph (a) or (b) of this section exists, it shall be the duty of 
such warehouseman to notify the Service in writing. Before the license 
of any inspector or weigher is permanently suspended or revoked pursuant 
to section 12 of the Act, such inspector or weigher shall be furnished 
by the Secretary, or his designated representative, a written statement 
specifying the charges and shall be allowed a reasonable time within 
which he may answer the same in writing and apply for a hearing, an 
opportunity for which shall be afforded in accordance with Sec. 736.99.



Sec. 736.73  Suspended or revoked license; termination of license.

    (a) In case a license issued to an inspector or a weigher is 
suspended or revoked by the Secretary, or his designated representative, 
such license shall be returned to the Secretary. At the expiration of 
any period of suspension of such license, unless in the meantime it be 
revoked, the dates of the beginning and termination of the suspension 
shall be indorsed thereon, it shall be returned to the inspector or 
weigher to whom it was originally issued and it shall be posted as 
prescribed in Sec. 736.63.
    (b) Any license issued under the Act and the regulations in this 
part to an inspector or weigher shall automatically be suspended as to 
any warehouse whenever the license of such warehouse shall be suspended 
and shall automatically terminate as to any warehouse whenever the 
license of such warehouse shall be revoked. Upon either suspension or 
termination of any inspector's or weigher's license under this 
paragraph, such license shall be returned to the Department. In case 
such license shall apply to other warehouses, the Secretary, or his 
designated representative, shall issue to the licensee a new license, 
omitting the names of the warehouses for which licenses have been 
revoked or suspended. Such new license shall be posted as prescribed in 
Sec. 736.63.



Sec. 736.74  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to an inspector or weigher, a duplicate thereof may be issued 
under the same number, in the discretion of the Secretary, or his 
designated representative.



Sec. 736.75  Unlicensed inspectors and weighers.

    No person shall in any way represent himself to be an inspector or 
weigher for purposes of the U.S. Warehouse Act unless he holds an 
unsuspended and unrevoked license or authorization in

[[Page 264]]

accordance with the provisions of paragraphs (q) and (r) of Sec. 736.2.

[42 FR 12144, Mar. 3, 1977. Redesignated at 50 FR 1814, Jan. 14, 1985]

                              Grain Grading



Sec. 736.76  Grade; statement.

    Whenever the grade of grain is required to be or is stated for the 
purpose of the act or the regulations in this part, it shall be stated 
in accordance with Secs. 736.77 through 736.79.



Sec. 736.77  Official Standards of the United States.

    The Official Standards of the United States are hereby adopted as 
the official grain standards for the purposes of the Act and the 
regulations in this part.

[45 FR 5662, Jan. 24, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.78  Standards of grades for other grain.

    Until official standards of the United States are fixed and 
established for the kind of grain to be inspected, the grade of the 
grain shall be stated, subject to the approval of the Administrator: (a) 
In accordance with the State standards, if any, established in the State 
in which the warehouse is located, (b) in the absence of any State 
standards, in accordance with the standards, if any, adopted by the 
local board of trade, chamber of commerce, or by the grain trade 
generally in the locality in which the warehouse is located, or (c) in 
the absence of the standards mentioned in paragraphs (a) and (b) of this 
section, in accordance with any standards approved for the purpose by 
the Service.

[45 FR 5662, Jan. 24, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.79  Grades based on inspection and sample.

    Whenever the grade of grain is required to be or is stated for the 
purposes of the act or the regulations in this part, it shall be based 
upon a correct and representative sample of the grain and the inspection 
and grading thereof shall be made under conditions which permit the 
determination of its true grade.

                              Grain Appeals

    Source: Sections 736.80 to 736.85 appear at 45 FR 5662, Jan. 24, 
1980, unless otherwise noted. Redesignated at 50 FR 1814, Jan. 14, 1985.



Sec. 736.80  Appeal procedure.

    The depositor, holder of receipt or the warehouseman may make an 
appeal as to the grade of a lot of grain stored or to be stored in a 
licensed warehouse. If the original grade certificate was issued by an 
inspector licensed under, or authorized by, the U.S. Grain Standards Act 
or the Agricultural Marketing Act, the appeal, including the amount of 
fees, shall be governed by the regulations issued under those Acts 
respectively; otherwise the appeal, including fees shall be governed by 
Secs. 736.81 through 736.83.



Sec. 736.81  Request for appeal.

    A request for an appeal inspection by a depositor or holder of 
receipt must be made by written notice to the warehouseman before the 
identity of the lot of grain has been lost and not later than the close 
of business on the first business day following furnishing of the 
statement of original grade or if the appeal is requested by the 
warehouseman, notice must be given promptly to the owner of the grain. 
Oral notice may be made if followed by written notice. Where is it not 
practical for a warehouseman to maintain the identity of all grain being 
received for storage until depositors receive a statement of grade and 
consequently opportunity for appeal, any depositor or his agent before 
or at the time of delivery of his grain may request the warehouseman to 
retain the identity of such lot until said depositor has been furnished 
with a statement of grade for the lot and has waived or requested and 
received an appeal inspection grade. The warehouseman need not preserve 
the identity of the lot in the original carrier; but with the knowledge 
and consent of the depositor or agent may use other means to preserve 
such identity. Further, if compliance with such request would adversely 
affect receiving, storing or delivering the grain of other depositors, 
the warehouseman may defer unloading such grain until

[[Page 265]]

such time as would not disrupt service to other depositors but without 
unnecessary delay to the party making such request.



Sec. 736.82  Appeal sample--obtaining, preservation, delivery and examination.

    (a) The lot of grain for which an appeal is requested shall be 
resampled in such manner and quantity as the depositor or holder of 
receipt and the warehouseman agree results in a representative sample of 
the lot acceptable to each for appeal purposes. Should they be unable to 
agree on such a sample, a sample drawn by a duly licensed inspector in 
the presence of both shall be deemed binding. In no case shall the 
sample be of less than 2000 grams by weight.
    (b) The sample shall be packaged, to the satisfaction of the 
interested parties, so as to preserve its original condition.
    (c) For grains for which there are official U.S. Standards the 
sample shall be secured and delivered to the nearest office charged with 
providing official inspection service under the U.S. Grain Standards Act 
and/or the Agricultural Marketing Act of 1946. At this point procedures 
as set forth in regulations issued under the U.S. Grain Standards Act or 
under the Agricultural Marketing Act of 1946 shall govern. For grain for 
which there are no official U.S. Standards the party requesting the 
appeal shall apply directly to the Administrator for relief. The 
Administrator or delegate thereof shall promptly determine the appeal 
based on approved standards and set the required fees. Such 
determination shall be binding on all concerned parties.
    (d) The sample shall be accompanied by: (1) A copy of the written 
request for appeal, (2) the grain inspection certificate originally 
issued, and (3) an agreement to pay the costs of such inspection as 
prescribed by the U.S. Grain Standards Act, the Agricultural Marketing 
Act or the Administrator.
    (e) The sample of the grain involved in the appeal shall be examined 
as soon as possible. Such tests shall be applied as are necessary; and, 
unless the appeal is dismissed, a grade certificate shall be issued by 
the person determining the grade, showing the grade assigned by him to 
such grain. This certificate shall supersede the inspection certificate 
originally issued for the grain involved. The original or a copy of the 
new grade certificate shall be sent to the depositor or holder of 
receipt, the licensed warehouseman and the licensed inspector making the 
original determination of grade.



Sec. 736.83  Dismissal of appeal.

    The departmental agency to whom the appeal has been made may dismiss 
such appeal without its determination upon request of the party 
initiating the appeal or for noncompliance with the regulations in this 
part.



Sec. 736.84  Freedom of appeal.

    (a) No person licensed under the Act, shall, directly or indirectly 
by any means whatsoever, deter or prevent or attempt to deter or prevent 
any party from taking an appeal.
    (b) No rule, regulation, bylaw, or custom of any market, board of 
trade, chamber of commerce, exchange, inspection department or similar 
organization nor any contract, agreement, or understanding, shall be 
ground for refusing to determine any appeal.



Sec. 736.85  Owner not compelled to store.

    Nothing in these regulations shall require the owner or his agent to 
store such grain with the licensed warehouseman after the appeal 
inspection, but if the grain is stored it shall be accepted for and 
delivered out of storage in accordance with the grade as finally 
determined in such appeal.



Secs. 736.86-736.95  [Reserved]

                              Miscellaneous



Sec. 736.96  Bonds required; re State warehouses.

    Every person applying for a license, or licensed under section 9 of 
the act shall, as such, be subject to all portions of the regulations in 
this part, so far as they may relate to warehousemen. In case there is a 
law of any State providing for a system of warehouses owned, operated or 
leased by such State, a person applying for a license under section 9 of 
the act, to accept the

[[Page 266]]

custody of grain and to store the same in any of said warehouses, may, 
in lieu of a bond or bonds, complying with Secs. 736.13 and 736.14, file 
with the Secretary, or his designated representative, a single bond 
meeting the requirements of the act and this part, in such form, and in 
such amount not less than $5,000 as he shall prescribe, to insure the 
performance by such person, with respect to the acceptance of the 
custody of grain and its storage in the warehouses in such system for 
which licenses are or may be issued, of his obligations arising during 
the periods of such licenses, and in addition, if desired by the 
applicant, during the periods of any amendments thereto. In fixing the 
amount of such bond, consideration shall be given, among other 
appropriate factors, to the character of the warehouses involved, their 
actual or contemplated capacity, the bonding requirements of the State 
and its liability with respect to such warehouses. If the Secretary, or 
his designated representative, shall find the existence of conditions 
warranting such action, there shall be added to the amount of the bond, 
so fixed, a further amount, fixed by him, to meet such conditions.



Sec. 736.97  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.



Sec. 736.98  Information of violations.

    Every person licensed under the act shall immediately furnish the 
Department any information which comes to the knowledge of such person 
tending to show that any provision of the act or the regulations in this 
part has been violated.



Sec. 736.99  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130 through 1.151).

[45 FR 6775, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 736.100  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report or other paper, 
document or proceeding relating to such warehouse, shall be sufficient 
unless otherwise directed by the Administrator.



Sec. 736.101  Assets and bond; combination warehouses.

    Where such license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the regulations applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse was used for its storage.



Sec. 736.102  Amendments.

    Any amendment to this part, unless otherwise stated, shall apply in 
the same manner to persons holding licenses at the time it becomes 
effective as it applies to persons thereafter licensed under the act.

                  Terminal and Futures Contract Markets



Sec. 736.103  Futures contract markets defined.

    For the purpose of Secs. 736.103 through 736.111 a futures contract 
market is any grain market designated as a futures contract market under 
authority of the Commodity Exchange Act (49 Stat. 1491, as amended; 7 
U.S.C. 1-17a).

[29 FR 15730, Nov. 24, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985, 
and amended at 53 FR 2477, Jan. 28, 1988]



Sec. 736.104  Licenses to weigh grain; futures markets.

    Licenses to weigh grain into, out of, and within licensed 
warehouses, receipts of which are deliverable in satisfaction of futures 
contracts may be issued to the weighmaster and his deputies of such 
contract market.

[[Page 267]]



Sec. 736.105  Registrar of warehouse receipts; futures contract market.

    The Administrator may approve as registrar of warehouse receipts 
issued for grain in licensed elevators operating in any terminal market 
or in any futures contract market the official designated by the State 
in which such market is located, if such an official position has been 
created by law, or any other individual, provided such individual is not 
an employee of, or the owner of, any such licensed elevator, or the 
owner of, or an employee of the owner of, grain deposited in any such 
licensed elevator.



Secs. 736.106--736.107  [Reserved]



Sec. 736.108  Additional bonding required.

    In addition to the financial responsibility and the bonding 
requirements of Secs. 736.6, 736.13 through 736.17, such additional bond 
shall be required for the protection of the public as will make the 
bonded responsibility of each licensed warehouseman equal to the maximum 
amount of bond required of nonlicensed warehousemen by the exchange, 
board of trade, or other agency within said market in which the licensed 
warehouseman is operating.



Sec. 736.109  Examination of warehouses; board of trade interest.

    Annually or more frequently if desired, a duly authorized committee 
of any exchange or board of trade that has been designated as a contract 
market may enter any warehouse operating under the regulations in this 
part, when accompanied by U.S. warehouse examiners, to observe the 
official examination of the warehouse; or such committee may participate 
in the making of such examination, under the supervision and direction 
of the U.S. warehouse examiner in charge. The committee shall be 
afforded full knowledge of the quantities, kinds, grades, and condition 
of all grain in the warehouse. The committee may also with the warehouse 
examiners have access to the warehouseman's records of receipts, fire 
insurance, weights and grades. In lieu of an examination by any 
committee of the exchange or board of trade the Department will furnish 
if desired to the secretary of the exchange or board of trade a 
summarized statement of its findings of conditions at each licensed 
warehouse operating within the market.



Sec. 736.110  Registration of public warehouse receipts; protection.

    When a contract market designates any agency for the registration of 
public warehouse receipts and such agency is approved as provided for in 
Sec. 736.105, all warehouse receipts shall be registered with the 
registrar and any change in ownership of a warehouse receipt shall be 
reported to the registrar by the owner thereof, giving his name and 
address to the registrar. All registered receipts shall be entitled to 
the following protection:
    (a)(1) Whenever any licensed warehouseman considers that any grain 
stored in his warehouse is out of condition, or becoming so, and should 
be loaded out in order to protect the interests of the parties 
concerned, such warehouseman shall notify the registrar and the 
Administrator, giving the location, approximate quantity, grades, and 
condition of such grain, and the specific reason which makes loading out 
necessary. The registrar shall immediately notify the chief sampler, if 
there be one, otherwise the chief inspector, of the contract market who 
shall at once proceed to the warehouse in which the grain is stored and 
examine it, in conjunction with the licensed warehouseman. If the chief 
sampler, or chief inspector, agrees with the warehouseman that the grain 
should be loaded out, he shall so notify the registrar and the 
Administrator. If the chief sampler does not agree with the 
warehouseman, the latter shall have the right to appeal to the 
Administrator who shall appoint an appeals committee as provided in 
Sec. 736.107. If, on such appeal, the warehouseman is sustained, the 
registrar shall be notified and such warehouse receipts as are selected 
as provided in this section shall no longer be regular for delivery in 
satisfaction of futures contracts made under the rules and regulations 
of such contract market.
    (2) The registrar shall thereupon select the oldest registered 
warehouse receipt for grain of the grade involved

[[Page 268]]

and such additional next oldest registered warehouse receipts in the 
order of their issuance as may be necessary to equal the total quantity 
of the grain involved, unless such grain has been stored identity 
preserved, and shall notify such holder or holders or their agents and 
the president of the contract market of the condition of the grain and 
the necessity for its being loaded out. When this information reaches 
the president of the contract market he shall appoint a committee 
consisting of five disinterested handlers of cash grain, and notify the 
Administrator of the appointment of said committee giving the name, 
address, and business of each member. Each member of said committee 
shall be subject to disapproval by the Administrator. If no exception is 
taken to the committee membership during the same business day by the 
Administrator, the committee shall meet at once, and after taking into 
consideration various factors that establish the value of the grade of 
grain called for by the receipts held by such owner or owners, shall 
determine the fair value of the grain on the basis of the market 
quotations for grain of the grade called for by the receipts on the day 
of the finding of the appeals committee that the grain should be loaded 
out, which price shall be paid to the owner or holder of each such 
receipt by the licensed warehouseman. If the price offered is not 
satisfactory to any such owner or holder, a committee appointed by the 
president of such contract market at the request of such owner or holder 
shall procure other offers for such grain and such offers shall be 
immediately reported to such owner or holder or to his agent. If the 
owner refuses to accept any such offers he shall have the 2 following 
business days to order and furnish facilities for loading such grain out 
of store and during this period the warehouseman shall be obliged to 
deliver the grain covered by the warehouse receipts, but not more than 3 
days shall elapse after notification by the registrar to the holder of 
the receipts before satisfactory disposition shall have been made of the 
grain either by sale or by ordering out and furnishing facilities to 
load same, provided the amount of such grain does not exceed 100,000 
bushels in any one elevator. If the amount of grain in question exceeds 
100,000 bushels, the owner or owners of the warehouse receipts shall be 
allowed 48 hours of grace over and above the aforementioned 3 days for 
each 100,000 bushels or fraction thereof in excess of the first 100,000 
bushels.
    (b) In the event that the holder of the warehouse receipt or his 
agent fails to remove the grain or make other satisfactory disposition 
of same within the prescribed time it shall be held for his account and 
any loss in grade sustained shall likewise be for his account.
    (c) Nothing in this section shall be construed as prohibiting the 
warehouseman from fulfilling contracts from other stocks under his 
control, subject to the U.S. Warehouse Act and regulations thereunder.



Sec. 736.111  Terminal markets.

    Sections 736.103 through 736.111 apply only to warehousemen 
operating in such markets as may have been heretofore or may be 
hereafter designated as futures contract markets, and Secs. 736.103 
through 736.107 apply also to warehousemen operating in such markets as 
the Department may view as terminal markets, and the appointment 
heretofore or hereafter of a registrar of warehouse receipts, as 
provided in Sec. 736.105 is conclusive that the Department views such 
market as a terminal market for purposes of the Warehouse Act. All other 
regulations issued under the act and applicable to grain warehousemen 
shall apply to warehousemen operating in such terminal or futures 
contract markets except as such regulations may conflict with 
Secs. 736.103 through 736.111.

[29 FR 15730, Nov. 24, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985, 
and amended at 53 FR 2477, Jan. 28, 1988]



PART 737--TOBACCO WAREHOUSES--Table of Contents




                               Definitions

Sec.
737.1  Meaning of words.
737.2  Terms defined.

[[Page 269]]

                           Warehouse Licenses

737.3  Application form.
737.4  Grounds for not issuing license.
737.5  Net assets.
737.6  Posting license.
737.7  Suspension or revocation of license.
737.8  Return of suspended or revoked license.
737.9  Lost or destroyed warehouse license.
737.10  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

737.11  Bond required; time of filing.
737.12  Basis of amount of bond; additional amounts.
737.13  Amendment to license.
737.14  New bond required each year.
737.15  Approval of bond.

                           Warehouse Receipts

737.16  Form.
737.17  Copies of receipts.
737.18  Lost or destroyed receipts; bond.
737.19  Printing of receipts.
737.20  Partial delivery of tobacco.
737.21  Return of receipts before delivery of tobacco.
737.22  Nonnegotiable receipts.
737.23  Persons authorized to sign receipts.
737.24  Receipts; basis for issuance.
737.25  Omission of grade; no compulsion by warehouseman.

                     Duties of Licensed Warehouseman

737.26  Insurance; requirements.
737.27  Duties re insurance and bonding companies.
737.28  Records; safe keeping.
737.29  Warehouse charges.
737.30  Business hours.
737.31  Packaging tobacco.
737.32  Clean warehouse.
737.33  Package identification.
737.34  Package arrangement.
737.35  Care of stock and equipment.
737.36  Care of other commodities.
737.37  Removal of tobacco in storage.
737.38  Handling and storing; care.
737.39  Tobacco out of condition.
737.40  System of accounts.
737.41  Reports; copies.
737.42  Canceled receipts; auditing.
737.43  Examination of warehouses.
737.44  Weighing apparatus.
737.45  Licensee preferred for service.
737.46  Reporting fire losses.
737.47  [Reserved]

                                  Fees

737.48  License fees.
737.49  Warehouse annual and inspection fees.
737.50  Advance deposit.
737.51  Return of excess deposit.

           Licensed Samples, Inspectors, Graders, and Weigher

737.52  Applications; samplers', inspectors', graders', and weighers'.
737.53  Examination.
737.54  Posting of license.
737.55  Proper discharge of duties.
737.56  Official samples; sample tags and seals.
737.57  Inspection certificate; form.
737.58  Grade certificate; form.
737.59  Weight certificate; form.
737.60  Combined certificate.
737.61  Issuance of certificates.
737.62  Type, grade, form, or condition; statement.
737.63  Licensees to permit and assist in examinations.
737.64  Suspension or revocation of licenses.
737.65  Return of suspended, revoked, terminated licenses.
737.66  Lost or destroyed licenses.
737.67  Reports.
737.68  Unlicensed persons; misrepresentation.

                         Tobacco Classification

737.69  Type, grade, form, or condition; statement.
737.70  Standards to be used.
737.71  Type, grade, form, or condition.
737.72  Type, grade, and form; statement.
737.73  Statement of condition.

             Appeal on Sampling or Classification of Tobacco

737.74  New receipts; expenses.

                              Miscellaneous

737.75  Bonds required; re State warehouses.
737.76  Publications.
737.77  Violations to be reported.
737.78  Procedure in hearings.
737.79  One document and one license to cover several products.
737.80  Assets and bond; combination warehouses.
737.81  Amendments.

    Authority: 7 U.S.C. 241 et seq.

    Source: SRA, BAE 129, Revised, 7 FR 6806, Aug. 29, 1942; 13 FR 8731, 
Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 737 appear at 62 FR 
33540, June 20, 1997.

    Cross Reference: For regulations under the Tobacco Inspection Act, 
see 7 CFR part 29 of this chapter.

[[Page 270]]

                               Definitions



Sec. 737.1  Meaning of words.

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



Sec. 737.2  Terms defined.

    For the purposes of this part, unless otherwise provided, the 
following terms shall mean:
    (a) The act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486; 7 U.S.C. 241-273), as amended.
    (b) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (c) 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.
    (d) Designated representative. The Administrator.
    (e) Department. The United States Department of Agriculture.
    (f) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (g) Administrator. The Administrator of the Service, or any other 
officer or employee of the Service to whom authority has heretofore 
lawfully been delegated, or may hereafter lawfully be delegated, to act 
in his stead.
    (h) Regulations. Rules and regulations made under the act by the 
Secretary.
    (i) Warehouse. Unless otherwise clearly indicated by the context, 
any suitable building, structure, or other protected inclosure in which 
tobacco is or may be stored for interstate or foreign commerce, or, if 
located within any place under the exclusive jurisdiction of the United 
States, in which tobacco is or may be stored and for which a license has 
been issued under the act.
    (j)Warehouseman. Any person lawfully engaged in the business of 
storing tobacco and holding a warehouse license.
    (k)License. A license issued under the act by the Secretary.
    (l)Type. Any one of the main classes of tobacco having certain 
peculiar characteristics which will permit of its being divided into a 
single system of grades.
    (m)Grade. Any one of the divisions of a type, which may be a 
combination of any or all of the four factors, group, quality, color, 
and length.
    (n)Form. The designation of the stage of preparation of tobacco, 
such as unstemmed, stemmed, stems, etc.
    (o)Condition. Any state of tobacco which is not covered by form or 
grade and which has a material bearing on its value, including its 
keeping quality.
    (p)Sampler. A person licensed under the act by the Secretary to 
sample and to certificate or tag and seal samples of tobacco drawn by 
him under the act.
    (q)Inspector. A person licensed under the act by the Secretary to 
inspect and to certificate the keeping quality of the tobacco in 
addition to the performance of the duties of a sampler.
    (r)Grader. A person licensed under the act by the Secretary to grade 
and to certificate the type, grade, form, and condition of tobacco.
    (s)Weigher. A person licensed under the act by the Secretary to 
weigh and certificate the weight of tobacco.
    (t)Package. A hogshead, tierce, case, or other unit.
    (u)Official sample. A sample of a package of tobacco drawn, tagged, 
and prepared by a sampler in accordance with Secs. 737.55 through 
737.56.
    (v)Receipt. A warehouse receipt.
    (w)State. A State, Territory, or District of the United States.

[SRA, BAE 129, rev., 7 FR 6806, Aug. 29, 1942, as amended at 13 FR 8729, 
Dec. 30, 1948. Redesignated and amended at 50 FR 1814, Jan. 14, 1985; 63 
FR 60204, Nov. 9, 1998]

                           Warehouse Licenses



Sec. 737.3  Application form.

    Applications for licenses and for amendments to licenses under the 
act shall be made to the Secretary upon forms prescribed for the purpose 
and furnished by the Service, shall truly state the information therein 
contained, and shall be signed by the applicant. The applicant shall at 
any time furnish such additional information as the Department may find 
necessary to a proper consideration of his application.

[[Page 271]]



Sec. 737.4  Grounds for not issuing license.

    A license for the conduct of a warehouse shall not be issued if it 
be found by the Secretary, or his designated representative, that the 
warehouse is not suitable for the proper storage of tobacco, that the 
warehouseman is insolvent or is incompetent to conduct such warehouse in 
accordance with the act and the regulations in this part, or that there 
is any other sufficient reason within the purposes of the act for not 
issuing such license. Further, a license shall not be issued for any 
place to which tobacco is delivered by the producers or their agents for 
the purposes of obtaining CCC price support advances and for the display 
and auction of tobacco.

[63 FR 60204, Nov. 9, 1998]



Sec. 737.5  Net assets.

    Each warehouseman conducting a warehouse licensed, or for which 
application for license has been made, shall have and maintain, above 
all exemptions and liabilities, net assets liable for the payment of any 
indebtedness arising from the conduct of the warehouse, to the extent of 
at least $5 per 1,000 pounds of the maximum number of pounds of tobacco 
that the warehouse will accommodate when stored in the manner customary 
to the warehouse, as determined by the Administrator, except that the 
amount of such assets shall not be less than $5,000 and need not be more 
than $100,000. In case such warehouseman has applied for licenses to 
conduct two or more warehouses in the same State, the assets applicable 
to all of which shall be subject to the liabilities of each, such 
warehouses shall be deemed to be one warehouse for the purposes of the 
assets required under this section. For the purposes of this section 
only, paid-in capital stock, as such, shall not be considered a 
liability. A deficiency in such assets may be supplied by an increase in 
the amount of the licensed warehouseman's bond in accordance with 
Sec. 737.12(b).



Sec. 737.6  Posting license.

    Immediately upon receipt of his license or of any amendment thereto 
under the act, the warehouseman shall post the same, and thereafter, 
except as otherwise provided in the regulations in this part, keep it 
posted until suspended or terminated, in a conspicuous place in the 
principal office where receipts issued by such warehouseman are 
delivered to depositors.



Sec. 737.7  Suspension or revocation of license.

    Pending investigation, the Secretary, or his designated 
representative, whenever he deems necessary, may suspend a 
warehouseman's license temporarily without hearing. Upon written request 
and a satisfactory statement of reasons therefor, submitted by a 
warehouseman, the Secretary or his designated representative, may, 
without hearing, suspend or revoke the license issued to such 
warehouseman. The Secretary, or his designated representative, may, 
after opportunity for hearing has been afforded in the manner prescribed 
in this section, revoke a license issued to a warehouseman when such 
warehouseman (a) is bankrupt or insolvent, (b) has parted, in whole or 
in part, with his control over the licensed warehouse, (c) is in process 
of dissolution or has been dissolved, (d) has ceased to conduct such 
licensed warehouse, or (e) has in any other manner become nonexistent or 
incompetent or incapacitated to conduct the business of the warehouse. 
Whenever any of the conditions mentioned in paragraphs (a) through (e) 
of this section shall come into existence it shall be the duty of the 
warehouseman to notify immediately the Administrator of the existing 
condition. Before a license is revoked for any violation of or failure 
to comply with any provision of the act or of the regulations in this 
part or upon the ground that unreasonable or exorbitant charges have 
been made for services rendered, the warehouseman involved shall be 
furnished by the Secretary, or by his designated representative, a 
written statement specifying the charges and shall be allowed a 
reasonable time within which he may answer the same in writing and apply 
for a hearing, an opportunity for which shall be afforded in accordance 
with Sec. 737.78.

[[Page 272]]



Sec. 737.8  Return of suspended or revoked license.

    If a license issued to a warehouseman terminates or is suspended or 
revoked by the Secretary or by his designated representative it shall be 
returned to the Secretary when requested. At the expiration of any 
period of suspension of such license, unless it be in the meantime 
revoked, the dates of the beginning and termination of the suspension 
shall be endorsed thereon, it shall be returned to the licensed 
warehouseman to whom it was originally issued, and it shall be posted as 
prescribed in Sec. 737.6.



Sec. 737.9  Lost or destroyed warehouse license.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof may be issued under the 
same or a new number.



Sec. 737.10  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the act and no name or description conveying the impression that 
it or he is so licensed shall be used either in a receipt or otherwise, 
unless such warehouseman holds an unsuspended and unrevoked license for 
the conduct of such warehouse.

                             Warehouse Bonds



Sec. 737.11  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the act 
shall, before such license is granted, file with the Secretary or his 
designated representative a bond containing the following conditions and 
such other terms as the Secretary or his designated representative may 
prescribe in the approved bond forms, with such changes as may be 
necessary to adapt the forms to the type of legal entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall:
    Faithfully perform during the period of 1 year commencing 
__________, or until the termination of said license(s) in the event of 
termination prior to the end of the 1-year period, all obligations of a 
licensed ware- houseman under the terms of the Act and regulations 
thereunder relating to the above-named products; and
    Faithfully perform during said 1-year period and thereafter, whether 
or not said warehouse(s) remain(s) licensed under the Act, such delivery 
obligations and further obligations as a warehouseman as exist at the 
beginning of said 1-year period or are assumed during said period and 
prior to termination of said license(s) under contracts with the 
respective depositors of such products in the warehouse(s);
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act and regulations and contracts shall 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.

[28 FR 5637, June 8, 1963. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.12  Basis of amount of bond; additional amounts.

    (a) Exclusive of any amount which may be added in accordance with 
paragraphs (b) and (c) of this section, the amount of such bond shall be 
at the rate of $5 per 1,000 pounds of the maximum number of pounds of 
tobacco that the warehouse will accommodate when stored in the manner 
customary to the warehouse, as determined by the Administrator, but not 
less than $5,000 nor more than $50,000. In case a warehouseman has 
applied for licenses to conduct two or more warehouses in the same 
State, the assets applicable to all of which shall be subject to the 
liabilities of each, and shall desire to give a single bond meeting the 
requirements of the act and the regulations in this part for the said 
warehouses, such warehouses shall be deemed to be one warehouse for the 
purposes of the bond required under Secs. 737.11 through 737.15.
    (b) In case of a deficiency in net assets under Sec. 737.5 there 
shall be added to the amount ascertained in accordance with paragraph 
(a) of this section an amount equal to such deficiency.
    (c) If the Secretary, or his designated representative finds the 
existence of conditions warranting such action, there shall be added to 
the amount

[[Page 273]]

ascertained in accordance with paragraphs (a) and (b) of this section a 
further amount, fixed by him to meet such conditions.



Sec. 737.13  Amendment to license.

    If an application is made under Sec. 737.3 for an amendment to a 
license and no bond previously filed by the warehouseman under 
Secs. 737.11 through 737.15 covers obligations arising during the period 
of such amendment, the warehouseman shall, when notice has been given by 
the Secretary, or his designated representative that his application for 
such modification or extension will be granted upon compliance by such 
warehouseman with the act, file with the Secretary, within a time, if 
any, fixed in such notice, a bond complying with the act, unless bond in 
sufficient amount has been filed since the filing of such application. 
In the discretion of the Secretary, or his designated representative, a 
properly executed instrument in form approved by him, amending, 
extending, or continuing in force and effect the obligations of a valid 
bond previously filed by the warehouseman and otherwise complying with 
the act and the regulations in this part, may be filed in lieu of a new 
bond.



Sec. 737.14  New bond required each year.

    Whenever, a license has been issued for a longer period than 1 year, 
such license shall not be effective beyond 1 year from its effective 
date unless the warehouseman shall have filed a new bond in the required 
amount with, and such bond shall have been approved by the Secretary or 
his designated representative prior to the date on which that license 
would have expired had it been issued for but 1 year, subject to the 
provisions of Sec. 737.13.



Sec. 737.15  Approval of bond.

    No bond, amendment, or continuation thereof shall be deemed accepted 
for the purposes of the act and the regulations in this part until it 
has been approved by the Secretary or his designated representative.

                           Warehouse Receipts



Sec. 737.16  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
tobacco stored in a licensed warehouse shall, in addition to complying 
with the requirements of section 18 of the act, embody within its 
written or printed terms the following: (1) The name of the warehouseman 
and the designation, if any, of the warehouse, (2) the license number of 
the warehouseman, (3) the number of the bonded compartment, if any, in 
which the tobacco is stored, (4) a statement whether the warehouseman is 
incorporated or unincorporated, and if incorporated, under what laws, 
(5) in the event the relationship existing between the warehouseman and 
any depositor is not that of strictly disinterested custodianship, a 
statement setting forth the actual relationship, (6) the identification 
number given to each package in accordance with Sec. 737.33, (7) a 
statement, conspicuously placed, indicating whether the tobacco is 
insured by the warehouseman, and, if insured, to what extent against 
loss or damage by fire, lightning, or tornado, and (8) the words 
``Negotiable'' or ``Not negotiable'', according to the nature of the 
receipt, clearly and conspicuously printed or stamped thereon.
    (b) Every receipt, whether negotiable or nonnegotiable, issued for 
tobacco stored in a warehouse shall specify a period, not exceeding 3 
years, for which the tobacco is accepted for storage under the act and 
the regulations in this part, but upon demand and the surrender of the 
receipt by the lawful holder thereof at or before the expiration of the 
specified period, the warehouseman, so far as the available capacity of 
his warehouse then permits and upon such lawful terms and conditions as 
may be granted by him at such time to other depositors of tobacco in the 
warehouse, if he then continues to act as a licensed warehouseman, may 
either extend the original receipt by making an appropriate notation 
thereon or issue a new receipt for a further specified period not 
exceeding 3 years, provided it is actually determined by a licensed 
inspector that the tobacco has

[[Page 274]]

not deteriorated and that it is in proper condition for further storage.
    (c) Every negotiable receipt issued for tobacco stored in a licensed 
warehouse shall, in addition to complying with the requirements of 
paragraphs (a) and (b) of this section, embody within its written or 
printed terms a form of indorsement which may be used by the depositor, 
or his authorized agent, for showing the ownership of, and liens, 
mortgages, or other encumbrances on the tobacco covered by the receipt.
    (d) Whenever the type, grade, form, or condition is required to be 
or is stated in a receipt for tobacco stored in a licensed warehouse, it 
shall be stated in accordance with Sec. 737.69. Whenever the grade is 
stated in such receipt, the type, form, and condition also must be 
stated.
    (e) If a warehouseman issues a receipt under the act omitting any 
information, not required to be stated, for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.17  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed or stamped thereon the words ``Copy--Not 
Negotiable.'' A copy of each receipt issued shall be retained by the 
warehouseman for a period of one year after December 31 of the year in 
which the corresponding original receipt is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.18  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, if there be no 
statute of the United States or law of a State applicable thereto, a new 
receipt upon the same terms, subject to the same conditions, and bearing 
on its face the number and the date of the receipt in lieu of which it 
is issued and a plain and conspicuous statement that it is a duplicate 
issued in lieu of a lost or destroyed receipt, may be issued upon 
compliance with the conditions set out in paragraph (b) of this section.
    (b) Before issuing such duplicate receipt the warehouseman shall 
require the depositor or other person applying therefor to make and file 
with the warehouseman: (1) An affidavit showing that he is lawfully 
entitled to the possession of the original receipt, that he has not 
negotiated or assigned it, how the original receipt was lost or 
destroyed, and, if lost, that diligent effort has been made to find the 
receipt without success, and (2) a bond in an amount double the value, 
at the time the bond is given, of the tobacco represented by the lost or 
destroyed receipt. Such bond shall be in a form approved for the purpose 
by the Secretary, or his designated representative, shall be conditioned 
to indemnify the warehouseman against any loss sustained by reason of 
the issuance of such duplicate receipt, and shall have as surety thereon 
preferably a surety company which is authorized to do business and is 
subject to service of process in a suit on the bond in the State in 
which the warehouse is located, or at least two individuals who are 
residents of such State and each of whom owns real property therein 
having a value in excess of all exemptions and encumbrances, equal to 
the amount of the bond.



Sec. 737.19  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by

[[Page 275]]

the agreement under paragraph (c) of this section.

[62 FR 33540, June 20, 1997]



Sec. 737.20  Partial delivery of tobacco.

    If a warehouseman delivers a part only of a lot of tobacco for which 
he has issued a negotiable receipt under the act, he shall take up and 
cancel such receipt and issue a new receipt in accordance with the 
regulations in this part for the undelivered portion of the tobacco. The 
new receipt shall show the date of issuance and also indicate the number 
and date of the receipt first issued.



Sec. 737.21  Return of receipts before delivery of tobacco.

    Except as permitted by law or by the regulations in this part, a 
warehouseman shall not deliver tobacco for which he has issued a 
negotiable receipt until the receipt has been returned to him and 
canceled; and shall not deliver tobacco for which he has issued a 
nonnegotiable receipt until such receipt has been returned to him or he 
has obtained from the person lawfully entitled to such delivery, or his 
authorized agent, a written acknowledgment thereof. Before delivery is 
made of the last portion of a lot of tobacco covered by a nonnegotiable 
receipt, the receipt itself shall be surrendered.



Sec. 737.22  Nonnegotiable receipts.

    Each person to whom a nonnegotiable receipt is issued shall furnish 
the warehouseman with a statement in writing indicating the person or 
persons having power to authorize delivery of tobacco covered by such 
receipt, together with the bona fide signature of such person or 
persons. No licensed warehouseman shall honor an order for the release 
of tobacco covered by a nonnegotiable receipt until he has first 
ascertained that the person issuing the order has authority to order 
such release, and that the signature of the releasing party is genuine.



Sec. 737.23  Persons authorized to sign receipts.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to sign warehouse receipts 
for the warehouseman, and shall promptly notify the Department of any 
changes as to persons authorized to sign and shall file the signatures 
of such persons, and each warehouseman shall be bound by such signatures 
the same as if he had personally signed the receipt.



Sec. 737.24  Receipts; basis for issuance.

    Before issuing any receipt under the act each warehouseman shall, 
unless he has personally weighed, inspected and graded, if graded, a lot 
of tobacco, first obtain either a copy of or the original weight 
certificate, and inspection and/or grade certificate, if any, covering 
said lot of tobacco and said weight, inspection and grade certificate 
shall be filed as a permanent record in the warehouseman's office when 
the receipt is issued. The number of the warehouse receipt issued for 
the tobacco covered by such certificate or certificates shall be written 
on the certificate or certificates before filing. Such certificates 
shall be retained, as a part of the records of the warehouse, for a 
period of three years after December 31 of the year in which the 
certificates are issued.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 29 FR 13369, Sept. 26, 1964; 
47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.25  Omission of grade; no compulsion by warehouseman.

    No licensed warehouseman shall, directly or indirectly, by any means 
whatsoever compel or attempt to compel the depositor of any tobacco 
stored in his licensed warehouse to request the issuance of a receipt 
omitting the statement of grade.

                     Duties of Licensed Warehouseman



Sec. 737.26  Insurance; requirements.

    (a) Each warehouseman, when so requested in writing by the depositor 
of or the lawful holder of the receipt for any tobacco, shall, to the 
extent to which, in the exercise of due diligence, he is able to procure 
such insurance, keep such tobacco while in his custody insured in his 
own name, or arrange for

[[Page 276]]

its insurance otherwise, to the extent so requested against loss or 
damage by fire, lightning, or tornado. When insurance is not carried in 
the warehouseman's name, the receipts shall show that the tobacco is not 
insured by him. Such insurance shall be covered by lawful policies 
issued by one or more insurance companies authorized to do such 
business, and subject to service of process in suits brought, in the 
State where the warehouse is located. If the warehouseman is unable to 
procure such insurance to the extent requested, he shall, orally or by 
telegraph or by telephone and at his own expense, immediately notify the 
person making the request. Nothing in this section shall be construed to 
prevent a warehouseman from adopting a rule that he will insure all 
tobacco.
    (b) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 737.6 and at such other place as the Administrator or 
his representative may from time to time designate, a notice stating 
briefly the conditions under which tobacco will be insured against loss 
or damage by fire, lightning, or tornado.
    (c) Each warehouseman shall promptly take such steps as may be 
necessary and proper to collect any moneys which may become due under 
contracts of insurance entered into by him upon tobacco stored in his 
warehouse, and shall, as soon as collected, promptly pay to the persons 
concerned any portion of such moneys which they may be entitled to 
receive from him.



Sec. 737.27  Duties re insurance and bonding companies.

    Each warehouseman, in accordance with his contracts with insurance 
and bonding companies for the purpose of meeting the insurance and 
bonding requirements of the regulations in this part, shall pay such 
premiums, permit such reasonable inspections and examinations, and make 
such reasonable reports as may be provided for in such contracts.



Sec. 737.28  Records; safe keeping.

    Each warehouseman shall provide a metal fireproof safe, a fireproof 
vault, or a fireproof compartment in which he shall keep, when not in 
actual use, all records, books, and papers pertaining to the licensed 
warehouse, including his current receipt books, unissued receipt blanks, 
copies of receipts issued, and canceled receipts, except that with the 
written approval of the Administrator, or his representative, upon a 
showing by such warehouseman that it is not practicable to provide such 
fireproof safe, vault, or compartment, he may keep such records, books, 
and papers in some other place of safety. Each canceled receipt shall be 
retained by the warehouseman for a period of six years after December 31 
of the year in which the receipt is canceled and for such longer period 
as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the act. 
Canceled receipts shall be arranged by the warehouseman in numerical 
order and otherwise in such manner as shall be directed, for purposes of 
audit, by authorized officers or agents of the Department of 
Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 22 FR 1629, Mar. 14, 1957; 
47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.29  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for services rendered. Before a license to conduct a warehouse is 
granted the warehouseman shall file with the Service a copy of his rules 
and a schedule of charges to be made by him if licensed. Before making 
any change in such rules or schedule of charges he shall file with the 
Service a statement in writing showing the proposed change and the 
reasons therefor. Each warehouseman shall keep exposed conspicuously in 
the place prescribed by Sec. 737.6, and at such other place, accessible 
to the public, as the Administrator or his representative may from time 
to time designate, a copy of his current rules and schedules of charges.

[[Page 277]]



Sec. 737.30  Business hours.

    (a) Each warehouse shall be kept open for the purpose of receiving 
tobacco for storage and delivering tobacco out of storage every business 
day for a period of not less than 6 hours between the hours of 8 a.m. 
and 6 p.m., except as provided in paragraph (b) of this section. The 
warehouseman shall keep conspicuously posted on the door of the public 
entrance to his office and to his warehouse a notice showing the hours 
during which the warehouse will be kept open, except when such warehouse 
is kept open continuously from 8 a.m. to 6 p.m.
    (b) In case the warehouse is not to be kept open as required by 
paragraph (a) of this section, the notice posted as prescribed in that 
paragraph shall state the period during which the warehouse is to be 
closed and the name of an accessible person, with the address where he 
may be found, who shall be authorized to deliver tobacco stored in such 
warehouse, upon lawful demand and proper compliance with the regulations 
in this part.



Sec. 737.31  Packaging tobacco.

    (a) A warehouseman shall not receive for storage in his warehouse 
any tobacco that is not properly packaged.
    (b) A warehouseman shall return to the package from which it is 
taken all the tobacco drawn for the selection of a sample, except the 
portion used for such sample.



Sec. 737.32  Clean warehouse.

    (a) Each warehouseman shall keep his warehouse clean and free from 
trash, rubbish, and scattered tobacco. He shall also exercise every 
precaution to keep his warehouse free of rats or other pests.
    (b) When in the opinion of the Administrator or his representatives 
it may appear necessary, it shall be the duty of each licensed 
warehouseman to fumigate thoroughly his licensed warehouse with such 
chemicals as may be approved by the Administrator for that purpose.



Sec. 737.33  Package identification.

    A warehouseman shall mark, stencil, or tag each package of tobacco 
received for storage in his warehouse with a number by which the 
identity of such package will be preserved. Such numbers shall be in 
numerical sequence or any series of numerical sequences approved by the 
Administrator or his representative, shall be made with some durable 
substance, and shall be clear and legible. If tags are used they shall 
be made of substantial material and securely attached to the packages.



Sec. 737.34  Package arrangement.

    (a) Each warehouseman shall arrange the packages of tobacco so that 
the identification number thereon as required by Sec. 737.33 is visible, 
readily accessible, and arranged so as to permit an accurate check 
thereof, unless waived in writing by the Administrator.
    (b) If, at any time, a warehouseman shall be offered tobacco in such 
quantity for storage so as to exceed the capacity of this warehouse, as 
shown in his license, he shall not accept such tobacco until he has 
first secured authority through an amended license, and after such 
authority has been granted the warehouseman shall continue to arrange 
the tobacco in accordance with paragraph (a) of this section.

[63 FR 60204, Nov. 9, 1998]



Sec. 737.35  Care of stock and equipment.

    Each warehouseman shall at all times, including any period of 
suspension of his license, exercise such care in regard to tobacco in 
his custody as a reasonably careful owner would exercise under the same 
circumstances and conditions. He shall see that the sprinkler or other 
fire protection equipment, if any, provided for his warehouse is 
maintained in proper working order.



Sec. 737.36  Care of other commodities.

    If, at any time, a warehouseman shall handle tobacco other than for 
storage, or shall handle or store any other commodity, he shall so 
protect the same, and otherwise exercise such care with respect to it, 
as not to endanger the tobacco in his custody as a warehouseman or 
impair his ability to meet his obligations and perform his

[[Page 278]]

duties under the act and the regulations in this part. If the 
warehouseman shall store commodities other than those for which he is 
licensed, a nonlicensed receipt shall be issued, which shall contain in 
its terms a provision that such commodities are accepted for storage 
only until such time as the space which they may occupy may be needed 
for products for the storage of which the warehouseman is licensed. 
Under no circumstances shall any commodities for the storage of which 
the warehouseman is not licensed be stored if the storage of such 
commodities might adversely affect the commercial value of, or impair 
the insurance on, tobacco covered by licensed receipts.



Sec. 737.37  Removal of tobacco in storage.

    Except as permitted by law or the regulations in this part, a 
warehouseman shall not remove any tobacco in storage from the part of 
the warehouse shown in the receipt to another part covered by the 
license, or to any other licensed warehouse, without first securing the 
receipt and indorsing on it the fact and date of such removal and making 
an identical indorsement on the copy of the original receipt. If the 
insurance on any tobacco would be affected by such removal, prior to 
removal the warehouseman shall obtain the consent in writing of the 
holder of the receipt. In the event it should be necessary for purposes 
of proper sampling and inspecting to move temporarily tobacco from the 
licensed warehouse, or licensed compartment shown on the outstanding 
receipt to another licensed warehouse or licensed compartment, removal 
for such purpose may be made without recalling the outstanding receipt 
upon compliance with the following conditions:
    (a) That such tobacco will be moved only upon specific instructions 
of the depositor of the tobacco when title to the tobacco remains in 
him, or of the holder of the receipt, such instructions to be reduced to 
writing and filed by the warehouseman with his other warehouse records. 
Said instructions shall show by marks or numbers the specific tobacco to 
be moved, the warehouse or compartment from and to which the tobacco is 
to be moved, the date of removal and upon return to the warehouse or 
compartment from which removed the warehouseman shall indicate the date 
of return.
    (b) That said tobacco so removed shall be fully covered by insurance 
against loss by fire, lightning, tornado, or theft both while in transit 
to and from the licensed warehouse or licensed compartment shown in the 
outstanding receipt and while in the warehouse in which it is being 
sampled and inspected.
    (c) That no such removal from one licensed warehouse or licensed 
compartment to another licensed warehouse or licensed compartment shall 
take place while Department examiners are engaged in making inspections 
except as the chief of the inspection party may approve.

Under no other circumstances, unless it becomes absolutely necessary to 
protect the tobacco, shall tobacco covered by receipts issued under the 
act be removed from a warehouse, except as provided in Sec. 737.21. In 
case it becomes necessary to remove tobacco from a warehouse prior to 
the surrender of the receipts, the warehouseman immediately upon such 
removal, shall notify the Service of such removal and the necessity 
therefor.



Sec. 737.38  Handling and storing; care.

    A warehouseman shall not handle or store tobacco in such a manner as 
will injure or damage the tobacco or the packages containing the 
tobacco.



Sec. 737.39  Tobacco out of condition.

    (a) If the warehouseman, with the approval of a licensed inspector 
or grader shall determine that any tobacco is deteriorating and that 
such deterioration can not be stopped, the warehouseman shall give 
immediate notice of the fact in accordance with paragraphs (b) and (c) 
of this section.
    (b) Such notice shall state: (1) The warehouse in which the tobacco 
is stored; (2) the actual condition of the tobacco as nearly as can be 
ascertained, and the reason, if known, for such condition; (3) the 
outstanding receipts covering the tobacco out of condition, giving the 
number and date of each such receipt and the type, grade, form, 
condition, and weight of

[[Page 279]]

the tobacco as stated in each such receipt; and (4) that such tobacco 
will be delivered upon the return and surrender of the receipts 
therefor.
    (c) A copy of such notice shall be delivered in person or shall be 
sent by mail (1) to the persons holding the receipts, if known to the 
warehouseman; (2) to the person who originally deposited the tobacco; 
(3) to any other persons known by the warehouseman to be interested in 
the tobacco; and (4) to the Administrator. Public notice shall also be 
given by posting a copy of such notice at the place where the 
warehouseman is required to post his license. A copy of such notice 
shall be kept as a record of the warehouse. If the holders of the 
receipts and the owners of the tobacco are known to the warehouseman and 
cannot, in the regular course of the mails, be reached within 36 hours, 
the warehouseman shall, whether or not requested so to do, also 
immediately notify such persons by telegraph or telephone at their 
expense.
    (d) Any person financially interested in any tobacco or the receipt 
covering such tobacco stored in a licensed warehouse may, in writing, 
notify the warehouseman of the fact of his interest, and such 
warehouseman shall keep a record of that fact. If such person request in 
writing that he be notified regarding the condition of any such tobacco 
and agree to pay the cost of any telegraph or telephone toll charge the 
warehouseman shall notify such person in accordance with his request.
    (e) If the tobacco advertised in accordance with the requirements of 
this section has not been removed from storage by the owner thereof 
within seven days from the date of notice of its being out of condition, 
the warehouseman in whose warehouse such tobacco is stored may sell the 
same at public auction at the expense and for the account of the owner, 
after giving seven days' notice of such proposed sale in the manner 
specified in paragraphs (b) and (c) of this section.
    (f) Nothing contained in this section shall be construed as 
relieving the warehouseman from properly caring for any tobacco after 
notification of its condition has been given in accordance with this 
section.
    (g) Records required to be kept by this section shall be retained, 
as a part of the records of the warehouse, for a period of six years 
after December 31 of the year in which created, and for such longer 
period as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 29 FR 13369, Sept. 26, 1964; 
47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.40  System of accounts.

    A warehouseman shall use for his licensed warehouse a system of 
accounts, approved for the purpose by the Administrator or his 
representative, which shall show for each package of tobacco the name of 
the depositor, the identification number mentioned in Sec. 737.33, its 
weight, type, grade, form, and condition when same is required to be or 
is ascertained, its location, the dates received and delivered out of 
storage, the receipts issued and canceled, and a separate record for 
each depositor of his tobacco, and such accounts shall include a 
detailed record of all moneys received and disbursed and of all 
insurance policies taken out and canceled. Such records shall be 
retained by the warehouseman for a period of six years after December 
31, of the year in which created, and for such longer period as may be 
necessary for the purposes of any litigation which the warehouseman 
knows to be pending, or as may be required by the Administrator in 
particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 29 FR 13369, Sept. 26, 1964; 
47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.41  Reports; copies.

    (a) Each warehouseman shall, from time to time, when requested by 
the Administrator or his representative,

[[Page 280]]

make reports, on forms prescribed and furnished for the purpose by the 
Service, concerning the condition, contents, operation, and business of 
the warehouse.
    (b) Each warehouseman shall keep on file, as a part of the records 
of the warehouse, for a period of three years after December 31 of the 
year in which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 29 FR 13369, Sept. 26, 1964; 
47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.42  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33540, June 20, 1997]



Sec. 737.43  Examination of warehouses.

    Each warehouseman shall permit any officer or agent of the 
Department, authorized by the Secretary, or his designated 
representative, for the purpose, to enter and inspect or examine, at any 
time, any warehouse for the conduct of which such warehouseman has been 
licensed, the office thereof, the books, records, papers, and accounts 
relating thereto, and the contents thereof, and such warehouseman shall 
furnish such officer or agent the assistance necessary to enable him to 
make any inspection or examination under this section.



Sec. 737.44  Weighing apparatus.

    The weighing apparatus used for ascertaining the weight stated in a 
receipt or certificate, issued for tobacco stored in a licensed 
warehouse, shall be subject to examination by any officer or agent of 
the Department employed for the purpose. If the Service shall disapprove 
such weighing apparatus, it shall not thereafter, unless such 
disapproval is withdrawn, be used in ascertaining the weight of tobacco 
for the purposes of the act and the regulations in this part.



Sec. 737.45  Licensee preferred for service.

    (a) Except as authorized by the Administrator, a warehouseman shall 
not have any tobacco stored or to be stored in his warehouse, sampled, 
inspected, graded, or weighed for the purpose of his record or receipts 
by any person not licensed under the act to perform such services, if 
there be a person so licensed for such warehouse.
    (b) When a grade or weight certificate has been issued by a grader 
or weigher and delivered to the warehouseman with the first copy of such 
certificate, the warehouseman shall fill in the identification numbers 
required in Sec. 737.33, on each certificate, and shall mail or deliver 
the original certificate to the depositor and file the copy of such 
certificate as a part of the records of the warehouse.



Sec. 737.46  Reporting fire losses.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[62 FR 33540, June 20, 1997]



Sec. 737.47  [Reserved]

                                  Fees



Sec. 737.48  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 737.49  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single

[[Page 281]]

license and adding those amounts together to determine the total due. 
The fee will be assessed and payable when the warehouse bond is 
furnished in accordance with these regulations, for acceptance by the 
Secretary and annually thereafter on the bond renewal date. The capacity 
for each identifiable location will be determined by the Secretary. The 
total capacity of all locations may not exceed the capacity stated in 
the current license. An identifiable location is a fully functional 
public warehouse as determined by the Secretary. The annual fee a 
licensed warehouseman is assessed may be adjusted by the amount 
Commodity Credit Corporation (CCC) pays, if CCC has a storage contract 
or agreement with the warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 737.50  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[46 FR 63200, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33541, June 20, 1997]



Sec. 737.51  Return of excess deposit.

    The Treasurer of the United States shall hold in his custody each 
advance deposit made under Sec. 737.50 until the fee, if any, is 
assessed and he is furnished by the Service with a statement showing the 
amount thereof and against whom assessed. Any part of such advance 
deposit which is not required for the payment of any fee assessed shall 
be returned to the party depositing the same.

[SRA, BAE 129, rev., as amended at 3 FR 1400, June 14, 1938. 
Redesignated at 50 FR 1814, Jan. 14, 1985]

          Licensed Samplers, Inspectors, Graders, and Weighers



Sec. 737.52  Applications; samplers', inspectors', graders', and weighers'.

    (a) Applications for licenses to sample, to inspect, and to grade or 
to weigh tobacco under the act shall be made to the Administrator on 
forms furnished for the purpose by him.
    (b) Each such application shall be signed by the applicant, shall be 
verified by him under oath or affirmation administered by a duly 
authorized officer, and shall contain or be accompanied by: (1) The name 
and location of a warehouse or warehouses licensed, or for which 
application for license has been made under the act in which tobacco 
sought to be sampled, inspected, graded, or weighed under such license 
is or may be stored, (2) a statement from the warehouseman conducting 
such warehouse showing whether the applicant is competent and is 
acceptable to such warehouseman for the purpose, (3) satisfactory 
evidence that he has had at least one year's experience in the kind of 
service for which a license is sought or the equivalent of such 
experience, and that he is competent to perform such services, except in 
the case of applicants for weighers' licenses one month's experience 
will be sufficient, (4) a statement by the applicant that he agrees to 
comply with and abide by the terms of the act and the regulations in 
this part so far as the same may relate to him, and (5) such other 
information as the Service may deem necessary: Provided, That when an 
application for a license to sample,

[[Page 282]]

to inspect, to grade, or to weigh tobacco is filed by a person who does 
not intend to sample, to inspect, to grade, or to weigh for any 
particular licensed warehouseman but who does intend to sample, to 
inspect, to grade, or to weigh tobacco stored or to be stored in a 
licensed warehouse and to issue certificates therefor, as provided for 
by the Act and the regulations in this part, independent of the 
warehouse receipt, issued to cover such tobacco, it shall not be 
necessary to furnish such statement as is required by paragraph (b)(2) 
of this section.
    (c) The applicant shall at any time furnish such additional 
information as the Secretary or his designated representative shall find 
to be necessary to the consideration of his application.
    (d) A single application may be made by any person for a license to 
sample, to inspect, to grade, and to weigh upon complying with all the 
requirements of this section.

[SRA, BAE 129, rev.; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 30, 
1948; 19 FR 57, Jan. 6, 1954, as amended at 41 FR 34005, Aug. 12, 1976. 
Redesignated at 50 FR 1814, Jan. 14, 1985]

    Cross Reference: For inspectors, samplers, and weighers regulations 
under the Tobacco Inspection Act, see 7 CFR 29.106 through 29.113 of 
this chapter.



Sec. 737.53  Examination.

    Each applicant for license as a sampler, inspector, grader, or 
weigher, and each sampler, inspector, grader, or weigher, whenever 
requested by an authorized agent of the Department, shall submit to an 
examination or test to show his ability properly to perform the duties 
for which he is applying for license or for which he has been licensed, 
and each such applicant, or licensee shall furnish the Service any 
information requested, at any time, in regard to his sampling, 
inspecting, grading, or weighing of tobacco.



Sec. 737.54  Posting of license.

    Each sampler, inspector, grader, or weigher shall keep his license 
conspicuously posted at the place or office where he functions as a 
sampler, inspector, grader, or weigher, or in such other place as may be 
designated for the purpose by the Service.



Sec. 737.55  Proper discharge of duties.

    Each sampler, inspector, grader, or weigher, according to the nature 
of his license, when requested shall, without discrimination, as soon as 
practicable, and upon reasonable terms, sample, inspect, grade, or weigh 
tobacco stored or to be stored in a licensed warehouse for which he 
holds a license, if such tobacco be offered to him under such conditions 
as will permit proper sampling, inspecting, grading, or weighing. Each 
such licensee shall give preference to persons who request his services 
as such other persons who request his services in any other capacity. No 
official sample shall be drawn and no inspection, grade, or weight 
certificate shall be issued under the act for tobacco not stored or to 
be stored in a licensed warehouse.



Sec. 737.56  Official samples; sample tags and seals.

    (a) Each licensed sampler shall provide himself, unless provided by 
the warehouseman, with a sufficient quantity of tags of a kind and 
quality approved by the Administrator or his representative for 
identifying the samples of tobacco drawn by him. There shall be clearly 
written or printed on the face of each tag (1) the number of the tag, 
(2) the caption ``Official Tobacco Sample Drawn under the United States 
Warehouse Act'', (3) the name and location of the licensed warehouse in 
which the tobacco is or is to be stored, (4) the identification number, 
in accordance with Sec. 737.33, of the package from which the sample was 
drawn, except when sampled before being stored, in which case the 
private number and marks of the package shall be shown and a blank space 
left for said identification number, (5) the date on which the sample 
was drawn, and (6) a statement to the effect that the sample was drawn 
by a sampler licensed in accordance with the United States Warehouse Act 
and the regulations thereunder. One such tag shall be attached to each 
official sample of tobacco so as to preserve the identity of the sample.
    (b) Each sampler shall seal each official sample of tobacco drawn by 
him so as to prevent the removal of the tag mentioned in paragraph (a) 
of this section, or the separation of the sample

[[Page 283]]

into parts without breaking the seal. Such seal shall show (1) the name 
of the sampler, (2) the license number of such sampler, and (3) the 
insignia ``U.S.W.A.''
    (c) Each official sample taken from a package of tobacco stored or 
to be stored in a licensed warehouse shall be of such size and drawn and 
prepared in such manner as may be required by the Administrator or his 
representative.



Sec. 737.57  Inspection certificate; form.

    Each inspection certificate issued under the act by an inspector 
shall be in a form approved for the purpose by the Service and shall 
embody within its written or printed terms (a) the caption ``Tobacco 
Inspection Certificate Issued under the United States Warehouse Act'', 
(b) whether it is an original, first, second, or other copy, (c) the 
number of the certificate, (d) the name and location of the warehouse in 
which the tobacco is or is to be stored, (e) the date of the 
certificate, (f) the location of the tobacco at the time of inspecting, 
(g) a blank space for the purpose of showing the identification number 
of each package of tobacco, in accordance with Sec. 737.33, (h) the 
keeping quality or condition of each package of tobacco at the time of 
inspecting, (i) a blank space designated for the purpose in which may be 
stated any condition that, in the opinion of the inspector, may affect 
the keeping quality of the tobacco, (j) that the certificate is issued 
by a licensed inspector under the United States Warehouse Act and the 
regulations thereunder, and (k) the signature of the inspector. In 
addition, the inspection certificate may include any other matter not 
inconsistent with the act or the regulations in this part, provided the 
approval of the Service is first secured.



Sec. 737.58  Grade certificate; form.

    Each grade certificate issued under the act by a grader shall be in 
a form approved for the purpose by the Service and shall embody within 
its written or printed terms (a) the caption ``Tobacco Grade Certificate 
Issued under the United States Warehouse Act'', (b) whether it is an 
original, first, second, or other copy, (c) the number of the 
certificate, (d) the name and location of the warehouse in which the 
tobacco is or is to be stored, (e) the date of the certificate, (f) the 
location of the tobacco at the time of grading, (g) a blank space for 
the purpose of showing the identification number of each package, in 
accordance with Sec. 737.33, (h) the grade, type, form, and condition of 
each package of tobacco at the time of grading, (i) the number of each 
official sample, if graded upon sample, (j) that the certificate is 
issued by a licensed grader, under the United States Warehouse Act and 
regulations thereunder, (k) a blank space designated for the purpose in 
which may be stated any general remarks on the condition of the tobacco, 
and (l) the signature of such licensed grader. In addition, the grade 
certificate may include any other matter not inconsistent with the act 
or the regulations in this part, provided the approval of the Service is 
first secured.



Sec. 737.59  Weight certificate; form.

    Each weight certificate issued under the act by a weigher shall be 
in a form approved for the purpose by the Service, and shall embody 
within its written or printed terms (a) the caption ``Tobacco Weight 
Certificate Issued under the United States Warehouse Act'', (b) whether 
it is an original, first, second, or other copy, (c) the number of the 
certificate, (d) the name and location of the warehouse in which the 
tobacco is or is to be stored, (e) the date of the certificate, (f) the 
location of the tobacco at the time of weighing, (g) a blank space for 
the purpose of showing the identification number of each package, in 
accordance with Sec. 737.33, (h) the gross, tare, and net weight of each 
package of tobacco, (i) a blank space designated for the purpose in 
which may be stated any condition that in the opinion of the weigher may 
affect the weight of the tobacco, (j) that the certificate is issued by 
a licensed weigher, under the United States Warehouse Act and the 
regulations thereunder, and (k) the signature of the weigher. In 
addition, the weight certificate may include any other matter not 
inconsistent with the act or the regulations in this part, provided the 
approval of the Service is first secured.

[[Page 284]]



Sec. 737.60  Combined certificate.

    A combined certificate of inspection, grade, and weight may be 
issued if such certificate meets all the requirements of Secs. 737.57 
through 737.61.



Sec. 737.61  Issuance of certificates.

    Each licensed inspector, grader, or weigher shall, as soon as 
possible after inspecting, grading, or weighing any tobacco stored or to 
be stored in a licensed warehouse, issue an original and a first copy 
inspection, grade, or weight certificate, as the case may be, for such 
tobacco, and deliver both the original and first copy of the certificate 
to the warehouseman, in whose warehouse the tobacco is or is to be 
stored, except, when the functions of warehouseman, inspector, grader, 
and weigher are all performed by the same person, with the approval of 
the Administrator, inspection, grade, and weight certificates need not 
be issued.



Sec. 737.62  Type, grade, form, or condition; statement.

    Whenever the type, grade, form, or condition of tobacco is required 
to be or is stated for the purposes of the act and the regulations in 
this part, it shall be stated in accordance with Secs. 737.69 through 
737.73.



Sec. 737.63  Licensees to permit and assist in examinations.

    Each sampler, inspector, grader, or weigher shall permit any 
authorized officer or agent of the Department to inspect or examine at 
any time his books, papers, records, and accounts relating to the 
performance of his duties under the act and the regulations in this 
part, and shall, when requested, assist any such officer or agent in the 
inspection or examination mentioned in Sec. 737.43, as far as any such 
inspection or examination relates to the performance of his duties as a 
licensee.



Sec. 737.64  Suspension or revocation of licenses.

    Pending investigation the Secretary or his designated representative 
may, whenever he deems necessary, suspend the license of a sampler, 
inspector, grader, or weigher temporarily without hearing. Upon a 
written request and a satisfactory statement of reasons therefor 
submitted by the licensee, or when the licensee has ceased to perform 
the services for which licensed, the Secretary or his designated 
representative may, without hearing, suspend or revoke the license 
issued to such licensee. The Secretary, or his designated representative 
may, after opportunity for hearing, when possible, has been afforded in 
the manner prescribed in this section, suspend or revoke a license 
issued to a sampler, inspector, grader, or weigher when such licensee 
has, in any manner, become incompetent or incapacitated to perform his 
duties as such licensee. As soon as it shall come to the attention of a 
licensed warehouseman that any of the conditions in this section exist, 
it shall be his duty to notify in writing the Service. Before the 
license of any sampler, inspector, grader, or weigher is permanently 
suspended or revoked, pursuant to section 12 of the act, such licensee 
shall be furnished by the Secretary or his designated representative, a 
written statement specifying the charges and shall be allowed a 
reasonable time within which he may answer the same in writing and apply 
for a hearing, an opportunity for which shall be afforded in accordance 
with Sec. 737.78.

[SRA, BAE, 129, rev.; 7 FR 6806, Aug. 29, 1942, as amended at 13 FR 
8730, Dec. 30, 1948. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.65  Return of suspended, revoked, terminated licenses.

    In case a license issued to a sampler, inspector, grader, or weigher 
is suspended or revoked by the Secretary or by his designated 
representative, such license shall be returned to the Secretary. At the 
expiration of any period of suspension of such license, unless in the 
meantime it is revoked, the dates of the beginning and termination of 
the suspension shall be indorsed thereon, it shall be returned to the 
person to whom it was originally issued, and it shall be posted as 
prescribed in Sec. 737.54. Any license issued to a sampler, inspector, 
grader, or weigher shall automatically terminate as to any warehouse 
whenever the license of such warehouse is suspended, expires, or is 
revoked, and the license of such sampler, inspector, grader, or weigher 
shall be returned to the Secretary. In case such

[[Page 285]]

license shall apply to more than one warehouse, the Secretary or his 
designated representative shall issue a new license, omitting the names 
of the warehouses for which licenses have been suspended, terminated, or 
revoked. Such new license shall be posted as prescribed in Sec. 737.54.



Sec. 737.66  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a sampler, inpector, grader, or weigher a duplicate thereof or 
a new license may be issued under the same or a new number.



Sec. 737.67  Reports.

    Each sampler, inspector, grader, or weigher shall, from time to 
time, when requested by the Department, make reports on forms furnished 
for the purpose by the Service bearing upon his activities as such 
licensee.



Sec. 737.68  Unlicensed persons; misrepresentation.

    No person shall in any way represent himself to be a sampler, 
inspector, grader, or weigher licensed under the act unless he holds an 
unsuspended or unrevoked license issued under the act.

                         Tobacco Classification



Sec. 737.69  Type, grade, form, or condition; statement.

    Whenever the type, grade, form, or condition of tobacco is required 
to be or is stated for the purposes of the act and the regulations in 
this part, it shall be stated in accordance with Secs. 737.69 through 
737.73.



Sec. 737.70  Standards to be used.

    Until such time as official tobacco standards of the United States 
are in effect, the type, grade, form, and condition of tobacco shall be 
stated: (a) In accordance with such standards, if any, as may be 
approved for the purpose by the Administrator, or his representative, or 
(b) in the absence of any such standards, in accordance with the 
standards adopted by any tobacco organization or by the tobacco trade 
generally in the locality in which the warehouse is located, subject to 
disapproval by the Administrator.



Sec. 737.71  Type, grade, form, or condition.

    Whenever the type, grade, form, or condition of tobacco is stated 
for the purposes of the act and the regulations in this part, the terms 
used shall be correctly applied and shall be so selected as not to 
convey a false impression of the tobacco. In determining the type, 
grade, form, or condition of a package of tobacco, the package as a 
whole shall be considered rather than parts of it which do not 
materially affect the value of the entire package and minor 
irregularities in the tobacco shall be overlooked.



Sec. 737.72  Type, grade, and form; statement.

    Whenever the type, grade, or form of tobacco is stated for the 
purposes of the act and the regulations in this part, it shall be based 
upon a careful and thorough examination of the package of tobacco or an 
official sample thereof. In case the tobacco in one part of a package or 
sample is inferior to that in other parts of the package or sample, the 
grade assigned to the tobacco shall be an average, considering the 
proportion that each part bears to the whole, and in case of a question 
as to which grade of two or more grades should be assigned to the 
tobacco, the lowest grade in question shall be assigned.



Sec. 737.73  Statement of condition.

    Whenever the condition of tobacco is stated for the purpose of the 
act and the regulations in this part, it shall be based upon a careful 
and thorough examination of the package of tobacco. In case any portion 
of a package of tobacco is found to be in a tangled, doubtful keeping, 
or nested condition, the condition stated for the whole package shall be 
based upon such tangled, doubtful keeping, or nested portion.

             Appeal on Sampling or Classification of Tobacco



Sec. 737.74  New receipts; expenses.

    If a question arises as to the accuracy of an official sample, or 
whether the type, grade, form, or condition of the tobacco was correctly 
stated in a

[[Page 286]]

receipt or certificate issued under the act or the regulations in this 
part, the warehouseman concerned or any person financially interested in 
the tobacco involved may, after reasonable notice to the other party, 
submit the question to such committee as the Administrator may appoint. 
The decision of the committee shall be final, unless the Administrator 
shall direct a review of the question. Immediately upon making their 
decision, the committee shall issue a certificate embodying their 
findings to the appellants and the licensee or licensees involved. If 
the decision of the committee be that the sample was not representative 
of the package of tobacco, or that the type, grade, form, or condition 
was not correctly stated, the receipt or certificate involved shall be 
returned to and canceled by the licensee who issued it and the licensee 
shall issue in lieu thereof a new receipt or certificate embodying 
therein the statement of type, grade, form, or condition in accordance 
with the findings of the committee. All necessary and reasonable expense 
of such appeal shall be borne by the losing party, unless the 
Administrator shall decide that the expense should be prorated between 
the parties.

                              Miscellaneous



Sec. 737.75  Bonds required; re State warehouses.

    Every person applying for a license or licensed under section 9 of 
the act shall, as such, be subject to all portions of the regulations in 
this part, except Sec. 737.5, so far as they may relate to warehousemen. 
If there is a law of any State providing for a system of warehouses 
owned, operated, or leased by such State, a person applying for a 
license under section 9 of the act, to accept the custody of tobacco and 
to store the same in any of said warehouses, may, in lieu of a bond or 
bonds, complying with Sec. 737.12, file with the Secretary a single bond 
meeting the requirements of the act and the regulations in this part, in 
such form, and in such amount not less than $5,000 as he shall 
prescribe, to insure the performance by such person, with respect to the 
acceptance of the custody of tobacco and its storage in the warehouses 
in such system for which licenses are or may be issued, of his 
obligations arising during the periods of such licenses, and in 
addition, if desired by the applicant, during the periods of any 
modifications or extensions thereof. In fixing the amount of such bond, 
consideration shall be given, among other appropriate factors, to the 
character of the warehouses involved, their actual or contemplated 
capacity, the bonding requirements of the State, and its liability with 
respect to such warehouses. If the Secretary shall find the existence of 
conditions warranting such action, there shall be added to the amount of 
the bond so fixed a further amount, fixed by him, to meet such 
conditions.



Sec. 737.76  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.

[62 FR 33541, June 20, 1997]



Sec. 737.77  Violations to be reported.

    Every person licensed under the act shall immediately furnish the 
Service any information which comes to the knowledge of such person 
tending to show that any provision of the act or the regulations in this 
part has been violated.



Sec. 737.78  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130 through 1.151).

[45 FR 6775, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 737.79  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report, or other paper, 
document, or proceeding relating to such warehouse,

[[Page 287]]

shall be sufficient unless otherwise directed by the Administrator.



Sec. 737.80  Assets and bond; combination warehouses.

    Where such license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the regulations applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse was used for its storage.



Sec. 737.81  Amendments.

    Any amendment to, or revision of, the regulations in this part, 
unless otherwise stated therein, shall apply in the same manner to 
persons holding licenses at the time it becomes effective as it applies 
to persons thereafter licensed under the act.



PART 738--WOOL WAREHOUSES--Table of Contents




                               Definitions

Sec.
738.1  Words in singular form.
738.2  Terms defined.

                           Warehouse Licenses

738.3  Application form.
738.4  Grounds for not issuing license.
738.5  Net assets.
738.6  Posting license.
738.7  Suspension or revocation of license.
738.8  Return of terminated, suspended, or revoked license.
738.9  Lost or destroyed warehouse license.
738.10  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

738.11  Bond required; time of filing.
738.12  Basis of amount of bond; additional amounts.
738.13  Amendment of license.
738.14  New bond required each year.
738.15  Approval of bond.

                           Warehouse Receipts

738.16  Form.
738.17  Copies of receipts.
738.18  Lost or destroyed receipts; bond.
738.19  Printing of receipts.
738.20  Grade, weight, shrinkage of commingled wool.
738.21  Cancellation of receipts; delivery of wool.
738.22  Partial delivery of wool.
738.23  Receipts; return and cancellation.
738.24  Nonnegotiable receipts.
738.25  Omission of grade; no compulsion by warehouseman.

                     Duties of Licensed Warehouseman

738.26  Method of storing wool.
738.27  Insurance; requirements.
738.28  System of accounts.
738.29  Reports; copies.
738.30  Canceled receipts; auditing.
738.31  Warehouse charges.
738.32  [Reserved]
738.33  Examination of warehouses.
738.34  Identity-preserved wool.
738.35  Arrangement of wool.
738.36  Wet or fire-damaged wool.
738.37  Care of wool and other commodities.
738.38  Warehouse to be kept clean.
738.39  Business hours.
738.40  Excess storage.
738.41  Removal of wool from warehouse.
738.42  Delivery of wool.
738.43  Signers of warehouse receipts; filing names.
738.44  Weighing apparatus; examination.
738.45  Reporting fire losses.

                                  Fees

738.46  License fees.
738.47  Warehouse annual and inspection fees.
738.48  Advance deposit.
738.49  Return of excess deposit.

                          Graders and Weighers

738.50  Applications.
738.51  Examination.
738.52  Posting of license.
738.53  Proper discharge of duties.
738.54  Grade certificate; form.
738.55  Weight certificate; form.
738.56  Combined certificate.
738.57  Copies of certificates.
738.58  Inspections.
738.59  Reports.
738.60  Suspension or revocation of licenses.
738.61  Return of suspended, revoked, terminated licenses.
738.62  Lost or destroyed licenses.
738.63  Unlicensed persons; misrepresentation.

                              Wool Grading

738.64  Statement of grades.
738.65  Wool grades; adoption; terms defined.
738.66  Examination; basis of grade.
738.67  Wool standard forms.

                               Arbitration

738.68  Wool arbitration.

                              Miscellaneous

738.69  Bonds required of State warehouses.
738.70  Publications.

[[Page 288]]

738.71  Violations to be reported.
738.72  Procedure in hearings.
738.73  One document and one license to cover several products.
738.74  Amendments.

    Authority: 7 U.S.C. 241 et seq..

    Source: 5 FR 3607, Sept. 10, 1940, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 738 appear at 62 FR 
33540, June 20, 1997.

                               Definitions



Sec. 738.1  Words in singular form.

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



Sec. 738.2  Terms defined.

    For the purposes of the regulations in this part, unless the context 
otherwise require, the following terms shall be construed, respectively, 
to mean:
    (a) The act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486; 7 U.S.C. 241-274), as amended.
    (b) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (c) 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.
    (d) Designated representative. The Administrator.
    (e) Administrator. The Administrator of the Service or any other 
officer or employee of the Service to whom authority has heretofore 
lawfully been delegated, or may hereafter lawfully be delegated, to act 
in his stead.
    (f) Department. The United States Department of Agriculture.
    (g) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (h) Regulations. Rules and regulations made under the act by the 
Secretary.
    (i) Warehouse. Any suitable building, structure, or other protected 
inclosure in which wool is or may be stored for interstate or foreign 
commerce, or, if located within any place under the exclusive 
jurisdiction of the United States, in which wool is or may be stored and 
for which a license has been issued under the act.
    (j) Warehouseman. Any person lawfully engaged in the business of 
storing wool.
    (k) License. A license issued under the act by the Secretary or his 
designated representative.
    (l) Grader. A person licensed under the act by the Secretary or his 
designated representative, to grade and to certificate the grade of wool 
stored or to be stored in a licensed warehouse.
    (m) Weigher. A person licensed under the act by the Secretary or his 
designated representative, to weigh and to certificate the weight of 
wool stored or to be stored in a licensed warehouse.
    (n) Receipt. A warehouse receipt.
    (o) Kind of wool. Grease, scoured, or pulled, and sorted or unsorted 
wool, or sorted or unsorted mohair.
    (p) State. A State, Territory, or District of the United States.

[5 FR 3607, Sept. 10, 1940, as amended at 13 FR 8729, Dec. 30, 1948. 
Redesignated and amended at 50 FR 1814, Jan. 14, 1985]

                           Warehouse Licenses



Sec. 738.3  Application form.

    Applications for licenses and amendments to licenses under the act 
shall be made to the Secretary upon forms prescribed for the purpose and 
furnished by the Service, shall be in English, shall truly state the 
information therein contained, and shall be signed by the applicant. The 
applicant shall at any time furnish such additional information as the 
Secretary or the Administrator may find to be necessary to the proper 
consideration of his application.



Sec. 738.4  Grounds for not issuing license.

    A license for the conduct of a warehouse shall not be issued if it 
be found by the Secretary, or his designated representative, that the 
warehouse is not suitable for the proper storage of wool, that the 
warehouseman is incompetent to conduct such warehouse in accordance with 
the act and the regulations in this part, or that there is any other 
sufficient reason within the intent of the act for not issuing such 
license.

[[Page 289]]



Sec. 738.5  Net assets.

    Any warehouseman conducting a warehouse licensed or for which 
application for license has been made under the act shall have and 
maintain above all exemptions and liabilities net assets liable for the 
payment of any indebtedness arising from the conduct of the warehouse, 
to the extent of at least $15 per 1,000 pounds or fraction thereof of 
the maximum number of pounds of wool that the warehouse will accommodate 
when stored in the manner customary to the warehouse as determined by 
the Administrator: Provided, That the amount of such assets shall not be 
less than $5,000 and need not be more than $100,000. If such 
warehouseman has applied for licenses to conduct two or more warehouses 
in the same State, the assets applicable to all of which shall be 
subject to the liabilities of each, such warehouses shall be deemed to 
be one warehouse for the purposes of the assets required under this 
section. For the purposes of this section only, paid-in capital stock 
shall not be considered a liability. Any deficiency in the required net 
assets may be supplied by an increase in the amount of the 
warehouseman's bond in accordance with Sec. 738.12(b).



Sec. 738.6  Posting license.

    Immediately upon receipt of his license or of any amendment thereto 
under the act, the warehouseman shall post the same, and thereafter, 
except as otherwise provided in the regulations in this part, keep it 
posted, until suspended or revoked, in a conspicuous place in the 
principal office where receipts issued by the warehouseman are delivered 
to depositors.



Sec. 738.7  Suspension or revocation of license.

    Pending investigation, the Secretary, or his designated 
representative, whenever he deems necessary, may suspend a 
warehouseman's license temporarily without hearing. Upon written request 
and a satisfactory statement of reasons therefor submitted by a 
warehouseman, the Secretary, or his designated representative may, 
without hearing, suspend or revoke the license issued to such 
warehouseman. The Secretary or his designated representative may, after 
opportunity for hearing has been afforded in the manner prescribed in 
this section, revoke a license issued to a warehouseman when such 
warehouseman (a) is bankrupt or insolvent; (b) has parted, in whole or 
in part, with his control over the warehouse; (c) is in process of 
dissolution or has been dissolved; (d) has ceased to conduct such 
licensed warehouse; or (e) has in any other manner become non-existent 
or incompetent or incapacitated to conduct the business of the 
warehouse. Whenever any of the conditions mentioned in paragraphs (a) to 
(e) of this section shall come into existence, it shall be the duty of 
the warehouseman to notify immediately the Administrator of the existing 
condition. Before a license is permanently suspended or revoked for any 
violation of, or failure to comply with, any provision of the act or of 
the regulations in this part, or upon the ground that unreasonable or 
exorbitant charges have been made for services rendered, the 
warehouseman involved shall be furnished by the Secretary, or his 
designated representative, a written statement specifying the charges 
and shall be allowed a reasonable time within which he may answer the 
same in writing and apply for a hearing, an opportunity for which shall 
be afforded in accordance with Sec. 738.72.



Sec. 738.8  Return of terminated, suspended, or revoked license.

    When a license issued to a warehouseman terminates or is suspended 
or revoked by the Secretary or his designated representative, it shall 
be returned to the Secretary. At the expiration of any period of 
suspension of such license, unless it be in the meantime revoked, the 
dates of the beginning and termination of the suspension shall be 
indorsed thereon, it shall be returned to the warehouseman to whom it 
was originally issued, and it shall be posted as prescribed in 
Sec. 738.6: Provided, That in the discretion of the Secretary or his 
designated representative a new license may be issued without reference 
to the suspension.

[[Page 290]]



Sec. 738.9  Lost or destroyed warehouse license.

    Upon satisfactory evidence of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof may be issued under the 
same number.



Sec. 738.10  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman or any other person shall be 
designated or represented as licensed under the act, and no name or 
description conveying the impression that it or he is so licensed shall 
be used, either in a receipt or otherwise, unless such person or 
warehouseman holds an unsuspended and unrevoked license for the conduct 
of such warehouse.

                             Warehouse Bonds



Sec. 738.11  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the act 
shall, before such license is granted, file with the Secretary or his 
designated representative a bond containing the following conditions and 
such other terms as the Secretary or his designated representative may 
prescribe in the approved bond forms, with such changes as may be 
necessary to adapt the forms to the type of legal entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall:
    Faithfully perform during the period of 1 year commencing 
__________, or until the termination of said license(s) in the event of 
termination prior to the end of the 1 year period, all obligations of a 
licensed warehouseman under the terms of the act and regulations 
thereunder relating to the above-named products; and
    Faithfully perform during said 1 year period and thereafter, whether 
or not said warehouse(s) remain(s) licensed under the Act, such delivery 
obligations and further obligations as a warehouseman as exist at the 
beginning of said 1 year period or are assumed during said period and 
prior to termination of said license(s) under contracts with the 
respective depositors of such products in the warehouse(s);
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the act and regulations and contracts shall 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.

[28 FR 5637, June 8, 1963. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 738.12  Basis of amount of bond; additional amounts.

    (a) Exclusive of any amount which may be added in accordance with 
paragraphs (b) and (c) of this section, the amount of such bond shall be 
at the rate of $15 per 1,000 pounds or fraction thereof of the maximum 
number of pounds of wool that the warehouse will accommodate when stored 
in the manner customary to the warehouse for which such bond is 
required, as determined by the Administrator but not less than $5,000 
nor more than $50,000. If such warehouseman has applied for licenses to 
conduct two or more warehouses in the same State, the assets applicable 
to all of which shall be subject to the liabilities of each, and shall 
desire to give a single bond meeting the requirements of the act and the 
regulations in this part for the said warehouses, such warehouses shall 
be deemed to be one warehouse for the purposes of the bond required 
under Secs. 738.11 through 738.15.
    (b) In case of a deficiency in net assets as required by Sec. 738.5, 
there shall be added to the amount of the bond fixed in accordance with 
paragraph (a) of this section, an amount equal to such deficiency.
    (c) If the Secretary or his designated representative finds the 
existence of conditions warranting such action, there shall be added to 
the amount fixed in accordance with paragraphs (a) and (b) of this 
section a further amount fixed by him to meet such conditions.



Sec. 738.13  Amendment of license.

    If application is made under Sec. 738.3 for an amendment of a 
license, and no bond previously filed by the warehouseman under 
Secs. 738.11 through 738.15 covers obligations arising under such 
amendment, the warehouseman shall, when notice has been given by the 
Secretary, or his designated representative, that such amendment will be 
granted upon compliance by such warehouseman with the act, file with the

[[Page 291]]

Secretary, within a time, if any, fixed in such notice a bond complying 
with the act, unless bond in sufficient amount has been filed since the 
filing of such application. In the discretion of the Secretary, or his 
designated representative, a properly executed instrument in form 
approved by him, amending, extending, or continuing in force and effect 
the obligations of a valid bond previously filed by the warehouseman and 
otherwise complying with the act and the regulations in this part may be 
filed in lieu of a new bond.



Sec. 738.14  New bond required each year.

    Whenever a license has been issued for a period longer than 1 year, 
such license shall not be effective beyond 1 year from its effective 
date unless the warehouseman shall have filed a new bond in the required 
amount with, and such bond shall have been approved by, the Secretary or 
his designated representative, prior to the date on which that license 
would have expired had it been issued for but 1 year, subject to the 
provisions of Sec. 738.13.



Sec. 738.15  Approval of bond.

    No bond, amendment, or continuation thereof shall be deemed accepted 
for the purposes of the act and the regulations in this part until it 
has been approved by the Secretary or his designated representative.

                           Warehouse Receipts



Sec. 738.16  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
wool stored in a warehouse, shall, in addition to complying with the 
requirements of section 18 of the act, embody within its written or 
printed terms of the following:
    (1) The name of the warehouseman and the designation, if any, of the 
warehouse; (2) the number of the license issued to the warehouseman (3) 
a statement whether the warehouseman is incorporated or unincorporated, 
and, if incorporated, under what laws; (4) in the event the relationship 
existing between the warehouseman and any depositor is not that of 
strictly disinterested custodianship, a statement setting forth the 
actual relationship; (5) a statement, conspicuously placed, whether the 
wool is insured by the warehouseman and, if insured, to what extent and 
whether against fire, lightning, or otherwise; (6) the kind of wool; (7) 
a blank space designated for the purpose in which, if the wool is not 
commingled, a careful estimate of the shrinkage of the wool may be 
stated, or in which, if the wool is commingled, a careful estimate of 
the shrinkage of the wool shall be stated; (8) if the wool is not 
commingled, its identification in accordance with Sec. 738.34; (9) if 
the wool is commingled, a clear and conspicuous notation to that effect, 
and the designation of the lot or pile of which it is a part on the face 
of the receipt; and (10) the words ``Negotiable'' or ``Nonnegotiable'' 
and ``Original'' or ``Copy'' according to the nature of the receipt, 
clearly and conspicuously printed thereon.
    (b) Every receipt, whether negotiable or nonnegotiable, issued for 
wool stored in a warehouse shall specify a period, not exceeding 1 year, 
for which the wool is accepted for storage under the act and the 
regulations in this part. Upon demand and surrender of the old receipt, 
by the lawful holder thereof, at or before the expiration of the 
specified period, and cancelation of the receipt, the warehouseman, upon 
such lawful terms and conditions as he may grant at such time to other 
depositors of wool in his warehouse, if he then continues to act as a 
licensed warehouseman, shall issue a new receipt for a further specified 
period not exceeding 1 year and shall indicate thereon the date when the 
wool was first received.
    (c) Every negotiable receipt issued for wool stored in a warehouse 
shall, in addition to complying with the requirements of paragraph (a) 
of this section, embody within its written or printed terms the 
following: (1) If the wool covered by such receipt was graded by a 
licensed grader or weighed by a licensed weigher, a statement to that 
effect; (2) a form of indorsement which may be used by the depositor or 
the lawful holder of the receipt, or the authorized agent of either, for 
showing the ownership of, and liens, mortgages, or other encumbrances 
on, the wool covered by the receipt.

[[Page 292]]

    (d) Whenever the grade is stated in a receipt issued for wool stored 
in a warehouse, such grade shall be stated in accordance with 
Secs. 738.64 through 738.67.
    (e) If a warehouseman issues a receipt omitting the statement of 
grade on request of the depositor, as permitted by section 18 of the 
act, such receipt shall have clearly and conspicuously stamped or 
written on the face thereof the words ``Not graded on request of 
depositor.''
    (f) If a warehouseman issues a receipt under the act omitting any 
information not required to be stated, and for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made by the warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[5 FR 3607, Sept. 10, 1940; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 
30, 1948; 19 FR 57, Jan. 6, 1954, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 738.17  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed or stamped thereon the words ``Copy--Not 
Negotiable.'' A copy of each receipt issued shall be retained by the 
warehouseman for a period of one year after December 31 of the year in 
which the corresponding original receipt is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 738.18  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, if there be no 
statute of the United States or a law of a State applicable thereto, a 
new receipt upon the same terms, subject to the same conditions, and 
bearing on its face the number and the date of the receipt in lieu of 
which it is issued and a plain and conspicuous statement that it is a 
duplicate issued in lieu of a lost or destroyed receipt, may be issued 
upon compliance with the conditions set out in paragraph (b) of this 
section.
    (b) Before issuing such new or duplicate receipt the warehouseman 
shall require the depositor or other person applying therefor to make 
and file with the warehouseman:
    (1) An affidavit showing that he is lawfully entitled to the 
possession of the orginal receipt, that he has not negotiated or 
assigned it, how the original receipt was lost or destroyed, and if 
lost, that diligent effort has been made to find the receipt without 
success, and (2) a bond in an amount double the value at the time the 
bond is given of the wool represented by the lost or destroyed receipt. 
Such bond shall be in a form approved for the purpose by the Secretary 
or his designated representative, shall be conditioned to indemnify the 
warehouseman against any loss sustained by reason of the issuance of 
such duplicate receipt, and shall have as surety thereon preferably a 
surety company which is authorized to do business, and is subject to 
service of process in a suit on the bond, in the State in which the 
warehouse is located, or at least two individuals who are residents of 
such State and each of whom owns real property therein having a value, 
in excess of all exemptions and encumbrances, equal to the amount of the 
bond.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[5 FR 3607, Sept. 10, 1940; 7 FR 6806, Aug. 29, 1942; 13 FR 8731, Dec. 
30, 1948; 19 FR 57, Jan. 6, 1954, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]

    Cross Reference: For surety companies authorized to do business with 
the United States, see 31 CFR part 223.



Sec. 738.19  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by

[[Page 293]]

the agreement under paragraph (c) of this section.

[62 FR 33541, June 20, 1997]



Sec. 738.20  Grade, weight, shrinkage of commingled wool.

    The grade, weight, and approximate shrinkage stated in a receipt for 
wool that is or is to be commingled shall be as determined by a grader 
and weigher duly licensed to grade and weigh and to certificate the 
grade and weight thereof under the act and the regulations in this part.



Sec. 738.21  Cancellation of receipts; delivery of wool.

    Except as otherwise provided in the regulations in this part all 
receipts shall be canceled by the warehouseman when the wool covered by 
such receipts is to be delivered, is to be graded, sorted, or scoured, 
or its identity is to be disturbed in any manner.



Sec. 738.22  Partial delivery of wool.

    If a warehouseman delivers a part only of a lot of wool for which he 
has issued a negotiable receipt, he shall take up and cancel such 
receipt and issue a new receipt in accordance with the regulations in 
this part for the undelivered portion of the wool.



Sec. 738.23  Receipts; return and cancellation.

    Except as permitted by law or by the regulations in this part a 
warehouseman shall not deliver wool for which he has issued a negotiable 
receipt until such receipt has been returned to him and canceled, and 
shall not deliver wool for which he has issued his nonnegotiable receipt 
until such receipt has been returned to him or he has obtained from the 
person lawfully entitled to such delivery or his authorized agent a 
written order for delivery and a signed acknowledgment thereof. Such 
order shall specify the receipt involved, the grade of the wool if 
stated on the receipt, and the amount of wool to be delivered.



Sec. 738.24  Nonnegotiable receipts.

    Each person to whom a nonnegotiable receipt is issued or the holder 
thereof shall furnish the warehouseman with a statement in writing 
indicating the person or persons having power to authorize delivery of 
wool covered by such receipt together with the genuine bona fide 
signature of such person or persons. No licensed warehouseman shall 
honor an order for the release of wool covered by a nonnegotiable 
receipt until he has first ascertained that the person issuing the order 
has authority to order such release and that the signature of the 
releasing party is genuine.



Sec. 738.25  Omission of grade; no compulsion by warehouseman.

    No licensed warehouseman shall, directly or indirectly by any means 
whatsoever, compel or attempt to compel the depositor of any wool in his 
warehouse to request the issuance of a receipt omitting the statement of 
grade.

                     Duties of Licensed Warehouseman



Sec. 738.26  Method of storing wool.

    (a) Each warehouseman shall, subject to the provisions of section 13 
of the act, receive for storage in his warehouse all wool offered for 
storage the identity of which is to be preserved during the storage 
period, and also, if he so elects, as provided elsewhere in this part, 
all wool which is to be commingled. Each warehouseman who has elected to 
store in his warehouse wool which is to be commingled shall, when so 
requested in writing as to any wool by the depositor thereof, mingle 
such wool with other wool, if any, of the same kind, grade, and 
approximate shrinkage: Provided, That no wool may be commingled for 
which a receipt is outstanding unless the receipt clearly indicates that 
such wool is or is to be commingled. No warehouseman shall commingle 
with wool belonging to any depositor wool which is owned by him solely, 
jointly, or in common with others.
    (b) Before making any change in his policy as to whether he will 
store in his warehouse wool which is to be commingled, each warehouseman 
shall file with the Administrator a statement in writing showing the 
proposed change, the effective date thereof, and the reasons therefor.

[[Page 294]]



Sec. 738.27  Insurance; requirements.

    (a) Each warehouseman, when so requested in writing as to any wool 
by the depositor thereof or lawful holder of the receipt covering such 
wool, shall, to the extent to which in the exercise of due diligence he 
is able to procure such insurance, keep such wool while in his custody 
as a warehouseman insured in his own name or arrange for its insurance 
otherwise to the extent so requested against loss or damage by fire or 
lightning. When insurance is not carried in the warehouseman's name the 
receipts shall show that the wool is not insured by the warehouseman. 
Such insurance shall be covered by lawful policies issued by one or more 
insurance companies authorized to do such business and subject to 
service of process in suits brought in the State where the warehouse is 
located. If the warehouseman is unable to procure such insurance to the 
extent requested, he shall, orally, or by telegraph, or by telephone 
immediately notify the person making the request of the fact. Nothing in 
this section shall be construed to prevent the warehouseman from 
adopting a rule that he will insure all wool stored in his warehouse.
    (b) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 738.6 and at such other place as the Administrator or 
his representative may from time to time designate, a notice stating 
briefly the conditions under which the wool will be insured against loss 
or damage by fire or lightning.
    (c) Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of the regulations in this part, pay such 
premiums, permit such reasonable inspections and examinations, and make 
such reasonable reports as may be provided for in such contracts.
    (d) Each warehouseman shall promptly take such steps as may be 
necessary and proper to collect any moneys which may become due under 
contracts of insurance entered into by him for the purpose of meeting 
the requirements of the regulations in this part, and shall, as soon as 
collected, promptly pay over to the persons concerned any portion of 
such moneys which they may be entitled to receive from him.



Sec. 738.28  System of accounts.

    (a) Each warehouseman shall use for his warehouse a system of 
accounts, approved for the purpose by the Department, which shall show 
for each lot of wool received, its weight, the number of bags or bales, 
its grade when its grade is required to be, or is, ascertained, its 
location in the warehouse, the dates received for and delivered out of 
storage, the receipt issued and canceled, and a separate record for each 
depositor of wool, and such accounts shall include a detailed report of 
all moneys received and disbursed and of all insurance policies taken 
out and canceled. In addition, for wool the identity of which is to be 
preserved, the accounts shall show its identification in accordance with 
Sec. 738.34, and for wool the identity of which is not preserved the 
accounts shall show the designation of the lot or pile of which it is a 
part and the estimate of the shrinkage of such wool stated on the 
receipt therefor. Such records shall be retained by the warehouseman for 
a period of six years after December 31 of the year in which created, 
and for such longer period as may be necessary for the purposes of any 
litigation which the warehouseman knows to be pending, or as may be 
required by the Administrator in particular cases to carry out the 
purposes of the Act.
    (b) Each warehouseman shall provide a metal fireproof safe, a 
fireproof vault, or a fireproof compartment in which he shall keep, when 
not in actual use, all records, books, and papers pertaining to the 
warehouse, including his current receipt book, copies of receipts 
issued, and canceled receipts, except that, with the written approval of 
the Department upon a showing by such warehouseman that it is not 
practicable to provide such fireproof safe, vault, or compartment, he 
may keep such records, books, and papers in some other place of safety 
approved by the Administrator or his representatives. Each canceled 
receipt shall be retained by the warehouseman for a period of six years 
after December 31 of

[[Page 295]]

the year in which the receipt is canceled and for such longer period as 
may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the act. 
Canceled receipts shall be arranged by the warehouseman in numerical 
order and otherwise in such manner as shall be directed, for purposes of 
audit, by authorized officers or agents of the Department of 
Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[5 FR 3607, Sept. 10, 1940, as amended at 22 FR 1629, Mar. 14, 1957; 29 
FR 13369, Sept. 26, 1964; 47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 
1814, Jan. 14, 1985]



Sec. 738.29  Reports; copies.

    (a) Each warehouseman shall from time to time make such reports as 
the Administrator or his representative may require, on forms furnished 
for the purpose by the Service, concerning the condition, contents, 
operation, and business of the warehouse.
    (b) Each warehouseman shall keep on file, as a part of the records 
of the warehouse, for a period of three years after December 31 of the 
year in which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part. Copies of grade and 
weight certificates as are required to be filed by him by Sec. 738.57 
shall be retained, as a part of the records of the warehouse, for a 
period of one year after December 31 of the year in which the receipt 
based on such certificates is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[5 FR 3607, Sept. 10, 1940, as amended at 29 FR 13369, Sept. 26, 1964; 
47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 738.30  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33541, June 20, 1997]



Sec. 738.31  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for services rendered. Before a license to conduct a warehouse is 
granted the warehouseman shall file with the Service a copy of his rules 
and a schedule of charges to be made by him if licensed. Before making 
any change in such rules or schedule of charges he shall file with the 
Service a statement in writing showing the proposed change and the 
reasons therefor. Each warehouseman shall keep exposed conspicuously, in 
the place prescribed by Sec. 738.6 and at such other place, accessible 
to the public, as the Department may from time to time designate, a copy 
of his current rules and schedule of charges.



Sec. 738.32  [Reserved]



Sec. 738.33  Examination of warehouses.

    Each warehouseman shall permit any officer or agent of the 
Department, authorized by the Secretary, or his designated 
representative, for the purpose, to enter and inspect or examine at any 
time any warehouse for the conduct of which such warehouseman holds a 
license, the office thereof, the books, records, papers, and accounts 
relating thereto, and the contents thereof, and shall furnish such 
officer or agent the assistance necessary to enable him to make any such 
inspection or examination under this section.



Sec. 738.34  Identity-preserved wool.

    Upon the acceptance by a warehouseman for storage in his warehouse 
of any lot of wool, the identity of which is to be preserved, he shall 
store, or cause to be stored, such wool in an individual section or 
space designated by lot numbers, or by letters, or other clearly 
distinguishing words or signs, permanently and securely affixed thereto, 
or shall so mark the container or containers of such wool or so place 
the wool in the warehouses that its identity will not be lost during the 
storage period.



Sec. 738.35  Arrangement of wool.

    Each warehouseman shall arrange the bags or bales of wool in his 
warehouse so that each lot can be identified

[[Page 296]]

and the bags or bales in each lot readily checked. If tiered the bags or 
bales may be stored in double rows but one end of each bag so tiered 
shall face an aisle. Bulk wool shall be so stored that it may readily be 
measured and the quantity therein estimated. To each lot whether of 
bagged, baled, or bulk wool shall be secured a tag, which shall always 
be accessible and plainly visible, showing the lot or pile number and 
the number of bags or bales and, if bulk wool, the pounds of wool 
therein. For any wool which has been temporarily removed from a lot for 
display, sampling, or other purposes proper notation shall be made on 
the reverse side of the lot tag showing the quantity so removed and its 
location. Such notation shall be stricken out upon the return of the 
wool to its lot.



Sec. 738.36  Wet or fire-damaged wool.

    A warehouseman shall not store any wool that is excessively wet in 
contact with any other wool in the warehouse. A warehouseman shall not 
store in the same compartment with wool that has not been damaged by 
fire any bag or lot of wool that has been damaged by fire until the 
fire-damaged wool has been removed from the bag or lot, and then he 
shall not store it in contact with wool that has not been so damaged.



Sec. 738.37  Care of wool and other commodities.

    (a) Each warehouseman shall at all times, including any period of 
suspension of his license, exercise such care in regard to wool in his 
custody as a reasonably careful owner would exercise under the same 
circumstances and conditions. The warehouseman shall not handle or store 
wool in such manner as may tend to injure or damage the wool.
    (b) If, at any time, a warehouseman shall handle or receive wool 
otherwise than as a licensed warehouseman, or shall handle or store any 
other commodity, he shall so protect the same and otherwise exercise 
such care with respect to it as not to endanger the wool in his custody 
as a licensed warehouseman or impair the insurance thereon or his 
ability to meet his obligations and perform his duties under the act and 
the regulations in this part.



Sec. 738.38  Warehouse to be kept clean.

    Each warehouseman shall keep his warehouse clean and free from 
trash, dust, rubbish, and scattered wool. He shall also exercise every 
precaution to keep his warehouse free of moths and other pests.



Sec. 738.39  Business hours.

    (a) Each warehouse shall be kept open for the purpose of receiving 
wool for storage and delivering wool out of storage every business day, 
excepting Saturdays when the period may be shorter, for a period of not 
less than 6 hours between the hours of 8 a.m. and 6 p.m., except as 
provided in paragraph (b) of this section.
    (b) If the warehouse is not kept open regularly as required in 
paragraph (a) of this section, the warehouseman shall keep conspicuously 
posted on the door of the public entrance to his office and to his 
warehouse a notice showing the hours during which the warehouse will be 
kept open and the name of an accessible person, with the address where 
he is to be found, who shall be authorized to deliver wool stored in 
such warehouse, upon lawful demand by the depositor thereof or the 
holder of the receipt therefor.



Sec. 738.40  Excess storage.

    If at any time a warehouseman is offered wool in such quantity that 
to store it would result in exceeding his licensed capacity, he shall so 
arrange the wool as not to obstruct free access thereto and the proper 
use of sprinkler or other fire protection equipment provided for such 
warehouse and shall immediately apply to the Administrator to have the 
licensed capacity increased. Until such increase is granted, no receipt 
shall be issued for such wool.



Sec. 738.41  Removal of wool from warehouse.

    Unless it becomes absolutely necessary to protect the wool, no wool 
covered by receipts issued under the act shall be removed from a 
warehouse, except as provided in Sec. 738.42, and immediately upon any 
such removal the

[[Page 297]]

warehouseman shall notify the Administrator of such removal and the 
necessity therefor.



Sec. 738.42  Delivery of wool.

    Except as may be provided by law or by the regulations in this part, 
each warehouseman (a) upon proper presentation of a receipt for 
commingled wool and upon payment or tender of all advances and legal 
charges shall deliver to the lawful holder of such receipt wool of the 
kind, grade, quantity, and approximate shrinkage named in such receipt 
or in the grade certificate covering the particular lot of wool 
specified by the receipt, and (b) upon proper presentation of a receipt 
for any wool, the identity of which was to be preserved during the 
storage period, and upon payment or tender of all advances and legal 
charges, shall deliver to the person lawfully entitled thereto the 
identical wool so stored in his warehouse.



Sec. 738.43  Signers of warehouse receipts; filing names.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to sign warehouse receipts 
for the warehouseman, and shall promptly notify the Department of any 
changes as to person authorized to sign and shall file the signatures of 
such persons, and each warehouseman shall be bound by such signatures 
the same as if he had personally signed the receipt.



Sec. 738.44  Weighing apparatus; examination.

    Any weighing apparatus used for ascertaining the weight stated in a 
receipt or certificate issued for wool stored in a warehouse shall be 
subject to examination by any officer or agent of the Department. If the 
Department shall disapprove any such weighing apparatus, it shall not 
thereafter, unless such disapproval be withdrawn, be used in 
ascertaining the weight of any wool for the purposes of the act and the 
regulations in this part.



Sec. 738.45  Reporting fire losses.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[62 FR 33541, June 20, 1997]

                                  Fees



Sec. 738.46  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 738.47  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The fee will be assessed 
and payable when the warehouse bond is furnished in accordance with 
these regulations, for acceptance by the Secretary and annually 
thereafter on the bond renewal date. The capacity for each identifiable 
location will be determined by the Secretary. The total capacity of all 
locations may not exceed the capacity stated in the current license. An 
identifiable location is a fully functional public warehouse as 
determined by the Secretary. The annual fee a licensed warehouseman is 
assessed may be adjusted by the amount Commodity Credit Corporation 
(CCC) pays, if CCC has a storage contract or agreement with the 
warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.

[[Page 298]]

    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 738.48  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[46 FR 63200, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33541, June 20, 1997]



Sec. 738.49  Return of excess deposit.

    The Treasurer of the United States shall hold in a special deposit 
account each advance deposit made under Sec. 738.48 until the fee, if 
any, is assessed and he is furnished by the Service with a statement 
showing the amount thereof and against whom assessed. Any part of such 
advance deposit which is not required for the payment of any fee 
assessed shall be returned to the party depositing the same.

                          Graders and Weighers



Sec. 738.50  Applications.

    (a) Applications for licenses to grade or to weigh wool under the 
act shall be made to the Department on forms furnished for the purpose.
    (b) Each such application shall be signed by the applicant, shall be 
verified by him under oath or affirmation administered by a duly 
authorized officer, and shall contain or be accompanied by (1) the name 
and location of the warehouse or warehouses licensed, or for which 
application for license has been made, under the act, in which wool 
sought to be graded or weighed under such license is or may be stored; 
(2) a statement from the warehouseman conducting such warehouse showing 
whether the applicant is competent and is acceptable to such 
warehouseman for the purpose; (3) satisfactory evidence that he is 
competent to perform the kind of service for which a license is sought; 
(4) a statement by the applicant that he agrees to comply with and abide 
by the terms of the act and the regulations so far as the same may 
relate to him; and (5) such other information as the Department may deem 
necessary.
    (c) A single application may be made by any person for a license to 
grade and weigh upon complying with the requirements of this section.



Sec. 738.51  Examination.

    Each applicant for a license as a grader or weigher and each grader 
or weigher shall, whenever requested by an authorized agent of the 
Department designated by the Administrator for the purpose, submit to an 
examination or test to show his ability properly to perform the duties 
of a licensed grader or weigher.



Sec. 738.52  Posting of license.

    Each grader or weigher shall keep his license conspicuously posted 
in the office of the warehouse where most of the grading or weighing is 
done.



Sec. 738.53  Proper discharge of duties.

    Each grader and each weigher, when requested, shall, without 
discrimination, as soon as practicable, and upon reasonable terms, grade 
or weigh and certificate the grade or weight of wool stored or to be 
stored in a warehouse for which he holds a license, if such wool be 
offered to him under such conditions as permit proper grading or 
weighing and the determination of the grade or weight thereof. In every 
case when the graded wool is to be commingled the grader shall make a 
careful estimate of its shrinkage. Each such grader or weigher shall 
give preference to persons who request his services as such over persons 
who request his services in any other capacity. No grade certificate or 
weight certificate shall be issued under the act for wool not stored or 
not to be stored in a licensed warehouse.

[[Page 299]]



Sec. 738.54  Grade certificate; form.

    Each grade certificate issued under the act by a grader shall be in 
a form approved for the purpose by the Department, and shall embody 
within its written or printed terms: (a) The caption ``United States 
Warehouse Act, Wool Grade Certificate''; (b) whether it is an original, 
a duplicate, or other copy; (c) the name and location of the warehouse 
in which the wool is or is to be stored; (d) the date of the 
certificate; (e) the location of the wool at the time of grading; (f) 
the designation of the lot from which the wool was taken; (g) if the 
wool is not to be commingled, its identification in accordance with 
Sec. 738.34; (h) The consecutive number of the certificate; (i) the 
pounds of each grade of wool covered by the certificate; (j) a blank 
space designated for the purpose in which, if the identity of the wool 
is to be preserved, a careful estimate of the shrinkage of the wool may 
be stated or in which, if the wool is to be commingled, a careful 
estimate of the shrinkage of the wool shall be stated; (k) the grade of 
the wool as determined by such grader in accordance with Secs. 738.64 
through 738.67; (l) the lot or pile number assigned to the grade; (m) 
the kind of wool (n) that the certificate is issued by a licensed grader 
under the United States Warehouse Act and the regulations thereunder; 
and (o) the signature of the grader who graded the wool. In addition the 
grade certificate may include any other matter not inconsistent with the 
Act or the regulations in this part, provided the approval of the 
Service is first secured.



Sec. 738.55  Weight certificate; form.

    Each weight certificate issued under the act by a weigher shall be 
in a form approved for the purpose by the Department and shall embody 
within its written or printed terms: (a) The caption ``United States 
Warehouse Act, Wool Weight Certificate''; (b) whether it is an original, 
a duplicate, or other copy; (c) the name and location of the warehouse 
in which the wool is or is to be stored; (d) the date of the 
certificate; (e) if the identity of the wool is to be preserved its 
identification in accordance with Sec. 738.34; (f) the consecutive 
number of the certificate; (g) the weight of the wool and, if the wool 
be excessively wet or otherwise of a condition materially affecting its 
weight, a statement of such fact; (h) that the certificate is issued by 
a licensed weigher, under the United States Warehouse Act and the 
regulations thereunder; and (i) the signature of such weigher. In 
addition the weight certificate may include any other matter not 
inconsistent with the act or the regulations in this part, provided the 
approval of the Service is first secured.



Sec. 738.56  Combined certificate.

    The grade and weight of any wool, ascertained by a grader and 
weigher, may be stated on a certificate meeting the combined 
requirements of Secs. 738.54 and 738.55, if the form of such certificate 
shall have been approved for the purpose by the Department.



Sec. 738.57  Copies of certificates.

    Each grader and each weigher shall keep for a period of 1 year in a 
place accessible to persons financially interested, a copy of each 
certificate issued by him under the regulations in this part and shall 
file a copy of each such certificate with the warehouse in which the 
wool covered by the certificate is stored.



Sec. 738.58  Inspections.

    Each grader and each weigher shall permit any duly authorized 
officer or agent of the Department to inspect or examine, on any 
business day during the usual hours of business, his books, papers, 
records, and accounts relating to the performance of his duties under 
the act and the regulations in this part, and shall, with the consent of 
the warehouseman concerned, assist any such officer or agent in the 
inspection or examination mentioned in Sec. 738.33, as far as any such 
inspection or examination relates to the performance of his duties as a 
licensed grader or licensed weigher.



Sec. 738.59  Reports.

    Each grader and each weigher shall, from time to time, when 
requested by the Department, make reports on forms furnished for the 
purpose by the Service bearing upon his activities as such grader or 
weigher.

[[Page 300]]



Sec. 738.60  Suspension or revocation of licenses.

    Pending investigation, the Secretary, or his designated 
representative, may, whenever he deems necessary, suspend the license of 
a grader or weigher temporarily without hearing. Upon a written request 
and a satisfactory statement of reasons therefor submitted by the 
licensee, or when the licensee has ceased to perform the services for 
which licensed, the Secretary, or his designated representative, may 
without hearing, suspend or revoke the license issued to such licensee. 
The Secretary, or his designated representative, may, after opportunity 
for hearing has been afforded in the manner prescribed in this section, 
suspend or revoke a license issued to a grader or weigher when such 
licensee has, in any manner, become incompetent or incapacitated to 
perform his duties as such licensee. As soon as it shall come to the 
attention of a licensed warehouseman that any of the conditions in this 
section exist, it shall be his duty to notify in writing the 
Administrator. Before the license of any grader or weigher is 
permanently suspended or revoked pursuant to section 12 of the act, such 
licensee shall be furnished by the Secretary, or by his designated 
representative, a written statement specifying the charges and shall be 
allowed a reasonable time within which he may answer the same in writing 
and apply for a hearing, an opportunity for which shall be afforded in 
accordance with Sec. 738.72.



Sec. 738.61  Return of suspended, revoked, terminated licenses.

    (a) In case a license issued to a grader or weigher is suspended or 
revoked by the Secretary, or his designated representative, such license 
shall be returned to the Secretary. At the expiration of any period of 
suspension of such license, unless in the meantime it be revoked, the 
dates of the beginning and termination of the suspension shall be 
indorsed thereon, it shall be returned to the grader or weigher to whom 
it was originally issued, and it shall be posted as prescribed in 
Sec. 738.52.
    (b) Any license issued under the act and the regulations in this 
part to a grader or weigher shall automatically terminate as to any 
warehouse whenever the license of such warehouse shall expire or be 
suspended or revoked. Thereupon the license of such grader or weigher 
shall be returned to the Secretary. In case such license shall apply to 
other warehouses, the Secretary, or his designated representative, shall 
issue to him a new license, omitting the names of the warehouses the 
licenses of which have been suspended or revoked. Such new license shall 
be posted as prescribed in Sec. 738.52.



Sec. 738.62  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a grader or weigher, a duplicate thereof may be issued under 
the same number.



Sec. 738.63  Unlicensed persons; misrepresentation.

    No person shall in any way represent himself to be a grader or 
weigher licensed under the act if his license is in suspension or has 
been revoked.

                              Wool Grading



Sec. 738.64  Statement of grades.

    Whenever the grade of wool is required to be or is stated for the 
purposes of the act or the regulations in this part, it shall be stated 
in accordance with Secs. 738.64 through 738.67.



Sec. 738.65  Wool grades; adoption; terms defined.

    (a) The official wool grades of the United States within their scope 
are hereby adopted as the official wool standards for the purposes of 
the act and the regulations in this part.
    (b) Factors other than those included in the official grades and for 
which no standards of the United States are in effect shall be stated in 
accordance with any standards approved for the purpose by the Service.
    (c) Wool which is reduced in value because of the presence of 
extraneous matter, or irregularity, or other defect not affecting its 
grade, such as wrapped with sisal or binder twine, excessively wrapped, 
dead, cotted, burry, seedy, black, gray, or colored, damaged, 
carbonizing, kempy, or false packed, shall be so designated.

[[Page 301]]

    (d) For the purpose of this section the following terms used in 
connection with or to describe wool, shall be construed respectively to 
mean:
    (1) Excessively wrapped. Wool tied with more wrappings of twine than 
is necessary to bundle properly folded and rolled fleeces.
    (2) Dead wool. Wool from dead sheep.
    (3) Cotted wool. Wool that has felted or matted on the sheep's back.
    (4) Burry wool. Wool containing burrs removable by hand or 
mechanical means.
    (5) Seedy wool. Wool containing seeds, chaff, or other vegetable 
matter.
    (6) Black, gray, or colored wool. Entire fleeces or portions of 
fleeces of black, gray, or colored wool.
    (7) Damaged wool. Wool damaged by fire, water, moisture, or moths.
    (8) Carbonizing wool. Wool from which the burrs or other substances 
can be removed only by carbonizing.
    (9) Kempy wool. Wool containing kemps, opaque, white fibers, found 
generally in the fleeces of old or sick sheep.
    (10) False packed. A fleece so packed as fraudulently to conceal 
substances entirely foreign to wool.
    (11) Lamb's wool. The first fleeces shorn from young sheep.
    (12) Buck's. The heavy, oily fleeces shorn from male sheep.
    (13) Bright. Bright, white lustrous wool.
    (14) Semibright. Lustrous wool dulled in color by the foreign matter 
it contains.



Sec. 738.66  Examination; basis of grade.

    Whenever the grade of wool is required to be or is stated for the 
purposes of the act or the regulations in this part, it shall be based 
upon a careful and thorough examination of the wool, and the grading 
thereof shall be made under conditions which permit the determination of 
its true grade.



Sec. 738.67  Wool standard forms.

    Each warehouseman and grader shall keep himself provided with, or 
have access to, a set of practical forms of the official wool standards 
of the United States.

    Cross References: For official wool standards of the United States, 
and for forms of the official standards, see 7 CFR part 31 of this 
chapter.

                               Arbitration



Sec. 738.68  Wool arbitration.

    (a) Except when agreements have been made in accordance with the 
United States Arbitration Act (43 Stat. 883; 9 U.S.C. 1-14), in case a 
question arises as to whether the condition, grade, or shrinkage of the 
wool was correctly stated in a receipt, or grade certificate issued 
under the act and the regulations in this part, the licensed 
warehouseman or the lawful holder of the receipt or certificate 
concerned, after reasonable notice to the other interested party, may 
submit the question to an arbitration committee for determination in 
accordance with this section.
    (b) Such arbitration committee shall be composed of three or more 
disinterested persons who are competent to pass upon the questions 
involved. If there be a local trade organization such as a board of 
trade, chamber of commerce, exchange, or inspection department which 
provides such a committee under a rule or practice acceptable to the 
Administrator for the purpose, such as committee may determine the 
question. In the absence of such committee, or if for any good reason 
not inconsistent with the act and the regulations in this part such 
committee is not acceptable to either of the parties interested, the 
complainant and the other party shall each name a member, and the two 
members so named shall select a third member, who shall constitute the 
arbitration committee. Each member of any such committee shall at all 
times be subject, for good cause to the disapproval of the 
Administrator, and in case any member is so disapproved he shall not 
thereafter act on an arbitration committee which is considering any 
questions relating to the same lot of wool unless such disapproval be 
withdrawn.
    (c) It shall be the duty of the interested parties to acquaint the 
arbitration committee with the exact nature of the question to be 
determined and all the necessary facts and to permit the committee to 
examine the receipt,

[[Page 302]]

certificate, or wool involved or any papers or records needed for the 
determination of the question. The committee shall make a written 
finding setting forth the question involved, the necessary facts, and 
its determination. Such findings or a true copy thereof shall be filed 
as a part of the records of the licensed warehouseman involved. It may 
dismiss the matter without determination upon the request of the 
complainant, or for noncompliance by the complainant with the law or the 
regulations in this part, or because it is without sufficient evidence 
to determine the question, in which case the decision shall be deemed to 
be against the complainant. Except as otherwise provided by law, its 
decision shall be final for the purposes of the act and the regulations 
in this part, unless the Administrator shall direct a review of the 
question. Any necessary and reasonable expense of such arbitration shall 
be borne by the losing party, unless the committee shall decide that 
such expense shall be prorated between the parties.
    (d) If the decision of the arbitration committee by that the grade, 
condition, or shrinkage was not correctly stated, the receipt or 
certificate involved shall be returned to and canceled by the licensee 
who issued it, and he shall substitute therefor one conforming to the 
decision of the committee.

[5 FR 3607, Sept. 10, 1940, as amended at 13 FR 8729, Dec. 30, 1948. 
Redesignated at 50 FR 1814, Jan. 14, 1985]

                              Miscellaneous



Sec. 738.69  Bonds required of State warehouses.

    Every person applying for a license under section 9 of the act, or 
licensed thereunder, shall, as such, be subject to all portions of the 
regulations in this part, except Sec. 738.5, so far as they relate to 
warehousemen. If there is a law of any State providing for a system of 
warehouses owned, operated, or leased by such State, a person applying 
for a license under section 9 of the act to accept the custody of wool 
and to store the same in any of said warehouses may, in lieu of a bond 
or bonds, complying with Secs. 738.11 and 738.12, file with the 
Secretary a single bond meeting the requirements of the act and the 
regulations in this part, in such form and in such amount, not less than 
$5,000, as he shall prescribe, to insure the performance by such person 
with respect to the acceptance of the custody of wool and its storage in 
the warehouses in such system for which licenses are or may be issued of 
his obligations arising during the periods of such licenses, and in 
addition, if desired by the applicant, during the periods of any 
amendments thereto. In fixing the amount of such bond, consideration 
shall be given among other appropriate factors, to the character of the 
warehouses involved, their actual or contemplated capacity, the bonding 
requirements of the State, and its liability with respect to such 
warehouses. If the Secretary, or his designated representative, shall 
find the existence of conditions warranting such action, there shall be 
added to the amount of the bond so fixed, a further amount, fixed by 
him, to meet such conditions.



Sec. 738.70  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.

[62 FR 33541, June 20, 1997]



Sec. 738.71  Violations to be reported.

    Every person licensed under the act shall immediately furnish the 
Department any information which comes to the knowledge of such person 
tending to show that any provision of the act or the regulations in this 
part has been violated.



Sec. 738.72  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130--1.151).

[45 FR 6775, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]

[[Page 303]]



Sec. 738.73  One document and one license to cover several products.

    (a) A license may be issued for the storage of two or more 
agricultural products in a single warehouse. Where such license is 
desired, a single application, inspection, bond, record, report, or 
other paper, document, or proceeding relating to such warehouse shall be 
sufficient unless otherwise directed by the Service.
    (b) Where such license is desired, the amount of the bond, net 
assets, and inspection and license fees shall be determined by the 
Administrator in accordance with the regulations applicable to the 
particular agricultural product which would require the largest bond and 
the greatest amount of net assets and of fees if the full capacity of 
the warehouse was used for its storage.



Sec. 738.74  Amendments.

    Any amendment to, or revision of, the regulations in this part, 
unless otherwise stated therein, shall apply in the same manner to 
persons holding licenses at the time it becomes effective as it applies 
to persons thereafter licensed under the act.



PART 739--DRY BEAN WAREHOUSES--Table of Contents




                               Definitions

Sec.
739.1  Meaning of words.
739.2  Terms defined.

                           Warehouse Licenses

739.3  Application forms.
739.4  Grounds for not issuing license.
739.5  Net assets required.
739.6  License shall be posted.
739.7  Suspension or revocation of warehouse licenses.
739.8  Return of suspended or revoked warehouse licenses.
739.9  Lost or destroyed warehouse licenses.
739.10  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

739.11  Bond required; time of filing.
739.12  Basis of amount of bond; additional amounts.
739.13  Amendment to license.
739.14  New bond required each year.
739.15  Approval of bond.

                           Warehouse Receipts

739.16  Form.
739.17  Copies of receipts.
739.18  Lost or destroyed receipts; bond.
739.19  Printing of receipts.
739.20  Partial delivery of beans.
739.21  Return of receipts before delivery of beans.
739.22  Nonnegotiable receipts; releases.
739.23  Omission of grade; no compulsion by warehouseman.

                     Duties of Licensed Warehouseman

739.24  Beans must be inspected.
739.25  Insurance; requirements.
739.26  Premiums; inspections; reports.
739.27  Shrinkage of beans.
739.28  Care of beans in storage.
739.29  Care of nonlicensed beans or other commodities.
739.30  Records to be kept in safe place.
739.31  Warehouse charges.
739.32  Business hours.
739.33  Tagging identity-preserved beans.
739.34  Arrangement and tagging of stored beans.
739.35  Nonidentity-preserved beans; grading; weighing.
739.36  Delivery of beans from storage.
739.37  System of accounts.
739.38  Reports.
739.39  Copies of reports to be kept.
739.40  Canceled receipts; auditing.
739.41  Inspection and examination of warehouses.
739.42  Weighing apparatus; inspection.
739.43  Warehouse to be kept clean.
739.44  Fumigation of warehouse.
739.45  Damp, dirty, frosted beans; no storage.
739.46  Care in storage of beans.
739.47  Reconditioning deteriorated beans.
739.48  Procedure in handling deteriorated beans.
739.49  Excess storage.
739.50  Removal of beans from storage.
739.51  Signatures of persons signing receipts.
739.52  [Reserved]
739.53  Reporting fire losses.
739.54  Copies of certificates to be filed with warehouseman.

                                  Fees

739.55  License fees.
739.56  Warehouse annual and inspection fees.
739.57  Advance deposit.
739.58  Return of excess deposit.

                    Licensed Inspectors and Weighers

739.59  Inspector's and weigher's application.
739.60  Examination of applicant.
739.61  Posting of license.
739.62  Duties of licensees.
739.63  Inspection certificate; form.

[[Page 304]]

739.64  Weight certificate; form.
739.65  Combined inspection and weight certificate.
739.66  Copies of certificates to be kept.
739.67  Licensees to permit and assist in examination.
739.68  Reports.
739.69  Licenses; suspension or revocation.
739.70  Suspended or revoked license; return; termination of license.
739.71  Lost or destroyed licenses.
739.72  Unlicensed inspector or weigher; misrepresentation.

                   Bean Inspection and Classification

739.73  Statement of classification.
739.74  Standards to be used.
739.75  Statement of variety, grade, condition.

                            Appeal of Grades

739.76  Conditions and procedure of appeal.

                              Miscellaneous

739.77  Bonds required.
739.78  Publications.
739.79  Information of violations.
739.80  Procedure in hearings.
739.81  One document and one license to cover several products.
739.82  Bond for combination warehouse.
739.83  Amendments.

    Authority: 7 U.S.C. 241 et seq..

    Source: 10 FR 4964, May 4, 1945, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 739 appear at 62 FR 
33540, June 20, 1997.

                               Definitions



Sec. 739.1  Meaning of words.

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



Sec. 739.2  Terms defined.

    When used in the regulations in this part, unless otherwise 
distinctly expressed or manifestly incompatible with the intent thereof:
    (a) Beans means only dry edible beans used for human consumption.
    (b) The act means the United States Warehouse Act, approved August 
11, 1916 (39 Stat. 486; 7 U.S.C. 241-273), as amended.
    (c) Person means an individual, corporation, partnership, or two or 
more persons having a joint or common interest.
    (d) Department means the United States Department of Agriculture.
    (e) 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.
    (f) Administrator means the Administrator of the Service or any 
other officer or employee of the Service to whom authority has 
heretofore lawfully been delegated, or may hereafter lawfully be 
delegated, to act in his stead.
    (g) Designated representative means the Administrator.
    (h) Service means the Farm Service Agency of the U.S. Department of 
Agriculture.
    (i) Regulations means rules and regulations made under the act by 
the Secretary.
    (j) Warehouse means, unless otherwise clearly indicated by the 
context, any building, structure, or other protected inclosure in which 
beans are or may be stored for interstate or foreign commerce, or, if 
located within any place under the exclusive jurisdiction of the United 
States, in which beans are or may be stored and for which a license has 
been issued under the act.
    (k) Warehouseman means, unless otherwise clearly indicated by the 
context, any person lawfully engaged in the business of storing beans 
and holding a warehouse license.
    (l) License means a license issued under the act by the Secretary.
    (m) Licensed warehouseman's bond means a bond required to be given 
under the act by a licensed warehouseman.
    (n) Licensed inspector means a person licensed under the act by the 
Secretary to sample, to inspect, and to grade and to certificate the 
condition for storage and the grade of beans.
    (o) Licensed weigher means a person licensed under the act by the 
Secretary to weigh and to certificate the weight of beans stored or to 
be stored under the act.
    (p) Receipt means a warehouse receipt as prescribed by the act and 
regulations.
    (q) Dockage. See ``Pick.''

[[Page 305]]

    (r) Pick includes any material other than beans, together with 
undeveloped, shriveled, discolored, damaged, split, and small pieces of 
beans which are picked by hand or eliminated by mechanical means from 
the lot. The pick shall be calculated in terms of percentage based on 
the total weight of the beans including the material to be eliminated.

[10 FR 4964, May 4, 1945, as amended at 13 FR 8729, Dec. 30, 1948; 14 FR 
681, Feb. 16, 1949. Redesignated and amended at 50 FR 1814, Jan. 14, 
1985]

                           Warehouse Licenses



Sec. 739.3  Application forms.

    Applications for licenses under sections 4 and 9 of the act and for 
amendments thereto shall be made to the Secretary upon forms prescribed 
for the purpose and furnished by the Service, shall be in English, shall 
truly state the information therein contained, and shall be signed by 
the applicant. The applicant shall at any time furnish such additional 
information as the Secretary or his designated representative shall find 
to be necessary to the consideration of his application.



Sec. 739.4  Grounds for not issuing license.

    A license for the conduct of a warehouse shall not be issued if it 
be found by the Secretary, or his designated representative, that the 
warehouse is not suitable for the proper storage of beans, that the 
warehouseman is incompetent to conduct such warehouse in accordance with 
the act and the regulations in this part, or that there is any other 
sufficient reason within the intent of the act for not issuing such 
license.



Sec. 739.5  Net assets required.

    Any warehouseman conducting a warehouse licensed, or for which 
application for license has been made, under the act shall have and 
maintain, above all exemptions and liabilities, net assets liable for 
the payment of any indebtedness arising from the conduct of the 
warehouse, to the extent of at least 40 cents per hundredweight for the 
maximum number of hundredweight that the warehouse will accommodate, 
when stored in the manner customary to the warehouse, as determined by 
the Administrator, except that the amount of such assets shall not be 
less than $10,000. If such warehouseman has applied for licenses to 
conduct two or more warehouses in the same State, the assets applicable 
to all of which shall be subject to the liabilities of each, such 
warehouses shall be deemed to be one warehouse for the purposes of the 
assets required under this section. For the purposes of this section 
only, paid-in capital stock, as such, shall not be considered a 
liability. Any deficiency in the required net assets may be supplied by 
an increase in the amount of the warehouseman's bond in accordance with 
Sec. 739.12(b).

[39 FR 41825, Dec. 3, 1974. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.6  License shall be posted.

    Immediately upon receipt of his license or of any amendment thereto 
under the act, the warehouseman shall post the same and thereafter, 
except as otherwise provided in the regulations in this part, keep it 
posted until suspended or terminated, in a conspicuous place in the 
principal office where receipts issued by such warehouseman are 
delivered to depositors.



Sec. 739.7  Suspension or revocation of warehouse licenses.

    Pending investigation, the Secretary, or his designated 
representative, whenever he deems it necessary, may suspend a 
warehouseman's license temporarily without hearing. Upon written request 
and a satisfactory statement of reasons therefor submitted by a 
warehouseman, the Secretary, or his designated representative, may, 
without hearing suspend or revoke the license issued to such 
warehouseman. The Secretary, or his designated representative, may, 
after opportunity for hearing has been afforded in the manner prescribed 
in this section, cancel a license issued to a warehouseman when such 
warehouseman (a) is bankrupt or insolvent, (b) has parted in whole or in 
part with his control over the licensed warehouse, (c) is in process of 
dissolution or has been dissolved, (d) has ceased to conduct such 
licensed warehouse, or (e) has in any other manner

[[Page 306]]

become nonexistent or incompetent or incapacitated to conduct the 
business of the warehouse. Whenever any of the conditions mentioned in 
paragraphs (a) to (e) of this section shall come into existence it shall 
be the duty of the warehouseman to notify the Administrator immediately 
of the existing condition. Before a license is revoked for any violation 
of, or failure to comply with, any provision of the act or of the 
regulations in this part, or upon the ground that unreasonable or 
exorbitant charges have been made for services rendered, the 
warehouseman involved shall be furnished by the Secretary, or his 
designated representative, a written statement specifying the charges 
and shall be allowed a reasonable time within which he may answer the 
same in writing and apply for a hearing, an opportunity for which shall 
be afforded in accordance with Sec. 739.80.



Sec. 739.8  Return of suspended or revoked warehouse licenses.

    When a license issued to a warehouseman terminates, or is suspended, 
or revoked by the Secretary or his designated representative, it shall 
be returned to the Secretary. At the expiration of any period of 
suspension of such license, unless it be in the meantime revoked, the 
dates of the beginning and termination of the suspension shall be 
indorsed thereon, it shall be returned to the licensed warehouseman to 
whom it was originally issued, and it shall be posted as prescribed in 
Sec. 739.6.



Sec. 739.9  Lost or destroyed warehouse licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof or a new license may be 
issued under the same number.



Sec. 739.10  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the act and no name or description conveying the impression that 
it or he is so licensed shall be used, either in a receipt or otherwise, 
unless such warehouseman holds an unsuspended and unrevoked license for 
the conduct of such warehouse.

                             Warehouse Bonds



Sec. 739.11  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the act 
shall, before such license is granted, file with the Secretary or his 
designated representative a bond containing the following conditions and 
such other terms as the Secretary or his designated representative may 
prescribe in the approved bond forms, with such changes as may be 
necessary to adapt the forms to the type of legal entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall:
    Faithfully perform during the period of 1 year commencing 
__________, or until the termination of said license(s) in the event of 
termination prior to the end of the 1 year period, all obligations of a 
licensed warehouseman under the terms of the Act and regulations 
thereunder relating to the above-named products; and
    Faithfully perform during said 1 year period and thereafter, whether 
or not said warehouse(s) remain(s) licensed under the Act, such delivery 
obligations and further obligations as a warehouseman as exist at the 
beginning of said 1 year period or are assumed during said period and 
prior to termination of said license(s) under contracts with the 
respective depositors of such products in the warehouse(s);
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act and regulations and contracts shall 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.

[28 FR 5637, June 8, 1963. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.12  Basis of amount of bond; additional amounts.

    (a) Exclusive of any amount which may be added in accordance with 
paragraphs (b) and (c) of this section, the amount of such bond shall be 
at the rate of 40 cents per hundredweight for the maximum number of 
hundredweight that the warehouse will accommodate, when stored in the 
manner customary to the warehouse for which

[[Page 307]]

such bond is required, as determined by the Administrator, but not less 
than $20,000 nor more than $200,000. If such warehouseman has applied 
for licenses to conduct two or more warehouses in the same State, the 
assets applicable to all of which shall be subject to the liabilities of 
each, and shall desire to give a single bond meeting the requirements of 
the act and the regulations in this part for said warehouses, such 
warehouses shall be deemed to be one warehouse for the purposes of the 
bond required under this section.
    (b) In case of a deficiency in net assets under Sec. 739.5 there 
shall be added to the amount of the bond, fixed in accordance with 
paragraph (a) of this section, an amount equal to such deficiency.
    (c) If the Secretary, or his designated representative, finds the 
existence of conditions warranting such action, there shall be added to 
the amount fixed in accordance with paragraphs (a) and (b) of this 
section a further amount, fixed by him, to meet such conditions.

[10 FR 4964, May 4, 1945, as amended at 24 FR 3692, May 7, 1959; 39 FR 
41825, Dec. 3, 1974. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.13  Amendment to license.

    If application is made under Sec. 739.3 for an amendment to a 
license and no bond previously filed by the warehouseman under the 
regulations in this part covers obligations arising during the period of 
such amendment, the warehouseman shall, when notice has been given by 
the Secretary, or his designated representative, that his application 
for such amendment will be granted upon compliance by such warehouseman 
with the act, file with the Secretary, within a time, if any, fixed in 
such notice, a bond complying with the act, unless bond in sufficient 
amount has been filed since the filing of such application. In the 
discretion of the Secretary, a properly executed instrument in form 
approved by him, amending, extending or continuing in force and effect 
the obligations of a valid bond previously filed by the warehouseman and 
otherwise complying with the act and these regulations may be filed in 
lieu of a new bond.



Sec. 739.14  New bond required each year.

    A continuous form of license shall not remain in force for more than 
one year from its effective date, or any subsequent extension thereof, 
unless each year not more than 30 days before the date on which the 
license would expire, the warehouseman files a bond in the required 
amount with the Secretary and such bond has been approved by him or his 
designated representative.



Sec. 739.15  Approval of bond.

    No bond, amendment or continuation thereof shall be deemed accepted 
for the purposes of the act and the regulations in this part until it 
has been approved by the Secretary, or by his designated representative.

                           Warehouse Receipts



Sec. 739.16  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
beans stored in a warehouse shall, in addition to complying with the 
requirements of section 18 of the act, embody within its written or 
printed terms the following: (1) The name of the licensed warehouseman 
and the designation, if any, of the warehouse, (2) the license number of 
the warehouse, (3) a statement whether the warehouseman is incorporated 
or unincorporated, and if incorporated, under what laws. (4) in the 
event the relationship between the warehouseman and any depositor is not 
that of strictly disinterested custodianship, a statement setting forth 
the actual relationship, (5) the tag number given to each lot of beans 
in accordance with Sec. 739.33, (6) a statement conspicuously placed, 
whether or not the beans are insured, and, if insured, to what extent, 
by the warehouseman against loss by fire, lightning, or tornado, (7) a 
blank space designated for the purpose in which the condition of the 
beans shall be stated, (8) a blank space designated for the purpose in 
which the variety of the beans shall be stated, (9) the net weight, as 
well as the dockage or pick, if any, (10) the words ``Negotiable,'' or 
``Nonnegotiable,'' according to the nature of the receipt, clearly and 
conspicuously printed or stamped thereon, and (11) a statement 
indicating the amount of

[[Page 308]]

shrinkage and/or pickage agreed upon between the depositor and the 
warehouseman, in the case of nonidentity preserved beans.
    (b) Every receipt, whether negotiable or nonnegotiable, issued for 
beans stored in a warehouse shall specify a period, not exceeding one 
year, for which the beans are accepted for storage under the act and the 
regulations in this part, but, upon demand and surrender of the old 
receipt by the lawful holder thereof at or before the expiration of the 
specified period, the warehouseman, upon such lawful terms and 
conditions as may be granted by him at such time to other depositors of 
beans in the warehouse, may issue a new receipt for a further specified 
period not exceeding one year: Provided: (1) In the case of beans stored 
identity preserved it is first actually determined by a licensed 
inspector that the beans have not deteriorated and are in proper 
condition for further storage; and (2) in the case of beans stored on a 
fungible basis that the warehouseman determines the total quantity of 
beans covered by outstanding receipts calling for the same grade of 
beans as called for by the surrendered receipt, that the licensed 
inspector determines that all beans of the grade in question and stored 
on a fungible basis are in proper condition for further storage, and 
that the warehouseman determines that he has sufficient quantity of 
beans of the proper grade as determined by the licensed inspector to 
cover all outstanding receipts including the surrendered receipt.
    (c) The grade stated in a receipt issued for beans the identity of 
which is not to be preserved shall be stated as determined by the 
licensed grader who last graded the beans before the issuance of such 
receipt; and such receipt shall embody within its written or printed 
terms the following: (1) That the beans covered by the receipt were 
inspected and graded by a licensed inspector, and (2) a form of 
indorsement which may be used by the depositor, or his authorized agent, 
for showing the ownership of, and liens, mortgages or other encumbrances 
on the beans covered by the receipt.
    (d) Whenever the grade or other class of beans is stated in a 
receipt issued for beans stored in a warehouse, such grade or other 
class shall be stated in the receipt in accordance with Secs. 739.73 
through 739.75.
    (e) If a warehouseman issues a receipt omitting the statement of 
grade on request of the depositor as permitted by section 18 of the act, 
such receipt shall have clearly and conspicuously stamped or written on 
the face thereof the words ``Not graded on request of depositor.''
    (f) If a warehouseman issues a receipt under the act omitting any 
information not required to be stated for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made by the warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[10 FR 4964, May 4, 1945; 13 FR 8729, 8731, Dec. 30, 1948; 19 FR 57, 
Jan. 6, 1954, as amended at 47 FR 745, Jan. 7, 1982. Redesignated at 50 
FR 1814, Jan. 14, 1985]



Sec. 739.17  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed or stamped thereon the words ``Copy--Not 
Negotiable.'' A copy of each receipt issued shall be retained by the 
warehouseman for a period of one year after December 31 of the year in 
which the corresponding original receipt is canceled.

[29 FR 13369, Sept. 26, 1964. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.18  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, a new receipt upon 
the same terms, subject to the same conditions, and bearing on its face 
the number and the date of the receipt in lieu of which it is issued and 
a plain and conspicuous statement that it is a duplicate issued in lieu 
of a lost or destroyed receipt, may be issued upon compliance with the 
conditions set out in paragraph (b) of this section.
    (b) Before issuing such new or duplicate receipt, the warehouseman 
shall require the depositor or other person

[[Page 309]]

applying therefor to make and file with the warehouseman (1) an 
affidavit showing that he is lawfully entitled to the possession of the 
original receipt, that he has not negotiated or assigned it, how the 
original receipt was lost or destroyed, and if lost, that diligent 
effort has been made to find the receipt without success and (2) a bond 
in an amount double the value, at the time the bond is given, of the 
beans represented by the lost or destroyed receipt. Such bond shall be 
in the form approved for the purpose by the Secretary, or his designated 
representative, shall be conditioned to indemnify the warehouseman 
against any loss sustained by reason of the issuance of such duplicate 
receipt, and shall have as surety thereon preferably a surety company 
which is authorized to do business, and is subject to service of process 
in a suit on the bond in the State in which the warehouse is located, or 
at least two individuals who are residents of such State and each of 
whom owns real property therein having a value, in excess of all 
exemptions and encumbrances, equal to the amount of the bond.



Sec. 739.19  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.

[62 FR 33541, June 20, 1997]



Sec. 739.20  Partial delivery of beans.

    If a warehouseman delivers a part only of a lot of beans for which 
he has issued a negotiable receipt under the act, he shall take up and 
cancel such receipt and issue a new receipt in accordance with these 
regulations for the undelivered portion of the beans. The new receipt 
shall show the date of issuance and also indicate the number and date of 
the old receipt.



Sec. 739.21  Return of receipts before delivery of beans.

    Except as permitted by law or by the regulations in this part, a 
warehouseman shall not deliver beans for which he has issued a 
negotiable receipt until the receipt has been returned to him and 
canceled, and shall not deliver beans for which he has issued a 
nonnegotiable receipt until such receipt has been returned to him or he 
has obtained from the person lawfully entitled to such delivery, or his 
authorized agent, a written order therefor.



Sec. 739.22  Nonnegotiable receipts; releases.

    Each person to whom a nonnegotiable receipt is issued shall furnish 
the warehouseman with a statement in writing indicating the person or 
persons having power to authorize delivery of beans covered by such 
receipt, together with the bona fide signature of such person or 
persons. No licensed warehouseman shall honor an order for the release 
of beans covered by a nonnegotiable receipt until he has first 
ascertained that the person issuing the order has authority to order 
such release, and that the signature of the releasing party is genuine.



Sec. 739.23  Omission of grade; no compulsion by warehouseman.

    No warehouseman shall, directly or indirectly, by any means 
whatsoever, compel or attempt to compel the depositor of any beans 
stored in his licensed warehouse to request the issuance of a receipt 
omitting the statement of grade.

                     Duties of Licensed Warehouseman



Sec. 739.24  Beans must be inspected.

    No warehouseman shall accept beans for storage or any other purpose 
until they have been inspected and approved by a licensed inspector, nor 
store beans the identity of which is not to be preserved until their 
grade has been determined by a licensed inspector.



Sec. 739.25  Insurance; requirements.

    (a) Each warehouseman, when so requested in writing by the depositor 
of beans, or the lawful holder of the receipt for any beans, shall, to 
the extent

[[Page 310]]

to which, in the exercise of due diligence, he is able to procure such 
insurance, keep such beans while in his custody insured in his own name, 
to the extent so requested, against loss or damage by fire, lightning, 
or tornado. When insurance is not carried in the warehouseman's name, 
the receipt shall show that the beans are not insured by him. Such 
insurance shall be covered by lawful policies issued by one or more 
insurance companies authorized to do such business and subject to 
service of process in suits brought in the State where the warehouse is 
located. If the warehouseman is unable to procure such insurance to the 
extent requested, he shall, orally, or by telegraph or by telephone and 
at his own expense, immediately notify the person making the request. 
Nothing in this section shall be construed to prevent a warehouseman 
from adopting a rule that he will insure all beans.
    (b) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 739.6 and at such other place as the Administrator or 
his representative may from time to time designate, a notice stating 
briefly the conditions under which beans will be insured against loss or 
damage by fire, lightning, or tornado.
    (c) Each warehouseman shall take promptly such steps as may be 
necessary and proper to collect any moneys which may become due under 
contracts of insurance entered into by him for the purpose of meeting 
the requirements of the regulations in this part, and shall, as soon as 
collected, pay promptly to the persons concerned any portion of such 
moneys which they may be entitled to receive from him.



Sec. 739.26  Premiums; inspections; reports.

    Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of the regulations in this part, pay such 
premiums, permit such reasonable inspections and examinations, and make 
such reasonable reports as may be provided for in such contracts.



Sec. 739.27  Shrinkage of beans.

    When beans are received for storage, the warehouseman and the 
depositor shall agree upon an amount to be allowed for natural shrinkage 
and loss caused by rodents while the beans are in storage, and the 
amount so agreed upon shall be clearly stated in the warehouse receipt.



Sec. 739.28  Care of beans in storage.

    Each warehouseman shall at all times exercise such care in regard to 
beans in his custody as a reasonably careful owner would exercise under 
the same circumstances and conditions.



Sec. 739.29  Care of nonlicensed beans or other commodities.

    If at any time a warehouseman shall handle beans other than for 
storage, or shall handle or store any other commodity, he shall so 
protect the same and otherwise exercise such care with respect to them 
as not to endanger the beans in his custody as a warehouseman or impair 
his ability to meet his obligations and perform his duties under the act 
and the regulations in this part. If the warehouseman shall store 
commodities other than those for which he is licensed, a nonlicensed 
receipt shall be issued, which shall contain in its terms a provison 
that said commodities are accepted for storage only until such time as 
the space which they may occupy may be needed for products for the 
storage of which the warehouseman is licensed. Under no circumstances 
shall any commodities for the storage of which the warehouseman is not 
licensed be stored if the storage of such commodities might adversely 
affect the commercial value, or the insurance on beans covered by 
licensed receipts.



Sec. 739.30  Records to be kept in safe place.

    Each warehouseman shall provide a metal fireproof safe, a fireproof 
vault, or a fireproof compartment in which he shall keep, when not in 
actual use, all records, books, and papers pertaining to the warehouse, 
including his current receipt book, copies of receipts issued, and 
canceled receipts, except that with the written consent of the 
Administrator, or his representative, upon a

[[Page 311]]

showing by such warehouseman that it is not practicable to provide such 
fireproof safe, vault, or compartment, he may keep such records, books, 
and papers in some other place of safety approved by the Administrator 
or his representative. Each canceled receipt shall be retained by the 
warehouseman for a period of six years after December 31 of the year in 
which the receipt is canceled and for such longer period as may be 
necessary for the purposes of any litigation which the warehouseman 
knows to be pending, or as may be required by the Administrator in 
particular cases to carry out the purposes of the act. Canceled receipts 
shall be arranged by the warehouseman in numerical order and otherwise 
in such manner as shall be directed, for purposes of audit, by 
authorized officers or agents of the Department of Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[10 FR 4964, May 4, 1945, as amended at 22 FR 1629, Mar. 14, 1957; 47 FR 
745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.31  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for services rendered. Before a license to conduct a warehouse is 
granted under the act, the warehouseman shall file with the Service a 
dated copy of his rules and schedule of charges to be made by him if 
licensed. Before making any change in such rules or schedule of charges 
he shall file with the Service a statement in writing showing the 
proposed change and the reasons therefor. Each warehouseman shall keep 
exposed conspicuously in the place prescribed by Sec. 739.6, and at such 
other places, accessible to the public, as the Administrator or his 
representative may from time to time designate, a copy of his current 
rules and schedule of charges.



Sec. 739.32  Business hours.

    (a) Each warehouse shall be kept open for the purpose of receiving 
beans for storage and delivering beans out of storage every business day 
for a period of not less than six hours between the hours of 8 a.m. and 
6 p.m., except as provided in paragraph(b) of this section. The 
warehouseman shall keep conspicuously posted on the door of the public 
entrance to his office and to his warehouse a notice showing the hours 
during which the warehouse will be kept open, except when such office or 
warehouse is kept open continuously from 8 a.m. to 6 p.m.
    (b) If the warehouse is not to be kept open as above required, the 
notice shall state the period during which it is to be closed and the 
name and address of an accessible person authorized to make delivery 
upon lawful demand and surrender of the receipt.



Sec. 739.33  Tagging identity-preserved beans.

    Each warehouseman shall, upon acceptance for storage of any lot of 
sacked beans or of bulk beans to be specially binned, attach to such lot 
or bin an identification tag of good quality, or stencil a sufficient 
number of sacks in the lot in such manner as will readily make possible 
the identification of the lot at all times. Such tags shall show the lot 
number, the number of the receipt issued to cover such beans, the number 
of sacks in the lot, the variety or type of the beans, their grade, if 
determined, their net weight when they entered storage, and the date 
they entered storage.



Sec. 739.34  Arrangement and tagging of stored beans.

    Each warehouseman shall so store each lot of beans for which a 
receipt under the act has been issued that the tag or stencil 
identification marks thereon, required in Sec. 739.33, are visible and 
readily accessible, and shall arrange all bags in his warehouse so as to 
permit making a determination of the number of bags in storage at any 
time.



Sec. 739.35  Nonidentity-preserved beans; grading; weighing.

    All beans the identity of which is not to be preserved or has not 
been preserved shall be accepted for and delivered out of storage only 
on the basis of grades and weights determined by licensed inspectors and 
weighers.

[[Page 312]]



Sec. 739.36  Delivery of beans from storage.

    Except as may be provided by law or the regulations in this part, 
each warehouseman, (a) upon proper presentation of a receipt for any 
beans, other than bulk beans specially binned, and upon payment or 
tender of all advances and legal charges, shall deliver to such 
depositor or lawful holder of such receipt beans of the grade and 
quantity specified in such receipt, after making due allowance for such 
shrinkage as the receipt stipulates, or (b) upon proper presentation of 
a receipt for any beans the identity of which was to have been preserved 
during the storage period, and upon payment or tender of all advances 
and legal charges, shall deliver to the person lawfully entitled thereto 
the identical beans stored in his warehouse.



Sec. 739.37  System of accounts.

    Each warehouseman shall use for his warehouse a system of accounts, 
approved for the purpose by the Administrator, or his authorized 
representative, which shall show for each bag or lot of beans the name 
of the depositor, the weight of the beans, the number of bags in each 
lot, the grade when grade is required to be, or is ascertained, the 
location in the warehouse, the dates received for and delivered out of 
storage, the receipts issued and canceled, a separate record for each 
depositor; and such accounts shall include a detailed record of all 
moneys received and disbursed and of all effective insurance policies. 
In the case of beans the identity of which is to be preserved the tag 
number or stencil identification mark mentioned in Sec. 739.33 shall be 
shown. Such records shall be retained by the warehouseman for a period 
of six years after December 31 of the year in which created, and for 
such longer period as may be necessary for the purposes of any 
litigation which the warehouseman knows to be pending, or as may be 
required by the Administrator in particular cases to carry out the 
purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[10 FR 4964, May 4, 1945, as amended at 29 FR 13369, Sept. 26, 1964; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.38  Reports.

    Each warehouseman shall, from time to time, make such reports as the 
Service may require, on forms prescribed and furnished for the purpose 
by the Service, concerning the condition, contents, operation, and 
business of the warehouse.



Sec. 739.39  Copies of reports to be kept.

    Each warehouseman shall keep on file, as a part of the records of 
the warehouse, for a period of three years after December 31 of the year 
in which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.40  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipt for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33541, June 20, 1997]



Sec. 739.41  Inspection and examination of warehouses.

    Each warehouseman shall permit any officer or agent of the 
Department, authorized by the Secretary for the purpose, to enter and 
inspect or examine at any time any warehouse for the conduct of which 
such warehouseman holds a license, the office thereof, the books, 
records, papers, and accounts relating thereto, and the contents 
thereof, and shall furnish such officer or agent, when he so requests, 
the assistance necessary to enable him to

[[Page 313]]

make any inspection or examination under this section.



Sec. 739.42  Weighing apparatus; inspection.

    The weighing apparatus used for ascertaining the weight stated in a 
receipt or certificate shall be subject to examination by an officer or 
agent of the Department employed for such purpose. If the Service shall 
disapprove such weighing apparatus, it shall not thereafter, unless such 
disapproval be withdrawn, be used in ascertaining the weight of any 
beans for the purposes of the act and the regulations in this part.



Sec. 739.43  Warehouse to be kept clean.

    Each warehouseman shall keep his warehouse clean and free from 
trash, excessive dirt, rubbish, and scattered beans. He shall also 
exercise every precaution to keep his warehouse free of rats or other 
pests that might cause damage or injury to beans in storage. The 
warehouseman shall not under any circumstances accept for storage in his 
warehouse beans showing the presence of weevil or the larvae of weevil, 
nor continue to keep in storage beans so affected, without treating them 
in such manner as will destroy such weevil and larvae or with such 
chemicals as may be approved by the Service for that purpose.



Sec. 739.44  Fumigation of warehouse.

    When necessary, in the opinion of the Administrator or his 
representative, the warehouseman shall fumigate thoroughly his warehouse 
with chemicals approved by the Service.



Sec. 739.45  Damp, dirty, frosted beans; no storage.

    A warehouseman shall not, under any circumstances, accept for 
storage any beans with moisture content in excess of 17 percent and 
which contain foreign material likely to injure the keeping qualities of 
the beans or adversely affect their commercial value, or that are 
otherwise of a condition rendering them unsuitable for storage, but he 
may accept such beans for conditioning purposes and for storage after 
conditioning.



Sec. 739.46  Care in storage of beans.

    A warehouseman shall so handle and so store beans as not to injure 
or damage them in any manner.



Sec. 739.47  Reconditioning deteriorated beans.

    If the warehouseman considers that any beans in his warehouse are 
out of condition, or becoming so, he shall direct the licensed inspector 
to examine the beans in question, and, if such inspector finds such 
beans to be out of condition or becoming so, and he is of the opinion 
that such beans can be brought back into condition by mechanical or 
other means, or that further deterioration can be prevented, the 
warehouseman shall give immediate notice of the facts to the persons and 
in the manner specified in Sec. 739.48 (b) and (c). If, within 24 hours 
after the giving of such notice, the owners of such beans have not 
otherwise directed as to the disposition of same, such warehouseman, 
with the approval of the licensed inspector, shall subject the beans to 
the proper reconditioning process in his licensed warehouse to the 
extent to which it is equipped with machinery suitable for the purpose, 
otherwise in any other warehouse so equipped.



Sec. 739.48  Procedure in handling deteriorated beans.

    (a) If a warehouseman, with the approval of the licensed inspector, 
shall determine that any beans are deteriorating and that such 
deterioration can not be stopped, he shall give immediate notice thereof 
in accordance with paragraphs (b) and (c) of this section.
    (b) Such notice shall state (1) the name of the warehouse in which 
the beans are stored, (2) the quantity, kind, and grade of the beans at 
the time the notice is given, (3) the actual condition of the beans as 
nearly as can be ascertained, and the reason, if known, for such 
condition, and (4) the outstanding receipts covering the beans out of 
condition, giving the number and date of each such receipt and the 
quantity, the kind and grade of the beans as stated in each such 
receipt.
    (c) A copy of such notice shall be delivered in person or shall be 
sent by

[[Page 314]]

mail (1) to the persons holding the receipts if known to the 
warehouseman, (2) to the person who originally deposited the beans, (3) 
to any other persons known by the licensed warehouseman to be interested 
in the beans, (4) to the Administrator, and (5) public notice shall also 
be given by posting a copy of such notice at the place where the 
warehouseman is required to post his license. A copy of such notice 
shall be kept as a record of the warehouse. If the holders of the 
receipts and the owners of the beans are known to the warehouseman and 
cannot, in the regular course of the mails, be reached within 12 hours, 
the warehouseman shall, whether or not requested to do so, also 
immediately notify such persons by telegraph or telephone at their 
expense.
    (d) Any person interested in any beans or the receipt covering such 
beans stored in a licensed warehouse may notify the warehouseman of his 
interest in writing, and such warehouseman shall keep a record of that 
fact. If such person requests in writing that he be notified regarding 
the condition of any such beans and agrees to pay the cost of any 
telegraph or telephone toll charge, such warehouseman shall notify such 
person in accordance with such request.
    (e) If the beans advertised in accordance with the requirements of 
this section have not been removed from storage by the owner thereof 
within seven days from the date of notice of their being out of 
condition, the warehouseman may sell the same at public auction at the 
expense and for the account of the owner, after giving seven days' 
notice of such proposed sale in the manner specified in paragraphs (b) 
and (c) of this section.
    (f) Nothing contained in this section shall be construed as 
relieving the warehouseman from properly caring for any beans after 
sending notification of their condition in accordance with this section.
    (g) Records required to be kept by this section shall be retained, 
as a part of the records of the warehouse, for a period of six years 
after December 31 of the year in which created, and for such longer 
period as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[10 FR 4964, May 4, 1945, as amended at 29 FR 13369, Sept. 26, 1964; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.49  Excess storage.

    If at any time a warehouseman shall be offered for storage in his 
warehouse beans in excess of the licensed capacity as shown on his 
license, he shall not accept such beans until he has first secured 
authority through an amended license, and after such authority has been 
granted, the warehouseman shall continue to so arrange the beans as not 
to obstruct free access thereto and the proper use of sprinklers or 
other fire protection equipment provided for such warehouse.



Sec. 739.50  Removal of beans from storage.

    Except as may be permitted by law or the regulations in this part, a 
warehouseman shall not remove any beans from the warehouse or the part 
thereof designated in the receipt, unless such receipt is first 
surrendered and canceled. Under no circumstances, unless it becomes 
absolutely necessary to protect the interests of holders of receipts, 
shall beans be removed from the warehouse before the surrender of 
receipts, and immediately upon any such removal the warehouseman shall 
notify the Administrator of such removal and the necessity therefor.



Sec. 739.51  Signatures of persons signing receipts.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to sign warehouse receipts 
for the licensed warehouseman, and shall promptly notify the Department 
of any changes as to persons authorized to sign, and shall file 
signatures of such persons.

[[Page 315]]



Sec. 739.52  [Reserved]



Sec. 739.53  Reporting fire losses.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[62 FR 33541, June 20, 1997]



Sec. 739.54  Copies of certificates to be filed with warehouseman.

    When an inspection or weight certificate has been issued by a 
licensed inspector or weigher, a copy of such certificate shall be filed 
with the warehouseman in whose warehouse the beans covered by such 
certificate are stored, and such certificate shall become a part of the 
records of the warehouseman. Such certificates shall be retained, as a 
part of the records of the warehouse, for a period of three years after 
December 31 of the year in which the certificates are issued.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[10 FR 4964, May 14, 1945, as amended at 29 FR 13369, Sept. 26, 1964; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]

                                  Fees



Sec. 739.55  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 739.56  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The fee will be assessed 
and payable when the warehouse bond is furnished in accordance with 
these regulations, for acceptance by the Secretary and annually 
thereafter on the bond renewal date. The capacity for each identifiable 
location will be determined by the Secretary. The total capacity of all 
locations may not exceed the capacity stated in the current license. An 
identifiable location is a fully functional public warehouse as 
determined by the Secretary. The annual fee a licensed warehouseman is 
assessed may be adjusted by the amount Commodity Credit Corporation 
(CCC) pays, if CCC has a storage contract or agreement with the 
warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 739.57  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[46 FR 63200, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33541, June 20, 1997]



Sec. 739.58  Return of excess deposit.

    Advance deposits made under the regulations in this part shall be 
forwarded to the Treasurer of the United

[[Page 316]]

States for holding until the fee, if any, is assessed and he is 
furnished by the Service with a statement showing the amount thereof and 
against whom assessed. Any part of such advance deposit which is not 
required for the payment of any fee assessed shall be returned to the 
party depositing the same.

                    Licensed Inspectors and Weighers



Sec. 739.59  Inspector's and weigher's application.

    (a) Applications for licenses to inspect and grade or to weigh beans 
under the act shall be made to the Administrator on forms furnished for 
the purpose by him.
    (b) Each such application shall be in English, shall be signed by 
the applicant, shall be verified by him under oath or affirmation 
administered by a duly authorized officer, and shall contain or be 
accompanied by: (1) The name and location of a warehouse or warehouses 
licensed, or for which application for license has been made, under the 
Act, in which beans sought to be inspected and weighed under such 
license are or may be stored, (2) a statement from the warehouseman 
conducting such warehouse showing whether the applicant is competent and 
is acceptable to such warehouseman for the purpose, (3) satisfactory 
evidence that he has had at least one year's experience in the kind of 
service for which a license is sought or the equivalent of such 
experience, and that he is competent to perform such services, except in 
the case of applicants for weigher's licenses one month's experience 
will be sufficient, (4) a statement by the applicant that he agrees to 
comply with and abide by the terms of the Act and the regulations in 
this part so far as the same may relate to him, and (5) such other 
information as the Service may deem necessary; Provided, That when an 
application for a license to inspect beans is filed by a person who does 
not intend to inspect for any particular licensed warehouseman but who 
does intend to inspect beans stored or to be stored in a licensed 
warehouse and to issue inspectors' certificates therefor, as provided 
for by the Act and the regulations in this part, independent of the 
warehouse receipts issued to cover such beans, it shall not be necessary 
to furnish such statement as is required by paragraph (b)(2) of this 
section.
    (c) The applicant shall at any time furnish such additional 
information as the Secretary, or his designated representative, shall 
find to be necessary to the consideration of his application.
    (d) A single application may be made by any person for a license to 
inspect and to weigh upon complying with all the requirements of this 
section.
    (e) In lieu of compliance with the requirements of paragraph (b) of 
this section, the license applied for may be granted whenever such 
applicant furnishes satisfactory evidence that he holds an effective 
license under the Agricultural Marketing Act of 1946 and regulations 
thereunder, to inspect and grade such beans and to certificate the grade 
thereof.

[10 FR 4964, May 4, 1945, as amended at 13 FR 8729, 8731, Dec. 30, 1948; 
19 FR 57, Jan. 6, 1954; 40 FR 6475, Feb. 12, 1975; 41 FR 34005, Aug. 12, 
1976. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.60  Examination of applicant.

    Each applicant for a license as an inspector or as a weigher and 
each licensed inspector or licensed weigher shall, whenever requested by 
an authorized agent of the Department designated by the Administrator 
for the purpose, submit to an examination or test to show his ability 
properly to perform the duties for which he is applying for license or 
for which he has been licensed.



Sec. 739.61  Posting of license.

    Each licensed inspector shall keep his license conspicuously posted 
in the office where all or most of the inspecting is done, and each 
licensed weigher shall keep his license conspicuously posted in the 
warehouse office or in such place as may be designated for the purpose 
by the Service.



Sec. 739.62  Duties of licensees.

    Each inspector and each weigher, when requested, shall without 
discrimination, as soon as practicable, and upon reasonable terms, 
inspect or weigh and certificate the condition,

[[Page 317]]

grade, or weight for storage of beans stored or to be stored in a 
licensed warehouse, if such beans be offered to him under such 
conditions as permit proper inspection and the determination of the 
condition, grade, or weight thereof, as the case may be. Each such 
licensee shall give preference to persons who request his services as 
such over persons who request his services in any other capacity. No 
inspection or weight certificate shall be issued under the act for beans 
not stored or not to be stored in a licensed warehouse.



Sec. 739.63  Inspection certificate; form.

    Each inspection certificate issued under the act by a licensed 
inspector shall be in a form approved for the purpose by the Service and 
shall embody within its written or printed terms: (a) The caption 
``United States Warehouse Act, Bean Inspection Certificate,'' (b) 
whether it is an original, a duplicate, or other copy, (c) the name and 
location of the warehouse in which the beans are or are to be stored, 
(d) the date of the certificate, (e) the location of the beans at the 
time of inspection, (f) the identification number or mark of each lot of 
beans the identity of which is or is to be preserved, given in 
accordance with Sec. 739.33, (g) the grade, dockage, or pick and 
condition of the beans for storage at the time of inspection, (h) a 
statement that the certificate is issued by a licensed inspector, under 
the United States warehouse act and regulations thereunder, (i) a blank 
space designated for the purpose in which may be stated any general 
remarks on the condition of the beans, (j) the signature of such 
licensed inspector. In addition, the inspection certificate may include 
any other matter not inconsistent with the act or the regulations in 
this part, provided the approval of the Service is first secured.



Sec. 739.64  Weight certificate; form.

    Each weight certificate issued under the act by a licensed weigher 
shall be in a form approved for the purpose by the Administration, and 
shall embody within its written or printed terms: (a) The caption 
``United States Warehouse Act, Bean Weight Certificate,'' (b) whether it 
is an original, a duplicate, or other copy, (c) the name and location of 
the warehouse in which the beans are to be stored, (d) the date of the 
certificate, (e) the location of the beans at the time of weighing, (f) 
the identification number or mark of each lot of beans, the identity of 
which is or is to be preserved, given in accordance with Sec. 739.33, 
(g) the net weight of the beans, (h) a statement that the certificate is 
issued by a licensed weigher under the United States Warehouse Act and 
the regulations thereunder, and (i) the signature of such licensed 
weigher. In addition, the weight certificate may include any other 
matter not inconsistent with the act or the regulations in this part, 
provided the approval of the Service is first secured.



Sec. 739.65  Combined inspection and weight certificate.

    The weight, grade, and condition of any beans ascertained by a 
licensed inspector or a licensed weigher may be stated on a certificate 
meeting the combined requirements of Secs. 739.63 and 739.64, if the 
form of such certificate shall have been approved for the purpose by the 
Service.



Sec. 739.66  Copies of certificates to be kept.

    Each licensed inspector and each licensed weigher shall keep for a 
period of one year in a place accessible to persons financially 
interested in the beans a copy of each certificate issued by him under 
the regulations in this part and shall file a copy of each such 
certificate with the warehouse in which the beans covered by the 
certificate are stored.



Sec. 739.67  Licensees to permit and assist in examination.

    Each licensed inspector and each licensed weigher shall permit any 
officer or agent of the Department authorized by the Secretary or his 
designated representative for the purpose to inspect or examine at any 
time, his books, papers, records, and accounts relating to the 
performance of his duties under the act and the regulations in this 
part, and shall, with the consent of the warehouseman concerned, assist 
any such officer or agent in the inspection or examination of records 
mentioned in Sec. 739.37 as far as any such inspection or

[[Page 318]]

examination relates to the performance of the duties of such licensed 
inspector or licensed weigher under the act and the regulations in this 
part.



Sec. 739.68  Reports.

    Each licensed inspector and each licensed weigher shall, from time 
to time, when requested by the Service, make reports on forms furnished 
for the purpose by the Service, bearing upon his activities as such 
licensed inspector or licensed weigher.



Sec. 739.69  Licenses; suspension or revocation.

    Pending investigation, the Secretary, or his designated 
representative, may, whenever he deems necessary, suspend the license of 
an inspector or of a weigher temporarily without hearing. Upon a written 
request and a satisfactory statement of reasons therefor, submitted by 
the inspector or weigher, or when the inspector or weigher has ceased to 
perform such services at the warehouse, the Secretary, or his designated 
representative, may, without hearing, suspend or revoke the license 
issued to such inspector or weigher. The Secretary, or his designated 
representative, may, after opportunity for hearing, when possible, has 
been afforded in the manner prescribed in this section, suspend or 
revoke a license issued to an inspector or a weigher when such inspector 
or weigher has in any manner become incompetent or incapacitated to 
perform the duties of a licensed inspector or licensed weigher. As soon 
as it shall come to the attention of a warehouseman that any of the 
conditions mentioned in this section exist, it shall be his duty to 
notify the Administrator in writing. Before the license of any inspector 
or weigher is permanently suspended or revoked pursuant to section 12 of 
the act, such licensee shall be furnished by the Secretary or his 
designated representative, a written statement specifying the charges 
and shall be allowed a reasonable time within which he may answer the 
same in writing and apply for a hearing, an opportunity for which shall 
be afforded in accordance with Sec. 739.80.

[13 FR 8729, Dec. 30, 1948; 14 FR 121, Jan. 11, 1949. Redesignated at 50 
FR 1814, Jan. 14, 1985]



Sec. 739.70  Suspended or revoked license; return; termination of license.

    (a) If a license issued to an inspector or to a weigher is suspended 
or revoked, by the Secretary, or by his designated representative, it 
shall be returned to the Secretary. At the expiration of any period of 
suspension of a license, unless in the meantime it be revoked, the dates 
of the beginning and termination of the suspension shall be indorsed 
thereon, and it shall be returned to the inspector or weigher to whom it 
was originally issued, and it shall be posted as prescribed in 
Sec. 739.61.
    (b) Any license issued to an inspector or weigher shall 
automatically be suspended or terminated as to any warehouse whenever 
the license of such warehouse shall be suspended or revoked. Thereupon 
the license of such inspector or weigher shall be returned to the 
Secretary. If such license is applicable to warehouses other than those 
for which the licenses have been suspended or revoked, the Secretary, or 
his designated representative, shall issue a new license to the 
inspector or weigher, omitting the names of the warehouses for which 
licenses have been so suspended or revoked. Such new licenses shall be 
posted as prescribed in Sec. 739.61.



Sec. 739.71  Lost or destroyed licenses.

    Upon satisfactory proof to the loss or destruction of a license 
issued to an inspector or weigher, a duplicate thereof or a new license 
may be issued under the same or a new number.



Sec. 739.72  Unlicensed inspector or weigher; misrepresentation.

    No person shall in any way represent himself to be an inspector or 
weigher licensed under the act unless he holds an unsuspended and 
unrevoked license issued under the act.

[[Page 319]]

                   Bean Inspection and Classification



Sec. 739.73  Statement of classification.

    Whenever the variety, grade, or condition of beans is required to be 
or is stated for the purposes of this act and the regulations in this 
part, it shall be stated in accordance with Secs. 739.74 and 739.75.



Sec. 739.74  Standards to be used.

    The official bean standards of the United States are hereby adopted 
as the official beans standards for the purposes of the act and 
regulations.



Sec. 739.75  Statement of variety, grade, condition.

    Whenever the variety, grade or condition of beans is stated for the 
purpose of this act and the regulations in this part, the terms used 
shall be correctly applied and shall be so stated as not to convey a 
false impression of the beans. In case of doubt as to the variety, grade 
or condition of a given lot of beans, a determination shall be made of 
such facts by drawing samples fairly representative of the contents of 
the lot of beans offered for storage. These samples shall be thoroughly 
mixed, and after being so mixed, from this mixture by quartering a 
sufficient quantity shall be taken which shall constitute the sample for 
the purpose of determining the grade.

                            Appeal of Grades



Sec. 739.76  Conditions and procedure of appeal.

    (a) If a question arises as to whether the variety, grade or 
condition of the beans was correctly stated in a receipt or inspection 
certificate issued under the act or the regulations in this part, the 
warehouseman concerned or any person financially interested in the beans 
involved may, after reasonable notice to the other party, submit the 
question to such representatives of the Service as the Administrator may 
appoint. The decision of such representatives shall be final, unless the 
Administrator shall direct a review of the question. Immediately upon 
making their decision, these representatives shall issue a certificate 
embodying their findings to the appellants and the licensee or licensees 
involved.
    (b) If the decision of the representatives of the Service be that 
the variety, grade, or condition was not correctly stated, the receipt 
or certificate involved shall be returned to and canceled by the 
licensee who issued it, and the licensee shall issue in lieu thereof a 
new receipt or certificate embodying therein the statement of variety, 
grade, or condition, in accordance with the findings of the aforesaid 
representatives.
    (c) All necessary and reasonable expense of such arbitration shall 
be borne by the losing party, unless the Administrator or his 
representative shall decide that the expense should be prorated between 
the parties.

                              Miscellaneous



Sec. 739.77  Bonds required.

    Every person applying for a license, or licensed under section 9 of 
the act, shall, as such, be subject to all portions of the regulations 
in this part except Sec. 739.5, so far as they may relate to 
warehousemen. If there is a law of any State providing for a system of 
warehouses owned, operated, or leased by such State, a person applying 
for a license under section 9 of the act, to accept the custody of beans 
and to store the same in any of said warehouses, may, in lieu of a bond 
or bonds complying with Secs. 739.11 and 739.12, file with the Secretary 
a single bond meeting the requirements of the act and the regulations in 
this part, in such form and in such amount not less than $5,000 as he 
shall prescribe, to insure the performance by such person, with respect 
to the acceptance of the custody of beans and their storage in the 
warehouses in such system for which licenses are or may be issued, of 
his obligations arising during the periods of such licenses, or 
amendments thereto. In fixing the amount of such bond, consideration 
shall be given, among other appropriate factors, to the character of the 
warehouses involved, their actual or contemplated capacity, the bonding 
requirements of the State and its liability with respect to such 
warehouses. If the Secretary, or his designated representative, shall 
find the

[[Page 320]]

existence of conditions warranting such action, there shall be added to 
the amount of the bond so fixed a further amount, fixed by him, to meet 
such conditions.



Sec. 739.78  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.

[62 FR 33541, June 20, 1997]



Sec. 739.79  Information of violations.

    Every person licensed under the act shall immediately furnish the 
Service any information which comes to the knowledge of such person 
tending to show that any provision of the act or the regulations in this 
part has been violated.



Sec. 739.80  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130 through 1.151).

[45 FR 6776, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 739.81  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report, or other paper, 
document or proceeding relating to such warehouse, shall be sufficient 
unless otherwise directed by the Administrator.



Sec. 739.82  Bond for combination warehouse.

    Where such license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the regulations applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse were used for its storage.



Sec. 739.83  Amendments.

    Any amendment to, or revision of, the regulations in this part, 
unless otherwise stated therein, shall apply in the same manner to 
persons holding licenses at the time it becomes effective as it applies 
to persons thereafter licensed under the act.



PART 740--NUT WAREHOUSES--Table of Contents




                               Definitions

Sec.
740.1  Meaning of words.
740.2  Terms defined.

                           Warehouse Licenses

740.3  Application form.
740.4  All facilities to be licensed or exempted.
740.5  Scales; bin and compartment numbers.
740.6  Net assets.
740.7  Grounds for not issuing license.
740.8  License shall be posted.
740.9  Suspension, cancellation or revocation of warehouse licenses.
740.10  Return of suspended or revoked warehouse license.
740.11  Lost or destroyed warehouse license.
740.12  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

740.13  Bond required; time of filing.
740.14  Amount of bonds; additional amounts.
740.15  Amendment to license; bond.
740.16  New bond required each year.
740.17  Approval of bond.

                           Warehouse Receipts

740.18  Form.
740.19  Copies of receipts.
740.20  Lost or destroyed receipts; bond.
740.21  Printing of receipts.
740.22  Return of receipts before delivery of nuts.
740.23  Partial delivery of nuts.
740.24  Authority for delivery of nuts on nonnegotiable receipts.
740.25  Omission of grade; no compulsion by warehouseman.
740.26  Persons authorized to sign receipts.

                     Duties of Licensed Warehouseman

740.27  Cancelled receipts, auditing.
740.28  Nuts must be inspected and weighed.
740.29  Receipts; basis for issuance.
740.30  Insurance requirements.
740.31  Care of nuts in warehouses.
740.32  Care of nonlicensed nuts, or other commodities.
740.33  Records to be kept in safe place.

[[Page 321]]

740.34  Warehouse charges.
740.35  Numbered tags to be attached to packaged nuts.
740.36  Identification tag on stored nuts.
740.37  Bulk nuts; grade or other class and weights.
740.38  Identity-preserved nuts; bulk storage.
740.39  Delivery of nuts.
740.40  Removal of nuts from storage; conditions.
740.41  Loading out without weighing.
740.42  Business hours.
740.43  System of accounts.
740.44  Reports.
740.45  Copies of reports to be kept.
740.46  Inspections; examinations of warehouses.
740.47  Weighing; testing, measuring apparatus; inspection.
740.48  Warehouse to be kept clean.
740.49  [Reserved]
740.50  Excess storage.
740.51  Deteriorating nuts; handling.
740.52  Sale at public auction.
740.53  Compliance with contracts.
740.54  Reporting fire losses.
740.55  Grade-weight certificate; filing.

                                  Fees

740.56  License fees.
740.57  Warehouse annual and inspection fees.
740.58  Advance deposit.
740.59  Return of excess deposit.

                         Inspectors and Weighers

740.60  Inspector's and weigher's applications.
740.61  Examination of applicant.
740.62  Posting of license.
740.63  Duties of inspectors and weighers.
740.64  Inspection certification; form.
740.65  Copies of inspection certificates to be accessible.
740.66  Weight certificate; form.
740.67  Combination grade and weight certificate.
740.68  Copies of certificates to be kept.
740.69  Licensees to permit examination of records.
740.70  Reports by licensees.
740.71  Licenses; suspension, cancellation or revocation.
740.72  Suspended or revoked license; termination of license.
740.73  Lost or destroyed licenses.
740.74  Unlicensed inspectors and weighers.

                               Nut Grading

740.75  Classification; statement.
740.76  Grades based on inspection and sample.
740.77  Standards to be used.
740.78  Conditions and procedure for appeal of grades or other class.

                              Miscellaneous

740.79  Publications.
740.80  Information of violations.
740.81  Procedure in hearings.
740.82  One document and one license to cover several products.
740.83  Bond, assets, and fees for combination warehouse.
740.84  Amendments.

    Authority: 7 U.S.C. 241 et seq..

    Source: 41 FR 31163, July 27, 1976, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 740 appear at 62 FR 
33540, June 20, 1997.

                               Definitions



Sec. 740.1  Meaning of words.

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



Sec. 740.2  Terms defined.

    For the purposes of the regulations in this part, unless the context 
otherwise require, the following terms shall be construed, respectively, 
to mean:
    (a) Nuts. Unshelled nuts of the following kinds: American-grown 
peanuts, pecans, filberts, and English or Persian walnuts; and shelled 
American-grown peanuts.
    (b) The Act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486; (7 U.S.C. 241-273)) as amended.
    (c) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (d) Department. The United States Department of Agriculture.
    (e) Secretary. 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.
    (f) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (g) Administrator. The Administrator of the Service or any other 
officer or employee of that Service to whom authority has heretofore 
lawfully been delegated, or to whom authority may

[[Page 322]]

hereafter lawfully be delegated, to act in his stead.
    (h) Regulations. Rules and regulations made under the Act by the 
Secretary.
    (i) Warehouse. Unless the context otherwise clearly indicates, any 
building, structure, or other protected enclosure licensed or to be 
licensed under the Act, in which nuts are or may be stored for 
interstate or foreign commerce, or, if located within any place under 
the exclusive jurisdiction of the United States, in which nuts are or 
may be stored.
    (j) Warehouseman. Any person lawfully engaged in the business of 
storing nuts, who holds an effective warehouseman's license under the 
Act, or who has applied for such a license.
    (k) License. A license issued under the Act by the Secretary.
    (l) Warehouseman's bond. The bond required by the Act to be given by 
a warehouseman.
    (m) Licensed inspector. (1) A person licensed under provisions of 
section 11 of the United States Warehouse Act (7 U.S.C. 241 et seq.), or 
(2) a Federal employee authorized under provisions of the Agricultural 
Marketing Act of 1946 (7 U.S.C. 1621 et seq.), or (3) a person licensed 
under the provisions of the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621 et seq.) to inspect, grade, and certificate the grade or other 
class and/or condition of nuts stored or to be stored in a warehouse 
licensed under the U.S. Warehouse Act (the terms ``persons duly licensed 
to inspect'' or ``licensed inspector'' shall be defined accordingly).
    (n) Licensed weigher. A person licensed under the provisions of 
section 11 of the Unites States Warehouse Act (7 U.S.C. 241 et seq.), to 
weigh and certificate the weight of nuts stored or to be stored in a 
warehouse licensed under the U.S. Warehouse Act (the terms ``persons 
duly licensed to weigh'' or ``licensed weigher'' shall be defined 
accordingly).
    (o) Receipt. A licensed warehouse receipt issued under the Act.
    (p) Package. A bag, sack, box, or other container.
    (q) Ton. (Short ton) 2,000 pounds.

[41 FR 31163, July 27, 1976, as amended at 42 FR 26646, May 25, 1977. 
Redesignated and amended at 50 FR 1814, Jan. 14, 1985]

                           Warehouse Licenses



Sec. 740.3  Application form.

    Applications for licenses and for amendments of licenses under the 
Act shall be made to the Administrator upon prescribed forms furnished 
by the Service, shall be in English, shall truly state the information 
therein contained, and shall be signed by the applicant. The applicant 
shall at any time furnish such additional information as the 
Administrator shall find to be necessary to the consideration of his 
application.



Sec. 740.4  All facilities to be licensed or exempted.

    All facilities within the same city or town used for the storage of 
nuts by an applicant for a warehouse license must qualify for a license 
and be licensed under the Act if the applicant is to be licensed to 
operate as a nut warehouseman in such city or town, unless the 
facilities which are not to be covered by a license are exempted by the 
Administrator upon a finding that, due to the exercise of adequate 
controls by some independent agency over the operation of the 
nonfederally licensed facilities, there would be no likelihood of the 
interchange, substitution, or commingling of nuts stored in such 
facilities with nuts stored in the federally licensed facilities. If all 
such facilities do not qualify for a license or for an exemption under 
this section, the applicant shall not be licensed under the Act as a nut 
warehouseman in the city or town in which the facilities in question are 
located. Each applicant for a nut warehouse license must apply for a 
license covering all facilities operated by him for the storage of nuts 
within the same city or town or for exemption as provided in this 
section. If a licensed nut warehouseman acquires any additional nut 
storage facilities within the same city or town in which his licensed 
warehouse is located he shall file promptly an application for a license 
or an exemption of the additional facilities. No nut storage facility 
acquired by a licensed nut warehouseman, subsequent to the issuance of 
his license, in the same city or town as his licensed facilities, shall 
be used for the

[[Page 323]]

storage of nuts until it qualifies for license and is licensed or is 
exempted as provided in this section. If any one of the licensed nut 
storage facilities operated by a warehouseman in the same city or town 
becomes ineligible for a license at any time for any reason, it shall 
not thereafter be used for the storage of nuts, until the condition 
making it ineligible is removed or an exemption is granted as provided 
in this section. The use for the storage of nuts by a licensed 
warehouseman of a facility which is in the same city or town as his 
licensed facilities and is neither licensed nor exempted, or other 
violation of the provisions of this section, shall be cause for 
suspension or revocation of any license issued to the warehouseman for 
the storage of nuts.



Sec. 740.5  Scales; bin and compartment numbers.

    (a) Each warehouse must be equipped with suitable scales in good 
order, and so arranged that all nuts, whether for storage or for 
nonstorage purposes, can be weighed in and out of the warehouse. The 
scales in any warehouse shall be subject to examination by 
representatives of the Department and to disapproval by the 
Administrator. If he disapproves any weighing apparatus, it shall not 
thereafter be used in ascertaining the weight of nuts for the purposes 
of this Act, until such disapproval be withdrawn.
    (b) Both bulk bins and compartments for sacked nuts of all 
warehouses licensed under the Act shall be identified by means of 
clearly discernible numbers securely affixed thereto. The series of 
numbers to be used shall be approved by the Service. Bulk bins shall be 
numbered so as to be easily identified at the openings on top and also 
on or near the outlets. Compartments shall be numbered in such a manner 
as to clearly show the space covered by each number.



Sec. 740.6  Net assets.

    (a) Each warehouseman conducting a warehouse licensed, or for which 
application for a license has been made under the regulations in this 
part, shall have and maintain above all exemptions and liabilities, 
total net assets liable for the payment of any indebtedness arising from 
the conduct of the warehouse, to the extent of at least $25 per ton for 
the maximum number of tons of peanuts, 2 cents per pound for the maximum 
number of pounds of walnuts or filberts, and/or 3 cents per pound for 
the maximum number of pounds of pecans, that the warehouse could 
accommodate when stored in the manner customary to the warehouse as 
determined by the Administrator: Provided, That no person may be 
licensed as a warehouseman under the regulations in this part unless he 
has allowable net assets of at least $10,000: And provided further, That 
any deficiency in net assets required above the $10,000 minimum may be 
supplied by an increase in the amount of the warehouseman's bond in 
accordance with Sec. 740.14(c). In determining total net assets, credit 
may be given for insurable property such as buildings, machinery, 
equipment, and merchandise inventory, only to the extent that such 
property is protected by insurance against loss or damage by fire. Such 
insurance shall be in the form of lawful policies issued by one or more 
insurance companies authorized to do such business and subject to 
service of process in suits brought in the State in which the warehouse 
is located.
    (b) In case a warehouseman is licensed or is applying for licenses 
to operate two or more warehouses under the regulations in this part, 
the maximum quantity of nuts which all such warehouses will accommodate 
when stored in the manner customary to the warehouse, as determined by 
the Administrator, shall be considered in determining whether the 
warehouseman meets the net assets requirements specified in paragraph 
(a) of this section.
    (c) For the purposes of paragraphs (a) and (b) of this section only, 
capital stock as such shall not be considered a liability.



Sec. 740.7  Grounds for not issuing license.

    A license for the conduct of a warehouse, or any amendment to a 
license, under the regulations in this part, shall not be issued if it 
is found by the Secretary that the warehouse is not suitable for the 
proper storage of nuts;

[[Page 324]]

that the warehouseman does not possess a good reputation, or does not 
have a net worth of at least $10,000, or is incompetent to conduct such 
warehouse in accordance with the Act and the regulations in this part; 
or that there is any other sufficient reason within the intent of the 
Act for not issuing such license. If all the facilities operated for the 
storage of nuts by the applicant within the same city or town are not to 
be licensed under the Act, the applicant shall not be licensed as a nut 
warehouseman with respect to any of such facilities, unless an exemption 
of the facilities which are not to be licensed is granted as provided in 
Sec. 740.4.



Sec. 740.8  License shall be posted.

    Immediately upon receipt of his license of any modification or 
extension thereof under the Act, the warehouseman shall post the same, 
and thereafter, except as otherwise provided in the regulations in this 
part, keep it posted until suspended or terminated, in a conspicuous 
place in the principal office where receipts issued by such warehouseman 
are delivered to depositors.



Sec. 740.9  Suspension, cancellation or revocation of warehouse licenses.

    (a) Pending investigation, the Secretary, whenever he deems 
necessary, may suspend a warehouseman's license temporarily without 
hearing. Upon written request and a satisfactory statement of reasons 
therefor, submitted by a warehouseman, the Secretary may, without 
hearing, suspend or cancel the license issued to such warehouseman. The 
Secretary may, after opportunity for hearing has been afforded in the 
manner prescribed in this section, suspend or revoke a license issued to 
a warehouseman when he determines that such warehouseman:
    (1) Does not have a net worth of at least $10,000;
    (2) Has parted, in whole or in part, with his control over the 
licensed warehouse;
    (3) Is in process of dissolution or has been dissolved;
    (4) Has ceased to operate such licensed warehouse;
    (5) Has in any other manner become nonexistent or incompetent or 
incapacitated to conduct the business of the warehouse;
    (6) Has made unreasonable or exorbitant charges for services 
rendered;
    (7) Is operating in the same city or town in which his licensed 
warehouse facilities are located, any facility for storage of nuts which 
is not covered by a license or an exemption as provided in Sec. 740.4, 
or
    (8) Has in any other manner violated or failed to comply with any 
provision of the Act or the regulations in this part.
    (b) Whenever any of the conditions mentioned in paragraphs (a)(1) 
through (8) of this section shall come into existence, it shall be the 
duty of the warehouseman to notify the Administrator immediately of the 
existing condition. Before a license is revoked or suspended (other than 
temporarily pending investigation) for any violation of, or failure to 
comply with, any provision of the Act or of the regulations in this 
part, or upon the ground that unreasonable or exorbitant charges have 
been made for services rendered, the warehouseman involved shall be 
furnished by the Secretary a written statement specifying the charges 
and shall be allowed a reasonable time within which he may answer the 
same in writing and apply for a hearing, an opportunity for which shall 
be afforded in accordance with Sec. 740.81.



Sec. 740.10  Return of suspended or revoked warehouse license.

    In case a license issued to a ware- houseman terminates or is 
suspended, revoked, or canceled by the Secretary, it shall be returned 
immediately to the Secretary. At the expiration of any period of 
suspension of such license, unless it be in the meantime revoked or 
canceled, the dates of the beginning and termination of the suspension 
shall be indorsed thereon, and it shall be returned to the licensed 
warehouseman to whom it was originally issued, and it shall be posted as 
required in Sec. 740.8: Provided, That in the discretion of the 
Administrator a new license may be issued without reference to such 
suspension.

[[Page 325]]



Sec. 740.11  Lost or destroyed warehouse license.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof or a new license may be 
issued under the same or a new number at the discretion of the 
Administrator.



Sec. 740.12  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the Act and no name or description conveying the impression that 
it or he is so licensed shall be used, either in a receipt or otherwise 
unless such warehouseman holds an unsuspended, unrevoked, and uncanceled 
license for the conduct of such warehouse.

                             Warehouse Bonds



Sec. 740.13  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the Act 
shall, before such license is granted, file with the Secretary a bond 
containing the following conditions and such other terms as the 
Secretary may prescribe in the approved bond forms, with such changes as 
may be necessary to adapt the forms to the type of legal entity 
involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall:
    Faithfully perform during the period of 1 year commencing 
__________, or until the termination of said license(s) in the event of 
termination prior to the end of the 1 year period, all obligations of a 
licensed ware- houseman under the terms of the Act and regulations 
thereunder relating to the above-named products; and
    Faithfully perform during said 1 year period and thereafter, whether 
or not said warehouse(s) remain(s) licensed under the Act, such delivery 
obligations and further obligations as a warehouseman as exist at the 
beginning of said 1 year period or are assumed during said period and 
prior to termination of said license(s) under contracts with the 
respective depositors of such products in the warehouse(s);
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act and regulations and contracts shall 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.



Sec. 740.14  Amount of bonds; additional amounts.

    (a) The amount of bond to be furnished for each warehouse under the 
regulations in this part for peanuts shall be fixed at a rate of $25 per 
ton for the first 10,000 tons of licensed capacity and $20 per ton for 
all tons of licensed capacity over 10,000 tons; for walnuts and filberts 
the bond shall be fixed at a rate of 2 cents per pound for the licensed 
capacity; and for pecans the bond shall be fixed at a rate of 3 cents 
per pound for the licensed capacity: Provided, That in any case the 
amount of bond shall not be less than $20,000 nor more than $500,000, 
except as prescribed in paragraph (c) of this section. The licensed 
capacity shall be the maximum quantity of nuts that the warehouse will 
accommodate when stored in the manner customary to the warehouse as 
determined by the Administrator.
    (b) In case a warehouseman is licensed or is applying for licenses 
to operate two or more warehouses in the same State he may give a single 
bond meeting the requirements of the Act and the regulations in this 
part to cover all his warehouses within the State. In such case the 
warehouses to be covered by the bond shall be deemed to be one warehouse 
only for purposes of determining the amount of bond required under 
paragraph (a) of this section.
    (c) In case of a deficiency in net assets above the $10,000 minimum 
required under Sec. 740.6, there shall be added to the amount of bond 
determined in accordance with paragraph (a) of this section an amount 
equal to such deficiency. In any other case in which the Administrator 
finds that conditions exist which warrant requiring additional bond, 
there shall be added to the amount of bond as determined under the other 
provisions of this section, a further amount to meet such conditions.



Sec. 740.15  Amendment to license; bond.

    In case an application is made for an amendment to a license and no 
bond

[[Page 326]]

previously filed by the warehouseman under Secs. 740.13 through 740.17 
covers obligations arising during the period covered by such amendment, 
the warehouseman shall, when notice has been given by the Secretary, 
that his application for such amendment will be granted upon compliance 
by such warehouseman with the Act, file with the Secretary, within a 
time, if any, fixed in such notice, a bond complying with the Act. In 
the discretion of the Secretary, a properly executed instrument in form 
approved by him, amending, extending, or continuing in force and effect 
the obligations of a valid bond previously filed by the warehouseman and 
otherwise complying with the Act and the regulations in this part, may 
be filed in lieu of a new bond.



Sec. 740.16  New bond required each year.

    A continuous form of license shall not remain in force for more than 
one year from its effective date, or any subsequent extension thereof, 
unless each year prior to the date on which the license would expire, 
the warehouseman files a bond in the required amount with the Secretary 
and such bond has been approved by him.



Sec. 740.17  Approval of bond.

    No bond, amendment, or continuation thereof shall be accepted for 
the purposes of the Act and the regulations in this part until it has 
been approved by the Secretary.

                           Warehouse Receipts



Sec. 740.18  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
nuts stored in a licensed warehouse shall, in addition to complying with 
the requirements of section 18 of the Act, embody within its written or 
printed terms the following:
    (1) The name of the warehouseman and the designation, if any, of the 
warehouse.
    (2) The license number of the warehouse.
    (3) A statement whether the warehouseman is incorporated or 
unincorporated, and if incorporated, under what laws.
    (4) In the event the relationship existing between the warehouseman 
and and any depositor is not that of strictly disinterested 
custodianship, a statement setting forth the actual relationship.
    (5) A statement conspicuously placed, whether or not the nuts are 
insured, and, if insured, to what extent, by the warehouseman against 
loss by fire, lightning, tornado, or otherwise.
    (6) The kind and type of nut.
    (7) The net weight of the nuts.
    (8) In the case of nuts the identity of which are to be preserved, 
the identification or location in accordance with Secs. 740.35, 740.36, 
and 740.38; and
    (9) The words ``Not Negotiable,'' or ``Negotiable,'' according to 
the nature of the receipt, clearly and conspicuously printed or stamped 
thereon.
    (b) Every receipt, whether negotiable or nonnegotiable, issued for 
unshelled peanuts stored in a licensed warehouse shall specify that the 
unshelled peanuts are accepted for storage under the Act and the 
regulations in this part, for a period not to extend beyond July 1 
following the year in which harvested. Upon demand and the surrender of 
the old receipt by the lawful holder thereof on or before July 1, the 
warehouseman, upon such lawful terms and conditions as may be granted by 
him at such time to other depositors of unshelled peanuts in the 
warehouse, if he then continues to act as a licensed warehouseman, may 
issue a new receipt for a further specified period not to extend beyond 
March 31 of the year following the date of surrender of the old receipt: 
Provided, That the farmers' stock peanuts are first reinspected by a 
licensed inspector and found to be in proper condition for further 
storage and the grade or other class, as determined by the licensed 
inspector is shown on the new receipt.
    (c) Every receipt, whether negotiable or nonnegotiable, issued for 
shelled peanuts stored in dry storage space in a licensed warehouse 
shall specify a period, for which the peanuts are to be stored under the 
Act and the regulations in this part, not to extend beyond May 31 
following the year in which harvested. Every receipt, whether negotiable 
or nonnegotiable, issued for peanuts stored in cold storage space in a

[[Page 327]]

licensed warehouse shall specify a period, not exceeding one year, for 
which the peanuts are accepted for storage under the Act and regulations 
in this part. Upon demand for issuance of a new receipt, surrender of 
the old receipt by the lawful holder thereof at or before the expiration 
of the period specified therein and an offer to satisfy the 
warehouseman's lien, the warehouseman, upon such lawful terms and 
conditions as may be granted by him to other depositors of peanuts in 
his warehouse, shall, in the absence of some lawful excuse, issue a new 
receipt for a further specified period, not exceeding one year.
    (d) Every receipt, whether negotiable or nonnegotiable, issued for 
walnuts, filberts, or pecans stored in a licensed warehouse under 
ordinary dry storage conditions shall specify a period for which the 
walnuts, filberts, or pecans are accepted for storage under the Act and 
the regulations in this part not to extend beyond March 31 following the 
year in which harvested. Upon demand by the lawful holder and surrender 
of this receipt on or before March 31, the warehouseman, upon such 
lawful terms and conditions as may be granted by him at such time to 
other depositors of walnuts, filberts, or pecans in his warehouse, if he 
then continues to act as a licensed warehouseman may issue a new receipt 
for a further specified period not to extend beyond December 31 of the 
year following the date of surrender of the old receipt: Provided, That 
the walnuts, filberts, or pecans are first reinspected by a licensed 
inspector and found to be in proper condition for further storage and 
the grade and condition as determined by the licensed inspector and the 
year in which the walnuts, filberts, or pecans were harvested are shown 
on the new receipt: And provided further, That such nuts are placed in 
licensed cold storage space before or immediately following inspection 
thereof and before the issuance of receipts.
    (e) The grade or other class stated in a receipt issued for nuts, 
shall be stated in such receipt in accordance withSec. 740.77 as 
determined by the licensed inspector who last inspected the nuts before 
the issuance of such reciept, and such receipt shall embody within its 
written or printed terms the following: (1) That the nuts covered by the 
receipt were weighed by a licensed weigher, and inspected by a licensed 
inspector; (2) a form of indorsement which may be used by the depositor 
or his authorized agent, for showing the ownership of, and liens, 
mortgages, or other encumbrances on the nuts covered by the receipt.
    (f) If a warehouseman issues a receipt omitting the statement of 
grade or other class on request of the depositor as permitted by section 
18 of the Act, such receipt shall have clearly and conspicuously stamped 
or written on the face thereof the words ``not graded on request of 
depositor.''
    (g) If a warehouseman issues a receipt under the Act omitting any 
information not required to be stated, for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made by the warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.19  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed or stamped thereon the words ``Copy--Not 
Negotiable.'' A copy of each receipt issued shall be retained by the 
warehouseman for a period of one year after December 31 of the year in 
which the corresponding original receipt is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.20  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, if there be no 
statute of the United States or law of a State applicable thereto, a new 
receipt upon the

[[Page 328]]

same terms, subject to the same conditions, and bearing on its face the 
number and the date of the receipt in lieu of which it is issued and a 
plain and conspicuous statement that it is a duplicate receipt issued in 
lieu of a lost or destroyed receipt, may be issued upon compliance with 
the conditions set out in paragraph (b) of this section.
    (b) Before issuing such new or duplicate receipt the licensed 
warehouseman shall require the depositor or other person applying 
therefor to make and file with the warehouseman: (1) An affidavit 
showing that the applicant is lawfully entitled to the possession of the 
original receipt, that he has not negotiated or assigned it, how the 
original receipt was lost or destroyed, and if lost, that diligent 
effort has been made to find the receipt without success, and (2) a bond 
in an amount double the value, at the time the bond is given, of the 
nuts represented by the lost or destroyed receipt. Such bond shall be in 
a form approved for the purpose by the Secretary, shall be conditioned 
to indemnify the warehouseman against any loss sustained by reason of 
the issuance of such duplicate receipt, and shall have as surety thereon 
(i) preferably a surety company which is authorized to do business, and 
is subject to service of process in a suit on the bond, in the State in 
which the warehouse is located, or (ii) at least two individuals other 
than the applicant who are residents of such State and each of whom owns 
real property therein having a value, in excess of all exemptions and 
encumbrances, equal to the extent of the amount of the bond.



Sec. 740.21  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.

[62 FR 33541, June 20, 1997]



Sec. 740.22  Return of receipts before delivery of nuts.

    Except as permitted by law or by this part, a warehouseman shall not 
deliver nuts for which he has issued a negotiable receipt until the 
receipt has been returned to him and canceled; and shall not deliver 
nuts for which he has issued a nonnegotiable receipt until such receipt 
has been returned to him, or he has obtained from the person lawfully 
entitled to such delivery, or his authorized agent, a written order 
therefor.



Sec. 740.23  Partial delivery of nuts.

    Before delivery is made of the last portion of a lot of nuts covered 
by a nonnegotiable receipt, the receipt itself shall be surrendered. If 
a warehouseman delivers a part only of a lot of nuts for which he has 
issued a negotiable receipt under the Act, he shall take up and cancel 
such receipt and issue a new receipt bearing the same lot number for the 
undelivered portion of the nuts. In addition to showing the information 
required by Sec. 740.18, the new receipt shall also indicate the date 
and number of the receipt which it supersedes.



Sec. 740.24  Authority for delivery of nuts on nonnegotiable receipts.

    Each person to whom a nonnegotiable receipt is issued shall furnish 
the warehouseman with a statement in writing indicating the person or 
persons having power to authorize delivery of nuts covered by such 
receipt, together with the bona fide signature of such person or 
persons. No licensed warehouseman shall honor an order for the release 
of nuts covered by a nonnegotiable receipt until he has first 
ascertained that the person issuing the order has authority to order 
such release and that the signature of the releasing party is genuine: 
Provided, That if the holder of such nonnegotiable receipts agrees in 
writing to hold blameless both the warehouseman and bondsman for any 
loss that might result from improper delivery through receipt of an 
unauthorized telegram, deliveries may be made on receipt of telegraphic 
orders to be followed immediately with usual confirmation order.

[[Page 329]]



Sec. 740.25  Omission of grade; no compulsion by warehouseman.

    No warehouseman shall, directly or indirectly, by any means 
whatever, compel or attempt to compel the depositor of any nuts stored 
in his licensed warehouse to request the issuance of a receipt omitting 
the statement of grade or other class.



Sec. 740.26  Persons authorized to sign receipts.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to sign warehouse receipts 
for the warehouseman, and shall promptly notify the Department of any 
changes as to persons authorized to sign and shall file the signatures 
of such persons, and each warehouseman shall be bound by such signatures 
the same as if he had personally signed the receipt.

                     Duties of Licensed Warehousemen



Sec. 740.27  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33541, June 20, 1997]



Sec. 740.28  Nuts must be inspected and weighed.

    (a) Except in case of identity preserved nuts when grade or other 
class is omitted at request of depositor, all nuts received into the 
warehouse shall be inspected and weighed by a licensed inspector and/or 
weigher and no receipt may be issued under the Act and the regulations 
in this part until the nuts covered by such receipt have been so 
inspected and weighed.
    (b) When requested by the depositor of nuts the identity of which is 
to be preserved, a receipt omitting statement of grade or other class 
but not weight may be issued.
    (c) Except as provided in Sec. 740.41, all nuts delivered out of a 
warehouse must be weighed by a licensed weigher.
    (d) Warehousemen must keep stocks of nuts in storage by grades or 
other class in balance with the grades or other class of nuts 
represented by outstanding storage obligations for which receipts have 
been or are to be issued, except when the nuts have unavoidably improved 
or deteriorated through natural causes. In the case the grades or other 
class of stored nuts should get out of balance with grades or other 
class represented by outstanding storage obligations for which receipts 
have been or are to be issued, the warehouseman shall effect proper 
adjustments.



Sec. 740.29  Receipts; basis for issuance.

    Before issuing any receipt under the Act each warehouseman shall, 
unless he personally weighed, inspected, and graded, if graded, a lot of 
nuts, first obtain either a copy of, or the original weight certificate, 
and inspection certificate, if any, covering said lot of nuts. The 
warehouse records shall clearly identify the certificate(s) used as a 
basis of issuance of each warehouse receipt, and said inspection and 
weight certificate shall be kept on file as a record in the 
warehouseman's office. Such certificates shall be retained for a period 
of three years after December 31 of the year in which issued.



Sec. 740.30  Insurance requirements.

    (a) Each licensed warehouseman, when so requested in writing as to 
any nuts by the depositor thereof or lawful holder of the receipt 
covering such nuts, shall, to the extent to which in the exercise of due 
diligence he is able to procure such insurance, keep such nuts while in 
his custody as a licensed warehouseman insured in his own name or 
arrange for insurance otherwise to the extent so requested against loss 
or damage by fire, lightning and tornado. When insurance is not carried 
in the warehouseman's name the receipts shall show that the nuts are not 
insured by the warehouseman. Such insurance shall be covered by lawful 
policies issued by one or more insurance companies authorized to do such 
business, and subject to service of process in suits brought, in the 
State where the warehouse is located. If the warehouseman is unable to 
procure such insurance to the extent requested, he shall, by telegraph 
or orally in person or by telephone and with subsequent confirmation in 
writing, and at his own expense, immediately notify the person

[[Page 330]]

making the request of the fact. Nothing in this section shall be 
construed to prevent the warehouseman from adopting a rule that he will 
insure all nuts stored in his warehouse.
    (b) Each warehouseman shall comply fully with the terms of insurance 
policies or contracts covering his licensed warehouse and all products 
stored therein, and shall not commit any acts, nor permit his employees 
to do anything, which might impair or invalidate such insurance.
    (c) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 740.8, and at such other place as the Administrator 
or his representative may from time to time designate, a notice stating 
briefly the conditions under which the nuts will be insured against loss 
or damage by fire, lightning, and tornado.
    (d) Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of the regulations in this part, pay such 
premiums, permit such reasonable inspections and examinations, and make 
such reasonable reports as may be provided for in such contracts.
    (e) Each warehouseman shall promptly take such steps as may be 
necessary and proper to collect any moneys which may become due under 
contracts of insurance entered into by him for the purpose of meeting 
the requirements of the regulations in this part, and shall, as soon as 
collected, promptly pay to the persons concerned any portion of such 
moneys which they may be entitled to receive from him.



Sec. 740.31  Care of nuts in warehouses.

    Each warehouseman shall at all times exercise such care in regard to 
nuts in his custody as a reasonably careful owner would exercise under 
the same circumstances and conditions. Walnuts, filberts, and/or pecans 
stored under licensed receipts between March 31 and December 31, of the 
year following the year in which such walnuts, filberts, and/or pecans 
were harvested must be stored in a licensed cold-storage warehouse or 
room. Unless otherwise authorized by the Administrator, the warehouseman 
shall maintain even temperature and humidity in licensed cold-storage 
space, with temperature not higher than 37 deg. F., nor less than 
32 deg. F., and relative humidity not higher than 70 percent nor less 
than 55 percent at any time while nuts of any kind subject to this Act 
are in storage. Such licensed cold-storage warehouse or room shall be 
equipped with automatic recording instruments for temperature and 
relative humidity approved by the Administrator. Continuous records or 
charts of temperature and relative humidity shall be kept by the 
warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.32  Care of nonlicensed nuts, or other commodities.

    If, at any time, a warehouseman shall handle or store nuts otherwise 
than as a licensed warehouseman, or shall handle or store any other 
commodity, he shall so protect the same, and otherwise exercise care 
with respect to it, as not to endanger the nuts in his custody as a 
warehouseman or impair the insurance thereof or his ability to meet his 
obligations and perform his duties under the act and the regulations in 
this part. If the warehouseman stores commodities other than those for 
which he is licensed, licensed receipts shall not be issued therefor.



Sec. 740.33  Records to be kept in safe place.

    Each warehouseman shall provide a fireproof safe, vault, or 
compartment in which he shall keep, when not in actual use, all records, 
books, and papers pertaining to the licensed warehouse, including his 
current receipt book, copies of issued and canceled receipts, except 
that with the written consent of the Administrator, upon a showing by 
such warehouseman that it is not practicable to provide such fireproof 
safe, vault, or compartment, he may keep such records, books, and papers 
in some other place of safety approved by the Administrator. Each 
canceled receipt shall be retained by the warehouseman for a period of 6 
years after

[[Page 331]]

December 31, of the year in which the receipt is canceled and for such 
longer period as may be necessary for the purposes of any litigation 
which the warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act. 
Canceled receipts shall be arranged by the warehouseman in numerical 
order and otherwise in such manner as shall be directed, for purposes of 
audit, by authorized officers or agents of the Department of 
Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.34  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for service rendered. Before a license to conduct a warehouse is granted 
under the Act, the warehouseman shall file with the Service a copy of 
his rules and a schedule of charges to be made by him if licensed. 
Before making any change in such rules or schedule of charges, he shall 
file with the Service a statement in writing showing the proposed change 
and the reasons therefor. Each warehouseman shall keep exposed 
conspicuously in the place prescribed by Sec. 740.8, and at such other 
places, accessible to the public, as the Administrator or his 
representative may from time to time designate, a copy of his current 
rules and schedule of charges.



Sec. 740.35  Numbered tags to be attached to packaged nuts.

    Each warehouseman shall, upon acceptance of any lot of nuts in 
packages or sacks for storage, immediately stencil or mark an 
identification number or mark on each such package in the lot and attach 
to such lot a tag of good quality which shall identify the lot. Such tag 
shall show the lot number, the identification mark on each package, the 
number of the receipt issued to cover such nuts, the number of packages 
or sacks in the lot, the kind of nuts, the grade or other class if 
determined, and the gross weight of the nuts at the time they entered 
storage.



Sec. 740.36  Identification tag on stored nuts.

    Each warehouseman shall so store each lot of nuts for which a 
receipt under the Act has been issued that the tag thereon, required by 
Sec. 740.35 is visible and readily accessible, and shall arrange all 
packages in his licensed warehouse so as to permit an accurate count 
thereof and to facilitate sampling of the nuts and inspection for 
condition.



Sec. 740.37  Bulk nuts; grade or other class and weights.

    Each licensed warehouseman shall accept all nuts for storage and 
shall deliver out of storage all bulk nuts, other than specially binned 
or sacked nuts, in accordance with the grade or other class of such nuts 
as determined by a person duly licensed to inspect such nuts and to 
certificate the grade or other class thereof, and in accordance with the 
weights of such nuts as determined by a person duly licensed to weigh 
such nuts and to certificate the weight thereof, under the Act and the 
regulations in this part.



Sec. 740.38  Identity-preserved nuts; bulk storage.

    Upon the acceptance for storage in his licensed warehouse of any lot 
of bulk nuts the identity of which is to be preserved, the warehouseman 
shall store such nuts in an individual bin or compartment designated by 
lot or cargo numbers, or by letters, numbers or other clearly 
distinguishable words or signs, permanently and securely affixed 
thereto, or shall so mark the container or containers of such nuts, or 
so place the nuts in the warehouse, that their identity will not be lost 
during the storage period.



Sec. 740.39  Delivery of nuts.

    Except as may be provided by law or the regulations in this part, 
each licensed warehouseman: (a) Upon proper presentation of a receipt 
for any nuts, other than identity-preserved nuts, and upon payment or 
tender of all advances and legal charges, shall deliver to such 
depositor or lawful holder of such receipt nuts of the grade or other 
class and quantity specified in such receipt, and (b) upon proper 
presentation of a

[[Page 332]]

receipt for any nuts, the identity of which was to have been preserved 
during the storage period, and upon payment or tender of all advances 
and legal charges, shall deliver to the person lawfully entitled 
thereto, the identical nuts stored in his licensed warehouse.



Sec. 740.40  Removal of nuts from storage; conditions.

    Except as may be permitted by law or the regulations in this part, a 
licensed warehouseman shall not remove any nuts for storage from the 
licensed warehouse until such receipt is first surrendered and canceled. 
If it becomes absolutely necessary to remove the nuts prior to the 
surrender of the receipts in order to protect the interests of holders 
of the receipts, the warehouseman shall promptly notify the 
Administrator of such removal and the necessity therefor.



Sec. 740.41  Loading out without weighing.

    When the lawful owner of an entire lot of identity preserved nuts 
requests the warehouseman to deliver said lot without reweighing said 
nuts, the warehouseman may make such delivery if there is an accurate 
record of the weight of such nuts when received. Such deliveries shall 
be made only when the lawful owner agrees to assume all shortages and 
other risks incidental thereto, and after the warehouse receipts 
covering all of the nuts in the lot have been surrendered to the 
warehouseman and canceled.



Sec. 740.42  Business hours.

    (a) Each licensed warehouse shall be kept open for the purpose of 
receiving nuts for storage and delivering nuts out of storage every 
business day for a period of not less than six hours between the hours 
of 8 a.m. and 6 p.m., except as provided in paragraph (b) of this 
section. The warehouseman shall keep conspicuously posted on the door of 
the public entrance to his office and to his warehouse a notice showing 
the hours during which the warehouse will be kept open, except when such 
warehouse is kept open continuously for eight hours between 8 a.m. and 6 
p.m.
    (b) In case the warehouse is not to be kept open as required by 
paragraph (a) of this section, the notice posted as prescribed in that 
paragraph shall state the period during which the warehouse is to be 
closed and the name of an accessible person, with the telephone number 
and address where he is to be found, who shall be authorized to deliver 
nuts stored in such warehouse, upon lawful demand by the depositor 
thereof or the holder of the receipt therefor, as the case may be.



Sec. 740.43  System of accounts.

    Each licensed warehouseman shall have and maintain a system of 
accounts, approved for the purpose by the Service, which shall include 
but is not limited to a stock record showing for each lot of nuts, the 
name of the depositor, the weight of the nuts, the number of packages in 
each lot, the grade or other class when grade or other class is required 
to be, or is, ascertained, the location, the dates received for and 
delivered out of storage and the receipts issued and canceled, a 
separate record for each depositor and such accounts shall include a 
detailed record of all moneys received and disbursed and of all 
effective insurance policies. In the case of nuts stored in packages, 
the tag number mentioned in Sec. 740.35 shall be shown. Such rec- ords 
shall be retained by the warehouseman for a period of six years after 
December 31 of the year in which created, and for such longer period as 
may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.44  Reports.

    Each licensed warehouseman shall, from time to time, when requested 
by the Administrator, make such reports, on forms prescribed and 
furnished for the purpose by the Service, concerning the condition, 
contents, operation, and business of the warehouse as the Administrator 
may require.

[[Page 333]]



Sec. 740.45  Copies of reports to be kept.

    Each warehouseman shall keep on file, as a part of the records of 
the warehouse, for a period of 3 years after December 31 of the year in 
which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.46  Inspections; examinations of warehouses.

    Each licensed warehouseman shall permit any officer or agent of the 
Department of Agriculture, authorized by the Secretary for the purpose, 
to enter and inspect or examine, on any business day during the usual 
hours of business, any warehouse for the conduct of which such 
warehouseman holds a license, the office thereof, the books, records, 
papers, and accounts relating thereto, and the contents thereof, and 
such warehouseman shall furnish such officer or agent the assistance 
necessary to enable him to make any inspection or examination under this 
section.



Sec. 740.47  Weighing, testing, measuring apparatus; inspection.

    The apparatus used for determining the weight, quantity, or quality 
stated in a receipt or certificate shall be subject to examination by 
the Service. If the Service shall disapprove such apparatus, it shall 
not thereafter, unless such disapproval be withdrawn, be used in 
ascertaining the weight, quantity, or quality of nuts for the purposes 
of the Act and the regulations in this part.



Sec. 740.48  Warehouse to be kept clean.

    Each licensed warehouseman shall keep his warehouse clean and free 
from trash, dust, rubbish, or accumulations of materials that will 
increase the fire hazard or interfere with the handling of nuts.



Sec. 740.49  [Reserved]



Sec. 740.50  Excess storage.

    If at any time a warehouseman shall store nuts in his warehouse in 
excess of the capacity for which it is licensed, such warehouseman shall 
immediately notify the Service of such excess storage, the reason 
therefor, and the location thereof.



Sec. 740.51  Deteriorating nuts; handling.

    (a) If the licensed warehouseman, with the approval of the licensed 
inspector, shall determine that any nuts are deteriorating and that such 
deterioration cannot be stopped, the licensed warehouseman shall give 
immediate notice of the fact, in accordance with paragraphs (b) and (c) 
of this section.
    (b) Such notice shall state: (1) The warehouse in which the nuts are 
stored; (2) the quantity, kind, and grade or other class of the nuts at 
the time the notice is given; (3) the actual condition of the nuts as 
nearly as can be ascertained, and the reason, if known, for such 
condition; (4) the outstanding receipts covering the amount of nuts out 
of condition, giving the number and date of each such receipt and the 
quantity, the kind, and grade or other class of the nuts as stated in 
each such receipt; and (5) that such nuts will be delivered upon the 
return and cancellation of the receipts therefor.
    (c) A copy of such notice shall be delivered in person or shall be 
sent by mail: (1) To the person holding the receipts, if known to the 
licensed warehouseman; (2) to the person who originally deposited the 
nuts; (3) to any other persons known by the licensed warehouseman to be 
interested in the nuts; and (4) to the Administrator. If the holders of 
the receipts and owners of the nuts are known to the licensed 
warehouseman and cannot, in the regular course of the mails, be reached 
within 12 hours, the licensed warehouseman shall, whether or not 
requested so to do, also immediately notify such persons by telegraph or 
telephone at their expense. Public notice shall also be given by posting 
a copy of

[[Page 334]]

such notice at the place where the warehouseman is required to post his 
license and keeping such notice posted so long as the condition exists. 
A copy of such notice shall be kept as a record of the warehouse.
    (d) Any person, interested in any nuts or the receipt covering such 
nuts stored in a licensed warehouse, may, in writing, notify the 
licensed warehouseman conducting such licensed warehouse, of the fact of 
his interest, and such licensed warehouseman shall keep a record of the 
fact. If such person requests in writing that he be notified regarding 
the condition of any such nuts and agree to pay the cost of any 
telegraph or telephone toll charge, such licensed warehouseman shall 
notify such person in accordance with such request.
    (e) Nothing contained in this section shall be construed as 
relieving the licensed warehouseman from properly caring for any nuts 
after notification of their condition in accordance with this section.
    (f) Records required to be kept by this section shall be retained, 
as a part of the records of the warehouse, for a period of six years 
after December 31 of the year in which created, and for such longer 
period as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.52  Sale at public auction.

    If the nuts, advertised in accordance with the requirements of 
Sec. 740.51 have not been removed from storage by the owner thereof 
within 5 days from the date of notice of their being out of condition, 
the licensed warehouseman in whose licensed warehouse such nuts are 
stored may sell the same at public auction at the expense and for the 
account of the owner after giving 10 days' notice in the manner 
specified in Sec. 740.51(c).



Sec. 740.53  Compliance with contracts.

    Each warehouseman shall faithfully perform such obligations as a 
warehouseman as may be assumed by him under contracts with depositors of 
nuts in his warehouse.



Sec. 740.54  Reporting fire losses.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[62 FR 33541, June 20, 1997]



Sec. 740.55  Grade-weight certificate; filing.

    When an inspection or weight certificate has been issued by a 
licensed inspector or weigher, a copy of such certificate shall be filed 
with the warehouseman in whose warehouse the nuts covered by such 
certificate are stored, and such certificate shall become a part of the 
records of the licensed warehouseman. Such certificates shall be 
retained, as a part of the records of the warehouse, for a period of 
three years after December 31 of the year in which the certificates are 
issued.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[41 FR 31163, July 27, 1976, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]

                                  Fees



Sec. 740.56  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 740.57  Warehouse annual and inspection fees.

    Warehousemen must pay:

[[Page 335]]

    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The fee will be assessed 
and payable when the warehouse bond is furnished in accordance with 
these regulations, for acceptance by the Secretary and annually 
thereafter on the bond renewal date. The capacity for each identifiable 
location will be determined by the Secretary. The total capacity of all 
locations may not exceed the capacity stated in the current license. An 
identifiable location is a fully functional public warehouse as 
determined by the Secretary. The annual fee a licensed warehouseman is 
assessed may be adjusted by the amount Commodity Credit Corporation 
(CCC) pays, if CCC has a storage contract or agreement with the 
warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 740.58  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[46 FR 63201, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33541, June 20, 1997]



Sec. 740.59  Return of excess deposit.

    The Treasurer of the United States shall hold in his custody each 
advance deposit made under Sec. 740.58 until the fee, if any, is 
assessed and he is furnished by the Service with a statement showing the 
amount thereof and against whom assessed. Any part of such advance 
deposit which is not required for the payment of any fee assessed shall 
be returned to the party depositing the same.

                         Inspectors and Weighers



Sec. 740.60  Inspectors' and weighers' applications.

    (a) Application for licenses to inspect and grade or to weigh nuts 
under section 11 of the Act shall be made to the Administrator on forms 
furnished for the purpose by him. Each application shall be in English, 
shall be signed by the applicant, and shall contain or be accompanied by 
a statement from the warehouseman for whom the applicant will inspect, 
grade, or weigh nuts under the Act, showing whether the applicant is 
competent and is acceptable to such warehouseman for the purpose.
    (b) Each inspector's application shall contain:
    (1) Evidence that he can correctly grade nuts in accordance with the 
official standards of the United States, or in the absence of such 
standards in accordance with any standards approved by the 
Administrator, and
    (2) Satisfactory evidence that he will be provided with such means 
or facilities for inspecting and grading nuts as may be deemed 
necessary, for use in the locality in which the applicant expects to 
perform services as a licensed inspector.
    (c) Applications for licenses to weigh nuts shall be on forms 
furnished for the purpose by the Administrator and shall give such 
information as will show the applicant's experience in weighing nuts.

[[Page 336]]

    (d) A single application may be made by any person for a license as 
both inspector and weigher upon complying with the requirements of this 
section.
    (e) An applicant shall at any time furnish such additional 
information as the Department shall find to be necessary to the 
consideration of his application.

[41 FR 31163, July 27, 1976, as amended at 42 FR 26646, May 25, 1977. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.61  Examination of applicant.

    Each applicant for license as an inspector or weigher and each 
inspector or weigher shall, whenever requested by an authorized agent of 
the Department, submit to an examination or test to show his ability 
properly to inspect and grade or to weigh nuts.



Sec. 740.62  Posting of license.

    Each inspector or weigher shall keep his license conspicuously 
posted in a place designated for the purpose by the Service unless 
authorized by the Service not to do so.



Sec. 740.63  Duties of inspectors and weighers.

    Each inspector and each weigher whose license remains in effect 
shall, without discrimination, as soon as practicable, and upon 
reasonable terms, inspect, grade or weigh and certificate the grade or 
other class or weight of nuts, stored or to be stored, in a warehouse, 
for which he holds a license, if such nuts be offered to him under 
conditions as permit proper inspection and weighing and the 
determination of the grade or other class or weight thereof. No 
inspector shall issue a certificate of grade or other class for any nuts 
unless the inspection thereof be based upon a correct and representative 
sample of the nuts.



Sec. 740.64  Inspection certification; form.

    (a) Except as provided in paragraph (b) of this section, each 
inspection certificate issued under the Act by an inspector shall be in 
a form approved for the purpose by the Department, and shall embody the 
following information within its written or printed terms:
    (1) The caption ``United States Warehouse Act, Nut Inspection 
Certificate.''
    (2) Whether it is an original, a duplicate, or other copy, and that 
it is not negotiable.
    (3) The name and location of the warehouse in which the nuts are or 
are to be stored.
    (4) A statement showing whether the inspection covers nuts moving 
into or out of the warehouse.
    (5) The date of the certificate.
    (6) The consecutive number of the certificate.
    (7) The approximate amount of nuts covered by the certificate.
    (8) The kind of nuts covered by the certificate.
    (9) The grade or other class of the nuts, as determined by such 
licensed inspector, in accordance with Sec. 740.77, and, in the case of 
nuts for which no official nut standards of the United States are in 
effect, the standard or description in accordance with which such nuts 
are graded.
    (10) A statement that the certificate is issued by an inspector 
licensed under the United States Warehouse Act and the regulations 
thereunder.
    (11) The signature of the inspector who inspected and graded the 
nuts.

In addition, the inspection certificate may include any other matter not 
inconsistent with the Act or the regulations in this part, provided the 
approval of the Service is first secured.
    (b) In lieu of the inspection certificate provided for in the 
preceding paragraph, each inspector, who holds an unsuspended and 
unrevoked license under the Agricultural Marketing Act of 1946 and 
regulations thereunder to inspect and grade any nuts and to certificate 
the grade or other class thereof for shipment or delivery for shipment 
in interstate or foreign commerce, shall, unless otherwise requested as 
to any such nuts by the owner or depositor thereof, issue a certificate 
of grade or other class covering such nuts in accordance with the 
Agricultural Marketing Act of 1946 and regulations thereunder. Such nuts 
shall be deemed to be inspected and graded and such certificate of grade 
or other class shall be deemed to be an inspection certificate for the 
purposes of the Act and the regulations in this part.

[[Page 337]]



Sec. 740.65  Copies of inspection certificates to be accessible.

    Each inspector shall, as soon as possible after inspecting any nuts 
and not later than the close of business on the next following business 
day, make accessible to the parties interested in a transaction in which 
the nuts are involved at the place designated in Sec. 740.62 a true copy 
of the inspection certificate issued by him for such nuts or a record of 
each lot or parcel of nuts inspected or graded by such licensed 
inspector showing the information contained on such inspection 
certificate.



Sec. 740.66  Weight certificate; form.

    Each weight certificate issued under the Act by a weigher shall be 
in a form approved for the purpose by the Service, and shall embody the 
following information within its written or printed terms:
    (a) The caption ``United States Warehouse Act, Nut Weight 
Certificate.''
    (b) Whether it is an original, a duplicate, or other copy, and that 
it is not negotiable.
    (c) The name and location of the warehouse in which the nuts are or 
are to be stored.
    (d) Whether the nuts are weighed into or out of the warehouse.
    (e) The date of the certificate.
    (f) The consecutive number of the certificate.
    (g) The gross weight of the nuts.
    (h) A statement that the certificate is issued by a weigher licensed 
under the United States Warehouse Act and the regulations thereunder, 
and
    (i) The signature of the weigher.

In addition, the weight certificate may include any other matter not 
inconsistent with the Act or the regulations in this part provided the 
approval of the Service is first secured.



Sec. 740.67  Combination grade and weight certificate.

    The grade or other class and weight of any nuts ascertained by an 
inspector and a weigher may be stated on a certificate meeting the 
combined requirements of Secs. 740.64 through 740.66, if the form of 
such certificate shall have been approved for the purpose by the 
Service.



Sec. 740.68  Copies of certificates to be kept.

    Each inspector and each weigher shall keep for a period of one year 
in a place accessible to interested parties a copy of each certificate 
issued by him under the regulations in this part, and shall file a copy 
of each such certificate with the warehouse in which the nuts covered by 
the certificates are stored.



Sec. 740.69  Licensees to permit examination of records.

    Each inspector and each weigher shall permit any authorized officer 
or agent of the Department to inspect or examine on any business day 
during the usual hours of business, his books, papers, records, and 
accounts relating to the performance of his duties under the Act and 
this part, and shall, with the consent of the warehouseman concerned, 
assist any such officer or agent in the inspection or examination 
mentioned in Sec. 740.46 as far as any such inspection or examination 
relates to the performance of the duties of such inspector or weigher 
under the Act and the regulations in this part.



Sec. 740.70  Reports by licensees.

    Each inspector and each weigher shall, from time to time, if 
requested by the Service, make reports, on forms approved for the 
purpose by the Service, bearing upon his activities as such inspector or 
weigher.



Sec. 740.71  Licenses; suspension, cancellation or revocation.

    Pending investigation, the Secretary may, whenever he deems 
necessary, suspend the license of an inspector or weigher temporarily 
without hearing. Upon a written request or a satisfactory statement of 
reasons therefor, submitted by the inspector or weigher, the Secretary 
or his designated representative may, without hearing, suspend or cancel 
the license issued to such inspector or weigher. The Secretary may, 
after opportunity for hearing has been afforded in the manner prescribed 
in this section, suspend or revoke a license issued to an inspector or a 
weigher when such licensee: (a) Has ceased to perform services as such 
inspector or weigher, or (b) Has in any

[[Page 338]]

other manner become incompetent or incapacitated to perform the duties 
of such inspector or weigher. As soon as it shall come to the attention 
of a warehouseman that either of the conditions mentioned under (a) or 
(b) of this section exists, it shall be the duty of such warehouseman to 
notify the Service in writing. Before the license of any inspector or 
weigher is permanently suspended or revoked pursuant to section 12 of 
the Act, such inspector or weigher shall be furnished by the Secretary a 
written statement specifying the charges and shall be allowed a 
reasonable time within which he may answer the same in writing and apply 
for a hearing, an opportunity for which shall be afforded in accordance 
with Sec. 740.81.



Sec. 740.72  Suspended or revoked license; termination of license.

    (a) In case a license issued to an inspector or weigher is suspended 
or revoked by the Secretary, such license shall be returned to the 
Secretary. At the expiration of any period of suspension of such 
license, unless in the meantime it be revoked, the dates of the 
beginning and termination of the suspension shall be indorsed thereon, 
it shall be returned to the inspector or weigher to whom it was 
originally issued and it shall be posted as prescribed in Sec. 740.62.
    (b) Any license issued under the Act and the regulations in this 
part to an inspector or weigher shall automatically be suspended as to 
any warehouse whenever the license of such warehouse shall be suspended 
and shall automatically terminate as to any warehouse whenever the 
license of such warehouse shall be revoked. Upon either suspension or 
termination of any inspector's or weigher's license under this 
paragraph, such license shall be returned to the Department. In case 
such license shall apply to other warehouses, the Secretary shall issue 
to the licensee a new license, omitting the names of the warehouses for 
which licenses have been revoked or suspended. Such new license shall be 
posted as prescribed in Sec. 740.62.



Sec. 740.73  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to an inspector or weigher, a duplicate thereof may be issued 
under the same number, in the discretion of the Secretary.



Sec. 740.74  Unlicensed inspectors and weighers.

    No person shall in any way represent himself to be an inspector or 
weigher licensed under the Act unless he is a licensed inspector or 
licensed weigher as defined in accordance with the provisions of 
paragraphs (m) and (n) of Sec. 740.2

[42 FR 26646, May 25, 1977. Redesignated at 50 FR 1814, Jan. 14, 1985]

                               Nut Grading



Sec. 740.75  Classification; statement.

    Whenever the type or grade or other class of nuts is required to be 
or is stated for the purposes of the Act and the regulations in this 
part, it shall be stated in accordance with Sec. 740.77.



Sec. 740.76  Grades based on inspection and sample.

    Whenever the grade or other class of nuts is required to be or is 
stated for the purposes of the Act or the regulations in this part, it 
shall be based upon a correct and representative sample of the nuts and 
the inspection and grading thereof shall be made under conditions which 
permit the determination of its true grade or other class.



Sec. 740.77  Standards to be used.

    Official Nut Grading Standards of the United States are hereby 
adopted as the official nut grading standards of the Act and the 
regulations in this part; Provided, That, the grade of nuts for which no 
official nut standards of the United States are in effect, shall be 
stated: (a) In accordance with the standards, if any, adopted by the 
local board of trade, chamber of commerce, or by the nut trade generally 
in the locality in which the warehouse is located, subject to the 
approval of the Service, or (b) in the absence of the standards 
mentioned in (a) of this section, in accordance with any standards 
approved for the purpose by the Service.

[[Page 339]]



Sec. 740.78  Conditions and procedure for appeal of grades or other class.

    (a) If a question arises as to whether the kind, grade or other 
class, or condition of nuts was correctly stated in a receipt or 
inspection certificate issued under the Act or the regulations in this 
part, the warehouseman concerned or any person financially interested in 
the nuts involved may, after reasonable notice to the other party, 
submit the question to the Administrator, who may appoint a committee to 
make a determination. The decision of the committee shall be final 
unless the Administrator shall direct a review of the question. 
Immediately upon making its decision, the committee shall issue a 
certificate embodying its findings to the appellants and to the licensee 
or licensees involved.
    (b) If the decision of the committee be that the kind, grade or 
other class or condition of any identifiable lot was not correctly 
stated, a new receipt or certificate embodying therein the statement of 
kind, grade or other class or condition in accordance with the findings 
of the committee.
    (c) All necessary and reasonable expenses of such determination 
shall be borne by the losing party, unless the Administrator or his 
representative shall decide that the expense shall be prorated between 
the parties.

                              Miscellaneous



Sec. 740.79  Publications.

    Publications under the Act and the regulations in this part, shall 
be made in such media as deemed proper by the Administrator.



Sec. 740.80  Information of violations.

    Every person licensed under the Act shall immediately furnish the 
Administrator any information which comes to the knowledge of such 
persons tending to show that any provision of the Act or the regulations 
in this part has been violated.



Sec. 740.81  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130 through 1.151).

[45 FR 6776, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 740.82  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report or other paper, 
document or proceeding relating to such warehouse, shall be sufficient 
unless otherwise directed by the Administrator.



Sec. 740.83  Bond, assets, and fees for combination warehouse.

    Where such license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the regulations applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse was used for its storage.



Sec. 740.84  Amendments.

    Any amendment to, or revision of, the regulations in this part, 
unless otherwise stated therein, shall apply in the same manner to 
persons holding licenses at the time it becomes effective as it applies 
to persons thereafter licensed under the Act.



PART 741--SIRUP WAREHOUSES--Table of Contents




                               Definitions

Sec.
741.1  Words in singular form.
741.2  Terms defined.

                           Warehouse Licenses

741.3  Application forms.
741.4  Grounds for not issuing license.
741.5  Net assets required.
741.6  License shall be posted.
741.7  Suspension or revocation of warehouse licenses.
741.8  Return of terminated, suspended, or revoked warehouse license.
741.9  Lost or destroyed warehouse license.
741.10  Unlicensed warehousemen must not represent themselves as 
          licensed.

[[Page 340]]

                             Warehouse Bonds

741.11  Bond required; time of filing.
741.12  Basis of amount of bond; additional amounts.
741.13  Amendment of license.
741.14  New bond required each year.
741.15  Approval of bond.

                           Warehouse Receipts

741.16  Form.
741.17  Copies of receipts.
741.18  Lost or destroyed receipts; bond.
741.19  Printing of receipts.
741.20  Partial delivery of sirup.
741.21  Return of receipt before delivery of sirup.
741.22  Signatures of persons authorized to direct delivery to be filed 
          with ware- houseman.
741.23  Omission of grade; no compulsion by warehouseman.

                     Duties of Licensed Warehouseman

741.24  Sirup must be inspected.
741.25  Insurance requirements.
741.26  Premiums; inspections; reports.
741.27  Care of sirup in storage.
741.28  Care of nonlicensed sirup or other commodities.
741.29  Records to be kept in safe places.
741.30  Warehouse charges.
741.31  Business hours.
741.32  Numbered tags to be attached to each lot of sirup.
741.33  System of accounts.
741.34  Reports.
741.35  Copies of reports to be kept.
741.36  Canceled receipts; auditing.
741.37  Inspections and examinations of warehouses.
741.38  Inspection of weighing, testing, and measuring apparatus.
741.39  Care in storage.
741.40  Water or ash in sirup.
741.41  Procedure to follow prior to reconditioning deteriorating sirup.
741.42  Deteriorating sirup; handling.
741.43  Excess storage.
741.44  Removal of sirup from storage.
741.45  Signatures of persons to sign receipts to be filed with 
          Department.
741.46  Reporting fire losses.
741.47  Copies of inspection or weight certificates to be filed.

                                  Fees

741.48  License fees.
741.49  Warehouse annual and inspection fees.
741.50  Advance deposit.
741.51  Return of excess deposit.

                    Licensed Inspectors and Weighers

741.52  Inspector's and weigher's application.
741.53  Examination of applicant.
741.54  Posting of license.
741.55  Duties of licensees.
741.56  Inspection certificate; form.
741.57  Weight certificate; form.
741.58  Combined inspection and weight certificate.
741.59  Copies of certificates to be kept.
741.60  Licensees to permit and assist in examination.
741.61  Reports.
741.62  Licenses; suspensions; revocation.
741.63  Return of suspended or revoked licenses; termination of license.
741.64  Lost or destroyed licenses.
741.65  Unlicensed inspector or weigher; misrepresentation.

                   Sirup Inspection and Classification

741.66  Classification; statement.
741.67  Standards to be used.
741.68  Statement of kind, grade, condition.

                            Appeal of Grades

741.69  Appeal of grades.

                              Miscellaneous

741.70  Bonds required.
741.71  Publications.
741.72  Information of violations.
741.73  Procedure in hearings.
741.74  One document and one license to cover several products.
741.75  Amount of assets and bond needed for combination warehouses.
741.76  Amendments.

    Authority: 7 U.S.C. 241 et seq..

    Source: 4 FR 4834, Dec. 13, 1939, unless otherwise noted. 
Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 741 appear at 62 FR 
33540, June 20, 1997.

                               Definitions



Sec. 741.1  Words in singular form.

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



Sec. 741.2  Terms defined.

    For the purpose of the regulations in this part, unless the context 
otherwise require, the following terms shall be construed, respectively, 
to mean:
    (a) Sirups. Sugarcane sirup, maple sirup, or extracted honey, as 
defined in Service and Regulatory Announcement, Food, Drug and Cosmetic 
No. 2, Issued July 1944, by the Food and Drug Administration, Department 
of Health, Education, and Welfare.

[[Page 341]]

    (b) The act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486, 7 U.S.C. 241-273), as amended.
    (c) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (d) Secretary. 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.
    (e) Administrator. The Administrator of the Service or any other 
officer or employee of the Service to whom authority has heretofore 
lawfully been delegated, or to whom authority may hereafter lawfully be 
delegated, to act in his stead.
    (f) Designated representative. The Administrator.
    (g) Regulations. Regulations made under the act by the Secretary.
    (h) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (i) Warehouse. Unless otherwise clearly indicated by the context, 
any suitable building, structure, or other protected inclosure in which 
sirup is or may be stored for interstate or foreign commerce, or, if 
located within any place under the exclusive jurisdiction of the United 
States, in which sirup is or may be stored, and for which a license has 
been issued under the act.
    (j) Warehouseman. Unless otherwise clearly indicated by the context, 
any person lawfully engaged in the business of storing sirup and holding 
a warehouse license.
    (k) License. A license issued under the act by the Secretary.
    (l) Licensed warehouseman's bond. A bond required to be given under 
the act by a licensed warehouseman.
    (m) Licensed inspector. A person licensed under the act by the 
Secretary to inspect, to sample, to grade, and to certificate the grade 
and condition for storage of sirup.
    (n) Licensed weigher. A person licensed under the act by the 
Secretary to weigh and to certificate the weight for storage of sirup.
    (o) Receipt. A warehouse receipt.

[4 FR 4834, Dec. 13, 1939, as amended at 7 FR 6807, Aug. 29, 1942; 13 FR 
8730, Dec. 30, 1948. Redesignated and amended at 50 FR 1814, Jan. 14, 
1985]

                           Warehouse Licenses



Sec. 741.3  Application forms.

    Applications for licenses and for modifications or extensions of 
licenses under the act shall be made to the Secretary upon forms 
prescribed for the purpose and furnished by the Service, shall truly 
state the information therein contained, and shall be signed by the 
applicant. The applicant shall at any time furnish such additional 
information as the Secretary or the Administrator shall find to be 
necessary to the consideration of his application.



Sec. 741.4  Grounds for not issuing license.

    A license for the conduct of a warehouse shall not be issued if it 
be found by the Secretary or his designated representative, that the 
warehouse is not suitable for the proper storage of sirup, that the 
warehouseman is incompetent to conduct such warehouse in accordance with 
the act and this part, or that there is any other sufficient reason 
within the purposes of the act for not issuing such license.



Sec. 741.5  Net assets required.

    The warehouseman conducting a warehouse licensed or for which 
application for license has been made under the act shall have and 
maintain above all exemptions and liabilities net assets liable for the 
payment of any indebtedness arising from the conduct of the warehouse, 
to the extent of at least 5 cents per gallon of sugarcane sirup and 10 
cents per gallon of maple sirup or honey, of the maximum number of 
gallons that the warehouse will accommodate when stored in the manner 
customary to the warehouse as determined by the Administrator, except 
that the amount of such assets shall not be less than $5,000, and need 
not be more than $100,000. If such warehouseman has applied for licenses 
to conduct two or more warehouses in the same State, the assets 
applicable to all of which shall be subject to the liabilities of each, 
such warehouses shall be

[[Page 342]]

deemed to be one warehouse for the purposes of the assets required under 
this section. For the purposes of this section only, paid-in capital 
stock, as such, shall not be considered a liability. Any deficiency in 
the required net assets may be supplied by an increase in the amount of 
the warehouseman's bond in accordance with Sec. 741.12.



Sec. 741.6  License shall be posted.

    Immediately upon receipt of his license or of any modification or 
extension thereof under the act, the warehouseman shall post the same, 
and thereafter, except as otherwise provided in this part, keep it 
posted until suspended or terminated, in a conspicuous place in the 
principal office where receipts issued by such warehouseman are 
delivered to depositors.



Sec. 741.7  Suspension or revocation of warehouse licenses.

    Pending investigation, the Secretary, or his designated 
representative, whenever he deems necessary, may suspend a 
warehouseman's license temporarily without hearing. Upon written request 
and a satisfactory statement of reasons therefor, submitted by a 
warehouseman, the Secretary, or his designated representative, may, 
without hearing, suspend or revoke the license issued to such 
warehouseman. The Secretary, or his designated representative, may, 
after opportunity for hearing when possible has been afforded in the 
manner prescribed in this section, revoke a license issued to a 
warehouseman when such ware- houseman (a) is bankrupt or insolvent; (b) 
has parted, in whole or in part, with his control over the licensed 
warehouse; (c) is in process of dissolution or has been dissolved; (d) 
has ceased to conduct such licensed warehouse; or (e) has in any other 
manner become incompetent or incapacitated to conduct the business of 
the warehouse. Whenever any of the conditions mentioned in paragraphs 
(a) to (e) of this section shall come into existence it shall be the 
duty of the warehouseman to notify immediately the Administrator of the 
existing condition. Before a license is revoked for any violation of, or 
failure to comply with, any provision of the act or of this part, or 
upon the ground that unreasonable or exorbitant charges have been made 
for services rendered, the warehouseman involved shall be furnished by 
the Secretary, or his designated representative, a written statement 
specifying the charges and shall be allowed a reasonable time within 
which he may answer the same in writing and apply for a hearing, an 
opportunity for which shall be afforded in accordance with Sec. 741.73.



Sec. 741.8  Return of terminated, suspended, or revoked warehouse license.

    When a license issued to a ware- houseman terminates or is 
suspended, or revoked, by the Secretary, or his designated 
representative, it shall be returned to the Secretary. At the expiration 
of any period of suspension of such license, unless it be in the 
meantime revoked, the dates of the beginning and termination of the 
suspension shall be endorsed thereon, it shall be returned to the 
licensed warehouseman to whom it was originally issued, and it shall be 
posted as prescribed in Sec. 741.6: Provided, That in the discretion of 
the Administrator a new license may be issued without reference to the 
suspension.



Sec. 741.9  Lost or destroyed warehouse license.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman, a duplicate thereof may be issued under the 
same number.



Sec. 741.10  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the act and no name or description conveying the impression that 
it is or he is so licensed shall be used, either in a receipt or 
otherwise, unless such warehouseman holds an unsuspended or unrevoked 
license, for the conduct of such warehouse.

                             Warehouse Bonds



Sec. 741.11  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the act 
shall, before such license is granted, file with

[[Page 343]]

the Secretary or his designated representative a bond containing the 
following conditions and such other terms as the Secretary or his 
designated representative may prescribe in the approved bond forms, with 
such changes as may be necessary to adapt the forms to the type of legal 
entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall:
    Faithfully perform during the period of 1 year commencing ________, 
or until the termination of said license(s) in the event of termination 
prior to the end of the 1 year period, all obligations of a licensed 
warehouseman under the terms of the Act and regulations thereunder 
relating to the above-named products; and
    Faithfully perform during said 1 year period and thereafter, whether 
or not said warehouse(s) remain(s) licensed under the Act, such delivery 
obligations and further obligations as a warehouseman as exist at the 
beginning of said 1 year period or are assumed during said period and 
prior to termination of said license(s) under contracts with the 
respective depositors of such products in the warehouse(s);
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act and regulations and contracts shall 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.

[28 FR 5637, June 8, 1963. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.12  Basis of amount of bond; additional amounts.

    (a) Exclusive of any amount which may added in accordance with 
paragraphs (b) and (c) of this section, the amount of such bond shall be 
at the rate of 5 cents per gallon of sugarcane sirup and 10 cents per 
gallon of maple sirup or honey, of the maximum number of gallons that 
the warehouse will accommodate when stored in the manner customary to 
the warehouse for which such bond is required, as determined by the 
Administrator, but not less than $5,000 nor more than $50,000. If such 
warehouseman has applied for licenses to conduct two or more warehouses 
in the same State, the assets applicable to all of which shall be 
subject to the liabilities of each, and shall desire to give a single 
bond meeting the requirements of the act and this part for said 
warehouses, such warehouses shall be deemed to be one warehouse for the 
purposes of the bond required under Secs. 741.11 through 741.15.
    (b) In case of a deficiency in net assets under Sec. 741.5, there 
shall be added to the amount of the bond fixed in accordance with 
paragraph (a) of this section, an amount equal to such deficiency.
    (c) If the Secretary, or his designated representative, finds the 
existence of conditions warranting such action, there shall be added to 
the amount fixed in accordance with paragraphs (a) and (b) of this 
section a further amount, fixed by him, to meet such conditions.



Sec. 741.13  Amendment of license.

    If application is made under Sec. 741.3, for an amendment of a 
license, and no bond previously filed by the ware- houseman under 
Secs. 741.11 through 741.15 covers obligations incurred during the 
period of such amendment, the warehouseman shall, when notice has been 
given by the Secretary, or his designated representative, that such 
amendment will be granted upon compliance by such warehouseman with the 
act, file with the Secretary, within a time, if any, fixed in such 
notice, a bond complying with the act, unless bond in sufficient amount 
has been filed since the filing of such application. In the discretion 
of the Secretary, a properly executed instrument in form approved by 
him, amending, extending, or continuing in force and effect the 
obligations of a valid bond previously filed by the warehouseman and 
otherwise complying with the act and this part, may be filed in lieu of 
a new bond.



Sec. 741.14  New bond required each year.

    Whenever a license has been issued for a period longer than 1 year, 
such license shall not be effective beyond 1 year from its effective 
date unless the warehouseman shall have filed a new bond in the required 
amount with, and such bond shall have been approved by the Secretary, or 
his designated representative, prior to the date on which that license 
would have expired had it

[[Page 344]]

been issued for but 1 year, subject to the provisions of Sec. 741.13.



Sec. 741.15  Approval of bond.

    No bond, amendment, or continuation thereof, shall be deemed 
accepted for the purposes of the act and this part until it has been 
approved by the Secretary, or his designated representative.

                           Warehouse Receipts



Sec. 741.16  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
sirups stored in a warehouse, shall, in addition to complying with the 
requirements of section 18 of the act, embody within its written or 
printed terms the following: (1) The name of the licensed warehouseman 
and the designation, if any, of the warehouse; (2) the license number of 
the warehouse; (3) a statement whether the ware- houseman is 
incorporated or unincorporated, and if incorporated, under what laws; 
(4) in the case of identity-preserved sirup, the lot number given to 
each lot of sirup, in accordance with Sec. 741.32; (5) a statement 
conspicuously placed, whether or not the sirup is insured, and if 
insured, to what extent, by the warehouseman against loss by fire, 
lightning, or tornado; (6) a blank space, designated for the purpose, in 
which the kind of sirup shall be stated; (7) a blank space, designated 
for the purpose, in which the locality in which the sirup was produced 
shall be stated, if known; (8) a blank space, designated for the 
purpose, in which the condition of the sirup shall be stated; (9) if the 
sirup is in barrels, drums or jackets, the gross, tare, and net weight, 
or number of gallons; (10) if in cases, the number of cases and size of 
containers; (11) if in bulk for storage in tanks, the weight and/or the 
number of gallons; (12) the word ``negotiable'' or ``nonnegotiable,'' 
according to the nature of the receipt, clearly and conspicuously 
printed or stamped thereon; (13) in the event the relationship existing 
between the warehouseman and any depositor is not that of strictly 
disinterested custodianship, a statement setting forth the actual 
relationship.
    (b) Every receipt, whether negotiable or nonnegotiable, issued for 
sirup stored in a warehouse, shall specify a period, not exceeding 1 
year, for which the sirup is accepted for storage under the act and this 
part: Provided, however, That no receipt shall be issued for sugarcane 
sirup stored without refrigeration in barrels for a period extending 
beyond March 1, following the year in which produced. Upon demand and 
surrender of the old receipt by the lawful holder thereof at or before 
the expiration of the period specified, the warehouseman, upon such 
lawful terms and conditions as may be granted by him to other depositors 
of sirup in his warehouse, if he then continues to act as a licensed 
warehouseman, shall issue a new receipt for a further specified period 
not exceeding 1 year: Provided, It is actually determined by a licensed 
inspector that the sirup has not deteriorated and that it is in proper 
condition for storage for another year: And provided further, That this 
provision shall not relate to sirup stored in wooden barrels. If the 
warehouseman continues to act as a public, but not as a licensed 
warehouseman, he may issue a new non-licensed receipt.
    (c) The grade stated in a receipt issued for sirup stored in a 
warehouse, shall be stated as determined by the licensed inspector who 
last inspected the sirup before the issuance of such receipt, and such 
receipt shall embody within its written or printed terms the following: 
(1) That the sirup covered by the receipt was inspected by a licensed 
inspector, and (2) a form of indorsement which may be used by the 
depositor or his authorized agent, for showing the ownership of, and 
liens, mortgages, or other encumbrances on the sirup covered by the 
receipt.
    (d) Whenever the grade of sirup is stated in a receipt issued for 
sirup stored in a warehouse, such grade shall be stated in accordance 
with Secs. 741.66 through 741.68.
    (e) If a warehouseman issues a receipt omitting the statement of 
grade on request of the depositor as permitted by section 18 of the act, 
such receipt shall have clearly and conspicuously stamped or written on 
the face thereof the words ``Not graded on request of depositor''.

[[Page 345]]

    (f) If a warehouseman issues a receipt under the act omitting any 
information not required to be stated, for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made by the warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[4 FR 4834, Dec. 13, 1939, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.17  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed or stamped thereon the words ``Copy--Not 
Negotiable.'' A copy of each receipt issued shall be retained by the 
warehouseman for a period of one year after December 31 of the year in 
which the corresponding original receipt is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.18  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, if there be no 
statute of the United States or law of a State applicable thereto, a new 
receipt upon the same terms, subject to the same conditions and bearing 
on its face the number and the date of the receipt in lieu of which it 
is issued and a plain and conspicuous statement that it is a duplicate 
issued in lieu of a lost or destroyed receipt, may be issued upon 
compliance with the conditions set out in paragraph (b) of this section.
    (b) Before issuing such duplicate receipt the warehouseman shall 
require the depositor or other person applying therefor to make and file 
with the warehouseman (1) an affidavit showing that he is lawfully 
entitled to the possession of the original receipt, that he has not 
negotiated or assigned it, how the original receipt was lost or 
destroyed, and if lost, that diligent effort has been made to find the 
receipt without success and (2) a bond in amount double the value, at 
the time the bond is given, of the sirup represented by the lost or 
destroyed receipt. Such bond shall be in the form approved for the 
purpose by the Secretary, or his designated representative, shall be 
conditioned to indemnify the warehouseman against any loss sustained by 
reason of the issuance of such duplicate receipt, and shall have as 
surety thereon (i) preferably a surety company which is authorized to do 
business, and is subject to service of process in a suit on the bond, in 
the State in which the warehouse is located, or (ii) at least two 
individuals who are residents of such State and each of whom owns real 
property therein having a value in excess of all exemptions and 
encumbrances, to the extent of double the amount of the bond.



Sec. 741.19  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator, (b) Upon distinctive 
paper or card stock specified by the Administrator, (c) Printed by a 
printer with whom the United States has a subsisting agreement and bond 
for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.

[62 FR 33541, June 20, 1997]



Sec. 741.20  Partial delivery of sirup.

    If a warehouseman delivers a part only of a lot of sirup for which 
he has issued a negotiable receipt under the act, he shall take up and 
cancel such receipt and issue a new receipt in accordance with this part 
for the undelivered portion of the sirup. The new receipt shall show the 
date of issuance and also indicate the number and date of the old 
receipt.



Sec. 741.21  Return of receipt before delivery of sirup.

    Except as permitted by law or by this part, a warehouseman shall not 
deliver sirup for which he was issued a negotiable receipt until the 
receipt has been returned to him and canceled, and shall not deliver 
sirup for which he has

[[Page 346]]

issued a nonnegotiable receipt until such receipt has been returned to 
him or he has obtained from the person lawfully entitled to such 
delivery, or his authorized agent, a written order therefor.



Sec. 741.22  Signatures of persons authorized to direct delivery to be filed with warehouseman.

    Each person to whom a nonnegotiable receipt is issued shall furnish 
the warehouseman with a statement in writing indicating the person or 
persons having power to authorize delivery of sirup covered by such 
receipt, together with the bona fied signature of such person or 
persons. No licensed warehouseman shall honor an order for the release 
of sirup covered by a nonnegotiable receipt until he has first 
ascertained that the person issuing the order has authority to order 
such release and that the signature of the releasing party is genuine: 
Provided, That if the holder of such nonnegotiable receipt agrees in 
writing to hold blameless both the warehouseman and bondsman for any 
loss that might result from improper delivery through receipt of an 
unauthorized telegram, deliveries may be made on receipt of telegraphic 
orders to be followed immediately with usual confirmation order.



Sec. 741.23  Omission of grade; no compulsion by warehouseman.

    No warehouseman shall, directly or indirectly, by any means 
whatsoever, compel or attempt to compel the depositor of any sirup 
stored in his licensed warehouse to request the issuance of a receipt 
omitting the statement of grade.

                     Duties of Licensed Warehouseman



Sec. 741.24  Sirup must be inspected.

    (a) No warehouseman shall accept sirup for storage until it has been 
inspected and approved by a licensed inspector.
    (b) All sirup, the identity of which is not to be preserved, or has 
not been preserved, shall be accepted for and delivered out of storage 
only on the basis of grades and weights or quantities determined by 
licensed inspectors and weighers.



Sec. 741.25  Insurance requirements.

    (a) Each warehouseman, when so requested in writing by the depositor 
of or the lawful holder of the receipt for any sirup, shall, to the 
extent to which, in the exercise of due diligence, he is able to procure 
such insurance, keep such sirup while in his custody fully insured in 
his own name against loss or damage by fire, lightning, or tornado. When 
insurance is not carried in the warehouseman's name, the receipts shall 
show that the sirup is not insured by him. Such insurance shall be 
covered by lawful policies issued by one or more insurance companies 
authorized to do such business in the State where the warehouse is 
located. If the warehouseman is unable to procure such insurance, he 
shall, orally, or by telegraph or by telephone and at his own expense, 
immediately notify the person making the request. Nothing in this 
section shall be construed to prevent a warehouseman from adopting a 
rule that he will insure all sirup.
    (b) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 741.6, and at such other place as the Administrator, 
or his representative may from time to time designate, a notice stating 
briefly the conditions under which sirup will be insured against loss or 
damage by fire, lightning, or tornado.
    (c) Each warehouseman shall take promptly such steps as may be 
necessary and proper to collect any moneys which may become due under 
contracts of insurance entered into by him for the purpose of meeting 
the requirements of this part, and shall, as soon as collected, pay 
promptly to the persons concerned any portion of such moneys which they 
may be entitled to receive from him.



Sec. 741.26  Premiums; inspections; reports.

    Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of this part, pay such premiums, permit such 
reasonable inspections and examinations, and make such reasonable 
reports as may be provided for in such contracts.

[[Page 347]]



Sec. 741.27  Care of sirup in storage.

    Each warehouseman shall at all times exercise such care in regard to 
sirup in his custody as a reasonably careful owner would exercise under 
the same circumstances and conditions. If sirup is stored under 
refrigeration a temperature not in excess of 38 deg. Fahrenheit shall be 
maintained at all times in the licensed rooms or compartments and 
temperature records or charts showing correct temperature readings made 
at least four times daily shall be kept. Such records or charts shall be 
in such form as the Service may approve.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[4 FR 4834, Dec. 13, 1939, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.28  Care of nonlicensed sirup or other commodities.

    If at any time a warehouseman shall handle sirup other than for 
storage, or shall handle or store any other commodity, he shall so 
protect the same and otherwise exercise such care with respect to it as 
not to endanger the sirup in his custody as a warehouseman or impair his 
ability to meet his obligations and perform his duties under the Act and 
this part. If the warehouseman shall store commodities other than those 
for which he is licensed, a nonlicensed receipt shall be issued, which 
shall contain in its terms a provision that said commodities are 
accepted for storage only until such time as the space which they may 
occupy may be needed for products for the storage of which the 
warehouseman is licensed. Under no circumstances shall any commodities 
for the storage of which the warehouseman is not licensed be stored if 
the storage of such commodities might adversely affect the commercial 
value of, or impair the insurance on sirup covered by licensed receipts.



Sec. 741.29  Records to be kept in safe places.

    Each warehouseman shall provide a metal fireproof safe, a fireproof 
vault, or a fireproof compartment in which he shall keep, when not in 
actual use, all records, books, and papers pertaining to the warehouse, 
including his current receipt books, copies of receipts issued, and 
canceled receipts, except that with the written consent of the 
Administrator, or his representative, upon a showing by such 
warehouseman that it is not practicable to provide such fireproof safe, 
vault, or compartment, he may keep such records, books, and papers in 
some other place of safety, approved by the Administrator or his 
representative. Each canceled receipt shall be retained by the 
warehouseman for a period of six years after December 31 of the year in 
which the receipt is canceled and for such longer period as may be 
necessary for the purposes of any litigation which the warehouseman 
knows to be pending, or as may be required by the Administrator in 
particular cases to carry out the purposes of the act. Canceled receipts 
shall be arranged by the warehouseman in numerical order and otherwise 
in such manner as shall be directed, for purposes of audit, by 
authorized officers or agents of the Department of Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[4 FR 4834, Dec. 13, 1939, as amended at 22 FR 1629, Mar. 14, 1957; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.30  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for service rendered. Before a license to conduct a warehouse is granted 
under the act, the warehouseman shall file with the Service a copy of 
his rules and a schedule of charges to be made by him if licensed. 
Before making any change in such rules or schedule of charges he shall 
file with the Service a statement in writing showing the proposed change 
and the reasons therefor. Each warehouseman shall keep exposed 
conspicuously in the place prescribed by Sec. 741.6, and at such other 
places, accessible to the public, as the Administrator or his 
representative, may from time to time designate, a copy of his current 
rules and schedule of charges.



Sec. 741.31  Business hours.

    (a) Each warehouse shall be kept open for the purpose of receiving 
sirup for storage and delivering sirup out of

[[Page 348]]

storage every business day for a period of not less than 6 hours between 
the hours of 8 a.m. and 6 p.m., except as provided in paragraph (b) of 
this section. The warehouseman shall keep conspicuously posted on the 
door to the public entrance to his office and to his warehouse a notice 
showing the hours during which the warehouse will be kept open, except 
when such office or warehouse is kept open continuously from 8 a.m. to 6 
p.m.
    (b) If the warehouse is not to be kept open as required by paragraph 
(a) of this section, the notice shall state the period during which it 
is to be closed and the name and address of an accessible person 
authorized to make delivery upon lawful demand and surrender of the 
receipt.



Sec. 741.32  Numbered tags to be attached to each lot of sirup.

    Each warehouseman shall, upon acceptance for storage of any lot of 
sirup the identity of which is to be preserved, take such action as will 
result in preserving the identity of the product while in storage. He 
shall immediately assign a lot number to each such lot, and shall 
plainly and indelibly stamp, stencil, print, or otherwise appropriately 
mark the lot number on all packages in the lot. He shall attach to such 
lot a tag of good quality, which shall at all times be clearly visible 
and shall identify the lot. Such tag shall show the lot number, the 
number of the receipt issued covering the sirup, the number of packages 
in the lot, the type or style of packages, the kind of sirup, the grade, 
if determined, the net weight or number of gallons of sirup in the lot, 
and the date it entered storage.



Sec. 741.33  System of accounts.

    Each warehouseman shall use for his warehouse a system of accounts, 
approved for the purpose by the Administrator, or his authorized 
representative, which shall show for each lot of sirup the name and 
address of the depositor, the lot number mentioned in Sec. 741.32, the 
gross, tare, and net weight of sirup if in barrels, drums, or jackets, 
the number of cases and size of containers, if in cases, the grade, when 
grade is required to be or is ascertained, the dates received for and 
delivered out of storage, the receipts issued and canceled, a separate 
record for each depositor, and such accounts shall include a detailed 
record of all moneys received and disbursed and of all effective 
insurance policies. Such records shall be retained by the warehouseman 
for a period of six years after December 31 of the year in which 
created, and for such longer period as may be necessary for the purposes 
of any litigation which the warehouseman knows to be pending, or as may 
be required by the Administrator in particular cases to carry out the 
purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[4 FR 4834, Dec. 13, 1939, as amended at 29 FR 13369, Sept. 26, 1964; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.34  Reports.

    Each warehouseman shall, from time to time, make such reports as the 
Administrator may require, on forms prescribed and furnished for the 
purpose by the Service, concerning the condition, contents, operation, 
and business of the warehouse.



Sec. 741.35  Copies of reports to be kept.

    Each warehouseman shall keep on file, as a part of the records of 
the warehouse, for a period of three years after December 31 of the year 
in which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.36  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33542, June 20, 1997]



Sec. 741.37  Inspections and examinations of warehouses.

    Each warehouseman shall permit any officer or agent of the 
Department of

[[Page 349]]

Agriculture, authorized by the Secretary for the purpose, to enter and 
inspect or examine at any time any warehouse for the conduct of which 
such warehouseman holds a license, the office thereof, the books, 
records, papers, and accounts relating thereto, and the contents 
thereof, and shall furnish such officer or agent the assistance 
necessary to enable him to make any inspection or examination under this 
section.



Sec. 741.38  Inspection of weighing, testing, and measuring apparatus.

    The apparatus used for determining the weight, quantity, or quality 
stated in a receipt or certificate shall be subject to examination by 
any officer or agent of the Department of Agriculture employed for such 
purpose. If the Service shall disapprove such apparatus, it shall not 
thereafter, unless such disapproval be withdrawn, be used in 
ascertaining the weight, quantity, or quality of sirup for the purposes 
of the act and this part.



Sec. 741.39  Care in storage.

    Each warehouseman shall keep the stock stored in his licensed 
warehouse in an orderly manner, shall provide sufficient aisle space so 
as to permit easy and ready access to any and all lots of sirup stored 
therein, and shall so store each lot of sirup as to facilitate sampling 
of sirup and inspection for condition. The warehouseman shall at all 
times keep his warehouse clean and free from all litter.



Sec. 741.40  Water or ash in sirup.

    The warehouseman shall not accept for storage in his warehouse any 
sugarcane sirup which contains more than 30 percent by weight of water 
or more than 2.5 percent by weight of ash; nor shall he accept maple 
sirup containing in excess of 35 percent by weight of water or which 
weighs less than 11 pounds to the gallon; nor shall he accept honey 
weighing less than 11 pounds 12 ounces to the gallon, or containing in 
excess of 25 percent of water, or more than 0.25 percent of ash or 8 
percent of sucrose.



Sec. 741.41  Procedure to follow prior to reconditioning deteriorating sirup.

    If the warehouseman considers that any sirup in his warehouse is out 
of condition, or becoming so, he shall direct the licensed inspector to 
examine the sirup in question, and, if such inspector finds such sirup 
to be out of condition or becoming so, and he is of the opinion that 
such sirup can be brought back into condition by reprocessing or other 
means, or that further deterioration can be prevented, the warehouseman 
shall give immediate notice of the facts to the persons, and in the 
manner, specified in Sec. 741.42 (b) and (c). If, within 24 hours after 
the dispatch of such notice, the owners of such sirup have not otherwise 
directed as to the disposition of same, such warehouseman, with the 
approval of the licensed inspector, shall subject the sirup to the 
proper reconditioning process in his licensed warehouse to the extent to 
which it is equipped with apparatus suitable for the purpose, otherwise 
in any other warehouse so equipped.



Sec. 741.42  Deteriorating sirup; handling.

    (a) If a warehouseman, with the approval of the licensed inspector, 
shall determine that any sirup is deteriorating and that such 
deterioration cannot be stopped by processing or otherwise, he shall 
give immediate notice thereof in accordance with paragraphs (b) and (c) 
of this section.
    (b) Such notice shall state (1) the warehouse in which the sirup is 
stored; (2) the quantity, kind, and grade of the sirup at the time the 
notice is given; (3) the actual condition of the sirup as nearly as can 
be ascertained, and the reason, if known, for such condition; and (4) 
the outstanding receipts covering the sirup out of condition, giving the 
number and the date of each such receipt and the quantity, the kind and 
grade of the sirup as stated in each such receipt.
    (c) A copy of such notice shall be delivered in person or shall be 
sent by mail (1) to the persons holding the receipts if known to the 
warehouseman; (2) to the person who originally deposited the sirup; (3) 
to any other persons known by the licensed warehouseman to be interested 
in the sirup; (4) to the

[[Page 350]]

Administrator; and (5) public notice shall also be given by posting a 
copy of such notice at the place where the warehouseman is required to 
post his license. A copy of such notice shall be kept as a record of the 
warehouse. If the holders of the receipts and the owners of the sirup 
are known to the warehouseman and cannot, in the regular course of the 
mails, be reached within 12 hours, the warehouseman shall, whether or 
not requested to do so, also immediately notify such persons by 
telegraph or telephone at their expense.
    (d) Any person, interested in any sirup or the receipt covering such 
sirup stored in a licensed warehouse, may, in writing, notify the 
warehouseman of his interest, and such ware- houseman shall keep a 
record of that fact. If such person requests in writing that he be 
notified regarding the condition of any such sirup and agrees to pay the 
cost of any telegraph or telephone toll charge, such warehouseman shall 
notify such person in accordance with such request.
    (e) If the sirup advertised in accordance with the requirements of 
this section has not been removed from storage by the owner thereof 
within seven days from the dispatch of notice of its being out of 
condition, the warehouseman may sell the same at public auction at the 
expense and for the account of the owner, after giving 7 days' notice of 
such proposed sale in the manner specified in paragraphs (b) and (c) of 
this section.
    (f) Nothing contained in this section shall be construed as 
relieving the warehouseman from properly caring for any sirup after 
sending notification of its condition in accordance with this section.
    (g) Records required to be kept by this section shall be retained, 
as a part of the records of the warehouse, for a period of six years 
after December 31 of the year in which created, and for such longer 
period as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[4 FR 4834, Dec. 13, 1939, as amended at 29 FR 13369, Sept. 26, 1964; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.43  Excess storage.

    If at any time a warehouseman shall be offered for storage in his 
warehouse sirup in excess of the licensed capacity as shown on his 
license, he shall not accept such sirup until he has first secured 
authority through an amended license, and after such authority has been 
granted, the warehouseman shall continue to so arrange the sirup as not 
to obstruct free access thereto and the proper use of sprinklers or 
other fire-protection equipment provided for such warehouse.



Sec. 741.44  Removal of sirup from storage.

    Except as may be provided by law or this part, each warehouseman, 
(a) upon proper presentation and surrender of a receipt for sirup stored 
other than as identity preserved and upon payment or tender of all 
advances and legal charges, shall deliver to such depositor or lawful 
holder of such receipt sirup of the same grade and quantity specified in 
such receipt; and, (b) upon proper presentation and surrender of a 
receipt for sirup the identity of which was to have been preserved 
during the storage period and upon payment or tender of all advances and 
legal charges, shall deliver to the person lawfully entitled thereto the 
identical sirup covered by the surrendered receipt. Should it become 
necessary to remove sirup from the warehouse to protect the interests of 
depositors prior to the return and cancellation of receipts, the 
warehouseman shall immediately notify the Administrator of such removal 
and of the necessity therefor.



Sec. 741.45  Signatures of persons to sign receipts to be filed with Department.

    Each warehouseman shall file with the Department the name and 
genuine signature of each person authorized to

[[Page 351]]

sign warehouse receipts for the licensed warehouseman, and shall 
promptly notify the Department of any changes as to persons authorized 
to sign, and shall file signatures of such persons.

[4 FR 4834, Dec. 13, 1939; 14 FR 681, Feb. 16, 1949. Redesignated at 50 
FR 1814, Jan. 14, 1985]



Sec. 741.46  Reporting fire losses.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[62 FR 33542, June 20, 1997]



Sec. 741.47  Copies of inspection or weight certificates to be filed.

    When an inspection or weight certificate has been issued by a 
licensed inspector or weigher, a copy of such certificate shall be filed 
with the warehouseman in whose warehouse the sirup covered by such 
certificate is stored, and such certificate shall become a part of the 
records of the warehouseman. Such certificates shall be retained, as a 
part of the records of the warehouse, for a period of three years after 
December 31 of the year in which the certificates are issued.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[4 FR 4834, Dec. 13, 1939, as amended at 29 FR 13369, Sept. 26, 1964; 47 
FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]

                                  Fees



Sec. 741.48  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 741.49  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The fee will be assessed 
and payable when the warehouse bond is furnished in accordance with 
these regulations, for acceptance by the Secretary and annually 
thereafter on the bond renewal date. The capacity for each identifiable 
location will be determined by the Secretary. The total capacity of all 
locations may not exceed the capacity stated in the current license. An 
identifiable location is a fully functional public warehouse as 
determined by the Secretary. The annual fee a licensed warehouseman is 
assessed may be adjusted by the amount Commodity Credit Corporation 
(CCC) pays, if CCC has a storage contract or agreement with the 
warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 741.50  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in

[[Page 352]]

the form of a check, certified if required by the Service, draft, or 
post office or express money order, payable to the order of the Service.

[46 FR 63201, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33542, June 20, 1997]



Sec. 741.51  Return of excess deposit.

    The Treasurer of the United States shall hold in his custody each 
advance deposit made under Sec. 741.50 until the fee, if any, is 
assessed and he is furnished by the Service with a statement showing the 
amount thereof and against whom assessed. Any part of such advance 
deposit which is not required for the payment of any fee assessed shall 
be refunded to the party depositing same.

                    Licensed Inspectors and Weighers



Sec. 741.52  Inspector's and weigher's application.

    (a) Application for licenses to inspect and grade or to weigh sirup 
under the act shall be made to the Administrator on forms furnished for 
the purpose by him.
    (b) Each such application shall be signed by the applicant, shall be 
verified by him under oath or affirmation administered by a duly 
authorized officer, and shall contain or be accompanied by (1) the name 
and location of a warehouse or warehouses licensed, or for which 
application for license has been made, under the Act, in which sirup 
sought to be inspected and weighed under such license is or may be 
stored; (2) a statement from the warehouseman conducting such warehouse 
showing whether the applicant is competent and is acceptable to such 
warehouseman for the purpose; (3) satisfactory evidence that he has had 
at least one year's experience in the kind of service for which a 
license is sought or the equivalent of such experience, and that he is 
competent to perform such services, except in the case of applicants for 
weighers' licenses one month's experience will be sufficient; (4) a 
statement by the applicant that he agrees to comply with and abide by 
the terms of the Act and this part so far as the same may relate to him; 
and (5) such other information as the Service may deem necessary: 
Provided, That when an application for a license to inspect sirup is 
filed by a person who does not intend to inspect for any particular 
licensed warehouseman but who does intend to inspect sirup stored or to 
be stored in a licensed warehouse or warehouses and to issue inspector's 
certificates therefor, as provided for by the Act and this part, 
independent of the warehouse receipts issued to cover such sirup, it 
shall not be necessary to furnish such statement as is required by 
paragraph (b)(2) of this section.
    (c) The applicant shall at any time furnish such additional 
information as the Secretary or the Administrator shall find to be 
necessary to the consideration of his application.
    (d) A single application may be made by any person for a license to 
inspect and to weigh upon complying with all the requirements of this 
section.

[4 FR 4834, Dec. 13, 1939, as amended at 41 FR 34006, Aug. 12, 1976. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.53  Examination of applicant.

    Each applicant for a license as an inspector or as a weigher and 
each licensed inspector or licensed weigher shall, whenever requested by 
an authorized agent of the Department of Agriculture designated by the 
Administrator for the purpose, submit to an examination or test to show 
his ability properly to perform the duties for which he is applying for 
license or for which he has been licensed.



Sec. 741.54  Posting of license.

    Each licensed inspector shall keep his license conspicuously posted 
in the office where all or most of the inspecting is done, and each 
licensed weigher shall keep his license conspicuously posted in the 
warehouse office or in such place as may be designated for the purpose 
by the Service.



Sec. 741.55  Duties of licensees.

    Each inspector and each weigher, when requested, shall, without 
discrimination, as soon as practicable, and upon reasonable terms, 
inspect or weigh and certificate the condition, grade, or weight for 
storage of sirup stored or to be stored in a licensed warehouse if such 
sirup be offered to

[[Page 353]]

him under such conditions as permit proper inspection and the 
determination of the condition, grade, or weight thereof, as the case 
may be. Each such licensee shall give preference to persons who request 
his services as such over persons who request his services in any other 
capacity. No inspection or weight certificate shall be issued under the 
act for sirup not stored or not to be stored in a licensed warehouse.



Sec. 741.56  Inspection certificate; form.

    Each inspection certificate issued under the act by a licensed 
inspector shall be in a form approved for the purpose by the Service and 
shall embody within its written or printed terms (a) the caption 
``United States Warehouse Act Sirup Inspection Certificate''; (b) 
whether it is an original, a duplicate, or other copy; (c) the name and 
location of the warehouse in which the sirup is or is to be stored; (d) 
the date of the certificate; (e) the location of the sirup at the time 
of inspection; (f) the identification number of each lot of sirup, given 
in accordance with Sec. 741.32; (g) the grade and condition of the sirup 
for storage at the time of inspection; (h) the name of the locality in 
which produced, if known; (i) that the certificate is issued by a 
licensed inspector, under the United States Warehouse Act and 
regulations thereunder; (j) a blank space designated for the purpose in 
which may be stated any general remarks on the condition of the sirup; 
and (k) the signature of such licensed inspector. In addition, the 
inspection certificate may include any other matter not inconsistent 
with the act or this part, provided the approval of the Service is first 
secured.



Sec. 741.57  Weight certificate; form.

    Each weight certificate issued under the act by a licensed weigher 
shall be in a form approved for the purpose by the Service, and shall 
embody within its written or printed terms (a) the caption ``United 
States Warehouse Act Sirup Weight Certificate''; (b) whether it is an 
original, a duplicate, or other copy; (c) the name and location of the 
warehouse in which the sirup is or is to be stored; (d) the date of the 
certificate; (e) the location of the sirup at the time of weighing; (f) 
the identification mark of each lot of sirup given in accordance with 
Sec. 741.32; (g) the gross, tare, and net weight of the sirup if in 
barrels, drums, or jackets; or the number of cases and sizes of cans if 
in cases; (h) that the certificate is issued by a licensed weigher, 
under the United States Warehouse Act and the regulations thereunder; 
and (i) the signature of such licensed weigher. In addition, the weight 
certificate may include any other matter not inconsistent with the act 
or this part, provided the approval of the Service is first secured.



Sec. 741.58  Combined inspection and weight certificate.

    The grade, condition, and weight of any sirup ascertained by a 
licensed inspector and/or licensed weigher may be stated on a 
certificate meeting the combined requirements of Secs. 741.56 and 
741.57, if the form of such certificate shall have been approved for the 
purpose by the Service.



Sec. 741.59  Copies of certificates to be kept.

    Each licensed inspector and each licensed weigher shall keep for a 
period of 1 year in a place accessible to persons financially interested 
in the sirup, a copy of each certificate issued by him under this part 
and shall file a copy of each such certificate with the warehouse in 
which the sirup covered by the certificate is stored.



Sec. 741.60  Licensees to permit and assist in examination.

    Each licensed inspector and each licensed weigher shall permit any 
officer or agent of the Department of Agriculture, authorized by the 
Secretary for the purpose, to inspect or examine at any time his books, 
papers, records, and accounts relating to the performance of his duties 
under the act and this part, and shall, with the consent of the 
warehouseman concerned, assist any such officer or agent in the 
inspection or examination of records mentioned in Sec. 741.33 as far as 
any such inspection or examination relates to the performance of the 
duties of such licensed inspector or licensed weigher under the act and 
the regulations in this part.

[[Page 354]]



Sec. 741.61  Reports.

    Each licensed inspector and licensed weigher shall, from time to 
time, when requested by the Service, make reports on forms furnished for 
the purpose by the Service, bearing upon his activities as such licensed 
inspector or licensed weigher.



Sec. 741.62  Licenses; suspensions; revocation.

    Pending investigation, the Secretary or his designated 
representative may, whenever he deems necessary, suspend the license of 
an inspector or of a weigher temporarily without hearing. Upon a written 
request and a satisfactory statement of reasons therefor, submitted by 
the inspector or weigher, or when the inspector or weigher has ceased to 
perform such services at the warehouse, the Secretary or his designated 
representative may, without hearing, suspend or revoke the license 
issued to such inspector or weigher. The Secretary or his designated 
representative may, after opportunity for hearing, when possible, has 
been afforded in the manner prescribed in this section, suspend or 
revoke a license issued to an inspector or a weigher when such inspector 
or weigher has in any manner become incompetent or incapacitated to 
perform the duties of a licensed inspector or licensed weigher. As soon 
as it shall come to the attention of a warehouseman that any of the 
conditions mentioned in this section exist, it shall be his duty to 
notify in writing the Service. Before the license of any inspector or 
weigher is permanently suspended or revoked pursuant to section 12 of 
the act, such licensee shall be furnished by the Secretary, or by his 
designated representative, a written statement specifying the charges 
and shall be allowed a reasonable time within which he may answer the 
same in writing and apply for a hearing, an opportunity for which shall 
be afforded in accordance with Sec. 741.73.

[4 FR 4834, Dec. 13, 1939, as amended at 13 FR 8730, Dec. 30, 1948. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.63  Return of suspended or revoked licenses; termination of license.

    (a) If a license issued to an inspector or to a weigher is suspended 
or revoked by the Secretary, it shall be returned to the Secretary. At 
the expiration of any period of suspension of a license, unless in the 
meantime it be revoked, the dates of the beginning and termination of 
the suspension shall be indorsed thereon, and it shall be returned to 
the inspector or weigher to whom it was originally issued, and it shall 
be posted as prescribed in Sec. 741.54.
    (b) Any license issued to an inspector or weigher shall 
automatically be suspended or terminated as to any warehouse whenever 
the license of such warehouse shall expire or be suspended or revoked. 
Thereupon the license of such inspector or weigher shall be returned to 
the Secretary. If such license is applicable to warehouses other than 
those for which the licenses have been suspended or revoked, the 
Secretary or his designated representative shall issue a new license to 
the inspector or weigher, omitting the names of the warehouses for which 
licenses have been so suspended or revoked. Such new licenses shall be 
posted as prescribed in Sec. 741.54.



Sec. 741.64  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to an inspector or a weigher, a duplicate thereof may be issued 
under the same number.



Sec. 741.65  Unlicensed inspector or weigher; misrepresentation.

    No person shall in any way represent himself to be an inspector or 
weigher licensed under the act unless he holds an unsuspended, 
unrevoked, and uncanceled license issued under the act.

                   Sirup Inspection and Classification



Sec. 741.66  Classification; statement.

    Whenever the kind, grade, or other class or condition of sirup is 
required to be or is stated for the purposes of

[[Page 355]]

this act and this part, it shall be stated in accordance with 
Secs. 741.67 and 741.68.



Sec. 741.67  Standards to be used.

    Until such time as official sirup grades of the United States are in 
effect, the kind, grade, and condition of sirup shall be stated as far 
as applicable (a) in accordance with the State standards, if any, 
established in the State in which the warehouse is located; (b) in the 
absence of any State standards, in accordance with the standards, if 
any, adopted by any sirup organization or by the sirup trade generally 
in the locality in which the warehouse is located, subject to the 
disapproval of the Administrator; or (c) in the absence of the aforesaid 
standards in accordance with any standards approved by the 
Administrator.



Sec. 741.68  Statement of kind, grade, condition.

    Whenever the kind, grade, or other class or condition of sirup is 
stated for the purposes of this act and this part, the terms used shall 
be correctly applied and shall be so selected as not to convey a false 
impression of the sirup. In case of doubt as to the kind, grade, or 
condition of a given lot of sirup, a determination shall be made of such 
facts by drawing samples fairly representative of the contents of the 
lot of sirup offered for storage.

                            Appeal of Grades



Sec. 741.69  Appeal of grades.

    (a) If a question arises as to whether the kind, grade, or condition 
of the sirup was correctly stated in a receipt or inspection certificate 
issued under the act or this part the warehouseman concerned or any 
person financially interested in the sirup involved may, after 
reasonable notice to the other party, submit the question to the 
Administrator, who may appoint a committee to make a determination. The 
decision of the committee shall be final, unless the Administrator shall 
direct a review of the question. Immediately upon making its decision, 
the committee shall issue a certificate embodying its findings to the 
appellants and the licensee or licensees involved.
    (b) If the decision of the committee be that the kind, grade, or 
condition was not correctly stated, the receipt or certificate involved 
shall be returned to and be canceled by the licensee who issued it, and 
the licensee shall issue in lieu thereof a new receipt or certificate 
embodying therein the statement of kind, grade, or condition in 
accordance with the findings of the committee.
    (c) All necessary and reasonable expenses of such determination 
shall be borne by the losing party, unless the Administrator or his 
representative shall decide that the expense should be prorated between 
the parties.

                              Miscellaneous



Sec. 741.70  Bonds required.

    Every person applying for a license, or licensed under section 9 of 
the act shall, as such, be subject to all portions of this part except 
Sec. 741.5 so far as they may relate to warehousemen. If there is a law 
of any State providing for a system of warehouses owned, operated, or 
leased by such State, a person applying for a license under section 9 of 
the act, to accept the custody of sirup and to store the same in any of 
said warehouses, may, in lieu of a bond or bonds, complying with 
Secs. 741.11 and 741.12, file with the Secretary a single bond meeting 
the requirements of the act and this part, in such form and in such 
amount not less than $5,000, as he shall prescribe, to insure the 
performance by such person, with respect to the acceptance of the 
custody of sirup and its storage in the warehouses in such system for 
which licenses are or may be issued, of his obligations arising during 
the periods of such licenses, and in addition, if desired by the 
applicant, during the periods of any modifications or extensions 
thereof. In fixing the amount of such bond, consideration shall be 
given, among other appropriate factors, to the character of the 
warehouses involved, their actual or contemplated capacity, the bonding 
requirements of the State, and its liability with respect to such 
warehouses. If the Secretary shall find the existence of conditions 
warranting such action, there shall be added to the amount of the bond 
so fixed a further amount, fixed by him, to meet such conditions.

[[Page 356]]



Sec. 741.71  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.

[62 FR 33542, June 20, 1997]



Sec. 741.72  Information of violations.

    Every person licensed under the act shall immediately furnish the 
Administrator any information which comes to the knowledge of such 
person tending to show that any provision of the act or this part has 
been violated.



Sec. 741.73  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130-1.151).

[45 FR 6776, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 741.74  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report or other paper, 
document, or proceeding relating to such warehouse, shall be sufficient 
unless otherwise directed by the Administrator.

[4 FR 4834, Dec. 13, 1939. Redesignated at 13 FR 8730, Dec. 30, 1948, 
and at 50 FR 1814, Jan. 14, 1985]



Sec. 741.75  Amount of assets and bond needed for combination warehouses.

    Where such a license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the sections applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse was used for its storage.

[4 FR 4834, Dec. 13, 1939. Redesignated at 13 FR 8730, Dec. 30, 1948, 
and at 50 FR 1814, Jan. 14, 1985]



Sec. 741.76  Amendments.

    Any amendment or revision of this part, unless otherwise stated 
therein, shall apply in the same manner to persons holding licenses at 
the time it becomes effective as it applies to persons thereafter 
licensed under the act.

[4 FR 4834, Dec. 13, 1939. Redesignated at 13 FR 8730, Dec. 30, 1948, 
and at 50 FR 1814, Jan. 14, 1985]



PART 742--COTTONSEED WAREHOUSES--Table of Contents




                               Definitions

Sec.
742.1  Meaning of words.
742.2  Terms defined.

                           Warehouse Licenses

742.3  Application form.
742.4  Issuance of license; conditions.
742.5  Net assets required.
742.6  Modification or extension of license.
742.7  License shall be posted.
742.8  Suspension or revocation of warehouse licenses.
742.9  Return of suspended or revoked warehouse license.
742.10  Lost or destroyed warehouse license.
742.11  Unlicensed warehousemen must not represent themselves as 
          licensed.

                             Warehouse Bonds

742.12  Bond required; time of filing.
742.13  Basis of amount of bond; additional amounts.
742.14  Extension bond.
742.15  New bond required each year.
742.16  Approval of bond.

                           Warehouse Receipts

742.17  Form.
742.18  Copies of receipts.
742.19  Lost or destroyed receipts; bond.
742.20  Printing of receipts.
742.21  Partial delivery of cottonseed.
742.22  Return of receipts before delivery of cottonseed.
742.23  Authority for delivery of cottonseed on nonnegotiable receipt.
742.24  Receipts for storage; one bin; several bins.

[[Page 357]]

742.25  Omission of grade; no compulsion by warehouseman.

                     Duties of Licensed Warehouseman

742.26  Cottonseed must be inspected.
742.27  Insurance requirements.
742.28  Premiums; inspections; reports.
742.29  Insurance; collection and payment.
742.30  Shrinkage; agreement.
742.31  Care of cottonseed in storage.
742.32  Care of nonlicensed cottonseed, or other commodities.
742.33  Records to be kept in safe place.
742.34  Warehouse charges.
742.35  Business hours.
742.36  Numbered tags to be attached to cottonseed.
742.37  Identification tag.
742.38  Grade and weight determinations.
742.39  Bulk storage of identity-preserved cottonseed.
742.40  Delivery of cottonseed; conditions.
742.41  System of accounts.
742.42  Reports.
742.43  Canceled receipts; auditing.
742.44  Copies of reports to be kept.
742.45  Inspection and examination of warehouse.
742.46  Weighing apparatus; inspection.
742.47  Warehouse to be kept clean.
742.48  Excess storage.
742.49  Removal from storage.
742.50  Storage of wet cottonseed prohibited.
742.51  Storage to prevent damage.
742.52  Deteriorating cottonseed; handling; notice.
742.53  Sale of deteriorating cottonseed.
742.54  Compliance with contracts.
742.55  Reporting fire losses.
742.56  Grade or weight certificate; filing.
742.57  Identity-preserved cottonseed; non-storage.

                                  Fees

742.58  License fees.
742.59  Warehouse annual and inspection fees.
742.60  Advance deposit.
742.61  Return of excess deposit.

      Licensed Inspectors, Licensed Graders, and Licensed Weighers

742.62  Inspector's, grader's, weigher's application.
742.63  Examination of applicant.
742.64  Posting of license.
742.65  Duties of licensees.
742.66  Inspection certificate; form.
742.67  Grade certificate; form.
742.68  Weight certificate; form.
742.69  Combination certificate; form.
742.70  Copies of certificates to be kept.
742.71  Licensees to permit and assist in examination.
742.72  Reports.
742.73  Licenses; suspension; revocation.
742.74  Suspended or revoked license; return; termination of license.
742.75  Lost or destroyed licenses.
742.76  Unlicensed inspectors, graders, weighers; misrepresentation.

                           Cottonseed Grading

742.77  Classification; statement.
742.78  Standards to be used.
742.79  Statement of grade; condition.

                               Arbitration

742.80  Arbitration.

                              Miscellaneous

742.81  Bonds required.
742.82  Publications.
742.83  Information of violations.
742.84  Procedure in hearings.
742.85  One document and one license to cover several products.
742.86  Bond, assets, and fees for combination warehouse.
742.87  Amendments.

    Authority: 7 U.S.C. 241 et seq..

    Source: SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 
1954, unless otherwise noted. Redesignated at 50 FR 1814, Jan. 14, 1985.

    Editorial Note: Nomenclature changes to part 742 appear at 62 FR 
33540, June 20, 1997.

                               Definitions



Sec. 742.1  Meaning of words.

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



Sec. 742.2  Terms defined.

    For the purpose of this part, unless the context otherwise require, 
the following terms shall be construed, respectively, to mean:
    (a) The act. The United States Warehouse Act, approved August 11, 
1916 (39 Stat. 486; 7 U.S.C. 241-273), as amended.
    (b) Person. An individual, corporation, partnership, or two or more 
persons having a joint or common interest.
    (c) Secretary. 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.
    (d) Administrator. The Administrator of the Service or any other 
officer or

[[Page 358]]

employee of the Service to whom authority has heretofore lawfully been 
delegated, or may hereafter lawfully be delegated, to act in his stead.
    (e) Regulations. Rules and regulation made under the act by the 
Secretary.
    (f) Service. The Farm Service Agency of the U.S. Department of 
Agriculture.
    (g) Warehouse. Any building, structure, or other protected inclosure 
in which cottonseed is or may be stored for interstate or foreign 
commerce, or, if located within any place under the exclusive 
jurisdiction of the United States, in which cottonseed is or may be 
stored.
    (h) Warehouseman. Any person lawfully engaged in the business of 
storing cottonseed.
    (i) Cottonseed. Prime cottonseed, cool, clean and not containing in 
excess of 1 percent foreign matter nor in excess of 10 percent moisture; 
sound and not containing in excess of 6 percent damaged or immature 
seed, and shall be untreated by chemical process: Provided, That if the 
warehouse is equipped with such cooling and conditioning equipment as 
may be acceptable to the Department, or if the cottonseed is in sacks 
containing not more than 100 pounds to the sack and stored in such 
manner as the Administrator, or his representatives, may approve, the 
cottonseed may have a moisture content not in excess of 12 percent.
    (j) License. A license issued under the act by the Secretary.
    (k) Licensed warehouse. A warehouse for the conduct of which a 
license has been issued.
    (l) Licensed warehouseman's bond. A bond required to be given under 
the act by a licensed warehouseman.
    (m) Licensed grader. A person licensed under the act by the 
Secretary to grade and to certificate the grade or other class of 
cottonseed stored or to be stored in a licensed warehouse.
    (n) Licensed weigher. A person licensed under the act by the 
Secretary to weigh and certificate the weight of cottonseed stored or to 
be stored in a licensed warehouse.
    (o) Licensed inspector. A person licensed under the act by the 
Secretary to inspect, to sample, and to certificate the condition for 
storage of cottonseed.
    (p) Receipt. A warehouse receipt.
    (q) Bag. A sack or other package.
    (r) State. A State, Territory, or District of the United States.

[SRA, BAE 102, as amended July 14, 1931, and at 13 FR 8730, Dec. 30, 
1948. Redesignated and amended at 50 FR 1814, Jan. 14, 1985]

                           Warehouse Licenses



Sec. 742.3  Application form.

    Applications for licenses under sections 4 and 9 of the act and for 
modifications or extensions of licenses under section 5 of the act shall 
be made to the Secretary upon forms prescribed for the purpose and 
furnished by the Service, shall be in English, shall truly state the 
information therein contained, and shall be signed by the applicant. The 
applicant shall at any time furnish such additional information as the 
Secretary or the Administrator shall find to be necessary to the 
consideration of his application by the Secretary.



Sec. 742.4  Issuance of license; conditions.

    (a) A license for the conduct of a warehouse shall not be issued if 
it be found by the Secretary that the warehouse is not suitable for the 
proper storage of cottonseed, that the warehouseman is incompetent to 
conduct such warehouse in accordance with the act and the regulations in 
this part, or that there is any other sufficient reason within the 
purposes of the act for not issuing such license.
    (b) A building acceptable for storage of cottonseed shall be of 
sound construction, with sound floors, and, if the seed is not stored in 
accordance with either paragraphs (e), (f), or (g) of this section, it 
shall be separated into bins or compartments.
    (c) An extra licensed bin or compartment shall be maintained at all 
times with a storage capacity equal to the greatest number of tons that 
can be stored in any one bin or compartment, except as otherwise 
provided in paragraphs (e), (f), and (g) of this section. No cottonseed 
shall be stored in this extra bin or compartment except when necessary 
to move seed from another bin or compartment to prevent the seed from 
going out of condition.

[[Page 359]]

    (d) A conveying system must be provided throughout the entire 
warehouse, passing through or accessible to each bin or compartment in 
such a way that the cottonseed can be moved rapidly when deemed 
necessary to maintain it in proper condition.
    (e) A system of air cooling may be installed in the warehouse. If, 
in the discretion of the Administrator or his representative, it shall 
be determined that a warehouse equipped with a cooling system does not 
need bins, it shall not be necessary to construct bins in such 
warehouse.
    (f) If tanks are used for the storage of cottonseed both a conveying 
system and an approved air cooling system must be installed and 
maintained in good working order.
    (g) If cottonseed is stored in bags no special type of building is 
required other than one of sound construction, and with sound floors and 
of such character as to keep the cottonseed dry. No system of conveying 
or air cooling is required in bag storage.

[SRA, BAE 102, as amended July 11, 1929. Redesignated at 50 FR 1814, 
Jan. 14, 1985]



Sec. 742.5  Net assets required.

    The warehouseman conducting a warehouse licensed, or for which 
application for license has been made under the act, shall have and 
maintain above all exemptions and liabilities net assets liable for the 
payment of any indebtedness arising from the conduct of the warehouse, 
to the extent of at least $5 per ton of the maximum number of tons that 
the warehouse will accommodate when stored in the manner customary to 
the warehouse as determined by the Administrator, except that the amount 
of such assets shall not be less than $5,000, and need not be more than 
$100,000. In case such warehouseman has applied for licenses to conduct 
two or more warehouses in the same State, the assets applicable to all 
of which shall be subject to the liabilities of each, such warehouses 
shall be deemed to be one warehouse for the purposes of the assets 
required under this section. For the purposes of this section only, 
paid-in capital stock, as such, shall not be considered a liability. Any 
deficiency in the required net assets may be supplied by an increase in 
the amount of the warehouseman's bond in accordance with Sec. 742.13(b).



Sec. 742.6  Modification or extension of license.

    Each application for a modification or extension of a license under 
section 5 of the act shall be made to the Secretary, upon a form 
prescribed for the purpose and furnished by the Administrator, shall be 
in English, shall be signed by the applicant, and shall be filed with 
the Secretary not less than 30 days before the date of the termination 
of the license then in effect.



Sec. 742.7  License shall be posted.

    Immediately upon receipt of his license or of any modification or 
extension thereof under the act, the warehouseman shall post the same, 
and thereafter, except as otherwise provided in the regulations in this 
part, keep it posted until suspended or terminated, in a conspicuous 
place in the principal office where receipts issued by such warehouseman 
are delivered to depositors.



Sec. 742.8  Suspension or revocation of warehouse licenses.

    Pending investigation, the Secretary, whenever he deems necessary, 
may suspend a warehouseman's license temporarily without hearing. Upon 
written request and a satisfactory statement of reasons therefor, 
submitted by a warehouseman, the Secretary may, without hearing, suspend 
or cancel the license issued to such warehouseman. The Secretary may, 
after opportunity for hearing has been afforded in the manner prescribed 
in this section, suspend or cancel a license issued to a warehouseman 
when such warehouseman (a) is bankrupt or insolvent; (b) has parted, in 
whole or in part, with his control over the licensed warehouse; (c) is 
in process of dissolution or has been dissolved; (d) has ceased to 
conduct such licensed warehouse; or (e) has in any other manner become 
nonexistent or incompetent or incapacitated to conduct the business of 
the warehouse. Whenever any of the conditions mentioned in paragraphs 
(a) to (e) of this section shall come into existence, it shall be the 
duty of the warehouseman

[[Page 360]]

to notify immediately the Administrator of the existing condition. 
Before a license is permanently suspended, revoked, or canceled for any 
violation of, or failure to comply with, any provision of the act or of 
the regulations in this part or upon the ground that unreasonable or 
exorbitant charges have been made for services rendered, the 
warehouseman involved shall be furnished by the Secretary, or by an 
official of the Department of Agriculture designated for the purpose, a 
written statement specifying the charges and shall be allowed a 
reasonable time within which he may answer the same in writing and apply 
for a hearing, an opportunity for which shall be afforded in accordance 
with Sec. 742.84.

[SRA, BAE 102, as amended Sept. 1926, and at 13 FR 8730, Dec. 30, 1948. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.9  Return of suspended or revoked warehouse license.

    In case a license issued to a ware- houseman terminates or is 
suspended, revoked, or canceled by the Secretary, such license shall be 
immediately returned to the Secretary. At the expiration of any period 
of suspension of such license, unless it be in the meantime revoked or 
canceled, the dates of the beginning and termination of the suspension 
shall be indorsed thereon, it shall be returned to the licensed 
warehouseman to whom it was originally issued and it shall be posted as 
prescribed in Sec. 742.7: Provided, That in the discretion of the 
Administrator a new license may be issued without reference to the 
suspension.



Sec. 742.10  Lost or destroyed warehouse license.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a warehouseman a duplicate thereof may be issued under the 
same or a new number at the discretion of the Secretary.



Sec. 742.11  Unlicensed warehousemen must not represent themselves as licensed.

    No warehouse or its warehouseman shall be designated as licensed 
under the act, and no name or description conveying the impression that 
it or he is so licensed shall be used, either in a receipt or otherwise, 
unless such warehouseman holds an unsuspended, unrevoked, and uncanceled 
license for the conduct of such warehouse.

                             Warehouse Bond



Sec. 742.12  Bond required; time of filing.

    Each warehouseman applying for a warehouse license under the act 
shall, before such license is granted, file with the Secretary or his 
designated representative a bond containing the following conditions and 
such other terms as the Secretary or his designated representative may 
prescribe in the approved bond forms, with such changes as may be 
necessary to adapt the forms to the type of legal entity involved:
    Now, therefore, if the said license(s) or any amendments thereto be 
granted and said principal, and its successors and assigns operating 
said warehouse(s), shall:
    Faithfully perform during the period of 1 year commencing ________, 
or until the termination of said license(s) in the event of termination 
prior to the end of the 1 year period, all obligations of a licensed 
ware- houseman under the terms of the Act and regulations thereunder 
relating to the above-named products; and
    Faithfully perform during said 1 year period and thereafter, whether 
or not said warehouse(s) remain(s) licensed under the Act, such delivery 
obligations and further obligations as a warehouseman as exist at the 
beginning of said 1 year period or are assumed during said period and 
prior to termination of said license(s) under contracts with the 
respective depositors of such products in the warehouse(s);
    Then this obligation shall be null and void and of no effect, 
otherwise to remain in full force. For purposes of this bond, the 
aforesaid obligations under the Act and regulations and contracts shall 
include obligations under any and all modifications of the Act, the 
regulations, and the contracts that may hereafter be made, notice of 
which modifications to the surety being hereby waived.

[28 FR 5637, June 8, 1963. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.13  Basis of amount of bond; additional amounts.

    (a) Exclusive of any amount which may be added in accordance with 
paragraphs (b) and (c) of this section, the amount of such bond shall be 
at the rate of $5 per ton or fractional part thereof of the maximum 
number of

[[Page 361]]

tons that the warehouse will accommodate when stored in the manner 
customary to the warehouse for which such bond is required, as 
determined by the Administrator, but not less than $5,000 nor more than 
$50,000. If such warehouseman has applied for licenses to conduct two or 
more warehouses in the same State, the assets applicable to all of which 
shall be subject to the liabilities of each, and shall desire to give a 
single bond meeting the requirements of the act and the regulations in 
this part for said warehouses, such warehouses shall be deemed to be one 
warehouse for the purposes of the bond required, under Secs. 742.12 
through 742.16, but the maximum amount of the bond shall be raised to 
$100,000.
    (b) In case of a deficiency in net assets under Sec. 742.5, there 
shall be added to the amount of the bond, fixed in accordance with 
paragraph (a) of this section, an amount equal to such deficiency.
    (c) In case the Secretary finds the existence of conditions 
warranting such action, there shall be added to the amount fixed in 
accordance with paragraphs (a) and (b) of this section, a further 
amount, fixed by him, to meet such conditions.



Sec. 742.14  Extension bond.

    In case an application is made under Sec. 742.3 for a modification 
or an extension of a license and no bond previously filed by the 
warehouseman under Secs. 742.12 through 742.16 covers obligations 
arising during the period of such modification or extension, the 
warehouseman shall, when notice has been given by the Secretary that his 
application for such modification or extension will be granted upon 
compliance by such warehouseman with the act, file with the Secretary, 
within a time, if any, fixed in such notice, a bond complying with the 
act. In the discretion of the Secretary, a properly executed instrument 
in form approved by him, amending, extending or continuing in force and 
effect the obligations of a valid bond previously filed by the 
warehouseman and otherwise complying with the act and the regulations in 
this part, may be filed in lieu of a new bond.



Sec. 742.15  New bond required each year.

    Whenever a continuous form of license has been issued such license 
shall not be effective beyond one year from its effective date unless 
the warehouseman shall have filed a new bond in the required amount 
with, and such bond shall have been approved by, the Secretary prior to 
the date on which that license would have expired had it been issued for 
but one year, subject to the provisions of Sec. 742.14.



Sec. 742.16  Approval of bond.

    No bond, amendment, or continuation thereof shall be accepted for 
the purposes of the act and the regulations in this part until it has 
been approved by the Secretary.

                           Warehouse Receipts



Sec. 742.17  Form.

    (a) Every receipt, whether negotiable or nonnegotiable, issued for 
cottonseed stored in a licensed warehouse shall, in addition to 
complying with the requirements of section 18 of the act embody within 
its written or printed terms the following:
    (1) The name of the licensed warehouseman and the designation, if 
any, of the warehouse; (2) the license number of the warehouse; (3) a 
statement whether the warehouseman is incorporated or unincorporated, 
and, if incorporated, under what laws; (4) the tag number given to each 
bag or lot of cottonseed in accordance with Sec. 742.36; (5) a 
statement, conspicuously placed, whether or not the cottonseed is 
insured, and, if insured, to what extent, by the warehouseman against 
loss by fire, lightning, tornado, or flood; (6) a blank space designated 
for the purpose in which the condition of the cottonseed shall be 
stated; (7) the moisture content of the cottonseed at the time of 
storage; (8) the bin or compartment number in which the cottonseed is 
stored, if stored in bulk; (9) the words ``Not Negotiable'', or 
``Negotiable'', according to the nature of the receipt, clearly and 
conspicuously printed or stamped thereon; and (10) a statement 
indicating the amount of shrinkage agreed upon between the depositor and 
the warehouseman.

[[Page 362]]

    (b) Every receipt, whether negotiable, or nonnegotiable, issued for 
cottonseed stored in a licensed warehouse shall specify a period, for 
which the cottonseed is accepted for storage under the Act and the 
regulations in this part not to extend beyond July 1 following the year 
in which harvested. Upon demand and the surrender of the old receipt by 
the lawful holder thereof on or before July 1, the warehouseman, upon 
such lawful terms and conditions as may be granted by him at such time 
to other depositors of cottonseed in the warehouse, if he then continues 
to act as a licensed warehouseman, may either extend the old receipt by 
making a proper notation thereon or issue a new receipt for a further 
specified period not exceeding 3 months: Provided, That receipts 
covering seed stored in sacks as specified in Sec. 742.2(i) may be 
extended or new receipts issued for a further period not extending 
beyond June 30 following the second crop year in which the seeds were 
harvested, and provided it is actually determined in either case that 
the quality of the cottonseed has not been impaired, but in no event 
shall cottonseed of two different crop years be stored in the same bin, 
lot, or compartment. If receipts are extended by endorsements, such 
endorsement shall be made across the face of the receipt, shall be 
signed and dated by the licensed warehouseman as of the date of the 
extension, and shall read as follows: ``This receipt extended in 
accordance with the act and regulations not to extend beyond ______.''
    (c) The grade stated in a receipt issued for cottonseed, stored in a 
licensed warehouse, shall be stated in such receipt as determined by the 
licensed grader who last graded the cottonseed before the issuance of 
such receipt, and such receipt shall embody within its written or 
printed terms the following: (1) That the cottonseed was inspected by a 
licensed inspector, graded by a licensed grader, and weighed by a 
licensed weigher; (2) a form of indorsement which may be used by the 
depositor or his authorized agent, for showing the ownership of, and 
liens, mortgages, or other encumbrances on the cottonseed covered by the 
receipt.
    (d) Whenever the grade or other class of the cottonseed is stated in 
a receipt issued for cottonseed stored in a licensed warehouse, such 
grade or other class shall be stated in the receipt in accordance with 
Secs. 742.77 through 742.79.
    (e) If a warehouseman issues a receipt omitting the statement of 
grade on request of the depositor as permitted by section 18 of the act, 
such receipt shall have clearly and conspicuously stamped or written on 
the face thereof the words ``Not graded on request of depositor.''
    (f) If a warehouseman issues a receipt under the Act omitting any 
information not required to be stated, for which a blank space is 
provided in the form of the receipt, a line shall be drawn through such 
space to show that such omission has been made by the warehouseman.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102, as amended July 14, 1931, as amended at 47 FR 745, Jan. 
7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.18  Copies of receipts.

    At least one actual or skeleton copy of all receipts shall be made, 
and all copies, except skeleton copies, shall have clearly and 
conspicuously printed or stamped thereon the words ``Copy--Not 
Negotiable.'' A copy of each receipt issued shall be retained by the 
warehouseman for a period of one year after December 31 of the year in 
which the corresponding original receipt is canceled.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.19  Lost or destroyed receipts; bond.

    (a) In the case of a lost or destroyed receipt, if there be no 
statute of the United States or law of a State applicable thereto, a new 
receipt upon the same terms, subject to the same conditions, and bearing 
on its face the number and the date of the receipt in lieu of which it 
is issued and a plain and conspicuous statement that it is a duplicate 
receipt issued in lieu of a lost or destroyed receipt, may be issued

[[Page 363]]

upon compliance with the conditions set out in paragraph (b) of this 
section.
    (b) Before issuing such duplicate receipt the licensed warehouseman 
shall require the depositor or other person applying therefor to make 
and file with the warehouseman (1) an affidavit showing that he is 
lawfully entitled to the possession of the original receipt, that he has 
not negotiated or assigned it, how the original receipt was lost or 
destroyed, and if lost, that diligent effort has been made to find the 
receipt without success, and (2) a bond in an amount double the value, 
at the time the bond is given, of the cottonseed represented by the lost 
or destroyed receipt. Such bond shall be in a form approved for the 
purpose by the Secretary, shall be conditioned to indemnify the 
warehouseman against any loss sustained by reason of the issuance of 
such duplicate receipt, and shall have as surety thereon (i) a surety 
company which is authorized to do business, and is subject to service or 
process in a suit on the bond, in the State in which the warehouse is 
located, or (ii) at least two individuals who are residents of such 
State and each of whom owns real property therein having a value, in 
excess of its exemptions and encumbrances, to the extent of double the 
amount of the bond.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 
1985]



Sec. 742.20  Printing of receipts.

    No receipt shall be issued by a licensed warehouseman unless it is:
    (a) In a form prescribed by the Administrator,
    (b) Upon distinctive paper or card stock specified by the 
Administrator,
    (c) Printed by a printer with whom the United States has a 
subsisting agreement and bond for such printing, and
    (d) On paper and/or card stock tinted with ink in the manner 
prescribed by the agreement under paragraph (c) of this section.

[62 FR 33542, June 20, 1997]



Sec. 742.21  Partial delivery of cottonseed.

    (a) If a warehouseman is requested to deliver a part only of 
cottonseed stored in one bin or compartment for which he has issued 
negotiable receipts under the act, and such delivery is made in such a 
manner that no accurate record of the weight of the portion delivered 
can be ascertained, he shall take up and cancel all receipts covering 
the entire contents of the bin or compartment before making such partial 
delivery and no receipt shall be issued for the undelivered portion 
until the weight of such undelivered seed has been determined.
    (b) If a warehouseman is requested to deliver a part only of a lot 
of cottonseed for which he has issued a negotiable receipt under the 
act, and he can by actual accurate weight ascertain the amount to be 
delivered, he shall take up and cancel such receipt and issue a new 
receipt in accordance with the regulations in this part for the 
undelivered portion of the cottonseed. The new receipt shall show the 
date of issuance and also indicate the number and date of the old 
receipt.



Sec. 742.22  Return of receipts before delivery of cottonseed.

    Except as permitted by law or by the regulations in this part, a 
warehouseman shall not deliver cottonseed for which he has issued a 
negotiable receipt until the receipt has been returned to him and 
canceled, and shall not deliver cottonseed for which he has issued a 
nonnegotiable receipt until such receipt has been returned to him or he 
has obtained from the person lawfully entitled to such delivery, or his 
authorized agent, a written acknowledgment thereof.



Sec. 742.23  Authority for delivery of cottonseed on nonnegotiable receipt.

    Each person to whom a nonnegotiable receipt is issued shall furnish 
the warehouseman with a statement in writing indicating the person or 
persons having power to authorize delivery of cottonseed covered by such 
receipt, together with the bona fide genuine signature of such person or 
persons. No licensed warehouseman shall

[[Page 364]]

honor an order for the release of cottonseed covered by a nonnegotiable 
receipt until he has first ascertained that the person issuing the order 
has authority to order such release and that the signature of the 
releasing party is genuine.



Sec. 742.24  Receipts for storage; one bin; several bins.

    Any number of receipts may be issued for cottonseed in any one bin 
or compartment but a receipt shall not be issued for a lot of seed, a 
part of which is stored in one bin or compartment and a part in another 
bin or compartment.



Sec. 742.25  Omission of grade; no compulsion by warehouseman.

    No licensed warehouseman shall, directly or indirectly by any means 
whatsoever, compel or attempt to compel the depositor of any cottonseed 
stored in his licensed warehouse to request the issuance of a receipt 
omitting the statement of grade.

                     Duties of Licensed Warehouseman



Sec. 742.26  Cottonseed must be inspected.

    No licensed warehouseman shall receive into his licensed warehouse 
for storage cottonseed other than as defined in Sec. 742.2(i). Neither 
shall he receive such seed for storage until it has been inspected by an 
inspector licensed under this act and found by him to be in proper 
condition and suitable for storage.

[SRA, BAE 102, as amended Sept. 2, 1927. Redesignated at 50 FR 1814, 
Jan. 14, 1985]



Sec. 742.27  Insurance requirements.

    (a) Each licensed warehouseman when so requested in writing as to 
any cottonseed by the depositor thereof or lawful holder of the receipt 
covering such cottonseed shall, to the extent to which in the exercise 
of due diligence he is able to procure such insurance, keep such 
cottonseed while in his custody as a licensed warehouseman insured in 
his own name or arrange for its insurance otherwise to the extent so 
requested against loss or damage by fire, lightning, tornado, or flood. 
When insurance is not carried in the warehouseman's name the receipts 
shall show that the cottonseed is not insured by the warehouseman. Such 
insurance shall be covered by lawful policies issued by one or more 
insurance companies authorized to do such business, and subject to 
service of process in suits brought in the State where the warehouse is 
located. If the warehouseman is unable to procure such insurance to the 
extent requested, he shall, orally or by telegraph or by telephone and 
at his own expense, immediately notify the person making the request of 
the fact. Nothing in this section shall be construed to prevent the 
warehouseman from adopting a rule that he will insure all cottonseed 
stored in his warehouse.
    (b) Each warehouseman shall keep exposed conspicuously in the place 
prescribed by Sec. 742.7 and at such other place as the Administrator or 
his representative may from time to time designate, a notice stating 
briefly the conditions under which the cottonseed will be insured 
against loss or damage by fire, lightning, tornado, or flood.



Sec. 742.28  Premiums; inspections; reports.

    Each warehouseman shall, in accordance with his contracts with 
insurance and bonding companies for the purpose of meeting the insurance 
and bonding requirements of this part, pay such premium, permit such 
reasonable inspections and examinations, and make such reasonable 
reports as may be provided for in such contracts.



Sec. 742.29  Insurance; collection and payment.

    Each warehouseman shall promptly take such steps as may be necessary 
and proper to collect any moneys which may become due under contracts of 
insurance entered into by him for the purpose of meeting the 
requirements of this part, and shall, as soon as collected, promptly pay 
over to the persons concerned, any portion of such moneys which they may 
be entitled to receive from him.



Sec. 742.30  Shrinkage; agreement.

    At the time cottonseed is received for storage the warehouseman and 
the depositor shall agree upon an amount to

[[Page 365]]

be allowed for shrinkage while the cottonseed is in storage, such 
shrinkage to include loss caused by natural drying out of the 
cottonseed, but in no event shall the total amount of shrinkage exceed 5 
percent of the weight of the cottonseed at the time it entered storage. 
In case no agreement as to shrinkage has been made, the difference in 
the moisture content of the cottonseed at the beginning of the storage 
period and at the time of delivery shall form a basis for calculating 
shrinkage.



Sec. 742.31  Care of cottonseed in storage.

    Each warehouseman shall at all times exercise such care in regard to 
cottonseed in his custody as a reasonably careful owner would exercise 
under the same circumstances and conditions. He shall also equip his 
warehouse with thermometers to determine the temperature of the 
cottonseed while in storage and shall make readings of the thermometers 
with such frequency as the Administrator or his representatives may 
direct, and permanently record the same, but in no event shall such 
readings be made less frequently than every third working day. If the 
cottonseed attains a temperature of 110 deg. F. the warehouseman shall 
immediately take such action as is necessary to lower the temperature. 
If the depositor of the cottonseed or any other person to whom he may 
have transferred title or interest in the cottonseed desires to make 
temperature determinations he shall be permitted to do so in company 
with the warehouseman or the warehouseman's representative.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948, as amended at 47 FR 745, Jan. 
7, 1982. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.32  Care of nonlicensed cottonseed, or other commodities.

    If, at any time, a warehouseman shall handle or store cottonseed 
otherwise than as a licensed warehouseman, or shall handle or store any 
other commodity, he shall so protect the same, and otherwise exercise 
such care with respect to it, as not to endanger the cottonseed in his 
custody as a licensed warehouseman or impair his ability to meet his 
obligations and perform his duties under the act and the regulations in 
this part.



Sec. 742.33  Records to be kept in safe place.

    Each warehouseman shall provide a metal fireproof safe, a fireproof 
vault or a fireproof compartment in which he shall keep, when not in 
actual use, all records, books, and papers pertaining to the licensed 
warehouse, including his current receipt book, copies of receipts issued 
and canceled receipts, except that with the written consent of the 
Administrator, or his representative, upon a showing by such 
warehouseman that it is not practicable to provide such fireproof safe, 
vault, or compartment, he may keep such records, books, and papers in 
some other place of safety, approved by the Administrator or his 
representative. Each canceled receipt shall be retained by the 
warehouseman for a period of six years after December 31 of the year in 
which the receipt is canceled and for such longer period as may be 
necessary for the purposes of any litigation which the warehouseman 
knows to be pending, or as may be required by the Administrator in 
particular cases to carry out the purposes of the act. Canceled receipts 
shall be arranged by the warehouseman in numerical order and otherwise 
in such manner as shall be directed, for purposes of audit, by 
authorized officers or agents of the Department of Agriculture.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 22 FR 1629, Mar. 14, 1957; 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.34  Warehouse charges.

    A warehouseman shall not make any unreasonable or exorbitant charge 
for services rendered. Before a license to conduct a warehouse is 
granted under the act the warehouseman shall file with the Administrator 
a copy of his rules and a schedule of charges to be made by him if 
licensed. Before making any change in such rules or schedule of charges 
he shall file with the Administrator a statement in writing showing the 
proposed change and the reasons

[[Page 366]]

therefor. Each licensed warehouseman shall keep exposed conspicuously in 
the place prescribed by Sec. 742.7, and at such other place, accessible 
to the public, as the Administrator or his representative may from time 
to time designate, a copy of his current rules and schedule of charges.



Sec. 742.35  Business hours.

    (a) Each licensed warehouse shall be kept open for the purpose of 
receiving cottonseed for storage and delivering cottonseed out of 
storage every business day for a period of not less than six hours 
between the hours of 8 a.m. and 6 p.m., except as provided in paragraph 
(b) of this section. The warehouseman shall keep conspicuously posted on 
the door of the public entrance to his office and to his warehouse a 
notice showing the hours during which the warehouse will be kept open, 
except when such warehouse is kept open continuously from 8 a.m. to 6 
p.m.
    (b) In case the warehouse is not to be kept open as required by 
paragraph (a) of this section, the notice posted as prescribed in that 
paragraph shall state the period during which the warehouse is to be 
closed and the name of an accessible person, with the address where he 
is to be found, who shall be authorized to deliver cottonseed stored in 
such warehouse, upon lawful demand by the depositor thereof or the 
holder of the receipt therefor, as the case may be.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 47 FR 745, Jan. 7, 1982. Redesignated at 50 FR 1814, Jan. 14, 
1985]



Sec. 742.36  Numbered tags to be attached to cottonseed.

    Each warehouseman shall, upon acceptance for storage of any lot of 
sacked cottonseed, immediately attach to such lot a tag of good quality 
which shall identify the lot. Such tag shall show the lot number, the 
identification mark on each bag, the number of the receipt issued to 
cover such cottonseed, the number of sacks in the lot, the grade, if 
determined, and the gross weight of the cottonseed at the time it 
entered storage.

[SRA, BAE 102, as amended July 14, 1931. Redesignated at 50 FR 1814, 
Jan. 14, 1985]



Sec. 742.37  Identification tag.

    Each warehouseman shall so store each lot of cottonseed for which a 
receipt under the act has been issued that the tag thereon, required by 
Sec. 742.36, is visible and readily accessible, and shall arrange all 
bags in his licensed warehouse so as to permit an accurate count 
thereof.



Sec. 742.38  Grade and weight determinations.

    Each licensed warehouseman shall accept all cottonseed for storage 
and shall deliver out of storage all bulk cottonseed, other than 
specially binned or sacked cottonseed, in accordance with the grade of 
such cottonseed as determined by a person duly licensed to grade such 
cottonseed and to certificate the grade thereof, and in accordance with 
the weights of such cottonseed as determined by a person duly licensed 
to weigh such cottonseed and to certificate the weight thereof, under 
the act and the regulations in this part, and in accordance with the 
agreement regarding shrinkage as shown by the terms of the receipt or in 
the absence of such agreement in accordance with Sec. 742.30.



Sec. 742.39  Bulk storage of identity-preserved cottonseed.

    Upon the acceptance by a licensed warehouseman, for storage in his 
licensed warehouse, of any lot of bulk cottonseed the identity of which 
is to be preserved, he shall store, or cause to be stored, such 
cottonseed in an individual bin or compartment designated by lot numbers 
or letters, or other clearly distinguishable words or signs, permanently 
and securely affixed thereto, or shall so mark the container or 
containers of such cottonseed or so place the cottonseed in the 
warehouse that its identity will not be lost during the storage period.

[[Page 367]]



Sec. 742.40  Delivery of cottonseed; conditions.

    Except as may be provided by law or the regulations in this part, 
each licensed warehouseman, (a) upon proper presentation of a receipt 
for any bulk, other than specially binned cottonseed, and upon payment 
or tender of all advances and legal charges, shall deliver to such 
depositor or lawful holder of such receipt cottonseed of the grade and 
quantity specified in such receipt, after making due allowance for 
shrinkage as provided in the regulations in this part, and (b) upon 
proper presentation of a receipt for any cottonseed the identity of 
which was to have been preserved during the storeage period, and upon 
payment or tender of all advances and legal charges, shall deliver to 
the person lawfully entitled thereto, the identical cottonseed stored in 
his licensed warehouse.



Sec. 742.41  System of accounts.

    Each licensed warehouseman shall use for his licensed warehouse a 
system of accounts, approved for the purpose by the Administrator, which 
shall show for each bag or lot of cottonseed, the name of the depositor, 
the weight of the cottonseed, the number of bags in each lot, the grade 
when grade is required to be, or is ascertained, the location, the dates 
received for and delivered out of storage and the receipts issued and 
canceled, and a separate record for each depositor, and such accounts 
shall include a detailed record of all moneys received and disbursed and 
of all effective insurance policies. In the case of cottonseed stored in 
bags, the tag number mentioned in Sec. 742.36 shall be shown. There 
shall also be kept a record or chart for each bin, showing the 
temperature of cottonseed in storage as determined by the readings 
required by Sec. 742.31, and such other information as the Administrator 
may require. Such records shall be retained by the warehouseman for a 
period of six years after December 31 of the year in which created, and 
for such longer period as may be necessary for the purposes of any 
litigation which the warehouseman knows to be pending, or as may be 
required by the Administrator in particular cases to carry out the 
purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 29 FR 13369, Sept. 26, 1964; 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.42  Reports.

    Each licensed warehouseman shall, from time to time, when requested 
by the Administrator, make such reports, on forms prescribed and 
furnished for the purpose by the Service, concerning the condition, 
contents, operation, and business of the warehouse as the Administrator 
may require.



Sec. 742.43  Canceled receipts; auditing.

    Each warehouseman, if requested by the Service, shall forward 
canceled receipts for auditing to an entity or office of the Service as 
may be designated from time to time.

[62 FR 33542, June 20, 1997]



Sec. 742.44  Copies of reports to be kept.

    Each warehouseman shall keep on file, as a part of the records of 
the warehouse, for a period of three years after December 31 of the year 
in which submitted, an exact copy of each report submitted by such 
warehouseman under the regulations in this part.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[29 FR 13369, Sept. 26, 1964, as amended at 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.45  Inspection and examination of warehouse.

    Each licensed warehouseman shall permit any officer or agent of the 
Department of Agriculture, authorized by the Secretary for the purpose, 
to enter and inspect or examine, on any business day during the usual 
hours of business, any warehouse for the conduct of which such 
warehouseman holds a license, the office thereof, the books, records, 
papers, and accounts relating thereto, and the contents thereof, and 
such warehouseman shall furnish such

[[Page 368]]

officer or agent the assistance necessary to enable him to make any 
inspection or examination under this section.



Sec. 742.46  Weighing apparatus; inspection.

    The weighing apparatus used for ascertaining the weight stated in a 
receipt or certificate, issued for cottonseed stored in a licensed 
warehouse, shall be subject to examination by the officer or agent of 
the Department of Agriculture designated by the Administrator for the 
purpose. If the Service shall disapprove such weighing apparatus, it 
shall not thereafter, unless such disapproval be withdrawn, be used in 
ascertaining the weight of any cottonseed for the purposes of the act 
and the regulations in this part.



Sec. 742.47  Warehouse to be kept clean.

    Each licensed warehouseman shall keep his warehouse clean and free 
from trash, dust, rubbish, and scattered cottonseed.



Sec. 742.48  Excess storage.

    A warehouseman shall not store cottonseed in his licensed warehouse 
in excess of the capacity thereof determined in accordance with 
Sec. 742.13(a).



Sec. 742.49  Removal from storage.

    Except as may be permitted by law or the regulations in this part, a 
licensed warehouseman shall not remove any cottonseed for storage from 
the licensed warehouse or the part thereof designated in the receipt, if 
by such removal the insurance thereon will be impaired, without first 
obtaining the consent in writing of the holder of the receipt, and 
endorsing on such receipt the fact of such removal. Under no 
circumstances, unless it becomes absolutely necessary to protect the 
interests of holders of receipts, shall cottonseed be removed from the 
licensed warehouse, and immediately upon any such removal the 
warehouseman shall notify the Administrator of such removal and the 
necessity therefor.

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954. 
Redesignated at 50 FR 1814, Jan. 14, 1985. Reinstated at 62 FR 33339, 
June 19, 1997]

    Editorial Note: Section 742.49 was erroneously omitted in the Jan. 
1, 1995, through Jan. 1, 1997, revisions of the CFR.



Sec. 742.50  Storage of wet cottonseed prohibited.

    A warehouseman shall not under any circumstances accept for storage 
any cottonseed in his licensed warehouse that is wet or otherwise of a 
condition rendering it unsuitable for storage.



Sec. 742.51  Storage to prevent damage.

    A warehouseman shall not handle or store cottonseed in such manner 
as will injure or damage it or in any part of the warehouse in which it 
is likely to be injured or damaged by excessive moisture, or otherwise. 
If a licensed warehouseman accepts cottonseed for storage in bulk, 
unless his warehouse is equipped with both a conveyor and a cooling 
system, he shall not store such seed in an amount greater than 500 tons 
in any one bin or compartment.



Sec. 742.52  Deteriorating cottonseed; handling; notice.

    (a) If the licensed warehouseman, with the approval of the licensed 
inspector, shall determine that any cottonseed is deteriorating and that 
such deterioration cannot be stopped, the licensed warehouseman shall 
give immediate notice of the fact, in accordance with paragraphs (b) and 
(c) of this section.
    (b) Such notice shall state (1) the warehouse in which the 
cottonseed is stored; (2) the quantity, kind, and grade of the 
cottonseed at the time the notice is given; (3) the actual condition of 
the cottonseed as nearly as can be ascertained, and the reason, if 
known, for such condition; (4) the oldest outstanding receipts covering 
the amount of cottonseed out of condition, giving the number and date of 
each such receipt and the quantity, the kind, and grade of the 
cottonseed as stated in each such receipt; and (5) that such cottonseed 
will be delivered upon the return and cancellation of the receipt 
therefor.
    (c) A copy of such notice shall be delivered in person or shall be 
sent by

[[Page 369]]

mail (1) to the persons holding the receipts, if known to the licensed 
warehouseman; (2) to the person who originally deposited the cottonseed; 
(3) to any other persons known by the licensed warehouseman to be 
interested in the cottonseed; and (4) to the Administrator. If the 
holders of the receipts and the owners of the cottonseed are known to 
the licensed warehouseman and cannot, in the regular course of the 
mails, be reached within 12 hours, the licensed warehouseman shall, 
whether or not requested to do so, also immediately notify such persons 
by telegraph or telephone at their expense. Public notice shall also be 
given by posting a copy of such notice at the place where the 
warehouseman is required to post his license. A copy of such notice 
shall be kept as a record of the warehouse.
    (d) Any person, interested in any cottonseed or the receipt covering 
such cottonseed stored in a licensed warehouse, may, in writing, notify 
the licensed warehouseman, conducting such licensed warehouse, of the 
fact of his interest, and such licensed warehouseman shall keep a record 
of the fact. If such person requests in writing that he be notified 
regarding the condition of any such cottonseed and agrees to pay the 
cost of any telegraph or telephone charge, such licensed warehouseman 
shall notify such person in accordance with such request.
    (e) Nothing contained in this section shall be construed as 
relieving the licensed warehouseman from properly caring for any 
cottonseed after notification of its condition in accordance with this 
section.
    (f) Records required to be kept by this section shall be retained, 
as a part of the records of the warehouse, for a period of six years 
after December 31 of the year in which created, and for such longer 
period as may be necessary for the purposes of any litigation which the 
warehouseman knows to be pending, or as may be required by the 
Administrator in particular cases to carry out the purposes of the Act.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 29 FR 13369, Sept. 26, 1964; 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.53  Sale of deteriorating cottonseed.

    Subject to State law, if the cottonseed advertised in accordance 
with the requirements of Sec. 742.52 has not been removed from storage 
by the owner thereof within five days from the date of notice of its 
being out of condition, the licensed warehouseman in whose licensed 
warehouse such cottonseed is stored may immediately sell the same at 
public auction at the expense and for the account of the owner. Before 
such public sale is determined upon, the warehouseman shall immediately 
notify the Administrator by wire.



Sec. 742.54  Compliance with contracts.

    Each warehouseman shall faithfully perform such obligations as a 
warehouseman as may be assumed by him under contracts with depositors of 
cottonseed in his warehouse.

[14 FR 3829, July 13, 1949. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.55  Reporting fire losses.

    If at any time a fire occurs at or within any licensed warehouse, it 
shall be the duty of the warehouseman to report immediately the 
occurrence of such fire and the extent of damage to the Administrator.

[62 FR 33542, June 20, 1997]



Sec. 742.56  Grade or weight certificate; filing.

    When a grade or weight certificate has been issued by a licensed 
grader or weigher, a copy of such certificate shall be filed with the 
warehouseman in whose warehouse the cottonseed covered by such 
certificate is stored, and such certificate shall become a

[[Page 370]]

part of the records of the licensed warehouseman. Such certificates 
shall be retained, as a part of the records of the warehouse, for a 
period of 3 years after December 31 of the year in which the 
certificates are issued.

(Approved by the Office of Management and Budget under control number 
0560-0120)

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 29 FR 13369, Sept. 26, 1964; 47 FR 745, Jan. 7, 1982. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.57  Identity-preserved cottonseed; nonstorage.

    Subject to the provisions of section 13 of the act, a licensed 
warehouseman may elect not to receive cottonseed for storage the 
identity of which is to be preserved while in storage.

                                  Fees



Sec. 742.58  License fees.

    (a) Fees are collected in advance for each original, amended, 
modified, extended, reinstated, or duplicate warehouseman's license; and 
for each original, duplicate, or modified license issued to inspect, 
sample, grade, classify, or weigh commodities.
    (b) Fee changes, if applicable, will be announced by Notice in the 
Federal Register on or before July 1, and effective the following 
October 1.

[59 FR 51358, Oct. 11, 1994]



Sec. 742.59  Warehouse annual and inspection fees.

    Warehousemen must pay:
    (a) An annual fee which will be determined by computing the capacity 
for each warehouse location under a single license and adding those 
amounts together to determine the total due. The fee will be assessed 
and payable when the warehouse bond is furnished in accordance with 
these regulations, for acceptance by the Secretary and annually 
thereafter on the bond renewal date. The capacity for each identifiable 
location will be determined by the Secretary. The total capacity of all 
locations may not exceed the capacity stated in the current license. An 
identifiable location is a fully functional public warehouse as 
determined by the Secretary. The annual fee a licensed warehouseman is 
assessed may be adjusted by the amount Commodity Credit Corporation 
(CCC) pays, if CCC has a storage contract or agreement with the 
warehouseman.
    (b) An inspection fee for each original and amendment inspection.
    (c) An inspection fee at the rate of 100 percent of the annual fee 
charged warehouses without a CCC storage contract or agreement, in all 
cases where the license has been suspended and the warehouseman has 
requested reinstatement. No fee will be charged if the Secretary 
determines that the suspension was not justified.
    (d) A fee for each inspection requested by the warehouseman at the 
rate of 100 percent of the annual fee charged warehouses without a CCC 
storage contract or agreement.

[59 FR 51358, Oct. 11, 1994]



Sec. 742.60  Advance deposit.

    Before any license is granted, or an original examination or 
inspection is made, or reexamination or reinspection for modification of 
an existing license is made, or when the annual fee for the licensed 
warehouse is assessed, pursuant to the regulation in this part, the 
applicant or licensee shall deposit with the Service the amount of the 
fee prescribed. Such deposit shall be made in the form of a check, 
certified if required by the Service, draft, or post office or express 
money order, payable to the order of the Service.

[46 FR 63201, Dec. 30, 1981. Redesignated at 50 FR 1814, Jan. 14, 1985, 
as amended at 62 FR 33542, June 20, 1997]



Sec. 742.61  Return of excess deposit.

    The Treasurer of the United States shall hold in his custody each 
advance deposit made under Sec. 742.60 until the fee, if any, is 
assessed and he is furnished by the Service with a statement showing the 
amount thereof and against whom assessed. Any part of such advance 
deposit which is not required for the payment of any fee assessed shall 
be returned to the party depositing the same.

[SRA, BAE 102, as amended Sept. 1926, and at 3 FR 1400, June 14, 1938. 
Redesignated at 50 FR 1814, Jan. 14, 1985]

[[Page 371]]

      Licensed Inspectors, Licensed Graders, and Licensed Weighers



Sec. 742.62  Inspector's, grader's, weigher's application.

    (a) Application for licenses to inspect, to grade, or to weigh 
cottonseed under the act shall be made to the Administrator on forms 
furnished for the purpose by him.
    (b) Each such application shall be in English, shall be signed by 
the applicant, shall be verified by him under oath or affirmation 
administered by a duly authorized officer, and shall contain or be 
accompanied by (1) the name and location of a warehouse or warehouses 
licensed, or for which application for license has been made, under the 
Act in which cottonseed sought to be inspected, graded, and weighed 
under such license is or may be stored; (2) a statement from the 
warehouseman conducting such warehouse showing whether or not the 
applicant is competent and is acceptable to such warehouseman for the 
purpose; (3) satisfactory evidence that he has had at least one year's 
experience in the kind of service for which a license is sought or the 
equivalent of such experience, and that he is competent to perform such 
services, except in the case of applicants for weighers' licenses one 
month's experience will be sufficient; (4) a statement by the applicant 
that he agrees to comply with and abide by the terms of the Act and the 
regulations in this part so far as the same may relate to him; and (5) 
such other information as the Administrator may deem necessary: 
Provided, That when an application for a license to grade cottonseed is 
filed by a person who does not intend to grade cottonseed for any 
particular licensed warehouseman but who does intend to grade cottonseed 
stored or to be stored in a licensed warehouse and to issue grade 
certificates therefor, as provided for by the Act and the regulations in 
this part, independent of the warehouse receipts issued to cover such 
cottonseed, it shall not be necessary to furnish such statement as is 
required by paragraph (b)(2) of this section.
    (c) The applicant shall at any time furnish such additional 
information as the Secretary or the Administrator shall find to be 
necessary to the consideration of his application by the Secretary.
    (d) A single application may be made by any person for a license to 
inspect, to grade, and to weigh upon complying with all the requirements 
of this section.

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948; 19 FR 57, Jan. 6, 1954, as 
amended at 41 FR 34006, Aug. 12, 1976. Redesignated at 50 FR 1814, Jan. 
14, 1985]



Sec. 742.63  Examination of applicant.

    Each applicant for a license as an inspector, a grader, or a 
weigher, and each licensed inspector, licensed grader, or licensed 
weigher shall, whenever requested by an authorized agent of the 
Department of Agriculture designated by the Administrator for the 
purpose, submit to an examination or test to show his ability properly 
to perform the duties for which he is applying for license or for which 
he has been licensed.



Sec. 742.64  Posting of license.

    Each licensed grader shall keep his license conspicuously posted in 
the office where all or most of the grading is done and each licensed 
inspector or weigher shall keep his license conspicuously posted in the 
warehouse office or in such place as may be designated for the purpose 
by the Administrator.



Sec. 742.65  Duties of licensees.

    Each licensed inspector, each licensed grader, and each licensed 
weigher when requested, shall, without discrimination, as soon as 
practicable, and upon reasonable terms inspect, grade, or weigh and 
certificate the condition for storage, grade, or weight of cottonseed 
stored or to be stored in a licensed warehouse for which he holds a 
license, if such cottonseed be offered to him under such conditions as 
permit proper inspection and the determination of the condition, grade, 
or weight thereof, as the case may be. Each such inspector, grader, or 
weigher shall give preference to persons who request his services as 
such over persons who request his services in any other capacity. No 
inspection, grade, or weight certificate shall be issued under the act

[[Page 372]]

for cottonseed not stored or not to be stored in a licensed warehouse.



Sec. 742.66  Inspection certificate; form.

    Each inspection certificate issued under the act by a licensed 
inspector shall be in a form approved for the purpose by the 
Administrator, and shall embody within its written or printed terms (a) 
the caption ``United States Warehouse Act, Cottonseed Inspection 
Certificate''; (b) whether it is an original, a duplicate, or other 
copy; (c) the name and location of the licensed warehouse in which the 
cottonseed is or is to be stored; (d) the date of the certificate; (e) 
the location of the cottonseed at the time of inspection; (f) the 
identification number or mark of each bag of cottonseed, if in bags, 
given in accordance with Sec. 742.36; (g) the condition of the 
cottonseed for storage at the time of inspection; (h) that the 
certificate is issued by a licensed inspector, under the United States 
Warehouse Act and regulations thereunder; (i) a blank space designated 
for the purpose in which may be stated any general remarks on the 
condition of the cottonseed; (j) the signature of such licensed 
inspector. In addition, the inspection certificate may include any other 
matter not inconsistent with the act or the regulations in this part, 
provided the approval of the Service is first secured.



Sec. 742.67  Grade certificate; form.

    Each grade certificate issued under the act by a licensed grader 
shall be in a form approved for the purpose by the Administrator and 
shall embody within its written or printed terms (a) the caption 
``United States Warehouse Act, Cottonseed Grade Certificate''; (b) 
whether it is an original, a duplicate, or other copy; (c) the name and 
location of the licensed warehouse in which the cottonseed is or is to 
be stored; (d) the date of the certificate; (e) the location of the 
cottonseed at the time of grading; (f) the identification number or mark 
of each bag of cottonseed, if in bags, given in accordance with 
Sec. 742.36; (g) the grade or other class of each bag or lot of 
cottonseed covered by the certificate, in accordance with Secs. 742.77 
through 742.79 as far as applicable, and the standard or description in 
accordance with which the grade is made; (h) the approximate amount of 
cottonseed covered by the certificate; (i) that the certificate is 
issued by a licensed grader under the United States Warehouse Act and 
regulations thereunder; and (j) the signature of the licensed grader. In 
addition, the grade certificate may include any other matter not 
inconsistent with the act or the regulations in this part, provided the 
approval of the Service is first secured.



Sec. 742.68  Weight certificate; form.

    Each weight certificate issued under the act by a licensed weigher 
shall be in a form approved for the purpose by the Administrator, and 
shall embody within its written or printed terms (a) the caption 
``United States Warehouse Act, Cottonseed Weight Certificate''; (b) 
whether it is an original, a duplicate, or other copy; (c) the name and 
location of the licensed warehouse in which the cottonseed is or is to 
be stored; (d) the date of the certificate; (e) the location of the 
cottonseed at the time of weighing; (f) the identification number or 
mark of each bag of cottonseed, if in bags, given in accordance with 
Sec. 742.36; (g) the gross weight of the cottonseed; (h) that the 
certificate is issued by a licensed weigher, under the United States 
Warehouse Act and the regulations thereunder; and (i) the signature of 
such licensed weigher. In addition, the weight certificate may include 
any other matter not inconsistent with the act or the regulations in 
this part, provided the approval of the Service is first secured.



Sec. 742.69  Combination certificate; form.

    The condition, grade, and weight of any cottonseed, ascertained by a 
licensed inspector, a licensed grader, and a licensed weigher may be 
stated on a certificate meeting the combined requirements of 
Secs. 742.66 through 742.68, if the form of such certificate shall have 
been approved for the purpose by the Administrator.



Sec. 742.70  Copies of certificates to be kept.

    Each licensed inspector, each licensed grader, and each licensed 
weigher shall keep for a period of one year in

[[Page 373]]

a place accessible to persons financially interested a copy of each 
certificate issued by him under the regulations in this part and shall 
file a copy of each such certificate with the warehouse in which the 
cottonseed covered by the certificate is stored.



Sec. 742.71  Licensees to permit and assist in examination.

    Each licensed inspector, each licensed grader, and each licensed 
weigher shall permit any officer or agent of the Department of 
Agriculture, authorized by the Secretary for the purpose, to inspect or 
examine, on any business day during the usual hours of business, his 
books, papers, records, and accounts relating to the performance of his 
duties under the act and the regulations in this part, and shall, with 
the consent of the licensed warehouseman concerned, assist any such 
officer or agent in the inspection or examination of records mentioned 
in Sec. 742.41, as far as any such inspection or examination relates to 
the performance of the duties of such licensed inspector, licensed 
grader, or licensed weigher under the act and the regulations in this 
part.



Sec. 742.72  Reports.

    Each licensed inspector, each licensed grader, and each licensed 
weigher shall, from time to time, when requested by the Administrator, 
make reports on forms furnished for the purpose by the Service, bearing 
upon his activities as such licensed inspector, licensed grader, or 
licensed weigher.



Sec. 742.73  Licenses; suspension; revocation.

    Pending investigation the Secretary may, whenever he deems 
necessary, suspend the license of a licensed inspector, licensed grader, 
or licensed weigher temporarily, without hearing. Upon a written request 
and a satisfactory statement of reasons therefor, submitted by the 
licensed inspector, licensed grader, or licensed weigher, the Secretary 
may, without hearing, suspend or cancel the license issued to such 
licensed inspector, licensed grader, or licensed weigher. The Secretary 
may, after opportunity for hearing has been afforded in the manner 
prescribed in this section, suspend or cancel a license issued to a 
licensed inspector, licensed grader, or licensed weigher when such 
licensee, (a) has ceased to perform services as such inspector, grader, 
or weigher, or (b) has in any other manner become incompetent or 
incapacitated to perform the duties of such licensed inspector, licensed 
grader, or licensed weigher. As soon as it shall come to the attention 
of a licensed warehouseman that either of the conditions mentioned under 
paragraphs (a) and (b) of this section exist, it shall be the duty of 
such warehouseman to notify in writing the Administrator. Before the 
license of any licensed inspector, licensed grader, or licensed weigher 
is permanently suspended or revoked pursuant to section 12 of the Act, 
such licensed inspector, licensed grader, or licensed weigher shall be 
furnished by the Secretary, or by an official of the Department of 
Agriculture designated for the purpose, a written statement specifying 
the charges and shall be allowed a reasonable time within which he may 
answer the same in writing and apply for a hearing, an opportunity for 
which shall be afforded in accordance with Sec. 742.84.

[SRA, BAE 102, as amended Sept. 1926, and at 13 FR 8730, Dec. 30, 1948. 
Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.74  Suspended or revoked license; return; termination of license.

    (a) In case a license issued to a licensed inspector, licensed 
grader, or licensed weigher is suspended, revoked, or canceled by the 
Secretary, such license shall be returned to the Secretary. At the 
expiration of any period of suspension of such license, unless in the 
meantime it be revoked or canceled, the dates of the beginning and 
termination of the suspension shall be indorsed thereon, and it shall be 
returned to the licensed inspector, licensed grader, or licensed weigher 
to whom it was originally issued, and it shall be posted as prescribed 
in Sec. 742.64.
    (b) Any license issued under the act and the regulations in this 
part to an inspector, a grader, or a weigher shall automatically 
terminate as to any licensed warehouse whenever the license of such 
warehouse shall be revoked or canceled. Thereupon the license of such 
inspector, grader, or weigher shall be

[[Page 374]]

returned to the Secretary. In case such license shall apply to other 
warehouses the Secretary shall issue him a new license, omitting the 
names of the warehouses covering which licenses have been revoked or 
canceled. Such new license shall be posted as prescribed in Sec. 742.64.



Sec. 742.75  Lost or destroyed licenses.

    Upon satisfactory proof of the loss or destruction of a license 
issued to a licensed inspector, licensed grader, or licensed weigher, a 
duplicate thereof may be issued under the same or a new number, in the 
discretion of the Secretary.



Sec. 742.76  Unlicensed inspectors, graders, weighers; misrepresentation.

    No person shall in any way represent himself to be an inspector, 
grader, or weigher licensed under the act unless he holds an 
unsuspended, unrevoked, and uncanceled license issued under the act.

                           Cottonseed Grading



Sec. 742.77  Classification; statement.

    Whenever the grade or condition of cottonseed is required to be or 
is stated for the purposes of this act and the regulations in this part, 
it shall be stated in accordance with Secs. 742.78 and 742.79.



Sec. 742.78  Standards to be used.

    Until such time as official cottonseed grades of the United States 
are in effect, the grade and condition of cottonseed shall be stated as 
far as applicable (a) in accordance with the State standards, if any, 
established in the State in which the warehouse is located, (b) in the 
absence of any State standards, in accordance with the standards, if 
any, adopted by any cottonseed organization or by the cottonseed trade 
generally in the locality in which the warehouse is located, subject to 
the disapproval of the Administrator, or (c) in the absence of the 
aforesaid standards in accordance with any standards approved by the 
Administrator.



Sec. 742.79  Statement of grade; condition.

    Whenever the grade or condition of the cottonseed is stated for the 
purposes of this act and this part, the terms used shall be correctly 
applied and shall be so selected as not to convey a false impression of 
the cottonseed. In case of doubt as to the grade or condition of a given 
lot of cottonseed a determination shall be made of such facts by drawing 
at least six samples of five (5) pounds each, fairly representative of 
the contents of the car, or two samples of two (2) pounds each fairly 
representative of the contents of the wagon from the various parts of 
the carload or wagonload of cottonseed offered for storage. These 
samples shall be thoroughly mixed and after being so mixed, from this 
mixture by quartering, not less than 100 grams shall be taken, which 
shall constitute the sample for the purpose of determining the grade.

                               Arbitration



Sec. 742.80  Arbitration.

    (a) Except when agreements have been made in accordance with the 
``United States Arbitration Act'' (43 Stat. 883; 9 U.S.C. 1-14), in case 
a question arises as to whether the condition, grade, or weight of 
cottonseed was correctly stated in a receipt, inspection certificate, 
grade certificate, or weight certificate issued under the act and the 
regulations in this part or as to whether an official sample was 
properly drawn by a licensed inspector in accordance with the 
regulations in this part, the licensed warehouseman concerned or any 
person financially interested in the cottonseed involved may, after 
reasonable notice to the other interested party, submit the question to 
an arbitration committee for determination in accordance with this 
section.
    (b) Such arbitration committee shall be composed of three or more 
disinterested persons who are competent to pass upon the questions 
involved. If there be a local trade organization such as a board of 
trade, chamber of commerce, exchange, or inspection department which 
provides such a committee under a rule or practice acceptable to the 
Administrator for the purpose, such a committee may determine the 
question. In the absence of such a committee, or if for any good reason 
not inconsistent with the act and the

[[Page 375]]

regulations in this part such committee is not acceptable to either of 
the parties interested the complainant and the other party shall each 
name a member and the two members so named shall select a third member, 
who shall constitute the arbitration committee. Each member of any such 
committee shall at all times be subject, for good cause, to the 
disapproval of the Administrator, and in case any member is so 
disapproved he shall not thereafter act on an arbitration committee 
which is considering any questions relating to the same lot of 
cottonseed unless such disapproval be withdrawn.
    (c) It shall be the duty of the interested parties to acquaint the 
arbitration committee with the exact nature of the question to be 
determined and all the necessary facts and to permit the committee to 
examine the receipt, certificate, sample, or cottonseed involved or any 
papers or records needed for the determination of the question. The 
committee shall make a written finding setting forth the question 
involved, the necessary facts, and its determination. Such findings or a 
true copy thereof, shall be filed as a part of the records of the 
licensed warehouseman involved. It may dismiss the matter without 
determination upon the request of the complainant, or for noncompliance 
by the complainant with the law or the regulations in this part, or 
because it is without sufficient evidence to determine the question, in 
which case the decision shall be deemed to be against the complainant. 
Except as otherwise provided by law, its decision shall be final for the 
purposes of the act and the regulations in this part, unless the 
Administrator shall direct a review of the question. Any necessary and 
reasonable expense of such arbitration shall be borne by the losing 
party, unless the committee shall decide that such expense shall be 
prorated between the parties.
    (d) If the decision of the arbitration committee be that the grade, 
condition, or weight was not correctly stated, the receipt or 
certificate involved shall be returned to and canceled by the licensee 
who issued it and he shall substitute therefor one conforming to the 
decision of the committee. If the decision of the committee be that a 
sample was not properly drawn in accordance with the regulations in this 
part, it shall cease to be an official sample for the purposes of 
regulations in this part, and the licensed inspector, at the request of 
any of the parties of the arbitration, shall draw and substitute a new 
sample, complying with this part with respect to such sample.

[SRA, BAE 102, as amended Sept. 1926. Redesignated at 50 FR 1814, Jan. 
14, 1985]

                              Miscellaneous



Sec. 742.81  Bonds required.

    Every person applying for a license, or licensed under section 9 of 
the act shall as such, be subject to all portions of the regulations in 
this part except Sec. 742.5, so far as they may relate to warehousemen. 
In case there is a law of any State providing for a system of warehouses 
owned, operated, or leased by such State, a person applying for a 
license under section 9 of the act, to accept the custody of cottonseed 
and to store the same in any of said warehouses, may, in lieu of a bond 
or bonds, complying with Secs. 742.12 and 742.13, file with the 
Secretary a single bond meeting the requirements of the act and the 
regulations in this part, in such form, and in such amount not less than 
$5,000 as he shall prescribe, to insure the performance by such person, 
with respect to the acceptance of the custody of cottonseed and its 
storage in the warehouse in such system for which licenses are or may be 
issued, of his obligations arising during the periods of such licenses, 
and in addition, if desired by the applicant, during the periods of any 
modifications or extensions thereof. In fixing the amount of such bond, 
consideration shall be given, among other appropriate factors, to the 
character of the warehouses involved, their actual or contemplated 
capacity, the bonding requirements of the State, and its liability with 
respect to such warehouses. If the Secretary shall find the existence of 
conditions warranting such action, there shall be added to the amount of 
the bond so fixed, a further amount, fixed by him, to meet such 
conditions.

[[Page 376]]



Sec. 742.82  Publications.

    Publications under the act and the regulations in this part shall be 
made in such media as may be deemed proper by the Administrator.

[62 FR 33542, June 20, 1997]



Sec. 742.83  Information of violations.

    Every person licensed under the act shall immediately furnish the 
Administrator any information which comes to the knowledge of such 
person tending to show that any provision of the act or the regulations 
in this part has been violated.



Sec. 742.84  Procedure in hearings.

    Hearings under the Act or the regulations in this part, except those 
relating to appeals or arbitrations shall be conducted in accordance 
with the Rules of Practice Governing Formal Adjudicatory Administrative 
Proceedings Instituted by the Secretary under various statutes (7 CFR 
1.130--1.151).

[45 FR 6776, Jan. 30, 1980. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.85  One document and one license to cover several products.

    A license may be issued for the storage of two or more agricultural 
products in a single warehouse. Where such a license is desired, a 
single application, inspection, bond, record, report or other paper, 
document or proceeding relating to such warehouse, shall be sufficient 
unless otherwise directed by the Administrator.

[14 FR 3829, July 13, 1949. Redesignated at 50 FR 1814, Jan. 14, 1985]



Sec. 742.86  Bond, assets, and fees for combination warehouse.

    Where such license is desired, the amount of the bond, net assets, 
and inspection and license fees shall be determined by the Administrator 
in accordance with the regulations applicable to the particular 
agricultural product which would require the largest bond and the 
greatest amount of net assets and of fees if the full capacity of the 
warehouse was used for its storage.

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948. Redesignated at 14 FR 3829, 
July 13, 1949, and at 50 FR 1814, Jan. 14, 1985]



Sec. 742.87  Amendments.

    Any amendment to, or revision of, the regulations in this part, 
unless otherwise stated therein, shall apply in the same manner to 
persons holding licenses at the time it becomes effective as it applies 
to persons thereafter licensed under the act.

[SRA, BAE 102; 13 FR 8731, Dec. 30, 1948. Redesignated at 14 FR 3829, 
July 13, 1949, and at 50 FR 1814, Jan. 14, 1985]

[[Page 377]]





                     SUBCHAPTER D--SPECIAL PROGRAMS



                           PART 743 [RESERVED]



PART 750--SOIL BANK--Table of Contents




    Editorial Note: Part 750 (formerly part 485 of title 6), published 
at 21 FR 6289, Aug. 22, 1956, and redesignated at 26 FR 5788, June 29, 
1961, is no longer carried in the Code of Federal Regulations. This 
deletion does not relieve any person of any obligation or liability 
incurred under these regulations, nor deprive any person of any rights 
received or accrued under the provisions of this part. For Federal 
Register citations affecting this part, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, and 1973-1985,'' published in seven 
separate volumes.



PART 752--WATER BANK PROGRAM--Table of Contents




Sec.
752.1  Program objective.
752.2  Definitions.
752.3  Administration.
752.4  Geographical applicability.
752.5  Eligible farm.
752.6  Land eligible for designation.
752.7  Use of designated acreage.
752.8  Water bank program agreement.
752.9  Agreement period.
752.10  Awarding water bank agreements.
752.11  Responsibility of agreement signers.
752.12  Provisions relating to tenants and sharecroppers.
752.13  Determination of compliance.
752.14  Annual payments.
752.15  Adjustment of annual rates.
752.16  Refunds or forfeitures for noncompliance.
752.17  Actions defeating purposes of program.
752.18  Filing of false claims.
752.19  Depriving others of payments.
752.20  Modification of an agreement.
752.21  Termination of agreements.
752.22  Transfer of interest in an agreement.
752.23  Successors-in-interest.
752.24  Agreement not in conformity with regulations.
752.25  Performance based upon advice or action of county or State 
          committee.
752.26  Setoffs and withholdings.
752.27  Debt collection.
752.28  Appeals.
752.29  Payments not subject to claims.
752.30  Prohibition against payments.
752.31  Delegation of authority.
752.32  Paperwork Reduction Act assigned numbers.

    Authority: Secs. 2-12, 84 Stat. 1468-1471, as amended (16 U.S.C. 
1301-1311).

    Source: 48 FR 45528, Oct. 6, 1983, unless otherwise noted.



Sec. 752.1  Program objective.

    (a) The regulations in this part set forth the terms and conditions 
for the Water Bank Program. The Secretary is authorized to enter into 
agreements and make payments to eligible persons in important migratory 
waterfowl nesting and breeding areas. Specified wetlands identified for 
the conservation of water or related uses on a conservation plan shall 
be developed in cooperation with the Soil and Water Conservation 
District in which the lands are located.
    (b) The objective of the Water Bank Program (hereinafter referred to 
in this part as the ``program'') is to preserve, restore, and improve 
the wetlands of the Nation, and thereby: (1) Conserve surface waters, 
(2) preserve and improve habitat for migratory waterfowl and other 
wildlife resources, (3) reduce runoff, soil and wind erosion, (4) 
contribute to flood control, (5) contribute to improved water quality 
and reduce stream sedimentation, (6) contribute to improved subsurface 
moisture, (7) reduce acres of new land coming into production and to 
retire lands now in agricultural production, (8) enhance the natural 
beauty of the landscape, and (9) promote comprehensive and total water 
management planning.



Sec. 752.2  Definitions.

    (a) Adjacent land means land on a farm which adjoins designated 
types 1 through 7 wetlands and is considered essential for the 
protection of the wetland or for the nesting, breeding, or feeding of 
migratory waterfowl. Adjacent land need not be contiguous to the land 
designated as wetland, but cannot be located more than one quarter of a 
mile away. Types 1 and 2 wetlands may be designated as adjacent land 
rather than wetland if located not more than one quarter mile from types 
3 through 7 wetlands.
    (b) Administrator means the Administrator or Acting Administrator of 
the

[[Page 378]]

Farm Service Agency (FSA), U.S. Department of Agriculture.
    (c) Agreement means a water bank agreement.
    (d) Conservation plan means a written record of the land user's 
decisions on the use and management of the wetland and adjacent areas 
covered by the agreement. The conservation plan is the basis for the 
agreement. It includes a schedule of conservation treatment and 
management required to improve, protect, or restore the wetland and to 
maintain the wetland and adjacent land as a functional wetland unit for 
the life of the agreement. Conservation treatment and management of the 
vegetation for wetland protection, wildlife habitat, or other authorized 
objectives are consistent with the program objectives and priorities.
    (e) Wetlands means the inland fresh areas described as types 1 
through 7 in Circular 39, Wetlands of the United States, as published by 
the United States Department of the Interior.
    (f) In the regulations in this part and in all instructions, forms, 
and documents in connection therewith, all other words and phrases 
specifically relating to FSA operation shall, unless the context of 
subject matter otherwise requires, have the meanings assigned to them in 
the regulations governing reconstitution of farms, allotments and bases, 
part 719 of this chapter, as amended.

[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]



Sec. 752.3  Administration.

    (a) The program will be administered under the general supervision 
of the Administrator, in consultation with the Secretary of the Interior 
or his designee, and shall be carried out in the field by FSA State and 
county committees.
    (b) Members of county committees are authorized to approve water 
bank agreements on behalf of the Secretary of Agriculture.
    (c) State and county committees do not have authority to modify or 
waive any of the provisions of these regulations, or any amendment, 
supplement, or revision thereto. They do not have authority to modify or 
waive any of the provisions of any agreement entered into hereunder 
except to the extent specifically authorized in this part.

[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]



Sec. 752.4  Geographical applicability.

    The program will be applicable in States and counties designated by 
the Deputy Administrator, State and County Operations, FSA (hereinafter 
referred to as the ``Deputy Administrator'') after consultation with the 
United States Fish and Wildlife Service, United States Department of the 
Interior.



Sec. 752.5  Eligible farm.

    A farm is eligible for participation in the program if: (a) At the 
time the request for an agreement is filed, land on the farm is not 
covered by a Water Bank Program agreement; (b) the farm contains at 
least one of the types 3 through 7 wetlands which are identified in a 
conservation plan developed in cooperation with the Soil and Water 
Conservation District in which the farm is located; and (c) the farm 
meets the other requirements specified in this part.



Sec. 752.6  Land eligible for designation.

    (a) Land placed under an agreement shall be specifically identified 
and designated for the period of the agreement.
    (b) Land eligible for designation must be: (1) Privately owned 
inland fresh wetland areas of types 1 through 7 of which at least 2 
acres must be types 3 through 7 wetlands with respect to which, in the 
absence of inclusion in the program, destruction of the wetland 
character could reasonably be expected; (2) privately owned inland fresh 
wetland areas of types 1 through 7, which are under a drainage easement 
with the U.S. Department of the Interior or with a State government 
which permits agricultural use; or (3) other privately owned land which 
is adjacent to or within one quarter mile of designated types 1 through 
7 wetlands and which is determined by the county committee to be 
essential for the nesting, breeding, or feeding of migratory waterfowl, 
or for the protection of wetland.

[[Page 379]]

    (c) The following land is not eligible for designation: (1) Land on 
which the ownership has changed during the 2-year period preceding the 
first year of the agreement period unless: (i) The new ownership was 
acquired by will or succession as a result of the death of the previous 
owner, or (ii) the land was acquired by the owner or operator to replace 
eligible land from which he was displaced because of its acquisition by 
any Federal, State, or other agency having the right of eminent domain. 
However a new owner shall not be prohibited from entering into an 
agreement if the person has operated the land to be designated for as 
long as 2 years preceding the first year of the agreement and has 
control of such land for the agreement period. The provisions of this 
subparagraph shall not prohibit the continuation of an agreement by a 
new owner after an agreement has once been entered into under this part.
    (2) Land which is set aside or diverted under any other program 
administered by the Department of Agriculture.
    (3) Land which is owned by the United States or a State or local 
government or political subdivision thereof.
    (4) Land which is harvested in the first year of the agreement 
period prior to being designated, except for land on which timber is 
harvested in accordance with Sec. 752.7(g).
    (5) Types 1 through 7 wetlands which are common to more than one 
farm unless the portion of a wetland area located on the farm which 
controls the potential outlet for drainage is placed under agreement. 
After an agreement has been approved for the farm controlling the outlet 
for drainage, an agreement may be entered into with any or all other 
farms for other portions of the common wetland area if all agreements 
have the same beginning date as the farm controlling the outlet for 
drainage.

[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]



Sec. 752.7  Use of designated acreage.

    (a) The acreage designated under an agreement shall be maintained 
for the agreement period in a manner which will preserve, restore or 
improve the wetland character of the land. Persons entering into an 
agreement shall devote the adjacent land to conservation uses as 
specified in the agreement.
    (b) The designated acreage shall not be drained, burned, filled, or 
otherwise used in a manner which would destroy the wetland character of 
the acreage, except that the provisions of this paragraph shall not 
prohibit the carrying out of management practices which are specified in 
a conservation plan for the farm which is developed in cooperation with 
the Soil and Water Conservation District in which the farm is located.
    (c) The designated acreage shall not be used as a dumping area for 
draining other wetlands. However, the county committee may authorize the 
use of the designated area to receive limited drainage waters upon a 
determination that such use is consistent with the sound management of 
wetlands and is specified in the conservation plan for the farm.
    (d) The designated acreage shall not be used: (1) As a source of 
irrigation water or as acreage for a set-aside, land diversion, acreage 
reduction or other program, or (2) to meet the conserving base acreage 
requirement for any other program.
    (e) No crop shall be harvested from the designated acreage and such 
acreage shall not be grazed, except as may be specified in the 
conservation plan for the farm except that the designated acreage may be 
grazed in the first year of the agreement period prior to the date the 
agreement is approved.
    (f) During periods of severe drought, haying of the designated 
acreage may be approved under specified conditions which are prescribed 
by the Deputy Administrator in consultation with the Secretary of 
Interior or his designee.
    (g) The harvesting of timber products may be permitted but only in 
accordance with a Forest Management Plan which is included in the 
conservation plan and which is approved by the State forester or 
equivalent State official.

[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]

[[Page 380]]



Sec. 752.8  Water bank program agreement.

    (a) An agreement shall be executed for each participating farm. The 
agreement shall be signed by the owner of the designated acreage and any 
other person who, as landlord, tenant, or share cropper, will share in 
the payment or has an interest in the designated acreage.
    (b) There may be more than one agreement for a farm.
    (c) Each agreement shall be signed by a member of the county 
committee on behalf of the Secretary.

[48 FR 45528, Oct. 6, 1983, as amended at 50 FR 7744, Feb. 26, 1985]



Sec. 752.9  Agreement period.

    (a) The agreement period shall be 10 years. The agreement shall 
become effective on January 1 of the year in which the agreement is 
approved except that the agreement shall become effective on January 1 
of the next succeeding year in cases where, at the time the agreement is 
approved, the county committee determines that the agreement signers 
will be unable to comply with the provisions of Sec. 752.7 relating to 
the use of designated acreage in the year in which such agreement is 
approved.
    (b) Subject to a modification of payment rates and such other 
provisions which may be determined to be desirable, agreements may be 
renewed for additional periods of 10 years each.



Sec. 752.10  Awarding water bank agreements.

    (a) Persons wishing to be considered for an agreement shall file a 
request with the county committee indicating the acreage which is to be 
designated under the agreement. In order to be eligible for 
participation in the program, such persons must agree to designate: (1) 
2 or more acres of types 3 through 7 wetlands, and (2) a total of at 
least 10 acres consisting of types 1 through 7 wetlands or adjacent 
land, or any combination thereof, identified in a conservation plan 
developed in cooperation with the Soil and Water Conservation District 
in which the farm is located. In addition, the Soil Conservation Service 
(SCS) must certify that the designated acreage constitutes a viable 
wetland unit, contains sufficient adjacent land to protect the wetland, 
and provides essential habitat for the nesting, breeding or feeding of 
migratory waterfowl. An acreage of less than 10 acres may be designated 
if the SCS representative recommends acceptance of the acreage and 
certifies that the area offered for agreement is a good, viable wetland 
unit and that the acceptance of the acreage would be in accord with the 
purposes of the program.
    (b) Persons desiring to participate in the program may agree to 
designate any additional amount to types 1 through 7 wetlands and 
adjacent land. However, the maximum acreage of adjacent land which is 
designated under the agreement with respect to which payment shall be 
based cannot exceed four times the total acreage of types 3 through 7 
wetlands which is designated under the agreement. This maximum acreage 
restriction may be waived by the State committee if such waiver would 
further the program objectives.
    (c) Where funds allocated to the county do not permit accepting all 
requests which are filed, the county committee may limit the approval of 
requests for agreements in accordance with instructions issued by the 
Deputy Administrator.



Sec. 752.11  Responsibility of agreement signers.

    (a) The owner of the designated acreage is responsible for 
compliance with the agreement and for any refunds or deductions for 
failure to comply fully with the terms of the agreement while a party to 
such agreement.
    (b) Each other person signing the agreement is jointly and severally 
responsible with the owner for compliance with the agreement and for any 
refunds or payment reductions which may be required for failure to 
comply fully with the terms of the agreement while a party to such 
agreement.



Sec. 752.12  Provisions relating to tenants and sharecroppers.

    (a) No agreement shall be approved if it appears that the owner, 
landlord, or

[[Page 381]]

operator has (1) not afforded the tenants and sharecroppers having an 
interest in the designated acreage an opportunity to participate in the 
program, or (2) adopted any device or scheme for the purpose of 
depriving any tenant or sharecropper of their payment or any other right 
under the program.
    (b) The agreement shall be deemed to be in noncompliance if any of 
the conditions set forth in paragraph (a) of this section occur after 
the approval of the agreement.



Sec. 752.13  Determination of compliance.

    (a) Determination of the acreage designated under the agreement 
shall be made in accordance with part 718 of this chapter, as amended.
    (b) A representative of the county or State committee or any 
authorized representative of the Secretary shall have the right at any 
reasonable time to enter a farm concerning which representations have 
been made on any forms filed under the program in order to measure the 
designated acreage, to examine any records pertaining thereto, and to 
otherwise determine the accuracy of any representations and the 
performance of any obligations by the signatories of a WBP agreement.



Sec. 752.14  Annual payments.

    (a) Persons on the farm having an interest in the designated acreage 
shall be eligible for an annual payment.
    (b) The annual per acre payment rates for wetlands and for adjacent 
land shall be those rates which are recommended by the county and State 
committee and approved for each county by the Deputy Administrator. If 
the wetlands are subject to a drainage easement with the United States 
Department of the Interior or a state governmental entity, the payment 
rates for such wetlands will be 80 percent of the approved county rates 
which are applicable to wetlands in the county. A listing of all 
approved rates shall be available for inspection at the county FSA 
office.
    (c) The payment shall be divided among the owner of the designated 
acreage and any other person having an interest in such acreage, 
including tenants and sharecroppers, in the manner agreed upon by them 
as representing their respective contributions to compliance with the 
agreement. The county committee shall refuse to approve an agreement if 
it determines that the proposed division of payment is not fair and 
equitable. The annual payment and the division of the payment shall be 
specified in the agreement.



Sec. 752.15  Adjustment of annual rates.

    (a) The county committee shall reexamine the payment rates with 
respect to each agreement at the beginning of the fifth year of any ten-
year initial or renewal period and before the renewal period expires.
    (b) An adjustment in the payment rates shall be made for any initial 
or renewal period taking into consideration the current land rental 
rates and crop values in the area. No adjustment shall be made in a 
payment rate which will result in a reduction of an annual payment rate 
from the rate which is specified in the initial agreement.



Sec. 752.16  Refunds or forfeitures for noncompliance.

    (a) Except as otherwise provided in paragraph (b) of this section, 
no payment shall be made to any person for any year with respect to any 
agreement for which it is determined that for such year:
    (1) There has been a failure to maintain the wetland character of 
the designated acreage and devote the adjacent land to the use specified 
in the agreement as provided in Sec. 752.7. (a);
    (2) There has been a failure to comply with the prohibition against 
draining, burning, filling, or otherwise using the designated acreage in 
a manner which would destroy the wetland character of the acreage as 
provided in Sec. 752.7 (b);
    (3) There has been a failure to comply with the prohibition against 
using the designated acreage as a dumping area for draining other 
wetlands as provided in Sec. 752.7 (c);
    (4) There has been a failure to comply with the prohibition against 
using the designated acreage as a source of irrigation water or as 
acreage for a set-aside, land diversion, acreage reduction or other 
program, or to meet the conserving base acreage requirement for

[[Page 382]]

any other program as provided in Sec. 752.7 (d);
    (5) There has been a failure to comply with the prohibition against 
harvesting a crop from or grazing the designated acreage as provided in 
Sec. 752.7(e);
    (6) There has been a failure to comply with the provisions relating 
to haying the designated acreage during periods of severe drought as 
provided in Sec. 752.7(f);
    (7) There has been a failure to comply with the provisions relating 
to the harvesting of timber products as provided in Sec. 752.7(g); or
    (8) There has been a failure to comply with the provisions relating 
to tenants and sharecroppers as provided in Sec. 752.12.
    (b) The regulations governing the making of payments when there has 
been a failure to comply fully with the provisions of the program, part 
791 of this chapter, are applicable to the WBP.
    (c) The agreement shall be terminated in any case in which the 
failure to comply with the provisions of this part requires a refund or 
forfeiture of the entire annual payment under the agreement for the year 
and it is determined that the failure to comply is of such a nature as 
to warrant termination of the agreement. If an agreement is terminated, 
the persons signing the agreement shall forfeit all rights to further 
payments under the agreement and shall refund all payments received 
under the agreement.



Sec. 752.17  Actions defeating purposes of program.

    If the county committee with the concurrence of the State committee, 
or the State committee, finds that any person has taken any action which 
tends to defeat the purposes of the program, all or any part of the 
annual payment which otherwise would be due under the program may be 
withheld or be required to be refunded.



Sec. 752.18  Filing of false claims.

    The making of a fraudulent representation by a person in the payment 
documents or otherwise for the purpose of obtaining a payment from the 
county committee shall render the person liable, in addition to any 
liability under applicable Federal criminal and civil fraud statutes, 
for a refund of any payments received by such person as the result of 
the fraudulent representation.



Sec. 752.19  Depriving others of payments.

    If the State committee finds that any person has employed any scheme 
or device (including coercion, fraud, or misrepresentation) which 
deprives any other person of a payment to which such person is otherwise 
entitled under the program, the State committee may withhold or require 
a refund of all or any part of the program payment which otherwise would 
be due to the person who employed such scheme or device.



Sec. 752.20  Modification of an agreement.

    (a) Any reconstitution of farms shall be made in accordance with the 
regulations governing reconstitution of farms, part 719 of this chapter, 
as amended.
    (b) If the farm is reconstituted because of purchase, sale, change 
of operation, or otherwise, the agreement shall be modified in 
accordance with instructions issued by the Deputy Administrator with 
respect to any reconstituted farm which contains all or any part of the 
original designated acreage. The modified agreement or agreements shall 
reflect the changes in the number of acres in any reconstituted farm, 
the designated acreage, interested persons, and division of payments. If 
persons who were not signatories to the original agreement are required 
to execute such modified agreement or agreements in accordance with the 
provisions of Sec. 752.8, but such persons are not willing to become 
parties to the modified agreement or for any other reason a modified 
agreement is not executed, the agreement shall be terminated with 
respect to the designated acreage which is not continued in the program, 
and all unearned payments shall be forfeited or refunded to FSA. The 
annual payment for the year in which a reconstitution occurs shall not 
be considered earned unless the designated acreage is continued in the 
program and there is a compliance with the agreement for the full 
agreement year. The persons on the farm prior to the reconstitution who 
were signatories to the agreement

[[Page 383]]

shall be jointly and severally responsible for refunding the unearned 
payments previously made.
    (c) Except with respect to a farm which is reconstituted, if the 
ownership or operation of the farm changes in such a manner that the 
agreement no longer contains the signatures of persons required to sign 
the agreement in accordance with Sec. 752.8, the agreement shall be 
modified in accordance with instructions issued by the Deputy 
Administrator to reflect the new interested persons and new divisions of 
payments. If such persons are not willing to become parties to the 
modified agreement or for any other reason a modified agreement is not 
executed, the agreement shall be terminated and all unearned payments 
shall be forfeited or refunded. The annual payment for the year in which 
the change of ownership or operation occurs shall not be considered to 
have been earned unless the designated acreage is continued in the 
program and there is compliance with the agreement for the full 
agreement year. The persons on the farm prior to the change of ownership 
or operation who were signatories to the agreement shall be jointly and 
severally responsible for refunding the unearned payments previously 
made.
    (d) The Deputy Administrator may authorize other agreement 
modifications which are determined to be desirable to carry out the 
purposes of the program or to facilitate its administration.



Sec. 752.21  Termination of agreements.

    The Deputy Administrator may, by mutual agreement with the parties 
to the agreement, consent to the termination of an agreement where: (a) 
The operator of the farm is physically handicapped and could not 
reasonably be expected to comply with the terms and conditions of the 
agreement; (b) the operator is or was mentally unstable at the time of 
the signing of the agreement and could not reasonably be expected to 
comply with the terms and conditions of the agreement; (c) the parties 
to the agreement are unable to comply with the terms of the agreement as 
the result of conditions beyond their control; (d) compliance with the 
terms of the agreement would work a severe hardship on the parties to 
the agreement; or (e) termination of the agreement would be in the 
public interest. If an agreement is terminated in accordance with the 
provisions of this section, the annual payment for the year in which the 
agreement is terminated shall not be considered to have been earned 
unless there is compliance with the terms and conditions of the 
agreement for the entire calendar year.



Sec. 752.22  Transfer of interest in an agreement.

    (a) If a person acquires an interest in the designated acreage 
during the period covered by an agreement, such person may, with the 
consent of the other parties to the agreement and with approval of the 
county committee, become a party to the agreement and share in payments 
thereunder. A person, by becoming a party to the agreement, shall be 
jointly and severally responsible with the other signatories to the 
agreement for compliance with the terms and conditions of the agreement. 
In addition, such person shall be liable for any payment reductions or 
refunds which may be required as the result of the failure to comply 
with the terms and conditions of such agreement after becoming a party 
to the agreement.
    (b) If a signatory to an agreement ceases to have an interest in the 
designated acreage, such person thereby ceases to be a party to the 
agreement. However, such person will not be relieved of any liability 
for deductions and refunds for failure to comply with the terms and 
conditions of the agreement while a party to the agreement.



Sec. 752.23  Successors-in-interest.

    In case of death, incompetency, or disappearance of any person, any 
payment due shall be paid to the successor as determined in accordance 
with provisions of the regulations in part 707 of this chapter, as 
amended.



Sec. 752.24  Agreement not in comformity with regulations.

    If, after an agreement is approved by the county committee, it is 
discovered

[[Page 384]]

that such agreement is not in conformity with the regulations as the 
result of a misunderstanding of the program procedures by a signatory to 
the agreement, a modification of the agreement may be made by mutual 
agreement. If persons who are currently eligible to execute the 
corrected agreement are unwilling to do so, the agreement shall be 
terminated and all payments paid or payable under the agreement shall be 
forfeited or refunded, except as may be allowed by the Deputy 
Administrator in accordance with the provisions of Sec. 752.25.



Sec. 752.25  Performance based upon advice or action of county or State committee.

    The provisions of part 790 of this chapter, as amended, relating to 
performance based upon action or advice of an authorized representative 
of the Secretary shall be applicable to this program.



Sec. 752.26  Setoffs and withholdings.

    The regulations issued by the Secretary governing setoffs and 
withholdings, part 13 of this title, as amended, shall be applicable to 
this program.



Sec. 752.27  Debt collection.

    Any debts arising under this program are governed with respect to 
their collection by the Federal Claims Collection Act of 1966 (31 U.S.C. 
3701) and the regulations found at chapter II of 4 CFR.



Sec. 752.28  Appeals.

    Any person may obtain review of determinations affecting 
participation in this program in accordance with part 614 of this title.

[60 FR 67316, Dec. 29, 1995]



Sec. 752.29  Payments not subject to claims.

    Any payments due any person shall be determined and allowed without 
regard to State law and without regard to any claim or lien against any 
crop, or proceeds thereof, which may be asserted by any creditor, except 
as provided in Sec. 752.26.



Sec. 752.30  Prohibition against payments.

    The regulations in part 796 of this chapter prohibiting the making 
of payments to program participants who harvest or knowingly permit to 
be harvested for illegal use marijuana or other such prohibited drug-
producing plants on any part of the lands owned or controlled by them 
are applicable to this program.



Sec. 752.31  Delegation of authority.

    No delegation herein to a State or county committee shall preclude 
the Administrator, or his designee, from determining any question 
arising under the program or from reversing or modifying any 
determination made by a State or county committee.



Sec. 752.32  Paperwork Reduction Act assigned numbers.

    The Office of Management and Budget has approved the information 
collection requirements contained in these Regulations (Secs. 752.8, 
752.10 and 752.13) under the provisions of 44 U.S.C. Chapter 35 and OMB 
number 0560-0062 has been assigned.



PART 755--REGIONAL PROGRAMS--Table of Contents




    Subpart--Appalachian Land Stabilization and Conservation Program

Sec.
755.1  Definitions.
755.2  Purposes and objectives.
755.3  Geographical applicability.
755.4  General.
755.5  State programs.
755.6  Cost-share contract.
755.7  Cost-share payments.
755.8  Modification of contract.
755.9  Termination of contracts.
755.10  Noncompliance.
755.11  Signatures.
755.12  Filing of false claims.
755.13  Delegation of authority.
755.14  Reporting performance.
755.15  Handling exceptional cases.
755.16  Access to farms and to farm records.
755.17  Preservation of cropland, crop acreage and allotment history.
755.18  Appeals.
755.19  Availability of funds.
755.20  Rural community development projects.

    Authority: Sec. 208, 79 Stat. 5, 12; 40 U.S.C. App. 1, 2, 203.

[[Page 385]]


    Source: 30 FR 8669, July 9, 1965, unless otherwise noted.



    Subpart--Appalachian Land Stabilization and Conservation Program



Sec. 755.1  Definitions.

    As used in this subpart the following terms shall have the following 
meanings:
    (a) Act means the Appalachian Regional Development Act of 1965.
    (b) Appalachian Region or the Region means that area of the Eastern 
United States consisting of the following counties (including any 
political subdivision located within such area):
    In Alabama, the counties of Bibb, Blount, Calhoun, Chambers, 
Cherokee, Chilton, Clay, Cleburne, Colbert, Coosa, Cullman, De Kalb, 
Elmore, Etowah, Fayette, Franklin, Jackson, Jefferson, Lamar, 
Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan, 
Pickens, Randolph, Saint Clair, Shelby, Talladega, Tallapoosa, 
Tuscaloosa, Walker, and Winston;
    In Georgia, the counties of Banks, Barrow, Bartow, Carroll, Catoosa, 
Chattooga, Cherokee, Dade, Dawson, Douglas, Fannin, Floyd, Forsyth, 
Franklin, Gilmer, Gordon, Gwinnett, Habersham, Hall, Haralson, Heard, 
Jackson, Lumpkin, Madison, Murray, Paulding, Pickens, Polk, Rabun, 
Stephens, Towns, Union, Walker, White, and Whitfield;
    In Kentucky, the counties of Adair, Bath, Bell, Boyd, Breathitt, 
Carter, Casey, Clark, Clay, Clinton, Cumberland, Elliott, Estill, 
Fleming, Floyd, Garrard, Green, Greenup, Harlan, Jackson, Johnson, 
Knott, Knox, Laurel, Lawrence, Lee, Leslie, Letcher, Lewis, Lincoln, 
McCreary, Madison, Magoffin, Martin, Menifee, Monroe, Montgomery, 
Morgan, Owsley, Perry, Pike, Powell, Pulaski, Rockcastle, Rowan, 
Russell, Wayne, Whitley, and Wolfe;
    In Maryland, the counties of Allegany, Garrett, and Washington;
    In Mississippi, the counties of Alcorn, Benton, Chickasaw, Choctaw, 
Clay, Itawamba, Kemper, Lee, Lowndes, Marshall, Monroe, Noxubee, 
Oktibbeha, Pontotoc, Prentiss, Tippah, Tishomingo, Union, Webster, and 
Winston;
    In New York, the counties of Allegany, Broome, Cattaraugus, 
Chautauqua, Chemung, Chenango, Cortland, Delaware, Otsego, Schoharie, 
Schuyler, Steuben, Tioga, and Tompkins;
    In North Carolina, the counties of Alexander, Alleghany, Ashe, 
Avery, Buncombe, Burke, Caldwell, Cherokee, Clay, Davie, Forsyth, 
Graham, Haywood, Henderson, Jackson, McDowell, Macon, Madison, Mitchell, 
Polk, Rutherford, Stokes, Surry, Swain, Transylvania, Watauga, Wilkes, 
Yadkin, and Yancey;
    In Ohio, the counties of Adams, Athens, Belmont, Brown, Carroll, 
Clermont, Coshocton, Gallia, Guernsey, Harrison, Highland, Hocking, 
Holmes, Jackson, Jefferson, Lawrence, Meigs, Monroe, Morgan, Muskingum, 
Noble, Perry, Pike, Ross, Scioto, Tuscarawas, Vinton, and Washington;
    In Pennsylvania, the counties of Allegheny, Armstrong, Beaver, 
Bedford, Blair, Bradford, Butler, Cambria, Cameron, Carbon, Centre, 
Clarion, Clearfield, Clinton, Columbia, Crawford, Elk, Erie, Fayette, 
Forest, Fulton, Greene, Huntingdon, Indiana, Jefferson, Juniata, 
Lackawanna, Lawrence, Luzerne, Lycoming, McKean, Mercer, Mifflin, 
Monroe, Montour, Northumberland, Perry, Pike, Potter, Schuylkill, 
Snyder, Somerset, Sullivan, Susquehanna, Tioga, Union, Venango, Warren, 
Washington, Wayne, Westmoreland, and Wyoming;
    In South Carolina, the counties of Anderson, Cherokee, Greenville, 
Oconee, Pickens, and Spartanburg;
    In Tennessee, the counties of Anderson, Bledsoe, Blount, Bradley, 
Campbell, Cannon, Carter, Claiborne, Clay, Cocke, Coffee, Cumberland, 
DeKalb, Fentress, Franklin, Grainger, Greene, Grundy, Hamblen, Hamilton, 
Hancock, Hawkins, Jackson, Jefferson, Johnson, Knox, Loudon, McMinn, 
Macon, Marion, Meigs, Monroe, Morgan, Overton, Pickett, Polk, Putnam, 
Rhea, Roane, Scott, Sequatchie, Sevier, Smith, Sullivan, Unicoi, Union, 
Van Buren, Warren, Washington, and White;
    In Virginia, the counties of Alleghany, Bath, Bland, Botetourt, 
Buchanan, Carroll, Craig, Dickenson, Floyd, Giles, Grayson, Highland, 
Lee, Pulaski, Russell, Scott, Smyth, Tazewell, Washington, Wise, and 
Wythe;
    All the counties of West Virginia.
    (c) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the United States Department of 
Agriculture to whom authority has been delegated, or to whom authority 
may hereafter be delegated, to act in his stead.
    (d) Administrator means the Administrator or Acting Administrator of 
the Farm Service Agency, United States Department of Agriculture.
    (e) Deputy Administrator means the Deputy Administrator or Acting 
Deputy Administrator for State and County Operations, Farm Service 
Agency, United States Department of Agriculture.

[[Page 386]]

    (f) Director means the Director or Acting Director of the Farmer 
Programs Division, Farm Service Agency, United States Department of 
Agriculture.
    (g) State means any one of the States in the Appalachian Region.
    (h) State committee means the persons in a State designated by the 
Secretary as the Agricultural Stabilization and Conservation State 
Committee under section 8(b) of the Soil Conservation and Domestic 
Allotment Act, as amended.
    (i) County means a political subdivision of a State identified as a 
county.
    (j) County committee means the persons elected within a county as 
the county committee pursuant to regulations governing the selection and 
functions of Agricultural Stabilization and Conservation county and 
community committees under section 8(b) of the Soil Conservation and 
Domestic Allotment Act, as amended.
    (k) Operator means the person who is in charge of the supervision 
and conduct of the farming operations on the entire farm.
    (l) Occupier means any person other than the owner or operator who 
has an interest as tenant or sharecropper in the acreage covered by the 
contract.
    (m) Farm means that area of land defined as a farm under the 
regulations governing Reconstitution of Farms, Allotments, and Bases, 
part 719 of this chapter, as amended, or, for purposes of contracts 
entered into pursuant to Sec. 755.20, the land covered by the contract.
    (n) Cropland means that land considered as cropland under the 
regulations governing Reconstitution of Farms, Allotments, and Bases, 
part 719 of this chapter, as amended.
    (o) Contract means a Cost-Share Contract, Appalachian Land 
Stabilization and Conservation Program.
    (p) Commission means the Appalachian Regional Commission which is 
composed of one Federal member (Federal Cochairman) and one member from 
each participating State in the Appalachian region.
    (q) Federal Cochairman means the Federal Cochairman of the 
Appalachian Regional Commission.
    (r) State Cochairman means the State Cochairman of the Appalachian 
Regional Commission as elected by the State members of the Commission 
from among their number.

[30 FR 8669, July 9, 1965, as amended by Amdt. 2, 30 FR 14099, Nov. 9, 
1965; Amdt. 4, 33 FR 16141, Nov. 5, 1968; Amdt. 5, 35 FR 8442, May 29, 
1970]



Sec. 755.2  Purposes and objectives.

    The general purposes and objectives of the Appalachian Land 
Stabilization and Conservation Program are to promote economic growth of 
the Region and to promote the conservation and development of the 
Region's soil and water resources. This program is a long-term program 
designed to carry out the policy of the Act by assisting landowners, 
operators, or occupiers through contracts providing for land 
stabilization, erosion and sediment control, reclamation through changes 
in land use, and the establishment of practices and measures for the 
conservation and development of the Region's soil, water, woodland, 
wildlife, and recreation resources.



Sec. 755.3  Geographical applicability.

    The Appalachian Land Stabilization and Conservation Program will be 
limited to the States and counties designated as part of the Appalachian 
Region as defined in Sec. 755.1 of the regulations of this part, and 
then only in counties or areas specifically approved in the State 
program developed hereunder.



Sec. 755.4  General.

    (a) The Appalachian Land Stabilization and Conservation Program will 
be administered in the field by State and county committees under the 
general direction and supervision of the Administrator. Members of 
county committees are hereby authorized to sign contracts on behalf of 
the Secretary. State and county committees do not have authority to 
modify or waive any of the provisions of these regulations, or any 
amendment, supplement, or revision thereto.
    (b) Landowners, operators, and occupiers desiring to share in the 
accomplishment of the purposes and objectives of the program will be 
given an

[[Page 387]]

opportunity to participate in the program in accordance with the 
provisions of the program as set forth in this subpart. An applicant, as 
a part of his application for assistance, will file an acceptable 
conservation and development plan for the acreage to be included in his 
contract, and the measures specified in the plan must be carried out 
irrespective of whether cost-sharing is offered. The county committee 
will determine the practices and extent of such practices to be approved 
for cost-sharing to assist the applicant in carrying out his acceptable 
plan. A contract shall be entered into setting forth the extent of the 
approved assistance. An acceptable conservation and development plan 
will be a plan developed for the land proposed to be placed under 
contract, on a form prescribed by the Administrator, with technical 
planning assistance by technicians of the Soil Conservation Service, 
except in cases where the proposed treatment involves only a single 
practice of pasture renovation or timber stand improvement or conversion 
of less than 10 acres of land to grass or trees and such use does not 
involve critical areas or unusual costs and the conservation and 
development plan is acceptable to the county committee. In approving 
contracts, the county committees shall give preference to needy 
landowners, operators, and occupiers to the extent that such preference 
is consistent with the development of land treatment programs in the 
project area.
    (c) Detailed information concerning the program as it applies to an 
individual farm may be obtained from the county FSA office for the 
county in which the farm is located or from the State FSA office.

[30 FR 8669, July 9, 1965, as amended by Amdt. 4, 33 FR 16141, Nov. 5, 
1968]



Sec. 755.5  State programs.

    (a) The State program shall be developed by the State or a political 
subdivision thereof in accordance with the regulations contained in this 
subpart. The Farm Service Agency and other applicable agencies of the 
Department of Agriculture shall cooperate with the State governmental 
officials in the development of the program. The chairman of the State 
committee as the chairman of the State Agricultural Conservation Program 
Development Group shall be the point of contact with the State 
governmental officials. The State Agricultural Conservation Program 
Development Group, which consists of the State ASC Committee (including 
the State Director of Extension), the State conservationist of the Soil 
Conservation Service, and the Forest Service official having 
jurisdiction over farm forestry in the State, shall consult with 
organizations and agencies within the State that have conservation 
interests and responsibilities. Upon request of the Governor of the 
State, a person selected as a direct representative of the Governor may 
be designated by the Secretary as an additional member of the ACP 
Development Group with equal authority with other members of the Group 
in the development of the State program.
    (b) The State program shall include the following provisions: (1) 
Identification of program objectives and areas in the State where the 
program will be applicable; (2) the designation of practices for which 
cost-share assistance is requested for each designated area, including 
specifications for each proposed practice; and (3) the proposed cost-
share rates for each practice.
    (c) Minimum specifications which practices must meet to be eligible 
for Federal cost-sharing shall be set forth in the State program, or be 
incorporated therein by specific reference to a standard publication or 
other written document containing such specifications. For practices 
involving the establishment or improvement of vegetative cover, the 
specifications shall include, where appropriate, liming fertilization, 
and seeding rates, eligible seeds and mixtures, seeding dates, 
requirements for cultural operations and inoculation, and other steps 
essential to the successful establishment or improvement of the 
vegetative cover. For mechanical or construction type practices, the 
specifications shall include, where appropriate, the types and sizes of 
material, installation or construction requirements, and other steps 
essential to the proper functioning of the structure. For other 
practices, the specifications shall include those steps essential to the 
successful performance

[[Page 388]]

of the practice. Practice specifications may provide minimum performance 
requirements which will qualify the practice for cost-sharing and 
maximum limits of performance which will be eligible for cost-sharing. 
For practices which authorize Federal cost-sharing for applications of 
liming materials and commercial fertilizers, the minimum applications 
and maximum applications on which cost-sharing is authorized shall be 
determined on the basis of a current soil test: Provided, however, That 
if available facilities are not adequate to permit the desired use of 
soil tests under the program, an alternative basis for determination by 
the county committee of such application shall be authorized to the 
extent necessary.
    (d) The following practices and uses are authorized:
    (1) Establishment of permanent sod waterways to dispose of excess 
water without causing erosion.
    (2) Establishment of a permanent vegetative cover for soil 
protection or as a needed land use adjustment.
    (3) Constructing terraces to detain or control the flow of water and 
check soil erosion.
    (4) Constructing diversion terraces, ditches, or dikes to intercept 
runoff and divert excess water to protected outlets.
    (5) Constructing erosion control, detention, or sediment retention 
dams, pits, or ponds to prevent or heal gullying or to retard or reduce 
runoff of water.
    (6) Constructing channel lining, chutes, drop spillways, pipe drops, 
drop inlets, or similar structures for the protection of outlets and 
water channels that dispose of excess water.
    (7) Streambank or shore protection, channel clearance, enlargement 
or realinement, or construction of floodways, levees, or dikes, to 
prevent erosion or flood damage to farmland.
    (8) Establishment of a stand of trees or shrubs to prevent erosion.
    (9) Establishment of a stand of forest trees or shrubs on farmland 
for purposes other than the prevention of erosion.
    (10) Improvement of a stand of forest trees.
    (11) Establishment of contour strip-cropping to protect soil from 
erosion.
    (12) Constructing or sealing dams, pits, or ponds as a means of 
protecting vegetative cover or to make practicable the utilization of 
the land for vegetative cover.
    (13) Developing springs or seeps for livestock water as a means of 
protecting vegetative cover or to make practicable the utilization of 
the land for vegetative cover.
    (14) Controlling competitive shrubs to permit growth of adequate 
desirable vegetative cover.
    (15) Improvement of an established vegetative cover for soil or 
watershed protection.
    (16) Treatment of farmland to permit the use of legumes and grasses 
for soil improvement and protection.
    (17) Construction of water facilities for wildlife habitat or 
protection.
    (18) Establishment of vegetative cover to provide habitat, food, or 
shelter for wildlife.
    (19) Conservation practices to develop recreation resources--
establishment of picnic and sports area; establishment of camping and 
nature recreation areas; establishment of hunting and shooting preserve 
area; establishment of fishing area; establishment of summer water 
sports area; establishment of winter sports area.
    (20) Other practices not covered above which are determined to be 
needed to accomplish the purpose of the program.
    (e) The Soil Conservation Service shall have the same technical 
responsibility for Appalachian Land Stabilization and Conservation 
Program practices as it has for the same or similar Agricultural 
Conservation Program Practices including applicable components of 
approved recreation practices. The Forest Service is responsible for the 
technical phases of forestry practices.
    (f) Each proposed State program shall be submitted to the Commission 
by the member thereof representing such State. The estimated amount of 
funds needed to accomplish the objectives of such program shall be 
stated in the submission of the proposed program to the Commission. If 
approved by the Commission, the proposed State

[[Page 389]]

program shall be submitted to the Secretary by the Federal Cochairman. 
Responsibility is assigned to the Farmer Programs Division, FSA for 
review and recommendation for approval or disapproval by the Secretary.
    (g) Copies of bulletins setting forth the State program as approved 
by the Secretary shall be available in the office of the county 
committee.

[30 FR 8669, July 9, 1965, as amended by Amdt. 2, 30 FR 14099, Nov. 9, 
1965]



Sec. 755.6  Cost-share contract.

    (a) Filing requests. (1) Landowners, operators, or occupiers in 
eligible counties shall be furnished information with respect to the 
program and afforded an opportunity to request a cost-share contract 
covering those practices which would accomplish the objectives of the 
program on the farm.
    (2) The request shall be on a form and in accordance with 
instructions prescribed by the Administrator.
    (b) Entering into a contract. (1) The county committee is authorized 
to approve the contract on behalf of the Secretary.
    (2) The contract must be signed by the owner of the land on which 
cost-share payments are provided under the contract and by the operator 
of the farm. The contract shall also be signed by any occupiers who will 
share in payments in one or more years of the contract period.
    (3) There shall be only one contract for a farm.
    (4) The final date for signing the contract shall be the date 
announced by the Administrator.
    (c) Contract period. (1) The period to be covered by a contract 
shall be not less than 3 years or longer than 10 years as agreed to by 
the contract signers and the county committee.
    (2) The first year of the contract period shall begin on the date of 
the approval of the contract and shall end on December 31 of such year. 
Each subsequent year of the contract period shall be on a calendar year 
basis.



Sec. 755.7  Cost-share payments.

    (a) Subject to the conditions and limitations in this subpart, cost-
sharing may be authorized for practices needed during the period of the 
contract to conserve and develop soil, water, woodland, wildlife, and 
recreation resources. Payment of the cost-shares shall be made only upon 
application submitted on a form prescribed by the Administrator. 
Practices required to be established under the contract which are 
started after a request for a contract is filed shall be considered as 
started during the contract period.
    (b) Cost-share rates shall not exceed 80 per centum of the average 
cost of carrying out the land treatment measures or such lower rate as 
the county committee determines will accomplish the objectives of the 
program. As a further limitation, cost-sharing may not be authorized in 
excess of a total amount computed by multiplying the number of acres 
designated under contract times $50, unless a representative of the 
State committee approves an amount in excess of this limitation on the 
basis that the income potential and benefits derived from expenditures 
of the additional money warrant the higher limit.
    (c) Cost-sharing shall not be approved for more than 50 acres per 
farm.
    (d) The total acreage with respect to which any landowner, operator, 
or occupier receives cost-sharing payments shall not exceed 50 acres 
under all contracts in which he has an interest.
    (e) Cost-sharing for the practices or components thereof contained 
in the approved State program is conditioned upon the establishment, 
maintenance, and performance of the practices in accordance with all 
applicable specifications and program provisions. The county committee 
shall specify on the practice approval the date by which the practice 
must be completed. Subject to the availability of funds, cost-sharing 
may be authorized for the restoration or replacement of any needed 
conservation measure if during the contract period the original 
conservation use is destroyed or rendered unsuitable through no fault of 
the contract signers.
    (f) In addition to the provisions contained in this subpart, cost-
sharing payments shall also be subject to the following regulations of 
the Agricultural Conservation Program (7 CFR 701.1-701.93, as amended):

[[Page 390]]

Section 701.24 Failure to meet minimum requirements,
Section 701.25 Conservation materials and services,
Section 701.26 Practices carried out with aid for ineligible persons,
Section 701.27 Division of Federal cost-share,
Section 701.33 Compliance with regulatory measures,
Section 701.36 Depriving others of Federal cost-sharing,
Section 701.38 Misuse of purchase orders,
Section 701.39 Federal cost-shares not subject to claims, and
Section 701.40 Assignments.

The Agricultural Conservation Program regulations referred to above 
shall mean the Agricultural Conservation Program regulations applicable 
to the year in which the contract is approved.
    (g) Cost-share payments shall not be made under the program with 
respect to land owned by the Federal Government, a State, or a political 
subdivision thereof.

[30 FR 8669, July 9, 1965, as amended by Amdt. 1, 30 FR 9758, Aug. 5, 
1965; Amdt. 4, 33 FR 16141, Nov. 5, 1968]



Sec. 755.8  Modification of contract.

    (a) If the farm is reconstituted in accordance with the regulations 
governing Reconstitution of Farms, Allotments, and Bases, part 719 of 
this chapter, as amended, or if there is any change in the land covered 
by a contract entered into pursuant to Sec. 755.20, because of purchase, 
sale, change of operation, or otherwise, the contract shall be modified. 
Such modified contract or contracts shall reflect the changes in the 
number of acres in any resulting farm, the acreage covered by the 
contract, interested persons, and practices called for under the 
original contract. If persons who were not signatories to the original 
contract are eligible and required to sign such modified contract or 
contracts but are not willing to become parties to the modified contract 
or for any other reason a modified contract is not entered into, cost-
share payments for practices which have not been carried out shall be 
forfeited with respect to acreage not continued in the program. In 
addition, with respect to acreage not continued in the program, cost-
share payments paid for practices (or components thereof) which have 
been carried out shall be refunded by the owner of such acreage prior to 
reconstitution unless the county committee with the approval of the 
State committee determines that the failure to carry out all of the 
practices called for by the original contract will not impair the 
practices which have been carried out and the completed practices will 
provide conservation benefits consistent with the cost-shares which have 
been paid. Notwithstanding the foregoing, if control of land was lost 
through eminent domain proceedings or to an agency having the right of 
eminent domain, any cost-share payments paid under the contract with 
respect to such land are not required to be refunded.
    (b) Except in cases covered by paragraph (a) of this section, if the 
ownership or operation of the farm or the land covered by the contract 
changes in such a manner that the contract no longer contains the 
signatures of persons required to sign the contract as provided in 
Sec. 755.6, the contract shall be modified to reflect the new interested 
persons. If such persons are not willing to become parties to the 
modified contract, or for any other reason a modified contract is not 
entered into, cost-share payments shall be forfeited and refunded in 
accordance with the rules in paragraph (a) of this section.
    (c) Upon request of the contract signers and approval of the county 
committee, a contract may be modified to change or add practices, or to 
make other changes which are consistent with this subpart, the State 
program, and the conservation and development plan.
    (d) Upon request of the contract signers, a contract which would 
otherwise be in a noncompliance status at the end of the contract period 
under the provisions of Sec. 755.10(a) of these regulations may be 
modified to extend the contract period not to exceed a total period of 
10 years if the county committee determines that failure to establish 
the practices specified in the contract was not the result of the fault 
or negligence of the contract signers.

[30 FR 8669, July 9, 1965, as amended by Amdt. 5, 35 FR 8442, May 29, 
1970]

[[Page 391]]



Sec. 755.9  Termination of contracts.

    The Deputy Administrator may consent to the termination of a 
contract in cases where the parties to the contract are unable to comply 
with the terms of the contract due to conditions beyond their control, 
in cases where compliance with the terms of the contract would work a 
severe hardship on the parties to the contract, or in cases where 
termination of the contract would be in the public interest, provided 
the parties to the contract refund such part of the cost-share payments 
made under the contract as the Deputy Administrator determines 
appropriate.



Sec. 755.10  Noncompliance.

    (a) Failure to establish the practices specified in the contract 
within the time specified by the county committee shall be a violation 
of the contract and all payments under the contract shall be forfeited 
and refunded.
    (b) Failure to maintain a practice for the contract period or the 
normal lifespan of the practice, whichever is shorter, in accordance 
with good farming practices shall be a violation of the contract and any 
payment made in connection with such practice shall be refunded unless 
the practice is restored within the time prescribed by the county 
committee. The normal lifespan of a practice shall be determined by the 
county committee.
    (c) If the county committee finds that any person has adopted or 
participated in any practice which tends to defeat the purposes of the 
program, it may withhold, or require to be refunded, all or any part of 
cost-share payments paid or payable under the program. It shall be 
considered a practice defeating the purposes of the program if the 
contract signers do not make available for public use a recreation 
resource development for which costs are shared. The regulations 
governing nondiscrimination in federally assisted programs of the 
Department of Agriculture, part 15 of this title, shall be applicable to 
this program.

[30 FR 8669, July 9, 1965, as amended by Amdt. 3, 32 FR 12938, Sept. 12, 
1967]



Sec. 755.11  Signatures.

    Signatures to contracts and related forms shall be in conformity 
with the instructions on signatures and authorizations applicable to the 
Agricultural Conservation Program.



Sec. 755.12  Filing of false claims.

    The making of a fraudulent representation by a person in the payment 
documents or otherwise for the purpose of obtaining a payment from the 
county committee shall render the person liable, aside from any 
additional liability under criminal and civil frauds statutes, for a 
refund of the payments received by him with respect to which the 
fraudulent representation was made.



Sec. 755.13  Delegation of authority.

    No delegation in this subpart to a State or county committee shall 
preclude the Administrator, or his designee, from determining any 
question arising under the program or reversing or modifying any 
determinations made by a State or county committee.



Sec. 755.14  Reporting performance.

    The Operator of the farm, in accordance with instructions issued by 
the Deputy Administrator, shall report to the county committee on Form 
ACP-245 the extent of compliance with the terms of the contract.



Sec. 755.15  Handling exceptional cases.

    The Deputy Administrator may allow payment for performance not 
meeting all program requirements, where not prohibited by statute, if in 
his judgment such action is needed to permit a proper disposition of the 
case. Such action may be taken only where the person acted in good faith 
and in reasonable reliance on any instruction or commitment of any 
member, or employee of the State or county committee or representatives 
of other Federal agencies assigned responsibility under the program, in 
meeting his obligations under the contract and in so doing reasonably 
accomplished the purposes of the contract. The amount of the payment 
shall be based on the actual performance and shall not exceed the amount 
to which the person

[[Page 392]]

would have been entitled if the performance rendered had met all 
requirements.



Sec. 755.16  Access to farms and to farm records.

    County committeemen or their authorized representatives, or any 
authorized representative of the Secretary of Agriculture, shall have 
such access to farms and to records pertaining thereto as is necessary 
to make acreage determinations and to determine the extent of compliance 
with the terms of the contract.



Sec. 755.17  Preservation of cropland, crop acreage and allotment history.

    The cropland, crop acreage, and allotment history applicable to the 
designated acreage shall be preserved, for any Federal program under 
which such history is used as a basis for an allotment or other 
limitation on the production of such crop, for the period covered by the 
contract and an equal period thereafter so long as the approved practice 
is maintained on the land.



Sec. 755.18  Appeals.

    Any person may obtain reconsideration and review of determinations 
made under this subpart in accordance with the Appeal Regulations, part 
780 of this chapter (29 FR 8200), as amended.



Sec. 755.19  Availability of funds.

    The provisions of this program are necessarily subject to such 
legislation as the Congress of the United States may hereafter enact; 
the payments provided for in this subpart are contingent upon such 
appropriations as the Congress has or may hereafter provide for such 
purpose, and the amount of such payments must necessarily be within the 
limits finally determined by such appropriations.



Sec. 755.20  Rural community development projects.

    (a) Notwithstanding any other provision of this subpart, the county 
committee, in accordance with instructions issued by the Deputy 
Administrator, may enter into a contract with a State, county, city, 
town, or subdivision thereof, or a group acting for such a body, which 
owns, operates, or occupies land in the Appalachian Region. The 
contracts approved under this section shall be for projects which 
promote rural community development and conservation of the soil and 
water resources of the region.
    (b) Cost-sharing approved under this section shall not exceed 80 per 
centum of the cost of carrying out the approved land uses and 
conservation treatment on 50 acres of land occupied by such owner, 
operator, or occupier.

[35 FR 8442, May 29, 1970]



PART 759--SMALL HOG OPERATION PAYMENT PROGRAM--Table of Contents




Sec.
759.1  Applicability.
759.2  Administration.
759.3  Definitions.
759.4  Time and method for application.
759.5  Eligibility.
759.6  Rate of payment and limitations on funding.
759.7  Appeals.
759.8  Misrepresentation and scheme or device.
759.9  Estates, trusts, and minors.
759.10  Death, incompetency, or disappearance.
759.11  Maintaining records.
759.12  Refunds; joint and several liability.

    Authority:  7 U.S.C. 612c.

    Source:  64 FR 6496, Feb. 10, 1999, unless otherwise noted. 
Redesignated at 64 FR 62565, Nov. 17, 1999.



Sec. 759.1  Applicability.

    This part establishes the Small Hog Operations Program. The purpose 
of this program is to provide benefits to hog operations under clause 
(3) of section 32 of the Act of August 24, 1935 (7 U.S.C. 612c) in order 
to reestablish their purchasing power in connection with the normal 
production of hogs for domestic consumption.



Sec. 759.2  Administration.

    (a) This part shall be administered by the Farm Service Agency (FSA) 
under the general direction and supervision of the Deputy Administrator 
for Farm Programs, FSA. The program shall be carried out in the field by 
FSA State and county committees (State and county committees).

[[Page 393]]

    (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 the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this part.
    (d) No delegation herein to a State or county committee shall 
preclude the Deputy Administrator for Farm Programs, 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 timeliness or failure to meet such 
other requirements does not adversely affect the operation of the 
program.



Sec. 759.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Small Hog Operation Payment Program 
established by this part.
    Application means the Small Hog Operation Payment Program 
Application, FSA-1042.
    Cost-plus contract means an agreement between a hog operation and a 
purchaser which bases payment to the hog operation on the estimated cost 
of production of a hog plus a profit margin.
    Department means the United States Department of Agriculture.
    Eligible hogs means feeder pigs and slaughter hogs.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Feeder pigs means young pigs that are sold to another person for 
further feeding for a period of more than 1 month.
    Fixed-price contract means an agreement between a hog operation and 
a purchaser which bases payment at a negotiated fixed price and includes 
contracts that may specify the duration and minimum and/or maximum 
number of hogs to be delivered during the contract period.
    Hog operation means any person or group of persons who as a single 
unit raises hogs and whose production and facilities are located in the 
United States.
    Marketing period means the period beginning on July 1, 1998, and 
ending on December 31, 1998.
    Negotiated cash sales means a sale in which the price is determined 
by interactions between the hog operation and the purchaser during the 
current day, for delivery within the next 7 slaughter days, and does not 
include hogs which are sold under contract.
    Person means any individual, group of individuals, partnership, 
corporation, estate, trust, association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, a citizen 
or citizens of, or legal resident alien or aliens in the United States.
    Secretary means the Secretary of the United States Department of 
Agriculture or any other officer or employee of the Department who has 
been delegated the authority to act in the Secretary's stead with 
respect to the program established in this part.
    Slaughter hogs means barrows, gilts, sows, and boars that are sold 
for immediate slaughter.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.



Sec. 759.4  Time and method for application.

    (a) Hog operations may obtain an application, Form FSA-1042 (Small 
Hog Operation Payment Program Application), in person, by mail, by 
telephone, or by facsimile from any county FSA office. In addition, 
applicants may download a copy of the FSA-1042 at http://
www.fsa.usda.gov/dafp/psd/.

[[Page 394]]

    (b) A request for benefits under this part must be submitted on a 
completed Form FSA-1042. The Form FSA-1042 should be submitted to the 
FSA county office serving the county where the hog operation is located 
but, in any case, must be received by the FSA County Office by the close 
of business on September 24, 1999. Applications not received by the 
close of business on September 24, 1999, will be returned as not having 
been timely filed and the hog operation will not be eligible for 
benefits under this program.
    (c) The hog operation requesting benefits under this part must 
certify with respect to the accuracy and truthfulness of the information 
provided in their application for benefits. All information provided is 
subject to verification and spot checks by FSA. Refusal to allow FSA or 
any other agency of the Department of Agriculture to verify any 
information provided will result in a determination of ineligibility. 
Data furnished by the applicant will be used to determine eligibility 
for program benefits. Furnishing the data is voluntary; however, without 
it program benefits will not be approved. Providing a false 
certification to the Government is punishable by imprisonment, fines and 
other penalties.

[64 FR 6497, Feb. 10, 1999, as amended at 64 FR 47099, Aug. 30, 1999]



Sec. 759.5  Eligibility.

    (a) If a hog operation is owned by one or more individuals or 
entities who have an annual gross revenue of $2.5 million or more in 
farming and ranching operations in calendar year 1998, the payment to 
the operation will be reduced by a pro rata share based upon the 
ownership interest of such entity or individual.
    (b) To be eligible to receive cash payments under this part, a hog 
operation must:
    (1) Have sold fewer than 2,500 hogs (produced in the United States) 
during the period of July 1, 1998, through December 31, 1998;
    (2) Have sold hogs on a negotiated cash basis or under a contract 
other than a fixed-price or cost-plus contract during the marketing 
period;
    (3) Be engaged in the business of producing and marketing 
agricultural products at the time of filing the application; and
    (4) Apply for payments during the application period.
    (c) Hogs marketed during the marketing period under fixed-price 
contracts, cost-plus contracts, or under any circumstance not equivalent 
to be eligible for benefits under this part with respect to hogs subject 
to such sales.
    (d) A hog operation must submit a timely application and comply with 
all other terms and conditions of this part and those that are otherwise 
contained in the application to be eligible for benefits under this 
part.

[64 FR 6497, Feb. 10, 1999, as amended at 64 FR 47099, Aug. 30, 1999]



Sec. 759.6  Rate of payment and limitations on funding.

    (a) Benefits under this part may be made to hog operations for the 
quantity of eligible slaughter hogs and feeder pigs actually marketed 
during the marketing period in accordance with the limitations set forth 
in this section. Payments will be calculated by operation and shall be 
made in an amount determined by:
    (1) Multiplying $3.60 by the number of eligible feeder pigs marketed 
during the marketing period; plus
    (2) Multiplying $10 by the number of eligible slaughter hogs 
marketed during the marketing period;
    (3) Limiting the payment per hog operation otherwise calculated 
under paragraphs (a)(1) and (2) of this section to $5,000; and
    (4) Reducing the amount due as calculated under paragraphs (a)(1) 
through (3) of this section by amounts previously paid under this part 
based on marketings in the same period and, for claims filed after 
February 12, 1999, by reducing the payment further to zero as necessary 
to insure subject to paragraph (c), that the total payments under this 
part do not exceed $175 million.
    (b) Producers who filed an application under this part prior to 
February 12, 1999, do not need to file another application in order to 
receive benefits at the increased rates announced in the

[[Page 395]]

Federal Register published on August 30, 1999. A producer who wishes to 
amend an application filed prior to February 12, 1999, may file an 
amended application by the deadline for new applications specified in 
Sec. 759.4 of this part.
    (c) To the extent that $175 million is not sufficient to cover all 
claims under this part, claims filed on or before February 12, 1999, 
shall be paid in full for the eligible hogs and feeder pigs which were 
the subject of that claim. For claims filed after that date, the claims 
will be paid in the manner deemed appropriate by FSA to assure, to the 
extent practicable, that the claims are paid in the order in which they 
are filed, until the available funds are expended at which point no 
additional claims will be paid.

[64 FR 47099, Aug. 30, 1999]



Sec. 759.7  Appeals.

    Any hog operation which 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 11 of this title and part 780 of this title.



Sec. 759.8  Misrepresentation and scheme or device.

    (a) A hog operation shall be ineligible to receive assistance under 
this program if it is determined by the State committee or the county 
committee to have:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to a hog operation 
engaged in a misrepresentation, scheme, or device, or to any other 
person as a result of the hog operation's actions, shall be refunded 
with interest together with such other sums as may become due. Any hog 
operation or person engaged in acts prohibited by this section and any 
hog operation or person receiving payment under this part shall be 
jointly and severally liable for any refund due under this section and 
for related charges. The remedies provided in this part shall be in 
addition to other civil, criminal, or administrative remedies which may 
apply.



Sec. 759.9  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 otherwise eligible operator of a hog operation 
shall be eligible for assistance under this part only if such operation 
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.



Sec. 759.10  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a hog operation that is eligible to receive benefits in accordance with 
this part, such hog operation may receive such benefits.



Sec. 759.11  Maintaining records.

    Hog operations making application for benefits under this program 
must maintain accurate records and accounts that will document that they 
meet all eligibility requirements specified herein and the number of 
head of slaughter hogs and feeder pigs sold during the marketing period. 
Such records and accounts must be retained for at least 3 years after 
the date of the cash payment to hog operations under this program.



Sec. 759.12  Refunds; 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 application, or 
this part, and if any

[[Page 396]]

refund of a payment to FSA shall otherwise become due in connection with 
the application, or this part, all payments made under this part to any 
hog operation shall be refunded to FSA together with interest as 
determined in accordance with paragraph (c) of this section and late-
payment charges as provided for in part 1403 of this chapter.
    (b) All persons listed on a hog operation's application shall be 
jointly and severally liable for any refund, including related charges, 
which is determined to be due for any reason under the terms and 
conditions of the application or this part.
    (c) Interest shall be applicable to refunds required of the hog 
operation if FSA determines that payments or other assistance were 
provided to the producer was not eligible for such assistance. Such 
interest shall be charged at the rate of interest which the United 
States Treasury charges the Commodity Credit Corporation (CCC) for 
funds, as of the date FSA made such benefits available. Such interest 
shall accrue from the date such benefits were made available to the date 
of repayment or the date interest increases as determined in accordance 
with applicable regulations. FSA may waive the accrual of interest if 
FSA determines that the cause of the erroneous determination was not due 
to any action of the hog operation.
    (d) Interest determined in accordance with paragraph (c) of this 
section shall not be applicable to refunds required of the hog operation 
because of unintentional misaction on the part of the hog operation, as 
determined by FSA.
    (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 792.
    (f) Hog operations must refund to FSA any excess payments made by 
FSA with respect to such application.
    (g) In the event that a benefit under this subpart was provided as 
the result of erroneous information provided by any person, the benefit 
must be repaid with any applicable interest.



PART 760--INDEMNITY PAYMENT PROGRAMS--Table of Contents




                Subpart--Dairy Indemnity Payment Program

                           Program Operations

Sec.
760.1  Administration.
760.2  Definitions.

                   Payments to Dairy Farmers for Milk

760.3  Indemnity payments on milk.
760.4  Normal marketings of milk.
760.5  Fair market value of milk.
760.6  Information to be furnished.
760.7  Other requirements for affected farmers.
760.8  Application for payments for milk.
760.9  Other legal recourse.

            Payments to Manufacturers Affected by Pesticides

760.20  Payments to manufacturers of dairy products.
760.21  Application for payments by manufacturers.
760.22  Information to be furnished by manufacturer.
760.23  Other requirements for manufacturers.

                           General Provisions

760.24  Limitation of authority.
760.25  Estates and trusts; minors.
760.26  Appeals.
760.27  Setoffs.
760.28  Overdisbursement.
760.29  Death, incompetency, or disappearance.
760.30  Records and inspection thereof.
760.31  Assignment.
760.32  Instructions and forms.
760.33  Availability of funds.
760.34  Paperwork Reduction Act assigned numbers.

Subpart--Beekeeper Indemnity Payment Program (1978-80) [Reserved]



                Subpart--Dairy Indemnity Payment Program

    Authority: Dairy Indemnity Program, Pub. L. 105-277, 112 Stat. 2681 
and Pub. L. 106-78, 113 Stat. 1135.

    Source: 43 FR 10535, Mar. 14, 1978, unless otherwise noted.

[[Page 397]]

                           Program Operations



Sec. 760.1  Administration.

    This indemnity payment program will be carried out by FSA under the 
direction and supervision of the Deputy Administrator. In the field, the 
program will be administered by the State and county committees.



Sec. 760.2  Definitions.

    For purposes of this subject, the following terms shall have the 
meanings specified:
    (a) Secretary means the Secretary of Agriculture of the United 
States or any officer or employee of the U.S. Department of Agriculture 
to whom he has delegated, or to whom he may hereafter delegate, 
authority to act in his stead.
    (b) FSA means the Farm Service Agency, U.S. Department of 
Agriculture.
    (c) Deputy Administrator means the Deputy Administrator, State and 
County Operations, FSA.
    (d) State committee means the Agricultural Stabilization and 
Conservation State committee.
    (e) County committee means the Agricultural Stabilization and 
Conservation county committee.
    (f) Pesticide means an economic poison which was registered pursuant 
to the provisions of the Federal Insecticide, Fungicide, and Rodenticide 
Act, as amended (7 U.S.C. 135 through 135k), and approved for use by the 
Federal Government.
    (g) Chemicals or Toxic Substances means any chemical substance or 
mixture as defined in the Toxic Substances Control Act (15 U.S.C. 2602).
    (h) Nuclear Radiation or Fallout means contamination from nuclear 
radiation or fallout from any source.
    (i) Violating Substance means one or more of the items defined in 
paragraphs (f), (g), and (h) of this section.
    (j) Public agency means any Federal, State or local public 
regulatory agency.
    (k) Affected farmer means a person who produces whole milk which is 
removed from the commerical market any time from:
    (1) Pursuant to the direction of a public agency because of the 
detection of pesticide residues in such whole milk by tests made by a 
public agency or under a testing program deemed adequate for the purpose 
by a public agency, or
    (2) Pursuant to the direction of a public agency because of the 
detection of other residues of chemicals or toxic substances residues, 
or contamination from nuclear radiation or fallout in such whole milk by 
tests made by a public agency or under a testing program deemed adequate 
for the purpose by a public agency.
    (l) Affected manufacturer means a person who manufactures dairy 
products which are removed from the commercial market pursuant to the 
direction of a public agency because of the detection of pesticide 
residue in such dairy products by tests made by a public agency or under 
a testing program deemed adequate for the purpose by a public agency.
    (m) Milk handler means the marketing agency to or through which the 
affected dairy farmer marketed his whole milk at the time he was 
directed by the public agency to remove his whole milk from the 
commercial market.
    (n) Person means an individual, partnership, association, 
corporation, trust, estate, or other legal entity.
    (o) Application period means any period during which an affected 
farmer's whole milk is removed from the commercial market pursuant to 
direction of a public agency for a reason specified in paragraph (k) of 
this section and for which application for payment is made.
    (p) Pay period means (1) in the case of an affected farmer who 
markets his whole milk through a milk handler, the period used by the 
milk handler in settling with the affected farmer for his whole milk, 
usually biweekly or monthly, or (2) in the case of an affected farmer 
whose commercial market consists of direct retail sales to consumers, a 
calendar month.
    (q) Whole milk means milk as it is produced by cows.
    (r) Commercial market means (1) the market to which the affected 
farmer normally delivers his whole milk and from which it was removed 
because of

[[Page 398]]

detection therein of a residue of a violating substance(s) or (2) the 
market to which the affected manufacturer normally delivers his dairy 
products and from which they were removed because of detection therein 
of pesticide residue.
    (s) Removed from the commercial market means (1) produced and 
destroyed or fed to livestock, (2) produced and delivered to a handler 
who destroyed it or disposed of it as salvage (such as separating whole 
milk, destroying the fat, and drying the skim milk), or (3) produced and 
otherwise diverted to other than the commercial market.
    (t) Payment subject to refund means a payment which is made by a 
milk handler to an affected farmer, and which such farmer is obligated 
to refund to the milk handler.
    (u) Base period means the calendar month or 4-week period 
immediately preceding removal of milk from the market.

[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 
22, 1979; 52 FR 17935, May 13, 1987; 53 FR 44001, Nov. 1, 1988; 56 FR 
1358, Jan. 14, 1991; 61 FR 18485, Apr. 26, 1996]

                   Payments to Dairy Farmers for Milk



Sec. 760.3  Indemnity payments on milk.

    An indemnity payment for milk may be made to an affected farmer who 
is determined by the county committee to be in compliance with all the 
terms and conditions of this subpart in the amount of the fair market 
value of his normal marketings for the application period, as determined 
in accordance with Secs. 760.4 and 760.5, less (a) any amount he 
received for whole milk marketed during the applications period, and (b) 
any payment not subject to refund which he received from a milk handler 
with respect to whole milk removed from the commercial market during the 
application period.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec. 760.4  Normal marketings of milk.

    (a) The county committee shall determine the affected farmer's 
normal marketings which, for the purposes of this subpart, shall be the 
sum of the quantities of whole milk which such farmer would have sold in 
the commercial market in each of the pay periods in the application 
period but for the removal of his whole milk from the commercial market 
because of the detection of a residue of a violating substance.
    (b) Normal marketings for each pay period are based on the average 
daily production during the base period.
    (c) Normal marketings determined in paragraph (b) of this section 
are adjusted for any change in the daily average number of cows milked 
during each pay period the milk is off the market compared with the 
average number of cows milked daily during the base period.
    (d) If only a portion of a pay period falls within the application 
period, normal marketings for such pay period shall be reduced so that 
they represent only that part of such pay period which is within the 
application period.

[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, July 
22, 1979]



Sec. 760.5  Fair market value of milk.

    (a) The county committee shall determine the fair market value of 
the affected farmer's normal marketings, which, for the purposes of this 
subpart, shall be the sum of the net proceeds such farmer would have 
received for his normal marketings in each of the pay periods in the 
application period.
    (b) The county committee shall determine the net proceeds the 
affected farmer would have received in each of the pay periods in the 
application period (1) in the case of an affected farmer who markets his 
whole milk through a milk handler, by multiplying the affected farmer's 
normal marketings for each such pay period by the average net price per 
hundred-weight of whole milk paid during the pay period by such farmer's 
milk handler in the same area for whole milk similar in quality and 
butterfat test to that marketed by the affected farmer in the base 
period used to determine his normal marketings, or (2) in the case of an 
affected farmer whose commercial market consists of direct retail sales 
to consumers, by multiplying the affected farmer's normal marketings for 
each such pay period by the average net price per hundredweight of whole 
milk,

[[Page 399]]

as determined by the county committee, which other producers in the same 
area who marketed their whole milk through milk handlers received for 
whole milk similar in quality and butterfat test to that marketed by the 
affected farmer during the base period used to determine his normal 
marketings.
    (c) In determining the net price for whole milk, the county 
committee shall deduct from the gross price therefor any transportation, 
administrative, and other costs of marketing which it determines are 
normally incurred by the affected farmer but which were not incurred 
because of the removal of his whole milk from the commercial market.



Sec. 760.6  Information to be furnished.

    The affected farmer shall furnish to the county committee complete 
and accurate information sufficient to enable the county committee or 
the Deputy Administrator to make the determinations required in this 
subpart. Such information shall include, but is not limited to:
    (a) A copy of the notice from, or other evidence of action by, the 
public agency which resulted in the removal of the affected farmer's 
whole milk from the commercial market.
    (b) The specific name of the violating substance causing the removal 
of his whole milk from the commercial market, if not included in the 
notice or other evidence of action furnished under paragraph (a) of this 
section.
    (c) The quantity and butterfat test of whole milk produced and 
marketed during the base period. This information must be a certified 
statement from the affected farmer's milk handler or any other evidence 
the county committee accepts as an accurate record of milk production 
and butterfat tests during the base period.
    (d) The average number of cows milked during the base period and 
during each pay period in the application.
    (e) If the affected farmer markets his whole milk through a milk 
handler, a statement from the milk handler showing, for each pay period 
in the application period, the average price per hundred-weight of whole 
milk similar in quality to that marketed by the affected farmer during 
the base period used to determine his normal marketings. If the milk 
handler has information as to the transportation, administrative, and 
other costs of marketing which are normally incurred by producers who 
market through the milk handler but which the affected farmer did not 
incur because of removal of his whole milk from the market, the average 
price stated by the milk handler shall be the average gross price paid 
producers less any such costs. If the milk handler does not have such 
information, the affected farmer shall furnish a statement setting forth 
such costs, if any.
    (f) The amount of proceeds, if any, received by the affected farmer 
from the marketing of whole milk produced during the application period.
    (g) The amount of any payments not subject to refund made to the 
affected farmer by the milk handler with respect to the whole milk 
produced during the application period and remove from the commercial 
market.
    (h) To the extent that such information is available to the affected 
farmer, the name of any pesticide, chemical, or toxic substance used on 
the farm within 24 months prior to the application period, the use made 
of the pesticide, chemical, or toxic substance, the approximate date of 
such use, and the name of the manufacturer and the registration number, 
if any, on the label on the container of the pesticide, chemical, or 
toxic substance.
    (i) To the extent possible, the source of the pesticide, chemical, 
or toxic substance that caused the contamination of the whole milk, and 
the results of any laboratory tests on the feed supply.
    (j) Such other information as the county committee may request to 
enable the county committee or the Deputy Administrator to make the 
determinations required in this subpart.

[43 FR 10535, Mar. 14, 1978, as amended by Amdt. 1, 44 FR 36360, June 
22, 1979]



Sec. 760.7  Other requirements for affected farmers.

    An indemnity payment for milk may be made under this subpart to an 
affected farmer only under the following conditions:

[[Page 400]]

    (a) If the pesticide, chemical, or toxic substance, contaminating 
the milk was used by the affected farmer, he established each of the 
following:
    (1) That the pesticide, chemical or toxic substance, when used, was 
registered (if applicable) and approved for use as provided in 
Sec. 760.2(f);
    (2) That the contamination of his milk was not the result of his 
failure to use the pesticide, chemical, or toxic substance, according to 
the directions and limitations stated on the label;
    (3) That the contamination of his milk was not otherwise his fault.
    (b) If the pesticide, chemical, or toxic substance contaminating the 
milk was not used by the affected farmer, he establishes each of the 
following:
    (1) He did not know or have reason to believe that any feed which he 
purchased and which contaminated his milk contained a harmful residue of 
a pesticide, a chemical, or a toxic substance or was contaminated by 
nuclear radiation or fallout.
    (2) None of the milk was produced by dairy cattle which he knew, or 
had reason to know at the time he acquired them, were contaminated with 
residues of pesticides, chemicals or toxic substances, or by nuclear 
radiation or fallout.
    (3) The contamination of his milk was not otherwise his fault.
    (c) The affected farmer has adopted recommended practices for 
eliminating residues of pesticides, chemicals, or toxic substances or 
contamination from nuclear radiation or fallout from his milk as soon as 
practicable following the discovery of the initial contamination.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec. 760.8  Application for payments for milk.

    The affected farmer or his legal representative, as provided in 
Secs. 760.25 and 760.29, must sign and file an application for payment 
on a form which is approved for that purpose by the Deputy 
Administrator. The form must be filed with the county FSA office for the 
county where the farm headquarters are located no later than December 31 
following the end of the fiscal year in which the loss occurred, or such 
later date as the Deputy Administrator may specify. The application for 
payment shall cover application periods of at least 28 days, except 
that, if the entire application period, or the last application period, 
is shorter than 28 days, applications for payment may be filed for such 
shorter period. The application for payment shall be accompanied by the 
information required by Sec. 760.6 as well as any other information 
which will enable the county committee to determine whether the making 
of an indemnity payment is precluded for any of the reasons set forth in 
Sec. 760.7. Such information shall be submitted on forms approved for 
the purpose by the Deputy Administrator.

[43 FR 10535, Mar. 14, 1978, as amended at 51 FR 12986, Apr. 17, 1986; 
52 FR 17935, May 13, 1987]



Sec. 760.9  Other legal recourse.

    (a) No indemnity payment shall be made for contaminated milk 
resulting from residues of chemicals or toxic substances if, within 30 
days after receiving a complete application, the Deputy Administrator 
determines that other legal recouse is available to the farmer. An 
application shall not be deemed complete unless it contains all 
information necessary to make a determination as to whether other legal 
recourse is available to the farmer. However, notwithstanding such a 
determination, the Deputy Administrator may reopen the case at a later 
date and make a new determination on the merits of the case as may be 
just and equitable.
    (b) In the event that a farmer receives an indemnity payment under 
this subpart, and such farmer is later compensated for the same loss by 
the person (or the representative or successor in interest of such 
person) responsible for such loss, the indemnity payment shall be 
refunded by the farmer to the Department of Agriculture: Provided, That 
the amount of such refund shall not exceed the amount of other 
compensation received by the farmer.

[Amdt. 1, 44 FR 36361, June 22, 1979]

[[Page 401]]

            Payments to Manufacturers Affected by Pesticides



Sec. 760.20  Payments to manufacturers of dairy products.

    An indemnity payment may be made to the affected manufacturer who is 
determined by the Deputy Administrator to be in compliance with all the 
terms and conditions of this subpart in the amount of the fair market 
value of the product removed from the commercial market because of 
pesticide residues, less any amount the manufacturer receives for the 
product in the form of salvage.
    Note: Manufacturers are not eligible for payment when dairy products 
are contaminated by chemicals, toxic substances (other than pesticides) 
or nuclear radiation or fallout.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec. 760.21  Application for payments by manufacturers.

    The affected manufacturer, or his legal representatives, shall file 
an application for payment with the Deputy Administrator, FSA, 
Washington, D.C., through the county office serving the county where the 
contaminated product is located. The application for payment may be in 
the form of a letter or memorandum. Such letter or memorandum, however, 
must be accompanied by acceptable documentation to support such 
application for payment.



Sec. 760.22  Information to be furnished by manufacturer.

    The affected manufacturer shall furnish the Deputy Administrator, 
through the county committee, complete and accurate information 
sufficient to enable him to make the determination as to the 
manufacturer's eligibility to receive an indemnity payment. Such 
information shall include, but is not limited to:
    (a) A copy of the notice or other evidence of action by the public 
agency which resulted in the product being removed from the commerical 
market.
    (b) The name of the pesticide causing the removal of the product 
from the commerical market and, to the extent possible, the source of 
the pesticide.
    (c) A record of the quantity of milk or butterfat used to produce 
the product for which an indemnity payment is requested.
    (d) The identity of any pesticide used by the affected manufacturer.
    (e) Such other information as the Deputy Administrator may request 
to enable him to make the determinations required in this subpart.



Sec. 760.23  Other requirements for manufacturers.

    An indemnity payment may be made under this subpart to an affected 
manufacturer only under the following conditions:
    (a) If the pesticide contaminating the product was used by the 
affected manufacturer, he establishes each of the following: (1) That 
the pesticide, when used, was registered and recommended for such use as 
provided in Sec. 760.2(f); (2) that the contamination of his product was 
not the result of his failure to use the pesticide in accordance with 
the directions and limitations stated on the label of the pesticide; and 
(3) that the contamination of his product was not otherwise his fault.
    (b) If the pesticide contaminating the product was not used by the 
affected manufacturer: (1) He did not know or have reason to believe 
that the milk from which the product was processed contained a harmful 
level of pesticide residue, and (2) the contamination of his product was 
not otherwise his fault.
    (c) In the event that a manufacturer receives an indemnity payment 
under this subpart, and such manufacturer is later compensated for the 
same loss by the person (or the representative or successor in interest 
of such person) responsible for such loss, the indemnity payment shall 
be refunded by the manufacturer to the Department of Agriculture: 
Provided, That the amount of such refund shall not exceed the amount of 
other compensation received by the manufacturer.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982; 51 
FR 12987, Apr. 17, 1986; 52 FR 17935, May 13, 1987]

[[Page 402]]

                           General Provisions



Sec. 760.24  Limitation of authority.

    (a) County executive directors and State and county committees do 
not have authority to modify or waive any of the provisions of the 
regulations in this subpart.
    (b) The State committee may take any action authorized or required 
by the regulations in this subpart to be taken by the county committee 
when such action has not been taken by the county committee. The 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 the Deputy Administrator or his 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. 760.25  Estates and trusts; minors.

    (a) A receiver of an insolvent debtor's estate and the trustee of a 
trust estate shall, for the purpose of this subpart, be considered to 
represent an insolvent affected farmer or manufacturer and the 
beneficiaries of a trust, respectively, and the production of the 
receiver or trustee shall be considered to be the production of the 
person or manufacturer he represents. Program documents executed by any 
such person will be accepted only if they are legally valid and such 
person has the authority to sign the applicable documents.
    (b) An affected dairy farmer or manufacturer who is a minor shall be 
eligible for indemnity payments only if he meets one of the following 
requirements:
    (1) The right of majority has been conferred on him by court 
proceedings or by statute; (2) a guardian has been appointed to manage 
his property and the applicable program documents are signed 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 he been an 
adult.
    (2) [Reserved]



Sec. 760.26  Appeals.

    The appeal regulations issued by the Administrator, FSA, part 780 of 
this chapter, shall be applicable to appeals by dairy farmers or 
manufacturers from determinations made pursuant to the regulations in 
this subpart.



Sec. 760.27  Setoffs.

    (a) If the affected farmer or manufacturer is indebted to any agency 
of the United States and such indebtedness is listed on the county debt 
record, indemnity payments due the affected farmer or manufacturer under 
the regulations in this part shall be applied, as provided in the 
Secretary's setoff regulations, part 13 of this title, to such 
indebtedness.
    (b) Compliance with the provisions of this section shall not deprive 
the affected farmer or manufacturer of any right he would otherwise have 
to contest the justness of the indebtedness involved in the setoff 
action, either by administrative appeal or by legal action.



Sec. 760.28  Overdisbursement.

    If the indemnity payment disbursed to an affected farmer or to a 
manufacturer exceeds the amount authorized under the regulations in this 
subpart, the affected farmer or manufacturer shall be personally liable 
for repayment of the amount of such excess.



Sec. 760.29  Death, incompetency, or disappearance.

    In the case of the death, incompetency, or disappearance of any 
affected farmer or manufacturer who would otherwise receive an indemnity 
payment, such payment may be made to the person or persons specified in 
the regulations contained in part 707 of this chapter. The person 
requesting such payment shall file Form FSA-325, ``Application for 
Payment of Amounts Due Persons Who Have Died, Disappeared, or Have Been 
Declared Incompetent,'' as provided in that part.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]

[[Page 403]]



Sec. 760.30  Records and inspection thereof.

    (a) The affected farmer, as well as his milk handler and any other 
person who furnished information to such farmer or to the county 
committee for the purpose of enabling such farmer to receive a milk 
indemnity payment under this subpart, shall maintain any existing books, 
records, and accounts supporting any information so furnished for 3 
years following the end of the year during which the application for 
payment was filed. The affected farmer, his milk handler, and any other 
person who furnishes such information to the affected farmer or to the 
county committee shall permit authorized representatives of the 
Department of Agriculture and the General Accounting Office, during 
regular business hours, to inspect, examine, and make copies of such 
books, records, and accounts.
    (b) The affected manufacturer or any other person who furnishes 
information to the Deputy Administrator for the purposes of enabling 
such manufacturer to receive an indemnity payment under this subpart 
shall maintain any books, records, and accounts supporting any 
information so furnished for 3 years following the end of the year 
during which the application for payment was filed. The affected 
manufacturer or any other person who furnishes such information to the 
Deputy Administrator shall permit authorized representatives of the 
Department of Agriculture and the General Accounting Office, during 
regular business hours, to inspect, examine, and make copies of such 
books, records, and accounts.



Sec. 760.31  Assignment.

    No assignment shall be made of any indemnity payment due or to come 
due under the regulations in this subpart. Any assignment or attempted 
assignment of any indemnity payment due or to come due under this 
subpart shall be null and void.



Sec. 760.32  Instructions and forms.

    The Deputy Administrator shall cause to be prepared such forms and 
instructions as are necessary for carrying out the regulations in this 
subpart. Affected farmers and manufacturers may obtain information 
necessary to make application for a dairy indemnity payment from the 
county FSA office. Form FSA-373--Application for Indemnity Payment, is 
available at the county ASC office.

[43 FR 10535, Mar. 14, 1978, as amended at 47 FR 24689, June 8, 1982]



Sec. 760.33  Availability of funds.

    Payment of indemnity claims will be contingent upon the availability 
of funds to the Department to pay such claims. With respect to claims 
filed after October 1, 1982, if the Department determines that the 
amount of claims to be filed under the program will exceed the funds 
available to the Department, to pay such claims payments will be made so 
that each eligible claimant will receive a pro rata share of the 
remaining funds available to the Department to pay dairy indemnity 
claims.

(Approved by the Office of Management and Budget under control number 
0560-0045)

[48 FR 40367, Sept. 7, 1983 and 49 FR 8906, Mar. 9, 1984]



Sec. 760.34  Paperwork Reduction Act assigned numbers.

    The information collection requirements contained in these 
regulations (7 CFR part 760) 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 0560-0045.

[49 FR 29564, July 23, 1984]

Subpart--Beekeeper Indemnity Payment Program (1978-80) [Reserved]



PART 761--GENERAL AND ADMINISTRATIVE--Table of Contents




                      Subpart A--General Provisions

Sec.
761.1-761.6  [Reserved]
761.7  Appraisals.

    Authority:  7 U.S.C. 1989.

    Source:  64 FR 62567, Nov. 17, 1999, unless otherwise noted.

[[Page 404]]



Secs. 761.1-761.6  [Reserved]



Sec. 761.7  Appraisals.

    (a) General. This section describes requirements for:
    (1) real estate and chattel appraisals made in connection with the 
making and servicing of direct Farm Loan Program and nonprogram loans; 
and,
    (2) appraisal reviews conducted on appraisals made in connection 
with the making and servicing of direct and guaranteed Farm Loan Program 
and nonprogram loans.
    (b) Definitions.
    Administrative appraisal review means a review of an appraisal to 
determine if the appraisal:
    (1) Meets applicable Agency requirements; and
    (2) Is accurate outside the requirements of standard 3 of USPAP.
    Agency means the Farm Service Agency, including its employees and 
state and area committee members, and any successor agency.
    Farm Loan Programs (FLP) loans refers to Farm Ownership (FO), Soil 
and Water (SW), Recreation (RL), Economic Opportunity (EO), Operating 
(OL), Emergency (EM), Economic Emergency (EE), Softwood Timber (ST), and 
Rural Housing loans for farm service buildings (RHF).
    Technical appraisal review means a review of an appraisal to 
determine if such appraisal meets the requirements of USPAP pursuant to 
standard 3 of USPAP.
    USPAP (Uniform Standards of Professional Appraisal Practice) means 
standards governing the preparation, reporting, and reviewing of 
appraisals established by the Appraisal Foundation pursuant to the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
    (c) Appraisal standards. (1) Real estate. Real estate appraisals, 
technical appraisal reviews of real estate appraisals, and their 
respective forms must comply with the standards contained in USPAP, as 
well as applicable Agency regulations and procedures for the specific 
Farm Loan Program activity involved. A current copy of USPAP along with 
other applicable appraisal procedures and regulations is available for 
review in each Agency State Office.
    (2) Chattel. An appraisal of chattel property may be completed on an 
applicable Agency form (available in each Agency State Office) or other 
format containing the same information.
    (d) Use of an existing real estate appraisal. The Agency may use an 
existing real estate appraisal to reach a loan making or servicing 
decision under either of the following conditions:
    (1) The appraisal was completed within the previous 12 months and 
the Agency determines that:
    (i) The appraisal meets the provisions of this section and the 
applicable Agency loan making or servicing requirements, and
    (ii) Current market values have remained stable since the appraisal 
was completed; or
    (2) The appraisal was not completed in the previous 12 months, but 
has been updated by the appraiser or appraisal firm that completed the 
appraisal, and both the update and original appraisal were completed in 
accordance with USPAP.
    (e) Appraisal reviews. (1) Real estate appraisals. With respect to a 
real estate appraisal, the Agency may conduct a technical appraisal 
review or an administrative appraisal review, or both.
    (2) Chattel appraisals. With respect to a chattel appraisal, the 
Agency may conduct an administrative appraisal review.

[64 FR 62567, Nov. 17, 1999; 64 FR 69322, Dec 10, 1999; 65 FR 14433, 
Mar. 17, 2000]



PART 762--GUARANTEED FARM LOANS--Table of Contents




Sec.
762.1-762.100  [Reserved]
762.101  Introduction.
762.102  Abbreviations and definitions.
762.103  Full faith and credit.
762.104  Appeals.
762.105  Eligibility and substitution of lenders.
762.106  Preferred and certified lender programs.
762.107-762.109  [Reserved]
762.110  Loan application.
762.111-762.119  [Reserved]
762.120  Loan applicant eligibility.
762.121  Loan purposes.
762.122  Loan limitations.
762.123  Insurance and farm inspection requirements.

[[Page 405]]

762.124  Interest rates, terms, charges, and fees.
762.125  Financial feasibility.
762.126  Security requirements.
762.127  Appraisal requirements.
762.128  Environmental and special laws.
762.129  Percent of guarantee and maximum loss.
762.130  Loan approval and issuing the guarantee.
762.131-762.139  [Reserved]
762.140  General servicing responsibilities.
762.141  Reporting requirements.
762.142  Servicing related to collateral.
762.143  Servicing distressed accounts.
762.144  Repurchase of guaranteed portion from a secondary market 
          holder.
762.145  Restructuring guaranteed loans.
762.146  Other servicing procedures.
762.147  Servicing shared appreciation agreements.
762.148  Bankruptcy.
762.149  Liquidation.
762.150  Interest assistance program.
762.151-762.159  [Reserved]
762.160  Sale, assignment and participation.

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

    Source:  64 FR 7378, Feb. 12, 1999, unless otherwise noted.



Secs. 762.1-762.100  [Reserved]



Sec. 762.101  Introduction.

    (a) Scope. This subpart contains regulations governing Operating 
Loans and Farm Ownership loans guaranteed by the Farm Service Agency. 
This subpart applies to lenders, holders, borrowers, Agency personnel, 
and other parties involved in making, guaranteeing, holding, servicing, 
or liquidating such loans.
    (b) Policy. The Agency issues guarantees on loans made to qualified 
loan applicants without regard to race, color, religion, sex, national 
origin, marital status, or age, provided the loan applicant can enter 
into a legal and binding contract, or whether all or part of the 
applicant's income derives from any public assistance program or whether 
the applicant, in good faith, exercises any rights under the Consumer 
Protection Act.
    (c) Lender list and classification. (1) The Agency maintains a 
current list of lenders who express a desire to participate in the 
guaranteed loan program. This list is made available to farmers upon 
request.
    (2) Lenders who participate in the Agency guaranteed loan program 
will be classified into one of the following categories:
    (i) Standard Eligible Lender under Sec. 762.105,
    (ii) Certified Lender, or
    (iii) Preferred Lender under Sec. 762.106.
    (3) Lenders may continue to make loans under Approved Lender Program 
(ALP) agreements until they expire; however, these agreements will not 
be renewed when they expire. All ALP agreements with farm credit 
institutions will expire on February 12, 2001.
    (d) Type of guarantee. Guarantees are available for both a loan note 
or a line of credit. A loan note is used for a loan of fixed amount and 
term. A line of credit has a fixed term, but no fixed amount. The 
principal amount outstanding at any time, however, may not exceed the 
line of credit ceiling contained in the contract. Both guarantees are 
evidenced by the same loan guarantee form.
    (e) Termination of loan guarantee. The loan guarantee will 
automatically terminate as follows:
    (1) Upon full payment of the guaranteed loan. A zero balance within 
the period authorized for advances on a line of credit will not 
terminate the guarantee;
    (2) Upon payment of a final loss claim; or
    (3) Upon written notice from the lender to the Agency that a 
guarantee is no longer desired provided the lender holds all of the 
guaranteed portion of the loan. The loan guarantee will be returned to 
the Agency office for cancellation within 30 days of the date of the 
notice by the lender.



Sec. 762.102  Abbreviations and definitions.

    (a) Abbreviations.
    ALP--Approved lender program
    CLP--Certified lender program
    CONACT--Consolidated Farm and Rural Development Act (7 U.S.C. 1921 
et seq.)
    EPA--Environmental Protection Agency
    EIS--Environmental impact statement
    EM--Emergency loans
    FO--Farm ownership loans

[[Page 406]]

    FSA--Farm Service Agency
    OL--Operating loans
    PLP--Preferred lender program
    SW--Soil and water
    USDA--United States Department of Agriculture
    (b) Definitions.
    Additional security. Collateral in excess of that needed to fully 
secure the loan.
    Agency. The Farm Service Agency, including its employees and state 
and area committee members, and any successor agency.
    Allonge. An attachment or an addendum to a note.
    Applicant. For guaranteed loans, the lender requesting a guarantee 
is the applicant. The party applying to the lender for a loan will be 
considered the loan applicant.
    Aquaculture. The husbandry of aquatic organisms in a controlled or 
selected environment. An aquatic organism is any fish, amphibian, 
reptile, or aquatic plant. An aquaculture operation is considered to be 
a farm only if it is conducted on the grounds which the loan applicant 
owns, leases, or has an exclusive right to use. An exclusive right to 
use must be evidenced by a permit issued to the loan applicant and the 
permit must specifically identify the waters available to be used by the 
loan applicant only.
    Assignment of guaranteed portion. A process by which the lender 
transfers the right to receive payments or income on the guaranteed loan 
to another party, usually in return for payment in the amount of the 
loan's guaranteed principal. The lender retains the unguaranteed portion 
in its portfolio and receives a fee from the purchaser or assignee to 
service the loan, and receive and remit payments according to a written 
assignment agreement. This assignment can be reassigned or sold multiple 
times.
    Average farm customers. Those conventional farm borrowers who are 
required to pledge their crops, livestock, and other chattel and real 
estate security for the loan. This does not include those high-risk 
farmers with limited security and management ability who are generally 
charged a higher interest rate by conventional agricultural lenders. 
Also, this does not include those low-risk farm customers who obtain 
financing on a secured or unsecured basis, who have as collateral such 
items as savings accounts, time deposits, certificates of deposit, 
stocks and bonds, and life insurance, which they are able to pledge for 
the loan.
    Basic Security. All farm machinery, equipment, vehicles, foundation 
and breeding livestock herds and flocks, including replacements, and 
real estate which serves as security for a loan guaranteed by the 
Agency.
    Beginning farmer or rancher. A beginning farmer or rancher is an 
individual or entity who:
    (1) Meets the loan eligibility requirements for OL or FO assistance, 
as applicable, in accordance with this subpart;
    (2) Has not operated a farm or ranch, or who has operated a farm or 
ranch for not more than 10 years. This requirement applies to all 
members of an entity;
    (3) Will materially and substantially participate in the operation 
of the farm or ranch:
    (i) In the case of a loan made to an individual, individually or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm is located.
    (ii) In the case of a loan made to an entity, all members must 
materially and substantially participate in the operation of the farm or 
ranch. Material and substantial participation requires that the 
individual provide some amount of the management, or labor and 
management necessary for day-to-day activities, such that if the 
individual did not provide these inputs, operation of the farm or ranch 
would be seriously impaired;
    (4) Agrees to participate in any loan assessment and financial 
management programs required by Agency regulations;
    (5) Does not own real farm or ranch property or who, directly or 
through interests in family farm entities owns real farm or ranch 
property, the aggregate acreage of which does not exceed 25 percent of 
the average farm or ranch

[[Page 407]]

acreage of the farms or ranches in the county where the property is 
located. If the farm is located in more than one county, the average 
farm acreage of the county where the loan applicant's residence is 
located will be used in the calculation. If the applicant's residence is 
not located on the farm or if the loan applicant is an entity, the 
average farm acreage of the county where the major portion of the farm 
is located will be used. The average county farm or ranch acreage will 
be determined from the most recent Census of Agriculture developed by 
the U.S. Department of Commerce, Bureau of the Census or USDA;
    (6) Demonstrates that the available resources of the loan applicant 
and spouse (if any) are not sufficient to enable the loan applicant to 
enter or continue farming or ranching on a viable scale; and
    (7) In the case of an entity:
    (i) All the members are related by blood or marriage; and
    (ii) All the stockholders in a corporation are beginning farmers or 
ranchers.
    Borrower. An individual or entity which has outstanding obligations 
to the lender under any Agency loan or loan guarantee program. A 
borrower includes all parties liable for Agency debt, including 
collection-only borrowers, except those whose total loan and accounts 
have been voluntarily or involuntarily foreclosed or liquidated, or who 
have been discharged of all Agency debt.
    Capital leases. Agreements under which the lessee effectively 
acquires ownership of the asset being leased. A lease is a capital lease 
if it meets any one of the following criteria:
    (1) The lease transfers ownership of the property to the lessee at 
the end of the lease term.
    (2) The lessee has the right to purchase the property for 
significantly less than its market value at the end of the lease.
    (3) The term of the lease is at least 75 percent of the estimated 
economic life of the leased property.
    (4) The present value of the minimum lease payments equals or 
exceeds 90 percent of the fair market value of the leased property.
    Cash flow budget. A projection listing all anticipated cash inflows 
(including all farm income, nonfarm income and all loan advances) and 
all cash outflows (including all farm and nonfarm debt service and other 
expenses) to be incurred by the borrower during the period of the 
budget. Cash flow budgets for loans under $50,000 do not require income 
and expenses itemized by categories. A cash flow budget may be completed 
either for a 12 month period, a typical production cycle or the life of 
the loan, as appropriate. It may also be prepared with a breakdown of 
cash inflows and outflows for each month of the review period and 
includes the expected outstanding operating credit balance for the end 
of each month. The latter type is referred to as a ``monthly cash flow 
budget''.
    Collateral. Property pledged as security for a loan to ensure 
repayment of an obligation.
    Conditional commitment. The Agency's commitment to the lender that 
the material it has submitted is approved subject to the completion of 
all conditions and requirements contained therein.
    Consolidation. The combination of outstanding principal and interest 
balance of two or more OL loans.
    Controlled. When a director or employee has more than a 50 percent 
ownership in the entity or, the director or employee, together with 
relatives of the director or employee, have more than a 50 percent 
ownership.
    Cooperative. An entity which has farming as its purpose and whose 
members have agreed to share the profits of the farming enterprise. The 
entity must be recognized as a farm cooperative by the laws of the State 
in which the entity will operate a farm.
    Cosigner. A party who joins in the execution of a promissory note to 
assure its repayment. The cosigner becomes jointly and severally liable 
to comply with the terms of the note. In the case of an entity 
applicant, the cosigner cannot be a member, partner, joint operator, or 
stockholder of the entity.
    County average yield. The historical average yield for a commodity 
in a particular political subdivision, as determined or published by a 
government entity or other recognized source.

[[Page 408]]

    Debt writedown. To reduce the amount of the borrower's debt to that 
amount that is determined to be collectible based on an analysis of the 
security value and the borrower's ability to pay.
    Deferral. A postponement of the payment of interest or principal or 
both. Principal may be deferred in whole or in part, interest may only 
be partially deferred.
    Depreciation and amortization expenses. An annual allocation of the 
cost or other basic value of tangible capital assets, less salvage 
value, over the estimated life of the unit (which may be a group of 
assets), in a systematic and rational manner.
    Direct loan. A loan serviced by the Agency as lender.
    Entity. Cooperatives, corporations, partnerships, or joint 
operations.
    Family farm. A farm which:
    (1) Produces agricultural commodities for sale in sufficient 
quantities so that it is recognized in the community as a farm rather 
than a rural residence;
    (2) Provides enough agricultural income by itself, including rented 
land, or together with any other dependable income to enable the 
borrower to:
    (i) Pay necessary family living and operating expenses;
    (ii) Maintain essential chattel and real property; and
    (iii) Pay debts;
    (3) Is managed by:
    (i) The borrower when a loan is made to an individual; or,
    (ii) The members, stockholders, partners, or joint operators 
responsible for operating the farm when a loan is made to an entity;
    (4) Has a substantial amount of the labor requirement for the farm 
and nonfarm enterprise provided by:
    (i) The borrower and the borrower's immediate family for a loan made 
to an individual; or
    (ii) The members, stockholders, partners, or joint operators 
responsible for operating the farm, along with the families of these 
individuals, for a loan made to an entity; and
    (5) May use a reasonable amount of full-time hired labor and 
seasonal labor during peak load periods.
    Family living expenses. Any withdrawals from income to provide for 
needs of family members.
    Family members. The immediate members of the family residing in the 
same household with the individual borrower, or, in the case of an 
entity, with the operator.
    Farm. A tract or tracts of land, improvements, and other 
appurtenances which are used or will be used in the production of crops, 
livestock, or aquaculture products for sale in sufficient quantities so 
that the property is recognized as a farm rather than a rural residence. 
The term ``farm'' also includes any such land and improvements and 
facilities used in a nonfarm enterprise. It may also include the 
residence which, although physically separate from the farm acreage, is 
ordinarily treated as part of the farm in the local community.
    Feasible plan. A plan for loan servicing purposes which shows the 
elements of ``positive cash flow'' except that the minimum acceptable 
``Term Debt and Capital Lease Coverage Ratio'' is 1.0 rather than 1.1 
required for ``positive cash flow.''
    Financially viable operation. An operation which, with Agency 
assistance, is projected to improve its financial condition over a 
period of time to the point that the operator can obtain commercial 
credit without further Agency direct or guaranteed assistance. A 
borrower that will meet the Agency classification of ``commercial,'' as 
defined in Agency Instruction 2006-W, available in any Agency office, 
will be considered to be financially viable. Such an operation must 
generate sufficient income to:
    (1) Meet annual operating expenses and debt payments as they become 
due;
    (2) Meet basic family living expenses to the extent they are not met 
by dependable nonfarm income;
    (3) Provide for replacement of capital items; and
    (4) Provide for long-term financial growth.
    Fish. Any aquatic, gilled animal commonly known as ``fish'' as well 
as mollusks, or crustaceans (or other invertebrates) produced under 
controlled conditions (that is, feeding, tending, harvesting, and such 
other activities as

[[Page 409]]

are necessary to properly raise and market the products) in ponds, 
lakes, streams, artificial enclosures, or similar holding areas.
    Fixture. An item of personal property attached to real estate in 
such a way that it cannot be removed without defacing or dismantling the 
structure, or substantially damaging the structure itself.
    Graduation. The Agency's determination that a borrower of a direct 
loan, is financially stable enough to refinance that loan with a 
commercial lender with or without a guarantee.
    Guaranteed loan. A loan made and serviced by a lender for which the 
Agency has entered into a lenders agreement and for which the Agency has 
issued a loan note guarantee. This term also includes lines of credit 
except where otherwise indicated.
    Hazard insurance. Includes fire, windstorm, lightning, hail, 
explosion, riot, civil commotion, aircraft, vehicles, smoke, builder's 
risk, public liability, property damage, flood or mudslide, workers 
compensation, or any similar insurance that is available and needed to 
protect the security, or that is required by law.
    Holder. The person or organization other than the lender who holds 
all or a part of the guaranteed portion of an Agency guaranteed loan but 
who has no servicing responsibilities. When the lender assigns a part of 
the guaranteed loan to an assignee by way of execution of an assignment 
form, the assignee becomes a holder.
    In-house expenses. Expenses associated with credit management and 
loan servicing by the lender and the lender's contractor. In-house 
expenses include, but are not limited to: employee salaries, staff 
lawyers, travel, supplies, and overhead.
    Interest assistance agreement. The signed agreement between the 
Agency and the lender setting forth the terms and conditions of the 
interest assistance.
    Interest assistance anniversary date. Date on which interest 
assistance reviews and claims will be effective. This date is 
established by the lender. Once established, it will not change unless 
the loan is restructured.
    Interest assistance review. The yearly review process which includes 
an analysis of the borrower or applicant's farming operation and need 
for continued interest assistance, completion of the needs test and 
request for continuation of interest assistance.
    Joint operation. Individuals that have agreed to operate a farm or 
farms together as a business unit. The real and personal property is 
owned separately or jointly by the individuals. Joint operations include 
limited liability companies having more than one member.
    Land development. Items such as terracing, clearing, leveling, 
fencing, drainage and irrigation systems, ponds, forestation, permanent 
pastures, perennial hay crops, basic soil amendments, and other items of 
land improvements which conserve or permanently enhance productivity.
    Lender. The organization making and servicing the loan or advancing 
and servicing the line of credit which is guaranteed under the 
provisions of Agency regulations. The lender is also the party 
requesting a guarantee.
    Lender's agreement. The appropriate Agency form executed by the 
Agency and the lender setting forth the loan responsibilities of the 
lender and agency when the loan guarantee is issued.
    Lien.A legally enforceable hold or claim on the property of another 
obtained as security for the repayment of indebtedness or an encumbrance 
on property to enforce payment of an obligation.
    Liquidation expenses. The cost of an appraisal, due diligence 
evaluation, environmental assessment, outside attorney fees and other 
costs incurred as a direct result of liquidating the security for the 
guaranteed loan. Liquidation fees do not include in-house expenses.
    Loan or line of credit agreement. A document which contains certain 
lender and borrower agreements, conditions, limitations, and 
responsibilities for credit extension and acceptance in a loan format 
where loan principal balance may fluctuate throughout the term of the 
document.
    Loan applicant. The party applying to a lender for a guaranteed loan 
or line of credit.
    Loan transaction. Any loan approval or servicing action.

[[Page 410]]

    Loss claim. A request made to the Agency by a lender to receive a 
reimbursement based on a percentage of the lender's loss on a loan 
covered by an Agency guarantee.
    Loss rate. The net amount of guaranteed OL, FO, and SW loss claims 
paid on loans made in the past 7 years divided by the total loan amount 
of OL, FO, and SW made in the past 7 years.
    Major deficiency. A deficiency that directly affects the soundness 
of the loan.
    Majority interest. Any individual or a combination of individuals 
owning more than a 50 percent interest in a cooperative, corporation, 
joint operation, or partnership.
    Market value. The amount which an informed and willing buyer would 
pay an informed and willing, but not forced, seller in a completely 
voluntary sale.
    Minor deficiency. A deficiency that violates Agency regulations, but 
does not affect the soundness of a loan.
    Mortgage. A legal instrument giving the lender a security interest 
or lien on real or personal property of any kind.
    Negligent servicing. The failure to perform those services which 
would be considered normal industry standards of loan management or 
failure to comply with any servicing requirement of this subpart or the 
lenders agreement or the guarantee. The term includes the concept of a 
failure to act or failure to act timely consistent with actions of a 
reasonable lender in loan making, servicing, and collection.
    Net farm operating income. The gross income generated by a farming 
operation annually, minus all yearly operating expenses (including 
withdrawals from entities for living expenses), operating loan interest, 
interest on term debt and capital lease payments, and depreciation and 
amortization expenses. Net farm operating income does not include off-
farm income and social security taxes, carryover debt and delinquent 
interest.
    Net recovery value. The market value of the security property 
assuming that it will be acquired by the lender, and sold for its 
highest and best use, less the lender's costs of property acquisition, 
retention, maintenance, and liquidation.
    Nonessential asset. Assets in which the borrower has an ownership 
interest that do not contribute an income to pay essential family living 
expenses or maintain a sound farming operation, and are not exempt from 
judgment creditors.
    Normal income security. All security not considered basic security.
    Participation. A loan arrangement where a primary or lead lender is 
typically the lender of record but the loan funds may be provided by one 
or more other lenders due to loan size or other factors. Typically, 
participating lenders share in the interest income or profit on the loan 
based on the relative amount of the loan funds provided after deducting 
the servicing fees of the primary or lead lender.
    Partnership. Any entity consisting of two or more individuals who 
have agreed to operate a farm as one business unit. The entity must be 
recognized as a partnership by the laws of the State in which the entity 
will operate and must be authorized to own both real estate and personal 
property and to incur debts in its own name.
    Positive cash flow. The ability of a borrower's operation to 
demonstrate: a term debt and capital lease coverage ratio of at least 
1.1; and a capital replacement and term debt repayment margin equal to 
or greater than any planned capital asset purchases not financed. The 
term debt and capital lease coverage ratio and the capital replacement 
and term debt repayment margin are calculated as follows:
    (1) Add projected net farm operating income, projected annual 
nonfarm income, projected capital depreciation and amortization 
expenses, scheduled annual interest on term debt, and scheduled annual 
interest on capital leases.
    (2) Subtract from this sum projected annual income and social 
security tax payments, including any delinquent taxes, and family living 
expenses. The difference is the balance available for term debt 
repayment.
    (3) Divide the balance available for term debt repayment by the sum 
of the annual scheduled principal and interest payments on term debt, 
plus the annual scheduled principal and interest payments on capital 
leases, excluding

[[Page 411]]

delinquent installments. The quotient is the term debt and capital lease 
coverage ratio.
    (4) Add the balance available for term debt repayment to any cash 
carryover from the preceding year.
    (5) Subtract from this sum the amount of the total annual scheduled 
term debt and capital lease payments, and any debt carried over from the 
previous year. The difference is the capital replacement and term debt 
repayment margin.
    Potential liquidation value. The amount of the lender's protective 
bid at the foreclosure sale. Potential liquidation value is determined 
by an independent appraiser using comparables from other forced 
liquidation sales.
    Present value. The present worth of a future stream of payments 
discounted to the current date.
    Primary security. The minimum amount of collateral needed to fully 
secure a proposed loan.
    Principals of borrowers. Includes owners, officers, directors, 
entities and others directly involved in the operation and management of 
a business.
    Protective advances. Advances made by a lender to protect or 
preserve the collateral itself from loss or deterioration. Protective 
advances include but are not limited to:
    (1) Payment of delinquent taxes,
    (2) Annual assessments,
    (3) Ground rents,
    (4) Hazard or flood insurance premiums against or affecting the 
collateral,
    (5) Harvesting costs,
    (6) Other expenses needed for emergency measures to protect the 
collateral.
    Recapture. The amount that a guaranteed lender is entitled to 
recover from a guaranteed loan borrower in consideration for the lender 
writing down a portion of their guaranteed loan debt when that loan was 
secured by real estate and that real estate increases in value. Also, 
the act of collecting shared appreciation.
    Related by blood or marriage. Individuals who are connected to one 
another as husband, wife, parent, child, brother, or sister.
    Relative. An individual or spouse and anyone having the following 
relationship to either: parent, son, daughter, sibling, stepparent, 
stepson, stepdaughter, stepbrother, stepsister, half brother, half 
sister, uncle, aunt, nephew, niece, grandparent, granddaughter, 
grandson, and the spouses of the foregoing.
    Rescheduling. To rewrite the rates and terms of a single note or 
line of credit agreement.
    Restructuring. Changing terms of a debt through either a 
rescheduling, deferral, or writedown or a combination thereof.
    Sale of guaranteed portion. See assignment of guaranteed portion.
    Security. Property of any kind subject to a real or personal 
property lien. Any reference to ``collateral'' or ``security property'' 
shall be considered a reference to the term ``security.''
    Shared appreciation agreement. An agreement between a guaranteed 
lender and borrower that requires a borrower that has received a write 
down on a guaranteed loan secured by real estate to repay the lender 
some or all of the writedown received, based on a percentage of any 
increase in the value of that real estate at some future date, if 
certain conditions exist.
    State. The major political subdivision of the United States and the 
organization of program delivery for the Agency.
    Subordination. A document executed by a lender to relinquish their 
priority of lien in favor of another lender that provides the other 
lender with a priority right to collect a debt of a specific dollar 
amount from the sale of the same collateral.
    Subsequent loans. Any loans processed by the Agency after an initial 
loan has been made to the same borrower.
    Transfer and assumption. The conveyance by a debtor to an assuming 
party of the assets, collateral, and liabilities of the loan in return 
for the assuming party's binding promise to pay the debt outstanding.
    Typical plan. A projected income and expense statement listing all 
anticipated cash flows for a typical 12-month production cycle; 
including all farm and nonfarm income and all expenses

[[Page 412]]

(including debt service) to be incurred by the borrower during such 
period.
    Unaccounted for security. Items, as indicated on the lender's loan 
application, request for guarantee, or any interim agreements provided 
to the Agency, that are security for the guaranteed loan that were 
misplaced, stolen, sold, or otherwise missing, where replacement 
security was not obtained or the proceeds from their sale have not been 
applied to the loan.
    United States. The United States itself, each of the several States, 
the Commonwealth of Puerto Rico, the Virgin Islands of the United 
States, Guam, American Samoa, and the Commonwealth of the Northern 
Mariana Islands.
    Veteran. Any person who served in the military, naval, or air 
service during any war as defined in section 101(12) of title 38, United 
States Code.



Sec. 762.103  Full faith and credit.

    (a) Fraud and misrepresentation. The loan guarantee constitutes an 
obligation supported by the full faith and credit of the United States. 
The Agency may contest the guarantee only in cases of fraud or 
misrepresentation by a lender or holder, in which:
    (1) The lender or holder had actual knowledge of the fraud or 
misrepresentation at the time it became the lender or holder, or
    (2) The lender or holder participated in or condoned the fraud or 
misrepresentation.
    (b) Lender violations. The loan guarantee cannot be enforced by the 
lender, regardless of when the Agency discovers the violation, to the 
extent that the loss is a result of:
    (1) Violation of usury laws;
    (2) Negligent servicing;
    (3) Failure to obtain the required security; or,
    (4) Failure to use loan funds for purposes specifically approved by 
the Agency.
    (c) Enforcement by holder. The guarantee and right to require 
purchase will be directly enforceable by the holder even if:
    (1) The loan guarantee is contestable based on the lender's fraud or 
misrepresentation; or
    (2) The loan note guarantee is unenforceable by the lender based on 
a lender violation.



Sec. 762.104  Appeals.

    (a) The loan applicant or borrower and lender must jointly execute 
the written request for review of an alleged adverse decision made by 
the Agency. However, in cases where the Agency has denied or reduced the 
amount of the final loss payment, the decision may be appealed by the 
lender only.
    (b) A decision made by the lender adverse to the borrower is not a 
decision by the Agency, whether or not concurred in by the Agency, and 
may not be appealed.
    (c) The lender or Agency may request updated information from the 
borrower to implement an appeal decision.
    (d) Appeals will be handled in accordance with parts 11 and 780 of 
this title.



Sec. 762.105  Eligibility and substitution of lenders.

    (a) General. To participate in FSA guaranteed farm loan programs, a 
lender must meet the eligibility criteria in this part. The standard 
eligible lender must demonstrate eligibility and provide such evidence 
as the Agency may request.
    (b) Standard eligible lender eligibility criteria. (1) A lender must 
have experience in making and servicing agricultural loans and have the 
capability to make and service the loan for which a guarantee is 
requested;
    (2) The lenders must not have losses or deficiencies in processing 
and servicing guaranteed loans above a level which would indicate an 
inability to properly process and service a guaranteed agricultural 
loan.
    (3) A lender must be subject to credit examination and supervision 
by an acceptable State or Federal regulatory agency;
    (4) The lender must maintain an office near enough to the 
collateral's location so it can properly and efficiently discharge its 
loan making and loan servicing responsibilities or use Agency approved 
agents, correspondents, branches, or other institutions or persons to 
provide expertise to assist in carrying out its responsibilities. The 
lender must be a local lender unless it:

[[Page 413]]

    (i) normally makes loans in the region or geographic location in 
which the loan applicant's operation being financed is located, or
    (ii) demonstrates specific expertise in making and servicing loans 
for the proposed operation.
    (5) The lender, its officers, or agents must not be debarred or 
suspended from participation in Government contracts or programs or be 
delinquent on a Government debt.
    (c) Substitution of lenders. A new eligible lender may be 
substituted for the original lender, upon the original lender's 
concurrence, under the following conditions:
    (1) The Agency approves of the substitution in writing;
    (2) The new lender agrees in writing to:
    (i) Assume all servicing and other responsibilities of the original 
lender and to acquire the unguaranteed portion of the loan;
    (ii) Execute a lender's agreement if one is not in effect;
    (iii) Execute a modification of the guarantee provided by the Agency 
to identify the new lender, and contain the amount of debt at the time 
of the substitution and the new loan terms if applicable; and,
    (iv) Give any holder written notice of the substitution. If the rate 
and terms are changed, written concurrence from the holder is required.
    (3) The original lender will:
    (i) Assign their promissory note, lien instruments, loan agreements, 
and other documents to the new lender.
    (ii) If the loan is subject to an existing interest assistance 
agreement, submit a request for subsidy for the partial year that it has 
owned the loan.
    (d) Lender name or ownership changes.
    (1) When a lender begins doing business under a new name or 
undergoes an ownership change the lender will notify the Agency.
    (2) The lender's CLP or PLP status is subject to reconsideration 
when ownership changes.
    (3) The lender will execute a new lender's agreement when ownership 
changes.



Sec. 762.106  Preferred and certified lender programs.

    (a) General. (1) Lenders who desire PLP or CLP status must prepare a 
written request addressing:
    (i) The States in which they desire to receive PLP or CLP status and 
their branch offices which they desire to be considered by the Agency 
for approval; and
    (ii) Each item of the eligibility criteria for PLP or CLP approval 
in this section, as appropriate.
    (2) The lender may include any additional supporting evidence or 
other information the lender believes would be helpful to the Agency in 
making its determination.
    (3) The lender must send its request to the Agency State office for 
the State in which the lender's headquarters is located.
    (4) The lender must provide any additional information requested by 
the Agency to process a PLP or CLP request if the lender continues with 
the approval process.
    (b) CLP criteria. The lender must meet the following requirements to 
obtain CLP status:
    (1) Qualify as a standard eligible lender under Sec. 762.105;
    (2) Have a lender loss rate not in excess of the maximum CLP loss 
rate established by the Agency and published periodically in a Federal 
Register Notice. The Agency may waive the loss rate criteria for those 
lenders whose loss rate was substantially affected by a disaster as 
defined in part 1945, subpart A, of this title.
    (3) Have proven an ability to process and service Agency guaranteed 
loans by showing that the lender:
    (i) Submitted substantially complete and correct guaranteed loan 
applications; and
    (ii) Serviced all guaranteed loans according to Agency regulations;
    (4) Have made the minimum number of guaranteed OL, FO, or Soil and 
Water (SW) loans established by the Agency and published periodically in 
a Federal Register Notice.
    (5) Not be under any regulatory enforcement action such as a cease 
and desist order, written agreement, or an appointment of conservator or 
receiver, based upon financial condition;

[[Page 414]]

    (6) Designate a qualified person or persons to process and service 
Agency guaranteed loans for each of the lender offices which will 
process CLP loans. To be qualified, the person must meet the following 
conditions:
    (i) Have attended Agency sponsored training in the past 12 months or 
will attend training in the next 12 months; and
    (ii) Agree to attend Agency sponsored training each year;
    (7) Use forms acceptable to the Agency for processing, analyzing, 
securing, and servicing Agency guaranteed loans and lines of credit;
    (8) Submit to the Agency copies of financial statements, cash flow 
plans, budgets, promissory notes, analysis sheets, collateral control 
sheets, security agreements and other forms to be used for farm loan 
processing and servicing;
    (c) PLP criteria. The lender must meet the following requirements to 
obtain PLP status:
    (1) Meet the CLP eligibility criteria under this section.
    (2) Have a credit management system, satisfactory to the Agency, 
based on the following:
    (i) The lender's written credit policies and underwriting standards;
    (ii) Loan documentation requirements;
    (iii) Exceptions to policies;
    (iv) Analysis of new loan requests;
    (v) Credit file management;
    (vi) Loan funds and collateral management system;
    (vii) Portfolio management;
    (viii) Loan reviews;
    (ix) Internal credit review process;
    (x) Loan monitoring system; and
    (xi) The board of director's responsibilities.
    (3) Have made the minimum number of guaranteed OL, FO, or SW loans 
established by the Agency and published periodically in a Federal 
Register Notice.
    (4) Have a lender loss rate not in excess of the rate of the maximum 
PLP loss rate established by the Agency and published periodically in a 
Federal Register Notice. The Agency may waive the loss rate criteria for 
those lenders whose loss rate was substantially affected by a disaster 
as defined in part 1945, subpart A, of this title.
    (5) Show a consistent practice of submitting applications for 
guaranteed loans containing accurate information supporting a sound loan 
proposal.
    (6) Show a consistent practice of processing Agency guaranteed loans 
without recurring major or minor deficiencies.
    (7) Demonstrate a consistent, above average ability to service 
guaranteed loans based on the following:
    (i) Borrower supervision and assistance;
    (ii) Timely and effective servicing; and
    (iii) Communication with the Agency.
    (8) Designate a person or persons, approved by the Agency, to 
process and service PLP loans for the Agency.
    (d) CLP and PLP approval. (1) If a lender applying for CLP or PLP 
status is or has recently been involved in a merger or acquisition, all 
loans and losses attributed to both lenders will be considered in the 
eligibility calculations.
    (2) The Agency will determine which branches of the lender have the 
necessary experience and ability to participate in the CLP or PLP 
program based on the information submitted in the lender application and 
on Agency experience.
    (3) Lenders who meet the criteria will be granted CLP or PLP status 
for a period not to exceed 5 years.
    (4) PLP status will be conditioned on the lender carrying out its 
credit management system as proposed in its request for PLP status and 
any additional loan making or servicing requirements agreed to and 
documented the PLP lender's agreement. If the PLP lender's agreement 
does not specify any agreed upon process for a particular action, the 
PLP lender will act according to regulations governing CLP lenders.
    (e) Monitoring CLP and PLP lenders. CLP and PLP lenders will provide 
information and access to records upon Agency request to permit the 
Agency to audit the lender for compliance with these regulations.
    (f) Renewal of CLP or PLP status. (1) PLP or CLP status will expire 
within a

[[Page 415]]

period not to exceed 5 years from the date the lender's agreement is 
executed, unless a new lender's Agreement is executed.
    (2) Renewal of PLP or CLP status is not automatic. A lender must 
submit a written request for renewal of a lender's agreement with PLP or 
CLP status which includes information:
    (i) Updating the material submitted in the initial application; and,
    (ii) Addressing any new criteria established by the Agency since the 
initial application.
    (3) PLP or CLP status will be renewed if the applicable eligibility 
criteria under this section are met, and no cause exists for denying 
renewal under paragraph (g) of this section.
    (g) Revocation of PLP or CLP status. (1) The Agency may revoke the 
lender's PLP or CLP status at any time during the 5 year term for cause.
    (2) Any of the following instances constitute cause for revoking or 
not renewing PLP or CLP status:
    (i) Violation of the terms of the lender's agreement;
    (ii) Failure to maintain PLP or CLP eligibility criteria;
    (iii) Knowingly submitting false or misleading information to the 
Agency;
    (iv) Basing a request on information known to be false;
    (v) Deficiencies that indicate an inability to process or service 
Agency guaranteed farm loan programs loans in accordance with this 
subpart;
    (vi) Failure to correct cited deficiencies in loan documents upon 
notification by the Agency;
    (vii) Failure to submit status reports in a timely manner;
    (viii) Failure to use forms, or follow credit management systems 
(for PLP lenders) accepted by the Agency; or
    (ix) Failure to comply with the reimbursement requirements of 
Sec. 762.144(c)(7).
    (3) A lender which has lost PLP or CLP status must be reconsidered 
for eligibility to continue as a Standard Eligible Lender (for former 
PLP and CLP lenders), or as a CLP lender (for former PLP lenders) in 
submitting loan guarantee requests. They may reapply for CLP or PLP 
status when the problem causing them to lose their status has been 
resolved.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999]



Secs. 762.107-762.109  [Reserved]



Sec. 762.110  Loan application.

    (a) Loans for $50,000 or less. All lenders except PLP lenders will 
submit the following items:
    (1) A complete application for loans of $50,000 or less must, at 
least, consist of:
    (i) The application form;
    (ii) Loan narrative;
    (iii) Balance sheet;
    (iv) Cash flow budget;
    (v) Credit report;
    (vi) A plan for servicing the loan.
    (2) In addition to the minimum requirements, the lender will perform 
at least the same level of evaluation and documentation for a guaranteed 
loan that the lender typically performs for non-guaranteed loans of a 
similar type and amount.
    (3) The $50,000 threshold includes any single loan, or package of 
loans submitted for consideration at any one time. A lender must not 
split a loan into two or more parts to meet the threshold thereby 
avoiding additional documentation.
    (4) The Agency may require lenders with a lender loss rate in excess 
of the rate for CLP lenders to assemble additional documentation from 
paragraph (b) of this section.
    (b) Loans over $50,000. A complete application for loans over 
$50,000 will consist of the items required in paragraph (a) of this 
section plus the following:
    (1) Verification of income;
    (2) Verification of debts over $1,000;
    (3) Three years financial history;
    (4) Three years of production history (for standard eligible lenders 
only);
    (5) Proposed loan agreements; and,
    (6) If construction or development is planned, a copy of the plans, 
specifications, and development schedule.
    (c) Applications from PLP lenders. Notwithstanding paragraphs (a) 
and (b) of this section, a complete application for PLP lenders will 
consist of at least:
    (1) An application form;
    (2) A loan narrative; and

[[Page 416]]

    (3) Any other items agreed to during the approval of the PLP 
lender's status and contained in the PLP lender agreement.
    (d) Submitting applications. (1) All lenders must compile and 
maintain in their files a complete application for each guaranteed loan. 
See paragraphs (a), (b), and (c) of this section.
    (2) The Agency will notify CLP lenders which items to submit to the 
Agency.
    (3) PLP lenders will submit applications in accordance with their 
agreement with the Agency for PLP status.
    (4) CLP and PLP lenders must certify that the required items, not 
submitted, are in their files.
    (5) The Agency may request additional information from any lender or 
review the lender's loan file as needed to make eligibility and approval 
decisions.
    (e) Incomplete applications. If the lender does not provide the 
information needed to complete its application by the deadline 
established in an Agency request for the information, the application 
will be considered withdrawn by the lender.
    (f) Conflict of interest. (1) When a lender submits the application 
for a guaranteed loan, the lender will inform the Agency in writing of 
any relationship which may cause an actual or potential conflict of 
interest.
    (2) Relationships include:
    (i) The lender or its officers, directors, principal stockholders 
(except stockholders in a Farm Credit System institution that have stock 
requirements to obtain a loan), or other principal owners having a 
financial interest (other than lending relationships in the normal 
course of business) in the loan applicant or borrower.
    (ii) The loan applicant or borrower, a relative of the loan 
applicant or borrower, anyone residing in the household of the loan 
applicant or borrower, any officer, director, stockholder or other owner 
of the loan applicant or borrower holds any stock or other evidence of 
ownership in the lender.
    (iii) The loan applicant or borrower, a relative of the loan 
applicant or borrower, or anyone residing in the household of the loan 
applicant or borrower is an Agency employee.
    (iv) The officers, directors, principal stockholders (except 
stockholders in a Farm Credit System institution that have stock 
requirements to obtain a loan), or other principal owners of the lender 
have substantial business dealings (other than in the normal course of 
business) with the loan applicant or borrower.
    (v) The lender or its officers, directors, principal stockholders, 
or other principal owners have substantial business dealings with an 
Agency employee.
    (3) The lender must furnish additional information to the Agency 
upon request.
    (4) The Agency will not approve the application until the lender 
develops acceptable safeguards to control any actual or potential 
conflicts of interest.



Secs. 762.111-762.119  [Reserved]



Sec. 762.120  Loan applicant eligibility.

    Loan applicants must meet all of the following requirements to be 
eligible for a guaranteed OL or a guaranteed FO:
    (a) Agency loss. The loan applicant, and anyone who will execute the 
promissory note, have not caused the Agency a loss by receiving debt 
forgiveness on more than three occasions on or prior to April 4, 1996, 
or on any occasion after April 4, 1996, on all or a portion of any 
direct or guaranteed loan made under the authority of the CONACT by debt 
write-down, write-off, compromise under the provisions of section 331 of 
the CONACT, adjustment, reduction, charge-off, or discharge in 
bankruptcy or through any payment of a guaranteed loss claim under the 
same circumstances. Notwithstanding the preceding sentence, applicants 
who receive a write-down under section 353 of the CONACT, or are current 
on payments under a confirmed bankruptcy reorganization plan, may 
receive direct and guaranteed OL loans to pay annual farm and ranch 
operating expenses, which include family subsistence, if the applicant 
meets all other requirements for the loan.
    (b) Delinquent Federal debt. The loan applicant, and anyone who will 
execute the promissory note, is not delinquent

[[Page 417]]

on any Federal debt, other than a debt under the Internal Revenue Code 
of 1986. (Any debt under the Internal Revenue Code of 1986 may be 
considered by the lender in determining cash flow and creditworthiness.)
    (c) Outstanding judgments. The loan applicant, and anyone who will 
execute the promissory note, have no outstanding unpaid judgment 
obtained by the United States in any court. Such judgments do not 
include those filed as a result of action in the United States Tax 
Courts.
    (d) Citizenship. (1) The loan applicant is a citizen of the United 
States or an alien lawfully admitted to the United States for permanent 
residence under the Immigration and Nationalization Act. Indefinite 
parolees are not eligible. For an entity applicant, all members of an 
entity must meet this citizenship test.
    (2) Aliens must provide the appropriate Immigration and 
Naturalization Service forms to document their permanent residency.
    (e) Legal capacity. The loan applicant and all borrowers on the loan 
must possess the legal capacity to incur the obligations of the loan.
    (f) False or misleading information. The loan applicant, in past 
dealings with the Agency, must not have provided the Agency with false 
or misleading documents or statements.
    (g) Credit history. (1) The individual or entity loan applicant and 
all entity members must have acceptable credit history demonstrated by 
debt repayment.
    (2) A history of failures to repay past debts as they came due when 
the ability to repay was within their control will demonstrate 
unacceptable credit history.
    (3) Unacceptable credit history will not include:
    (i) Isolated instances of late payments which do not represent a 
pattern and were clearly beyond their control; or,
    (ii) Lack of credit history.
    (h) Test for credit. (1) The loan applicant is unable to obtain 
sufficient credit elsewhere without a guarantee to finance actual needs 
at reasonable rates and terms.
    (2) The potential for sale of any significant nonessential assets 
will be considered when evaluating the availability of other credit.
    (3) Ownership interests in property and income received by an 
individual or entity loan applicant, and any entity members as 
individuals will be considered when evaluating the availability of other 
credit to the loan applicant.
    (i) For OLs:
    (1) The individual or entity loan applicant must be an operator of 
not larger than a family farm after the loan is closed.
    (2) In the case of an entity borrower:
    (i) The entity must be authorized to operate, and own if the entity 
is also an owner, a farm in the State or States in which the farm is 
located; and
    (ii) If the entity members holding a majority interest are related 
by marriage or blood, at least one member of the entity must operate the 
family farm; or,
    (iii) If the entity members holding a majority interest are not 
related by marriage or blood, the entity members holding a majority 
interest must also operate the family farm.
    (j) For FOs:
    (1) The individual must be the operator and owner of not larger than 
a family farm after the loan is closed.
    (2) In the case of an entity borrower:
    (i) The entity must be authorized to own and operate a farm in the 
state or states in which the farm is located; and
    (ii) If the entity members holding a majority interest are related 
by marriage or blood, at least one member of the entity also must 
operate the family farm and at least one member of the entity or the 
entity must own the family farm; or,
    (iii) If the entity members holding a majority interest are not 
related by marriage or blood, the entity members holding a majority 
interest must operate the family farm and the entity members holding a 
majority interest or the entity must own the family farm.
    (k) For entity loan applicants. Entity loan applicants must meet the 
following additional eligibility criteria:
    (1) Each entity member's ownership interest may not exceed the 
family farm definition limits;

[[Page 418]]

    (2) The collective ownership interest of all entity members may 
exceed the family farm definition limits only if the following 
conditions are met:
    (i) All of the entity members are related by blood or marriage;
    (ii) All of the members are or will be operators of the entity; and,
    (iii) The majority interest holders of the entity must meet the 
requirements of paragraphs (d), (f), (g), and (i) through (j) of this 
section;
    (3) The entity must be controlled by farmers or ranchers engaged 
primarily and directly in farming or ranching in the United States after 
the loan is made; and
    (4) The entity members are not themselves entities.
    (l) Neither the applicant nor any entity member has been convicted 
of planting, cultivating, growing, producing, harvesting, or storing a 
controlled substance under Federal or state law within the last five 
crop years. ``Controlled substance'' is defined at 21 CFR 1308. 
Applicants must certify on the application that it and its members, if 
an entity, have not been convicted of such a crime within the relevant 
period. If the lender uses the lender's Agency approved forms, the 
certification may be an attachment to the form.



Sec. 762.121  Loan purposes.

    (a) Operating Loan purposes. (1) Loan funds disbursed under an OL 
guarantee may only be used for the following purposes:
    (i) Payment of costs associated with reorganizing a farm or ranch to 
improve its profitability;
    (ii) Purchase of livestock, including poultry, and farm or ranch 
equipment or fixtures, quotas and bases, and cooperative stock for 
credit, production, processing or marketing purposes;
    (iii) Payment of annual farm or ranch operating expenses, examples 
of which include feed, seed, fertilizer, pesticides, farm or ranch 
supplies, repairs and improvements which are to be expensed, cash rent 
and family subsistence;
    (iv) Payment of scheduled principal and interest payments on term 
debt provided the debt is for authorized FO or OL purposes;
    (v) Other farm and ranch needs;
    (vi) Payment of costs associated with land and water development for 
conservation or use purposes;
    (vii) Refinancing indebtedness incurred for any authorized OL 
purpose, when the lender and loan applicant can demonstrate the need to 
refinance;
    (viii) Payment of loan closing costs;
    (ix) Payment of costs associated with complying with Federal or 
State-approved standards under the Occupational Safety and Health Act of 
1970 (29 U.S.C. 655, 667). This purpose is limited to applicants who 
demonstrate that compliance with the standards will cause them 
substantial economic injury; and
    (x) Payment of training costs required or recommended by the Agency.
    (2) Loan funds under a line of credit may be advanced only for the 
following purposes:
    (i) Payment of annual operating expenses, family subsistence, and 
purchase of feeder animals;
    (ii) Payment of current annual operating debts advanced for the 
current operating cycle; (Under no circumstances can carry-over 
operating debts from a previous operating cycle be refinanced);
    (iii) Purchase of routine capital assets, such as replacement of 
livestock, that will be repaid within the operating cycle;
    (iv) Payment of scheduled, non-delinquent, term debt payments 
provided the debt is for authorized FO or OL purposes.
    (v) Purchase of cooperative stock for credit, production, processing 
or marketing purposes; and
    (vi) Payment of loan closing costs.
    (b) Farm ownership loan purposes. Guaranteed FO are authorized only 
to:
    (1) Acquire or enlarge a farm or ranch; examples include, but are 
not limited to, providing down payments, purchasing easements for the 
loan applicant's portion of land being subdivided, and participating in 
the beginning farmer downpayment FO program under part 1943, subpart A, 
of this title;
    (2) Make capital improvements; examples include, but are not limited 
to, the construction, purchase, and improvement of a farm dwelling, 
service buildings and facilities that can be

[[Page 419]]

made fixtures to the real estate, (Capital improvements to leased land 
may be financed subject to the limitations in Sec. 762.122);
    (3) Promote soil and water conservation and protection; examples 
include the correction of hazardous environmental conditions, and the 
construction or installation of tiles, terraces and waterways;
    (4) Pay closing costs, including but not limited to, purchasing 
stock in a cooperative and appraisal and survey fees; and
    (5) Refinancing indebtedness incurred for authorized FO and OL 
purposes, provided the lender and loan applicant demonstrate the need to 
refinance the debt.
    (c) Highly erodible land or wetlands conservation. Loans may not be 
made for any purpose which contributes to excessive erosion of highly 
erodible land or to the conversion of wetlands to produce an 
agricultural commodity. A decision by the Agency to reject an 
application for this reason may be appealable. An appeal questioning 
whether the presence of a wetland, converted wetland, or highly erodible 
land on a particular property must be filed directly with the USDA 
agency making the determination in accordance with the agency's appeal 
procedures.
    (d) Judgment debts. Loans may not be used to satisfy judgments 
obtained in the United States District courts. However, Internal Revenue 
Service judgment liens may be paid with loan funds.



Sec. 762.122  Loan limitations.

    (a) Dollar limits. Guaranteed loans are limited to the following:
    (1) The total outstanding combined guaranteed FO and OL principal 
balance cannot exceed $700,000 and,
    (2) The total outstanding direct and guaranteed FO principal balance 
cannot exceed $700,000 and,
    (3) The total outstanding direct and guaranteed OL principal balance 
cannot exceed $700,000 and,
    (4) The total combined outstanding direct and guaranteed FO and OL 
principal balance cannot exceed $900,000.
    (b) Line of credit advances. The total dollar amount of line of 
credit advances and income releases cannot exceed the total estimated 
expenses, less interest expense, as indicated on the borrower's cash 
flow budget, unless the cash flow budget is revised and continues to 
reflect a feasible plan.
    (c) OL term limitations. (1) No guaranteed OL shall be made to any 
loan applicant after the 15th year that a loan applicant, or any 
individual signing the promissory note, received a direct or guaranteed 
OL.
    (2) Notwithstanding paragraph (c)(1) of this section, if a borrower 
had any combination of direct or guaranteed OL closed in 10 or more 
prior calendar years prior to October 28, 1992, eligibility to receive 
new guaranteed OL is extended for 5 additional years from October 28, 
1992, and the years need not run consecutively. However, in the case of 
a line of credit, each year in which an advance is made after October 
28, 1992, counts toward the 5 additional years. Once determined 
eligible, a loan or line of credit may be approved for any authorized 
term.
    (d) Leased land. When FO funds are used for improvements to leased 
land the terms of the lease must provide reasonable assurance that the 
loan applicant will have use of the improvement over its useful life, or 
provide compensation for any unexhausted value of the improvement if the 
lease is terminated.
    (e) Tax-exempt transactions. The Agency will not guarantee any loan 
made with the proceeds of any obligation the interest on which is 
excluded from income under section 103 of the Internal Revenue Code of 
1986. Funds generated through the issuance of tax-exempt obligations may 
not be used to purchase the guaranteed portion of any Agency guaranteed 
loan. An Agency guaranteed loan may not serve as collateral for a tax-
exempt bond issue.
    (f) Floodplain restrictions. The Agency will not guarantee any loan 
to purchase, build, or expand buildings located in a special 100 year 
floodplain as defined by FEMA flood hazard area maps unless flood 
insurance is available and purchased.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999]

[[Page 420]]



Sec. 762.123  Insurance and farm inspection requirements.

    (a) Insurance. (1) Lenders must require borrowers to maintain 
adequate property, public liability, and crop insurance to protect the 
lender and Government's interests.
    (2) By loan closing, loan applicants must either:
    (i) Obtain at least the catastrophic risk protection (CAT) level of 
crop insurance coverage, if available, for each crop of economic 
significance, as defined by part 402 of this title, or
    (ii) Waive eligibility for emergency crop loss assistance in 
connection with the uninsured crop. EM loan assistance under part 1945, 
subpart D, of this title is not considered emergency crop loss 
assistance for purposes of this waiver and execution of the waiver does 
not render the borrower ineligible for EM loans.
    (3) Loan applicants must purchase flood insurance if buildings are 
or will be located in a special flood hazard area as defined by FEMA 
flood hazard area maps and if flood insurance is available.
    (4) Insurance, including crop insurance, must be obtained as 
required by the lender or the Agency based on the strengths and 
weaknesses of the loan.
    (b) Farm inspections. Before submitting an application the lender 
must make an inspection of the farm to assess the suitability of the 
farm and to determine any development that is needed to make it a 
suitable farm.



Sec. 762.124  Interest rates, terms, charges, and fees.

    (a) Interest rates. (1) The interest rate on a guaranteed loan or 
line of credit may be fixed or variable as agreed upon between the 
borrower and the lender. The lender may charge different rates on the 
guaranteed and the non-guaranteed portions of the note. The guaranteed 
portion may be fixed while the unguaranteed portion may be variable, or 
vice versa. If both portions are variable, different bases may be used.
    (2) If a variable rate is used, it must be tied to a rate 
specifically agreed to between the lender and borrower in the loan 
instruments. Variable rates may change according to the normal practices 
of the lender for its average farm customers, but the frequency of 
change must be specified in the loan or line of credit instrument.
    (3) Neither the interest rate on the guaranteed portion nor the 
unguaranteed portion may exceed the rate the lender charges its average 
agricultural loan customer. At the request of the Agency, the lender 
must provide evidence of the rate charged the average agricultural loan 
customer. This evidence may consist of average yield data, or documented 
administrative differential rate schedule formulas used by the lender.
    (4) Interest must be charged only on the actual amount of funds 
advanced and for the actual time the funds are outstanding. Interest on 
protective advances made by the lender to protect the security will be 
charged at the note rate but limited to paragraph (a)(3) of this 
section.
    (5) The lender and borrower may collectively obtain a temporary 
reduction in the interest rate through the interest assistance program 
in accordance with Sec. 762.150.
    (b) OL terms. (1) Loan funds or advances on a line of credit used to 
pay annual operating expenses will be repaid when the income from the 
year's operation is received, except when the borrower is establishing a 
new enterprise, developing a farm, purchasing feed while feed crops are 
being established, or recovering from disaster or economic reverses.
    (2) The final maturity date for each loan cannot exceed 7 years from 
the date of the promissory note or line of credit agreement. Advances 
for purposes other than for annual operating expenses will be scheduled 
for repayment over the minimum period necessary considering the loan 
applicant's ability to repay and the useful life of the security, but 
not in excess of 7 years.
    (3) All advances on a line of credit must be made within 5 years 
from the date of the Loan Guarantee.
    (c) FO terms. Each loan must be scheduled for repayment over a 
period not to exceed 40 years from the date of the note or such shorter 
period as may be necessary to assure that the loan will be adequately 
secured, taking into

[[Page 421]]

account the probable depreciation of the security.
    (d) Balloon installments under loan note guarantee. Balloon payment 
terms are permitted on FO or OL subject to the following:
    (1) Extended repayment schedules may include equal, unequal, or 
balloon installments if needed on any guaranteed loan to establish a new 
enterprise, develop a farm, or recover from a disaster or an economical 
reversal.
    (2) Loans with balloon installments must have adequate collateral at 
the time the balloon installment comes due. Crops, livestock other than 
breeding livestock, or livestock products produced are not sufficient 
collateral for securing such a loan.
    (3) The borrower must be projected to be able to refinance the 
remaining debt at the time the balloon payment comes due based on the 
expected financial condition of the operation, the depreciated value of 
the collateral, and the principal balance on the loan.
    (e) Charges and Fees. (1) The lender may charge the loan applicant 
and borrower fees for the loan provided they are no greater than those 
charged to unguaranteed customers for similar transactions. Similar 
transactions are those involving the same type of loan requested (for 
example, operating loans or farm real estate loans).
    (2) Late payment charges (including default interest charges) are 
not covered by the guarantee. These charges may not be added to the 
principal and interest due under any guaranteed note or line of credit. 
However, late payment charges may be made outside of the guarantee if 
they are routinely made by the lender in similar types of loan 
transactions.
    (3) Lenders may not charge a loan origination and servicing fee 
greater than 1 percent of the loan amount for the life of the loan when 
a guaranteed loan is made in conjunction with a down payment FO for 
beginning farmers under part 1943, subpart A, of this title.



Sec. 762.125  Financial feasibility.

    (a) General. (1) Notwithstanding any other provision of this 
section, PLP lenders will follow their internal procedures on financial 
feasibility as agreed to by the Agency during PLP certification.
    (2) The loan applicant's proposed operation must project a positive 
cash flow.
    (3) For standard eligible lenders, the projected income and expenses 
of the borrower and operation used to determine positive cash flow must 
be based on the loan applicant's proven record of production and 
financial management.
    (4) For CLP lenders, the projected income and expenses of the 
borrower and the operation must be based on the loan applicant's 
financial history and proven record of financial management.
    (5) For those farmers without a proven history, a combination of any 
actual history and any other reliable source of information that are 
agreeable with the lender, the loan applicant, and the Agency will be 
used.
    (6) The cash flow budget analyzed to determine positive cash flow 
must represent the predicted cash flow of the operating cycle.
    (7) Lenders must use price forecasts that are reasonable and 
defensible. Sources must be documented by the lender and acceptable to 
the Agency.
    (8) When positive cash flow depends on income from other sources in 
addition to income from owned land, the income must be dependable and 
likely to continue.
    (9) The lender will analyze business ventures other than the farm 
operation to determine their soundness and contribution to the 
operation. Guaranteed loan funds will not be used to finance a nonfarm 
enterprise. Nonfarm enterprises include, but are not limited to: raising 
earthworms, exotic birds, tropical fish, dogs, or horses for nonfarm 
purposes; welding shops; boarding horses; and riding stables.
    (10) When the loan applicant has or will have a cash flow budget 
developed in conjunction with a proposed or existing Agency direct loan, 
the two cash flow budgets must be consistent.
    (b) Estimating production. (1) Standard eligible lenders must use 
the best sources of information available for estimating production in 
accordance with this subsection when developing cash flow budgets.

[[Page 422]]

    (2) Deviations from historical performance may be acceptable, if 
specific to changes in operation and adequately justified and acceptable 
to the Agency.
    (3) For existing farmers, actual production for the past 3 years 
will be utilized.
    (4) For those farmers without a proven history, a combination of any 
actual history and any other reliable source of information that are 
agreeable with the lender, the loan applicant, and the Agency will be 
used.
    (5) When the production of a growing commodity can be estimated, it 
must be considered when projecting yields.
    (6) When the loan applicant's production history has been so 
severely affected by a declared disaster that an accurate projection 
cannot be made, the following applies:
    (i) County average yields are used for the disaster year if the loan 
applicant's disaster year yields are less than the county average 
yields. If county average yields are not available, State average yields 
are used. Adjustments can be made, provided there is factual evidence to 
demonstrate that the yield used in the farm plan is the most probable to 
be realized.
    (ii) To calculate a historical yield, the crop year with the lowest 
actual or county average yield may be excluded, provided the loan 
applicant's yields were affected by disasters at least 2 of the previous 
5 consecutive years.
    (c) Refinancing. Loan guarantee requests for refinancing must ensure 
that a reasonable chance for success still exists. The lender must 
demonstrate that problems with the loan applicant's operation that have 
been identified, can be corrected, and the operation returned to a sound 
financial basis.



Sec. 762.126  Security requirements.

    (a) General. (1) The lender is responsible for ensuring that proper 
and adequate security is obtained and maintained to fully secure the 
loan, protect the interest of the lender and the Agency, and assure 
repayment of the loan or line of credit.
    (2) The lender will obtain a lien on additional security when 
necessary to protect the Agency's interest.
    (b) Guaranteed and unguaranteed portions. (1) All security must 
secure the entire loan or line of credit. The lender may not take 
separate security to secure only that portion of the loan or line of 
credit not covered by the guarantee.
    (2) The lender may not require compensating balances or certificates 
of deposit as means of eliminating the lender's exposure on the 
unguaranteed portion of the loan or line of credit. However, 
compensating balances or certificates of deposit as otherwise used in 
the ordinary course of business are allowed for both the guaranteed and 
unguaranteed portions.
    (c) Identifiable security. The guaranteed loan must be secured by 
identifiable collateral. To be identifiable, the lender must be able to 
distinguish the collateral item and adequately describe it in the 
security instrument.
    (d) Type of security. (1) Guaranteed loans may be secured by any 
property if the term of the loan and expected life of the property will 
not cause the loan to be undersecured.
    (2) For loans with terms greater than 7 years, a lien must be taken 
on real estate.
    (3) Loans can be secured by a mortgage on leasehold properties if 
the lease has a negotiable value and is subject to being mortgaged.
    (4) The lender or Agency may require additional personal and 
corporate guarantees to adequately secure the loan. These guarantees are 
separate from, and in addition to, the personal obligations arising from 
members of an entity signing the note as individuals.
    (e) Lien position. All guaranteed loans will be secured by the best 
lien obtainable. Provided that:
    (1) When the loan is made for refinancing purposes, the guaranteed 
loan must hold a security position no lower than on the refinanced loan.
    (2) Any chattel-secured guaranteed loan must have a higher lien 
priority (including purchase money interest) than an unguaranteed loan 
secured by the same chattels and held by the same lender.
    (3) Junior lien positions are acceptable only if the equity position 
is strong. Junior liens on crops, or livestock products will not be 
relied upon for security unless the lender is involved in multiple 
guaranteed loans to

[[Page 423]]

the same borrower and also has the first lien on the collateral.
    (4) When taking a junior lien, prior lien instruments will not 
contain future advance clauses (except for taxes, insurance, or other 
reasonable costs to protect security), or cancellation, summary 
forfeiture, or other clauses that jeopardize the Government's or the 
lender's interest or the borrower's ability to pay the guaranteed loan, 
unless any such undesirable provisions are limited, modified, waived or 
subordinated by the lienholder for the benefit of the Agency and the 
lender.
    (f) Additional security, or any loan of $10,000 or less may be 
secured by the best lien obtainable on real estate without title 
clearance or legal services normally required, provided the lender 
believes from a search of the county records that the loan applicant can 
give a mortgage on the farm and provided that the lender would, in the 
normal course of business, waive the title search. This exception to 
title clearance will not apply when land is to be purchased.
    (g) Multiple owners. If security has multiple owners, all owners 
must execute the security documents for the loan.
    (h) Exceptions. The Deputy Administrator for Farm Loan Programs has 
the authority to grant an exception to any of the requirements involving 
security, if the proposed change is in the best interest of the 
Government and the collection of the loan will not be impaired.



Sec. 762.127  Appraisal requirements.

    (a) General. The Agency may require a lender to obtain an appraisal 
based on the type of security, loan size, and whether it is primary or 
additional security. Except for authorized liquidation expenses, the 
lender is responsible for all appraisal costs, which may be passed on to 
the borrower, or a transferee in the case of a transfer and assumption.
    (b) Exception. Notwithstanding other provisions of this section, an 
appraisal is not required for any additional security, or for loans of 
$50,000 or less if a strong equity position exists.
    (c) Chattel appraisals. A current appraisal (not more than 12 months 
old) of primary chattel security is generally required on all loans. An 
appraisal for loans or lines of credit for annual production purposes 
that are secured by crops is only required when a guarantee is requested 
late in the current production year and actual yields can be reasonably 
estimated. The appraised value of chattel property will be based on 
public sales of the same, or similar, property in the market area. In 
the absence of such public sales, reputable publications reflecting 
market values may be used. Appraisal reports may be on the Agency's 
appraisal of chattel property form or on any other appraisal form 
containing at least the same information. Chattel appraisals will be 
performed by appraisers who possess sufficient experience or training to 
establish market (not retail) values as determined by the Agency.
    (d) Real estate appraisals. A current real estate appraisal is 
required when real estate will be primary security. Agency officials may 
accept an appraisal that is not current if there have been no 
significant changes in the market or on the subject real estate and the 
appraisal was either completed within the past 12 months or updated by a 
qualified appraisal if not completed within the past 12 months.
    (1) Appraiser qualifications. On loan transactions of $250,000 or 
less, the lender must demonstrate to the Agency's satisfaction that the 
appraiser possesses sufficient experience or training to estimate the 
market value of agricultural property. On loan transactions greater than 
$250,000, which includes principal plus accrued interest through the 
closing date, the appraisal must be completed by a State certified 
general appraiser.
    (2) Appraisals. Real estate appraisals must be completed in 
accordance with the Uniform Standards of Professional Appraisal 
Practice. Appraisals may be either a complete or limited appraisal 
provided in a self-contained or summary format. Restricted reports, as 
defined in the Uniform Standards of Professional Appraisal Practice, are 
not acceptable.

[64 FR 7378, Feb. 12, 1999, as amended at 64 FR 62568, Nov. 17, 1999; 65 
FR 14433, Mar. 17, 2000]

[[Page 424]]



Sec. 762.128  Environmental and special laws.

    (a) Environmental requirements. The requirements found in part 1940, 
subpart G, of this title must be met for guaranteed OL and FO. CLP and 
PLP lenders may certify that they have documentation in their file to 
demonstrate compliance with paragraph (c) of this section. Standard 
eligible lenders must submit evidence supporting compliance with this 
section.
    (b) Determination. The Agency determination of whether an 
environmental problem exists will be based on:
    (1) The information supplied with the application;
    (2) The Agency Official's personal knowledge of the operation;
    (3) Environmental resources available to the Agency including, but 
not limited to, documents, third parties, and governmental agencies;
    (4) A visit to the farm operation when the available information is 
insufficient to make a determination;
    (5) Other information supplied by the lender or loan applicant upon 
Agency request. If necessary, information not supplied with the 
application will be requested by the Agency.
    (c) Special requirements. Lenders will assist in the environmental 
review process by providing environmental information. In all cases, the 
lender must retain documentation of their investigation in the loan 
applicant's case file.
    (1) A determination must be made as to whether there are any 
potential impacts to a 100 year floodplain as defined by Federal 
Emergency Management Agency floodplain maps, Natural Resources 
Conservation Service data, or other appropriate documentation.
    (2) The lender will assist the borrower in securing any applicable 
permits or waste management plans. The lender may consult with the 
Agency for guidance on activities which require consultation with State 
regulatory agencies, special permitting or waste management plans.
    (3) The lender will examine the security property to determine if 
there are any structures or archeological sites which are listed or may 
be eligible for listing in the National Register of Historic Places. The 
lender may consult with the Agency for guidance on which situations will 
need further review in accordance with the National Historical 
Preservation Act and part 1940, subpart G, and part 1901, subpart F, of 
this title.
    (4) The loan applicant must certify they will not violate the 
provisions of Sec. 363 of the CONACT, the Food Security Act of 1985, and 
Executive Order 11990 relating to Highly Erodible Land and Wetlands.
    (5) All lenders are required to ensure that due diligence is 
performed in conjunction with a request for guarantee of a loan 
involving real estate. Due diligence is the process of evaluating real 
estate in the context of a real estate transaction to determine the 
presence of contamination from release of hazardous substances, 
petroleum products, or other environmental hazards and determining what 
effect, if any, the contamination has on the security value of the 
property. The Agency will accept as evidence of due diligence the most 
current version of the American Society of Testing Materials (ASTM) 
transaction screen questionnaire available from 100 Barr Harbor Drive, 
West Conshohocken, Pennsylvania 19428-2959, or similar documentation, 
approved for use by the Agency, supplemented as necessary by the ASTM 
phase I environmental site assessments form.
    (d) Equal opportunity and nondiscrimination. (1) With respect to any 
aspect of a credit transaction, the lender will not discriminate against 
any applicant on the basis of race, color, religion, national origin, 
sex, marital status, or age, provided the applicant can execute a legal 
contract. Nor will the lender discriminate on the basis of whether all 
or a part of the applicant's income derives from any public assistance 
program, or whether the applicant in good faith, exercises any rights 
under the Consumer Protection Act.
    (2) Where the guaranteed loan involves construction, the contractor 
or subcontractor must file all compliance reports, equal opportunity and 
nondiscrimination forms, and otherwise comply with all regulations 
prescribed by the Secretary of Labor pursuant to Executive Orders 11246 
and 11375.

[[Page 425]]

    (e) Other Federal, State and local requirements. Lenders are 
required to coordinate with all appropriate Federal, State, and local 
agencies and comply with special laws and regulations applicable to the 
loan proposal.



Sec. 762.129  Percent of guarantee and maximum loss.

    (a) General. The percent of guarantee will not exceed 90 percent 
based on the credit risk to the lender and the Agency both before and 
after the transaction. The Agency will determine the percentage of 
guarantee.
    (b) Exceptions. The guarantee will be issued at 95 percent in any of 
the following circumstances:
    (1) The sole purpose of a guaranteed FO or OL is to refinance an 
Agency direct farm loan. When only a portion of the loan is used to 
refinance a direct Agency farm credit program loan, a weighted 
percentage of a guarantee will be provided;
    (2) When the purpose of an FO guarantee is to participate in the 
down payment loan program; or
    (3) When a guaranteed OL is made to a farmer or rancher who is 
participating in the Agency's down payment loan program. The guaranteed 
OL must be made during the period that a borrower has the down payment 
loan outstanding.
    (c) CLP and PLP guarantees. All guarantees issued to CLP or PLP 
lenders will not be less than 80 percent.
    (d) Maximum loss. The maximum amount the Agency will pay the lender 
under the loan guarantee will be any loss sustained by such lender on 
the guaranteed portion including:
    (1) The pro rata share of principal and interest indebtedness as 
evidenced by the note or by assumption agreement;
    (2) Any loan subsidy due and owing;
    (3) The pro rata share of principal and interest indebtedness on 
secured protective and emergency advances made in accordance with this 
subpart; and
    (4) Principal and interest indebtedness on recapture debt pursuant 
to a shared appreciation agreement. Provided that the lender has paid 
the Agency its pro rata share of the recapture amount due.



Sec. 762.130  Loan approval and issuing the guarantee.

    (a) Processing timeframes. (1) Standard Eligible Lenders. Complete 
applications from Standard Eligible Lenders will be approved or 
rejected, and the lender notified in writing, no later than 30 calendar 
days after receipt.
    (2) CLP and PLP lenders.
    (i) Complete applications from CLP or PLP lenders will be approved 
or rejected not later than 14 calendar days after receipt.
    (ii) For PLP lenders, if this time frame is not met, the proposed 
guaranteed loan will automatically be approved, subject to funding, and 
receive an 80 or 95 percent guarantee, as appropriate.
    (3) Complete applications. For purposes of determining the 
application processing timeframes, an application will be not be 
considered complete until all information required to make an approval 
decision, including the information for an environmental review, is 
received by the Agency.
    (4) The Agency will confirm the date an application is received with 
a written notification to the lender.
    (b) Funding preference. Loans are approved subject to the 
availability of funding. When it appears that there are not adequate 
funds to meet the needs of all approved loan applicants, applications 
that have been approved will be placed on a preference list according to 
the date of receipt of a complete application. If approved applications 
have been received on the same day, the following will be given 
priority:
    (1) An application from a veteran
    (2) An application from an Agency direct loan borrower
    (3) An application from a loan applicant who:
    (i) Has a dependent family,
    (ii) Is an owner of livestock and farm implements necessary to 
successfully carry out farming operations, or
    (iii) Is able to make down payments.
    (4) Any other approved application.
    (c) Conditional commitment. (1) The lender must meet all of the 
conditions specified in the conditional commitment to secure final 
Agency approval of the guarantee.
    (2) The lender, after reviewing the conditions listed on the 
conditional

[[Page 426]]

commitment, will complete, execute, and return the form to the Agency. 
If the conditions are not acceptable to the lender, the Agency may agree 
to alternatives or inform the lender and the loan applicant of their 
appeal rights.
    (d) Lender requirements prior to issuing the guarantee. (1) Lender 
certification. The lender will certify as to the following on the 
appropriate Agency form:
    (i) No major changes have been made in the lender's loan or line of 
credit conditions and requirements since submission of the application 
(except those approved in the interim by the Agency in writing);
    (ii) Required hazard, flood, crop, worker's compensation, and 
personal life insurance (when required) are in effect;
    (iii) Truth in lending requirements have been met;
    (iv) All equal employment and equal credit opportunity and 
nondiscrimination requirements have been or will be met at the 
appropriate time;
    (v) The loan or line of credit has been properly closed, and the 
required security instruments have been obtained, or will be obtained, 
on any acquired property that cannot be covered initially under State 
law;
    (vi) The borrower has marketable title to the collateral owned by 
the borrower, subject to the instrument securing the loan or line of 
credit to be guaranteed and subject to any other exceptions approved in 
writing by the Agency. When required, an assignment on all USDA crop and 
livestock program payments has been obtained;
    (vii) When required, personal, joint operation, partnership, or 
corporate guarantees have been obtained;
    (viii) Liens have been perfected and priorities are consistent with 
requirements of the conditional commitment;
    (ix) Loan proceeds have been, or will be disbursed for purposes and 
in amounts consistent with the conditional commitment and as specified 
on the loan application. In line of credit cases, if any advances have 
occurred, advances have been disbursed for purposes and in amounts 
consistent with the conditional commitment and line of credit 
agreements;
    (x) There has been no material adverse change in the borrower's 
condition, financial or otherwise, since submission of the application; 
and
    (xi) All other requirements specified in the conditional commitment 
have been met.
    (2) Inspections. The lender must notify the Agency of any scheduled 
inspections during construction and after the guarantee has been issued. 
The Agency may attend these field inspections. Any inspections or review 
performed by the Agency, including those with the lender, are solely for 
the benefit of the Agency. Agency inspections do not relieve any other 
parties of their inspection responsibilities, nor can these parties rely 
on Agency inspections for any purpose.
    (3) Execution of lender's agreement. The lender must execute the 
Agency's lender's agreement and deliver it to the Agency.
    (4) Closing report and guarantee fees.
    (i) The lender must complete an Agency closing report form and 
return it to the Agency along with any guarantee fees.
    (ii) Guarantee fees are 1 percent and are calculated as follows: Fee 
= Loan Amount x % Guaranteed x .01. The nonrefundable fee is paid to the 
Agency by the lender. The fee may be passed on to the borrower and 
included in loan funds.
    (iii) The following guaranteed loan transactions are not charged a 
fee:
    (A) Loans involving interest assistance;
    (B) Loans where a majority of the funds are used to refinance an 
Agency direct loan; and
    (C) Loans to beginning farmers or ranchers involved in the direct 
beginning farmer downpayment program.
    (e) Promissory notes, line of credit agreements, mortgages, and 
security agreements. The lender will use its own promissory notes, line 
of credit agreements, real estate mortgages (including deeds of trust 
and similar instruments), and security agreements (including chattel 
mortgages in Louisiana and Puerto Rico), provided:
    (1) The forms meet Agency requirements;
    (2) Documents comply with State law and regulation;

[[Page 427]]

    (3) The principal and interest repayment schedules are stated 
clearly in the notes and are consistent with the conditional commitment;
    (4) The note is executed by the individual liable for the loan. For 
entities, the note is executed by the member who is authorized to sign 
for the entity, and by all members of the entity as individuals. 
Individual liability can be waived by the Agency for members holding 
less than 10 percent ownership in the entity if the collectability of 
the loan will not be impaired; and
    (5) When the loan purpose is to refinance or restructure the 
lender's own debt, the lender may continue to use the existing debt 
instrument and attach an allonge that modifies the terms of the original 
note.
    (f) Replacement of loan guarantee, or assignment guarantee 
agreement. If the guarantee or assignment guarantee agreements are lost, 
stolen, destroyed, mutilated, or defaced, except where the evidence of 
debt was or is a bearer instrument, the Agency will issue a replacement 
to the lender or holder upon receipt of acceptable documentation 
including a certificate of loss and an indemnity bond.



Secs. 762.131-762.139  [Reserved]



Sec. 762.140  General servicing responsibilities.

    (a) General. (1) Lenders are responsible for servicing the entire 
loan in a reasonable and prudent manner, protecting and accounting for 
the collateral, and remaining the mortgagee or secured party of record.
    (2) The lender cannot enforce the guarantee to the extent that a 
loss results from a violation of usury laws or negligent servicing.
    (b) Borrower supervision. The lender's responsibilities regarding 
borrower supervision include, but are not limited to the following:
    (1) Ensuring loan funds are not used for unauthorized purposes.
    (2) Ensuring borrower compliance with the covenants and provisions 
contained in the promissory note, loan agreement, mortgage, security 
instruments, any other agreements, and this part. Any violations which 
indicate non-compliance on the part of the borrower must be reported, in 
writing, to both the Agency and the borrower.
    (3) Ensuring the borrower is in compliance with all laws and 
regulations applicable to the loan, the collateral, and the operations 
of the farm.
    (4) Receiving all payments of principal and interest on the loan as 
they fall due and promptly disbursing to any holder its pro-rata share 
according to the amount of interest the holder has in the loan, less 
only the lender's servicing fee.
    (5) Performing an annual analysis of the borrower's financial 
condition to determine the borrower's progress. The annual analysis will 
include:
    (i) For loans secured by real estate only, the analysis for standard 
eligible lenders must include an analysis of the borrower's balance 
sheet. CLP lenders will determine the need for the annual analysis based 
on the financial strength of the borrower and document the file 
accordingly. PLP lenders will perform an annual analysis in accordance 
with the requirements established in the lender's agreement.
    (ii) For loans secured by chattels, all lenders will review the 
borrower's progress regarding business goals, trends and changes in 
financial performance, and compare actual to planned income and expenses 
for the past year.
    (iii) An account of the whereabouts or disposition of all 
collateral.
    (iv) A discussion of any observations about the farm business with 
the borrower.
    (c) Monitoring of development. The lender's responsibilities 
regarding the construction, repairs, or other development include, but 
are not limited to:
    (1) Determining that all construction is completed as proposed in 
the loan application;
    (2) Making periodic inspections during construction to ensure that 
any development is properly completed within a reasonable period of 
time; and
    (3) Verification that the security is free of any mechanic's, 
materialmen's, or other liens which would affect the lender's lien or 
result in a different lien priority from that proposed in the request 
for guarantee.

[[Page 428]]

    (d) The guaranteed loan installments will be paid before 
unguaranteed loans held by the same lender.



Sec. 762.141  Reporting requirements.

    Lenders are responsible for providing the local Agency credit 
officer with all of the following information on the loan and the 
borrower:
    (a) When the guaranteed loan becomes 30 days past due, and following 
the lender's meeting or attempts to meet with the borrower, all lenders 
will submit the appropriate Agency form showing guaranteed loan borrower 
default status. The form will be resubmitted every 60 days until the 
default is cured either through restructuring or liquidation.
    (b) All lenders will submit the appropriate guaranteed loan status 
reports as of March 31 and September 30 of each year;
    (c) CLP lenders also must provide the following:
    (1) A written summary of the lender's annual analysis of the 
borrower's operation. This summary should describe the borrower's 
progress and prospects for the upcoming operating cycle. This annual 
analysis may be waived or postponed if the borrower is financially 
strong. The summary will include a description of the reasons an 
analysis was not necessary.
    (2) For lines of credit, an annual certification stating that a cash 
flow projecting at least a feasible plan has been developed, that the 
borrower is in compliance with the provisions of the line of credit 
agreement, and that the previous year income and loan funds and security 
proceeds have been accounted for.
    (d) In addition to the requirements of paragraphs (a), (b), and (c) 
of this section, the standard eligible lender also will provide:
    (1) Borrower's balance sheet, and income and expense statement for 
the previous year.
    (2) For lines of credit, the cash flow for the borrower's operation 
that projects a feasible plan or better for the upcoming operating 
cycle. The standard eligible lender must receive approval from the 
Agency before advancing future years' funds.
    (3) An annual farm visit report or collateral inspection.
    (e) PLP lenders will submit additional reports as required in their 
lender's agreement.
    (f) A lender receiving a final loss payment must complete and return 
an annual report on its collection activities for each unsatisfied 
account for 3 years following payment of the final loss claim.



Sec. 762.142  Servicing related to collateral.

    (a) General. The lender's responsibilities regarding servicing 
collateral include, but are not limited to, the following:
    (1) Obtain income and insurance assignments when required.
    (2) Ensure the borrower has or obtains marketable title to the 
collateral.
    (3) Inspect the collateral as often as deemed necessary to properly 
service the loan.
    (4) Ensure the borrower does not convert loan security.
    (5) Ensure the proceeds from the sale or other disposition of 
collateral are accounted for and applied in accordance with the lien 
priorities on which the guarantee is based or used for the purchase of 
replacement collateral.
    (6) Ensure the loan and the collateral are protected in the event of 
foreclosure, bankruptcy, receivership, insolvency, condemnation, or 
other litigation.
    (7) Ensure taxes, assessments, or ground rents against or affecting 
the collateral are paid.
    (8) Ensure adequate insurance is maintained.
    (9) Ensure that insurance loss payments, condemnation awards, or 
similar proceeds are applied on debts in accordance with lien priorities 
on which the guarantee was based, or used to rebuild or acquire needed 
replacement collateral.
    (b) Partial releases. (1) A lender may release guaranteed loan 
security without FSA concurrence as follows:
    (i) When the security item is being sold for market value and the 
proceeds will be applied to the loan in accordance with lien priorities. 
In the case of term loans, proceeds will be applied as

[[Page 429]]

extra payments and not as a regular installment on the loan.
    (ii) The security item will be used as a trade-in or source of down 
payment funds for a like item that will be taken as security.
    (iii) The security item has no present or prospective value.
    (2) A partial release of security may be approved in writing by the 
Agency upon the lender's request when:
    (i) Proceeds will be used to make improvements to real estate that 
increase the value of the security by an amount equal to or greater than 
the value of the security being released.
    (ii) Security will be released outright with no consideration, but 
the total unpaid balance of the guaranteed loan is less than or equal to 
75 percent of the value of the security for the loan after the release, 
excluding the value of growing crops or planned production, based on a 
current appraisal of the security.
    (iii) Significant income generating property will not be released 
unless it is being replaced and business assets will not be released for 
use as a gift or any similar purpose.
    (iv) Agency concurrence is provided in writing to the lender's 
written request. Standard eligible lenders and CLP lenders will submit 
the following to the Agency:
    (A) A current balance sheet on the borrower; and
    (B) A current appraisal of the security. Based on the level of risk 
and estimated equity involved, the Agency will determine what security 
needs to be appraised. Any required security appraisals must meet the 
requirements of Sec. 762.127; and
    (C) A description of the purpose of the release; and
    (D) Any other information requested by the Agency to evaluate the 
proposed servicing action.
    (3) The lender will provide the Agency copies of any agreements 
executed to carry out the servicing action.
    (4) PLP lenders will request servicing approval in accordance with 
their agreement with the Agency at the time of PLP status certification.
    (c) Subordinations. (1) The Agency may subordinate its security 
interest on a direct loan when a guaranteed loan is being made if the 
requirements of the regulations governing Agency direct loan 
subordinations are met and only in the following circumstances:
    (i) To permit a guaranteed lender to advance funds and perfect a 
security interest in crops, feeder livestock, livestock offspring, or 
livestock products;
    (ii) When the lender requesting the guarantee needs the 
subordination of the Agency's lien position to maintain its lien 
position when servicing or restructuring;
    (iii) When the lender requesting the guarantee is refinancing the 
debt of another lender and the Agency's position on real estate security 
will not be adversely affected; or
    (iv) To permit a line of credit to be advanced for annual operating 
expenses.
    (2) The Agency may subordinate its basic security in a direct loan 
to permit guaranteed line of credit only when both of the following 
additional conditions are met:
    (i) The total unpaid balance of the direct loans is less than or 
equal to 75 percent of the value of all of the security for the direct 
loans, excluding the value of growing crops or planned production, at 
the time of the subordination. The direct loan security value will be 
determined by an appraisal. The lender requesting the subordination and 
guarantee is responsible for providing the appraisal and may charge the 
applicant a reasonable appraisal fee.
    (ii) The applicant cannot obtain sufficient credit through a 
conventional guaranteed loan without a subordination.
    (3) The lender may not subordinate its interest in property which 
secures a guaranteed loan except as follows:
    (i) The lender may subordinate its security interest in crops, 
feeder livestock, livestock offspring, or livestock products when no 
funds have been advanced from the guaranteed loan for their production, 
so a lender can make a loan for annual production expenses; or
    (ii) The Agency's national office may provide an exception to the 
subordination prohibition if such action is in the Agency's best 
interest. However, in no

[[Page 430]]

case can the loan made under the subordination include tax exempt 
financing.
    (d) Transfer and assumption. Transfers and assumptions are subject 
to the following conditions:
    (1) For standard eligible and CLP lenders, the servicing action must 
be approved by the Agency in writing.
    (2) For standard eligible and CLP lenders, the transferee must apply 
for a loan in accordance with Sec. 762.110, including a current 
appraisal, unless the lien position of the guaranteed loan will not 
change, and any other information requested by the Agency to evaluate 
the transfer and assumption.
    (3) PLP lenders may process transfers and assumptions in accordance 
with their agreement with the Agency.
    (4) Any required security appraisals must meet the requirements of 
Sec. 762.127.
    (5) The Agency will review, approve or reject the request in 
accordance with the time frames in Sec. 762.130.
    (6) The transferee must meet the eligibility requirements and loan 
limitations for the loan being transferred, all requirements relating to 
loan rates and terms, loan security, feasibility, and environmental and 
other laws applicable to a loan applicant under this part.
    (7) The lender will use its own assumption agreements or conveyance 
instruments, providing they are legally sufficient to obligate the 
transferee for the total outstanding debt. The lender will provide the 
Agency copies of any agreements executed to carry out the servicing 
action.
    (8) The lender must execute a modification of the guarantee provided 
by the Agency to designate the party that assumed the guaranteed debt, 
the amount of debt at the time of the assumption (including interest 
that being capitalized), and the new loan terms, if applicable.
    (9) The lender must give any holder notice of the transfer. If the 
rate and terms are changed, written concurrence from the holder is 
required.
    (10) The Agency will agree to releasing the transferor or any 
guarantor from liability only if the requirements of Sec. 762.146(c) are 
met.



Sec. 762.143  Servicing distressed accounts.

    (a) A borrower is in default when 30 days past due on a payment or 
in violation of provisions of the loan documents.
    (b) In the event of a borrower default, SEL and CLP lenders will:
    (1) Report to the Agency in accordance with Sec. 762.141.
    (2) Determine whether it will repurchase the guaranteed portion from 
the holder in accordance with Sec. 762.144, if the guaranteed portion of 
the loan was sold on the secondary market.
    (3) Arrange a meeting with the borrower within 15 days of default 
(45 days after payment due date for monetary defaults) to identify the 
nature of the delinquency and develop a course of action that will 
eliminate the delinquency and correct the underlying problems. Non-
monetary defaults will be handled in accordance with the lender's note, 
loan agreements and any other applicable loan documents.
    (i) The lender and borrower will prepare a current balance sheet and 
cash flow projection in preparation for the meeting. If the borrower 
refuses to cooperate, the lender will compile the best financial 
information available.
    (ii) The lender or the borrower may request the attendance of an 
Agency credit officer. If requested, the Agency credit officer will 
assist in developing solutions to the borrower's financial problems.
    (iii) The lender will summarize the meeting and proposed solutions 
on the Agency form for guaranteed loan borrower default status completed 
after the meeting. The lender will indicate the results on this form for 
the lender's consideration of the borrower for interest assistance in 
conjunction with rescheduling under Sec. 762.145(b).
    (iv) The lender must decide whether to restructure or liquidate the 
account within 90 days of default, unless the lender can document 
circumstances that justify an extension by the Agency.
    (v) The lender may not initiate foreclosure action on the loan until 
60 days after eligibility of the borrower to participate in the interest 
assistance programs has been determined by the Agency. If the lender or 
the borrower

[[Page 431]]

does not wish to consider servicing options under this section, this 
should be documented, and liquidation under Sec. 762.149 should begin.
    (vi) If a borrower is current on a loan, but will be unable to make 
a payment, a restructuring proposal may be submitted in accordance with 
Sec. 762.145 prior to the payment coming due.
    (c) PLP lenders will service defaulted loans according to their 
lender's agreement.



Sec. 762.144  Repurchase of guaranteed portion from a secondary market holder.

    (a) Request for repurchase. The holder may request the lender to 
repurchase the unpaid guaranteed portion of the loan when:
    (1) The borrower has not made a payment of principal and interest 
due on the loan for at least 60 days; or
    (2) The lender has failed to remit to the holder its pro-rata share 
of any payment made by the borrower within 30 days of receipt of a 
payment.
    (b) Repurchase by the lender. (1) When a lender is requested to 
repurchase a loan from the holder, the lender must consider the request 
according to the servicing actions that are necessary on the loan. In 
order to facilitate servicing and simplified accounting of loan 
transactions, lenders are encouraged to repurchase the loan upon the 
holder's request.
    (2) The repurchase by the lender will be for an amount equal to the 
portion of the loan held by the holder plus accrued interest.
    (3) The guarantee will not cover separate servicing fees that the 
lender accrues after the repurchase.
    (c) Repurchase by the Agency. (1) If the lender does not repurchase 
the loan, the holder must inform the Agency in writing that demand was 
made on the lender and the lender refused. Following the lender's 
refusal, the holder may continue as holder of the guaranteed portion of 
the loan or request that the Agency purchase the guaranteed portion. 
Within 30 days after written demand to the Agency from the holder with 
required attachments, the Agency will forward to the holder payment of 
the unpaid principal balance, with accrued interest to the date of 
repurchase. If the holder does not desire repurchase or purchase of a 
defaulted loan, the lender must forward the holder its pro-rata share of 
payments, liquidation proceeds and Agency loss payments.
    (2) With its demand on the Agency, the holder must include:
    (i) A copy of the written demand made upon the lender.
    (ii) Originals of the guarantee and note properly endorsed to the 
Agency, or the original of the assignment of guarantee.
    (iii) A copy of any written response to the demand of the holder by 
the lender.
    (iv) An account to which the Agency can forward the purchase amount 
via electronic funds transfer.
    (3) The amount due the holder from the Agency includes unpaid 
principal, unpaid interest to the date of demand, and interest which has 
accrued from the date of demand to the proposed payment date.
    (i) Upon request by the Agency, the lender must furnish upon Agency 
request a current statement, certified by a bank officer, of the unpaid 
principal and interest owed by the borrower and the amount due the 
holder.
    (ii) Any discrepancy between the amount claimed by the holder and 
the information submitted by the lender must be resolved by the lender 
and the holder before payment will be approved by the Agency. The Agency 
will not participate in resolution of any such discrepancy. When there 
is a discrepancy, the 30 day Agency payment requirement to the holder 
will be suspended until the discrepancy is resolved.
    (iii) In the case of a request for Agency purchase, the government 
will only pay interest that accrues for up to 90 days from the date of 
the demand letter to the lender requesting the repurchase. However, if 
the lender requested repurchase from the Agency within 60 days of the 
request to the holder and for any reason not attributable to the holder 
and the lender, the Agency cannot make payment within 30 days of the 
holder's demand to the Agency, the holder will be entitled to interest 
to the date of the payment.

[[Page 432]]

    (4) At the time of purchase by the Agency, the original assignment 
of guarantee will be assigned by the holder to the Agency without 
recourse, including all rights, title, and interest in the loan.
    (5) Purchase by the Agency does not change, alter, or modify any of 
the lender's obligations to the Agency specified in the lender's 
agreement or guarantee; nor does the purchase waive any of the Agency's 
rights against the lender.
    (6) The Agency succeeds to all rights of the holder under the 
Guarantee including the right of set-off against the lender.
    (7) Within 180 days of the Agency's purchase, the lender will 
reimburse the Agency the amount of repurchase, with accrued interest, 
through one of the following ways:
    (i) By liquidating the loan security and paying the Agency its pro-
rata share of liquidation proceeds; or
    (ii) Paying the Agency the full amount the Agency paid to the holder 
plus any accrued interest.
    (8) The lender will be liable for the purchase amount and any 
expenses incurred by the Agency to maintain the loan in its portfolio or 
liquidate the security. While the Agency holds the guaranteed portion of 
the loan, the lender will transmit to the Agency any payment received 
from the borrower, including the pro-rata share of liquidation or other 
proceeds.
    (9) If the borrower files for reorganization under the provisions of 
the bankruptcy code or pays the account current while the purchase by 
the Government is being processed, the Agency may hold the loan as long 
it determines this action to be in the Agency's interest. If the lender 
is not proceeding expeditiously to collect the loan or reimbursement is 
not waived under this paragraph, the Agency will demand payment by the 
lender and collect the purchase amount through administrative offset of 
any claims due the lender.
    (10) The Agency may sell a purchased guaranteed loan on a non-
recourse basis if it determines that selling the portion of the loan 
that it holds is in the Government's best interest. A non-recourse 
purchase from the Agency requires a written request to the Agency from 
the party that wishes to purchase it, and written concurrence from the 
lender;
    (d) Repurchase for servicing. (1) If, due to loan default or 
imminent loan restructuring, the lender determines that repurchase is 
necessary to adequately service the loan, the lender may repurchase the 
guaranteed portion of the loan from the holder, with the written 
approval of the Agency.
    (2) The lender will not repurchase from the holder for arbitrage 
purposes. With its request for Agency concurrence, the lender will 
notify the Agency of its plans to resell the guaranteed portion 
following servicing.
    (3) The holder will sell the guaranteed portion of the loan to the 
lender for an amount agreed to between the lender and holder.



Sec. 762.145  Restructuring guaranteed loans.

    (a) General. (1) To restructure guaranteed loans standard eligible 
lenders must:
    (i) Obtain prior written approval of the Agency for all 
restructuring actions; and,
    (ii) Provide the items in paragraph (b) and (e) of this section to 
the Agency for approval.
    (2) If the standard eligible lender's proposal for servicing is not 
agreed to by the Agency, the Agency approval official will notify the 
lender in writing within 14 days of the lender's request.
    (3) To restructure guaranteed loans CLP lenders must:
    (i) Obtain prior written approval of the Agency only for debt write 
down under this section.
    (ii) Submit all calculations required in paragraph (e) of this 
section for debt writedown.
    (iii) For restructuring other than write down, provide FSA with a 
certification that each requirement of this section has been met, a 
narrative outlining the circumstances surrounding the need for 
restructuring, and copies of any applicable calculations.
    (4) PLP lenders will restructure loans in accordance with their 
lender's agreement.
    (5) All lenders will submit copies of any restructured notes or 
lines of credit to the Agency.

[[Page 433]]

    (b) Requirements. For any restructuring action, the following 
conditions apply:
    (1) The borrower meets the eligibility criteria of Sec. 762.120, 
except the provisions regarding prior debt forgiveness and delinquency 
on a federal debt do not apply.
    (2) The borrower's ability to make the amended payment is documented 
by the following:
    (i) A feasible plan (see Sec. 762.102(b)). If interest assistance is 
required to achieve a feasible plan, the items required by 
Sec. 762.150(d) must be submitted with a restructuring request. Feasible 
plan is defined in Sec. 762.102(b).
    (ii) Current financial statements from all liable parties.
    (iii) Verification of nonfarm income.
    (iv) Verification of all debts of $1,000 or more.
    (v) Applicable credit reports.
    (vi) Financial history (and production history for standard eligible 
lenders) for the past 3 years to support the cash flow projections.
    (3) A final loss claim may be reduced, adjusted, or rejected as a 
result of negligent servicing after the concurrence with a restructuring 
action under this section.
    (4) Balloon payments are prohibited; however, the loan can be 
restructured with unequal installments, provided that, in addition to a 
feasible plan for the upcoming operating cycle, a feasible plan can be 
reasonably projected after the installments increase. Feasible plan is 
defined in Sec. 762.102(b).
    (5) If a borrower is current on a loan, but will be unable to make a 
payment, a restructuring proposal may be submitted prior to the payment 
coming due.
    (6) The lender may capitalize the outstanding interest when 
restructuring the loan as follows:
    (i) As a result of the capitalization of interest, a rescheduled 
promissory note may increase the amount of principal which the borrower 
is required to pay. However, in no case will such principal amount 
exceed the statutory loan limits contained in Sec. 762.122.
    (ii) When accrued interest causes the loan amount to exceed the 
statutory loan limits, rescheduling may be approved without 
capitalization of the amount that exceeds the limit. Noncapitalized 
interest may be scheduled for repayment over the term of the rescheduled 
note.
    (iii) Only interest that has accrued at the rate indicated on the 
borrower's original promissory notes may be capitalized. Late payment 
fees or default interest penalties that have accrued due to the 
borrower's failure to make payments as agreed are not covered under the 
guarantee and may not be capitalized.
    (iv) The Agency will provide the lender with a modification of 
guarantee form to identify the new loan principal and the guaranteed 
portion if greater than the original loan amounts, and to waive the 
restriction on capitalization of interest, if applicable, to the 
existing guarantee documents. The modification form will be attached to 
the original guarantee as an addendum.
    (v) Approved capitalized interest will be treated as part of the 
principal and interest that accrues thereon, in the event that a loss 
should occur.
    (7) The lender's security position will not be adversely affected 
because of the restructuring. New security instruments may be taken if 
needed, but a loan does not have to be fully secured in order to be 
restructured.
    (8) Any holder agrees in writing to any changes in the original loan 
terms, including the approval of interest assistance. If the holder does 
not agree, the lender must repurchase the loan from the holder for any 
loan restructuring to occur.
    (9) After a guaranteed loan is restructured, the lender must provide 
the Agency with a copy of the restructured promissory note.
    (c) Rescheduling. The following conditions apply when a guaranteed 
loan is rescheduled or reamortized:
    (1) Payments will be rescheduled within the following terms:
    (i) FO and existing SW may be amortized over the remaining term of 
the note or rescheduled with an uneven payment schedule. The maturity 
date cannot exceed 40 years from the date of the original note.
    (ii) OL notes must be rescheduled over a period not to exceed 15 
years from the date of the rescheduling. An

[[Page 434]]

OL line of credit may be rescheduled over a period not to exceed 7 years 
from the date of the rescheduling or 10 years from the date of the 
original note, whichever is less. Advances cannot be made against a line 
of credit loan that has had any portion of the loan rescheduled.
    (2) The interest rate for a rescheduled loan is the negotiated rate 
agreed upon by the lender and the borrower at the time of the action, 
subject to the loan limitations for each type of loan.
    (3) A new note is not necessary when rescheduling occurs. However, 
if a new note is not taken, the existing note or line of credit 
agreement must be modified by attaching an allonge or other legally 
effective amendment, evidencing the revised repayment schedule and any 
interest rate change. If a new note is taken, the new note must 
reference the old note and state that the indebtedness evidenced by the 
old note or line of credit agreement is not satisfied. The original note 
or line of credit agreement must be retained.
    (d) Deferrals. The following conditions apply to deferrals:
    (1) Payments may be deferred up to 5 years, but the loan may not be 
extended beyond the final due date of the note.
    (2) The principal portion of the payment may be deferred either in 
whole or in part.
    (3) Interest may be deferred only in part. Payment of a reasonable 
portion of accruing interest as indicated by the borrower's cash flow 
projections is required for multi-year deferrals.
    (4) There must be a reasonable prospect that the borrower will be 
able to resume full payments at the end of the deferral period.
    (e) Debt writedown. The following conditions apply to debt 
writedown:
    (1) A lender may only write down a delinquent guaranteed loan or 
line of credit in an amount sufficient to permit the borrower to develop 
a feasible plan as defined in Sec. 762.102(b).
    (2) The lender will request other creditors to negotiate their debts 
before a writedown is considered.
    (3) The borrower cannot develop a feasible plan after consideration 
is given to rescheduling and deferral under this section.
    (4) The present value of the loan to be written down, based on the 
interest rate of the rescheduled loan, will be equal to or exceed the 
net recovery value of the loan collateral.
    (5) The loan will be restructured with regular payments at terms no 
shorter than 5 years for a line of credit and OL note and no shorter 
than 20 years for FO, unless required to be shorter by 
Sec. 762.145(c)(1)(i) and (ii).
    (6) No further advances may be made on a line of credit that is 
written down.
    (7) Loans may not be written down with interest assistance. If a 
borrower's loan presently on interest assistance requires a writedown, 
the writedown will be considered without interest assistance.
    (8) The writedown is based on writing down the shorter-term loans 
first.
    (9) When a lender requests approval of a writedown for a borrower 
with multiple loans, the security for all of the loans will be cross-
collateralized and continue to serve as security for the loan that is 
written down. If a borrower has multiple loans and one loan is written 
off entirely through debt writedown, the security for that loan will not 
be released and will remain as security for the other written down debt. 
Additional security instruments will be taken if required to cross-
collateralize security and maintain lien priority.
    (10) The writedown will be evidenced by an allonge or amendment to 
the existing note or line of credit reflecting the writedown.
    (11) The borrower executes an Agency shared appreciation agreement 
for loans which are written down and secured by real estate.
    (i) The lender will attach the original agreement to the 
restructured loan document.
    (ii) The lender will provide the Agency a copy of the executed 
agreement, and
    (iii) Security instruments must ensure future collection of any 
appreciation under the agreement.
    (12) The lender will prepare and submit the following to the Agency:
    (i) A current appraisal of all security in accordance with 
Sec. 762.127.

[[Page 435]]

    (ii) A completed report of loss on the appropriate Agency form for 
the proposed writedown loss claim.
    (iii) Detailed writedown calculations as follows:
    (A) Calculate the present value.
    (B) Determine the net recovery value.
    (C) If the net recovery value exceeds the present value, writedown 
is unavailable; liquidation becomes the next servicing consideration. If 
the present value equals or exceeds the net recovery value, the debt may 
be written down to the present value.
    (iv) The lender will make any adjustment in the calculations as 
requested by the Agency.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999]



Sec. 762.146  Other servicing procedures.

    (a) Additional loans and advances. (1) Notwithstanding any provision 
of this section, the PLP lender may make additional loans or advances in 
accordance with the lender's agreement with the Agency.
    (2) SEL and CLP lenders must not make additional loans or advances 
without prior written approval of the Agency, except as provided in the 
borrower's loan or line of credit agreement.
    (3) In cases of a guaranteed line of credit, lenders may make an 
emergency advance when a line of credit has reached its ceiling. The 
emergency advance will be made as an advance under the line and not as a 
separate note. The lender's loan documents must contain sufficient 
language to provide that any emergency advance will constitute a debt of 
the borrower to the lender and be secured by the security instrument. 
The following conditions apply:
    (i) The loan funds to be advanced are for authorized operating loan 
purposes;
    (ii) The financial benefit to the lender and the Government from the 
advance will exceed the amount of the advance; and
    (iii) The loss of crops or livestock is imminent unless the advance 
is made.
    (4) Protective advance requirements are found in Sec. 762.149.
    (b) Release of liability upon withdrawal. An individual who is 
obligated on a guaranteed loan may be released from liability by a 
lender, with the written consent of the Agency, provided the following 
conditions have been met:
    (1) The individual to be released has withdrawn from the farming or 
ranching operation;
    (2) A divorce decree or final property settlement does not hold the 
withdrawing party responsible for the loan payments;
    (3) The withdrawing party's interest in the security is conveyed to 
the individual or entity with whom the loan will be continued;
    (4) The ratio of the amount of debt to the value of the remaining 
security is less than or equal to .75, or the withdrawing party has no 
income or assets from which collection can be made; and
    (5) Withdrawal of the individual does not result in legal 
dissolution of the entity to which the loans are made. Individually 
liable members of a general or limited partnership may not be released 
from liability.
    (6) The remaining liable party projects a feasible plan (see 
Sec. 762.102(b)).
    (c) Release of liability after liquidation. After a final loss claim 
has been paid on the borrower's account, the lender may release the 
borrower or guarantor from liability if;
    (1) The Agency agrees to the release in writing;
    (2) The lender documents its consideration of the following factors 
concerning the borrower or guarantors:
    (i) The likelihood that the borrower or guarantor will have a 
sufficient level of income in the reasonably near future to contribute 
to a meaningful reduction of the debt;
    (ii) The prospect that the borrower or guarantor will inherit assets 
in the near term that may be attached by the Agency for payment of a 
significant portion of the debt;
    (iii) Whether collateral has been properly accounted for, and 
whether liability should be retained in order to take action against the 
borrower or a third party for conversion of security;
    (iv) The availability of other income or assets which are not 
security;
    (v) The possibility that assets have been concealed or improperly 
transferred;

[[Page 436]]

    (vi) The effect of other guarantors on the loan; and
    (vii) Cash consideration or other collateral in exchange for the 
release of liability.
    (3) The lender will use its own release of liability documents.
    (d) Interest rate changes. (1) The lender may change the interest 
rate on a performing (nondelinquent) loan only with the borrower's 
consent.
    (2) If the loan has been sold on the secondary market, the lender 
must repurchase the loan or obtain the holder's written consent.
    (3) To change a fixed rate of interest to a variable rate of 
interest or vice versa, the lender and the borrower must execute a 
legally effective allonge or amendment to the existing note.
    (4) If a new note is taken, it will be attached to and refer to the 
original note.
    (5) The lender will inform the Agency of the rate change.
    (e) Consolidation. Two or more Agency guaranteed loans may be 
consolidated, subject to the following conditions:
    (1) The borrower must project a feasible plan after the 
consolidation. See Sec. 762.102(b) for definition of feasible plan.
    (2) Only OL may be consolidated.
    (3) Existing lines of credit may only be consolidated with a new 
line of credit if the final maturity date and conditions for advances of 
the new line of credit are made the same as the existing line of credit.
    (4) Guaranteed OL may not be consolidated with a line of credit, 
even if the line of credit has been rescheduled.
    (5) Guaranteed loans made prior to October 1, 1991, cannot be 
consolidated with those loans made on or after October 1, 1991.
    (6) OL secured by real estate or with an outstanding interest 
assistance agreement or shared appreciation agreement cannot be 
consolidated.
    (7) A new note or line of credit agreement will be taken. The new 
note or line of credit agreement must describe the note or line of 
credit agreement being consolidated and must state that the indebtedness 
evidenced by the note or line of credit agreement is not satisfied. The 
original note or line of credit agreement must be retained.
    (8) The interest rate for a consolidated OL loan is the negotiated 
rate agreed upon by the lender and the borrower at the time of the 
action, subject to the loan limitations for each type of loan.
    (9) A modification of guarantee will be executed. The modification 
will indicate the consolidated loan amount, new terms, and percentage of 
guarantee, and will be attached to the originals of the guarantees being 
consolidated. If loans with a different guarantee percentage are 
consolidated, the new guarantee will be at the lowest percentage of 
guarantee being consolidated.
    (10) Any holders must consent to the consolidation, or the 
guaranteed portion must be repurchased by the lender.



Sec. 762.147  Servicing shared appreciation agreements.

    (a) Lender responsibilities. The lender is responsible for:
    (1) Monitoring the borrower's compliance with the shared 
appreciation agreement;
    (2) Notifying the borrower of the amount of recapture due; and,
    (3) Beginning October 1, 1999, a notice of the agreement's 
provisions not later than 12 months before the end of the agreement; and
    (4) Reimbursing the Agency for its pro-rata share of recapture due.
    (b) Recapture. (1) Recapture of any appreciation of real estate 
security will take place at the end of the term of the agreement, or 
sooner if the following occurs:
    (i) On the conveyance of the real estate security (or a portion 
thereof) by the borrower.
    (A) If only a portion of the real estate is conveyed, recapture will 
only be triggered against the portion conveyed. Partial releases will be 
handled in accordance with Sec. 762.141(b).
    (B) Transfer of title to the spouse of the borrower on the death of 
such borrower will not be treated as a conveyance under the agreement.
    (ii) On repayment of the loan; or
    (iii) If the borrower ceases farming.
    (2) Calculating recapture.

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    (i) The amount of recapture will be based on the difference between 
the value of the security at the time recapture is triggered and the 
value of the security at the time of writedown, as shown on the shared 
appreciation agreement.
    (ii) Security values will be determined through appraisals obtained 
by the lender and meeting the requirements of Sec. 762.127.
    (iii) All appraisal fees will be paid by the lender.
    (iv) The amount of recapture will not exceed the amount of writedown 
shown on the shared appreciation agreement.
    (v) If recapture is triggered within 4 years of the date of the 
shared appreciation agreement, the lender shall recapture 75 percent of 
any positive appreciation in the market value of the property securing 
the loan or line of credit agreement.
    (vi) If recapture is triggered after 4 years from the date of the 
shared appreciation agreement, the lender shall recapture 50 percent of 
any positive appreciation in the market value of the property securing 
the loan or line of credit agreement.
    (3) Servicing recapture debt.
    (i) If recapture is triggered under the shared appreciation 
agreement and the borrower is unable to pay the recapture in a lump sum, 
the lender may:
    (A) Reschedule the recapture debt with the consent of the Agency, 
provided the lender can document the borrower's ability to make 
amortized payments on the recapture debt, plus pay all other 
obligations. In such case, the recapture debt will not be covered by the 
guarantee;
    (B) Pay the Agency its pro rata share of the recapture due. In such 
case, the recapture debt of the borrower will be covered by the 
guarantee; or
    (C) Service the account in accordance with Sec. 762.149.
    (ii) If recapture is triggered, and the borrower is able but 
unwilling to pay the recapture in a lump sum, the lender will service 
the account in accordance with Sec. 762.149.
    (4) Paying the Agency. Any shared appreciation recaptured by the 
lender will be shared on a pro-rata basis between the lender and the 
Agency.



Sec. 762.148  Bankruptcy.

    (a) Lender responsibilities. The lender must protect the guaranteed 
loan debt and all collateral securing the loan in bankruptcy 
proceedings. The lender's responsibilities include, but are not limited 
to:
    (1) Filing a proof of claim where required and all the necessary 
papers and pleadings;
    (2) Attending, and where necessary, participating in meetings of the 
creditors and court proceedings;
    (3) Protecting the collateral securing the guaranteed loan and 
resisting any adverse changes that may be made to the collateral;
    (4) Seeking a dismissal of the bankruptcy proceeding when the 
operation as proposed by the borrower to the bankruptcy court is not 
feasible;
    (5) When permitted by the bankruptcy code, requesting a modification 
of any plan of reorganization if it appears additional recoveries are 
likely.
    (6) Monitor confirmed plans under chapters 11, 12 and 13 of the 
bankruptcy code to determine borrower compliance. If the borrower fails 
to comply, the lender will seek a dismissal of the reorganization plan; 
and
    (7) Keeping the Agency regularly informed in writing on all aspects 
of the proceedings.
    (i) The lender will submit a default status report when the borrower 
defaults and every 60 days until the default is resolved or a final loss 
claim is paid.
    (ii) The default status report will be used to inform the Agency of 
the bankruptcy filing, the reorganization plan confirmation date and 
effective date, when the reorganization plan is complete, and when the 
borrower is not in compliance with the reorganization plan.
    (b) Bankruptcy expenses. (1) Reorganization.
    (i) Expenses, such as legal fees and the cost of appraisals incurred 
by the lender as a direct result of the borrower's chapter 11, 12, or 13 
reorganization, are covered under the guarantee, provided they are 
reasonable, customary, and provide a demonstrated economic benefit to 
the lender and the Agency.

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    (ii) Lender's in-house expenses, which are those expenses which 
would normally be incurred for administration of the loan, including in-
house lawyers, are not covered by the guarantee.
    (2) Liquidation expenses in bankruptcy.
    (i) Reasonable and customary liquidation expenses may be deducted 
from the proceeds of the collateral in liquidation bankruptcy cases.
    (ii) In-house expenses are not considered customary liquidation 
expenses, may not be deducted from collateral proceeds, and are not 
covered by the guarantee.
    (c) Estimated loss claims in reorganization. (1) At confirmation. 
The lender may submit an estimated loss claim upon confirmation of the 
reorganization plan in accordance with the following:
    (i) The estimated loss payment will cover the guaranteed percentage 
of the principal and accrued interest written off, plus any allowable 
costs incurred as of the effective date of the plan.
    (ii) The lender will submit supporting documentation for the loss 
claim, and any additional information requested by the Agency, including 
justification for the legal fees included on the claim.
    (iii) The estimated loss payment may be revised as consistent with a 
court-approved reorganization plan.
    (iv) Protective advances made and approved in accordance with 
Sec. 762.149 may be included in an estimated loss claim associated with 
a reorganization, if:
    (A) They were incurred in connection with the initiation of 
liquidation action prior to bankruptcy filing; or
    (B) The advance is required to provide repairs, insurance, etc. to 
protect the collateral as a result of delays in the case, or failure of 
the borrower to maintain the security.
    (2) Interest only losses. The lender may submit an estimated loss 
claim for interest only after confirmation of the reorganization plan in 
accordance with the following:
    (i) The loss claims may cover interest losses sustained as a result 
of a court-ordered, permanent interest rate reduction.
    (ii) The loss claims will be processed annually on the anniversary 
date of the effective date of the reorganization plan.
    (iii) If the borrower performs under the terms of the reorganization 
plan, annual interest reduction loss claims will be submitted on or near 
the same date, beyond the period of the reorganization plan.
    (3) Actual loss.
    (i) Once the reorganization plan is complete, the lender will 
provide the Agency with documentation of the actual loss sustained.
    (ii) If the actual loss sustained is greater than the prior 
estimated loss payment, the lender may submit a revised estimated loss 
claim to obtain payment of the additional amount owed by the Agency 
under the guarantee.
    (iii) If the actual loss is less than the prior estimated loss, the 
lender will reimburse the Agency for the overpayment plus interest at 
the note rate from the date of the payment of the estimated loss.
    (4) Payment to holder. In reorganization bankruptcy, if a holder 
makes demand upon the Agency, the Agency will pay the holder interest to 
the plan's effective date. Accruing interest thereafter will be based 
upon the provisions of the reorganization plan.
    (d) Liquidation under the bankruptcy code. (1) Upon receipt of 
notification that a borrower has filed for protection under Chapter 7 of 
the bankruptcy code, or a liquidation plan under chapter 11, the lender 
must proceed according to the liquidation procedures of this part.
    (2) If the property is abandoned by the trustee, the lender will 
conduct the liquidation according to Sec. 762.149.
    (3) Proceeds received from partial sale of collateral during 
bankruptcy may be used by the lender to pay reasonable costs, such as 
freight, labor and sales commissions, associated with the partial sale. 
Reasonable use of proceeds for this purpose must be documented with the 
final loss claim in accordance with Sec. 762.149(a)(vi).



Sec. 762.149  Liquidation.

    (a) Mediation. When it has been determined that default cannot be 
cured through any of the servicing options available, or if the lender 
does not wish

[[Page 439]]

to utilize any of the authorities provided in this part, the lender 
must:
    (1) Participate in mediation according to the rules and regulations 
of any State which has a mandatory farmer-creditor mediation program;
    (2) Consider private mediation services in those States which do not 
have a mandatory farmer-creditor mediation program; and
    (3) Not agree to any proposals to rewrite the terms of a guaranteed 
loan which do not comply with this part. Any agreements reached as a 
result of mediation involving defaults and or loan restructuring must 
have written concurrence from the Agency before they are implemented.
    (b) Liquidation plan. If a default cannot be cured after considering 
servicing options and mediation, the lender will proceed with 
liquidation of the collateral in accordance with the following:
    (1) Within 30 days of the decision to liquidate, standard eligible 
and CLP lenders will submit a written liquidation plan to the Agency 
which includes:
    (i) Current balance sheets from all liable parties or, if the 
parties are not cooperative, the best information available, or in 
liquidation bankruptcies, a copy of the bankruptcy schedules or 
discharge notice;
    (ii) A proposed method of maximizing the collection of debt which 
includes specific plans to collect any remaining loan balances on the 
guaranteed loan after loan collateral has been liquidated, including 
possibilities for judgment;
    (A) If the borrower has converted loan security, the lender will 
determine whether litigation is cost effective. The lender must address, 
in the liquidation plan, whether civil or criminal action will be 
pursued. If the lender does not pursue the recovery, the reason must be 
documented when an estimated loss claim is submitted.
    (B) Any proposal to release the borrower from liability will be 
addressed in the liquidation plan in accordance with Sec. 762.146(c)(2);
    (iii) An independent appraisal report on all collateral securing the 
loan that meets the requirements of Sec. 762.127 and a calculation of 
the net recovery value of the security as defined in Sec. 762.102. The 
appraisal requirement may be waived by the Agency in the following 
cases:
    (A) The bankruptcy trustee is handling the liquidation and the 
lender has submitted the trustee's determination of value;
    (B) The lender's proposed method of liquidation rarely results in 
receipt of less than market value for livestock and used equipment; or
    (C) A purchase offer has already been received for more than the 
debt;
    (iv) An estimate of time necessary to complete the liquidation;
    (v) An estimated loss claim if the liquidation period is expected to 
exceed 90 days.
    (vi) An estimate of reasonable liquidation expenses; and
    (vii) An estimate of any protective advances.
    (2) PLP lenders will submit a liquidation plan as required by their 
lender's agreement.
    (c) Agency approval of the liquidation plan. (1) CLP lender's or 
standard eligible lender's liquidation plan, and any revisions of the 
plan, must be approved by the Agency.
    (2) If, within 20 calendar days of the Agency's receipt of the 
liquidation plan, the Agency fails to approve it or fails to request 
that the lender make revisions, the lender may assume the plan is 
approved. The lender may then proceed to begin liquidation actions at 
its discretion as long as it has been at least 60 days since the 
borrower's eligibility for interest assistance was considered.
    (3) At its option, the Agency may liquidate the guaranteed loan as 
follows:
    (i) Upon Agency request, the lender will transfer to the Agency all 
rights and interests necessary to allow the Agency to liquidate the 
loan. The Agency will not pay the lender for any loss until after the 
collateral is liquidated and the final loss is determined; and
    (ii) If the Agency conducts the liquidation, interest accrual will 
cease on the date the Agency notifies the lender in writing that it 
assumes responsibility for the liquidation.
    (d) Estimated loss claims. An estimated loss claim will be submitted 
by the lender with the liquidation plan if the

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liquidation is expected to exceed 90 days. The estimated loss will be 
based on the following:
    (1) The Agency will pay the lender the guaranteed percentage of the 
total outstanding debt, less the net recovery value of the remaining 
security, less any unaccounted for security; and
    (2) The lender will discontinue interest accrual on the defaulted 
loan at the time the estimated loss claim is paid by the Agency. If the 
lender estimates that there will be no loss after considering the costs 
of liquidation, interest accrual will cease 90 days after the decision 
to liquidate or an estimated loss of zero will be submitted.
    (e) Protective advances. (1) Prior written authorization from the 
Agency is required for all protective advances in excess of $5,000 for 
CLP lenders and $3,000 for standard eligible lenders. The dollar amount 
of protective advances allowed for PLP lenders will be specified when 
PLP status is awarded by the Agency or as contained in the lender's 
agreement.
    (2) The lender may claim recovery for the guaranteed portion of any 
loss of monies advanced as protective advances as allowed in this part, 
plus interest that accrues on the protective advances.
    (3) Payment for protective advances is made by the Agency when the 
final loss claim is approved, except in bankruptcy actions.
    (4) Protective advances are used only when the borrower is in 
liquidation, liquidation is imminent, or when the lender has taken title 
to real property in a liquidation action.
    (5) Legal fees are not a protective advance.
    (6) Protective advances may only be made when the lender can 
demonstrate the advance is in the best interest of the lender and the 
Agency.
    (7) Protective advances must constitute a debt of the borrower to 
the lender and be secured by the security instrument.
    (8) Protective advances must not be made in lieu of additional 
loans.
    (f) Unapproved loans or advances. The amount of any payments made by 
the borrower on unapproved loans or advances outside of the guarantee 
will be deducted from any loss claim submitted by the lender on the 
guaranteed loan, if that loan or advance was paid prior to, and to the 
detriment of, the guaranteed loan.
    (g) Acceleration. (1) If the borrower is not in bankruptcy, the 
lender shall send the borrower notice that the loan is in default and 
the entire debt has been determined due and payable immediately after 
other servicing options have been exhausted.
    (2) The loan cannot be accelerated until after the borrower has been 
considered for interest assistance and the conclusion of mandatory 
mediation in accordance with Sec. 762.149.
    (3) The lender will submit a copy of the acceleration notice or 
other document to the Agency.
    (h) Foreclosure. (1) The lender is responsible for determining the 
necessary parties to any foreclosure action, or who should be named on a 
deed of conveyance taken in lieu of foreclosure.
    (2) When the property is liquidated, the lender will apply the net 
proceeds to the guaranteed loan debt.
    (3) When it is necessary to enter a bid at a foreclosure sale, the 
lender may bid the amount that it determines is reasonable to protect 
its and the Agency's interest. At a minimum, the lender will bid the 
lesser of the net recovery value or the unpaid guaranteed loan balance.
    (i) Final loss claims. (1) Lenders may submit a final loss claim 
when the security has been liquidated and all proceeds have been 
received and applied to the account.
    (2) If a lender acquires title to property either through voluntary 
conveyance or foreclosure proceeding, the lender will submit a final 
loss claim after disposing of the property. The lender may pay 
reasonable maintenance expenses to protect the value of the property 
while it is owned by the lender. These may be paid as protective 
advances or deducted as liquidation expenses from the sales proceeds 
when the lender disposes of the property. The lender must obtain Agency 
written concurrence before incurring maintenance expenses which exceed 
the amounts allowed in Sec. 762.149(e)(1).

[[Page 441]]

    (3) The lender will make its records available to the Agency for the 
Agency's audit of the propriety of any loss payment.
    (4) All lenders will submit the following documents with a final 
loss claim:
    (i) An accounting of the use of loan funds;
    (ii) An accounting of the disposition of loan security and its 
proceeds;
    (iii) A copy of the loan ledger indicating loan advances, interest 
rate changes, protective advances, and application of payments, rental 
proceeds, and security proceeds, including a running outstanding balance 
total; and
    (iv) Documentation, as requested by the Agency, concerning the 
lender's compliance with the requirements of this part.
    (5) The Agency will notify the lender of any discrepancies in the 
final loss claim or, approve or reject the claim within 40 days.
    (6) The Agency will reduce a final loss claim based on its 
calculation of the dollar amount of loss caused by the lender's 
negligent servicing of the account. Loss claims may be reduced or 
rejected as a result of the following:
    (i) A loss claim may be reduced by the amount caused by the lender's 
failure to secure property after a default, and will be reduced by the 
amount of interest that accrues when the lender fails to contact the 
borrower or takes no action to cure the default, once it occurs. Losses 
incurred as a result of interest accrual during excessive delays in 
collection, as determined by the Agency, will not be paid.
    (ii) Unauthorized release of security proceeds, failure to verify 
ownership or possession of security to be purchased, or failure to 
inspect collateral as often required so as to ensure its maintenance.
    (7) Losses will not be reduced for the following:
    (i) Servicing deficiencies that did not contribute materially to the 
dollar amount of the loss.
    (ii) Unaccounted security, as long as the lender's efforts to locate 
and recover the missing collateral was equal to that which would have 
been expended in the case of an unguaranteed loan in the lender's 
portfolio.
    (8) Default interest, late charges, and loan servicing fees are not 
payable under the loss claim.
    (9) The final loss will be the remaining outstanding balance after 
application of the estimated loss payment and the application of 
proceeds from the liquidation of the security.
    (10) If the final loss is less than the estimated loss, the lender 
will reimburse the Agency for the overpayment, plus interest at the note 
rate from the date of the estimated loss payment.
    (11) The lender will return the original guarantee marked paid after 
receipt of a final loss claim.
    (j) Future Recovery. The lender will remit any recoveries made on 
the account after the Agency's payment of a final loss claim to the 
Agency in proportion to the percentage of guarantee, in accordance with 
the lender's agreement, until the account is paid in full or otherwise 
satisfied.
    (k) Overpayments. The lender will repay any final loss overpayment 
determined by the Agency upon request.
    (l) Electronic funds transfer. The lender will designate one or more 
financial institutions to which any Agency payments will be made via 
electronic funds transfer.



Sec. 762.150  Interest assistance program.

    (a) Requests for interest assistance. (1) To apply for interest 
assistance in conjunction with a new request for guarantee, the lender 
will submit the following:
    (i) A completed cash flow projection and interest assistance needs 
analysis portion of the application form. Interest assistance can be 
applied to each loan, only to one loan or any distribution the lender 
selects; however, interest assistance is only available on as many loans 
as necessary to achieve a positive cash flow.
    (ii) For loans with unequal payments, a proposed debt repayment 
schedule which shows principal and interest payments for the subject 
loan, in each year of the loan.
    (2) To request interest assistance on an existing guaranteed loan, 
the lender must submit to the Agency the following:
    (i) A completed cash flow projection and interest assistance needs 
analysis

[[Page 442]]

portion of the application form. Interest assistance can be applied to 
each loan, only to one loan or any distribution the lender selects as 
required to achieve a feasible plan.
    (ii) For loans with unequal payments, a proposed debt repayment 
schedule which shows scheduled payments for the subject loan in each of 
the remaining years of the loan.
    (iii) Cash flow budgets and supporting justification to document 
that the request meets the requirements outlined in paragraph (b) of 
this section. This will include a typical cash flow if the projected 
cash flow budget is atypical.
    (3) Requests for interest assistance on lines of credit or loans 
made for annual operating purposes must be accompanied by a projected 
monthly cash flow budget.
    (b) Requirements. (1) The typical term of scheduled loan repayment 
will not be reduced solely for the purpose of maximizing eligibility for 
interest assistance. To be eligible for interest assistance, a loan must 
be scheduled over the maximum terms typically used by lenders for 
similar type loans within the limits set by Sec. 762.124 of this part. 
At a minimum, loans will be scheduled for repayment over the terms 
listed below, but for OL not to exceed the life of the security:
    (i) An OL for the purpose of providing annual operating and living 
expenses will be scheduled for repayment when the income is scheduled to 
be received from the sale of the crops, livestock, and livestock 
products which will serve as security for the loan.
    (ii) OL for purposes other than annual operating and living expenses 
(i.e. equipment, livestock, refinancing of existing debt) will be 
scheduled over 7 years from the effective date of the proposed interest 
assistance agreement.
    (iii) FO and SW secured by real estate will be scheduled for 20 
years from the closing date of the original note covered by the 
guarantee.
    (2) The lender must document that positive cash flow, as defined in 
Sec. 762.102(b), is not possible without reducing the interest rate on 
the borrower's loan and with the debt restructured over the term of 
repayment cited above.
    (3) The lender must determine whether the borrower, including 
members of an entity, owns any significant assets which do not 
contribute directly to essential family living or farm operations. The 
lender must determine the market value of these assets and prepare a 
cash flow budget based on the assumption that the value of these assets 
will be used for debt reduction. If a positive cash flow can then be 
achieved, the borrower is not eligible for interest assistance. All 
interest assistance calculations will be based on the cash-flow budget 
which assumes that the assets will be sold.
    (4) A borrower's new guaranteed loan is eligible for interest 
assistance if all the following conditions are met:
    (i) The applicant needs interest assistance in order to achieve a 
positive cash flow as defined in Sec. 762.102(b).
    (ii) If significant changes in the borrower's cash flow budget are 
anticipated after the initial 12 months, then the typical cash flow 
budget must demonstrate that the borrower will still have a feasible 
plan, as defined in Sec. 762.102(b), following the anticipated changes, 
with or without interest assistance.
    (iii) If a positive cash flow cannot be achieved, even with other 
creditors voluntarily adjusting their debts and with the interest 
assistance, the interest assistance request will not be approved.
    (5) An existing guaranteed loan is eligible for interest assistance 
if the borrower needs interest assistance to achieve a feasible plan as 
defined in Sec. 762.102(b), and the borrower meets the eligibility 
criteria of Sec. 762.120, except the provision regarding prior debt 
forgiveness. If a feasible plan cannot be achieved, even with other 
creditors voluntarily adjusting their debts and with the interest 
assistance, the interest assistance request will not be approved. If a 
borrower has multiple loans, interest assistance may be provided on one 
or each loan, as available, to the extent necessary to achieve a 
feasible plan.
    (6) The term of the interest assistance agreement under this section 
shall not exceed 10 years from the date

[[Page 443]]

of the first interest assistance agreement signed by the loan applicant, 
including entity members, or the outstanding term of the loan, as 
limited by this section, whichever is less.
    (7) The lender may charge a fixed or variable interest rate. The 
type of rate must be the same as the type of rate in the underlying note 
or line of credit agreement. The lender will reduce the interest rate 
charged the borrower's account by at least the amount of interest 
assistance.
    (8) The borrower must be an operator of not larger than a family 
size farm.
    (c) Interest assistance closing. (1) Initial guaranteed loans will 
be closed in accordance with Sec. 762.130.
    (2) The lender will then prepare and deliver to the Agency a closing 
report for each initial and existing guaranteed loan which has been 
granted interest assistance.
    (3) When all requirements have been met, the lender and the Agency 
will execute an interest assistance agreement.
    (d) Interest assistance claims and payments. (1) The interest 
assistance claim will be prepared by the lender. The following 
conditions apply to the claims process:
    (i) No claim period can exceed 12 months. The initial and final 
claim periods may be less than 12 months. In such claims, the 4 percent 
payment will be prorated over the number of months in the claim period. 
The period for all other claims must be 12 months.
    (ii) To permit the borrower to prepare for the upcoming year, a 
claim should be filed within 60 days of each anniversary date. Claims 
not filed within 1 year of the anniversary date will not be paid and the 
amount due the lender is permanently forfeited.
    (iii) If a claim is submitted without an interest assistance review 
in accordance with Sec. 762.102, when it is required, the claim will not 
be processed until the review is submitted by the lender.
    (iv) Upon full payment of the note or line of credit, the lender 
will immediately prepare the request for interest assistance payment and 
submit it to the Agency.
    (v) Interest assistance payments shall cease upon the assumption and 
transfer of the loan if the transferee was not liable for the debt on 
the effective date of the interest assistance agreement. The lender 
shall request payment through the date of the transfer or assumption. 
The claim must be submitted within 1 year or it will be denied and the 
payment permanently forfeited.
    (vi) All claims will be supported by detailed calculations of 
average daily principal balances during the claim period.
    (vii) The Agency will review the claim and the supporting 
documentation. If the information and the supporting documentation is 
not complete and correct, the reviewing official will notify the lender 
in writing, of the actions needed to correct the request.
    (viii) If there is a substitution of lender, a claim for the first 
lender's interest assistance, through the effective date of the 
substitution, will be submitted by the first lender and processed at the 
time of the substitution.
    (ix) Interest assistance claims shall be submitted concurrently with 
the submission of estimated loss claims where interest accrual ceases, 
or final loss claims that are not preceded by an estimated loss claim.
    (2) [Reserved]
    (e) Request for continuation of interest assistance. (1) For all 
interest assistance agreements exceeding 12 months, the lender will 
perform an analysis of the applicant's farming operation and need for 
continued interest assistance. The following information will be 
submitted to the Agency:
    (i) A summary of the operation's actual financial performance in the 
previous year, including a detailed income and expense statement.
    (ii) A narrative description of the causes of any major differences 
between the previous year's projections and actual performance.
    (iii) A current balance sheet.
    (iv) A cash flow budget for the period being planned. A monthly cash 
flow budget is required for all lines of credit and operating loans made 
for annual operating purposes. All other loans may include either an 
annual or monthly cash flow budget.
    (v) A copy of the interest assistance needs analysis portion of the 
application form which has been completed

[[Page 444]]

based on the planned period's cash flow budget.
    (2) The loan will be eligible for continuation of interest 
assistance if the cash flow budget projects a feasible plan with 
interest assistance applied. However, interest assistance can be applied 
only to as many loans as necessary to achieve a positive cash flow for 
the plan period. If the cash flow budget indicates that the borrower 
requires a level of interest assistance greater than 4 percent to 
project a feasible plan, then the Agency will deny the continuation of 
interest assistance. Interest assistance will be reduced to zero during 
that period. See Sec. 762.102(b) for the definition of feasible plan.
    (3) The documentation listed above will be provided to the Agency 
concurrently with the lender's submission of its request for interest 
assistance payment. This information will be provided to the Agency 
within 60 days after the review date specified on the interest 
assistance agreement.
    (4) A request for continuation of interest assistance will be 
completed for 12 month periods, effective on the anniversary date.
    (5) The initial review may be submitted in conjunction with any 
claim within the initial 12 month period. The anniversary date and 
length of the review period will be stated on the interest assistance 
agreement. Any request for interest assistance adjustment submitted 
effective any time other than the review date will be denied, except for 
those cases where it is necessary to service the loan with rescheduling, 
reamortization, deferral or writedown.
    (6) If the review is not completed and submitted to the Agency 
within 1 year of the review date, no claim will be paid for that period.
    (f) Notification of Adverse Action. The lender will be notified in 
writing of all Agency decisions in which a request for interest 
assistance, a request for continuation of interest assistance or 
lender's claim for interest assistance are denied. The notification 
letter will provide specific reasons for the decision and appeals will 
be handled in accordance with parts 11 and 780 of this title.
    (g) Servicing of loans covered by an interest assistance agreement.
    (1) Loans covered by interest assistance agreements cannot be 
consolidated.
    (2) The loan will be transferred with the interest assistance 
agreement only in cases where the transferee was liable for the debt at 
the time interest assistance was granted. Under no other circumstances 
will the interest assistance be transferred. If interest assistance is 
necessary for the transferee to achieve a positive cash flow, the lender 
may request such assistance, which may be approved if interest 
assistance funds are available and the applicant is eligible. The 
maximum length of the agreement will be 10 years from the date of the 
first agreement covering a loan for which the transferee was liable. If 
interest assistance is necessary for a positive cash flow and funds are 
not available, the request for assumption of the Agency guaranteed debt 
will be denied.
    (3) When consideration is given to using a debt writedown to service 
a delinquent account, the subsidy level will be recalculated prior to 
any writedown. If a feasible plan can be obtained using interest 
assistance and funds are available, then the interest assistance will be 
authorized and no writedown will be approved. If a feasible plan cannot 
be achieved using 4 percent interest assistance, all further 
calculations for determining debt writedown eligibility and amounts to 
be written down will be based on the borrower receiving no interest 
assistance. If debt writedown is approved, the interest assistance claim 
for the previous review period will be processed in conjunction with the 
writedown loss claim. The interest assistance agreement will not be 
canceled and the anniversary date can remain the same or be re-
established under the same guidelines that it was originally 
established. If the lender determines through its annual analysis that 
interest assistance is necessary for a feasible plan, a request to 
reinstate the subsidy in a subsequent review period may be submitted in 
accordance with paragraph (e) of this section.
    (4) In the event of rescheduling or deferral of loans with interest 
assistance, interest assistance will remain available for that loan 
under the terms of

[[Page 445]]

the existing interest assistance agreement. Additional years of interest 
assistance and/or increases in the restructured loan amount will require 
additional funding. If the additional interest assistance is needed in 
order to produce a feasible plan throughout the life of the rescheduled 
loan and funds are not available for the additional interest assistance, 
then the rescheduling will not be approved by the Agency. In no case 
will the subsidy be extended more than 10 years from the effective date 
of the first interest assistance agreement signed by the loan applicant 
or by anyone who signed the note or line of credit agreement.
    (5) In cases where the interest on a loan covered by an interest 
assistance agreement is reduced by court order in a reorganization plan 
under the bankruptcy code, interest assistance agreement will be 
terminated effective on the date of the court ordered interest 
reduction. The lender will file a claim due through the effective date 
of the court ordered interest reduction. Guaranteed loans which have had 
their interest reduced by bankruptcy court order are not eligible to 
receive interest assistance.
    (6) For Loan Guarantees held by holders, Agency purchase of the 
guaranteed portion of a loan will stop interest assistance payments on 
that portion. Interest assistance payments will cease upon termination 
of the Loan Guarantee, upon reaching the expiration date contained in 
the agreement or upon cancellation by the Agency.
    (7) When a borrower defaults on a loan, interest assistance may be 
considered in conjunction with a rescheduling action in accordance with 
Sec. 762.145(b). After the meeting required by Sec. 762.143(b)(3) and 
consideration of actions to correct the delinquency, the lender will 
notify the Agency of the results of the meeting. If the restructuring 
proposal includes interest assistance, the lender will provide the items 
required by paragraph (d) of this section in addition to those items 
required by Sec. 762.145. Liquidation must not be initiated, except in 
accordance with Sec. 762.143(b)(3)(v).
    (h) Cancellation of interest assistance agreement. The interest 
assistance agreement is incontestable except for fraud or 
misrepresentation, of which the lender and borrower have actual 
knowledge at the time that the interest assistance agreement is 
executed, or which the lender or borrower participates in or condones.
    (i) Adjustment of assistance level between review dates. After the 
initial or renewal request for interest assistance is processed, no 
adjustments can be made until the next review or adjustment date except 
when necessary to service the loan with a rescheduling or deferral.
    (j) Excessive interest assistance. Upon written notice to the 
lender, borrower and any holder, the Agency may amend or cancel the 
interest assistance agreement and collect from the lender any amount of 
interest Assistance granted which resulted from incomplete or inaccurate 
information, an error in computation, or any other reason which resulted 
in payment that the lender was not entitled to receive.
    (k) The Deputy Administrator for Farm Loan Programs has the 
authority to grant an exception to any requirement involving interest 
Assistance if it is in the best interest of the Government.

[64 FR 7378, Feb. 12, 1999; 64 FR 38298, July 16, 1999]



Secs. 762.151-762.159  [Reserved]



Sec. 762.160  Sale, assignment and participation.

    (a) The following general requirements apply to selling, assigning 
or participating guaranteed loans.
    (1) Subject to Agency concurrence, the lender may sell, assign or 
participate all or part of the guaranteed portion of the loan to one or 
more holders at or after loan closing, only if the loan is not in 
default. However, a line of credit can be participated, but not sold or 
assigned.
    (2) The Agency may refuse to execute the Assignment of Guarantee and 
prohibit the sale in case of the following:
    (i) The Agency purchased and is holder of a loan that was sold by 
the lender that is requesting the assignment.
    (ii) The lender has not complied with the reimbursement requirements 
of Sec. 762.144(c)(7), except when the 180 day

[[Page 446]]

reimbursement or liquidation requirement has been waived by the Agency.
    (3) The lender will provide the Agency with copies of all 
appropriate forms used in the sale or assignment.
    (4) The guaranteed portion of the loan may not be sold or assigned 
by the lender until the loan has been fully disbursed to the borrower, 
except a line of credit may be participated prior to being fully 
advanced.
    (5) The lender is not permitted to sell, assign or participate any 
amount of the guaranteed or unguaranteed portion of loan to the loan 
applicant or borrower, or members of their immediate families, their 
officers, directors, stockholders, other owners, or any parent, 
subsidiary, or affiliate.
    (6) Upon the lender's sale or assignment of the guaranteed portion 
of the loan, or participation of the line of credit, the lender will 
remain bound to all obligations indicated in the Guarantee, lender's 
agreement, the Agency program regulations, and to future program 
regulations not inconsistent with the provisions of the Lenders 
agreement. The lender retains all rights under the security instruments 
for the protection of the lender and the United States.
    (b) The following will occur upon the lender's sale or assignment of 
the guaranteed portion of the loan:
    (1) The holder will succeed to all rights of the Guarantee 
pertaining to the portion of the loan purchased.
    (2) The lender will send the holder the borrower's executed note 
attached to the Guarantee.
    (3) The holder, upon written notice to the lender and the Agency, 
may assign the unpaid guaranteed portion of the loan. The holder must 
sell the guaranteed portion back to the original lender if requested for 
servicing or liquidation of the account.
    (4) The guarantee or assignment of guarantee in the holder's 
possession does not cover:
    (i) Interest accruing 90 days after the holder has demanded 
repurchase by the lender, except as provided in the assignment of 
guarantee and Sec. 762.144(c)(3)(iii).
    (ii) Interest accruing 90 days after the lender or the Agency has 
requested the holder to surrender evidence of debt repurchase, if the 
holder has not previously demanded repurchase.
    (c) In a participation, the lender sells an interest in a loan but 
retains the note, the collateral securing the note, and all 
responsibility for loan servicing and liquidation. The guarantee does 
not encompass the participant.
    (1) The lender must retain at least 10 percent of the total 
guaranteed loan amount from the unguaranteed portion of the loan in its 
portfolio, except when the loan guarantee exceeds 90 percent, the lender 
must retain the total unguaranteed portion.
    (2) Participation with a lender by any entity does not make that 
entity a holder or a lender as defined in this part.
    (d) Negotiations concerning premiums, fees, and additional payments 
for loans are to take place between the holder and the lender. The 
Agency will participate in such negotiations only as a provider of 
information.

[64 FR 7358, Feb. 12, 1999; 64 FR 38298, July 16, 1999]



PART 773--SPECIAL APPLE LOAN PROGRAM--Table of Contents




Sec.
773.1  Introduction.
773.2  Definitions.
773.3  Appeals.
773.4-773.5  [Reserved]
773.6  Eligibility requirements.
773.7  Loan uses.
773.8  Limitations.
773.9  Environmental compliance.
773.10  Other Federal, State, and local requirements.
773.11-773.17  [Reserved]
773.18  Loan application.
773.19  Interest rate, terms, security requirements, and repayment.
773.20  Funding applications.
773.21  Loan decision, closing and fees.
773.22  Loan servicing.
773.23  Exception.

    Authority: Pub. L. 106-224.

    Source: 65 FR 76117, Dec. 6, 2000, unless otherwise noted.



Sec. 773.1  Introduction.

    This part contains the terms and conditions for loans made under the 
Special Apple Loan Program. These

[[Page 447]]

regulations are applicable to applicants, borrowers, and other parties 
involved in making, servicing, and liquidating these loans. The program 
objective is to assist producers of apples suffering from economic loss 
as a result of low apple prices.



Sec. 773.2  Definitions.

    As used in this part, the following definitions apply:
    Agency is the Farm Service Agency, its employees, and any successor 
agency.
    Apple producer is a farmer in the United States or its territories 
that produced apples, on not less than 10 acres, for sale in 1999 or 
2000.
    Applicant is the individual or business entity applying for the 
loan.
    Business entity is a corporation, partnership, joint operation, 
trust, limited liability company, or cooperative.
    Cash flow budget is a projection listing all anticipated cash 
inflows (including all farm income, nonfarm income and all loan 
advances) and all cash outflows (including all farm and nonfarm debt 
service and other expenses) to be incurred by the borrower during the 
period of the budget. A cash flow budget may be completed either for a 
12 month period, a typical production cycle or the life of the loan, as 
appropriate.
    Domestically owned enterprise is an entity organized in the United 
States under the law of the state or states in which the entity operates 
and a majority of the entity is owned by members meeting the citizenship 
test.
    False information is information provided by an applicant, borrower, 
or other source to the Agency which information is known by the provider 
to be incorrect, and was given to the Agency in order to obtain benefits 
for which the applicant or borrower would not otherwise have been 
eligible.
    Feasible plan is a plan that demonstrates that the loan will be 
repaid as agreed, as determined by the Agency.
    Security is real or personal property pledged as collateral to 
assure repayment of a loan in the event there is a default on the loan.
    USPAP is Uniform Standards of Professional Appraisal Practice.



Sec. 773.3  Appeals.

    A loan applicant or borrower may request an appeal or review of an 
adverse decision made by the Agency in accordance with 7 CFR part 11.



Secs. 773.4-773.5  [Reserved]



Sec. 773.6  Eligibility requirements.

    Loan applicants must meet all of the following requirements to be 
eligible for a Special Apple Program Loan:
    (a) The loan applicant must be an apple producer;
    (b) The loan applicant must be a citizen of the United States or an 
alien lawfully admitted to the United States for permanent residence 
under the Immigration and Nationalization Act. For a business entity 
applicant, the majority of the business entity must be owned by members 
meeting the citizenship test or, other entities that are domestically 
owned. Aliens must provide the appropriate Immigration and 
Naturalization Service forms to document their permanent residency;
    (c) The loan applicant and anyone who will execute the promissory 
note must possess the legal capacity to enter into contracts, including 
debt instruments;
    (d) At loan closing the loan applicant and anyone who will execute 
the promissory note must not be delinquent on any Federal debt, other 
than a debt under the Internal Revenue Code of 1986;
    (e) At loan closing the loan applicant and anyone who will execute 
the promissory note must not have any outstanding unpaid judgments 
obtained by the United States in any court. Such judgments do not 
include those filed as a result of action in the United States Tax 
Courts;
    (f) The loan applicant, in past or present dealings with the Agency, 
must not have provided the Agency with false information; and
    (g) The individual or business entity loan applicant and all entity 
members must have acceptable credit history demonstrated by debt 
repayment. A history of failure to repay past debts as they came due 
(including debts to the Internal Revenue Service) when the ability to 
repay was within their control will demonstrate unacceptable

[[Page 448]]

credit history. Unacceptable credit history will not include isolated 
instances of late payments which do not represent a pattern and were 
clearly beyond the applicant's control or lack of credit history.



Sec. 773.7  Loan uses.

    Loan funds may be used for any of the following purposes related to 
the production or marketing of apples:
    (a) Payment of costs associated with reorganizing a farm to improve 
its profitability;
    (b) Payment of annual farm operating expenses;
    (c) Purchase of farm equipment or fixtures;
    (d) Acquiring, enlarging, or leasing a farm;
    (e) Making capital improvements to a farm;
    (f) Refinancing indebtedness;
    (g) Purchase of cooperative stock for credit, production, processing 
or marketing purposes; or
    (h) Payment of loan closing costs.



Sec. 773.8  Limitations.

    (a) The maximum loan amount any individual or business entity may 
receive under the Special Apple Loan Program is limited to $500,000.
    (b) The maximum loan is further limited to $300 per acre of apple 
trees in production in 1999 or 2000, whichever is greater.
    (c) Loan funds may not be used to pay expenses incurred for lobbying 
or related activities.
    (d) Loans may not be made for any purpose which contributes to 
excessive erosion of highly erodible land or to the conversion of 
wetlands to produce an agricultural commodity.



Sec. 773.9  Environmental compliance.

    (a) Except as otherwise specified in this section, prior to approval 
of any loan, an environmental evaluation will be completed by the Agency 
to determine if the proposed action will have any adverse impacts on the 
human environment and cultural resources. Loan applicants will provide 
all information necessary for the Agency to make its evaluation.
    (b) The following loan actions were reviewed for the purpose of 
compliance with the National Environmental Policy Act (NEPA), 40 CFR 
parts 1500 through 1508, and determined not to have a significant impact 
on the quality of the human environment, either individually or 
cumulatively. Therefore the following loan actions are categorically 
excluded from the requirements of an environmental evaluation:
    (1) Payment of legal costs associated with reorganizing a farm to 
improve its profitability as long as there will be no changes in the 
land's use or character;
    (2) Purchase of farm equipment which will not be affixed to a 
permanent mount or position;
    (3) Acquiring or leasing a farm;
    (4) Refinancing an indebtedness not greater than $30,000;
    (5) Purchase of stock in a credit association or in a cooperative 
which deals with the production, processing or marketing of apples; and
    (6) Payment of loan closing costs.
    (c) The loan actions listed in paragraph (b) of this section were 
also reviewed in accordance with section 106 of the National Historic 
Preservation Act (NHPA). It was determined that these loan actions are 
non-undertakings with no potential to affect or alter historic 
properties and therefore, will not require consultation with the State 
Historic Preservation Officer, Tribal Historic Preservation Officer, or 
other interested parties.
    (d) If adverse environmental impacts, either direct or indirect, are 
identified, the Agency will complete an environmental assessment in 
accordance with the Council on Environmental Quality's Regulations for 
Implementing the Procedural Provisions of NEPA to the extent required by 
law.
    (e) In order to minimize the financial risk associated with 
contamination of real property from hazardous waste and other 
environmental concerns, the Agency will complete an environmental risk 
evaluation of the environmental risks to the real estate collateral 
posed by the presence of hazardous substances and other environmental 
concerns.
    (1) The Agency will not accept real estate as collateral which has 
significant environmental risks.

[[Page 449]]

    (2) If the real estate offered as collateral contains significant 
environmental risks, the Agency will provide the applicant with the 
option of properly correcting or removing the risk, or offering other 
non-contaminated property as collateral.



Sec. 773.10  Other Federal, State, and local requirements.

    Borrowers are required to comply with all applicable:
    (a) Federal, State, or local laws;
    (b) Regulatory commission rules; and
    (c) Regulations which are presently in existence, or which may be 
later adopted including, but not limited to, those governing the 
following:
    (1) Borrowing money, pledging security, and raising revenues for 
repayment of debt;
    (2) Accounting and financial reporting; and
    (3) Protection of the environment.



Secs. 773.11-773.17  [Reserved]



Sec. 773.18  Loan application.

    (a) A complete application will consist of the following:
    (1) A completed Agency application form;
    (2) If the applicant is a business entity, any legal documents 
evidencing the organization and any State recognition of the entity;
    (3) Documentation of compliance with the Agency's environmental 
regulations contained in 7 CFR part 1940, subpart G;
    (4) A balance sheet on the applicant;
    (5) The farm's operating plan, including the projected cash flow 
budget reflecting production, income, expenses, and loan repayment plan;
    (6) The last 3 years of production and income and expense 
information;
    (7) Payment to the Agency for ordering a credit report; and
    (8) Any additional information required by the Agency to determine 
the eligibility of the applicant, the feasibility of the operation, or 
the adequacy and availability of security.
    (b) Except as required in Sec. 773.19(e), the Agency will waive 
requirements for a complete application, listed in paragraphs (a)(5) and 
(a)(6) of this section, for requests of $30,000 or less.



Sec. 773.19  Interest rate, terms, security requirements, and repayment.

    (a) Interest rate. The interest rate will be fixed for the term of 
the loan. The rate will be established by the Agency and available in 
each Agency Office, based upon the cost of Government borrowing for 
loans of similar maturities.
    (b) Terms. The loan term will be for up to 3 years, based upon the 
useful life of the security offered.
    (c) Security requirements. The Agency will take a lien on the 
following security, if available, as necessary to adequately secure the 
loan:
    (1) Real estate;
    (2) Chattels;
    (3) Crops;
    (4) Other assets owned by the applicant; and
    (5) Assets owned and pledged by a third party.
    (d) Documentation of security value.
    (1) For loans that are for $30,000 or less, collateral value will be 
based on the best available, verifiable information.
    (2) For loans of greater than $30,000 where the applicant's balance 
sheet shows a net worth of three times the loan amount or greater, 
collateral value will be based on tax assessment of real estate and 
depreciation schedules of chattels, as applicable, less any existing 
liens.
    (3) For loans of greater than $30,000 where the applicant's balance 
sheet shows a net worth of less than three times the loan amount, 
collateral value will be based on an appraisal. Such appraisals must be 
obtained by the applicant, at the applicant's expense and acceptable to 
the Agency. Appraisals of real estate must be completed in accordance 
with USPAP.
    (e) Repayment. (1) All loan applicants must demonstrate that the 
loan can be repaid.
    (2) For loans that are for $30,000 or less where the applicant's 
balance sheet shows a net worth of three times the loan amount or 
greater, repayment ability will be considered adequate without further 
documentation.
    (3) For loans that are for $30,000 or less where the applicant's 
balance sheet shows a net worth of less than

[[Page 450]]

three times the loan amount, repayment ability must be demonstrated 
using the farm's operating plan, including a projected cash flow budget 
based on historical performance. Such operating plan is required 
notwithstanding Sec. 773.18 of this part.
    (4) For loans that are for more than $30,000, repayment ability must 
be demonstrated using the farm's operating plan, including a projected 
cash flow budget based on historical performance.
    (f) Creditworthiness. All loan applicants must have an acceptable 
credit history demonstrated by debt repayment. A history of failure to 
repay past debts as they came due (including debts to the Internal 
Revenue Service) when the ability to repay was within their control will 
demonstrate unacceptable credit history. Unacceptable credit history 
will not include isolated instances of late payments which do not 
represent a pattern and were clearly beyond the applicant's control or 
lack of credit history.



Sec. 773.20  Funding applications.

    Loan requests will be funded based on the date the Agency approves 
the application. Loan approval is subject to the availability of funds.



Sec. 773.21  Loan decision, closing, and fees.

    (a) Loan decision. (1) The Agency will approve a loan if it 
determines that:
    (i) The loan can be repaid;
    (ii) The proposed use of loan funds is authorized;
    (iii) The applicant has been determined eligible;
    (iv) All security requirements have been, or will be met at closing;
    (vi) All other pertinent requirements have been, or will be met at 
closing.
    (2) The Agency will place conditions upon loan approval as necessary 
to protect its interest.
    (b) Loan closing. (1) The applicant must meet all conditions 
specified by the loan approval official in the notification of loan 
approval prior to loan closing;
    (2) There must have been no significant changes in the plan of 
operation or the applicant's financial condition since the loan was 
approved; and
    (2) The applicant will execute all loan instruments and legal 
documents required by the Agency to evidence the debt, perfect the 
required security interest in property securing the loan, and protect 
the Government's interests, in accordance with applicable State and 
Federal laws. In the case of an entity applicant, all officers or 
partners and any board members also will be required to execute the 
promissory notes as individuals.
    (c) Fees. The applicant will pay all loan closing fees including 
credit report fees, fees for appraisals, fees for recording any legal 
instruments determined to be necessary, and all notary, lien search, and 
similar fees incident to loan transactions. No fees will be assessed for 
work performed by Agency employees.

    Editorial Note: At 65 FR 76119, Dec. 6, 2000, Sec. 773.21 was added 
with two paragraphs designated (b)(2).



Sec. 773.22  Loan servicing.

    Loans will be serviced in accordance with subpart J of part 1951, or 
its successor regulation, during the term of the loan. If the loan is 
not paid in full during this term, servicing will proceed in accordance 
with Sec. 1951.468 of that part.



Sec. 773.23  Exception.

    The Agency may grant an exception to the security requirements of 
this section, if the proposed change is in the best financial interest 
of the Government and not inconsistent with the authorizing statute or 
other applicable law.



PART 774--Emergency Loan for Seed Producers Program--Table of Contents




Sec.
774.1  Introduction.
774.2  Definitions.
774.3  Appeals.
774.4-774.5  [Reserved]
774.6  Eligibility requirements.
774.7  [Reserved]
774.8  Limitations.
774.9  Environmental requirements.
774.10  Other Federal, State, and local requirements.
774.11-774.16  [Reserved]
774.17  Loan application.
774.18  Interest rate, terms, and security requirements.
774.19  Processing applications.
774.20  Funding applications.
774.21  [Reserved]

[[Page 451]]

774.22  Loan closing.
774.23  Loan servicing.
774.24  Exception.

    Authority: Pub. L. 106-224

    Source: 65 FR 76119, Dec. 6, 2000, unless otherwise noted.



Sec. 774.1  Introduction.

    The regulations of this part contain the terms and conditions under 
which loans are made under the Emergency Loan for Seed Producers 
Program. These regulations are applicable to applicants, borrowers, and 
other parties involved in making, servicing, and liquidating these 
loans. The program objective is to assist certain seed producers 
adversely affected by the bankruptcy filing of AgriBiotech.



Sec. 774.2  Definitions.

    As used in this part, the following definitions apply:
    Agency is the Farm Service Agency, its employees, and any successor 
agency.
    Applicant is the individual or business entity applying for the 
loan.
    Business entity is a corporation, partnership, joint operation, 
trust, limited liability company, or cooperative.
    Domestically owned enterprise is an entity organized in the United 
States under the law of the state or states in which the entity operates 
and a majority of the entity is owned by members meeting the citizenship 
test.
    False information is information provided by an applicant, borrower 
or other source to the Agency that the borrower knows to be incorrect, 
and that the borrower or other source provided in order to obtain 
benefits for which the borrower would not otherwise have been eligible.
    Seed producer is a farmer that produced a 1999 crop of grass, 
forage, vegetable, or sorghum seed for sale to AgriBiotech under 
contract.



Sec. 774.3  Appeals.

    A loan applicant or borrower may request an appeal or review of an 
adverse decision made by the Agency in accordance with 7 CFR part 11.



Secs. 774.4-774.5  [Reserved]



Sec. 774.6  Eligibility requirements.

    Loan applicants must meet all of the following requirements to be 
eligible under the Emergency Loan for Seed Producers Program;
    (a) The loan applicant must be a seed producer;
    (b) The individual or entity loan applicant must have a timely filed 
proof of claim in the Chapter XI bankruptcy proceedings involving 
AgriBiotech and the claim must have arisen from acontract to grow seeds 
in the United States;
    (c) The loan applicant must be a citizen of the United States or an 
alien lawfully admitted to the United States for permanent residence 
under the Immigration and Nationalization Act. For a business entity 
applicant, the majority of the business entity must be owned by members 
meeting the citizenship test or, other entities that are domestically 
owned. Aliens must provide the appropriate Immigration and 
Naturalization Service forms to document their permanent residency;
    (d) The loan applicant and anyone who will execute the promissory 
note must possess the legal capacity to enter into contracts, including 
debt instruments;
    (e) At loan closing, the applicant and anyone who will execute the 
promissory note must not be delinquent on any Federal debt, other than a 
debt under the Internal Revenue Code of 1986;
    (f) At loan closing, the applicant and anyone who will execute the 
promissory note must not have any outstanding unpaid judgments obtained 
by the United States in any court. Such judgments do not include those 
filed as a result of action in the United States Tax Courts;
    (g) The loan applicant, in past and current dealings with the 
Agency, must not have provided the Agency with false information.



Sec. 774.7  [Reserved]



Sec. 774.8  Limitations.

    (a) The maximum loan amount any individual or business entity may 
receive will be 65% of the value of the

[[Page 452]]

timely filed proof of claim against AgriBiotech in the bankruptcy 
proceeding as determined by the Agency.
    (b) Loan funds may not be used to pay expenses incurred for lobbying 
or related activities.
    (c) Loans may not be made for any purpose which contributes to 
excessive erosion of highly erodible land or to the conversion of 
wetlands to produce an agricultural commodity.



Sec. 774.9  Environmental requirements.

    The loan actions in this part were reviewed for the purpose of 
compliance with the National Environmental Policy Act (NEPA), 40 CFR 
parts 1500 through 1508, and determined not to have a significant impact 
on the quality of the human environment, either individually or 
cumulatively. These loan actions are categorically excluded from the 
requirements of an environmental evaluation due to the fact that the 
loan funds would be utilized to replace operating capital the applicant 
would have had if AgriBiotech had not filed bankruptcy.



Sec. 774.10  Other Federal, State, and local requirements.

    Borrowers are required to comply with all applicable:
    (a) Federal, State, or local laws;
    (b) Regulatory commission rules; and
    (c) Regulations which are presently in existence, or which may be 
later adopted including, but not limited to, those governing the 
following:
    (1) Borrowing money, pledging security, and raising revenues for 
repayment of debt;
    (2) Accounting and financial reporting; and
    (3) Protection of the environment.



Sec. 774.11-774.16  [Reserved]



Sec. 774.17  Loan application.

    A complete application will consist of the following:
    (a) A completed Agency application form;
    (b) Proof of a bankruptcy claim in the AgriBiotech bankruptcy 
proceedings;
    (c) If the applicant is a business entity, any legal documents 
evidencing the organization and any State recognition of the entity;
    (d) Documentation of compliance with the Agency's environmental 
regulations contained in 7 CFR part 1940, subpart G;
    (e) A balance sheet on the applicant; and
    (f) Any other additional information the Agency needs to determine 
the eligibility of the applicant and the application of any Federal, 
State or local laws.



Sec. 774.18  Interest rate, terms and security requirements.

    (a) Interest rate. (1) The interest rate on the loan will be zero 
percent for 18 months or until the date of settlement of, completion of, 
or final distribution of assets in the bankruptcy proceeding involving 
AgriBiotech, whichever comes first.
    (2) Thereafter interest will begin to accrue at the regular rate for 
an Agency Farm operating-direct loan (available in any Agency office).
    (b) Terms. (1) Loans shall be due and payable upon the earlier of 
the settlement of the bankruptcy claim or 18 months from the date of the 
note.
    (2) However, any principal remaining thereafter will be amortized 
over a term of 7 years at the Farm operating-direct loan interest rate 
(available in any Agency office). If the loan is not paid in full during 
this term and default occurs, servicing will proceed in accordance with 
Sec. 1951.468 of this title.
    (c) Security Requirements. (1) The Agency will require a first 
position pledge and assignment of the applicant's monetary claim in the 
AgriBiotech bankruptcy estate to secure the loan.
    (2) If the applicant has seed remaining in their possession that was 
produced under contract to AgriBiotech, the applicant also will provide 
the Agency with a first lien position on this seed. It is the 
responsibility of the applicant to negotiate with any existing 
lienholders to secure the Agency's first lien position.



Sec. 774.19  Processing applications.

    Applications will be processed until such time that funds are 
exhausted, or

[[Page 453]]

all claims have been paid and the bankruptcy involving AgriBiotech has 
been discharged. When all loan funds have been exhausted or the 
bankruptcy is discharged, no further applications will be accepted and 
any pending applications will be considered withdrawn.



Sec. 774.20  Funding applications.

    Loan requests will be funded based on the date the Agency approves 
an application. Loan approval is subject to the availability of funds.



Sec. 774.21  [Reserved]



Sec. 774.22  Loan closing.

    (a) Conditions. The applicant must meet all conditions specified by 
the loan approval official in the notification of loan approval prior to 
closing.
    (b) Loan instruments and legal documents. The applicant will execute 
all loan instruments and legal documents required by the Agency to 
evidence the debt, perfect the required security interest in the 
bankruptcy claim, and protect the Government's interest, in accordance 
with applicable State and Federal laws. In the case of an entity 
applicant, all officers or partners and any board members also will be 
required to execute the promissory notes as individuals.
    (c) Fees. The applicant will pay all loan closing fees for recording 
any legal instruments determined to be necessary and all notary, lien 
search, and similar fees incident to loan transactions. No fees will be 
assessed for work performed by Agency employees.



Sec. 774.23  Loan servicing.

    Loans will be serviced in accordance with subpart J of part 1951 of 
this title, or its successor regulation. If the loan is not repaid as 
agreed and default occurs, servicing will proceed in accordance with 
section 1951.468 of that part.



Sec. 774.24  Exception.

    The Agency may grant an exception to any of the requirements of this 
section, if the proposed change is in the best financial interest of the 
Government and not inconsistent with the authorizing statute or other 
applicable law.



PART 777--DISASTER PAYMENT PROGRAM FOR 1990 CROP OF SUGARCANE, SUGAR BEETS, SOYBEANS AND PEANUTS--Table of Contents




Sec.
777.1  General statement.
777.2  Administration.
777.3  Definitions.
777.4  Availability of disaster payments.
777.5  Disaster benefits.
777.6  Filing application for payment.
777.7  Report of acreage, production disposition, and indemnity 
          payments.
777.8  Availability of funds.
777.9  Misrepresentation, scheme and device, and fraud.
777.10  Refunds to CCC.
777.11  Cumulative liability.
777.12  Appeals.
777.13  Liens.
777.14  Other regulations.
777.15  OMB control numbers assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: 7 U.S.C. 1446.

    Source: 56 FR 25346, June 4, 1991, unless otherwise noted.



Sec. 777.1  General statement.

    This part implements a Disaster Payment Program for the 1990 crop 
year as provided by section 201(k) of the Agricultural Act of 1949, as 
amended, and Dire Emergency Supplemental Appropriations Act for Fiscal 
year 1990. The purpose of the program is to make disaster payments to 
eligible producers of sugarcane, sugar beets, peanuts and soybeans who 
have suffered a loss of production of their 1990 crop as the result of a 
natural disaster in 1989.



Sec. 777.2  Administration.

    (a) The program will be administered under the general supervision 
of the Administrator, Farm Service Agency (FSA), and shall be carried 
out in the field by State and county Agricultural Stabilization and 
Conservation (ASC) committees.
    (b) State and county ASC committees and representatives and 
employees thereof do not have the authority to modify or waive any of 
the provisions of this part as amended or supplemented.
    (c) The State ASC committee shall take any action required by this 
part which has not been taken by a county

[[Page 454]]

ASC committee. The State ASC committee shall also:
    (1) Correct or require a county ASC committee to correct, any action 
taken by such county ASC committee which is not in accordance with this 
part, or
    (2) Require a county ASC committee to withhold taking any action 
which is not in accordance with this part.
    (d) FSA shall determine all yields and prices under this part and 
may utilize any agency of the Department of Agriculture in making such 
determinations. To the extent practicable, FSA will use data provided by 
the National Agricultural Statistical Service (NASS). Any reference in 
this part to NASS shall not restrict FSA from using data from other 
sources.
    (e) No delegation herein to a State or county ASC committee shall 
preclude 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 ASC committee.



Sec. 777.3  Definitions.

    In determining the meanings of the provisions of this part, unless 
the context indicates otherwise, words imparting the singular include 
and apply to several persons or things, words imparting the plural 
include the singular, words imparting the masculine gender include the 
feminine as well, and words used in the present tense include the past 
and future as well as the present. The following terms shall have the 
following meanings and all other words and phrases shall have the 
meanings assigned to them in the regulations governing the 
reconstitution of farms in part 719 of this chapter.
    Actual production means the quantity of soybeans and peanuts 
actually harvested and in the case of sugar beets and sugarcane the 
quantity of sugar produced from such crop, or which could have been 
harvested or produced as determined by the county ASC committee in 
accordance with instructions issued by the Deputy Administrator, State 
and County Operations (Deputy Administrator), (FSA). Such quantity 
includes all harvest acreages including sugarcane harvested for seed.
    Disaster payment yield means as applicable, the average of actual 
yields for the years 1987 through 1989 in accordance with instructions 
issued by the Deputy Administrator or the county average yield for the 
crop, established by FSA. Such county average yield shall be the average 
of the county average yields, including seed cane production, for the 
years 1985 through 1989 as determined by NASS, excluding the year in 
which the yield was the highest and the year in which the yield was the 
lowest.
    Eligible crop means the 1990 crop of sugarcane, sugar beets, 
soybeans and peanuts.
    Eligible disaster means a December 1989 frost or freeze.
    Eligible producer means, with respect to an eligible crop for which 
an application for disaster payment has been made under this part, a 
person who as owner, landlord, tenant, or sharecropper is entitled to 
share in such crops, or the proceeds therefrom, available for marketing 
from the farm or would have been if such crop had been produced. Such 
person includes the producer who was on the farm at the time of the 1989 
freeze and who may or may not have been the producer who harvested the 
1990 crop.
    Expected production means the disaster yield times the sum of the 
1990 planted acreage of the crop and the 1990 prevented planted acreage 
of the crop.



Sec. 777.4  Availability of disaster payments.

    Disaster payments will be made available to eligible producers of 
1990 crop of an eligible crop who suffered losses because of the 
occurrence of an eligible disaster in 1989.



Sec. 777.5  Disaster benefits.

    (a) Disaster payments for low yield losses on 1990 crop of sugarcane 
are authorized to be made to producers who file a CCC-441SU, Application 
for 1990 Disaster Benefits, if:
    (1) The farm operator submits an Application for Disaster Credit 
(Form FSA-574), in accordance with instructions issued by the Deputy 
Administrator;
    (2) The farm operator submits a record of Production and Yield (Form 
FSA-658) in accordance with Sec. 1477.7; and

[[Page 455]]

    (3) The county ASC committee determines that because of an eligible 
disaster condition, producers on a farm were able to harvest less than 
60 percent of the expected production of an eligible crop in 1990.
    (b) Each eligible producer's share of a disaster payment shall be 
based on the eligible producer's share of the crop or the proceeds 
therefrom or, if no crop was produced, the share which the eligible 
producer would have otherwise received if the crop had been produced.



Sec. 777.6  Filing application for payment.

    (a) Applications for payment shall be filed by the applicant with 
the county FSA office serving the county where the producer's farm is 
located for administrative purposes.
    (b) An application for payment shall be filed as soon as practicable 
after the producer's eligibility has been established in accordance with 
Sec. 777.5(a). Applications for payment must be filed no later than June 
28, 1991.



Sec. 777.7  Report of acreage, production disposition, and indemnity payments.

    (a) Eligible producers shall report, in accordance with instructions 
issued by the Deputy Administrator, the acreage, production, and 
disposition of all eligible crops produced in 1990 on an acreage for 
which an application for a disaster payment is filed. Such production 
reports must be filed no later than the date established by the Deputy 
Administrator.
    (b) If there has been a disposition of crop production through 
commercial channels, the eligible producer must furnish documentary 
evidence of such disposition or provide FSA the authority necessary in 
order to verify the information provided on the report. Such authority 
includes access to producers' disposition documents of warehousemen and 
processors. Acceptable evidence shall include, but not limited to, such 
items as the original or a copy of commercial receipts, CCC loan 
documents, settlement sheets, or records of sugar production.
    (c) If there has been a disposition of crop production other than 
through commercial channels, such as seed cane, the eligible producer 
must furnish such documentary evidence as the county ASC committee 
determines to be necessary in order to verify the information provided 
by the producer.



Sec. 777.8  Availability of funds.

    In the event the total amount of all claims submitted exceeds $11 
million, each payment shall be reduced by a uniform percentage.



Sec. 777.9  Misrepresentation, scheme and device, and fraud.

    (a) If FSA determines that any producer has erroneously represented 
any fact or has adopted, participated in, or benefited from, any scheme 
or device which has the effect of defeating, or is designed to defeat 
the purpose of this part, such producer shall not be eligible for 
disaster payments under this part and all payments previously made to 
any such producer shall be refunded to FSA. The amount paid to FSA shall 
include any interest and other amounts as determined in accordance with 
this part.
    (b) If any misrepresentation, scheme or device, or practice has been 
employed for the purpose of causing FSA to make a payment which FSA 
under this part otherwise would not make, all amounts paid by FSA to any 
such producer shall be refunded to FSA together with interest and other 
amounts as determined in accordance with this part, and no further 
disaster payments shall be made to such producer by FSA.
    (c) If the county ASC committee determines that any producer has 
adopted or participated in any practice which tends to defeat the 
purpose of the program established in accordance with this part, the 
county committee shall withhold or require to be refunded all or part of 
the payments which otherwise would be due the producer under this part.



Sec. 777.10  Refunds to CCC.

    (a) In the event that there is a failure to comply with any term, 
requirement, or condition for payment made in accordance with this part, 
all such payments made to the producer shall be refunded to FSA, 
together with interest.
    (b) Producers must refund to FSA any excess payments made by FSA.

[[Page 456]]

    (c) In the event that the loss of production was established as a 
result of erroneous information provided by any person to the county FSA 
office or was erroneously computed by such office, the loss of 
production shall be re-computed and the payment due shall be corrected 
as necessary. Any refund of payments which are determined to be required 
as a result of such re-computation shall be remitted to FSA.



Sec. 777.11  Cumulative liability.

    The liability of any producer for any payment or refund which is 
determined in accordance with this part to be due to FSA shall 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, 18 U.S.C. 286, 287, 371, 641, 1001; and 
31 U.S.C. 3729.



Sec. 777.12  Appeals.

    Reconsideration and review of all determinations made in accordance 
with this part with respect to a farm or an individual producer shall be 
made in accordance with part 780 of this chapter.



Sec. 777.13  Liens.

    Any payment which is due 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, and the proceeds thereof, which may be asserted 
by any creditor, except agencies of the United States Government.



Sec. 777.14  Other regulations.

    The following regulations and amendments thereto shall also be 
applicable to this part:
    (a) 7 CFR part 3, Debt Management.
    (b) 7 CFR part 12, Highly Erodible Land and Wetland Conservation.
    (c) 7 CFR part 707, Payments Due Persons Who Have Died, Disappeared 
or Have Been Declared Incompetent.
    (d) 7 CFR part 719, Reconstitution of Farms, Allotments, Normal Crop 
Acreage and Preceding Year Planted Acreage.
    (e) 7 CFR part 780, Appeal Regulations.
    (f) 7 CFR part 790, Incomplete Performance Based Upon Action or 
Advice of an Authorized Representative of the Secretary.
    (g) 7 CFR part 796, Denial of Program Eligibility for Controlled 
Substance Violation.



Sec. 777.15  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements of this part shall be 
submitted to the Office of Management and Budget (OMB) for purposes of 
the Paperwork Reduction Act and it is anticipated that an OMB Number 
will be assigned.



PART 780--APPEAL REGULATIONS--Table of Contents




Sec.
780.1  Definitions.
780.2  Applicability.
780.3-780.5  [Reserved]
780.6  Mediation.
780.7  Reconsideration and appeals with the county and State committees 
          and reconsideration with the regional service offices.
780.8  Time limitations for filing requests for reconsideration or 
          appeal.
780.9  Appeals of NRCS technical determinations.
780.10  Other finality provisions.
780.11  Reservation of authority.

    Authority: 5 U.S.C. 301; 15 U.S.C. 714b and 714c; 16 U.S.C. 590h.

    Source: 60 FR 67316, Dec. 29, 1995, unless otherwise noted.



Sec. 780.1  Definitions.

    For purposes of this part:
    1994 Act means the Federal Crop Insurance Reform and Department of 
Agriculture Reorganization Act of 1994 (Public Law 103-354).
    Agency means FSA and its county and State committees and their 
personnel, CCC, NRCS, FCIC, and any other agency or office of the 
Department which the Secretary may designate, or any successor agency.
    Appeal means a written request by a participant asking the next 
level reviewing authority to review a decision.
    CCC means the Commodity Credit Corporation, a wholly owned 
Government corporation within the U.S. Department of Agriculture.
    County committee means an FSA county or area committee established 
in accordance with section 8(b) of the

[[Page 457]]

Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)).
    FCIC means the Federal Crop Insurance Corporation, a wholly owned 
Government corporation within the U.S. Department of Agriculture.
    Final decision means the program decision rendered by the county or 
State committee or the FCIC Regional Service Office upon written request 
of the participant. A decision that is otherwise final shall remain 
final unless the decision is timely appealed to the State committee or 
NAD. A decision of FSA or FCIC made by personnel subordinate to the 
county committee is considered ``final'' for the purpose of appeal to 
NAD only after that decision has been appealed to the county committee 
under the provisions of this part.
    FSA means the Farm Service Agency.
    NAD means the National Appeals Division, established pursuant to the 
1994 Act.
    NAD regulations means the National Appeals Division (NAD) rules of 
procedure published by the Secretary at 7 CFR part 11 implementing title 
II, subtitle H of the 1994 Act.
    NRCS means the Natural Resource Conservation Service of the United 
States Department of Agriculture, formerly the Soil Conservation 
Service.
    Reconsideration is a subsequent consideration of a prior decision by 
the same reviewing authority.
    Regional Service Office means the regional offices established by 
FSA and FCIC for the purpose of making determinations for private 
insurance companies reinsured by FCIC under the Federal Crop Insurance 
Act and for FSA for insurance contracts delivered through county FSA 
offices (including underwriting decisions), the applicability of 
provisions under chapter IV of 7 CFR, and decisions as to insurability 
and rating of acreage.
    Reviewing authority means a person or committee assigned the 
responsibility of making a decision on the appeal filed by the 
participant in accordance with this part.
    State committee means an FSA State committee established in 
accordance with section 8(b) of the Soil Conservation and Domestic 
Allotment Act (16 U.S.C. 590h(b)) including, where appropriate, the 
Director of the Caribbean Area FSA office for Puerto Rico and the Virgin 
Islands.
    Technical determination of NRCS means a decision by NRCS concerning 
the status and condition of the natural resources based on science and 
on the best professional judgment of natural resource professionals 
within NRCS.



Sec. 780.2  Applicability.

    (a)(1) Except as provided in other regulations, this part applies to 
decisions made under programs and by agencies, as set forth herein:
    (i) Decisions in those domestic programs administered by the Farm 
Service Agency (FSA), and programs administered by FSA on behalf of the 
Commodity Credit Corporation (CCC) through State and county committees, 
which are generally set forth in chapters VII and XIV of this title;
    (ii) Technical decisions made by the Natural Resources Conservation 
Service (NRCS) under title XII of the Food Security Act of 1985, as 
amended;
    (iii) Decisions made by personnel of the Federal Crop Insurance 
Corporation (``FCIC'') or FSA with respect to contracts of insurance 
insured by FCIC and the noninsured crop disaster assistance program;
    (iv) Decisions made by personnel of FCIC or FSA with respect to 
contracts of insurance provided by private insurance carriers and 
reinsured by FCIC under the provisions of the Federal Crop Insurance 
Act; and
    (v) Other programs to which this part is made applicable by 
individual program regulations.
    (2) For covered programs, this part is applicable to any decision 
made by FSA and its State and county committees, CCC, FCIC, the 
personnel and agents of FSA, FCIC, or CCC, and by the officials of NRCS 
(to the extent provided in Sec. 780.9), except as otherwise may be 
provided in individual program requirements or by the Secretary.
    (3) This part is not applicable to any decision:
    (i) Made by FSA or FCIC with respect to any matter arising under the 
terms of the Standard Reinsurance Agreement between FCIC and any private 
insurance company reinsured by FCIC

[[Page 458]]

under the provisions of the Federal Crop Insurance Act, as amended; or
    (ii) Made by any private insurance company with respect to any 
contract of insurance issued to any producer by the private insurance 
company and reinsured by FCIC under the provisions of the Federal Crop 
Insurance Act, as amended. Those insurance contracts are subject to 
dispute resolution through arbitration or mediation in accordance with 
the contract terms.
    (b) With respect to matters identified in paragraph (a) of this 
section, participants may request reconsideration or appeal, under the 
provisions of this part, of decisions by an agency made with respect to:
    (1) Denial of participation in a program;
    (2) Compliance with program requirements;
    (3) Issuance of payments or other program benefits to a participant 
in a program;
    (4) Making payments or other benefits to an individual or entity who 
is not a participant in a program; or
    (5) Technical determinations by NRCS.
    (c) No reconsideration or appeal may be sought under this part of 
any general program provision or program policy, or any statutory or 
regulatory requirement that is applicable to all similarly situated 
participants.
    (d) Mathematical formulas established under a statute or program 
regulations, and decisions based solely on the application of those 
formulas, are not appealable under this part.
    (e) Only a participant may seek reconsideration or appeal under this 
part.



Secs. 780.3-780.5  [Reserved]



Sec. 780.6  Mediation.

    Participants have the right to seek mediation involving any decision 
appealed under this part in accordance with the provisions of section 
282 of the 1994 Act, if the mediation program of the State where the 
participant's farming operation giving rise to the decision is located 
has been certified by the Secretary for the program involved in the 
agency decision. Any time limitation for review contained in this part 
will be stayed pending timely pursuit and completion of the mediation 
process.



Sec. 780.7  Reconsideration and appeals with the county and State committees and reconsideration with the regional service offices.

    (a) A participant may appeal a decision of personnel subordinate to 
the county committee by filing with the county committee a written 
request for appeal that states the basis upon which the participant 
relies to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program policies; or
    (2) All material facts were not properly considered in such 
decision.
    (b) A participant may seek reconsideration of a final decision by a 
county committee or the Regional Service Office by filing a written 
request for reconsideration with the county committee or the Regional 
Service Office that states the basis upon which the participant relies 
to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program regulations; or
    (2) All material facts were not properly considered in such 
decision.
    (c) A participant may appeal a final decision by a county committee 
or the Regional Service Office to the State committee and request an 
informal hearing in connection therewith, by filing a written appeal 
with the State committee.
    (d) A participant may seek reconsideration of a decision by a State 
committee, and request an informal hearing in connection therewith, by 
filing a written request for reconsideration with the State committee 
that states the basis upon which the participant relies to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program regulations; or
    (2) All material facts were not properly considered in such 
decision.
    (e) Nothing in this part prohibits a participant from filing an 
appeal of a final decision of the county committee or the Regional 
Service Office with NAD in accordance with the NAD regulations.

[[Page 459]]

    (f) This section does not apply to a technical determination by 
NRCS. Procedures regarding the appeal of a technical determination by 
NRCS are contained in Sec. 780.9.



Sec. 780.8  Time limitations for filing requests for reconsideration or appeal.

    (a) A request for reconsideration or an appeal of a decision shall 
be filed within 30 days after written notice of the decision which is 
the subject of the request is mailed or otherwise made available to the 
participant. A request for reconsideration or appeal shall be considered 
to have been ``filed'' when personally delivered in writing to the 
appropriate reviewing authority or when the properly addressed request, 
postage paid, is postmarked. A decision shall become final and non-
reviewable unless reconsideration is timely sought or the decision is 
timely appealed.
    (b) A request for reconsideration or appeal may be accepted and 
acted upon even though it is not filed within the time prescribed in 
paragraph (a) of this section if, in the judgment of the reviewing 
authority with whom such request is filed, the circumstances warrant 
such action.



Sec. 780.9  Appeals of NRCS technical determinations.

    (a) Notwithstanding any other provision of this part, a technical 
determination of NRCS issued to a participant pursuant to Title XII of 
the Food Security Act of 1985, as amended, including wetland 
determinations, may be appealed to a county committee in accordance with 
the procedures in this part.
    (b) If the county committee hears the appeal and agrees with the 
participant's appeal, the county committee shall refer the case with its 
findings to the NRCS State Conservationist to review the matter and 
review the technical determination. The County or State committee 
decision shall incorporate, and be based upon, the NRCS State 
Conservationist's technical determination.



Sec. 780.10  Other finality provisions.

    The finality provisions contained in section 281 of the 1994 Act 
shall be applied to appeals under this part to the extent provided for 
in that section of the 1994 Act.



Sec. 780.11  Reservations of authority.

    (a) Representatives of FSA, FCIC, and CCC may correct all errors in 
entering data on program contracts, loan agreements, and other program 
documents and the results of the computations or calculations made 
pursuant to the contract or agreement.
    (b) Nothing contained in this part shall preclude the Secretary, or 
the Administrator of FSA, Executive Vice President of CCC, the Manager 
of FCIC, the Chief of NRCS, if applicable, or a designee, from 
determining at any time any question arising under the programs within 
their respective authority or from reversing or modifying any decision 
made by FSA or its county and State committees, FCIC, or CCC.



PART 781--DISCLOSURE OF FOREIGN INVESTMENT IN AGRICULTURAL LAND--Table of Contents




Sec.
781.1  General.
781.2  Definitions.
781.3  Reporting requirements.
781.4  Assessment of penalties.
781.5  Penalty review procedure.
781.6  Paperwork Reduction Act assigned number.

    Authority: Sec. 1-10, 92 Stat. 1266 (7 U.S.C. 3501 et seq.).

    Source: 49 FR 35074, Sept. 6, 1984, unless otherwise noted.



Sec. 781.1  General.

    The purpose of these regulations is to set forth the requirements 
designed to implement the Agricultural Foreign Investment Disclosure Act 
of 1978. The regulations require that a foreign person who acquires, 
disposes of, or holds an interest in United States agricultural land 
shall disclose such transactions and holdings to the Secretary of 
Agriculture. In particular, the regulations establish a system for the 
collection of information by the Agricultural Stablization and 
Conservation Service (FSA) pertaining to foreign investment in United 
States agricultural land. The information collected will be

[[Page 460]]

utilized in the preparation of periodic reports to Congress and the 
President by the Economic Research Service (ERS) concerning the effect 
of such holdings upon family farms and rural communities.



Sec. 781.2  Definitions.

    In determining the meaning of the provisions of this part, unless 
the context indicates otherwise, words importing the singular include 
and apply to several persons or things, words importing the plural 
include the singular, and words used in the present tense include the 
future as well as the present. The following terms shall have the 
following meanings:
    (a) AFIDA. AFIDA means the Agricultural Foreign Investment 
Disclosure Act of 1978.
    (b) Agricultural land. Agricultural land means land in the United 
States used for forestry production and land in the United States 
currently used for, or, if currently idle, land last used within the 
past five years, for farming, ranching, or timber production, except 
land not exceeding ten acres in the aggregate, if the annual gross 
receipts from the sale of the farm, ranch, or timber products produced 
thereon do not exceed $1,000. Farming, ranching, or timber production 
includes, but is not limited to, activities set forth in the Standard 
Industrial Classification Manual (1987), Division A, exclusive of 
industry numbers 0711-0783, 0851, and 0912-0919 which cover animal 
trapping, game management, hunting carried on as a business enterprise, 
trapping carried on as a business enterprise, and wildlife management. 
Land used for forestry production means, land exceeding 10 acres in 
which 10 percent is stocked by trees of any size, including land that 
formerly had such tree cover and that will be naturally or artificially 
regenerated.
    (c) Any interest. Any interest means all interest acquired, 
transferred or held in agricultural lands by a foreign person, except:
    (1) Security interests;
    (2) Leaseholds of less than 10 years;
    (3) Contingent future interests;
    (4) Noncontingent future interests which do not become possessory 
upon the termination of the present possessory estate;
    (5) Surface or subsurface easements and rights of way used for a 
purpose unrelated to agricultural production; and
    (6) An interest solely in mineral rights.
    (d) County. County means a political subdivision of a State 
identified as a County or parish. In Alaska, the term means an area so 
designated by the State Agricultural Stabilization and Conservation 
committee.
    (e) Foreign government. Foreign government means any government 
other than the United States government, the government of a State, or a 
political subdivision of a State.
    (f) Foreign individual. Foreign individual means foreign person as 
defined in paragraph (g)(1) of this section.
    (g) Foreign person. Foreign person means:
    (1) Any individual:
    (i) Who is not a citizen or national of the United States; or
    (ii) Who is not a citizen of the Northern Mariana Islands or the 
Trust Territory of the Pacific Islands; or
    (iii) Who is not lawfully admitted to the United States for 
permanent residence or paroled into the United States under the 
Immigration and Nationality Act;
    (2) Any person, other than an individual or a government, which is 
created or organized under the laws of a foreign government or which has 
its principal place of business located outside of all the States;
    (3) Any foreign government;
    (4) Any person, other than an individual or a government:
    (i) Which is created or organized under the laws of any State; and
    (ii) In which a significant interest or substantial control is 
directly or indirectly held:
    (A) By any individual referred to in paragraph (g)(1) of this 
section; or
    (B) By any person referred to in paragraph (g)(2) of this section; 
or
    (C) By any foreign government referred to in paragraph (g)(3) of 
this section; or

[[Page 461]]

    (D) By any numerical combination of such individuals, persons, or 
governments, which combination need not have a common objective.
    (h) Person. Person means any individual, corporation, company, 
association, partnership, society, joint stock company, trust, estate, 
or any other legal entity.
    (i) Secretary. Secretary means the Secretary of Agriculture.
    (j) Security interest. Security interest means a mortgage or other 
debt securing instrument.
    (k) Significant interest of substantial control. Significant 
interest or substantial control means:
    (1) An interest of 10 percent or more held by a person referred to 
in paragraph (g)(4) of this section, by a single individual referred to 
in paragraph (g)(1) of this section, by a single person referred to in 
paragraph (g)(2) of this section, by a single government referred to in 
paragraph (g)(3) of this section; or
    (2) An interest of 10 percent or more held by persons referred to in 
paragraph (g)(4) of this section, by individuals referred to in 
paragraph (g)(1) of this section, by persons referred to in paragraph 
(g)(2) of this section, or by governments referred to in paragraph 
(g)(3) of this section, whenever such persons, individuals, or 
governments are acting in concert with respect to such interest even 
though no single individual, person, or government holds an interest of 
10 percent or more; or
    (3) An interest of 50 percent or more, in the aggregate, held by 
persons referred to in paragraph (g)(4) of this section, by individuals 
referred to in paragraph (g)(1) of this section, by persons referred to 
in paragraph (g)(2) of this section, or by governments referred to in 
paragraph (g)(3) of this section, even though such individuals, persons, 
or governments may not be acting in concert.
    (l) State. State means any of the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, 
Guam, the Virgin Islands, American Samoa, the Trust Territory of the 
Pacific Islands or any other territory or possession of the United 
States.

[49 FR 35074, Sept. 6, 1984, as amended at 58 FR 48274, Sept. 15, 1993]



Sec. 781.3  Reporting requirements.

    (a) All reports required to be filed pursuant to this part shall be 
filed with the FSA County office in the county where the land with 
respect to which such report must be filed is located or where the FSA 
County office administering programs carried out on such land is 
located; Provided, that the FSA office in Washington, DC, may grant 
permission to foreign persons to file reports directly with its 
Washington office when complex filings are involved, such as where the 
land being reported is located in more than one county.
    (b) Any foreign person who held, holds, acquires, or transfers any 
interest in United States agricultural land is subject to the 
requirement of filing a report on form FSA-153 by the following dates:
    (1) August 1, 1979, if the interest in the agricultural land was 
held on the day before February 2, 1979, or
    (2) Ninety days after the date of acquisition or transfer of the 
interest in the agricultural land, if the interest was acquired or 
transferred on or after February 2, 1979.
    (c) Any person who holds or acquires any interest in United States 
agricultural land at a time when such person is not a foreign person and 
who subsequently becomes a foreign person must submit, not later than 90 
days after the date on which such person becomes a foreign person, a 
report containing the information required to be submitted under 
paragraph (e) of this section.
    (d) Any foreign person who holds or acquires any interest in United 
States land at a time when such land is not agricultural land and such 
land subsequently becomes agricultural land must submit, not later than 
90 days after the date on which such land becomes agricultural, a report 
containing the information required to be submitted under paragraph (e) 
of this section.
    (e) Any foreign person required to submit a report under this 
regulation,

[[Page 462]]

except under paragraph (g) of this section, shall file an FSA-153 report 
containing the following information:
    (1) The legal name and the address of such foreign person;
    (2) In any case in which such foreign person is an individual, the 
citizenship of such foreign person;
    (3) In any case in which such foreign person is not an individual or 
a government, the nature and name of the person holding the interest, 
the country in which such foreign person is created or organized, and 
the principal place of business of such foreign person;
    (4) The type of interest held by a foreign person who acquired or 
transferred an interest in agricultural land;
    (5) The legal description and acreage of such agricultural land;
    (6) The purchase price paid for, or any other consideration given 
for, such interest; the amount of the purchase price or the value of the 
consideration yet to be given; the current estimated value of the land 
reported;
    (7) In any case in which such foreign person transfers such 
interest, the legal name and the address of the person to whom such 
interest is transferred; and
    (i) In any case in which such transferee is an individual, the 
citizenship of such transferee; and
    (ii) In any case in which such transferee is not an individual, or a 
government, the nature of the person holding the interest, the country 
in which such transferee is created or organized, and the principal 
place of business;
    (8) The agricultural purposes for which such foreign person intends, 
on the date on which such report is submitted, to use such agricultural 
land;
    (9) When applicable, the name, address and relationship of the 
representative of the foreign person who is completing the FSA-153 form 
for the foreign person;
    (10) How the tract of land was acquired or transferred, the 
relationship of the foreign person to the previous owner, producer, 
manager, tenant or sharecropper, and the rental agreement; and
    (11) The date the interest in the land was acquired or transferred.
    (f)(1) Any foreign person, other than an individual or government, 
required to submit a report under paragraphs (b), (c), and (d) of this 
section, must submit, in addition to the report required under paragraph 
(e) of this section, a report containing the following information:
    (i) The legal name and the address of each foreign individual or 
government holding significant interest or substantial control in such 
foreign person;
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and
    (iii) In any case in which the holder of significant interest or 
substantial control in such foreign person is not an individual or a 
government, the nature and name of the foreign person holding such 
interest, the country in which such holder is created or organized, and 
the principal place of business of such holder.
    (2) In addition, any such foreign person required to submit a report 
under paragraph (f)(1) of this section may also be required, upon 
request, to submit a report containing:
    (i) The legal name and the address of each individual or government 
whose legal name and address did not appear on the report required to be 
submitted under paragraph (f)(1) of this section, if such individual or 
government holds any interest in such foreign person:
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and
    (iii) In any case in which the holder of such interest is not an 
individual or a government, the nature and name of the person holding 
the interest, the country in which such holder is created or organized, 
and the principal place of business of such holder.
    (g) Any foreign person, other than an individual or a government, 
whose legal name is contained on any report submitted in satisfaction of 
paragraph (f) of this section may also be required, upon request, to:
    (1) Submit a report containing:
    (i) The legal name and the address of each foreign individual or 
government holding significant interest or substantial control in such 
foreign person;
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and

[[Page 463]]

    (iii) In any case in which the holder of such interest in such 
foreign person is not an individual or a government, the nature and name 
of the foreign person holding such interest, the country in which each 
holder is created or organized, and the principal place of business of 
such holder.
    (2) Submit a report containing:
    (i) The legal name and address of each individual or government 
whose legal name and address did not appear on the report required to be 
submitted under paragraph (g)(1) of this section if such individual or 
government holds any interest in such foreign person and, except in the 
case of a request which involves a foreign person, a report was required 
to be submitted pursuant to paragraph (f)(2) of this section, disclosing 
information relating to nonforeign interest holders;
    (ii) In any case in which the holder of such interest is an 
individual, the citizenship of such holder; and
    (iii) In any case in which the holder of such interest is not an 
individual or government and, except in a situation where the 
information is requested from a foreign person, a report was required to 
be submitted pursuant to paragraph (f)(2) of this section disclosing 
information relating to nonforeign interest holders, the nature and name 
of the person holding the interest, the country in which such holder is 
created or organized, and the principal place of business of such 
holder.
    (h)(1) Any person which has issued fewer than 100,000 shares of 
common and preferred stock and instruments convertible into equivalents 
thereof shall be considered to have satisfactorily determined that it 
has no obligation to file a report pursuant to Sec. 781.3 if, in 
addition to information within its knowledge, a quarterly examination of 
its business records fails to reveal that persons with foreign mailing 
addresses hold significant interest or substantial control in such 
person.
    (2) Any person which has issued 100,000 or more shares of common and 
preferred stock and instruments convertible into equivalents thereof 
shall be considerd to have satisfactorily determined that it has no 
obligation to file a report pursuant to Sec. 781.3 if, in addition to 
information within its knowledge, a quarterly examination of its 
business records fails to reveal that the percentage of shares held in 
such person both by persons with foreign mailing addresses and 
investment institutions which manage shares does not equal or exceed 
significant interest or substantial control in such person.
    (3) If the person in paragraph (h)(2) of this section determines 
that the percentage of shares, which is held in it both by persons with 
foreign mailing addresses and investment institutions which manage 
shares, equals or exceeds significant interest or substantial control in 
such persons, then such person shall be considered to have 
satisfactorily attempted to determine whether it has an obligation to 
file a report pursuant to Sec. 781.3 if it sends questionnaires to each 
such investment institution holding an interest in it inquiring as to 
whether the persons for which they are investing are foreign persons and 
the percentage of shares reflected by the affirmative responses from 
each such investment institution plus the percentage of shares held by 
persons listed on the business records with foreign mailing addresses 
does not reveal that foreign persons hold significant interest or 
substantial control in such person.
    (i) Any foreign person, who submitted a report under paragraph (b), 
(c), or (d) of this section at a time when such land was agricultural, 
and such agricultural land later ceases to be agricultural, must submit, 
not later than 90 days after the date on which such land ceases being 
agricultural, a revised report from FSA-153 or a written notification of 
the change of status of the land to the FSA office where the report form 
was originally filed. The report form and notification must contain the 
following information:
    (1) The legal name and the address of such foreign person;
    (2) The legal description, which includes the State and county where 
the land is located, and the acreage of such land;
    (3) The date the land ceases to be agricultural;
    (4) The use of the land while agricultural.
    (j) If any foreign person who submitted a report under paragraph 
(b),

[[Page 464]]

(c), or (d) of this section ceases to be a foreign person, such person 
must submit, not later than 90 days after the date such person ceases 
being a foreign person, a written notification of the change of status 
of the person to the FSA office where the report form FSA-153 was 
originally filed. The notification must contain the following 
information:
    (1) The legal name of such person;
    (2) The legal description and acreage of such land;
    (3) The date such person ceases to be foreign.
    (k) Any foreign person who submitted a report under paragraph (b), 
(c), or (d) of this section must submit, not later than 90 days after 
the change of information contained on the report, a written 
notification of the change to the FSA office where the report form FSA-
153 was originally filed. The following information must be kept current 
on the report:
    (1) The legal address of such foreign person;
    (2) The legal name and the address required to be submitted under 
(f)(1) of this section;
    (3) The legal name and the address required to be submitted under 
(g)(1) of this section.

[49 FR 35074, Sept. 6, 1984, as amended at 51 FR 25993, July 18, 1986]



Sec. 781.4  Assessment of penalties.

    (a) Violation of the reporting obligations will consist of:
    (1) Failure to submit any report in accordance with Sec. 781.3;
    (2) Failure to maintain any submitted report with accurate 
information; or
    (3) Submission of a report which the foreign person knows:
    (i) Does not contain, initially or within thirty days from the date 
of a letter returning for completion such incomplete report, all the 
information required to be in such report; or
    (ii) Contains misleading or false information.
    (b) Any foreign person who violates the reporting obligation as 
described in paragraph (a) of this section shall be subject to the 
following penalties:
    (1) Late-filed reports: One-tenth of one percent of the fair market 
value, as determined by the Farm Service Agency, of the foreign person's 
interest in the agricultural land, with respect to which such violation 
occurred, for each week or portion thereof that such violation 
continues, but the total penalty imposed shall not exceed 25 percent of 
the fair market value of the foreign person's interest in such land.
    (2) Submission of an incomplete report or a report containing 
misleading or false information, failure to submit a report or failure 
to maintain a submitted report with accurate information: 25 percent of 
the fair market value, as determined by the Farm Service Agency, of the 
foreign person's interest in the agricultural land with respect to which 
such violation occurred.
    (3) Penalties prescribed above are subject to downward adjustments 
based on factors including:
    (i) Total time the violation existed.
    (ii) Method of discovery of the violation.
    (iii) Extenuating circumstances concerning the violation.
    (iv) Nature of the information misstated or not reported.
    (c) The fair market value for the land, with respect to which such 
violation occurred, shall be such value on the date the penalty is 
assessed, or if the land is no longer agricultural, on the date it was 
last used as agricultural land. The price or current estimated value 
reported by the foreign person, as verified and/or adjusted by the 
County Agricultural Stabilization and Conservation Committee for the 
County where the land is located, will be considered to be the fair 
market value.



Sec. 781.5  Penalty review procedure.

    (a) Whenever it appears that a foreign person has violated the 
reporting obligation as described in paragraph (a) of Sec. 781.4, a 
written notice of apparent liability will be sent to the foreign 
person's last known address by the Farm Service Agency. This notice will 
set forth the facts which indicate apparent liability, identify the type 
of violation listed in paragraph (a) of Sec. 781.4 which is involved, 
state the amount of the penalty to be imposed, include a statement of 
fair market value of the foreign person's interest in the subject

[[Page 465]]

land, and summarize the courses of action available to the foreign 
person.
    (b) The foreign person involved shall respond to a notice of 
apparent liability within 60 days after the notice is mailed. If a 
foreign person fails to respond to the notice of apparent liability, the 
proposed penalty shall become final. Any of the following actions by the 
foreign person shall constitute a response meeting the requirements of 
this paragraph.
    (1) Payment of the proposed penalty in the amount specified in the 
notice of apparent liability and filing of a report, if required, in 
compliance with Sec. 781.3. The amount shall be paid by check or money 
order drawn to the Treasurer of the United States and shall be mailed to 
the U.S. Department of Agriculture, P.O. Box 2415, Washington, DC 20013. 
The Department is not responsible for the loss of currency sent through 
the mails.
    (2) Submission of a written statement denying liability for the 
penalty in whole or in part. Allegations made in any such statement must 
be supported by detailed factual data. The statement should be mailed to 
the Administrator, Farm Service Agency, U.S. Department of Agriculture, 
P.O. Box 2415, Washington, DC 20013.
    (3) A request for a hearing on the proposed penalty may be filed in 
accordance with part 780 of this title.
    (c) After a final decision is issued pursuant to an appeal under 
part 780 of this title, the Administrator or Administrator's designee 
shall mail the foreign person a notice of the determination on appeal, 
stating whether a report must be filed or amended in compliance with 
Sec. 781.3, the amount of the penalty (if any), and the date by which it 
must be paid. The foreign person shall file or amend the report as 
required by the Administrator. The penalty in the amount stated shall be 
paid by check or money order drawn to the Treasurer of the United States 
and shall be mailed to the United States Department of Agriculture, P.O. 
Box 2415, Washington, DC 20013. The Department is not responsible for 
the loss of currency sent through the mails.
    (d) If the foreign person contests the notice of apparent liability 
by submitting a written statement or a request for a hearing thereon, 
the foreign person may elect either to pay the penalty or decline to pay 
the penalty pending resolution of the matter by the Administrator. If 
the Administrator determines that the foreign person is not liable for 
the penalty or is liable for less than the amount paid, the payment will 
be wholly or proportionally refunded. If the Administrator ultimately 
determines that the foreign person is liable, the penalty finally 
imposed shall not exceed the amount imposed in the notice of apparent 
liability.
    (e) If a foreign person fails to respond to the notice of apparent 
liability as required by paragraph (b) of this section, or fails to pay 
the penalty imposed by the Administrator under paragraph (d) of this 
section, the case will, without further notice, be referred by the 
Department to the Department of Justice for prosecution in the 
appropriate District Court to recover the amount of the penalty.
    (f) Any amounts approved by the U.S. Department of Agriculture for 
disbursement to a foreign person under the programs administered by the 
Department may be setoff against penalties assessed hereunder against 
such person, in accordance with the provisions of 7 CFR part 13.

[49 FR 35074, Sept. 6, 1984, as amended at 60 FR 67318, Dec. 29, 1995]



Sec. 781.6  Paperwork Reduction Act assigned number.

    The information collection requirements contained in these 
regulations (7 CFR part 781) 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 0560-0097.



PART 782--END-USE CERTIFICATE PROGRAM--Table of Contents




                           Subpart A--General

Sec.
782.1  Basis and purpose.
782.2  Definitions.
782.3  Administration.
782.4  OMB control numbers assigned pursuant to the Paperwork Reduction 
          Act.

[[Page 466]]

      Subpart B--Implementation of the End-Use Certificate Program

782.10  Identification of commodities subject to end-use certificate 
          regulations.
782.11  Extent to which commodities are subject to end-use certificate 
          regulations.
782.12  Filing FSA-750, End-Use Certificate for Wheat.
782.13  Importer responsibilities.
782.14  Identity preservation.
782.15  Filing FSA-751, Wheat Consumption and Resale Report.
782.16  Designating end use on form FSA-751.
782.17  Wheat purchased for resale.
782.18  Wheat purchased for export.
782.19  Penalty for noncompliance.

                     Subpart C--Records and Reports

782.20  Importer records and reports.
782.21  End-user and exporter records and reports.
782.22  Subsequent buyer records and reports.
782.23  Failure to file end-use certificates or consumption and resale 
          reports.
782.24  Recordkeeping and examination of records.
782.25  Length of time records are to be kept.

    Authority: 19 U.S.C. 3391(f).

    Source: 60 FR 5089, Jan. 26, 1995, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 782 appear at 61 FR 
32643, June 25, 1996.



                           Subpart A--General



Sec. 782.1  Basis and purpose.

    The regulations contained in this part are issued pursuant to and in 
accordance with Section 321(f) of the North American Free Trade 
Agreement Implementation Act. These regulations govern the establishment 
of the end-use certificate program, the completion of end-use 
certificates, the identification of commodities requiring end-use 
certificates, the submission of reports, and the keeping of records and 
making of reports incident thereto.



Sec. 782.2  Definitions.

    As used in this part and in all instructions, forms, and documents 
in connection therewith, the words and phrases defined in this section 
shall have the meanings herein assigned to them unless the context or 
subject matter requires otherwise. References contained herein to other 
parts of this chapter or title shall be construed as references to such 
parts and amendments now in effect or later issued.
    Date of entry means the effective time of entry of the merchandise, 
as defined in 19 CFR part 101.
    End Use means the actual manner in which Canadian-produced wheat was 
used, including, among other uses, milling, brewing, malting, 
distilling, manufacturing, or export.
    End user means the entity that uses Canadian-produced wheat for, 
among other uses, milling, brewing, malting, distilling, manufacturing, 
or other use, except resale.
    Entity means a legal entity including, but not limited to, an 
individual, joint stock company, corporation, association, partnership, 
cooperative, trust, and estate.
    Entry means that documentation required by 19 CFR part 142 to be 
filed with the appropriate U.S. Customs officer to secure the release of 
imported merchandise from U.S. Customs custody, or the act of filing 
that documentation.
    Grain handler means an entity other than the importer, exporter, 
subsequent buyer, or end user that handles wheat on behalf of an 
importer, exporter, subsequent buyer, or end user.
    Importer means a party qualifying as an Importer of Record pursuant 
to 19 U.S.C. 1484(a).
    Metric ton means a unit of measure that equals 2,204.6 pounds.
    Subsequent buyer means an entity other than the end user or importer 
which owns wheat originating in Canada.
    Workdays means days that the Federal government normally conducts 
business, which excludes Saturdays, Sundays, and Federal holidays.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996; 64 
FR 12885, Mar. 16, 1999]



Sec. 782.3  Administration.

    The end-use certificate program will be administered under the 
general supervision and direction of the Administrator, Farm Service 
Agency (FSA), U.S. Department of Agriculture (USDA), through the Office 
of the Deputy Administrator for Commodity Operations (DACO), FSA, 
Washington, D.C., and the Kansas City Commodity

[[Page 467]]

Office (KCCO), FSA, Kansas City, MO, in coordination with the 
Commissioner of Customs pursuant to a Memorandum of Understanding.



Sec. 782.4  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements in this part have been 
approved by the Office of Management and Budget and assigned OMB control 
number 0560-0151.

[61 FR 32643, June 25, 1996]



      Subpart B--Implementation of the End-Use Certificate Program



Sec. 782.10  Identification of commodities subject to end-use certificate regulations.

    (a) The regulations in this part are applicable to wheat and barley, 
respectively, imported into the U.S. from any foreign country, as 
defined in 19 CFR 134.1, or instrumentality of such foreign country 
that, as of April 8, 1994, required end-use certificates for imports of 
U.S.-produced wheat or barley.
    (b) Because Canada is the only country with such requirements on 
wheat, and no country has an end-use certificate requirement for barley, 
only wheat originating in Canada is affected by the regulations in this 
part.



Sec. 782.11  Extent to which commodities are subject to end-use certificate regulations.

    (a) In the event that Canada eliminates the requirement for end-use 
certificates on imports from the U.S., the provisions of the regulations 
in this part shall be suspended 30 calendar days following the date 
Canada eliminates its end-use certificate requirement, as determined by 
the Secretary.
    (b) The provisions of the regulations in this part may be suspended 
if the Secretary, after consulting with domestic producers, determines 
that the program has directly resulted in the:
    (1) Reduction of income to U.S. producers of agricultural 
commodities, or
    (2) Reduction of the competitiveness of U.S. agricultural 
commodities in world export markets.



Sec. 782.12  Filing FSA-750, End-Use Certificate for Wheat.

    (a) Each entity that imports wheat originating in Canada shall, for 
each entry into the U.S., obtain form FSA-750, End-Use Certificate for 
Wheat, from Kansas City Commodity Office, Warehouse Contract Division, 
P.O. Box 419205, Kansas City, MO 64141-6205, and submit the completed 
original form FSA-750 to KCCO within 10 workdays following the date of 
entry or release. Each form FSA-750 shall set forth, among other things, 
the:
    (1) Name, address, and telephone number of the importer,
    (2) Customs entry number,
    (3) Date of entry,
    (4) Importer number,
    (5) Class of wheat being imported,
    (6) Grade, protein content, moisture content, and dockage level of 
wheat being imported,
    (7) If imported as a result of a contract for sale, the date of such 
contract.
    (8) Quantity imported, in net metric tons, rounded to the nearest 
hundredth of a metric ton, per conveyance,
    (9) Storage location of the wheat,
    (10) Mode of transportation and the name of the transportation 
company used to import the wheat, and
    (11) A certification that the identity of the Canadian-produced 
wheat will be preserved until such time as the wheat is either delivered 
to a subsequent buyer or end-user, or loaded onto a conveyance for 
direct delivery to an end user.
    (b) Importers may provide computer generated form FSA-750, provided 
such computer generated forms:
    (1) Are approved in advance by KCCO,
    (2) Contain a KCCO-assigned serial number, and
    (3) Contain all of the information required in paragraphs (a)(1) 
through (a)(9).
    (c) KCCO will accept form FSA-750 submitted through the following 
methods:
    (1) Mail service, including express mail,
    (2) Facsimile machine, and
    (3) Other electronic transmissions, provided such transmissions are 
approved in advance by KCCO. The importer remains responsible for 
ensuring

[[Page 468]]

that electronically transmitted forms are received in accordance with 
paragraph (a).
    (d) The original form FSA-750 and one copy of form FSA-750 shall be 
signed and dated by the importer.
    (e) Distribution of form FSA-750 will be as follows:
    (1) If form FSA-750 is submitted to KCCO in accordance with 
paragraph (c)(1);
    (i) The original shall be forwarded to Kansas City Commodity Office, 
Warehouse License and Contract Division, P.O. Box 419205, Kansas City, 
MO 64141-6205, by the importer,
    (ii) One copy shall be retained by the importer.
    (2) If form FSA-750 is submitted to KCCO in accordance with 
paragraphs (c)(2) or (c)(3), the original form FSA-750 that is signed 
and dated by the importer in accordance with paragraph (d) shall be 
maintained by the importer,
    (3) The importer shall provide a photocopy to the end user or, if 
the wheat is purchased for purposes of resale, the subsequent buyer(s).
    (f) The completion and filing of an end-use certificate does not 
relieve the importer of other legal requirements, such as those imposed 
by other U.S. agencies, pertaining to the importation.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996; 64 
FR 12885, Mar. 16, 1999]



Sec. 782.13  Importer responsibilities.

    The importer shall:
    (a) File form FSA-750 in accordance with Sec. 782.12.
    (b) Immediately notify each subsequent buyer, grain handler, or end 
user that the wheat being purchased or handled originated in Canada and 
may only be commingled with U.S.-produced wheat by the end user or when 
loaded onto a conveyance for direct delivery to the end user or a 
foreign country.
    (c) Provide each subsequent buyer or end user with a copy of form 
FSA-750 that was filed when the Canadian wheat entered the U.S.
    (d) Submit to KCCO, within 15 workdays following the date of sale, 
form FSA-751, Wheat Consumption and Resale Report, in accordance with 
Sec. 782.15.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]



Sec. 782.14  Identity preservation.

    (a) The importer and all subsequent buyers of the imported wheat 
shall preserve the identity of the Canadian-produced wheat.
    (b) Canadian-produced wheat may only be commingled with U.S.-
produced wheat by the end user, or when loaded onto a conveyance for 
direct delivery to the end user or foreign country.
    (c) Failure to meet the requirements in paragraphs (a) and (b) of 
this section shall constitute noncompliance by the importer or 
subsequent buyer for the purposes of this part.



Sec. 782.15  Filing FSA-751, Wheat Consumption and Resale Report.

    (a) For purposes of providing information relating to the 
consumption and resale of Canadian-produced wheat, form FSA-751, Wheat 
Consumption and Resale Report, shall be filed with KCCO by each:
    (1) Importer and subsequent buyer, for each sale to a subsequent 
buyer or end user, within 15 workdays following the date of sale.
    (2) End user and exporter, for full and partial consumption or 
export, within 15 workdays following:
    (i) March 31,
    (ii) June 30,
    (iii) September 30, and
    (iv) December 31.
    (b) Each form FSA-751 shall set forth, among other things, the:
    (1) Name, address, and telephone number of the filer,
    (2) Storage location of the wheat,
    (3) Name and address of the importer,
    (4) Form FSA-750, End-Use Certificate for Wheat, serial number,
    (5) Class of wheat,
    (6) Date the wheat was received at the filer's facility,
    (7) Quantity of wheat received, in net metric tons, rounded to the 
nearest hundredth of a metric ton,
    (8) Certification to be completed by end users and exporters that 
requires the end user or exporter to provide, among other things:

[[Page 469]]

    (i) A certification of compliance with these regulations,
    (ii) The quantity consumed or exported,
    (iii) The quantity remaining,
    (iv) The manner in which the commodity was used.
    (v) The signature of an authorized representative of the end user or 
exporter.
    (9) Certification to be completed by subsequent buyers and importers 
that requires the subsequent buyer or importer to provide, among other 
things:
    (i) A certification of compliance with the regulations in this part,
    (ii) The quantity resold,
    (iii) The name, address, and telephone number of the buyer, and
    (iv) The signature of an authorized representative of the subsequent 
buyer or importer.
    (c) End user and exporter shall submit form FSA-751 to KCCO 
quarterly until the wheat has been fully utilized or exported in 
accordance with the regulations in this part.
    (d) Importers and subsequent buyers shall, for each individual sale, 
submit form FSA-751 to KCCO until the imported wheat has been fully 
resold.
    (e) Filers may provide computer generated form FSA-751, provided 
such computer generated forms:
    (1) Are approved in advance by KCCO, and
    (2) Contain the information required in paragraphs (b)(1) through 
(b)(9) of this section.
    (f) KCCO will accept form FSA-751 submitted through the following 
methods:
    (1) Mail service, including express mail,
    (2) Facsimile machine, and
    (3) Other electronic transmissions, provided such transmissions are 
approved in advance by KCCO. The importer, end user, exporter, or 
subsequent buyer remains responsible for ensuring that electronically 
transmitted forms are received in accordance with this section.
    (g) Distribution of form FSA-751 will be as follows:
    (1) If form FSA-751 is submitted to KCCO in accordance with 
paragraph (f)(1) of this section:
    (i) The original shall be forwarded to Kansas City Commodity Office, 
Warehouse License and Contract Division, P.O. Box 419205, Kansas City, 
MO 64141-6205, by the importer, end user, exporter, or subsequent buyer.
    (ii) One copy shall be retained by the importer, end user, exporter, 
or subsequent buyer.
    (2) If form FSA-751 is submitted to KCCO in accordance with 
paragraphs (f)(2) or (f)(3) of this section, the original form FSA-751 
shall be maintained by the importer, end user, exporter, or subsequent 
buyer.

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]



Sec. 782.16  Designating end use on form FSA-751.

    (a) If the end use specified on the applicable form FSA-751, Wheat 
Consumption and Resale Report, is ``export,'' the exporter must specify 
the final destination, by country, on form FSA-751.
    (b) If the end user utilizes the wheat for purposes other than 
milling, brewing, malting, distilling, export, or manufacturing, such 
use must be specifically designated on form FSA-751.



Sec. 782.17  Wheat purchased for resale.

    (a) This section applies to an importer or subsequent buyer who 
imports or purchases Canadian-produced wheat for the purpose of 
reselling the wheat.
    (b) The importer or subsequent buyer shall immediately notify each 
subsequent buyer, grain handler, exporter, or end user that the wheat 
being purchased or handled originated in Canada and may only be 
commingled with U.S.-produced wheat by the end user or when loaded onto 
a conveyance for direct delivery to the end user or a foreign country.
    (c) The importer or subsequent buyer shall provide all purchasers of 
Canadian-produced wheat with a photocopy of the form FSA-750 submitted 
to KCCO by the importer in accordance with Sec. 782.12(a).

[60 FR 5089, Jan. 26, 1995, as amended at 61 FR 32643, June 25, 1996]

[[Page 470]]



Sec. 782.18  Wheat purchased for export.

    (a) This section applies to an importer or subsequent buyer who 
imports or purchases Canadian-produced wheat for the purpose of export 
to a foreign country or instrumentality.
    (b) Wheat that is purchased for the purpose of export must be stored 
identity preserved while the importer or subsequent buyer maintains 
control of the wheat, except that such wheat may be commingled when 
loaded onto a conveyance for delivery to the foreign country or 
instrumentality.
    (c) Importers or subsequent buyers that purchase wheat for export to 
a foreign country or instrumentality must complete form FSA-751 
quarterly, in accordance with Sec. 782.15.



Sec. 782.19  Penalty for noncompliance.

    It shall be a violation of 18 U.S.C. 1001 for any entity to engage 
in fraud with respect to, or to knowingly violate, the provisions set 
forth in this part.



                     Subpart C--Records and Reports



Sec. 782.20  Importer records and reports.

    (a) The importer shall retain a copy of each form:
    (1) FSA-750, End-Use Certificate for Wheat, that is submitted to 
KCCO in accordance with Sec. 782.12(a); and
    (2) FSA-751, Wheat Consumption and Resale Report, that is submitted 
to KCCO in accordance with Sec. 782.15(a)(1).
    (b) The importer shall maintain records to verify that the wheat was 
identity preserved until such time as the wheat was:
    (1) Loaded onto the conveyance for direct delivery to an end user, 
or
    (2) Delivered to an end user, or
    (3) Delivered to a subsequent buyer.
    (c) Copies of the documents, information, and records required in 
paragraphs (a) and (b) of this section shall be kept on file at the 
importer's headquarters office or other location designated by the 
importer for the period specified in Sec. 782.25.



Sec. 782.21  End-user and exporter records and reports.

    (a) The end user or exporter shall retain a copy of each form FSA-
751, Wheat Consumption and Resale Report, that is filed with KCCO in 
accordance with Sec. 782.15(a)(2).
    (b) The end user or exporter shall retain a copy of each form FSA-
750, End-Use Certificate for Wheat, provided to the end-user or exporter 
in accordance with Sec. 782.17(b).
    (c) The exporter shall maintain records to verify that wheat 
purchased for the purpose of export was stored identity preserved until 
such time as the wheat was loaded onto a conveyance for delivery to the 
foreign country or instrumentality.
    (d) Copies of the documents required in paragraphs (a), (b), and (c) 
of this section shall be kept on file at the end-user's or exporter's 
headquarters office or other location designated by the end user or 
exporter for the period specified in Sec. 782.25.



Sec. 782.22  Subsequent buyer records and reports.

    (a) The subsequent buyer shall retain a copy of each form FSA-751, 
Wheat Consumption and Resale Report, that is filed with KCCO in 
accordance with Sec. 782.15(a)(1).
    (b) The subsequent buyer shall retain a copy of each form FSA-750, 
End-Use Certificate for Wheat, provided to the subsequent buyer in 
accordance with Sec. 782.17(b).
    (c) The subsequent buyer shall maintain records to verify that the 
wheat specified on the end-use certificate was identity preserved during 
the time that the subsequent buyer maintained control of the wheat, or 
until the wheat was loaded onto a conveyance for direct delivery to an 
end user.
    (d) Copies of the documents and records required in paragraphs (a) 
through (c) of this section shall be kept on file at the subsequent 
buyer's headquarters office or other location designated by the 
subsequent buyer for the period specified in Sec. 782.25.



Sec. 782.23  Failure to file end-use certificates or consumption and resale reports.

    Failure by importers, end users, exporters, and subsequent buyers to 
file form FSA-750, End-Use Certificate for

[[Page 471]]

Wheat, and form FSA-751, Wheat Consumption and Resale Report, as 
applicable, and retain or maintain related copies and records shall 
constitute noncompliance for the purposes of Sec. 782.19.



Sec. 782.24  Recordkeeping and examination of records.

    (a) Examination. For the purpose of verifying compliance with the 
requirements of this part, each importer, end-user, exporter, and 
subsequent buyer shall make available at one place at all reasonable 
times for examination by representatives of USDA, all books, papers, 
records, contracts, scale tickets, settlement sheets, invoices, written 
price quotations, or other documents related to the importation of the 
Canadian-produced wheat that is within the control of such entity.
    (b) Orderly retention of records. To facilitate examination and 
verification of the records and reports required by this part, copies of 
form FSA-750, End-Use Certificate for Wheat, and form FSA-751, Wheat 
Consumption and Resale Report, shall be filed in an orderly manner, and 
must be made available for inspection by representatives of USDA.



Sec. 782.25  Length of time records are to be kept.

    The records required to be kept under this part shall be retained 
for 3 years following the filing date of the applicable record. Records 
shall be kept for such longer period of time as may be requested in 
writing by USDA representatives.



PART 783--1997 TREE ASSISTANCE PROGRAM--Table of Contents




Sec.
783.1  Applicability.
783.2  Administration.
783.3  Definitions.
783.4  Program deadlines.
783.5  Ownership, income and payment limitations.
783.6  Qualifying loss.
783.7  Eligible costs.
783.8  Application process.
783.9  Obligations of an eligible owner.
783.10  Partial performance.
783.11  Liens and claims of creditors; set-offs.
783.12  Appeals.
783.13  Misrepresentation and scheme or device.
783.14  Estates, trusts, and minors.
783.15  Death, incompetency, or disappearance.
783.16  Other regulations.
783.17  Paperwork Reduction Act assigned numbers.

    Authority: Pub. L. 105-18, 111 Stat. 158.

    Source: 62 FR 50850, Sept. 29, 1997, unless otherwise noted.



Sec. 783.1  Applicability.

    The regulations in this part set forth the terms and conditions of 
the Tree Assistance Program (TAP) authorized by the Act Making Emergency 
Supplemental Appropriations for Recovery from Natural Disasters for the 
Fiscal Year ending September 30, 1997 (1997 Emergency Appropriations 
Act). Within specified limits, FSA is authorized by the 1997 Emergency 
Appropriations Act to reimburse eligible owners for up to 100 percent of 
the cost of replanting or rehabilitating eligible trees and eligible 
vines damaged by natural disasters occurring from October 1, 1996, 
through September 30, 1997.



Sec. 783.2  Administration.

    (a) This part shall be administered by the Farm Service Agency (FSA) 
under the general direction and supervision of the Deputy Administrator 
for Farm Programs, FSA. The program shall be carried out in the field by 
FSA State and county 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.

[[Page 472]]

    (d) The State committee shall allow the county committee to approve 
applications only for those owners of eligible trees and eligible vines 
who actually owned the eligible trees or eligible vines at time of the 
eligible disaster and at the time of application.
    (e) No delegation herein to a State or county committee shall 
preclude the Deputy Administrator for Farm Programs, 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.



Sec. 783.3  Definitions.

    (a) In determining the meaning of the provisions of this part, 
unless the context indicates otherwise, singular terms include the 
plural and plural terms include the singular, masculine terms include 
the feminine, and terms used in the present tense include the future.
    (b) The following terms contained in this part shall have the 
following meanings:
    Annual gross revenue means, with respect to a person as defined in 
part 1400 of this title:
    (1) For a person who receives more than 50 percent of such person's 
gross income from farming, ranching, and forestry operations, the total 
gross income received from such operations.
    (2) For a person who receives 50 percent or less of such person's 
gross income from farming, ranching, and forestry operations, the total 
gross income from all sources.
    (3) The determinations made in accordance with 7 CFR part 1400, 
subpart B, shall include all entities in which an individual or entity 
has an interest, whether or not such entities are engaged in farming.
    (4) The year for which the annual gross income shall be received for 
the purpose of this definition shall be the 1996 tax year.
    Cutting means a vine which was planted in the ground for commercial 
production of grapes, kiwi fruit, or passion fruit.
    Eligible owner means an individual, partnership, corporation, 
association, estate, trust, or other business enterprise or legal entity 
and includes any Indian tribe under the Indian Self-Determination and 
Education Assistance Act; any Indian organization or entity chartered 
under the Indian Reorganization Act; any tribal organization under the 
Indian Self-Determination and Assistance Act; and, any economic 
enterprise under the Indian Financing Act of 1974 which meets the 
requirements of this part.
    Eligible trees means papaya trees or orchard trees grown for 
commercial production of fruit and nuts.
    Eligible vines means grape, kiwi fruit, or passion fruit vines grown 
for commercial production.
    Individual stand means an area of eligible trees or vines which are 
tended by an eligible owner as a single operation, whether or not such 
trees or vines are planted in the same field or similar location, as 
determined by the Deputy Administrator. Differing species of trees or 
vines in the same field or similar area may be considered to be separate 
individual stands if FSA determines that the species have significantly 
differing levels of freeze, drought, earthquake, hurricane, or typhoon 
susceptibility.
    Local county office means the county FSA office or USDA Service 
Center that services the farm if an FSA farm serial number has been 
assigned or, if no serial number is assigned, then the office that 
services the county in which the eligible trees or vines are located.
    Natural disaster means drought, excessive moisture, hail, freeze, 
tornado, hurricane, earthquake, or excessive wind.
    Normal mortality means the percentage of plant loss on the 
individual stand of eligible trees or eligible vines which normally 
occurs in a 12-month period.
    Orchard means eligible trees planted for commercial annual 
production of fruit or nuts.
    Owner means a person who has legal ownership of the eligible trees 
or vines as determined by FSA. Eligible tree or vine owners need not own 
the land on which the trees or vines are planted.
    Seedling means an eligible tree which was planted in the ground for 
commercial purposes.

[[Page 473]]

    Total mortality means the actual percentage of eligible tree or 
eligible vine losses on a given individual stand.
    (c) The definitions set forth in this section shall be applicable 
for all purposes of administering the Tree Assistance Program. The terms 
defined in part 718 of this chapter shall also be applicable, except 
where those definitions conflict with the definitions set forth in this 
section.



Sec. 783.4  Program deadlines.

    (a) A request for benefits under this part to reimburse for losses 
to eligible trees and eligible vines must be submitted to FSA at the 
local county office by close of business on Friday, September 26, 1997.
    (b) All related and supporting documentation shall be submitted at 
the time the request for assistance is filed or no later than September 
30, 1997.
    (c) The State committee shall allow the county committee to approve 
late-filed requests received after the enrollment period ends, but no 
later than September 30, 1997. Late-filed requests will be accepted only 
for those owners who applied late due to circumstances beyond their 
control as determined by the county committee and concurred with by the 
State committee.
    (d) The State committee may approve an extension, not to exceed 24 
months beyond the date of application, to complete TAP practices if 
delays are determined to be beyond the control of the applicant.



Sec. 783.5  Ownership, income and payment limitations.

    (a) An eligible owner must:
    (1) Own less than 500 acres of each type of eligible tree or 
eligible vine, regardless of their size or condition, which produce 
annual crops for commercial purposes, or are grown for harvest for 
commercial purposes; and
    (2) Have owned the eligible trees or eligible vines at the time the 
natural disaster occurred and continuously until the application for TAP 
benefits is submitted.
    (b) No person, as defined in part 1400 of this title, as applicable, 
with an annual gross revenue in excess of $2.5 million for the 1996 tax 
year will be eligible for TAP benefits.
    (c) The amount of payments which any person, as determined in 
accordance with part 1400 of this title, may receive under this part in 
connection with losses of eligible trees and eligible vines, shall not 
exceed $25,000.
    (d) An owner who acquires eligible trees or eligible vines from a 
previous owner approved for 1997 TAP shall not receive additional 
program benefits due to an increase in the number of persons associated 
with the new ownership. A new owner is allowed to receive TAP benefits 
not paid to the previous owner if the new owner:
    (1) Acquires ownership of land or trees for which TAP benefits have 
been approved;
    (2) Meets the income and payment limitation under this part;
    (3) Agrees to complete all practices which the original owner has 
not completed; and
    (4) Agrees to receive any remaining payments and assumes full 
responsibility for all provisions of TAP, including refund of payments 
made to the previous owner, if necessary.
    (e) In the event the total amount of claims submitted under this 
part during the sign-up period exceeds the applicable funds available 
for such period, such payments shall be reduced by a uniform national 
percentage. Such payment reductions shall be applied after the 
imposition of applicable payment limitation provisions.
    (f) Federal, State, and local governments and agencies and political 
subdivisions thereof are not eligible for benefits under this part.



Sec. 783.6  Qualifying loss.

    (a) An eligible owner may receive assistance under this part for 
qualifying loss of eligible trees, eligible orchard tree seedlings, 
eligible vines or cuttings as determined by the Deputy Administrator for 
Farm Programs, FSA:
    (1) Which were destroyed or injured as a result of a natural 
disaster, as determined by the county committee in accordance with the 
instructions of the Deputy Administrator; and
    (2) For which the total mortality rate equals or exceeds 20 percent, 
after deducting the normal mortality the owner would have incurred.

[[Page 474]]

    (b) Qualifying loss determinations shall be made on an individual 
stand basis. A qualifying loss shall be the loss for the individual 
stand of eligible trees, or eligible vines, as appropriate, after 
deducting the normal mortality of such trees or vines, equal to or in 
excess of 20 percent mortality.
    (c) Qualifying losses of eligible trees or vines shall not include:
    (1) Losses which could have been prevented through readily-available 
horticultural measures; or
    (2) Losses of trees or vines which would normally have been 
rehabilitated or replanted within the 12-month period following the 
loss, in the absence of the natural disaster.
    (d) When visible evidence of losses no longer exists on the site 
where the eligible trees or eligible vines were planted, acceptable 
evidence as determined in accordance with instructions issued by the 
Deputy Administrator must be established for the county committee to 
qualify the individual stand for the program.



Sec. 783.7  Eligible costs.

    (a) Payments will be made only to the extent specifically provided 
for in this part. An eligible owner shall be reimbursed under this part, 
to the extent of the availability of funds, for an amount not to exceed 
100 percent of the eligible costs of replanting or rehabilitating trees 
or vines, not in excess of the number of trees or vines constituting the 
qualifying loss. Such reimbursement may be based on average costs or the 
actual costs for the replanting, or rehabilitating practices, as 
determined by the Deputy Administrator. If the costs are to replace 
eligible trees or eligible vines, the costs reimbursed under this part 
shall only be for replacement seedlings or cuttings of a size and 
quality determined by Deputy Administrator to be sufficient for that 
purpose. The costs for which cost-sharing shall be permitted shall only 
be the costs of:
    (1) The seedlings or cuttings, eligible tree or vine rehabilitation 
measures;
    (2) Site preparation measures and debris handling measures that are 
normal cultural practices for the type of individual stand being re-
established and necessary to ensure successful plant survival;
    (3) Chemicals and nutrients if needed to ensure successful plant 
survival; and
    (4) Labor used to physically plant or rehabilitate such seedlings or 
cuttings as based on standard labor rates as determined by the county 
committee.
    (b) Costs eligible for reimbursement under this part specifically 
exclude items such as fencing, irrigation, irrigation equipment, 
measures to protect seedlings from wildlife, and general land and 
eligible tree or vine stand improvements, and re-establishing structures 
and windscreens.
    (c) When eligible trees or eligible vines are replanted instead of 
rehabilitated, the types planted may be different than those originally 
planted if the new types have the same general end use as determined by 
the county committee. Payments will be based on the lesser of rates 
established to plant the types actually lost or the cost to establish 
the trees or vines actually used. Eligible costs shall not include costs 
incurred for planting species of seedlings or cuttings differing 
significantly from the species of the seedlings or cuttings constituting 
the qualifying loss except as approved by the Deputy Administrator. If 
such substitution is approved, eligible costs shall be the lesser of:
    (1) The actual eligible costs incurred; or
    (2) The estimated eligible costs which otherwise would have been 
incurred to replant the species constituting the qualifying loss.
    (d) Costs eligible for reimbursement under this part shall only 
include expenditures approved within the limits set by this part, 
including, but not limited to, those limits set forth in paragraph (a) 
of this section. Eligible costs include costs incurred before an 
application for payment is submitted. Eligible costs shall only include 
those costs for which the eligible owner has submitted documentation 
determined by the county committee to adequately document such costs. 
The county committee shall limit TAP payments for eligible costs at the 
minimum level to re-establish an individual stand, as determined by the 
State committee.

[[Page 475]]

    (e) Payments shall not exceed the lesser of 100 percent of the 
eligible costs actually incurred by an eligible applicant for replanting 
or rehabilitating the qualifying loss, or the average cost to replant or 
rehabilitate the qualifying loss, as determined by the Deputy 
Administrator.



Sec. 783.8  Application process.

    (a) Applications for payment shall be filed by the eligible owner 
with the local county office and shall contain an estimate by the 
applicant of the number of eligible trees or eligible vines which 
constitute the qualifying loss and the amount of the acreage of the 
individual stands with respect to which the loss was suffered. The 
applicant must provide sufficient evidence of the losses so as to allow 
the county committee to determine qualifying losses.
    (b)(1) The county committee or a designee may conduct field reviews 
to determine the actual qualifying loss and the acreage of individual 
stands with respect to which the loss was suffered. The county committee 
and, if designated by the county committee, the county executive 
director, are authorized, subject to the provisions of this part, to 
approve or disapprove all applications, subject to the limitations and 
conditions of this part, provided the applicant is not a county 
committee member or an FSA employee.
    (2) The State committee shall approve or disapprove applications of 
the county committee members and all FSA employees except applications 
submitted by the State Executive Director, or by a State committee 
member.
    (3) The Deputy Administrator, or a designee, shall approve or 
disapprove applications of State committee members and the State 
Executive Director.
    (4) All applications forwarded to a higher reviewing authority for 
consideration shall be accompanied by committee recommendations. No 
application shall be approved unless the owner meets all eligibility 
requirements. Information furnished by the applicant 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 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 shall not be approved until 
sufficient additional information is provided by the owner.
    (c) If an owner is eligible to receive payments under this part and 
the catastrophic risk protection crop insurance program (7 CFR part 
402), or the noninsured crop disaster assistance program (7 CFR part 
1437) for the same tree or vine loss, the eligible owner must choose 
whether to receive the other program benefits or payments under this 
part. The eligible owner cannot receive both. However, if the other 
program benefits are not available until after the eligible owner has 
received benefits under this part, the eligible owner may obtain the 
other program benefits if the eligible owner refunds the total amount of 
the payment received prior to receiving the other program benefits. If 
the eligible owner purchased additional coverage insurance, as defined 
in 7 CFR 400.651, or is eligible for emergency loans, the eligible owner 
will be eligible for assistance under such program, and this part as 
long as the amount received for the loss under the additional coverage 
or the emergency loan together with the amount received from the other 
programs does not exceed the amount of the actual loss of the eligible 
owner.

[62 FR 50850, Sept. 29, 1997, as amended at 63 FR 3791, Jan. 27, 1998]



Sec. 783.9  Obligations of an eligible owner.

    (a) Eligible owners must submit a request for assistance on the 
approved form and must also submit all documentation requested by the 
appropriate official as necessary to make determinations specified in 
this part.
    (b) Eligible owners must:
    (1) Comply with all terms and conditions of this part;
    (2) Execute all required documents;
    (3) Comply with all applicable noxious weed laws; and

[[Page 476]]

    (4) Complete the TAP practice within 24 months of the date the 
application is approved.
    (c) In the event of a determination that a person was erroneously 
determined to be eligible or has become ineligible for all or part of a 
payment made under this part for any reason, including a failure to 
comply with the terms and conditions of this part, or other condition 
for payment imposed by the county or State committee or the Deputy 
Administrator, such person shall refund any payment paid under this part 
together with interest. Such interest shall be charged at the rate 
determined for late payment charges under part 1403 of this title and 
computed from the date of disbursement of the payment to the date of the 
refund.
    (d) Eligible owners must allow representatives of FSA to visit the 
site for the purposes of examining and certifying mortality and practice 
completion.



Sec. 783.10  Partial performance.

    (a) Participants may elect not to replant the maximum amount of 
eligible trees or eligible vines because of imposition of the payment 
limitation in Sec. 783.5(c) or any other reason. If owners partially 
complete their practices after they apply, but do not replant or 
rehabilitate all of their qualifying trees or vines, the county 
committee shall calculate payment based on the extent performed.
    (b) Eligible owners who have been paid but choose not to complete 
the practice by the final practice expiration date shall refund their 
payments with interest. Interest on these refunds shall be calculated 
beginning on the date the payment was disbursed. Such refund amounts may 
be reduced, at the discretion of the Deputy Administrator, when only 
part of the required replanting practice is not implemented.



Sec. 783.11  Liens and claims of creditors; set-offs.

    Any 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 person except 
agencies of the U.S. Government. The regulations governing set-offs and 
withholdings found at part 792 of this chapter shall be applicable to 
this part.



Sec. 783.12  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 11 of this title and part 780 of this chapter.



Sec. 783.13  Misrepresentation and scheme or device.

    (a) A person shall be ineligible to receive assistance under this 
program if such person is determined by the State committee or the 
county committee to have:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) All moneys paid by CCC under this part to any such person or to 
any other person as a result of such person's actions shall be refunded 
to CCC with interest together with such other sums as may become due. 
The party engaged in acts prohibited by this section and the party 
receiving payment shall be jointly and severally liable for any refund 
due under this section and for related charges. The remedies provided to 
CCC in this part shall be in addition to other civil, criminal, or 
administrative remedies which may apply.



Sec. 783.14  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 otherwise eligible owner shall be eligible for 
assistance under this subpart 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;

[[Page 477]]

    (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. 783.15  Death, incompetency, or disappearance.

    In the case of death, incompetency or disappearance of any owner who 
is eligible to receive assistance in accordance with this part, such 
person or persons specified in part 707 of this chapter may receive such 
assistance.



Sec. 783.16  Other regulations.

    In addition to any other regulations as may be applicable, the 
following regulations shall also apply to this part:
    (a) Part 11 of this title, National Appeals Division Rules of 
Foreclosure;
    (b) Part 12 of this title, Highly Erodible Land and Wetland 
Conservation;
    (c) Part 703 of this chapter, Debt Settlements, Policies and 
Procedures;
    (d) Part 718 of this chapter, Provisions Applicable to Multiple 
Programs;
    (e) Part 780 of this chapter, Appeal Regulations;
    (f) Part 1400 of this title, Payment Limitation and Payment 
Eligibility; and
    (g) Part 1404 of this title, Assignments.



Sec. 783.17  Paperwork Reduction Act assigned numbers.

    The information collection requirements of this part have been 
submitted to the Office of Management and Budget (OMB) for purposes of 
the Paperwork Reduction Act.



PART 784--LAMB MEAT ADJUSTMENT ASSISTANCE PROGRAM--Table of Contents




Sec.
784.1  Applicability; available payments.
784.2  Administration.
784.3  Definitions.
784.4  Year 1 time and method for application.
784.5  Year 1 eligibility.
784.6  Year 1 rate of payment and limitations on funding.
784.7  Year 2 and Year 3 time and method for application.
784.8  Year 2 and Year 3 eligibility.
784.9  Year 2 and Year 3 rate of payment.
784.10  Availability of funds for Year 1 through Year 3.
784.11  Appeals.
784.12  Misrepresentation and scheme or device.
784.13  Estates, trusts, and minors.
784.14  Death, incompetency, or disappearance.
784.15  Maintaining records.
784.16  Refunds; joint and several liability.

    Authority: Clause (3) of section 32 of the Act of August 24, 1935, 
as amended; 7 U.S.C. 612c.

    Source: 65 FR 38412, June 21, 2000, unless otherwise noted.



Sec. 784.1  Applicability; available payments.

    (a) This part establishes the Lamb Meat Adjustment Assistance 
Program. The purpose of this program is to provide benefits to sheep and 
lamb operations pursuant to clause (3) of section 32 of the Act of 
August 24, 1935, as amended (7 U.S.C. 612c) in order to reestablish 
their purchasing power in connection with the normal production of sheep 
and lambs for domestic consumption and boost the long-term development 
and growth of sheep and lamb farming in the United States.
    (b) Under and subject to this part, FSA will provide with respect to 
sheep and lamb operations: ``Year 1'' payments in which sheep and lamb 
operations will receive payments for, during the time period 
encompassing ``Year 1'' as defined in these regulations, purchasing 
eligible rams for breeding, enrolling their herd in a sheep improvement 
program, and for making improvements to their production facilities; and 
``Year 2'' and ``Year 3'' payments for marketings of eligible slaughter 
lambs or feeder lambs during the period encompassing those time periods. 
Unless otherwise determined by the agency in accordance with the 
provisions of this part, the amount that may be expended under this part 
shall not exceed $30 million. Claims that exceed that amount will be 
prorated in accordance with the provisions for proration that are 
contained in this part.

[[Page 478]]



Sec. 784.2  Administration.

    (a) This part shall be administered by the Farm Service Agency (FSA) 
under the general direction and supervision of the Deputy Administrator 
for Farm Programs, FSA. The program shall be carried out in the field by 
FSA State and county 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.
    (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 the 
regulations of this part; or
    (2) Require a county committee to withhold taking any action which 
is not in accordance with the regulations of this part.
    (d) No delegation herein to a State or county committee shall 
preclude the Deputy Administrator for Farm Programs, 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 timeliness or failure to meet such 
other requirements does not adversely affect the operation of the 
program.



Sec. 784.3  Definitions.

    The definitions set forth in this section shall be applicable for 
all purposes of administering the Lamb Meat Adjustment Assistance 
Program established by this part.
    Agricultural Marketing Service or AMS means the Agricultural 
Marketing Service of the Department.
    Application means the Lamb Meat Adjustment Assistance Program 
Application, Forms FSA-382 and FSA-383.
    Department means the United States Department of Agriculture.
    Eligible lambs means feeder lambs and slaughter lambs.
    Farm Service Agency or FSA means the Farm Service Agency of the 
Department.
    Feeder lamb means a ewe or wether of less than 1 year of age that 
when sold is intended to be further fed a grain concentrate diet to 
reach an acceptable slaughter market weight.
    Muscling confirmation score of ``Average Choice'' means a muscling 
confirmation score of that designation assigned in accordance with 
official USDA standards and procedures.
    Person means any individual, group of individuals, partnership, 
corporation, estate, trust, association, cooperative, or other business 
enterprise or other legal entity who is, or whose members are, a citizen 
or citizens of, or legal resident alien or aliens in the United States.
    Secretary means the Secretary of the United States Department of 
Agriculture or any other officer or employee of the Department who has 
been delegated the authority to act in the Secretary's stead with 
respect to the program established in this part.
    Sheep and lamb operation means any self-contained, separate 
enterprise operated as an independent unit exclusively within the United 
States in which a person or group of persons raise sheep and/or lambs.
    Sheep improvement program means the ``National Sheep Improvement 
Program'' operated by the American Sheep Industry Association or other 
similar program for herd improvement approved by the FSA with respect to 
payments under this part.
    Slaughter lamb means a lamb that is sold for immediate slaughter.
    United States means the 50 States of the United States of America, 
the District of Columbia, and the Commonwealth of Puerto Rico.
    USDA Choice, USDA Prime, USDA Yield Grade 2 means, respectively, the 
classifications so designated under the Official United States Standards 
for Grades of Lamb, Yearling, Mutton, and Mutton Carcasses promulgated 
by the Secretary of Agriculture under the Agricultural Marketing Act of 
1946, as amended (60 Stat. 1087; 7 U.S.C. 1621-1627) and related 
authorities.

[[Page 479]]

    Year 1 means the period of time beginning July 22, 1999, and ending 
September 30, 2000.
    Year 2 means the period of time beginning August 1, 2000, and ending 
July 31, 2001.
    Year 3 means the period of time beginning August 1, 2001, and ending 
July 31, 2002.



Sec. 784.4  Year 1 time and method for application.

    (a) Sheep and lamb producers may obtain a ``Year 1'' application, 
Form FSA-382 (Lamb Meat Adjustment Assistance Program Payment 
Application), in person, by mail, by telephone, or by facsimile from any 
county FSA office. In addition, applicants may download a copy of the 
Form FSA-382 at http://www.usda.gov/dafp/psd/.
    (b) A request for ``Year 1'' benefits under this part must be 
submitted on a completed Form FSA-382. The Form FSA-382 should be 
submitted to the FSA county office serving the county where the sheep 
and lamb operation is located but, in any case, must be received by the 
FSA county office by the close of business on October 13, 2000. 
Applications not received by the close of business on October 13, 2000, 
will be returned as not having been timely filed and the sheep and lamb 
operation filing the application will not be eligible for benefits under 
this program.
    (c) The sheep and lamb operation requesting ``Year 1'' benefits 
under this part must certify to the accuracy of the information provided 
in their application for benefits. All information provided is subject 
to verification and spot checks by FSA. Refusal to allow FSA or any 
other agency of the Department of Agriculture to verify any information 
provided will result in a determination of ineligibility. Data furnished 
by the applicant will be used to determine eligibility for program 
benefits. Furnishing the data is voluntary; however, without it program 
benefits will not be approved. Providing a false certification may be 
subject to additional civil and criminal sanctions.
    (d) Not withstanding any other provisions of this section, payments 
will not be made under this section for the acquisition of rams to the 
extent that any such purchase, at any time during ``Year 1'', created, 
or help create, a ratio of rams to ewes for the operation that was less 
than 1 ram to 15 ewes. However, the limitation on payments provided for 
in the preceding sentence shall not apply to the extent that the 
operation establishes to the satisfaction of the COC that a lower ratio 
of rams to ewes is customary for the operation.



Sec. 784.5  Year 1 eligibility.

    (a) To be eligible to receive the ``Year 1'' payments under this 
part, as described in Sec. 784.1, at the rates provided in Sec. 784.6, a 
sheep and lamb operation must be engaged in the business of producing 
and marketing agricultural products at the time of filing the 
application, must have in 1999 gross annual revenue of $2.5 million or 
less, and must have done at least one of the following during ``Year 
1'':
    (1) Purchased rams for breeding purposes within that operation, 
provided that such rams must have been at least 90 days of age when 
purchased and must have been, or will be, maintained by the operation 
for at least 90 days continuously after the date of purchase;
    (2) Enrolled sheep in an eligible sheep improvement program; or
    (3) Made sheep and lamb operation facility improvements with respect 
to their operation.
    (b) With respect to paragraph (a)(3) of this section, in order to 
receive payments, the sheep and lamb operation must submit supporting 
documentation of the cost of the improvements made to the facility 
during program ``Year 1'' and must use facility improvements for sheep 
and lamb production activities continuously for at least the next 3 
consecutive years. Upon a failure to maintain the facility for the full 
three years, the operation must refund the ``Year 1'' facility payment 
immediately and with interest.
    (c) With respect to payments made for activities addressed in 
paragraph (a)(1) of this section, upon any failure to maintain a ram 
after payment for the full required 90-day period, unless that period 
has already expired, the operation must immediately refund the payment 
made and with interest.

[[Page 480]]



Sec. 784.6  Year 1 rate of payment and limitations on funding.

    Subject to the availability of funds and to the proration rules of 
Sec. 784.10, ``Year 1'' payments for qualifying operations shall be at 
the following rates:
    (a) Up to $100 for each eligible ram purchased, up to $2,500 per 
sheep and lamb operation;
    (b) $.50 for each qualifying sheep enrolled in a qualifying sheep 
improvement program, up to $500 per sheep and lamb operation; plus
    (c) 20% of the cost of the qualifying facility improvements up to 
$2,500 per sheep and lamb operation.



Sec. 784.7  Year 2 and Year 3 time and method for application.

    (a) To receive ``Year 2'' and ``Year 3'' benefits, as described in 
Sec. 784.1, at rates set out in Sec. 784.9, sheep and lamb operations 
may obtain an application, Form FSA-383 (Lamb Meat Adjustment Assistance 
Program Payment Application), in person, by mail, by telephone, or by 
facsimile from any county FSA office. In addition, applicants may 
download a copy of the Form FSA-383 at http://www.fsa.usda.gov/dafp/
psd/.
    (b) Sheep and lamb operations must have the certification section of 
the application Form FSA-383 completed prior to submission of the form 
to the county office.
    (c) A request for ``Year 2'' and ``Year 3'' benefits under this part 
must be submitted on a completed Form FSA-383. The Form FSA-383 should 
be submitted to the FSA county office serving the county where the sheep 
and lamb operation is located but, in any case, must be received by the 
FSA county office by the close of business on August 15, 2001, if 
applying for ``Year 2'' benefits, and by the close of business on August 
15, 2002, if applying for ``Year 3'' benefits. Applications not received 
by the respective deadlines will be returned as not having been timely 
filed and the sheep and lamb operation will not be eligible for the 
benefits which were the subject of the failed application.
    (d) The sheep and lamb operation requesting benefits under this part 
must certify to the accuracy of the information provided in their 
application for benefits. All information provided is subject to 
verification and spot checks by FSA. Refusal to allow FSA or any other 
agency of the Department of Agriculture to verify any information 
provided will result in a determination of ineligibility. Data furnished 
by the applicant will be used to determine eligibility for program 
benefits. Furnishing the data is voluntary; however, without it program 
benefits will not be approved. Providing a false certification to the 
Government is punishable by imprisonment, fines and other penalties.



Sec. 784.8  Year 2 and Year 3 eligibility.

    (a) Subject to the availability of funds, ``Year 2'' and ``Year 3'' 
payments will, as described to in Sec. 784.1, be made for eligible 
marketings of slaughter lambs for slaughter. (Criteria for feeder lamb 
payments appear elsewhere in this section). Such payments for slaughter 
lambs, as opposed to feeder lambs, can be received by an operation, at 
the rates described in Sec. 784.9, for those eligible lambs slaughtered 
in the respective time periods comprising ``Year 2'' and ``Year 3'' if 
the lambs were owned, by the operation, in the normal course of raising 
lambs for slaughter, continuously for 30 days prior to the marketing for 
slaughter and if the carcasses produced by the slaughter of the lamb 
meets the criteria set out in paragraph (b) of this section. Other 
criteria, as set out in this part, may also apply as a condition for, or 
limitation on, payment.
    (b) In order for a marketing of a slaughter lamb to qualify for 
payment under paragraph (a) of this section, the carcass produced by the 
slaughter must be evaluated and certified by an AMS agent or their 
assigned representative that such carcass meets the following criteria:
    (1) Meet the requirements of USDA Quality Grade Choice or Prime;
    (2) Meet the requirements of USDA Yield Grade 2;
    (3) Have a muscling confirmation score of ``Average Choice'' or 
better; and
    (4) Have a 55-75 pound dressed hot carcass weight;
    (c) Subject to the availability of funds, in order to be eligible 
for the ``Year 2'' and ``Year 3'' feeder lamb

[[Page 481]]

payments referred to in Sec. 784.1, at the rates specified in 
Sec. 784.9, sheep operations must have in the preceding year of which 
payment is sought had a gross annual revenue of $2.5 million or less, 
and must for the year in which the payment is sought marketed qualifying 
feeder lambs. In order for a feeder lamb to be a qualifying feeder lamb 
it must have been:
    (1) Owned by the operation, as part of its normal raising of lambs 
for slaughter, continuously for 30 days prior to the time of the 
qualifying marketing; and
    (2) At the time of the marketing must have been, as determined and 
certified by AMS, thick-muscled and large-framed.
    (d) To be eligible for any payments under this section, the sheep 
and lamb operation must be engaged in the business of producing and 
marketing agricultural products at the time of filing the application.
    (e) In addition, to be eligible for ``Year 2'' and ``Year 3'' 
payments, a sheep and lamb operation must submit a timely application 
during the application period for ``Year 2'' and ``Year 3'' benefits and 
comply with all other terms and conditions of this part or are contained 
in the application to be eligible for such benefits.



Sec. 784.9  Year 2 and Year 3 rate of payment.

    Subject to the availability of funds, and the proration rules set 
out in Sec. 784.10, ``Year 2'' and ``Year 3'' payments may be made to 
sheep and lamb operations at the following rates:
    (a) $3 for each qualifying feeder lamb; plus
    (b) $5 for each eligible qualifying slaughter lamb, except those 
slaughter lambs marketed during the period of June 1 through July 31 of 
the applicable program year for which the payment rate will be $8 per 
head.



Sec. 784.10  Availability of funds for Year 1 through Year 3.

    Total payments under this part, unless otherwise determined by the 
FSA, cannot exceed $30 million. In the event that funds should be 
insufficient to complete payments for a program year then the claims for 
that program year shall be prorated by a national factor so as to reduce 
the payments to be made to the amount available. Payments for preceding 
years will not be affected.



Sec. 784.11  Appeals.

    Any sheep and lamb operation which is dissatisfied with a 
determination made pursuant to this part may make a request for 
reconsideration or appeal of such determination in accordance with the 
appeal regulations set forth at parts 11 and 780 of this title.



Sec. 784.12  Misrepresentation and scheme or device.

    (a) A sheep and lamb operation shall be ineligible to receive 
assistance under this program if it is determined by the State committee 
or the county committee to have:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of this program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination.
    (b) Any funds disbursed pursuant to this part to any person or 
operation engaged in a misrepresentation, scheme, or device, shall be 
refunded with interest together with such other sums as may become due. 
Any sheep and lamb operation or person engaged in acts prohibited by 
this section and any sheep and lamb operation or person receiving 
payment under this part shall be jointly and severally liable with other 
persons or operations involved in such claim for benefits for any refund 
due under this section and for related charges. The remedies provided in 
this part shall be in addition to other civil, criminal, or 
administrative remedies which may apply.



Sec. 784.13  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 for assistance under this part 
must, also:

[[Page 482]]

    (1) Establish that the right of majority has been conferred on the 
minor by court proceedings or by statute;
    (2) Show a guardian has been appointed to manage the minor's 
property and the applicable program documents are executed by the 
guardian; or
    (3) Furnish a bond under which the surety guarantees any loss 
incurred for which the minor would be liable had the minor been an 
adult.



Sec. 784.14  Death, incompetency, or disappearance.

    In the case of death, incompetency, disappearance or dissolution of 
a person that is eligible to receive benefits in accordance with this 
part, such person or persons specified in part 707 of this chapter may 
receive such benefits, as determined appropriate by FSA.



Sec. 784.15  Maintaining records.

    Persons making application for benefits under this program must 
maintain accurate records and accounts that will document that they meet 
all eligibility requirements specified herein. Such records and accounts 
must be retained for 3 years after the date of payment to the sheep and 
lamb operations under this program. Destruction of the records after 
such date shall be the risk of the party undertaking the destruction.



Sec. 784.16  Refunds; 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 application, or 
this part, and if any refund of a payment to FSA shall otherwise become 
due in connection with the application, or this part, all payments made 
under this part to any sheep and lamb operation shall be refunded to FSA 
together with interest as determined in accordance with paragraph (c) of 
this section and late payment charges as provided in part 1403 of this 
title.
    (b) All persons signing a sheep and lamb operation's application for 
payment as having an interest in the operation shall be jointly and 
severally liable for any refund, including related charges, which is 
determined to be due for any reason under the terms and conditions of 
the application or this part with respect to such operation.
    (c) Interest shall be applicable to refunds required of any person 
under this part if FSA determines that payments or other assistance was 
provided to a person who was not eligible for such assistance. Such 
interest shall be charged at the rate of interest which the United 
States Treasury charges the Commodity Credit Corporation (CCC) for 
funds, from the date FSA made such benefits available to the date of 
repayment or the date interest increases as determined in accordance 
with applicable regulations. FSA may waive the accrual of interest if 
FSA determines that the cause of the erroneous determination was not due 
to any action of the person.
    (d) Interest determined in accordance with paragraph (c) of this 
section may be waived at the discretion of FSA alone for refunds 
resulting from those violations determined by FSA to have been beyond 
the control of the person committing the violation.
    (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 792.
    (f) Any excess payments made by FSA with respect to any application 
under this part must be refunded.
    (g) In the event that a benefit under this subpart was provided as 
the result of erroneous information provided by any person, the benefit 
must be repaid with any applicable interest.

[[Page 483]]





        SUBCHAPTER E--PROVISIONS COMMON TO MORE THAN ONE PROGRAM



PART 792--DEBT SETTLEMENT POLICIES AND PROCEDURES--Table of Contents




Sec.
792.1  Applicability.
792.2  Administration.
792.3  Definitions.
792.4  Demand for payment of debts.
792.5  Collection by payment in full.
792.6  Collection by installment payments.
792.7  Collection by administrative offset.
792.8  Priorities of offsets versus assignments.
792.9  Withholding.
792.10  Late payment interest, penalty and administrative charges.
792.11  Waiver of late payment interest, penalty charge and 
          administrative charges.
792.12  Administrative appeal.
792.13  Additional administrative collection action.
792.14  Contact with debtor's employing agency.
792.15  Prior provision of rights with respect to debt.
792.16  Discharge of debts.
792.17  Referral of delinquent debts to credit reporting agencies.
792.18  Referral of debts to Department of Justice.
792.19  Referral of delinquent debts to IRS for tax refund offset.
792.20  Reporting discharged debts to IRS.
792.21  Referral of debts to private collection agencies.
792.22  Collection and compromise.

    Authority: 31 U.S.C. 3701, 3711, 3716-3719, 3728; 4 CFR parts 101-
105; 7 CFR 3.21(b).

    Source: 59 FR 15829, Apr. 5, 1994, unless otherwise noted.



Sec. 792.1  Applicability.

    Except as may otherwise be provided by statute, this part sets forth 
the manner in which the Farm Service Agency (FSA) will settle and 
collect debts by FSA. The provisions of part 1403 of this title are 
applicable to actions of FSA regarding the settlement and collection of 
debts on the behalf of the Commodity Credit Corporation (CCC).



Sec. 792.2  Administration.

    The regulations in this part will be administered under the general 
supervision and direction of the Administrator, FSA.



Sec. 792.3  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).
    CCC means the Commodity Credit Corporation.
    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 debtor and preparer, under penalty of perjury.
    Claim means an amount of money or property which has been determined 
by FSA, after a notice of delinquency and a demand for the payment of 
the debt has been made by FSA, to be owed to FSA 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 FSA which has not been satisfied 
through payment or otherwise.
    Debt record refers to the account, register, balance sheet, file, 
ledger, data

[[Page 484]]

file, or similar record of debts owed to FSA, CCC, 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 FSA 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. 792.4.
    Discharged debt means any debt, or part thereof, which FSA has 
determined is uncollectible and has closed out, and if the amount in 
controversy exceeds $100,000.00, excluding interest and administrative 
charges, or such higher amount as may be prescribed, in which the 
Department of Justice has concurred in such determination.
    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 higher of the Prompt Payment Act interest rate or the standard 
late payment rate prescribed by 31 U.S.C. 3717, which is based on the 
Treasury Department's current value of funds rate.
    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.
    System of records means a group of any records under the control of 
FSA or CCC 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.



Sec. 792.4  Demand for payment of debts.

    (a) When a debt is due FSA, 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 FSA has not been arranged with 
the debtor, the initial demand may be followed by two subsequent written 
demands at approximately 30-day intervals, unless it is determined by 
FSA that further demands would be futile and the debtor's response does 
not require rebuttal. The initial or subsequent demand letters shall 
specify the following:
    (1) The basis for and the amount of the debt determined to be due 
FSA, including the principal, applicable interest, costs, and other 
charges;
    (2) FSA' 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. 792.10.
    (4) FSA' 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;

[[Page 485]]

    (5) FSA' intent, if applicable, under Sec. 792.17, to report any 
delinquent debt to a credit reporting agency no sooner than 60 days from 
the date of the letter;
    (6) FSA' intent, if applicable, under Sec. 792.19, 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.
    (7) If not previously provided, the debtor's right to request 
administrative review by an authorized FSA 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, if applicable.
    (8) The debtor's right to a full explanation of the debt and to 
dispute any information in the records of FSA concerning the debt;
    (9) The opportunity afforded the debtor to enter into a written 
agreement which is acceptable to FSA for the repayment of the debt;
    (10) That FSA maintains the right to initiate legal action to 
collect the amount of the debt;
    (11) That if any portion of the debt remains unpaid or if a 
repayment schedule satisfactory to FSA has not been arranged 90 days 
after the due date, a penalty charge shall be assessed on the unpaid 
balance of the debt as prescribed in Sec. 792.10(e);
    (b) When FSA deems it necessary to protect the Government's 
interest, written demand may be preceded by other appropriate actions.



Sec. 792.5  Collection by payment in full.

    Except as FSA may provide, FSA 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, FSA will impose 
late payment interest, as provided in Sec. 792.10, unless such interest 
is waived as provided in Sec. 792.11.



Sec. 792.6  Collection by installment payments.

    (a) Payments in installments may be arranged, at FSA' 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 FSA, no installment 
arrangement 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 workdays following its request by FSA.
    (c) All installment payment agreements shall be in writing and 
require the payment of interest at the late payment interest rate in 
effect on the date such agreement is executed, unless such interest is 
waived or reduced by FSA. The installment agreement shall specify all 
the terms of the arrangement and include provision for accelerating the 
debt in the event the debtor defaults.
    (d) FSA 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 
FSA a security interest in the assets until the debt is paid in full.
    (f) If the debtor owes more than one debt to FSA, FSA may allow the 
debtor to designate the manner in which a voluntary installment payment 
is to be

[[Page 486]]

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 FSA.



Sec. 792.7  Collection by administrative offset.

    (a) The provisions of this section shall apply to all debts due FSA 
except as otherwise provided in this part and part 1404 of this title. 
This section is not applicable to:
    (1) FSA requests for administrative offset against money payable to 
a debtor from the Civil Service Retirement and Disability Fund and FSA 
requests for salary offset against a present, former or retired employee 
of the Federal Government which shall be made in accordance with 
regulations at part 3 of this title;
    (2) FSA requests for administrative offset against a Federal income 
tax refund payable to a debtor which shall be made in accordance with 
Sec. 792.19;
    (3) Cases in which FSA 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 FSA; and
    (4) Any case in which a statute explicitly provides for or prohibits 
using administrative offset to collect the debt for the type of debt 
involved.
    (b) Debts due FSA or CCC may be collected by administrative offset 
from amounts payable by FSA 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 chapter 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 FSA related to the debt;
    (3) The debtor has been given the opportunity to enter into a 
written agreement which is acceptable to FSA for repayment of the debt;
    (4) The debtor has been notified in writing that the debt will be 
collected by administrative offset if not paid; and
    (5) 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 FSA:
    (1) When requested or approved by the Department of Justice; or
    (2) When a person is indebted under a judgment in favor of FSA or 
the United States.
    (d) A payment due any person may be offset when there is a breach of 
a contract or a violation of FSA program requirements, and offset is 
considered necessary by FSA to protect the financial interests of the 
Government.
    (e) FSA may effect administrative offset against a payment to be 
made to a debtor prior to completion of the procedures required by 
paragraphs (b)(1) through (b)(4) of this section if:
    (1) Failure to take the offset would substantially prejudice FSA' 
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.
    (f)(1) Judgments in favor of the United States may be offset against 
any amounts payable by FSA based on information provided by or obtained 
from the Department of Justice. Debts due any agency other than FSA 
which have not been reduced to judgment shall be offset against amounts 
payable by FSA 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 Financial Management 
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;

[[Page 487]]

    (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.
    (g)(1) After FSA has complied with the provisions of this part, FSA 
may request other agencies of the Government to offset amounts payable 
by them to persons indebted to FSA.
    (2) In the case of a request to IRS for a tax refund offset, the 
provisions at Sec. 792.19 shall apply.
    (h)(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 FSA.
    (ii) Debts to other agencies of USDA as determined by FSA.
    (iii) Debts to other government agencies as determined by FSA.
    (2) In the case of multiple debts involving the same debtor, FSA 
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 
FSA based on the facts and circumstances of the particular case.
    (i) Amounts recovered by offset for FSA and CCC debts but later 
found not to be owed to the Government shall be promptly refunded.
    (j) The debtor shall be notified whenever any offset action has been 
taken.
    (k) Offsets made pursuant to this section shall not deprive a debtor 
of any right he or she might otherwise have to contest the debt involved 
in the offset action either by administrative appeal or by legal action.
    (l) 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 FSA.
    (2) When FSA 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.
    (m) 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.
    (n) Offset action will not be taken against payments when:
    (1) A debt has been discharged as provided in Sec. 792.16.
    (2) FSA determines such action will unduly interfere with the 
administration of an FSA or CCC program.
    (3) The debt has been delinquent for more than ten years or legal 
action to enforce the debt due FSA is barred by an applicable period of 
limitation, whichever is later.

[59 FR 15829, Apr. 5, 1994, as amended at 60 FR 43706, Aug. 23, 1995]



Sec. 792.8  Priorities of offsets versus assignments.

    (a) No amounts payable to a debtor by FSA shall be paid to an 
assignee until there have been collected any amounts owed by the debtor 
except as provided in this section.

[[Page 488]]

    (b) A payment which is assigned in accordance with part 1404 of this 
title by execution of Form CCC-36 shall be subject to offset for any 
debt owed to FSA or CCC or any judgment in favor of the United States 
without regard to the date notice of assignment was accepted by FSA or 
CCC.
    (c) A payment which is assigned in accordance with part 1404 of this 
title by execution of Form CCC-252 shall be offset:
    (1) Against any debt of the assignor entered on the debt record of 
the applicable FSA office prior to the filing of such form with FSA or 
CCC, or
    (2) At anytime, regardless of the date of filing of such form with 
FSA or CCC, if the debt which is the basis for the offset arises from a 
judgment in favor of the United States, or under the same contract under 
which the payment is earned by the assignor.
    (d) With respect to all other Federal agencies, offset shall be made 
of any amounts due any other Federal agency which have not been reduced 
to judgment, and which are entered on the debt record of the appropriate 
FSA office prior to the date the notice of assignment was accepted by 
FSA or CCC.
    (e) Any amount due and payable to the assignor which remains after 
deduction of amounts paid to the assignee shall be available for offset.



Sec. 792.9  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 FSA to ensure that the interests of FSA and the United States will be 
protected as provided in this section.
    (b) A payment may be withheld to protect the interests of FSA or the 
United States only if FSA 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 FSA;
    (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 FSA;
    (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 FSA;
    (5) The facts available to FSA are insufficient to determine the 
amount to be offset or the proper payee;
    (6) A judgment on a claim of FSA has been obtained; or
    (7) Such action has been requested by the Department of Justice.
    (c) Except for debts due FSA or CCC, withholding action by FSA on 
amounts payable to debtors of other Government agencies may not be made 
unless requested by the Department of Justice.



Sec. 792.10  Late payment interest, penalty and administrative charges.

    (a) Late payment interest provisions of this section shall not 
apply:
    (1) To debts owed by Federal agencies and State and local 
governments. Interest on debts owed by such entities shall be charged to 
the extent authorized under the common law or applicable statutory 
authority.
    (2) 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;
    (3) If the late payment interest is waived by FSA in accordance with 
Sec. 792.11.
    (4) To administrative charges as set forth in paragraph (f) of this 
section.
    (b) FSA 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 program 
interest, and any other charges which are otherwise due and owing to FSA 
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 FSA charges on delinquent debts. The late payment 
interest rate shall be equal to the higher of the Treasury Department's 
current value

[[Page 489]]

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. The rate of interest assessed under the Prompt Payment 
Act was chosen as an alternative rate to ensure that the Government 
would recoup interest at a rate which was at least as high as that which 
it pays for late payments.
    (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, including notice of 
late payment interest, is first mailed or hand-delivered to the debtor.
    (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. FSA 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) Except as specified in paragraph (a)(2) of this section, a 
penalty charge of three (3) percent per annum will be assessed on any 
portion of a debt which remains unpaid ninety (90) days after the date 
described in paragraph (d)(1) or (d)(2) of this section, if no repayment 
schedule satisfactory to FSA has been agreed upon. Such penalty charge 
will be assessed retroactively from the date late payment interest began 
to accrue and applied on a daily basis. Such rate shall continue to 
accrue until the delinquent debt has been paid.
    (f) FSA 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, 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 the penalty 
charge assessed in accordance with paragraph (e) of this section and 
late payment interest, and third to outstanding principal.



Sec. 792.11  Waiver of late payment interest, penalty charge and administrative charges.

    (a) FSA 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) FSA may waive the assessment and collection of all or a portion 
of the penalty charge 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 such interest began to accrue, whichever is 
later, until the date a final administrative determination is issued. 
Such waiver shall not apply for any 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, the penalty 
charge and administrative charges under this part may be waived by FSA 
in full, or in part, if it is determined by the Controller, FSA, or his 
or her designee,

[[Page 490]]

that such action is in the best interest of FSA.



Sec. 792.12  Administrative appeal.

    If the opportunity to appeal the determination has not previously 
been provided under part 24 of this title or part 780 of this chapter or 
any other appeal procedure, a debtor may obtain an administrative review 
under part 780 of this chapter, or other applicable appeal procedures, 
of FSA' 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 FSA' initial demand letter, unless a longer period 
is specified in the initial demand letter.



Sec. 792.13  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 FSA to 
collect debts owed to the Government.



Sec. 792.14  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, FSA 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, 3 CFR, 1964-1965 Comp., p 306.



Sec. 792.15  Prior provision of rights with respect to debt.

    FSA will not provide an administrative appeal with respect to issues 
which were raised or should have been raised at any administrative 
review requested by the debtor as provided under another statute or 
regulation before:
    (a) Effecting administrative offset;
    (b) Referring the debt to private collection or credit reporting 
agencies;
    (c) Referring the debt 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. 792.16  Discharge of debts.

    (a) Except as required by other applicable regulation or statute, a 
debt or part thereof owed FSA shall be discharged with the concurrence 
of the Department of Justice, if applicable, 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 FSA and no appeal will be taken by FSA;
    (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. 792.7(b)(5).
    (b) Debts discharged in accordance with this section may be reported 
to the Internal Revenue Service pursuant to Sec. 792.20.



Sec. 792.17  Referral of delinquent debts to credit reporting agencies.

    (a) This section specifies the procedures that will be followed by 
FSA and the rights that will be afforded to debtors when FSA reports 
delinquent debts to credit reporting agencies.
    (b) Before disclosing information to a credit reporting agency in 
accordance with this part, FSA 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. 792.4, of FSA' intent to make 
such a report. Such notification shall include:
    (1) FSA' 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 FSA, installment payments, and that if 
such

[[Page 491]]

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 FSA has reported any delinquent debt to a credit 
reporting agency.
    (e)(1) FSA 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) FSA 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 FSA.
    (g) FSA 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 FSA 
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, FSA shall, upon request of the debtor, provide for a 
review of the debt in accordance with Sec. 792.12. 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. 792.12.
    (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, FSA 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 
Administrator, FSA, 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 FSA 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) FSA shall not report delinquent debt information to credit 
reporting agencies when: (i) The debtor has entered a repayment 
agreement covering the debt with FSA, and such agreement is still valid; 
or
    (ii) FSA 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) The provisions of paragraphs (a) through (k) of this section 
apply to commercial debts owed by farm producers and all personal debts. 
All commercial debts owed by debtors other than farm producers may be 
reported to credit reporting agencies without following the provisions 
of paragraphs (a) through (k) of this section.



Sec. 792.18  Referral of debts to Department of Justice.

    (a) Debts that exceed $100,000.00 exclusive of interest, penalties, 
and administrative charges, or such higher amount as may be prescribed, 
shall be

[[Page 492]]

referred to the Department of Justice before they can be discharged.
    (b) Debts which cannot be compromised or on which collection action 
cannot be suspended or terminated, may be referred to the Department of 
Justice for collection action. Claims of less than $600.00 exclusive of 
interest, penalties, and administrative costs will not be referred to 
the Department of Justice unless:
    (1) Referral is important to a significant enforcement policy, or
    (2) The debtor not only has the clear ability to pay the claim, but 
the Government can effectively enforce payment, having due regard for 
the exemptions available to the debtor under State and Federal law and 
the judicial remedies available to the Government.



Sec. 792.19  Referral of delinquent debts to IRS for tax refund offset.

    FSA 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. 792.20  Reporting discharged debts to IRS.

    (a) In accordance with IRS regulations, FSA may report to IRS as 
discharged debts on IRS Form 1099-G 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 FSA 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.
    (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.



Sec. 792.21  Referral of debts to private collection agencies.

    If FSA' collection efforts have been unsuccessful after 90 days from 
the date of delinquency, the head of the agency or his designee may 
enter into a contract with any person or organization, under such terms 
and conditions as the head of the agency or his designee considers 
appropriate for collection services to recover debts owed to FSA.



Sec. 792.22  Collection and compromise.

    The Administrator, FSA, or his designee may compromise any claim of 
the Government of not more than $100,000.00 exclusive of interest, 
penalties, and administrative charges, or such higher amount as may be 
prescribed, that has not been referred to another executive or 
legislative agency for further collection action.



PART 795--PAYMENT LIMITATION--Table of Contents




                                 General

Sec.
795.1  [Reserved]
795.2  Applicability.
795.3  Definitions.
795.4  Family members.
795.5  Timing for determining status of persons.
795.6  Multiple individuals or other entities.
795.7  Entities or joint operations not considered as a person.
795.8  Corporations and stockholders.
795.9  Estate or trust.
795.10  Club, society, fraternal or religious organization.
795.11  Husband and wife.
795.12  Minor children.
795.13  Other cases.
795.14  Changes in farming operations.
795.15  Determination whether agreement is a share lease or a cash 
          lease.
795.16  Custom farming.
795.17  Scheme or device.
795.20  Joint and several liability.
795.21  Appeals.
795.22  Interpretations.
795.23  Paperwork Reduction Act assigned number.
795.24  Relief.

    Authority: Sec. 1001 of the Food Security Act of 1985, as amended, 
99 Stat, 1444, as amended, 7 U.S.C 1308; Pub. L. 99-500 and Pub. L. 99-
591.

    Source: 43 FR 9784, Mar. 10, 1978, unless otherwise noted.

                                 General



Sec. 795.1  [Reserved]



Sec. 795.2  Applicability.

    (a) The provisions of this part are applicable to payments when so 
provided by the individual program regulations

[[Page 493]]

under which the payments are made. The amount of the limitation shall be 
as specified in the individual program regulations.
    (b) The limitation shall be applied to the payments for a commodity 
for a crop year.
    (c) The limitation shall not be applicable to payments made to 
States, political subdivisions, or agencies thereof for participation in 
the programs on lands owned by such States, political subdivisions, or 
agencies thereof so long as such lands are farmed primarily in the 
direct furtherance of a public function. However, the limitation is 
applicable to persons who rent or lease land owned by States, political 
subdivisions, or agencies thereof.
    (d) The limitation shall not be applicable to payments made to 
Indian tribal ventures participating in the programs where a responsible 
official of the Bureau of Indian Affairs or the Indian Tribal Council 
certifies that no more than the program payment limitation shall accrue 
directly or indirectly to any individual Indian and the State committee 
reviews and approves the exemption.
    (e) Except as provided in part 1497 of this title, this part shall 
not be applicabie to contracts entered into on or after August 1, 1988 
in accordance with part 704 of this chapter.

[49 FR 14719, Apr. 13, 1984, as amended at 51 FR 8453, Mar. 11, 1986; 51 
FR 36905, Oct. 16, 1986; 53 FR 29570, Aug. 5, 1988]



Sec. 795.3  Definitions.

    (a) The terms defined in part 719 of this chapter, governing 
reconstitutions of farms, shall be applicable to this part and all 
documents issued in accordance with this part, except as otherwise 
provided in this section.
    (b)(1) Subject to the provisions of this part, the term ``person'' 
shall mean an individual, joint stock company, corporation, association, 
trust, estate, or other legal entity. In order to be considered to be a 
separate person for the purposes of this part with respect to any crop, 
in addition to any other provision of this part, an individual or other 
legal; entity must:
    (i) Have a separate and distinct interest in the crop or the land on 
which the crop is produced;
    (ii) Exercise separate responsibility for such interest; and
    (iii) Be responsible for payment of the cost of farming related to 
such interest from a fund or account separate from that of any other 
individual or entity.
    (2) The term ``person'' shall not include any cooperative 
association of producers that markets commodities for producers with 
respect to the commodities so marketed for producers.
    (c) The term ``family member'' shall mean the individual, the great-
grandparent, grand-parent, child, grandchild, and great-grandchild of 
such individual and the spouses of all such individuals.
    (d) The term ``separate unit'' shall mean an individual who, prior 
to December 31, 1985: (1) Had been engaged in a separate farming 
operation and (2) in accordance with the provisions of this part, had 
been determined to be a separate person or could have so determined 
under the circumstances existing at such time.

[52 FR 26295, July 14, 1987]



Sec. 795.4  Family members.

    Effective for the 1987 through 1990 crops, an individual shall not 
be denied a determination that such individual was a ``person'' solely 
on the basis that:
    (a) A family member cosigns for, or makes a loan to, such individual 
and leases, loans or gives equipment, land or labor to such an 
individual; and
    (b) Such family members were organized as separate units prior to 
December 31, 1985.

[52 FR 26295, July 14, 1987]



Sec. 795.5  Timing for determining status of persons.

    Except as otherwise set forth in this part, the status of 
individuals or entities as of March 1, or such other date as may be 
determined and announced by the Administrator shall be the basis on 
which determinations are made in accordance with this part for the year 
for which the determination is made.

[51 FR 21836, June 16, 1986; 51 FR 36905, Oct. 16, 1986]

[[Page 494]]



Sec. 795.6  Multiple individuals or other entities.

    The rules in Secs. 795.5 through 795.16 shall be used to determine 
whether certain multiple individuals or legal entities are to be treated 
as one person or as separate persons for the purpose of applying the 
limitation. In cases in which more than one rule would appear to be 
applicable, the rule which is most restrictive on the number of persons 
shall apply.



Sec. 795.7  Entities or joint operations not considered as a person.

    A partnership, joint venture, tenants-in-common, or joint tenants 
shall not be considered as a person but, notwithstanding the provisions 
of Sec. 795.3, each individual or other legal entity who shares in the 
proceeds derived from farming by such joint operations shall be 
considered a separate person, except as otherwise provided in this part, 
and shall be listed as a producer for payment purposes on program 
documents. The payment shares listed on the program documents for each 
individual or other legal entity shall be the same as each individual or 
other legal entity shares in the proceeds derived from farming by such 
joint operation. Notwithstanding the foregoing, each individual or other 
legal entity who shares in the proceeds derived from farming by such 
joint operation shall not be considered as a separate person unless the 
individual or other legal entity is actively engaged in the farming 
operations of the partnership or other joint operation. An individual or 
other legal entity shall be considered as actively engaged in the 
farming operation only if its contribution to the joint operation is 
commensurate with its share in the proceeds derived from farming by such 
joint operation. Members of the partnership or joint venture must 
furnish satisfactory evidence that their contributions of land, labor, 
management, equipment, or capital to the joint operation are 
commensurate with their claimed shares of the proceeds. A capital 
contribution may be a direct out-of-pocket input of a specified sum or 
an amount borrowed by the individual. If the contribution consists 
substantially of capital, such capital must have been contributed 
directly to the joint operation by the individual or other legal entity 
and not acquired as a result of (a) a loan made to the joint operation, 
(b) a loan which was made to such individual or other legal entity by 
the joint operation or any of its members or related entities, or (c) a 
loan made to such individual or other legal entity which was guaranteed 
by the joint operation or any of its members or related entities.



Sec. 795.8  Corporations and stockholders.

    (a) A corporation (including a limited partnership) shall be 
considered as one person, and an individual stockholder of the 
corporation may be considered as a separate person to the extent that 
such stockholder is engaged in the production of the crop as a separate 
producer and otherwise meets the requirements of Sec. 795.3, except that 
a corporation in which more than 50 percent of the stock is owned by an 
individual (including the stock owned by the individual's spouse, minor 
children, and trusts for the benefit of such minor children), or by a 
legal entity, shall not be considered as a separate person from such 
individual or legal entity.
    (b) Where the same two or more individuals or other legal entities 
own more than 50 percent of the stock in each of two or more 
corporations, all such corporations shall be considered as one person.
    (c) The percentage share of the value of the stock owned by an 
individual or other legal entity shall be determined as of March 1 of 
the crop year, except that where a stockholder voluntarily acquires 
stock after March 1 and before the harvest of the crop, the amount of 
any stock so acquired shall be included in determining the percentage 
share of the value of the stock owned by the stockholder. Where there is 
only one class of stock, a stockholder's percentage share of the value 
of the outstanding stock shall be equal to the percentage of the 
outstanding stock owned by the stockholder. If the corporation has more 
than one class of stock the percentage share of the value of the stock 
owned by a stockholder shall be determined by the Deputy Administrator 
on the basis of market quotations, and if market quotations

[[Page 495]]

are lacking or too scarce to be recognized the percentage share of the 
value of the stock shall be determined by the Deputy Administrator on 
the basis of all relevant factors affecting the fair market value, 
including the rights and privileges of the various stock issues.

(Title I, Agricultural Act of 1970, as amended by the Agriculture and 
Consumer Protection Act of 1973, Pub. L. 93-86, 87 Stat. 221 (7 U.S.C. 
1307) and under Title I, Rice Production Act of 1975, Pub. L. 94-214, 90 
Stat. 181 (7 U.S.C. 428c note), and Pub. L. 95-156, 91 Stat. 1264 (7 
U.S.C. 1307 note, 7 U.S.C. 1307, 7 U.S.C. 1441))

[43 FR 9784, Mar. 10, 1978, as amended at 45 FR 10311, Feb. 15, 1980; 45 
FR 11795, Feb. 22, 1980]



Sec. 795.9  Estate or trust.

    (a) An estate or irrevocable trust shall be considered as one person 
except that, where two or more estates or irrevocable trusts have common 
beneficiaries or heirs (including spouses and minor children) with more 
than a 50-percent interest, all such estates or irrevocable trusts shall 
be considered as one person.
    (b) An individual heir of an estate or beneficiary of a trust may be 
considered as a separate person to the extent that such heir or 
beneficiary is engaged in the production of crops as a separate producer 
and otherwise meets the requirements of Sec. 795.3, except that an 
estate or irrevocable trust which has a sole heir or beneficiary shall 
not be considered as a separate person from such heir or beneficiary.
    (c) Where an irrevocable trust or an estate is a producer on a farm 
and one or more of the beneficiaries or heirs of such trust or estate 
are minor children, the minor children's pro rata share of the program 
payments to the trust or estate shall be attributed to the parent of the 
minor children except as otherwise provided in Sec. 795.12.
    (d) A revocable trust shall not be considered as a separate person 
from the grantor.



 Sec. 795.10  Club, society, fraternal or religious organization.

    Each individual club, society, fraternal or religious organization 
may be considered as a separate person to the extent that each such 
club, society, fraternal or religious organization is engaged in the 
production of crops as a separate producer and otherwise meets the 
requirements of Sec. 795.3.



Sec. 795.11  Husband and wife.

    With respect to the 1988 crop year, a husband and wife shall be 
considered to be one person except that such individuals who, 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 the operations remain separate and distinct from 
any farming operation conducted by the other spouse if such individuals 
have executed a Contract to Participate in the 1988 Price Support and 
Production Adjustment Programs by April 15, 1988. Such individuals must 
file a form FSA-561 with the county committee for each such farming 
operation by July 8, 1988, if they desire to be considered as separate 
persons under this section.

[53 FR 21410, June 8, 1988]



Sec. 795.12  Minor children.

    (a) A minor child and his parents or guardian (or other person 
responsible for him) shall be considered as one person, except that the 
minor child may be considered as a separate person if such minor child 
is a producer on a farm in which the parents or guardian or other person 
responsible for him (including any entity in which the parents or 
guardian or other person responsible for him has a substantial interest, 
i.e., more than a 20-percent interest) takes no part in the operation of 
the farm (including any activities as a custom farmer) and owns no 
interest in the farm or allotment or in any portion of the production on 
the farm, and if such minor child:
    (1) Is represented by a court-appointed guardian who is required by 
law to make a separate accounting for the minor and ownership of the 
farm is vested in the minor, or
    (2) Has established and maintains a different household from his 
parents or guardian and personally carries out the actual farming 
operations on the farm for which there is a separate accounting, or

[[Page 496]]

    (3) Has a farming operation resulting from his being the beneficiary 
of an irrevocable trust and ownership of the property is vested in the 
trust or the minor.
    (b) A person shall be considered a minor until he reaches 18 years 
of age. Court proceedings conferring majority on a person under 18 years 
of age will not change such person's status as a minor for purposes of 
applying the regulations.



Sec. 795.13  Other cases.

    Where the county committee is unable to determine whether certain 
individuals or legal entities involved in the production of a commodity 
are to be treated as one person or separate persons, all the facts 
regarding the arrangement under which the commodity is produced shall be 
submitted to the State committee for decision. Where the State committee 
is unable to determine whether such individuals or legal entities are to 
be treated as one person or separate persons, all the facts regarding 
the arrangement under which the farming operation is conducted shall be 
submitted to the Deputy Administrator for decision.



Sec. 795.14  Changes in farming operations.

    (a) Subject to the provisions of this part, a person may exercise 
his or her right heretofore existing under law, to divide, sell, 
transfer, rent, or lease his or her property if such division, sale, 
transfer, rental arrangement, or lease is legally binding as between the 
parties thereto. However, any document representing a division, sale, 
transfer, rental arrangement, or lease which is fictitious or not 
legally binding as between the parties thereto shall be considered to be 
for the purpose of evading the payment limitation and shall be 
disregarded for the purpose of applying the payment limitation. Any 
change in farming operations that would otherwise serve to increase the 
number of persons for application of the payment limitation must be bona 
fide and substantive.
    (b) A substantive change includes, for example, a substantial 
increase or decrease in the size of the farm by purchase, sale, or 
lease; a substantial increase or decrease in the size of allotment by 
purchase, sale, or lease; a change from a cash lease to a share lease or 
vice versa; and dissolution of an entity such as a corporation or 
partnership.
    (c) Examples of the types of changes that would not be considered as 
substantive are the following:
    Example 1. A corporation is owned equally by four shareholders. The 
corporation owns land, buildings, and equipment and in the prior year 
carried out substantial farming operations. Three of the shareholders 
propose forming a partnership which they would own equally. The 
partnership would cash lease land and equipment from the corporation 
with the objective of having the three partners considered as separate 
persons for purposes of applying the payment limitation under the 
provisions of Sec. 795.7 of the regulations.
    The formation of such a partnership and the leasing of land from a 
corporation in which they hold a major interest would not constitute a 
substantive and bona fide change in operations. Therefore, the 
corporation and the partners would be limited to a single payment 
limitation.
    Example 2. Three individuals each have individual farming operations 
which, if continued unchanged, would permit them to have a total of 
three payment limitations.
    The three individuals propose forming a corporation which they would 
own equally. The corporation would then cash lease a portion of the 
farmland owned and previously operated by the individuals with the 
objective of having the corporation considered as a separate person for 
purposes of applying the payment limitation under the provisions of 
Sec. 795.8 of the regulations. The formation of such a corporation and 
the leasing of land from the stockholders would not constitute a 
substantive and bona fide change in operations. Therefore, the 
corporation and the three individuals would be limited to three payment 
limitations.



Sec. 795.15  Determining whether agreement is a share lease or a cash lease.

    (a) Cash lease. If a rental agreement contains provisions for a 
guaranteed minimum rental with respect to the amount of rent to be paid 
to the landlord by a tenant, such agreement shall be considered to be a 
cash rental agreement. In addition, the rental agreement must be 
customary and reasonable for the area.
    (b) Share lease. If a rental agreement contains provisions that 
require the payment of rent on the basis of the

[[Page 497]]

amount of the crop produced or the proceeds derived from the crop, such 
agreement shall be considered to be a share rental agreement. In 
addition, the rental agreement must be customary and reasonable for the 
area.

[51 FR 8454, Mar. 11, 1986 and 51 FR 36905, Oct. 16, 1986]



Sec. 795.16  Custom farming.

    (a) Custom farming is the performance of services on a farm such as 
land preparation, seeding, cultivating, applying pesticides, and 
harvesting for hire with remuneration on a unit of work basis, except 
that, for the purpose of applying the provisions of this section, the 
harvesting of crops and the application of agricultural chemicals by 
firms regularly engaged in such businesses shall not be regarded as 
custom farming. A person performing custom farming shall be considered 
as being separate from the person for whom the custom farming is 
performed only if:
    (1) The compensation for the custom farming is paid at a unit of 
work rate customary in the area and is in no way dependent upon the 
amount of the crop produced, and (2) the person performing the custom 
farming (and any other entity in which such person has more than a 20-
percent interest) has no interest, directly or indirectly, (i) in the 
crop on the farm by taking any risk in the production of the crop, 
sharing in the proceeds of the crop, granting or guaranteeing the 
financing of the crop, (ii) in the allotment on the farm, or (iii) in 
the farm as landowner, landlord, mortgage holder, trustee, lienholder, 
guarantor, agent, manager, tenant, sharecropper, or any other similar 
capacity.
    (b) A person having more than a 20-percent interest in any legal 
entity performing custom farming shall be considered as being separate 
from the person for whom the custom farming is performed only if:
    (1) The compensation for the custom farming service is paid at a 
unit of work rate customary in the area and is in no way dependent upon 
the amount of the crop produced, and (2) the person having such interest 
in the legal entity performing the custom farming has no interest, 
directly or indirectly, (i) in the crop on the farm by taking any risk 
in the production of the crop, sharing in the proceeds of the corp, 
granting or guaranteeing the financing of the crop, (ii) in the 
allotment on the farm, or (iii) in the farm as landowner, landlord, 
mortgage holder, trustee, lienholder, guarantor, agent, manager, tenant, 
sharecropper, or in any other similar capacity.



Sec. 795.17  Scheme or device.

    All or any part of the payments otherwise due a person under the 
upland cotton, wheat, feed grain and rice programs on all farms in which 
the person has an interest may be withheld or required to be refunded if 
the person adopts or participates in adopting any scheme or device 
designed to evade or which has the effect of evading the rules of this 
part. Such acts shall 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 or submitting false information to the county 
committee (for example, a set-aside agreement which is entered into that 
differs from information furnished to the county committee concerning 
the manner in which program payments are actually shared, concerning the 
actual facts of a sale, or concerning the transfer of property) or 
creating fictitious entities for the purpose of concealing the interest 
of a person in a farming operation.



Sec. 795.20  Joint and several liability.

    Where two or more individuals or legal entities, who are treated as 
one person hereunder, receive payments which in the aggregate exceed the 
limitation, such individuals or legal entities shall be liable, jointly 
and severally, for any liability arising therefrom. The provisions of 
this part requiring the refund of payments shall be applicable in 
addition to any liability under criminal and civil fraud statutes.



Sec. 795.21  Appeals.

    Any person may obtain reconsideration and review of determinations 
made under this part in accordance with the appeal regulations, part 780 
of this chapter, as amended.

[[Page 498]]



Sec. 795.22  Interpretations.

    In interpretations previously issued pursuant to the payment 
limitation regulations and published at 36 FR 16569, 37 FR 3049, 39 FR 
15021 and 41 FR 17527 shall be applicable in construing the provisions 
of this part.



Sec. 795.23  Paperwork Reduction Act assigned number.

    The information collection requirements contained in these 
regulations (7 CFR part 795) 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 control number 0560-0096.

[49 FR 14719, Apr. 13, 1984]



Sec. 795.24  Relief.

    If a producer relied on a county committee and/or State committee 
``person'' determination for a crop year and higher reviewing authority 
makes a more restrictive determination, the Deputy Administrator may 
grant relief only for such crop year if the producer was not afforded an 
opportunity to exercise other alternatives with respect to the 
producer's farming operation and the program provisions and the county 
committee has determined that the producers acted in good faith based 
upon the original ``person'' determination.

[51 FR 8454, Mar. 11, 1986; 51 FR 36905, Oct. 16, 1986]

[[Page 499]]





                      SUBCHAPTER F--PUBLIC RECORDS


PART 798--AVAILABILITY OF INFORMATION TO THE PUBLIC--Table of Contents




Sec.
798.1  General statement.
798.2  Public inspection and copying.
798.3  Index.
798.4  Requests for records.
798.5  Appeals.
798.6  Fees.

    Authority: 5 U.S.C. 301, 552; 7 CFR 1.1 through 1.16.

    Source: 44 FR 10353, Feb. 20, 1979, unless otherwise noted.



Sec. 798.1  General statement.

    This part is issued in accordance with the regulations of the 
Secretary of Agriculture at 7 CFR 1.1 through 1.16, and appendix A, 
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 FSA and Commodity Credit 
Corporation (CCC) to the public.



Sec. 798.2  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 maintained by FSA and/or CCC at the Office of 
the Director, Information Division, Farm Service Agency, Room 3608 South 
Building, P.O. Box 2415, Washington, D.C. 20013, between the hours of 
8:15 and 4:45 p.m., Monday through Friday.

[50 FR 53259, Dec. 31, 1985]



Sec. 798.3  Index.

    5 U.S.C. 552(a)(2) requires that each agency publish or otherwise 
make available a current index of all materials required to be made 
available for public inspection and copying. FSA maintains an index of 
FSA National Handbooks, CCC Board Dockets, decisions of the Board of 
Contract Appeals of the Department of Agriculture affecting FSA or CCC, 
and Marketing Quota Review Committee determinations. In view of the 
small number of public requests for such index, publication of the index 
is unnecessary and impractical. The index is maintained and available to 
the public at the office shown in Sec. 798.2 and copies of the index are 
available upon request in person or by mail to that office.



Sec. 798.4  Request for records.

    Request for records under 5 U.S.C. 552(a)(3) shall be made in 
accordance with 7 CFR 1.3. Reasonable requests for material not in 
existence may also be honored where their compilation will not unduly 
interfere with FSA operations and programs. Each FSA office in the field 
and each FSA office and division in Washington (see statement of 
Organization and Functions of FSA, 40 FR 18815, and of CCC, 35 FR 14951, 
and any amendments thereto) is designated as an ``information center'' 
and shall make space available to inspect and copy records in their 
custody not exempted from disclosure. Copies of records shall also be 
made available upon request. The head of each office or division is 
authorized to receive requests for records and to make determinations 
regarding requests for records in the office's custody in accordance 
with 7 CFR 1.4(c). Requests to Washington divisions and offices shall be 
addressed to USDA, FSA, P.O. Box 2415, Washington, D.C. 20013. The heads 
of FSA field offices shall be addressed as listed in the local telephone 
directory under ``U.S. Government, Department of Agriculture, FSA''. 
Names and addresses of heads of field offices may also be obtained from 
the office indicated in Sec. 798.2.



Sec. 798.5  Appeals.

    Any person whose request under Sec. 798.4 of this part 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, FSA (Executive Vice-President, CCC), USDA, FSA, P.O. Box 
2415, Washington, D.C. 20013.



Sec. 798.6  Fees.

    This schedule supplements the fee schedule in 7 CFR, part 1, subpart 
A,

[[Page 500]]

appendix A and sets forth the fees to be charged by FSA for providing 
copies of records, materials, and services not covered in appendix A:
    (a) Records, materials and services furnished without cost.
    (1) One copy each of related directives, or blank forms required by 
FSA for program participation, if requester is a program participant.
    (2) List of names and addresses of county and/or community committee 
members, and names of county employees in the county.
    (3) One copy of an investigation report furnished to an appellant 
for a program appeal.
    (b) Records, materials and services for which fees are charged.
    (1) National handbooks. Three dollars for the first copy. One dollar 
for each additional copy. (The term ``copy'' includes all national 
amendments to date. They will be furnished separately for the requester 
to assemble).
    (2) Field supplementation to national handbooks. Five cents per 
page, not to exceed $3, for each supplement.
    (3) Computerized records. The requester shall furnish the necessary 
reels when computerized records are furnished on magnetic tape.

[[Page 501]]





                 SUBCHAPTER G--ENVIRONMENTAL PROTECTION



PART 799--ENVIRONMENTAL QUALITY AND RELATED ENVIRONMENTAL CONCERNS--COMPLIANCE WITH THE NATIONAL ENVIRONMENTAL POLICY ACT--Table of Contents




Sec.
799.1  Background.
799.2  Purpose.
799.3  Applicability.
799.4  Definitions.
799.5  FSA officials and offices responsible for carrying out NEPA.
799.6  Adoption of regulations issued by others in implementing the 
          procedural provisions of NEPA.
799.7  Early involvement in private and state and local activities 
          requiring Federal approval.
799.8  Making supplements to EISs part of the final administrative 
          record.
799.9  Ensuring that environmental factors are considered in agency 
          decisionmaking.
799.10  Criteria and identification of FSA actions as to degree of 
          involvement under the NEPA process.
799.11  Expedited procedures.
799.12  Program termination.
799.13  Environmental information.

Appendix 1 to Part 799--Organization Chart--FSA-USDA
Appendix 2 to Part 799--Form FSA-929

    Authority: Pub. L. 91-190, 83 Stat. 852, as amended (42 U.S.C. 
4321); E.O. 11514; E.O. 11991; 40 CFR 1507.3, 7 CFR 3100.

    Source: 45 FR 32313, May 16, 1980, unless otherwise noted.



Sec. 799.1  Background.

    The National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 
et seq.) establishes national policies and goals for the protection of 
the environment. Section 102(2) of NEPA contains certain procedural 
requirements directed toward the attainment of such goals. Section 
(102)(2) also requires all Federal agencies to give appropriate 
consideration to the environmental effects of their proposed actions in 
their decisionmaking and to prepare detailed environmental statements on 
recommendations or reports on proposals for legislation and other major 
Federal actions significantly affecting the quality of the human 
environment. Executive Order 11991 of May 24, 1977 (42 FR 26967), 
directed the Council on Environmental Quality (CEQ) to issue regulations 
to implement the procedural provisions of NEPA. Accordingly, CEQ issued 
final NEPA regulations (40 CFR parts 1500 through 1508) on November 29, 
1978, which are binding on all Federal agencies as of July 30, 1979. 
These regulations provide that each Federal agency shall as necessary 
adopt implementing procedures to supplement the regulations. The U.S. 
Department of Agriculture adopted such procedures in a final rule (7 CFR 
part 3100) published on July 30, 1979. The CEQ regulations at 40 CFR 
1507.3 (b) identify those items which must be addressed in agency 
procedures.



Sec. 799.2  Purpose.

    The purpose of this part is to establish agency procedures which 
supplement NEPA regulations issued by CEQ and USDA. This regulation, 
together with such NEPA regulations issued by CEQ and USDA, will 
supersede regulations issued by the Farm Service Agency (FSA) on 
December 20, 1974 (39 FR 43996).



Sec. 799.3  Applicability.

    This part, together with NEPA regulations issued by CEQ and USDA, 
applies to all programs administered by FSA which might have significant 
impacts on the environment.



Sec. 799.4  Definitions.

    (a) The term environmental evaluation means agency appraisal of the 
potential or likely environmental impacts of proposed legislation, a new 
program, a major change in a program, an action related to a program or 
an action related to part of a program which will be used by the 
responsible agency official to determine whether or not an environmental 
assessment and/or an environmental impact statement is needed. Such 
appraisal shall relate to the same environmental concerns as an 
environmental impact statement. The environmental evaluation shall 
particularly

[[Page 502]]

focus on the adverse affects of FSA actions on the environmental factors 
listed on Form FSA-929 (see Appendix 2) and on the significance of the 
action as discussed in the CEQ regulations concerning NEPA at 40 CFR 
1508.27. As required, the environmental evaluation shall be made by an 
interdisciplinary team.
    (b) In the regulations in this part and in all instructions, forms, 
and documents in connection therewith, all other words and phrases 
shall, unless the context or subject matter otherwise requires, have the 
meanings assigned to them in the regulations governing reconstitution of 
farms, allotments and bases, part 719 of this chapter, as amended.



Sec. 799.5  FSA officials and offices responsible for carrying out NEPA.

    (a) Responsible officials. The Administrator of FSA, or his or her 
designee, is the responsible Federal official for carrying out the 
purpose of NEPA for all FSA programs. County committees, State 
committees, and Directors of Washington Divisions, within their 
respective areas of responsibility with the assistance of the FSA 
representative on the USDA Environmental Quality Committee, shall assist 
the Administrator in complying with the policies and purposes of NEPA 
generally, and, in particular, in determining whether the quality of the 
human environment will be significantly affected in implementing agency 
programs and preparing the necessary environmental documents.
    (b) Offices responsible for carrying out NEPA--(1) Washington 
divisions. Washington divisions are responsible for carrying out NEPA 
with regard to legislative proposals and multi-State and national 
programs or major revisions of national programs.
    (2) State committees. State committees are responsible for carrying 
out NEPA with regard to major actions in a State or area within a State.
    (3) County committees. County committees are responsible for 
carrying out NEPA with regard to major actions within a county.
    (c) All environmental assessments, environmental impact statements 
(EISs) and similar documents will be forwarded through the appropriate 
agency channels to the FSA representative on the USDA Environmental 
Quality Committee for review and submission to the Administrator.



Sec. 799.6  Adoption of regulations issued by others in implementing the procedural provisions of NEPA.

    In addition to provisions provided for in this part 799, FSA adopts 
the NEPA regulations issued by CEQ (40 CFR parts 1500 through 1508) and 
NEPA regulations issued by USDA (7 CFR part 3100).



Sec. 799.7  Early involvement in private and state and local activities requiring Federal approval.

    (a) The NEPA regulations at 40 CFR 1501.2(d) require agencies to 
provide for early involvement in actions which, while planned by private 
applicants or other non-Federal entities, require some form of Federal 
involvement.
    (b) To implement the requirements of 40 CFR 1501.2(d) with respect 
to these actions FSA shall:
    (1) Prepare, where practicable, generic guidelines describing the 
scope and level of environmental information required from applicants 
seeking assistance from FSA as a basis for evaluating their proposed 
actions, and make these guidelines available upon request.
    (2) Provide such guidance on a project-by-project basis to 
applicants seeking assistance from FSA.
    (3) Upon receipt of an application for agency approval, or 
notification that an application will be filed, consult as required with 
other appropriate parties to initiate and coordinate the necessary 
environmental analyses.
    (c) The responsibilities under this section shall be coordinated by 
the Conservation and Environmental Protection Division of the Farm 
Service Agency, Washington, D.C.
    (d) To facilitate compliance with paragraph (a) of this section, 
private applicants seeking assistance from FSA and other non-Federal 
entities are expected to:
    (1) Contact FSA as early as possible in the planning process for 
guidance on the scope and level of environmental

[[Page 503]]

information required to be submitted in support of their application;
    (2) Conduct any studies which are deemed necessary and appropriate 
by FSA to determine the impact of the proposed action on the human 
environment;
    (3) Consult with appropriate Federal, regional, State and local 
agencies and other potentially interested parties during preliminary 
planning stages to ensure that all environmental factors are identified;
    (4) Submit applications for all Federal, regional, State and local 
approvals as early as possible in the planning process;
    (5) Notify FSA as early as possible of all other Federal, regional, 
State, local and Indian tribe actions required for project completion so 
that FSA may coordinate all Federal environmental reviews; and
    (6) Notify FSA of all known parties potentially affected by or 
interested in the proposed action.



Sec. 799.8  Making supplements to EISs part of the final administrative record.

    Where FSA evaluates a proposal on the basis of a formal 
administrative record and an EIS on the proposal has been prepared, any 
supplement to the EIS shall be made a part of the formal record before a 
final decision on the proposal is made.



Sec. 799.9  Ensuring that environmental factors are considered in agency decisionmaking.

    (a) The NEPA regulations at 40 CFR 1501.1 contain requirements to 
ensure adequate consideration of environmental factors in 
decisionmaking. To fulfill these requirements, FSA officials shall:
    (1) Consider all relevant environmental factors in evaluating 
proposals for agency action;
    (2) Make all relevant environmental documents, comments and 
responses part of the record in formal rulemaking or adjudicatory 
proceedings.
    (3) Ensure that all relevant environmental documents, comments and 
responses accompany the proposal through existing review processes;
    (4) Consider only those alternatives encompassed by the range of 
alternatives discussed in the relevant environmental documents when 
evaluating proposals for agency action.
    (5) Where an EIS has been prepared, consider the specific 
alternatives analyzed in the EIS when evaluating the proposal which is 
the subject of the EIS.
    (b) The four categories of FSA activities that have or are likely to 
have significant environment impacts on the human environment are:
    (1) Legislative proposals.
    (2) Initial program implementation.
    (3) Major changes in ongoing programs.
    (4) Major environmental concerns with ongoing programs.
    (c) Initial NEPA involvement in program categories in paragraph (b) 
of this section shall begin at the time FSA begins developing proposed 
legislation, begins the planning stage for implementing a new or changed 
program or receives notice that an ongoing program may have a 
significant adverse impact on the quality of the human environment. 
Where a legislative EIS or environmental assessment is part of the 
formal transmittal of a legislative program proposal to Congress, such 
legislative EIS or assessment may negate the need for the subsequent 
preparation of a program impact statement when FSA implements the 
resulting program. The decision whether such additional statement is 
needed will be made by an interdisciplinary team. The NEPA process on 
legislative proposals and FSA programs is carried out at the national 
level.
    (d) Individual farm participation in FSA programs will normally not 
require any major involvement with the NEPA process. The practices 
carried out under FSA programs that might have impacts on the quality of 
the human environment will normally have been discussed in environmental 
assessments or impact statements on the applicable programs. However, 
for those practices that might significantly affect the quality of the 
human environment, the county committee

[[Page 504]]

shall make an environmental evaluation before approval. If the 
environmental evaluation shows that the implementation of a proposed FSA 
practice on an individual farm will have significant adverse affects on 
the quality of the human environment, the county committee will not 
approve the practice implementation until after the completion of the 
NEPA-EIS process in accordance with this part. For those actions for 
which technical assistance is provided by an agency other than FSA, and 
such technical agency is required by its regulations to implement NEPA 
requirements when providing such assistance, the county committee shall 
use the environmental determination and considerations of such agency 
instead of duplicating the NEPA-EIS process. Individual farm 
participation in acreage set-aside, acreage allotments, price support 
and loans and other similar or related programs will not significantly 
affect the quality of the human environment.
    (e) Pooling agreements and special projects carried out under 
several FSA programs involving two or more farmers in a local geographic 
area will not normally require any major involvement with the NEPA 
process. However, the county committee shall, with the assistance of a 
local interdisciplinary team, as necessary, make an environmental 
evaluation of proposed pooling agreements or special projects that have 
a potential for significantly affecting the quality of the human 
environment. The NEPA process shall begin with the initial involvement 
of FSA personnel in the planning or development of pooling agreements or 
special projects. If it is determined from an environmental evaluation 
that the implementation of a proposed pooling agreement or a proposed 
special project will have a significant adverse impact on the quality of 
the human environment, the completion of the NEPA-EIS process in 
accordance with these regulations will be necessary before approval. For 
those actions for which technical assistance is provided by an agency 
other than FSA and such technical agency is required by its regulations 
to implement NEPA when providing such assistance the county committee 
shall use the environmental determinations and considerations of such 
agency instead of duplicating the NEPA-EIS process.



Sec. 799.10  Criteria and identification of FSA actions as to degree of involvement under the NEPA process.

    (a) FSA will for each of its legislative proposals, initial program 
implementations, program changes or any actions under its ongoing 
programs make a determination by the use of an environmental evaluation 
as to whether or not an environmental assessment or EIS is required.
    (b) The NEPA regulations issued by CEQ at 40 CFR 1507.3(b)(2) in 
conjunction with the regulations at 40 CFR 1508.4 require agencies to 
determine those typical classes of actions for treatment under NEPA. The 
typical classes of FSA actions for treatment under NEPA are set forth as 
follows:
    (1) Actions normally requiring an EIS are:
    (i) Production adjustment programs to balance supply and demand of 
specified commodities, through cropland set-aside or other acreage 
diversion.
    (ii) Agricultural Conservation Program.
    (iii) Rural Clean Water Program.
    (iv) Other major actions that are determined after an environmental 
evaluation and/or an environmental assessment to significantly affect 
the quality of the human environment.
    (2) Actions normally not requiring an assessment or an EIS are:
    (i) Individual farm participation in FSA programs.
    (ii) Pooling agreements and special projects under FSA programs.
    (iii) Production adjustment programs for tobacco, peanuts and extra 
long staple cotton.
    (iv) Emergency Conservation Program.
    (v) Water Bank Program.
    (vi) Forestry Incentives Program.
    (vii) Sugar Program.
    (viii) Wool and Mohair Incentives Program.
    (ix) Bee and Dairy Indemnity Programs.
    (x) Commodity Income and Support and Disaster Protection Programs.
    (xi) Facility Loan Program.
    (xii) Grain Reserve Program.
    (xiii) Livestock Feed Program.

[[Page 505]]

    (xiv) Naval Stores Program.
    (xv) Indian Acute Distress Donation Program.
    (xvi) Other major actions that are determined after an environmental 
evaluation not to significantly affect the quality of the human 
environment.
    (c) FSA will independently determine by an environmental evaluation 
whether an environmental assessment or an EIS is required on actions 
included in paragraph (b) of this section where the presence of 
extraordinary circumstances or other unforseeable factors indicate that 
some other level of environmental review may be appropriate.
    (d) If an environmental evaluation indicates that an action will 
significantly affect the quality of the human environment, the 
preparation of an environmental assessment and/or an EIS will be 
necessary before the action is carried out.



Sec. 799.11  Expedited procedures.

    Where emergency circumstances make it necessary to take action with 
significant environmental impact without following the provisions of the 
NEPA regulations issued by CEQ, USDA, and FSA, FSA will, by working 
through the USDA Office of Environmental Quality, consult with CEQ and/
or EPA about alternative arrangements (7 CFR 3100.35).



Sec. 799.12  Program termination.

    An environmental assessment or an EIS will not be needed when a 
program or part of a program is discontinued because of a mandatory 
legislative requirement where the enabling legislation for such program 
does not provide authority to ameliorate or mitigate any resulting 
environmental effects on the quality of the human environment.



Sec. 799.13  Environmental information.

    Interested persons may contact the Conservation and Environmental 
Protection Division, FSA, for information regarding FSA compliance with 
NEPA.

[[Page 506]]

[GRAPHIC] [TIFF OMITTED] TC19SE91.000


[[Page 507]]


[GRAPHIC] [TIFF OMITTED] TC19SE91.001


[[Page 509]]



  CHAPTER VIII--GRAIN INSPECTION, PACKERS AND STOCKYARD ADMINISTRATION 
      (FEDERAL GRAIN INSPECTION SERVICE), DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
800             General regulations.........................         511
801             Official performance requirements for grain 
                    inspection equipment....................         589
802             Official performance and procedural 
                    requirements for grain weighing 
                    equipment and related grain handling 
                    systems.................................         593
810             Official United States standards for grain..         595
868             General regulations and standards for 
                    certain agricultural commodities........         620

[[Page 511]]



PART 800--GENERAL REGULATIONS--Table of Contents




                               Definitions

Sec.
800.0  Meaning of terms.

                             Administration

800.1  Mission.
800.2  Administrator.
800.3  Nondiscrimination--policy and provisions.
800.4  Procedures for establishing regulations, official standards, and 
          official criteria.
800.5  Complaints and reports of alleged violations.
800.6  Provisions for hearings.
800.7  Information about the Service, Act, and regulations.
800.8  Public information.

    Official Inspection and Class X or Class Y Weighing Requirements

800.15  Services.
800.16  Certification requirements for export grain.
800.17  Special inspection and weighing requirements for sacked export 
          grain.
800.18  Waivers of the official inspection and Class X weighing 
          requirements.

                 Recordkeeping and Access to Facilities

800.25  Required elevator and merchandising records.
800.26  Access to records and facilities.

                              Registration

800.30  Foreign commerce grain business.
800.31  Who must register.
800.32  When to register.
800.33  How to register.
800.34  Registration fee.
800.35  Review of applications.
800.36  Certificates of registration.
800.37  Notice of change in information.
800.38  Termination and renewal of registration.
800.39  Suspension or revocation of registration for cause.

        Conditions for Obtaining or Withholding Official Services

800.45  Availability of official services.
800.46  Requirements for obtaining official services.
800.47  Withdrawal of request for official services.
800.48  Dismissal of request for official services.
800.49  Conditional withholding of official services.
800.50  Refusal of official services and civil penalties.
800.51  Expenses of agency, field office, or Board of Appeals and 
          Review.
800.52  Official services not to be denied.

                              Descriptions

800.55  Descriptions by grade.
800.56  Requirements on descriptions.

                        Grain Handling Practices

800.60  Deceptive actions and practices.
800.61  Prohibited grain handling practices.

                                  Fees

800.70  Fees for official services performed by agencies.
800.71  Fees assessed by the Service.
800.72  Explanation of additional service fees for services performed in 
          the United States only.
800.73  Computation and payment of service fees; general fee 
          information.

                       Kinds of Official Services

800.75  Kinds of official inspection and weighing services.
800.76  Prohibited services; restricted services.

                    Inspection Methods and Procedures

800.80  Methods and order of performing official inspection services.
800.81  Sample requirements; general.
800.82  Sampling provisions by level of service.
800.83  Sampling provisions by kind of movement.
800.84  Inspection of grain in land carriers, containers, and barges in 
          single lots.
800.85  Inspection of grain in combined lots.
800.86  Inspection of shiplot, unit train, and lash barge grain in 
          single lots.
800.87  New inspections.
800.88  Loss of identity.

                   Weighing Provisions and Procedures

800.95  Methods and order of performing weighing services.
800.96  Weighing procedures.
800.97  Weighing grain in containers, land carriers, barges, and 
          shiplots.
800.98  Weighing grain in combined lots.
800.99  Checkweighing sacked grain.

                            Original Services

800.115  Who may request original services.
800.116  How to request original services.
800.117  Who shall perform.
800.118  Certification.

     Official Reinspection Services and Review of Weighing Services

800.125  Who may request reinspection services or review of weighing 
          services.
800.126  How to request reinspection or review of weighing services.
800.127  Who shall perform reinspection or review of weighing services.

[[Page 512]]

800.128  Conflicts of interest.
800.129  Certificating reinspection and review of weighing results.

                       Appeal Inspection Services

800.135  Who may request appeal inspection services.
800.136  How to request appeal inspection services.
800.137  Who shall perform appeal inspection services.
800.138  Conflict of interest.
800.139  Certificating appeal inspections.

                  Official Records and Forms (General)

800.145  Maintenance and retention of records--general requirements.
800.146  Maintenance and retention of records issued by the Service 
          under the Act.
800.147  Maintenance and retention of records on delegations, 
          designations, contracts, and approval of scale testing 
          organizations.
800.148  Maintenance and retention of records on organization, staffing, 
          and budget.
800.149  Maintenance and retention of records on licenses and approvals.
800.150  Maintenance and retention of records on fee schedules.
800.151  Maintenance and retention of records on space and equipment.
800.152  Maintenance and retention of file samples.
800.153  Maintenance and retention of records on official inspection, 
          Class X or Class Y weighing, and equipment testing service.
800.154  Availability of official records.
800.155  Detailed work records--general requirements.
800.156  Official inspection records.
800.157  Official weighing records.
800.158  Equipment testing work records.
800.159  Related official records.

                          Official Certificates

800.160  Official certificates; issuance and distribution.
800.161  Official certificate requirements.
800.162  Certification of grade; special requirements.
800.163  Divided-lot certificates.
800.164  Duplicate certificates.
800.165  Corrected certificates.
800.166  Reproducing certificates.

           Licenses and Authorizations (For Individuals Only)

800.170  When a license or authorization or approval is required.
800.171  Who may be licensed or authorized.
800.172  Applications for licenses.
800.173  Examinations and reexaminations.
800.174  Issuance and possession of licenses and authorizations.
800.175  Termination of licenses.
800.176  Voluntary cancellation or suspension of licenses.
800.177  Automatic suspension of license by change in employment.
800.178  Summary revocation of licenses.
800.179  Refusal of renewal, suspension, or revocation of licenses for 
          cause.
800.180  Summary cancellation of licenses.

         Duties and Conduct of Licensed and Authorized Personnel

800.185  Duties of official personnel and warehouse samplers.
800.186  Standards of conduct.
800.187  Conflicts of interest.
800.188  Crop year, variety, and origin statements.
800.189  Corrective actions for violations.

   Delegations, Designations, Approvals, Contracts, and Conflicts of 
                                Interest

800.195  Delegations.
800.196  Designations.
800.197  Approval as a scale testing and certification organization.
800.198  Contracts.
800.199  Conflict-of-interest provisions.

             Supervision, Monitoring, and Equipment Testing

800.215  Activities that shall be supervised.
800.216  Activities that shall be monitored.
800.217  Equipment that shall be tested.
800.218  Review of rejection or disapproval of equipment.
800.219  Conditional approval on use of equipment.

    Authority: Pub. L. 94-582, 90 Stat. 2867, as amended, (7 U.S.C. 71 
et seq.).

    Source: 45 FR 15810, Mar. 11, 1980, unless otherwise noted.

                               Definitions



Sec. 800.0  Meaning of terms.

    (a) Construction. Words used in the singular form shall be 
considered to imply the plural and vice versa, as appropriate. When a 
section; e.g., Sec. 800.2, is cited, it refers to the indicated section 
in these regulations.
    (b) Definitions. For the purpose of these regulations, unless the 
context requires otherwise, the following terms shall have the meanings 
given for them below. The terms defined in the Act have been 
incorporated herein for easy reference.

[[Page 513]]

    (1) Act. The United States Grain Standards Act, as amended (39 Stat. 
482-485, as amended 7 U.S.C. 71 et seq.).
    (2) Additives. Materials approved by the Food and Drug 
Administration or the Environmental Protection Agency and added to grain 
for purposes of insect and fungi control, dust suppression, or 
identification.
    (3) Administrator. The Administrator of the Grain Inspection, 
Packers and Stockyards Administration or any person to whom authority 
has been delegated.
    (4) Agency. A delegated State or an official agency designated by 
the Administrator, as appropriate.
    (5) Appeal inspection service. An official review by a field office 
of the results of an original inspection service or a reinspection 
service.
    (6) Applicant. An interested person who requests an official 
inspection or a Class X or Class Y weighing service.
    (7) Approved scale testing organization. A State or local 
governmental agency, or person, approved by the Service to perform 
official equipment testing services with respect to weighing equipment.
    (8) Approved weigher. A person employed by or at an approved 
weighing facility and approved by the Service to physically perform 
Class X or Class Y weighing services, and certify the results of Class Y 
weighing.
    (9) Approved weighing equipment. Any weighing device or related 
equipment approved by the Service for the performance of Class X or 
Class Y weighing services.
    (10) Approved weighing facility. An elevator that is approved by the 
Service to receive Class X or Class Y weighing services.
    (11) Assigned area of responsibility. A geographical area assigned 
to an agency or to a field office for the performance of official 
inspection or Class X or Class Y weighing services.
    (12) Board appeal inspection service. An official review by the 
Board of Appeals and Review of the results on an appeal inspection 
service.
    (13) Board of Appeals and Review. The Board of Appeals and Review of 
the Service.
    (14) Business day. The established field office working hours, any 
Monday through Friday that is not a holiday, or the working hours and 
days established by an agency.
    (15) Cargo shipment. Bulk or sacked grain that is loaded directly 
aboard waterborne carrier for shipment. Grain loaded aboard a land 
carrier for shipment aboard a waterborne carrier shall not be considered 
to be a cargo shipment.
    (16) Carrier. A truck, trailer, truck/trailer(s) combination, 
railroad car, barge, ship, or other container used to transport bulk or 
sacked grain.
    (17) Chapter. Chapter VIII of the Code of Federal Regulations (7 CFR 
chapter VIII).
    (18) Circuit. A geographical area assigned to a field office.
    (19) Class X or Class Y weighing equipment testing. Any operation or 
procedure performed by official personnel to determine the accuracy of 
the equipment used, or to be used, in the performance of Class X or 
Class Y weighing services.
    (20) Combined lot. Grain loaded aboard, or being loaded aboard, or 
discharged from two or more carriers as one lot.
    (21) Compliance. Conformance with all requirements and procedures 
established by statute, regulation, instruction, or directive so that 
managerial, administrative, and technical functions are accomplished 
effectively. Compliance functions include: evaluating alleged 
violations, initiating preliminary investigations; initiating 
implementation of all necessary corrective actions; conducting 
management and technical reviews; administering the designation of 
agencies and the delegation of State agencies to perform official 
functions; identifying and, where appropriate, waiving and monitoring 
conflicts of interest; licensing agency personnel; responding to audits 
of FGIS programs; and reviewing and, when appropriate, approving agency 
fee schedules.
    (22) Container. A carrier, or a bin, other storage space, bag, box, 
or other receptacle for grain.
    (23) Contract grade. The official grade, official factors, or 
official criteria specified in a contract for sale or confirmation of 
sale; or in the absence of a contract the official grade, official 
factors,

[[Page 514]]

or official criteria specified by the applicant for official service.
    (24) Contract service. An inspection or weighing service performed 
under a contract between an applicant and the Service.
    (25) Contractor. A person who enters into a contract with the 
Service for the performance of specified official inspection or official 
monitoring services.
    (26) Date of official inspection service or Class X or Class Y 
weighing services. The day on which an official inspection, or a Class X 
or Class Y weighing service is completed. For certification purposes, a 
day shall be considered to end at midnight, local time.
    (27) Deceptive loading, handling, weighing, or sampling. Any manner 
of loading, handling, weighing, or sampling that knowingly deceives or 
attempts to deceive official personnel.
    (28) Delegated State. A State agency delegated authority under the 
Act to provide official inspection service, or Class X or Class Y 
weighing services, or both, at one or more export port locations in the 
State.
    (29) Department of Agriculture and Department. The United States 
Department of Agriculture (USDA).
    (30) Designated agency. A State or local governmental agency, or 
person, designated under the Act to provide either official inspection 
service, or Class X or Class Y weighing services, or both, at locations 
other than export port locations.
    (31) Door-probe sample. A sample taken with a probe from a lot of 
bulk grain that is loaded so close to the top of the carrier that it is 
possible to insert the probe in the grain only in the vicinity of the 
tailgate of the truck or trailer, the door of the railroad boxcar, or in 
a similarly restricted opening or area in the carrier in which the grain 
is located or is loaded in hopper cars or barges in such a manner that a 
representative sample cannot be obtained.
    (32) Elevator. Any warehouse, storage, or handling facility used 
primarily for receiving, storing, or shipping grain. In a facility that 
is used primarily for receiving, storing, and shipping grain, all parts 
of the main facility, as well as annexes, shall be considered to be part 
of the elevator. A warehouse, storage, and handling facility that is 
located adjacent to and is operated primarily as an adjunct of a grain 
processing facility shall not be considered to be an elevator.
    (33) Elevator areas and facilities. All operational areas, including 
the automated data processing facilities that are an integral part of 
the inspection or weighing operations of an elevator; the loading and 
unloading docks; the headhouse and control rooms; all storage areas, 
including the bins, the interstices, the bin floor, and the basement; 
and all handling facilities, including the belts, other conveyors, 
distributor scales, spouting, mechanical samplers, and electronic 
controls.
    (34) Employed. An individual is employed if the individual is 
actually employed or the employment is being withheld pending issuance 
of a license under the Act.
    (35) Exporter. Any person who ships or causes to be shipped any bulk 
or sacked grain in a final carrier or container in which the grain is 
transported from the United States to any place outside the United 
States.
    (36) Export elevator. Any grain elevator, warehouse, or other 
storage or handling facility in the United States (i) from which bulk or 
sacked export grain is loaded (A) aboard a carrier in which the grain is 
shipped from the United States to any place outside thereof, or (B) into 
a container for shipment to an export port location where the grain and 
the container will be loaded aboard a carrier in which it will be 
shipped from the United States to any place outside thereof; and (ii) 
which has been approved by the Service as a facility where Class X or 
Class Y weighing of grain may be obtained.
    (37) Export grain. Grain for shipment from the United States to any 
place outside thereof.
    (38) Export port location. A commonly recognized port of export in 
the United States or Canada, as determined by the Administrator, from 
which grain produced in the United States is shipped to any place 
outside the United States. Such locations include any coastal or border 
location or site in the United States which contains one or more export 
elevators, and is identified by the Service as an export port location.

[[Page 515]]

    (39) False, incorrect, and misleading. Respectively false, 
incorrect, and misleading in any particular.\2\
---------------------------------------------------------------------------

    \1\ [Reserved]
    \2\ A definition taken from the U.S. Grain Standards Act, as 
amended, with certain modifications which do not change the meanings.
---------------------------------------------------------------------------

    (40) Federal Register. An official U.S. Government publication 
issued under the Federal Register Act of July 26, 1935, as amended (44 
U.S.C. 301 et seq.).
    (41) Field Office. An office of the Service designated to perform or 
supervise official inspection services and Class X and Class Y weighing 
services.
    (42) Grain. Corn, wheat, rye, oats, barley, flaxseed, sorghum, 
soybeans, triticale, mixed grain, sunflower seed, canola, and any other 
food grains, feed grains, and oilseeds for which standards are 
established under section 4 of the Act.
    (43) Handling. Loading, unloading, elevating, storing, binning, 
mixing, blending, drying, aerating, screening, cleaning, washing, 
treating, or fumigating grain.
    (44) Holiday. The legal public holidays specified in paragraph (a) 
of section 6103, Title 5, of the United States Code (5 U.S.C. 6103(a)) 
and any other day declared to be a holiday by Federal statute or 
Executive Order. Under section 610 and Executive Order No. 10357, as 
amended, if the specified legal public holiday falls on a Saturday, the 
preceding Friday shall be considered to be the holiday, or if the 
specified legal public holiday falls on a Sunday, the following Monday 
shall be considered to be the holiday.
    (45) ``IN'' movement. A movement of grain into an elevator, or into 
or through a city, town, port, or other location without a loss of 
identity.
    (46) Instructions. The Notices, Instructions, Handbooks, and other 
directives issued by the Service.
    (47) Interested person. Any person having a contract or other 
financial interest in grain as the owner, seller, purchaser, 
warehouseman, or carrier, or otherwise.
    (48) Interstate or foreign commerce. Commerce from any State to or 
through any other State, or to or through any foreign country.
    (49) Licensee. Any person licensed by the Service.
    (50) Loading. Placing grain in or aboard any carrier or container.
    (51) ``LOCAL'' movement. A bin run or other inhouse movement, or 
grain in bins, tanks, or similar containers which are not in transit or 
designed to transport grain
    (52)  [Reserved]
    (53) Lot. A specific quantity of grain identified as such.
    (54) Material error. An error in the results of an official 
inspection service that exceeds the official tolerance, or any error in 
the results of a Class X or Class Y weighing service
    (55) Material portion. A subsample, component, or sublot which is 
determined to be inferior to the contract or declared grade. A subsample 
is a material portion when it has sour, musty, or commercially 
objectionable foreign odors, when it is heating; or when it is of 
distinctly low quality. A component is a material portion when it is 
infested or when it is determined to be inferior in quality by more than 
one numerical grade to the contract or declared grade. A sublot is a 
material portion when a factor result causes a breakpoint to be exceeded 
or when a factor result exceeds specific sublot contract requirements. A 
sublot designated a material portion shall include only one sublot.
    (56) Merchandiser. Any person, other than a producer, who buys and 
sells grain and takes title to the grain. A person who operates as a 
broker or commission agent and does not take title to the grain shall 
not be considered to be a merchandiser.
    (57) Monitoring. Observing or reviewing activities performed under 
or subject to the Act for adherence to the Act, the regulations, 
standards, and instructions and preparing reports thereon.
    (58) Nonregular workday. Any Sunday or holiday.
    (59) Official agency. Any State or local government agency, or any 
person, designated by the Administrator pursuant to subsection (f) of 
section 7 of the Act for the conduct of official inspection (other than 
appeal inspection), or subsection (c) of section 7A of the Act for the 
conduct of Class X or

[[Page 516]]

Class Y weighing (other than review of weighing).
    (60) Official certificate. Those certificates which show the results 
of official services performed under the Act as provided in the 
instructions, and any other official certificates which may be approved 
by the Service in accordance with the instructions.
    (61) Official criteria. A quantified physical or chemical property 
of grain that is approved by the Service to determine the quality or 
condition of grain or other facts relating to grain.
    (62) Official factor. A quantified physical or chemical property of 
grain as identified in the Official U.S. Standards for Grain.
    (63) Official forms. License, authorizations, and approvals; 
official certificates; official pan tickets; official inspection or 
weighing logs; weight sheets; shipping bin weight loading logs; official 
equipment testing reports; official certificates of registration; and 
any other forms which may be issued or approved by the Service that show 
the name of the Service or an agency and a form number.
    (64) Official grade designation. A numerical or sample grade 
designation, specified in the standards relating to kind, class, 
quality, and condition of grain provided for in the Act.
    (65) Official inspection. The determination (by original inspection, 
and when requested, reinspection and appeal inspection) and the 
certification, by official personnel, of the kind, class, quality, or 
condition of grain, under standards provided for in the Act; or the 
condition of vessels and other carriers or receptacles for the 
transportation of grain insofar as it may affect the quality of such 
grain; or other facts relating to grain under other criteria approved by 
the Administrator (the term ``officially inspected'' shall be construed 
accordingly).
    (66) Official inspection equipment testing. Any operation or 
procedure by official personnel to determine the accuracy of equipment 
used, or to be used, in the performance of official inspection services.
    (67) Official inspection technician. Any official personnel who 
perform or supervise the performance of specified official inspection 
services and certify the results thereof, other than certifying the 
grade of the grain.
    (68) Official inspector. Any official personnel who perform or 
supervise the performance of official inspection services and certify 
the results thereof including the grade of the grain.
    (69) Official marks. The symbols or terms ``official certificate,'' 
``official grade,'' ``officially sampled,'' ``officially inspected,'' 
``official inspection,'' ``U.S. inspected,'' ``loaded under continuous 
official inspection,'' ``official weighing,'' ``officially weighed,'' 
``official weight,'' ``official supervision of weighing,'' ``supervision 
of weighing,'' ``officially supervised weight,'' ``loaded under 
continiuous official weighing,'' ``loaded under continuous official 
inspection and weighing,'' ``officially tested,'' ``Class X weight,'' 
``official Class X weighing,'' ``Class X weighing,'' ``official Class Y 
weighing,'' ``Class Y weighing,'' and ``Class Y weight.''
    (70) Official personnel. Persons licensed or otherwise authorized by 
the Administrator pursuant to Section 8 of the Act to perform all or 
specified functions involved in official inspection, Class X or Class Y 
weighing, or in the supervision of official inspection, or Class X or 
Class Y weighing.
    (71) Official sample. A sample obtained from a lot of grain by, and 
submitted for official inspection by, official personnel (the term 
``official sampling'' shall be construed accordingly).
    (72) Official sampler. Any official personnel who perform or 
supervise the performance of official sampling services and certify the 
results thereof.
    (73) Official stowage examination. Any examining operation or 
procedure performed by official personnel to determine the suitability 
of a carrier or container to receive or store grain.
    (74) Official tolerance. A statistical allowance prescribed by the 
Service, on the basis of expected variation, for use in performing or 
supervising the performance of official inspection services, official 
equipment testing services, and, when determined under an established 
loading plan, reinspection services and appeal inspection services.
    (75) Official U.S. Standards for Grain. The Official U.S. Standards 
for Grain established under the Act describe the

[[Page 517]]

physical and biological condition of grain at the time of inspection.
    (76) Official weigher. Any official personnel who perform or 
supervise the performance of Class X or Class Y weighing services and 
certify the results thereof, including the weight of the grain.
    (77) Official weighing. (Referred to as Class X weighing.) The 
determination and certification by official personnel of the quantity of 
a lot of grain under standards provided for in the Act, based on the 
actual performance of weighing or the physical supervision thereof, 
including the physical inspection and testing for accuracy of the 
weights and scales and the physical inspection of the premises at which 
weighing is performed and the monitoring of the discharge of grain into 
the elevator or conveyance. (The terms ``officially weigh'' and 
``officially weighed'' shall be construed accordingly.)
    (78) Official weighing technician. Any personnel who perform or 
supervise specified weighing services and certify the results thereof 
other than certifying the weight of grain.
    (79) Official weight sample. Sacks of grain obtained at random by, 
or under the complete supervision of, official personnel from a lot of 
sacked grain for the purpose of computing the weight of the grain in the 
lot.
    (80) Original inspection. An initial official inspection of grain.
    (81) ``Out'' movement. A movement of grain out of an elevator or out 
of a city, town, port, or other location.
    (82) Person. Any individual, partnership, corporation, association, 
or other business entity.
    (83) Quantity. Pounds or kilograms, tons or metric tons, or bushels.
    (84) Reasonably continuous operation. A loading or unloading 
operation in one specific location which does not include inactive 
intervals in excess of 88 consecutive hours.
    (85) Regular workday. Any Monday, Tuesday, Wednesday, Thursday, 
Friday, or Saturday that is not a holiday.
    (86) Regulations. The regulations in parts 800, 801, and 802 of this 
chapter.
    (87) Reinspection service. An official review of the results of an 
original inspection service by the agency or field office that performed 
the original inspection service.
    (88) Respondent. The party proceeded against.
    (89) Review of weighing service. An official review of the results 
of a Class X or Class Y weighing service.
    (90) Secretary. The Secretary of Agriculture of the United States or 
any person to whom authority has been delegated.
    (91) Service. The Federal Grain Inspection Service of the Grain 
Inspection, Packers and Stockyards Administration of the United States 
Department of Agriculture.
    (92) Service representative. An authorized salaried employee of the 
Service; or a person licensed by the Administrator under a contract with 
the Service.
    (93) Shallow-probe sample. A sample taken with a probe from a lot of 
bulk grain that is loaded so close to the top of the carrier that it is 
possible to insert the probe in the grain at the prescribed locations, 
but only at an angle greater or more obtuse from the vertical than the 
angle prescribed in the instructions.
    (94) Ship. The verb ``ship'' with respect to grain means transfer 
physical possession of the grain to another person for the purpose of 
transportation by any means of conveyance, or transport one's own grain 
by any means of conveyance.
    (95) Shiplot grain. Grain loaded aboard, or being loaded aboard, or 
discharged from an ocean-going vessel including a barge, lake vessel, or 
other vessel of similar capacity.
    (96) Shipper's Export Declaration. The Shipper's Export Declaration 
certificate filed with the U.S. Department of Commerce, Bureau of 
Census.
    (97) Specified service point. A city, town, or other location 
specified by an agency for the performance of official inspection or 
Class X or Class Y weighing services and within which the agency or one 
or more of its inspectors or weighers is located.
    (98) Standardization. The act, process, or result of standardizing 
methodology and measurement of quality and quantity. Standardization 
functions include: compiling and evaluating data to develop and to 
update grading and

[[Page 518]]

weighing standards, developing or evaluating new methodology for 
determining grain quality and quantity, providing reference standards 
for official grading methods, and reviewing official results through the 
use of a quality control and weight monitoring program.
    (99) State. Any one of the States (including Puerto Rico) or 
territories or possessions of the United States (including the District 
of Columbia).
    (100) Submitted sample. A sample submitted by or for an interested 
person for official inspection, other than an official sample.
    (101) Supervision. The effective guidance of agencies, official 
personnel and others who perform activities under the Act, so as to 
reasonably assure the integrity and accuracy of the program activities. 
Supervision includes overseeing, directing, and coordinating the 
performance of activities under the Act, reviewing the performance of 
these activities; and effecting appropriate action. FGIS supervisory 
personnel supervise agencies, official personnel and others who perform 
activities under the Act. Agency supervisors are responsible for the 
direct supervision of their own official personnel and employees. FGIS 
provides oversight, guidance, and assistance to agencies as they carry 
out their responsibilities.
    (102) Supervision of weighing (Referred to as Class Y weighing.) 
Such supervision by official personnel of the grain-weighing process as 
is determined by the Administrator to be adequate to reasonably assure 
the integrity and accuracy of the weighing and of certificates which set 
forth the weight of the grain and such physical inspection by such 
personnel of the premises at which the grain weighing is performed as 
will reasonably assure that all the grain intended to be weighed has 
been weighed and discharged into the elevator or conveyance.
    (103) United States. The States (including Puerto Rico) and the 
territories and possessions of the United States (including the District 
of Columbia).
    (104) Use of official inspection service. The use of the services 
provided under a delegation or designation or provided by the Service.
    (105) Uniform in quality. A lot of grain in which there are no 
material portions.
    (106) Warehouseman's sampler. An elevator employee licensed by the 
Service to obtain samples of grain for a warehouseman's sample-lot 
inspection service. Warehouseman's samplers are not considered official 
personnel, but they are licensed under authority of section 11 of the 
Act.

[45 FR 15810, Mar. 11, 1980, as amended at 49 FR 36068, Sept. 14, 1984; 
49 FR 37055, Sept. 21, 1984; 49 FR 49586, Dec. 21, 1984; 52 FR 6495, 
Mar. 4, 1987; 55 FR 24041, June 13, 1990; 57 FR 3273, Jan. 29, 1992; 60 
FR 5835, Jan. 31, 1995]

                             Administration



Sec. 800.1  Mission.

    The mission of the Federal Grain Inspection Service is to facilitate 
the marketing of grain, oilseeds, pulses, rice, and related commodities 
by:
    (a) Establishing descriptive standards and terms,
    (b) Accurately and consistently certifying quality,
    (c) Providing for uniform official inspection and weighing,
    (d) Carrying out assigned regulatory and service responsibilities, 
and
    (e) Providing the framework for commodity quality improvement 
incentives to both domestic and foreign buyers.

[54 FR 9197, Mar. 6, 1989]



Sec. 800.2  Administrator.

    The Administrator is delegated, from the Secretary, responsibility 
for administration of the United States Grain Standards Act and 
responsibilities under the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621 et seq.). The Administrator is responsible for the establishment of 
policies, guidelines, and regulations by which the Service is to carry 
out the provisions of the Act and the Agricultural Marketing Act of 
1946. The regulations promulgated under the Agricultural Marketing Act 
of 1946 appear at part 68 of this title (7 CFR part 68). The 
Administrator is authorized by the Secretary to take any action required 
by law or considered to be necessary and proper to the discharge of

[[Page 519]]

the functions and services under the Act. The Administrator may delegate 
authority to the Deputy Administrator and other appropriate officers and 
employees. The Administrator may, in emergencies or other circumstances 
which would not impair the objectives of the Act, suspend for period 
determined by the Administrator any provision of the regulations or 
official grain standards. The Administrator may authorize research; 
experimentation; and testing of new procedures, equipment, and handling 
techniques to improve the inspection and weighing of grain. The 
Administrator may waive the official inspection and official weighing 
requirements pursuant to Section 5 of the Act.

[60 FR 5835, Jan. 31, 1995]



Sec. 800.3  Nondiscrimination--policy and provisions.

    In implementing, administering, and enforcing the Act and the 
regulations, standards, and instructions, it is the policy of the 
Service to promote adherence to the provisions of the Civil Rights Act 
of 1964 (42 U.S.C. 2000a et seq.), (Pub. L. 88-352).



Sec. 800.4  Procedures for establishing regulations, official standards, and official criteria.

    Notice of proposals to prescribe, amend, or revoke regulations, 
official standards, and official criteria under the Act shall be 
published in accordance with applicable provisions of the Administrative 
Procedure Act (5 U.S.C. 551, et seq.). Proposals to establish, amend, or 
revoke grain standards will be made effective not less than 1 calendar 
year after promulgation unless, for good cause, the Service determines 
that the public health, interest, or safety require that they become 
effective sooner. Any interested person desiring to file a petition for 
the issuance, amendment, or revocation of regulations, Official U.S. 
Standards for Grain, or official criteria may do so in accordance with 
Sec. 1.28 of the regulations of the Office of the Secretary of 
Agriculture (7 CFR 1.28).



Sec. 800.5  Complaints and reports of alleged violations.

    (a) General. Except as provided in paragraphs (b) and (c) of this 
section, complaints and reports of violations involving the Act or the 
regulations, standards, and instructions issued under the Act should be 
filed with the Service in accordance with Sec. 1.133 of the regulations 
of the Office of the Secretary of Agriculture (7 CFR 1.133) and with the 
regulations and the instructions.
    (b) Reinspection, review of weighing, and appeal services. 
Complaints involving the results of official inspection or Class X or 
Class Y weighing services shall, to the extent practicable, be submitted 
as requests for a reinspection service, a review of weighing service, an 
appeal inspection service, or a Board appeal inspection service as set 
forth in these regulations.
    (c) Foreign buyer complaints. Inquiries or complaints from importers 
or other purchasers in foreign countries involving alleged discrepancies 
in the quality or weight of officially inspected or Class X weighed 
export grain shall, to the extent possible, be submitted by the 
importers or purchasers to the appropriate U.S. Agricultural Attache in 
accordance with Sec. 2.68(a)(14) of the regulations of the Office of the 
Secretary of Agriculture (7 CFR 2.68(a)(14)) and the instructions issued 
by the Foreign Agricultural Service of the Department.

[45 FR 15810, Mar. 11, 1980, as amended at 54 FR 5924, Feb. 7, 1989]



Sec. 800.6  Provisions for hearings.

    Opportunities will be provided for hearings prescribed or authorized 
by sections 7(g)(3), 7A(c)(2), 9, 10(d), and 17A(d) of the Act, and the 
hearings shall be conducted in accordance with the Rules of Practice 
Governing Formal Adjudicatory Administrative Proceedings Instituted by 
the Secretary under Various Statutes (7 CFR, part 1, subpart H).

[[Page 520]]



Sec. 800.7  Information about the Service, Act, and regulations.

    Information about the Grain Inspection, Packers and Stockyards 
Administration, Service, Act, regulations, official standards, official 
criteria, rules of practice, instructions, and other matters related to 
the official inspection or Class X or Class Y weighing of grain may be 
obtained by telephoning or writing the U.S. Department of Agriculture, 
Grain Inspection, Packers and Stockyards Administration, P.O. Box 96454, 
Washington, D.C. 20090-6454, or any field office or agency of the 
Service.

[60 FR 5836, Jan. 31, 1995]



Sec. 800.8  Public information.

    (a) General. This section is issued in accordance with Secs. 1.1 
through 1.23 of the regulations of the Secretary of Agriculture in part 
1, subpart A, of subtitle A of title 7 (7 CFR 1.1 through 1.23), and 
appendix A thereto, implementing the Freedom of Information Act (5 
U.S.C. 552). The Secretary's regulations, as implemented by this 
section, govern the availability of records of the Service to the 
public.
    (b) Public inspection and copying. Materials maintained by the 
Service, including those described in 7 CFR 1.5, will be made available, 
upon a request which has not been denied, for public inspection and 
copying at the U.S. Department of Agriculture, Grain Inspection, Packers 
and Stockyards Administration, at 14th Street and Independence Avenue, 
SW., Washington, D.C. 20250. The public may request access to these 
materials during regular working hours, 8:00 a.m. to 4:30 p.m., est, 
Monday through Friday except for holidays.
    (c) Indexes. FGIS shall maintain an index of all material required 
to be made available in 7 CFR 1.5. Copies of these indexes will be 
maintained at the location given in paragraph (b) of this section. 
Notice is hereby given that quarterly publication of these indexes is 
unnecessary and impracticable, because the material is voluminous and 
does not change often enough to justify the expense of quarterly 
publication. However, upon specific request, copies of any index will be 
provided at a cost not to exceed the direct cost of duplication.
    (d) Requests for records. Requests for records under 5 U.S.C. 
552(a)(3) shall be made in accordance with 7 CFR 1.6 and shall be 
addressed as follows: Office of the Administrator, Grain Inspection, 
Packers and Stockyards Administration; FOIA Request, U.S. Department of 
Agriculture, P.O. Box 96454, Washington, D.C. 20090-6454.
    (e) Appeals. Any person whose request under paragraph (d) of this 
section, is denied shall have the right to appeal such denial in 
accordance with 7 CFR 1.13. Appeals shall be addressed to the 
Administrator, Grain Inspection, Packers and Stockyards Administration, 
FOIA Appeal, P.O. Box 96454, Washington, D.C. 20090-6454.

(Secs. 5, 18, Pub. L. 94-582, 90 Stat. 2869, 2884; (7 U.S.C. 76, 87e))

[48 FR 57467, Dec. 30, 1983, as amended at 54 FR 5924, Feb. 7, 1989; 60 
FR 5836, Jan. 31, 1995]

    Official Inspection and Class X or Class Y Weighing Requirements



Sec. 800.15  Services.

    (a) General. These regulations implement requirements for a national 
inspection and weighing system. This system promotes the uniform and 
accurate application of the official grain standards and provides 
inspection and weighing services required by the Act and as requested by 
applicants for official services. The types and kinds of services 
available under the Act and regulations can be obtained at all specified 
service points in the United States and on U.S. grain in Canadian ports.
    (b) Responsibilities for complying with the official inspection, 
aflatoxin testing, and weighing requirements.
    (1) Export grain. Exporters are responsible for (i) complying with 
all inspection, Class X weighing, and other certification provisions and 
requirements of section 5(a)(1) of the Act and the regulations 
applicable to export grain and (ii) having all corn, as defined in 
Sec. 810.401, exported from the United States tested for aflatoxin 
contamination unless the buyer and seller agree not to have the corn 
tested. The Service shall perform the aflatoxin testing service unless 
the buyer and seller

[[Page 521]]

agree to have the corn tested by an entity other than the Service.
    (2) Intercompany barges. Operators of export elevators at export 
port locations are responsible for complying with Class X weighing 
requirements and regulations covering intercompany grain shipments 
received by barge.
    (3) Grain in marked containers. When grain is in a container that 
bears an official grade designation or mark, the person who places the 
designation or mark on the container or the person who places the grain 
in a container that bears the designation or mark shall be responsible 
for determining that the grain has been inspected or weighed by official 
personnel and qualifies for the official grade designation or mark.
    (4) Grain for which representations have been made. Any person who 
makes a representation that (i) grain has been officially inspected or 
weighed; or (ii) grain has been officially inspected or weighed and 
found to be of a particular kind, class, quality, condition, or weight; 
or (iii) particular facts have been established with respect to the 
grain by official inspection or weighing, shall be responsible for 
determining that the representation is true and is not in violation of 
the Act and regulations.

[50 FR 49668, Dec. 4, 1985, as amended at 57 FR 2439, Jan. 22, 1992]



Sec. 800.16  Certification requirements for export grain.

    (a) General. Official Export Grain Inspection and Weight 
Certificates, Official Export Grain Inspection Certificates, and 
Official Export Grain Weight Certificates for bulk or sacked grain shall 
be issued according to Sec. 800.162 for export grain loaded by an export 
elevator. Only these types of export certificates showing the official 
grade, official aflatoxin test results if required under the Act and the 
regulations, and/or the Class X weight of the grain shall be considered 
to be in compliance with inspection and weighing requirements under the 
Act for export grain.
    (b) Promptly furnished. Export certificates shall be considered 
promptly furnished if they are forwarded by the shipper or the shipper's 
agent to the consignee not later than 10 business days after issuance.

[50 FR 49668, Dec. 4, 1985, as amended at 57 FR 2439, Jan. 22, 1992]



Sec. 800.17  Special inspection and weighing requirements for sacked export grain.

    (a) General. Subject to the provisions of Sec. 800.18, sacked export 
grain shall be (1) officially inspected on the basis of official samples 
obtained with an approved sampling device and operated in accordance 
with instructions, (2) Class X weighed or checkweighed, and (3) 
officially checkloaded by official personnel at the time the grain is 
loaded aboard the export carrier, in accordance with the provisions of 
paragraphs (b) and (c) of this section.
    (b) Services at time of loading. When official sampling, official 
inspection, Class X weighing or checkweighing, and checkloading of 
sacked export grain loaded aboard an export carrier is performed at one 
location and time, official export inspection and weight certificate(s) 
which identify the export carrier shall be issued.
    (c) Services prior to loading. When official sampling, official 
inspection, and Class X weighing or checkweighing of sacked export grain 
is performed prior to the date of loading aboard an export carrier, 
official ``OUT'' certificates shall be issued. An examination by 
official personnel for condition and checkloading of the grain shall be 
made as the grain is loaded aboard the export carrier. If the 
examination for condition and the checkloading shows that the identity 
or quantity of the grain has not changed or the condition of the grain 
has not changed beyond expected variations prescribed in the 
instruction, official export inspection and weight certificates shall be 
issued on the basis of the official ``OUT'' certificates and the 
checkloading. If the identity, quantity, or the condition has changed, 
official export inspection and weight certificates shall be issued on 
the basis of the most representative samples, including weight samples, 
obtained at the time the grain is loaded aboard the export carrier.

[50 FR 49668, Dec. 4, 1985]

[[Page 522]]



Sec. 800.18  Waivers of the official inspection and Class X weighing requirements.

    (a) General. Waivers from the official inspection and Class X 
weighing requirements for export grain under section 5 of the Act shall 
be provided in accordance with this section and the Act.
    (b) Waivers. (1) 15,000 metric-ton waiver. Official inspection and 
Class X weighing requirements apply only to exporters and individual 
elevator operators who (i) exported 15,000 metric tons or more of grain 
during the preceding calendar year, or (ii) have exported 15,000 metric 
tons or more of grain during the current calendar year. Exporters and 
elevator operators who are granted a waiver by reason of this paragraph 
shall, as a condition of the waiver, keep such accounts, records, and 
memorandum to fully and correctly disclose all transactions concerning 
lots of all export grain shipments. In addition, the exporters or 
elevator operators shall notify the Service in writing of the intention 
to export grain under this waiver. In the case of lots waived under this 
provision, if such lots are required by contract to be inspected or 
weighed, or if the lots are represented by official inspection or weight 
certificates, then such certificates shall meet the requirements of 
section 5 of the Act.
    (2) Grain exported for seeding purposes. Official inspection and 
Class X weighing requirements do not apply to grain exported for seeding 
purposes, provided that (i) the grain is (A) sold or consigned for sale 
and invoiced as seed; and (B) identified as seed for seeding purposes on 
the Shipper's Export Declaration; and (ii) records pertaining to these 
shipments are made available, upon request by the Service, for review or 
copying purposes.
    (3) Grain shipped in bond. Official inspection and weighing 
requirements do not apply to grain that is shipped from a foreign 
country to a foreign country through the United States in bond in 
accordance with applicable regulations of the United States Customs 
Service (19 CFR part 18).
    (4) Grain exported by rail or truck to Canada or Mexico. Inspection 
and weighing requirements do not apply to grain exported by rail or 
truck from the United States to Canada or Mexico.
    (5) Grain not sold by grade. Official inspection requirements may be 
waived by the Service on a shipment-by-shipment basis for export grain 
not sold, offered for sale, or consigned for sale by official grade if 
(i) the contract and any amendments clearly show that the buyer and 
seller mutually agree to ship the grain without official inspection and 
(ii) a copy of the contract and any amendments is furnished in advance 
of loading, along with a completed application on a form prescribed by 
the Service.
    (6) Service not available. Upon request, any required official 
inspection or Class X weighing of grain may be waived on a shipment-by-
shipment basis if (i) official personnel are not and will not be 
available within a 24-hour period to perform needed inspection or 
weighing services and (ii) both the buyer and seller of the grain are 
made aware that the grain has not been officially inspected or Class X 
weighed.
    (7) Emergency waiver. Upon request, the requirements for official 
inspection or Class X weighing may be waived whenever the Service 
determines (i) that an emergency exists that precludes official 
inspection or Class X weighing and (ii) that granting an emergency 
waiver will not impair the objectives of the Act. To qualify for an 
emergency waiver, the exporter or elevator operator shall make timely 
application and comply with all conditions which may be required by the 
Service.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 49669, Dec. 4, 1985]

                 Recordkeeping and Access to Facilities



Sec. 800.25  Required elevator and merchandising records.

    (a) Elevator and merchandiser recordkeeping. Every person and every 
State or political subdivision of a State that owns or operates an 
elevator and every merchandiser that has obtained or obtains official 
inspection or official weighing services other than (1) submitted sample 
inspection service, or (2)

[[Page 523]]

official sampling service, or (3) official stowage examination service 
shall keep such accounts, records, and memoranda that fully and 
correctly disclose all transactions concerning the lots of grain for 
which the elevator or merchandiser received official services, except as 
provided under Sec. 800.18.
    (b) Retention period. Records specified in this section may be 
disposed of after a period of 3 years from the date of the official 
service; provided, the 3-year period may be extended if the elevator 
owner or operator, or merchandiser is notified in writing by the 
Administrator that specific records should be retained for a longer 
period for effective administration and enforcement of the Act. This 
requirement does not restrict or modify the requirements of any other 
Federal, State, or local statute concerning recordkeeping.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[51 FR 1768, Jan. 15, 1986]



Sec. 800.26  Access to records and facilities.

    (a) Inspection of records and facilities. Prior to the examination 
of records or inspection of facilities by an authorized representative 
of the Secretary or the Administrator, the authorized representative 
shall contact or otherwise notify the elevator manager or manager's 
representative of their presence and furnish proof of identity and 
authority. While in the elevator, the authorized representative shall 
abide by the safety regulations in effect at the elevator. Every 
elevator owner and operator and every merchandiser shall permit 
authorized representatives of the Secretary or Administrator to enter 
its place of business during normal business hours and have access to 
the facilities and to inspect any books, documents, papers, and records 
that are maintained by such persons. Such access and inspection will be 
to effectuate the purpose, provisions, and objectives of the Act and to 
assure the integrity of official services under the Act or of any 
official transaction with which the Act is concerned. All copies of such 
records will be made at the Service's expense. Reasonable accommodations 
shall be made available to the duly authorized representative by 
elevator owners and operators, and merchandisers for such examination of 
records.
    (b) Disclosure of business information. FGIS employees or persons 
acting for FGIS under the Act shall not, without the consent of the 
elevator operator or merchandiser concerned, divulge or make known in 
any manner, any facts or information acquired pursuant to the Act and 
regulations except as authorized by the Administrator, by a court of 
competent jurisdiction, or otherwise by law.

[51 FR 1768, Jan. 15, 1986]

                              Registration



Sec. 800.30  Foreign commerce grain business.

    ``Foreign commerce grain business'' is defined as the business of 
buying grain for sale in foreign commerce or the business of handling, 
weighing, or transporting grain for sale in foreign commerce. This 
provision shall not include:
    (a) Any person who only incidentally or occasionally buys for sale, 
or handles, weighs, or transports grain for sale and is not engaged in 
the regular business of buying grain for sale, or handling, weighing, or 
transporting grain for sale;
    (b) Any producer of grain who only incidentally or occasionally 
sells or transports grain which the producer has purchased;
    (c) Any person who transports grain for hire and does not own a 
financial interest in such grain; or
    (d) Any person who buys grain for feeding or processing and not for 
the purpose of reselling and only incidentally or occasionally sells 
such grain as grain.

[48 FR 44455, Sept. 29, 1983]



Sec. 800.31  Who must register.

    Each person who has engaged in foreign commerce grain business 
totaling 15,000 or more metric tons during the preceding or current 
calendar year must register with the Service and shall be deemed to be 
regularly engaged in foreign commerce grain business. This includes 
foreign-based firms operating in the United States but does

[[Page 524]]

not include foreign governments or their agents. The Service will, upon 
request, register persons not required to register under this section if 
they comply with the requirements of Secs. 800.33 and 800.34.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44455, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec. 800.32  When to register.

    A person shall submit an application for registration to the Service 
at least 30 calendar days before regularly engaging in foreign commerce 
grain business according to Sec. 800.31. For good cause shown, the 
Service may waive this 30-day requirement.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44455, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec. 800.33  How to register.

    Any person who is required or desires to register must submit an 
application for registration to the Service. Application forms can be 
obtained from the Service. Each application shall: (a) Be typewritten or 
legibly written in English; (b) include all information required by the 
application form; and (c) be signed by the applicant. The information 
required by this paragraph may be submitted to the Service via 
telephone, subject to written confirmation. An applicant shall furnish 
any additional information requested by the Service for consideration of 
the application.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44456, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec. 800.34  Registration fee.

    An applicant shall submit the registration fee prescribed in 
Sec. 800.71 with the completed application. If an application is 
dismissed, the fee shall be refunded by the Service. No fee or portion 
of a fee shall be refunded if a person is registered and the 
registration is subsequently suspended or revoked under Sec. 800.39.

[48 FR 44456, Sept. 29, 1983]



Sec. 800.35  Review of applications.

    (a) The Service shall review each application to determine if it 
complies with Secs. 800.32, 800.33, and 800.34. If the application 
complies and the fee has been paid, the applicant shall be registered.
    (b) If the application does not comply with Secs. 800.32, 800.33, 
and 800.34 and the omitted information prevents a satisfactory review by 
the Service, the applicant shall be provided an opportunity to submit 
the needed information. If the needed information is not submitted 
within a reasonable time, the application may be dismissed. The Service 
shall promptly notify the applicant, in writing, of the reasons for the 
dismissal.

[48 FR 44456, Sept. 29, 1983]



Sec. 800.36  Certificates of registration.

    The Service shall furnish the applicant with an original and three 
copies of the registration certificate. The registration shall be 
effective on the issue date shown on the certificate. Each certificate 
of registration is issued on the condition that the registrant will 
comply with all provisions of the Act, regulations, and instructions. 
The Service shall charge a fee, in accordance with Sec. 800.71, for each 
additional copy of a certificate of registration requested by a 
registrant.

[48 FR 44456, Sept. 29, 1983]



Sec. 800.37  Notice of change in information.

    Each registrant shall notify the Service within 30 days of any 
change in the information contained in the application for registration. 
If the notice is submitted orally, it shall be promptly confirmed in 
writing.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[48 FR 44453 and 44456, Sept. 29, 1983, as amended at 54 FR 5924, Feb. 
7, 1989]



Sec. 800.38  Termination and renewal of registration.

    Each certificate of registration shall terminate on December 31 of 
the calendar year for which it is issued. The Service shall send a 
letter to each registrant notifying the registrant of the

[[Page 525]]

impending termination of the registration and providing instructions for 
requesting renewal. The registration may be renewed in accordance with 
Secs. 800.33 and 800.34. Failure to receive the letter shall not exempt 
registrants from the responsibility of renewing their registration if 
required by Sec. 800.31.

[48 FR 44456, Sept. 29, 1983]



Sec. 800.39  Suspension or revocation of registration for cause.

    (a) General. Registration is subject to suspension or revocation 
whenever the Administrator determines that the registrant has violated 
any provision of the Act or regulations, or has been convicted of any 
violation involving the handling, weighing, or inspection of grain under 
Title 18 of the United States Code.
    (b) Procedure. Before the Service suspends or revokes a 
registration, the registrant (hereinafter the ``respondent''): (1) Shall 
be notified of the proposed action and the reasons therefor and (2) 
shall be afforded opportunity for a hearing in accordance with the Rules 
of Practice Governing Formal Adjudicatory Proceedings Instituted by the 
Secretary under Various Statutes (7 CFR, 1.130 through 1.151). Prior to 
formal adjudicatory proceedings, the Service may allow the respondent to 
express views on the action proposed by the Service in an informal 
conference before the Administrator. If the Service and the respondent 
enter into a consent agreement, no formal adjudicatory proceedings shall 
be initiated.

[48 FR 44456, Sept. 29, 1983]

        Conditions For Obtaining Or Withholding Official Services



Sec. 800.45  Availability of official services.

    (a) Original inspection and weighing services. Original inspection 
and weighing services on grain are available according to this section 
and Secs. 800.115 through 800.118 when requested by an interested 
person.
    (b) Reinspection, review of weighing, and appeal inspection 
services. Reinspection, review of weighing, appeal inspection, and Board 
appeal inspection services are available when requested by an interested 
person, according to Secs. 800.125 through 800.129 and Secs. 800.135 
through 800.139.
    (c) Proof of authorization. If an application for official services 
is filed by a person representing the applicant, the agency or the field 
office receiving the application may require written proof of the 
authority to file the application.

(Approved by the Office of Management and Budget under control number 
0580-0012)

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30913, Aug. 2, 1984, as amended at 50 FR 45392, Oct. 31, 1985; 54 
FR 5924, Feb. 7, 1989]



Sec. 800.46  Requirements for obtaining official services.

    (a) Consent and agreement by applicant. In submitting a request for 
official services, the applicant and the owner of the grain consent to 
the special and general requirements specified in paragraphs (b) and (c) 
of this section. These requirements are essential to carry out the 
purposes or provisions of the Act.
    (b) General requirements. (1) Access to grain. Grain on which 
official services are to be performed shall, except as provided in 
Secs. 800.85, 800.86, 800.98, and 800.99, be made accessible by the 
applicant for the performance of the requested official service and 
related monitoring and supervision activities. For the purposes of this 
section, grain is not ``accessible'' if it is offered for official 
services (i) in containers or carriers that are closed and cannot, with 
reasonable effort, be opened by or for official personnel; (ii) when any 
portion is located so as to prohibit the securing or a representative 
sample; or (iii) under conditions prescribed in the instructions as 
being hazardous to the health or safety of official personnel.
    (2) Working space. When official services are performed at an 
elevator, adequate and separate space must be provided by the applicant 
for the performance of the requested service and related monitoring and 
supervision activities. Space will be ``adequate'' if it meets the 
space, location, and safety requirements specified in the instructions.
    (3) Notice of changes. The operator of each facility at which 
official services

[[Page 526]]

are performed must notify the appropriate agency or field office 
promptly, in full detail, of changes in the grain handling and weighing 
facilities, equipment, or procedures at the elevator that could or would 
affect the proper performance of official services.
    (4) Loading and unloading conditions. As applicable, each applicant 
for official services must provide or arrange for suitable conditions in 
the (i) loading and unloading areas and the truck and railroad holding 
areas; (ii) gallery and other grain-conveying areas; (iii) elevator 
legs, distributor, and spout areas; (iv) pier or dock areas; (v) deck 
and stowage areas in the carrier; and (vi) equipment used in loading or 
unloading and handling the grain. Suitable conditions are those which 
will facilitate accurate inspection and weighing, maintain the quantity 
and the quality of the grain that is to be officially inspected or 
weighed, and not be hazardous to the health and safety of official 
personnel, as prescribed in the instructions.
    (5) Timely arrangements. Requests for official service shall be made 
in a timely manner; otherwise, official personnel may not be available 
to provide the requested service. For the purpose of this paragraph, 
``timely manner'' shall mean not later than 2 p.m., local time, of the 
preceding business day.
    (6) Observation of activities. Each applicant for official services 
must provide any interested person, or their agent, an opportunity to 
observe sampling, inspection, weighing, and loading or unloading of 
grain. Appropriate observation areas shall be mutually defined by the 
Service and facility operator. The areas shall be safe and shall afford 
a clear and unobstructed view of the performance of the activity, but 
shall not permit a close over-the-shoulder type of observation by the 
interested person.
    (7) Payment of bills. Each applicant, for services under the Act, 
must pay bills for the services according to Secs. 800.70 through 
800.73.
    (8) Written confirmations. When requested by the agency or field 
office, verbal requests for official services shall be confirmed in 
writing. Each written request shall be signed by the applicant, or the 
applicant's agent, and shall show or be accompanied by the following 
information: (i) The identification, quantity, and specific location of 
the grain; (ii) the name and mailing address of the applicant; (iii) the 
kind and scope of services desired; and (iv) any other information 
requested by the agency or field office.
    (9) Names and addresses of interested persons. When requested, each 
applicant for official services shall show on the application form the 
name and address of each known interested person.
    (10) Surrender of superseded certificates. When a request for 
official service results in a certificate being superseded, the 
superseded certificate must be promptly surrendered.
    (11) Recordkeeping and access. Each applicant for official services 
must comply with applicable recordkeeping and access-to-facility 
provisions in Secs. 800.25 and 800.26.
    (12) Monitoring equipment. Owners and operators of elevators shall, 
upon a finding of need by the Administrator, provide equipment necesary 
for the monitoring by official personnel of grain loading, unloading, 
handling, sampling, weighing, inspection, and related activities. The 
finding of need will be based primarily on a consideration of manpower 
and efficiency.
    (c) Special requirements for official Class X and Class Y weighing 
services. (1) General. Weighing services shall be provided only at 
weighing facilities which have met the conditions, duties, and 
responsibilities specified in section 7A(f) of the Act and this section 
of the regulations. Weighing services will be available only in 
accordance with the requirements of Sec. 800.115. Facilities desiring 
weighing services should contact the Service in advance to allow the 
Service time to determine if the facility complies with the provisions 
of the Act and regulations.
    (2) Conditions. The facility shall provide the following information 
annually to the Service: (i) The facility owner's name and address; (ii) 
the facility operator's name and address; (iii) the name of each 
individual employed by the facility as a weigher and a statement that 
each individual: (A) Has a technical ability to operate grain weighing 
equipment and (B) has a reputation for honesty and integrity; (iv)

[[Page 527]]

a blueprint or similar drawing of the facility showing the location of: 
(A) The loading, unloading, and grain handling systems; (B) the scale 
systems used or to be used in weighing grain; and (C) the bins and other 
storage areas; (v) the identification of each scale in the facility that 
is to be used for weighing grain under the Act; (vi) the following 
information regarding automated data processing systems: (A) Overall 
system intent, design, and layout; (B) make, model, and technical 
specifications of all hardware; (C) description of software, language 
used, and flow charts of all programs, subprograms, routines, and 
subroutines; and (D) complete operating instructions; and (vii) any 
other information deemed necessary to carry out the provisions of the 
Act.

If a facility has, or plans to have, an automated data processing system 
which is used in conjunction with any portion of the scale system, grain 
handling system, or the preparing or printing of official weight 
certificates, the facility shall make available to the Service 
sufficient documentation to ensure that the system cannot be used 
deceptively or otherwise provide inaccurate information. The Service or 
approved scale testing and certification organization shall conduct an 
onsite review to evaluate the performance and accuracy of each scale 
that will be used for weighing grain under the Act, and the performance 
of the grain loading, unloading, and related grain handling equipment 
and systems.
    (3) Duties and responsibilities of weighing facilities requesting 
official services. (i) Providing official services. Upon request, each 
weighing facility shall permit official weighing services to be 
performed promptly.
    (ii) Supervision. Each weighing facility shall supervise its 
employees and shall take action necessary to assure that employees are 
performing their duties according to the Act, regulations, and 
instructions and are not performing prohibited functions or are not 
involved in any action prohibited by the Act, regulations, and 
instructions.
    (iii) Facilities and equipment. (A) General. Each weighing facility 
shall obtain and maintain facilities and equipment which the Service 
determines are needed for weighing services performed at the facility. 
Each facility shall operate and shall maintain each scale system and 
related grain handling system used in weighing according to instructions 
issued by the manufacturer and by the Service. A scale log book for each 
approved scale used for official weighing services shall be maintained 
according to instructions at each weighing facility.
    (B) Malfunction of scales. Scales or scale systems that are 
operating in other than a correct and approved manner shall not be used 
for weighing grain under the Act. Before the malfunctioning scale or 
scale system can be used again for weighing grain under the Act, it 
shall be repaired and determined to be operating properly by the Service 
or approved scale testing and certification organization.
    (iv) Oral directives. FGIS oral directives issued to elevator 
personnel shall be confirmed in writing upon request by elevator 
management. Whenever practicable, the Service shall issue oral 
directives through elevator management officials.

(Approved by the Office of Management and Budget under control number 
0580-0012)

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984, as amended at 49 FR 49587, Dec. 21, 1984; 50 
FR 45392, Oct. 31, 1985; 54 FR 5924, Feb. 7, 1989]



Sec. 800.47  Withdrawal of request for official services.

    An applicant may withdraw a request for official services any time 
before official personnel release results, either verbally or in 
writing. See Sec. 800.51 for reimbursement of expenses, if any.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984]



Sec. 800.48  Dismissal of request for official services.

    (a) Conditions for dismissal. (1) General. An agency or the Service 
shall dismiss requests for official services when (i) Sec. 800.76 
prohibits the requested service; (ii) performing the requested service 
is not practicable; (iii) the agency or the

[[Page 528]]

Service lacks authority under the Act or regulations; or (iv) sufficient 
information is not available to make an accurate determination.
    (2) Original services. A request for original services shall be 
dismissed if a reinspection, review of weighing, appeal inspection, or 
Board appeal inspection has been performed on the same lot at the same 
specified service point within 5 business days.
    (3) Reinspection, appeal inspection, or Board appeal inspection 
services. A request for a reinspection, appeal inspection, or Board 
appeal inspection service shall be dismissed when: (i) The kind and 
scope are different from the kind and scope of the last inspection 
service; (ii) the condition of the grain has undergone a material 
change; (iii) the request specifies a representative file sample and a 
representative file sample is not available, (iv) the applicant requests 
that a new sample be obtained and a new sample cannot be obtained; or 
(v) the service cannot be performed within 5 business days of the date 
of the last inspection date.
    (4) Review of weighing services. A request for review of weighing 
services shall be dismissed when the request (i) is filed before the 
weighing results have been released, or (ii) is filed more than 90 
calendar days after the date of the original service.
    (b) Procedure for dismissal. When an agency or the Service proposes 
to dismiss a request for official services, the applicant shall be 
notified of the proposed action. The applicant will then be afforded 
reasonable time to take corrective action or to demonstrate there is no 
basis for the dismissal. If the agency or the Service determines that 
corrective action has not been adequate, the applicant will be notified 
again of the decision to dismiss the request for service, and any 
results of official services shall not be released.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 45392, Oct. 31, 1985]



Sec. 800.49  Conditional withholding of official services.

    (a) Conditional withholding. An agency or the Service shall 
conditionally withhold requests for official services when an applicant 
fails to meet any requirement prescribed in Sec. 800.46.
    (b) Procedure and withholding. When an agency or the Service 
proposes to conditionally withhold official services, the applicant 
shall be notified of the reason for the proposed action. The applicant 
will then be afforded reasonable time to take corrective action or to 
show that there is no basis for withholding services. If the agency or 
the Service determines that corrective action has not been adequate, the 
applicant will be notified. Any results of official services shall not 
be released when a request for service is withheld.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984]



Sec. 800.50  Refusal of official services and civil penalties.

    (a) Grounds for refusal. Any or all services available to an 
applicant under the Act may be refused, either temporarily or 
indefinitely, by the Service for causes prescribed in section 10(a) of 
the Act. Such refusal by the Service may be restricted to the particular 
facility or applicant (if not a facility) found in violation or to a 
particular type of service, as the facts may warrant. Such action may be 
in addition to, or in lieu of, criminal penalties or other remedial 
action authorized by the Act.
    (b) Provision and procedure for summary refusal. The Service may, 
without first affording the applicant (hereafter in this section 
``respondent'') a hearing, refuse to provide official inspection and 
Class X or Y weighing services pending final determination of the 
proceeding whenever the Service has reason to believe there is cause, as 
prescribed in section 10 of the Act, for refusing such official services 
and considers such action to be in the best interest of the official 
services system under the Act: Provided that within 7 days after refusal 
of such service, the Service shall afford the respondent an opportunity 
for a hearing as provided under paragraph (c)(2) of this section.

[[Page 529]]

Pending final determination, the Service may terminate the temporary 
refusal if alternative managerial, staffing, financial, or operational 
arrangements satisfactory to the Service can be and are made by the 
respondent.
    (c) Procedure for other than summary refusal. Except as provided in 
paragraph (b) of this section, before the Service refuses to provide 
official services the respondent shall be (1) notified of the services 
that are to be refused, the locations at which and the time period for 
which service will be refused, and the reasons for the refusal; and (2) 
afforded an opportunity for a hearing in accordance with the provisions 
of the Rules of Practice Governing Formal Adjudicatory Proceedings 
Instituted by the Secretary Under Various Statutes (7 CFR 1.130 et 
seq.). At the discretion of the Service, prior to initiation of formal 
adjudicatory proceedings, the respondent may be given an opportunity to 
express his or her views on the action proposed by the Service in an 
informal conference before the Administrator of the Service. If, as a 
result of such an informal conference, the Service and the respondent 
enter into a consent agreement, no formal adjudicatory proceedings shall 
be initiated.
    (d) Assessment of civil penalties. Any person who has knowingly 
committed any violation of section 13 of the Act or has been convicted 
of any violation of other Federal law with respect to the handling, 
weighing, or official inspection of grain may be assessed a civil 
penalty not to exceed $75,000 for each such violation as the 
Administrator determines is appropriate to effect compliance with the 
Act. Such action may be in addition to, or in lieu of, criminal 
penalties under section 14 of the Act, or in addition to, or in lieu of, 
the refusal of official services authorized by the Act.
    (e) Provisions for civil penalty hearings. Before a civil penalty is 
assessed against any person, such person shall be afforded an 
opportunity for a hearing as provided under paragraph (c)(2) of this 
section.
    (f) Collection of civil penalties. Upon failure to pay the civil 
penalty, the Service may request the Attorney General to file civil 
action to collect the penalty in a court of appropriate jurisdiction.

[45 FR 15810, Mar. 11, 1980, as amended at 51 FR 12830, Apr. 16, 1986]



Sec. 800.51  Expenses of agency, field office, or Board of Appeals and Review.

    For any request that has been dismissed or withdrawn under 
Sec. 800.47, Sec. 800.48, or Sec. 800.49, respectively, each applicant 
shall pay expenses incurred by the agency or the Service.

(Secs. 8, 9, 10, 13 and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 
2880, and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e)

[49 FR 30915, Aug. 2, 1984]



Sec. 800.52  Official services not to be denied.

    Subject to the provisions of Secs. 800.48, 800.49, and 800.50, no 
person entitled to official services under the Act shall be denied or 
deprived of the right thereto by reason of any rule, regulation, bylaw, 
or custom of any market, board of trade, chamber of commerce, exchange, 
inspection department, or similar organization; or by any contract, 
agreement, or other understanding.

                              Descriptions



Sec. 800.55  Descriptions by grade.

    (a) General. In any sale, offer for sale, or consignment for sale, 
which involves the shipment of grain in interstate or foreign commerce, 
the description of grain, as being of a grade in any advertising, price 
quotation, other negotiation of sale, contract of sale, invoice, bill of 
lading, other document, or description on bags or other containers of 
the grain, is prohibited if such description is other than by an 
official grade designation, with or without additional information as to 
specified factors. An official grade designation contains any of the 
following: The term ``U.S.,'' the numerals 1 through 5, the term 
``Sample grade,'' or the name of a subclass or a special grade of grain 
specified in the Official United States Standards for Grain.
    (b) Proprietary brand names or trademarks. A description of grain by 
a proprietary brand name or a trademark that does not resemble an 
official

[[Page 530]]

grade designation will not be considered to be a description by grade; 
but a description by a proprietary brand name or trademark that contains 
singly or in combination any of the terms referenced in paragraph (a) of 
this section shall be considered to resemble an official grade 
designation.
    (c) Use of one or more factor designations. In interstate commerce, 
a description of grain by the use of one or more grade factor 
designations which appear in the Official United States Standards for 
Grain or by other criteria will not be considered to be a description by 
grade.
    (d) False or misleading descriptions. In any sale, offer for sale, 
or consignment for sale of any grain which involves the shipment of 
grain from the United States to any place outside thereof, knowingly 
using a false or misleading description of grain by official grade 
designation, or other description is prohibited.

[50 FR 9982, Mar. 13, 1985]



Sec. 800.56  Requirements on descriptions.

    Section 13 of the Act contains certain prohibitions with respect to 
the use of official grade designations, official marks, and other 
representations with respect to grain.
    (a) The use of an official grade designation, with or without factor 
information, or of official criteria information, or of the term 
``official grain standards,'' shall not, without additional information, 
be considered to be a representation that the grain was officially 
inspected.
    (b) The use of any symbol or term listed as an official mark, at 
Sec. 800.0(b)(68), with respect to grain shall be considered to be a 
representation of official service under the Act: Provided however, that 
the use of the official marks ``official certificate;'' ``officially 
inspected;'' ``official inspection;'' ``officially weighed;'' ``official 
weight;'' and ``official weighing'' shall not be considered to be a 
representation of official service under the Act if it is clearly shown 
that the activity occurred under the U.S. Warehouse Act (7 U.S.C. 241 et 
seq.): Provided further, that the use of the official mark ``officially 
tested'' with respect to grain inspection and weighing equipment shall 
not be considered to be a representation of testing under the Act if it 
is clearly shown that the equipment was tested under a State statute.

[50 FR 9982, Mar. 13, 1985]

                        Grain Handling Practices



Sec. 800.60  Deceptive actions and practices.

    In the absence of prior adequate notice to appropriate official 
personnel, any action or practice, including the loading, weighing, 
handling, or sampling of grain that knowingly causes or is an attempt to 
cause the issuance by official personnel of a false or incorrect 
official certificate or other official form, is deemed to be deceptive 
and, as such, is a violation of section 13(a)(3) of the Act. For the 
purposes of this paragraph, adequate notice is written or oral notice 
given to an agency or the Service, as applicable, before official 
personnel begin to perform official inspection or weighing services. If 
oral notice is given, it must be confirmed in writing within 2 business 
days. To be adequate, the notice must explain the nature and extent of 
the action or practice in question and must identify the grain, stowage 
container, equipment, facility, and the official personnel actually or 
potentially involved.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[48 FR 17330, Apr. 22, 1983, as amended at 48 FR 44453, Sept. 29, 1983; 
54 FR 5924, Feb. 7, 1989]



Sec. 800.61  Prohibited grain handling practices.

    (a) Definitions. For the purpose of this section, dockage and 
foreign material in grain shall be:
    (1) Defined for export elevators at export port locations as set 
forth in 7 CFR part 810 and as dust removed from grain and collected in 
a bin/container and as dust settling on floors, equipment, and other 
areas, commonly referred to as dust sweepings; and
    (2) Defined for other than export elevators as set forth in 7 CFR 
part 810.
    (b) Prohibited practices. Except as permitted in paragraphs (c) and 
(d) of this section, no person shall:

[[Page 531]]

    (1) Recombine or add dockage or foreign material to any grain, or
    (2) Blend different kinds of grain except when such blending will 
result in grain being designated as Mixed grain in accordance with 
subpart E of the Official United States Standards for Grain.
    (3) Add water to grain for purposes other than milling, malting, or 
similar processing operations.
    (c) Exemption. (1) The Administrator may grant exemptions from 
paragraph (b) of this section for grain shipments sent directly to a 
domestic end-user or processor. Requests for exemptions shall be 
submitted by grain handlers to the Service through the domestic end-
users or processors or their representatives.
    (2) Grain sold under an exemption shall be consumed or processed 
into a product(s) by the purchaser and not resold into the grain market.
    (3) Products or byproducts from grain sold under an exemption shall 
not be blended with or added to grain in commercial channels, except for 
vegetable oil which may be used as a dust suppressant in accordance with 
(d)(4) of this section.
    (d) Exceptions. Paragraph (b) shall not be construed as prohibiting 
the following grain handling practices. Compliance with paragraphs 
(d)(1) through (d)(6) of this section does not excuse compliance with 
applicable Federal, State, and local laws.
    (1) Blending. Grain of the same kind, as defined by the Official 
United States Standards for Grain, may be blended to adjust quality. 
Broken corn or broken kernels may be recombined or added to whole grain 
of the same kind provided that no foreign material or dockage has been 
added to the broken corn or broken kernels.
    (2) Insect and fungi control. Grain may be treated to control 
insects and fungi. Elevators, other grain handlers, and their agents are 
responsible for the proper use and applications of insecticides and 
fungicides. Sections 800.88 and 800.96 include additional requirements 
for grain that is officially inspected and weighed.
    (3) Marketing dockage and foreign material. Dockage and foreign 
material may be marketed separately.
    (4) Dust suppressants. Grain may be treated with an additive, other 
than water, to suppress dust during handling. Elevators, other grain 
handlers, and their agents are responsible for the proper use and 
application of dust suppressants. Sections 800.88 and 800.96 include 
additional requirements for grain that is officially inspected and 
weighed.
    (5) Identification. Confetti or similar material may be added to 
grain for identification purposes. Elevators, other grain handlers, and 
their agents are responsible for the proper use and application of such 
materials. Sections 800.88 and 800.96 include additional requirements 
for grain that is officially inspected or weighed.
    (6) Export loading facilities. Between May 1, 1987, and December 31, 
1987, export elevators at export port locations may recombine dockage 
and foreign material, but not dust, with grain provided such 
recombination occurs during the loading of a vessel with the intended 
purpose of ensuring uniformity of dockage and foreign material in the 
cargo.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[52 FR 24437, June 30, 1987, as amended at 59 FR 52077, Oct. 14, 1994]

                                  Fees



Sec. 800.70  Fees for official services performed by agencies.

    (a) Assessment and use of fees. (1) Fees assessed by an agency for 
official inspection and Class X or Class Y weighing services or testing 
of inspection equipment shall be reasonable and nondiscriminatory.
    (2) In the case of a State or local governmental agency, fees shall 
not be used for any purpose other than to finance the cost of the 
official inspection and Class X or Class Y weighing service and 
inspection equipment testing service performed by the agency or the cost 
of other closely related programs administered by the agency.
    (b) Approval required. (1) Restriction. Only fees that meet the 
requirements stated in this section and are approved by the Service as 
reasonable and nondiscriminatory may be charged by an agency.

[[Page 532]]

    (2) Exceptions. For good cause shown by an agency, the Administrator 
may grant case-by-case exceptions to the requirements in this section, 
provided that a determination is made that the agency fees would be 
reasonable and nondiscriminatory.
    (c) Reasonable fees. In determining if an agency's fees are 
reasonable, the Service will consider whether the fees: (1) Cover the 
estimated total cost to the agency of (i) official inspection services, 
(ii) Class X or Class Y weighing services, (iii) inspection equipment 
testing services, and (iv) related supervision and monitoring activities 
performed by the agency; (2) Are reasonably consistent with fees 
assessed by adjacent agencies for similar services; (3) Are assessed on 
the basis of the average cost of performing the same or similar services 
at all locations served by the agency; and (4) Are supported by 
sufficient information which shows how the fees were developed.
    (d) Nondiscriminatory fees. In determining if fees are 
nondiscriminatory, the Service will consider whether the fees are 
collected from all applicants for official service in accordance with 
the approved fee schedule. Charges for time and travel incurred in 
providing service at a location away from a specified service point 
shall be assessed in accordance with the approved fee schedule.
    (e) Schedule of fees to be established. (1) Each agency shall 
establish a schedule of fees for official services which the agency is 
delegated or designated the authority to perform. The schedule shall be 
in a standard format in accordance with the instructions. Such schedules 
may include fees for nonofficial services provided by the agency, but 
they shall be clearly identified and will not be subject to approval by 
the Service.
    (2) The schedule shall be published and made available by the agency 
to all users of its services.
    (f) Request for approval of fees. (1) Time requirement. A request 
for approval of a new or revised fee shall be submitted to the Service 
not less than 60 days in advance of the proposed effective date for the 
fee. Failure to submit a request within the prescribed time period may 
be considered grounds for postponment or denial of the request.
    (2) Contents of request. Each request shall show (i) the present 
fee, if any, and the proposed fee, together with data showing in detail 
how the fee was developed, and (ii) the proposed effective date.
    (g) Review of request. (1) Approval action. If upon review the 
Service finds that the request and supporting data justify the new or 
revised fee, the request will be marked ``approved'' and returned to the 
agency.
    (2) Denial action. If the Service finds that the request and 
supporting data do not justify the new or revised fee, approval of the 
request will be withheld pending receipt of any additional supporting 
data which the agency has to offer. If the data are not submitted within 
a reasonable period, the request shall be denied. In the case of a 
denial of a request, the agency shall be notified of the reason for 
denial.

(Approved by the Office of Management and Budget under control numbers 
0580-0003 and 0580-0012)

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
48 FR 44453, Sept. 29, 1983; 50 FR 30131, July 24, 1985]



Sec. 800.71  Fees assessed by the Service.

    (a) Official inspection and weighing services. The fees shown in 
schedules A and B apply to official inspection and weighing services 
performed by FGIS in the United States and Canada. The fees shown in 
schedule C apply to official inspection and weighing services performed 
by delegated States and designated agencies in the United States, except 
for those State agencies that have been delegated additional 
responsibilities by FGIS. These States shall be assessed fees as set 
forth in the State's Delegation of Authority document. Failure of a 
delegated State or designated agency to pay prescribed fees within 30 
days after being due, shall result in automatic termination of the 
delegation or designation. The delegation or designation shall be 
reinstated if fees currently due, plus interest and any further expenses 
incurred by the Service because of the termination are paid within 60 
days of the termination.

[[Page 533]]

    Schedule A.--Fees for Official Inspection and Weighing Services 
                     Performed in the United States.

   Table 1.--Fees for Official Services Performed at an Applicant's Facility in an Onsite FGIS Laboratory \1\
----------------------------------------------------------------------------------------------------------------
                                                     Monday to       Monday to       Saturday,
                                                  Friday (6 a.m.  Friday (6 p.m.    Sunday, and      Holidays
                                                    to 6 p.m.)      to 6 a.m.)     Overtime \2\
----------------------------------------------------------------------------------------------------------------
                 (1) Inspection and Weighing Services Hourly Rates (per service representative)
----------------------------------------------------------------------------------------------------------------
1-year contract.................................          $25.80          $28.00          $36.40          $43.60
6-month contract................................           28.40           30.20           38.60           50.60
3-month contract................................           32.40           33.40           42.00           52.20
Noncontract.....................................           37.60           39.60           48.00           59.00
----------------------------------------------------------------------------------------------------------------


(2) Additional Tests (cost per test, assessed in
 addition to the hourly rate) \3\
    (i) Aflatoxin (other than Thin Layer Chromatography)           $8.50
    (ii) Aflatoxin (Thin Layer Chromatography method)...           20.00
    (iii) Corn oil, protein, and starch (one or any                 1.50
     combination).......................................
    (iv) Soybean protein and oil (one or both)..........            1.50
    (v) Wheat protein (per test)........................            1.50
    (vi) Sunflower oil (per test).......................            1.50
    (vii) Vomitoxin (qualitative).......................            7.50
    (viii) Vomitoxin (quantitative).....................           12.50
    (ix) Waxy corn (per test)...........................            1.50
    (x) Fees for other tests not listed above will be
     based on the lowest noncontract hourly rate.
    (xi) Other services
        (a) Class Y Weighing (per carrier)
            (1) Truck/container.........................             .30
            (2) Railcar.................................            1.25
            (3) Barge...................................            2.50
(3) Administrative Fee (assessed in addition to all
 other applicable fees, only one administrative fee will
 be assessed when inspection and weighing services are
 performed on the same carrier).
    (i) All outbound carriers (per-metric-ton) \4\
        (a) 1-1,000,000.................................         $0.1038
        (b) 1,000,001-1,500,000.........................          0.0947
        (c) 1,500,001-2,000,000.........................          0.0512
        (d) 2,000,001-5,000,000.........................          0.0379
        (e) 5,000,001-7,000,000.........................          0.0205
        (f) 7,000,001+..................................         0.0092
\1\ Fees apply to original inspection and weighing, reinspection, and
  appeal inspection service and include, but are not limited to,
  sampling, grading, weighing, prior to loading stowage examinations,
  and certifying results performed within 25 miles of an employee's
  assigned duty station. Travel and related expenses will be charged for
  service outside 25 miles as found in Sec.  800.72 (a).
\2\ Overtime rates will be assessed for all hours in excess of 8
  consecutive hours that result from an applicant scheduling or
  requesting service beyond 8 hours, or if requests for additional
  shifts exceed existing staffing.
\3\ Appeal and reinspection services will be assessed the same fee as
  the original inspection service.
\4\ The administrative fee is assessed on an accumulated basis beginning
  at the start of the Service's fiscal year (October 1 each year).


Table 2.--Services Performed at Other Than an Applicant's Facility in an
                           FGIS Laboratory 1 2
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(1) Original Inspection and Weighing (Class X) Services
    (i) Sampling only (use hourly rates from Table 1)
    (ii) Stationary lots (sampling, grade/factor, &
     checkloading)
        (a) Truck/trailer/container (per carrier).......          $18.50
        (b) Railcar (per carrier).......................           28.30
        (c) Barge (per carrier).........................          178.50
        (d) Sacked grain (per hour per service                      0.02
         representative plus an administrative fee per
         hundredweight) (CWT)...........................

[[Page 534]]

 
    (iii) Lots sampled online during loading (sampling
     charge under (i) above, plus):
        (a) Truck/trailer container (per carrier).......            9.85
        (b) Railcar (per carrier).......................           19.10
        (c) Barge (per carrier).........................          108.10
        (d) Sacked grain (per hour per service                      0.02
         representative plus an administrative fee per
         hundredweight) (CWT)...........................
    (iv) Other services
        (a) Submitted sample (per sample--grade and                10.90
         factor)........................................
        (b) Warehouseman inspection (per sample)........           18.00
        (c) Factor only (per factor--maximum 2 factors).            4.70
        (d) Checkloading/condition examination (use                 0.02
         hourly rates from Table 1, plus an
         administrative fee per hundredweight if not
         previously assessed) (CWT).....................
        (e) Reinspection (grade and factor only.                   11.90
         Sampling service additional, item (i) above)...
        (f) Class X Weighing (per hour per service                 49.20
         representative)................................
    (v) Additional tests (excludes sampling)
        (a) Aflatoxin (per test--other than TLC method).           26.30
        (b) Aflatoxin (per test--TLC method)............          104.00
        (c) Corn oil, protein, and starch (one or any               8.30
         combination)...................................
        (d) Soybean protein and oil (one or both).......            8.30
        (e) Wheat protein (per test)....................            8.30
        (f) Sunflower oil (per test)....................            8.30
        (g) Vomitoxin (qualitative).....................           26.70
        (h) Vomitoxin (quantitative)....................           31.80
        (i) Waxy corn (per test)........................            9.60
        (j) Canola (per test--00 dip test)..............            9.60
        (k) Pesticide Residue Testing \3\
            (1) Routine Compounds (per sample)..........          204.80
            (2) Special Compounds (per service                    102.40
             representative)............................
        (l) Fees for other tests not listed above will
         be based on the lowest noncontract hourly rate
         from Table 1.
(2) Appeal inspection and review of weighing service.\4\
    (i) Board Appeals and Appeals (grade and factor)....           78.50
        (a) Factor only (per factor--max 2 factors).....           40.60
        (b) Sampling service for Appeals additional
         (hourly rates from Table 1)
    (ii) Additional tests (assessed in addition to all
     other applicable fees)
        (a) Aflatoxin (per test, other than TLC)........           26.30
        (b) Aflatoxin (TLC).............................          104.00
        (c) Corn oil, protein, and starch (one or any              16.20
         combination)...................................
        (d) Soybean protein and oil (one or both).......           16.20
        (e) Wheat protein (per test)....................           16.20
        (f) Sunflower oil (per test)....................           16.20
        (g) Vomitoxin (per test--qualitative)...........           37.00
        (h) Vomitoxin (per test--quantitative)..........           42.10
        (i) Vomitoxin (per test--HPLC Board Appeal).....          131.10
        (j) Pesticide Residue Testing \3\
            (1) Routine Compounds (per sample)..........          204.80
            (2) Special Compounds (per service                    102.40
             representative)............................
        (k) Fees for other tests not listed above will
         be based on the lowest noncontract hourly rate
         from Table 1.
    (iii) Review of weighing (per hour per service                 71.40
     representative)....................................
(3) Stowage examination (service-on-request) \3\
    (i) Ship (per stowage space) (minimum $252.50 per              50.50
     ship)..............................................

[[Page 535]]

 
    (ii) Subsequent ship examinations (same as original)
     (minimum $151.50 per ship)
    (iii) Barge (per examination).......................           40.50
    (iv) All other carriers (per examination)...........          15.50
------------------------------------------------------------------------
\1\ Fees apply to original inspection and weighing, reinspection, and
  appeal inspection service and include, but are not limited to,
  sampling, grading, weighing, prior to loading stowage examinations,
  and certifying results performed within 25 miles of an employee's
  assigned duty station. Travel and related expenses will be charged for
  service outside 25 miles as found in Sec.  800.72 (a).
\2\ An additional charge will be assessed when the revenue from the
  services in Schedule A, Table 2, does not cover what would have been
  collected at the applicable hourly rate as provided in Sec.  800.72
  (b).
\3\ If performed outside of normal business, 1\1/2\ times the applicable
  unit fee will be charged.
\4\ If, at the request of the Service, a file sample is located and
  forwarded by the Agency for an official agency, the Agency may, upon
  request, be reimbursed at the rate of $2.50 per sample by the Service.


                  Table 3.-- Miscellaneous Services \1\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(1) Grain grading seminars (per hour per service                  $49.20
 representative) \2\....................................
(2) Certification of diverter-type mechanical samplers             49.20
 (per hour per service representative) \2\..............
(3) Special weighing services (per hour per service
 representative) \2\
    (i) Scale testing and certification.................           49.20
    (ii) Evaluation of weighing and material handling              49.20
     systems............................................
    (iii) NTEP Prototype evaluation (other than Railroad           49.20
     Track Scales)......................................
    (iv) NTEP Prototype evaluation of Railroad Track               49.20
     Scales (plus usage fee per day for test car).......          110.00
    (v) Mass standards calibration and reverification...           49.20
    (vi) Special projects...............................           49.20
(4) Foreign travel (per day per service representative).          445.40
(5) Online customized data EGIS service
    (i) One data file per week for 1 year...............          500.00
    (ii) One data file per month for 1 year.............          300.00
(6) Samples provided to interested parties (per sample).            2.50
(7) Divided-lot certificates (per certificate)..........            1.50
(8) Extra copies of certificates (per certificate)......            1.50
(9) Faxing (per page)...................................            1.50
(10) Special mailing (actual cost)
(11) Preparing certificates onsite or during other than
 normal business hours (use hourly rates from Table 1)
------------------------------------------------------------------------
\1\ Any requested service that is not listed will be performed at $49.20
  per hour.
\2\ Regular business hours--Monday through Friday--service provided at
  other than regular hours charged at the applicable overtime hourly
  rate.

     Schedule B--Fees for Official Inspection, Weighing, and Appeal 
               Inspection Services Performed in Canada \1\

------------------------------------------------------------------------
                                                    Regular   Nonregular
                                                    workday     workday
 Inspection and weighing service (bulk or sacked    (Monday     (Sunday
                      grain)                          thru        and
                                                   Saturday)   holiday)
------------------------------------------------------------------------
(1) Original inspection services and official
 weighing services: \2, 3\
  (i) Contract services (per hour per service        $103.00    $130.00
   representative)...............................
  (ii) Noncontract service (per hour per service      137.00     172.00
   representative)...............................
(2) Extra copies of certificates (per copy)......       3.00       3.00
------------------------------------------------------------------------
\1\ Official inspection and weighing services include, but are not
  limited to grading, weighing, sampling, stowage examination, equipment
  testing, scale testing and certification, test weight reverification,
  evaluation of inspection and weighing equipment demonstrating official
  inspection and weighing functions, furnishing standard illustrations,
  and certifying inspection and weighing results.

[[Page 536]]

 
\2\ Fees for reinspection and appeal inspection services shall be
  assessed at the applicable contract or noncontract hourly rate as the
  original inspection. However, if additional personnel are required to
  perform the reinspection or appeal inspection service, the applicant
  will be assessed the noncontract original inspection hourly fee.
\3\ Board appeal inspections are based on file samples. See Sec.
  800.71, schedule A for Board Appeal fees.

    Schedule C--Fees for FGIS Supervision of Official Inspection and 
   Weighing Services Performed by Delegated States and/or Designated 
                    Agencies in the United States \1\

                                 Table 1
------------------------------------------------------------------------
                                                               Offical
                                                             inspection
        Inspection services (bulk or sacked grain)               or
                                                            reinspection
                                                              services
------------------------------------------------------------------------
(1) Official sample-lot inspection service (white
 certificate):
  (i) For official grade and official factor
   determinations:........................................
    (A) Truck or trailer (per inspection \2\..............         $0.30
    (B) Boxcar or hopper car (per inspection\2\...........          0.95
    (C) Barge (per inspection)\2\.........................          6.15
    (D) Ship (per ship)\3\................................         49.20
    (E) All other lots (per inspection)\2\ \4\............          0.30
  (ii) For official factor or official criteria
   determinations:
    (A) Factor determination (per inspection) (maximum 2            0.20
     factors)\5\..........................................
    (B) Official criteria\2\ \6\..........................          0.20
(2) Stowage examination services:
  (i) Ship (per stowage certificate)......................          3.00
  (ii) Other carriers (per stowage certificate)...........          0.20
(3) Warehouseman's sample-lot inspection service (yellow
 certificate) or submitted sample inspection service (pink
 certificate):
  (i) For official grade and official factor                        0.30
   determinations (per inspection)........................
  (ii) For official factor or official criteria
   determinations:
    (A) Factor determination (per inspection) (maximum 2            0.20
     factors)\5\..........................................
    (B) Official criteria\2\ \6\..........................          0.20
(4) Reinspection services:
  (i) Truck, boxcar, hopper car, barge, ship,                       0.30
   warehouseman's sample-lot, submitted sample, factor
   determination, and all other lots (per sample
   inspected).............................................
  (ii) Official criteria\2\ \6\...........................          0.20
------------------------------------------------------------------------
Note: The footnotes for table 1 are shown at the end of table 2.


                                 Table 2
------------------------------------------------------------------------
                                                    Official weighing
                                                        services
   Official services (bulk or sacked grain)    -------------------------
                                                 (class X)    (class Y)
------------------------------------------------------------------------
Official weighing services:
  (i) Truck or trailer (per carrier)..........        $0.30        $0.20
  (ii) Boxcar or hopper car (per carrier).....          .95          .25
  (iii) Barge (per carrier)...................         6.15         1.55
  (iv) Ship (per carrier) \3\ \7\.............        49.20        12.30
  (v) All other lots (per lot or part lot) \4\          .30          .20
------------------------------------------------------------------------
\1\ The fees include the cost of supervision functions performed by the
  Service for official inspection and weighing services performed by
  delegated States and/or designated agencies.
\2\ A fee shall be assessed for each carrier or sample inspected if a
  combined lot certificate is issued or a uniform loading plan is used
  to determine grade.
\3\ A fee shall be assessed per ship regardless of the number of lots or
  sublots loaded at a specific service point. A fee shall not be
  assessed for divided-lot certificates.
\4\ Inspection services for all other lots include, but are not limited
  to, sampling service, condition examinations, and examination of grain
  in bins and containers. For weighing services, all other lots include,
  but are not limited to, seavans and inhouse bin transfers.
\5\ Fees shall be assessed for a maximum of two factors. If more than
  two factors are determined, fees are assessed at rates in table 1
  (1)(i) or (3)(i) above, as applicable, based on carrier or type sample
  represented.
\6\ Official criteria includes, but is not limited to, protein and oil
  analyses. A fee shall be assessed for each sample tested.
\7\ A Class Y ship fee shall be assessed for shipments destined for
  domestic markets only.

    (b) Registration certificates and renewals. (1) Fees for 
registration certificates and renewals will be based on the nature of 
the business:
  (i) Firms engaged in the business of buying grain for sale in foreign 
commerce or the business of handling, weighing, or transporting of grain 
for sale in foreign commerce.....................................$135.00
  (ii) Firms engaged in the business of buying grain for sale in foreign 
commerce or the business of handling, weighing, or transporting of grain 
for sale in foreign commerce who also are in a control relationship, as 
defined in Section 17A(b)(2) of the Act, with respect to a business 
engaged in the business of buying, handling, weighing, or transporting 
grain for sale in interstate commerce.............................270.00
    (2) Requests for extra copies of registration certificates shall be 
accompanied by a fee of $2.50 for each copy.
    (c) Designation amendments. An application for an amendment to a 
designation shall be accompanied by a fee of $75.00.

[[Page 537]]

    (d) Each application for approval to operate as a scale testing 
organization shall be accompanied by a fee of $250.

(Secs. 8 and 9, Pub. L. 94-582, 90 Stat. 2873, 2877 (7 U.S.C. 79(j), 
79a(1)); secs. 9, 18, Pub. L. 94-582, 90 Stat. 2875 and 2884 (7 U.S.C. 
79a and 87e); secs. 8 and 9, Pub. L. 94-582, 90 Stat. 2873, 2877 (7 
U.S.C. 79(j), 79a(1)), as amended by Pub. L. 97-35, 95 Stat. 371, 372)

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
49 FR 26563, June 28, 1984; 50 FR 38504, Sept. 23, 1985; 51 FR 43724, 
Dec. 4, 1986; 53 FR 21792, June 10, 1988; 59 FR 52656, Oct. 19, 1994; 61 
FR 43303, Aug. 22, 1996; 62 FR 31702, June 11, 1997; 62 FR 34342, June 
25, 1997; 62 FR 48939, Sept. 18, 1997; 63 FR 32714, June 16, 1998; 63 FR 
35504, June 30, 1998; 63 FR 70992, Dec. 23, 1998; 64 FR 6783, Feb. 11, 
1999; 65 FR 16785, Mar. 30, 2000]



Sec. 800.72  Explanation of additional service fees for services performed in the United States only.

    (a) When transportation of the service representative to the service 
location (at other than a specified duty point) is more than 25 miles 
from an FGIS office, the actual transportation cost in addition to the 
applicable hourly rate for each service representative will be assessed 
from the FGIS office to the service point and return. When commercial 
modes of transportation (e.g., airplanes) are required, the actual 
expense incurred for the round-trip travel will be assessed. When 
services are provided to more than one applicant, the travel and other 
related charges will be prorated between applicants.
    (b) In addition to a 2-hour minimum charge for service on Saturdays, 
Sundays, and holidays, an additional charge will be assessed when the 
revenue from the services in Sec. 800.71, schedule A, table 2, does not 
equal or exceed what would have been collected at the applicable hourly 
rate. The additional charge will be the difference between the actual 
unit fee revenue and the hourly fee revenue. Hours accrued for travel 
and standby time shall apply in determining the hours for the minimum 
fee.

[61 FR 43305, Aug. 22, 1996]



Sec. 800.73  Computation and payment of service fees; general fee information.

    (a) Computing hourly rates. The applicable hourly rate will be 
assessed in quarter hour increments for:
    (1) Travel from the FGIS field office or assigned duty station to 
the service point and return;
    (2) The performance of the requested service, less mealtime.
    (b) Application of fees when service is delayed or dismissed by the 
applicant. The applicable hourly rate will be assessed for the entire 
period of scheduled service when:
    (1) Service has been requested at a specified location;
    (2) A service representative is on duty and ready to provide service 
but is unable to do so because of a delay not caused by the Service; and
    (3 FGIS officials determine that the service representative cannot 
be utilized to provide service elsewhere without cost to the Service.
    (c) Application of fees when an application for service is withdrawn 
or dismissed. The applicable hourly rate will be assessed to the 
applicant for the entire period of scheduled service if the request is 
withdrawn or dismissed after the service representative departs for the 
service point, or if the service request is not canceled by 2 p.m., 
local time, the business day preceding the date of scheduled service. 
However, the applicable hourly rate will not be assessed to the 
applicant if FGIS officials determine that the service representative 
can be utilized elsewhere or released without cost to the Service.
    (d) To whom fees are assessed. Fees for inspection, weighing, and 
related services performed by service representatives, including 
additional fees as provided in Sec. 800.72, shall be assessed to and 
paid by the applicant for the service.
    (e) Monthly payment of administrative fee. At the option of the 
applicant, an agreement for 12 equal monthly payments may be entered 
into for payment of the administrative fee. These monthly payments will 
be based on the previous fiscal year's volume applied to the current 
year's administrative fee

[[Page 538]]

schedule. If the volume of grain inspected is more than the amount of 
grain agreed upon at the beginning of the fiscal year, at the point the 
agreed upon volume is exceeded, the current year's administrative fee 
schedule shall apply to the remaining amount of grain for the rest of 
the fiscal year. If the volume of grain inspected is less than the 
agreed upon amount, any excess monies paid to the Service shall be 
applied to the next fiscal year's administrative fee unless a request 
for a refund is made by the applicant.
    (f) Advance payment. As necessary, the Administrator may require 
that fees shall be paid in advance of the performance of the requested 
service. Any fees paid in excess of the amount due shall be used to 
offset future billings, unless a request for a refund is made by the 
applicant.
    (g) Form of payment. Bills for fees assessed under the regulations 
in this part for official services performed by FGIS shall be paid by 
check, draft, or money order, payable to the U.S. Department of 
Agriculture, Grain Inspection, Packers and Stockyards Administration.

[61 FR 43305, Aug. 22, 1996]

                       Kinds of Official Services



Sec. 800.75  Kinds of official inspection and weighing services.

    (a) General. Paragraphs (b) through (m) of this section describe the 
kinds of official service available. Each kind of service has several 
levels. Secs. 800.115, 800.116, 800.117, and 800.118 explain Original 
Services, Secs. 800.125, 800.126, 800.127, 800.128, and 800.129 explain 
Reinspection Services and Review of Weighing Services, and 
Secs. 800.135, 800.136, 800.137, 800.138, and 800.139 explain Appeal 
Inspection Services. The results of each official service listed in 
paragraphs (b) through (j) will be certificated according to 
Sec. 800.160.
    (b) Official sample-lot inspection service. This service consists of 
official personnel (1) sampling an identified lot of grain and (2) 
analyzing the grain sample for grade, official factors, or official 
criteria, or any combination thereof, according to the regulations, 
Official U.S. Standards for Grain, instructions, and the request for 
inspection.
    (c) Warehouseman's sample-lot inspection service. This service 
consists of (1) a licensed warehouseman sampler (i) sampling an 
identified lot of grain using an approved diverter-type mechanical 
sampler and (ii) sending the sample to official personnel and (2) 
official personnel analyzing the grain sample for grade, official 
factors, official criteria, or any combination thereof, according to the 
regulations, Official U.S. Standards for Grain, instructions, and the 
request for inspection.
    (d) Submitted sample inspection service. This service consists of an 
applicant or an applicant's agent submitting a grain sample to official 
personnel, and official personnel analyzing the grain sample for grade, 
official factors, official criteria, or any combination thereof, 
according to the regulations, Official U.S. Standards for Grain, 
instructions, and the request for inspection.
    (e) Official sampling service. This service consists of official 
personnel (1) sampling an identified lot of grain and (2) forwarding a 
representative portion(s) of the sample along with a copy of the 
certificate, as requested by the applicant.
    (f) Official stowage examination service. (1) This service consists 
of official personnel visually determining if an identified carrier or 
container is clean; dry; free of infestation, rodents, toxic substances, 
and foreign odor; and is suitable to store or carry grain.
    (2) A stowage examination may be obtained as a separate service or 
with one or more other services. Approval of the stowage space is 
required for official sample-lot inspection services on all export lots 
of grain and all official sample-lot inspection services performed on 
outbound domestic lots of grain which are sampled and inspected at the 
time of loading. Also, approval of the stowage space is required for any 
weighing services performed on all outbound land carriers.
    (g) Class X weighing service. This service consists of official 
personnel (1) completely supervising the loading or unloading of an 
identified lot of grain and (2) physically weighing or completely 
supervising approved weighers weighing the grain.
    (h) Class Y weighing service. This service consists of (1) approved 
weighers

[[Page 539]]

physically weighing the grain and (2) official personnel partially or 
completely supervising the loading or unloading of an identified lot of 
grain.
    (i) Checkweighing service (sacked grain). This service consists of 
official personnel or approved weighers under the supervision of 
official personnel (1) physically weighing a selected number of sacks 
from a grain lot and (2) determining the estimated total gross, tare, 
and new weights, or the estimated average gross or net weight per filled 
sack according to the regulations, instructions, and request by the 
applicant.
    (j) Checkloading service. This service consists of official 
personnel (1) performing a stowage examination; (2) computing the number 
of filled grain containers loaded aboard a carrier; and (3) if 
practicable, sealing the carrier for security.
    (k) Test weight reverification service. This service consists of 
official personnel (1) comparing the weight of elevator test weights 
with known weights; (2) correcting the elevator test weights, when 
necessary; and (3) issuing a Report of Test.
    (l) Railroad track scale testing service. This service consists of 
official personnel (1) testing railroad track scales with Service-
controlled test cars and (2) issuing a Report of Test.
    (m) Hopper and truck scale testing service. This service consists of 
official personnel (1) testing hopper and truck scales and (2) issuing a 
Report of Test.

(The information collection requirements contained in this section were 
approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 45392, Oct. 31, 1985]



Sec. 800.76  Prohibited services; restricted services.

    (a) Prohibited services. No agency shall perform any inspection 
function or provide any inspection service on the basis of unofficial 
standards, procedures, factors, or criteria if the agency is designated 
or authorized to perform the service or provide the service on an 
official basis under the Act. No agency shall perform official and 
unofficial weighing on the same mode of conveyance at the same facility.
    (b) Restricted services. (1) Not standardized grain. When an 
inspection or weighing service is requested on a sample or a lot of 
grain which does not meet the requirements for grain as set forth in the 
Official U.S. Standards for Grain, a certificate showing the words ``Not 
Standardized Grain'' shall be issued according to the instructions.
    (2) Grain screening. The inspection or weighing of grain screenings 
may be obtained from an agency or field office according to the 
instructions.

[50 FR 45393, Oct. 31, 1985, as amended at 60 FR 65235, Dec. 19, 1995; 
63 FR 45677, Aug. 27, 1998]

                    Inspection Methods and Procedures



Sec. 800.80  Methods and order of performing official inspection services.

    (a) Methods. (1) General. All official inspection services shall be 
performed in accordance with methods and procedures prescribed in the 
regulations and the instructions.
    (2) Lot inspection services. A lot inspection service shall be based 
on a representative sampling and examination of the grain in the entire 
lot, except as provided in Sec. 800.85, and an accurate analysis of the 
grain in the sample.
    (3) Stowage examination service. A stowage examination service shall 
be based on a thorough and accurate examination of the carrier or 
container into which grain will be loaded.
    (4) Submitted sample inspection service. A submitted sample 
inspection service shall be based on a submitted sample of sufficient 
size to enable official personnel to perform a complete analysis for 
grade. If a complete analysis for grade cannot be performed because of 
an inadequate sample size or other conditions, the request for service 
shall be dismissed or a factor only inspection may be performed upon 
request.
    (5) Reinspection and appeal inspection service. A reinspection, 
appeal inspection, or Board appeal inspection service shall be based on 
an independent review of official grade information, official factor 
information, or other information consistent with the scope of the 
original inspection.

[[Page 540]]

    (b) Order of service. Official inspection services shall be 
performed, to the extent practicable, in the order in which they are 
received. Priority shall be given to inspections required for export 
grain. Priority may be given to other kinds of inspection services under 
the Act with the specific approval of the Service.
    (c) Recording receipt of documents. Each document submitted by or on 
behalf of an applicant for inspection services shall be promptly stamped 
or similarly marked by official personnel to show the date of receipt.
    (d) Conflicts of interest. No official personnel shall perform or 
participate in performing an official inspection service on grain or on 
a carrier or container in which they have a direct or indirect financial 
interest.

[50 FR 49669, Dec. 4, 1985]



Sec. 800.81  Sample requirements; general.

    (a) Samples for official sample-lot inspection service. (1) Original 
official sample-lot inspection service. For original sample-lot 
inspection purposes, an official sample shall be (i) obtained by 
official personnel; (ii) representative of the grain in the lot; (iii) 
protected from manipulation, substitution, and improper or careless 
handling; and (iv) obtained within the prescribed geographical 
boundaries of the agency or field office performing the service.
    (2) Official sample-lot reinspection and appeal inspection service. 
For an official sample-lot reinspection service or an official appeal 
sample-lot inspection service, the sample(s) on which the reinspection 
or appeal is determined shall (i) be obtained by official personnel and 
(ii) otherwise meet the requirements of paragraph (a)(1) of this 
section. If the reinspection or appeal inspection is determined on the 
basis of official file sample(s), the samples shall meet the 
requirements of Sec. 800.82(d).
    (3) New sample. Upon request and if practicable, a new sample shall 
be obtained and examined as a part of a reinspection or appeal 
inspection. The provision for a new sample shall not apply if obtaining 
the new sample involves a change in method of sampling.
    (b) Representative sample. A sample shall not be considered 
representative unless it (1) has been obtained by official personnel, 
(2) is of the size prescribed in the instructions, and (3) has been 
obtained, handled, and submitted in accordance with the instructions. A 
sample which fails to meet the requirements of this paragraph may, upon 
request of the applicant, be inspected as a submitted sample.
    (c) Protecting samples. Official personnel shall protect official 
samples, warehouseman's samples, and submitted samples from 
manipulation, substitution, or improper and careless handling which may 
deprive the samples of their representativeness or which may change the 
physical or chemical properties of the grain, as appropriate, from the 
time of sampling or receipt until the inspection services are completed 
and the file samples have been discarded.
    (d) Restriction on sampling. Official personnel shall not perform an 
original inspection or a reinspection service on an official sample or a 
warehouseman's sample unless the grain from which the sample was 
obtained was located within the area of responsibility assigned to the 
agency or field office at the time of sampling. Upon request, the 
Administrator may grant an exception to this rule on a case-by-case 
basis.
    (e) Disposition of samples. (1) Excess grain. Any grain in excess of 
the quantity specified in the instructions for the requested service, 
the file samples, and samples requested by interested persons shall be 
returned to the lot from which the grain was obtained or to the owner of 
the lot or the owner's order.
    (2) Inspection samples. Inspection samples, after they have served 
their intended purpose, shall be disposed of as follows:
    (i) Samples which contain toxic substances or materials shall be 
kept out of food and feed channels, and
    (ii) Official personnel shall dispose of samples obtained or 
submitted to them according to procedures established by the Service. 
Complete and accurate records of disposition shall be maintained.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 49669, Dec. 4, 1985]

[[Page 541]]



Sec. 800.82  Sampling provisions by level of service.

    (a) Original inspection service. (1) Official sample-lot inspection 
service. Each original inspection service shall be performed on the 
basis of one or more official samples obtained by official personnel 
from grain in the lot and forwarded to the appropriate agency or field 
office.
    (2) Warehouseman's sample-lot inspection. Each original 
warehouseman's sample-lot inspection service shall be performed on the 
basis of samples obtained by a licensed warehouseman and sent to the 
appropriate agency or field office in whose circuit the warehouse is 
located.
    (3) Submitted sample service. Each original submitted sample 
inspection service shall be performed on the basis of the sample as 
submitted.
    (b) Reinspection, and appeal inspection services. (1) Official 
sample-lot inspection service. Each of these inspection services shall 
be performed on the basis of official samples as available, including 
file samples, at the time the service is requested. In performing these 
services, a sample obtained with an approved diverter-type mechanical 
sampler or with a pelican sampler generally shall be used with respect 
to quality factors and official criteria, and a sample obtained with a 
probe at the time of the reinspection or appeal, generally, shall be 
used with respect to heating, musty, sour, insect infestation, and other 
condition and odor factors. In instances where original inspection 
results are based on samples obtained by probe, the decision as to 
whether file samples or new samples obtained by probe are to be used 
shall be made by the official personnel performing the service.
    (2) Warehouseman's sample-lot inspection service. Each reinspection 
service and appeal inspection service on a warehouseman's sample shall 
be performed on an analysis of the official file sample.
    (3) Submitted sample service. Each reinspection service and appeal 
inspection service on a submitted sample shall be performed on an 
analysis of the official file sample.
    (c) Board appeal inspection services. Board appeal inspection 
services shall be performed on an analysis of the official file sample.
    (d) Use of file samples. (1) Requirements for use. A file sample 
that is retained by official personnel in accordance with the procedures 
prescribed in the instructions may be considered representative for a 
reinspection service, appeal inspection service, and a Board appeal 
inspection service if (i) the file sample has remained at all times in 
the custody and control of the official personnel that performed the 
inspection service in question; and (ii) the official personnel who 
performed the original inspection service and those who are to perform 
the reinspection, the appeal inspection, or the Board appeal inspection 
service determine that the samples were representative at the time the 
original inspection service was performed and that the quality or 
condition of the grain in the samples has not changed.
    (2) Certificate statement. When the results of a reinspection, 
appeal inspection, or Board appeal inspection service are based on an 
official file sample, the certificate for the reinspection service, the 
appeal inspection service, and the Board appeal inspection service shall 
show a statement, as specified in the instructions, indicating that the 
results are based on the official file sample.

[50 FR 49670, Dec. 4, 1985]



Sec. 800.83  Sampling provisions by kind of movement.

    (a) Export cargo movements. (1) Bulk grain. Except as may be 
approved by the Administrator on a shipment-by-shipment basis in an 
emergency, each inspection for official grade, official factor, or 
official criteria on an export cargo shipment of bulk grain shall be 
performed on official samples obtained from the grain (i) as the grain 
is being loaded aboard the final carrier; (ii) after the final elevation 
of the grain prior to loading and as near to the final loading spout as 
is physically practicable (except as approved by the Administrator when 
representative samples can be obtained before the grain reaches the 
final loading spout); and

[[Page 542]]

(iii) by means of a diverter-type mechanical sampler approved by the 
Service and operated in accordance with instructions. If an approved 
diverter-type mechanical sampler is not properly installed at an 
elevator or facility as required, each certificate issued at that 
elevator or facility for an export cargo shipment of bulk grain shall 
show a statement indicating the type of approved sampling method used, 
as prescribed in the instructions.
    (2) Sacked grain. Each inspection for official grade, official 
factor, or official criteria on an export cargo shipment of sacked grain 
shall be performed on official samples obtained from the grain by any 
sampling method approved by the Service and operated in accordance with 
instructions.
    (b) Other movements. Each inspection for official grade, official 
factor, or official criteria on a domestic cargo movement (``In,'' 
``Out,'' or en route barge movement), a movement in a land carrier (any 
movement in a railcar, truck trailer, truck/trailer combination, or 
container), or a ``LOCAL'' movement of bulk or sacked grain shall be 
performed on official samples obtained from the grain by any sampling 
method approved by the Service and operated in accordance with the 
instructions.

[50 FR 49670, Dec. 4, 1985]



Sec. 800.84  Inspection of grain in land carriers, containers, and barges in single lots.

    (a) General. The reinspection of bulk or sacked grain loaded or 
unloaded from any carrier or container, except shiplot grain, shall be 
conducted in accordance with the provisions in this section and 
procedures prescribed in the instructions.
    (b) Single and multiple grade procedure. (1) Single grade. When 
grain in a carrier or container is offered for inspection as one lot and 
the grain is found to be uniform in condition, the grain shall be 
sampled, inspected, graded, and certificated as one lot. For the purpose 
of this paragraph, condition only includes the factors heating, musty, 
or sour.
    (2) Multiple grade. When grain in a carrier or container is offered 
for inspection as one lot and the grain is found to be not uniform in 
condition because portions of the grain are heating, musty, or sour, the 
grain in each portion will be sampled, inspected, and graded separately; 
but the results shall be shown on one certificate. The certificate shall 
show the approximate quantity or weight of each portion, the location of 
each portion in the carrier or container, and the grade of the grain in 
each portion.
    (3) Infested. If any portion of grain in a lot is found to be 
infested, according to applicable provisions of the Official U.S. 
Standards for Grain, the entire lot shall be considered infested. When 
grain in railcars or trucks with permanently enclosed tops is considered 
infested, the applicant for inspection shall be promptly notified and 
given the option of (i) receiving a grade certificate with a special 
grade designation indicating that the entire lot is infested or (ii) 
fumigating the grain in the lot in accordance with instructions and 
receiving a grade certificate without the special grade designation.
    (c) One certificate per carrier: exceptions. Except as provided in 
this paragraph, one official certificate shall be issued for the 
inspection of the grain in each truck, trailer, truck/trailer(s) 
combination, railcar, barge, or similarly sized carrier. The 
requirements of this paragraph are not applicable:
    (1) When grain is inspected in a combined lot under Sec. 800.85;
    (2) When grain is inspected under paragraph (d) of this section; or
    (3) When certification is at the option of the applicant in 
accordance with instructions.
    (d) Bulkhead lots. If grain in a carrier is offered for official 
inspection as two or more lots and the lots are separated by bulkheads 
or other partitions, the grain in each lot shall be sampled, inspected, 
and graded separately in accordance with paragraphs (a) and (b) of this 
section. An official certificate shall be issued for each lot inspected. 
Each certificate shall show the term ``Bulkhead Lot,'' the approximate 
quantity or weight of the grain in the lot, the location of the lot in 
the carrier, and the grade of the grain in the lot.
    (e) Bottom not sampled. If bulk grain offered for official 
inspection is at rest in a carrier or container and is fully

[[Page 543]]

accessible for sampling in an approved manner, except that the bottom of 
the carrier or container cannot be reached with each probe, the grain 
shall be sampled as thoroughly as possible with an approved probe. The 
grain in the resulting samples shall be inspected, graded, and 
certificated, except that each certificate shall show a statement, as 
specified in the instructions, indicating the depth probed. Any 
inspection which is based on a sample that does not represent the entire 
carrier or container does not meet the mandatory inspection requirements 
of section 5(a)(1) of the Act.
    (f) Partial inspection--heavily loaded. (1) General. When an ``In'' 
movement of bulk grain is offered for inspection at rest in a carrier or 
container and is loaded in such a manner that it is possible to secure 
only door-probe or shallow-probe samples, the container shall be 
considered to be ``heavily loaded,'' and the request for inspection 
either shall be dismissed or a partial inspection shall be made. If the 
request is for the inspection of an ``Out'' movement of grain, the 
request shall be dismissed on the grounds that the grain is not 
accessible for a correct ``Out'' inspection.
    (2) Certification procedure. If a partial inspection is made, the 
grain will be sampled as thoroughly as possible with an approved probe 
and inspected, graded, and a ``partial inspection--heavily loaded'' 
certificate issued. The certificate shall show the words ``Partial 
inspection--heavily loaded'' in the space provided for remarks. The type 
of samples that were obtained shall be described in terms of ``door 
probe'' or ``shallow probe.''
    (3) Reinspection and appeal inspection procedure. A request for a 
reinspection or an appeal inspection service on grain in a carrier or 
container that is certificated as ``partial inspection--heavily loaded'' 
shall be dismissed in accordance with Sec. 800.48(a)(4).
    (4) Restriction. No ``partial inspection--heavily loaded'' 
certificate shall be issued for sacked grain or any inspection other 
than the inspections described in paragraphs (f)(1) through (4) of this 
section and Sec. 800.85(h)(2).
    (g) Part lots. (1) General. If a portion of the grain in a carrier 
or container is removed, the grain that is removed and the grain 
remaining shall be considered separate lots. When an official inspection 
service is requested on either portion, the grain shall be sampled, 
inspected, graded, and a ``part-lot'' inspection certificate issued.
    (2) Grain remaining in carrier or container. The certificate for 
grain remaining in a carrier or container shall show (i) the following 
completed statement: ``Partly unloaded; results based on portion 
remaining in (show carrier or container identification),'' (ii) the term 
``Part lot'' following the quantity information, (iii) the 
identification of the carrier or container, and (iv) the estimated 
amount and location of the part lot.
    (3) Grain unloaded from carrier or container. If grain is sampled by 
official personnel during unloading, the certificate for the grain that 
is unloaded shall show (i) the completed statement: ``Part lot; results 
based on portion removed from (show carrier identification)'' and (ii) 
the term ``Part lot'' following the quantity information. If the grain 
is not sampled by official personnel during unloading, the certificate 
may, upon request of the applicant, show a completed statement such as 
``Applicant states grain is ex-car ____'' or ``Applicant states grain is 
ex-barge ____,'' but the certificate shall not otherwise show a carrier 
or container identification or the term ``Part lot.''
    (h) Identification for compartmented cars. The identification for 
compartments in a compartmented railcar shall, in the absence of readily 
visible markings, be stated in terms of the location of the grain in a 
compartment, with the first compartment at the brake end of the car 
being identified as B-1, and the remaining compartments being numbered 
consecutively towards the other end of the car.

[50 FR 49671, Dec. 4, 1985, as amended at 57 FR 11428, Apr. 3, 1992]



Sec. 800.85  Inspection of grain in combined lots.

    (a) General. The official inspection for grade of bulk or sacked 
grain loaded aboard, or being loaded aboard, or discharged from two or 
more carriers or containers (including barges designed for loading 
aboard a ship) as a

[[Page 544]]

combined lot shall be performed according to the provisions of this 
section and procedures prescribed in the instructions.
    (b) Application procedure. (1) For inspection during loading, 
unloading, or at rest. Applications for official inspection of grain as 
a combined lot shall (i) be filed in accordance with Sec. 800.116; (ii) 
show the estimated quantity of grain that is to be certificated as one 
lot; (iii) show the contract grade if applicable; and (iv) identify each 
carrier into which grain is being loaded or from which grain is being 
unloaded.
    (2) Recertification. An application for recertification as a 
combined lot of grain that has been officially inspected and 
certificated as two or more single lots shall (i) be filed not later 
than 2 business days after the latest inspection date of the single lots 
and (ii) show information specified in paragraph (b)(1) of this section.
    (c) Inspection procedure; general--land carriers and barges. (1) 
Inspection during loading, or unloading, or at rest. Grain in two or 
more land carriers and barges that are to be officially inspected as a 
combined lot shall be sampled in a reasonably continuous operation. 
Representative samples shall be obtained from the grain in each 
individual carrier and inspected in accordance with procedures as 
prescribed in the instructions.
    (2) Recertification. Grain that has been officially inspected and 
certificated as two or more single lots may be recertificated as a 
combined lot if (i) the grain in each lot was sampled in a reasonably 
continuous operation; (ii) the original inspection certificates issued 
for the single lots have been surrendered to official personnel; (iii) 
representative file samples of the single lots are available; (iv) the 
grain in the single lots is of one grade and quality; (v) official 
personnel who performed the inspection service for the single lots and 
those who are to recertificate the grain as a combined lot determine 
that the samples used as a basis for the inspection of the grain in the 
single lots were representative at the time of sampling and have not 
changed in quality or condition; and (vi) the quality or condition of 
the grain meets uniformity requirements established by the Service for 
official inspection of grain in combined lots.
    (d) Weighted or mathematical average. Official factor and official 
criteria information shown on a certificate for grain in a combined lot 
shall, subject to the provisions of paragraphs (e) through (g) of this 
section, be based on the weighted or mathematical averages of the 
analysis of the sublots in the lot and shall be determined in accordance 
with the instructions.
    (e) Infested grain. If the grain in a combined lot is offered for 
official inspection as it is being loaded aboard a carrier and the 
grain, or a portion of the grain, in a lot is found to be infested, 
according to applicable provisions of the Official U.S. Standards for 
Grain, the applicant shall be notified and may exercise options 
specified in the instructions. When grain in railcars or trucks with 
permanently enclosed tops is considered infested, the applicant shall be 
given the option of (1) receiving a grade certificate with a special 
grade designation indicating that the entire lot is infested or (2) 
fumigating the grain in the lot in accordance with instructions and 
receiving a grade certificate without the special grade designation.
    (f) Grain uniform in quality. Samples obtained from grain officially 
inspected as a combined lot shall be examined for uniformity of quality. 
If the grain in the samples is found to be uniform in quality and the 
grain is loaded aboard or is unloaded from the carriers in a reasonably 
continuous operation, the grain in the combined lot shall be officially 
inspected and certificated as one lot. The requirements of this 
paragraph (f) and paragraph (c) of this section with respect to 
reasonably continuous loading or unloading do not apply to grain which 
is at rest in carriers when the grain is offered for inspection.
    (g) Grain not uniform in quality. When grain officially inspected as 
a combined lot is found to be not uniform in quality or if the grain is 
not loaded or unloaded in a reasonably continuous operation, the grain 
in each portion, and any grain which is loaded or unloaded at different 
times, shall be officially sampled, inspected, graded, and certificated 
as single lots.

[[Page 545]]

    (h) Special certification procedures. (1) Grain not uniform in 
quality. When grain in a combined lot is found to be not uniform in 
quality under paragraph (g) of this section, the official inspection 
certificate for each portion of different quality shall show (i) the 
grade, identification, and approximate quantity of the grain and (ii) 
other information required by the instructions.
    (2) Partial inspection. When an inbound movement of bulk grain is 
offered for official inspection at rest as a combined lot and all 
carriers are not fully accessible for sampling, the request for official 
inspection either shall be dismissed or a combined lot inspection shall 
be made on those carriers that are accessible. Those lots that are not 
accessible shall be handled in accordance with Sec. 800.84. If the 
request is for an official inspection service on an outbound movement of 
grain at rest in a combined lot, the request shall be dismissed on the 
ground that the grain is not accessible for a correct ``Out'' 
inspection.
    (3) Official mark. If grain in a combined lot is inspected for grade 
as it is being loaded aboard two or more carriers, upon request of the 
applicant, the following mark shall be shown on the inspection 
certificate: ``Loaded under continuous official inspection'' or ``Loaded 
under continuous official inspection and weighing.''
    (4) Combined-lot certification; general. Each official certificate 
for a combined-lot inspection service shall show the identification for 
the ``combined lot'' or, at the request of the applicant, the 
identification of each carrier in the combined lot. If the 
identification of each carrier is not shown, the statement ``Carrier 
identification available on official inspection log'' shall be shown on 
the inspection certificate in the space provided for remarks. The 
identification and any seal information for the carriers may be shown on 
the reverse side of the inspection certificate, provided the statement 
``See reverse side'' is shown on the face of the certificate in the 
space provided for remarks.
    (5) Recertification. If a request for a combined-lot inspection 
service is filed after the grain has been officially inspected and 
certificated as single lots, the combined-lot inspection certificate 
shall show (i) the date of inspection of the grain in the combined lot 
(if the single lots were inspected on different dates, the latest of the 
dates shall be shown); (ii) a serial number other than the serial 
numbers of the official inspection certificates that are to be 
superseded; (iii) the location of the grain, if at rest, or the name of 
the elevator from which or into which the grain in the combined lot was 
loaded or unloaded; (iv) a statement showing the approximate quantity of 
grain in the combined lot; (v) a completed statement showing the 
identification of any superseded certificates; and (vi) if at the time 
of issuing the combined-lot inspection certificate the superseded 
certificates are not in the custody of the official personnel, a 
statement indicating that the superseded certificates have not been 
surrendered shall be clearly shown in the space provided for remarks. If 
the superseded certificates are in the custody of official personnel, 
the superseded certificates shall be clearly marked ``Void.''
    (i) Further combining. After a combined-lot inspection certificate 
has been issued, there shall be no further combining and no dividing of 
the certificate.
    (j) Limitation. No combined-lot inspection certificate shall be 
issued (1) for any official inspection service other than as described 
in this section or (2) which shows a quantity of grain in excess of the 
quantity in the single lots.

[50 FR 49672, Dec. 4, 1985]



Sec. 800.86  Inspection of shiplot, unit train, and lash barge grain in single lots.

    (a) General. Official inspection for grade of bulk or sacked grain 
aboard, or being loaded aboard, or being unloaded from a ship, unit 
train, or lash barges as a single lot shall be performed according to 
the provisions of this section and procedures prescribed in the 
instructions.
    (b) Application procedure. Applications for the official inspection 
of shiplot, unit train, and lash barges as a single lot shall:
    (1) Be filed in advance of loading or unloading;

[[Page 546]]

    (2) Show the estimated quantity of grain to be certificated;
    (3) Show the contract grade and official criteria if applicable; and
    (4) Identify the carrier and stowage area into which the grain is 
being loaded, or from which the grain is being unloaded, or in which the 
grain is at rest.
    (c) Inspection procedures. (1) General information. Shiplot, unit 
train, and lash barge grain officially inspected as a single lot shall 
be sampled in a reasonably continuous operation. Representative samples 
shall be obtained from the grain offered for inspection and inspected 
and graded in accordance with a statistical acceptance sampling and 
inspection plan according to the provisions of this section and 
procedures prescribed in the instructions.
    (2) Tolerances. The probability of accepting or rejecting portions 
of the lot during loading or unloading is dependent on inspection 
results obtained from preceding portions and the applied breakpoints and 
procedures. Breakpoints shall be periodically reviewed and revised based 
on new estimates of inspection variability. Tables 1 through 24 list the 
breakpoints for all grains.

                     Table 1--Grade Limits (GL) and Breakpoints (BP) for Six-Rowed Malting Barley and Six-Rowed Blue Malting Barley
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Minimum limits of--                             Maximum limits of--
                                                         -----------------------------------------------------------------------------------------------
                                                                                                                                     Skinned
                          Grade                           Test weight    Suitable                   Damaged    Foreign     Other       and        Thin
                                                           per bushel    malting     Sound barley   kernels    material    grains     broken     barley
                                                            (pounds)      types     (percent) \1\  (percent)  (percent)  (percent)   kernels   (percent)
                                                                        (percent)                                                   (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              GL   BP      GL   BP       GL   BP     GL   BP    GL   BP    GL   BP    GL   BP    GL   BP
U.S. No. 1..............................................   47.0  -0.5   95.0  -1.3    97.0  -1.0    2.0  0.8   0.5  0.1   2.0  0.8   4.0  1.1   7.0  0.6
U.S. No. 2..............................................   45.0  -0.5   95.0  -1.3    94.0  -1.4    3.0  0.9   1.0  0.4   3.0  0.9   6.0  1.4  10.0  0.9
U.S. No. 3..............................................   43.0  -0.5   95.0  -1.3    90.0  -1.6    4.0  1.1   2.0  0.5   5.0  1.3   8.0  1.5  15.0  0.9
U.S. No. 4..............................................   43.0  -0.5   95.0  -1.3    87.0  -1.9    5.0  1.3   3.0  0.6   5.0  1.3  10.0  1.6  15.0  0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered against sound barley.


                  Table 2--Grade Limits (GL) and Breakpoints (BP) for Two-Rowed Malting Barley
----------------------------------------------------------------------------------------------------------------
                                        Minimum limits of--                       Maximum limits of--
                              ----------------------------------------------------------------------------------
                                                                                             Skinned
            Grade              Test weight    Suitable      Sound                 Foreign      and        Thin
                                per bushel    malting     barley \1\  Wild oats   material    broken     barley
                                 (pounds)      types      (percent)   (percent)  (percent)   kernels   (percent)
                                             (percent)                                      (percent)
----------------------------------------------------------------------------------------------------------------
                                   GL   BP      GL   BP      GL   BP    GL   BP    GL   BP    GL   BP    GL   BP
U.S. No. 1...................   50.0  -0.5   97.0  -1.0   98.0  -0.8   1.0  0.6   0.5  0.1   5.0  1.3   5.0  0.4
U.S. No. 2...................   48.0  -0.5   97.0  -1.0   98.0  -0.8   1.0  0.6   1.0  0.4   7.0  1.3   7.0  0.5
U.S. No. 3...................   48.0  -0.5   95.0  -1.3   96.0  -1.1   2.0  0.8   2.0  0.5  10.0  1.8  10.0  0.9
U.S. No. 4...................   48.0  -0.5   95.0  -1.3   93.0  -1.1   3.0  0.9   3.0  0.6  10.0  1.8  10.0  0.9
----------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered
  against sound barley.
Note: Malting barley shall not be infested in accordance with Sec.  810.107(b) and shall not contain any special
  grades as defined in Sec.  810.206. Six- and two-rowed barley varieties not meeting the above requirements
  shall be graded in accordance with standards established for the class Barley.


                           Table 3--Grade Limits (GL) and Breakpoints (BP) for Barley
----------------------------------------------------------------------------------------------------------------
                                  Minimum limits of--                      Maximum limits of--
                              ----------------------------------------------------------------------------------
                                                                         Heat
            Grade              Test weight     Sound       Damaged     damaged    Foreign     Broken      Thin
                                per bushel     barley    kernels \1\   kernels    material   kernels     barley
                                 (pounds)    (percent)    (percent)   (percent)  (percent)  (percent)  (percent)
----------------------------------------------------------------------------------------------------------------
                                   GL   BP      GL   BP      GL   BP    GL   BP    GL   BP    GL   BP    GL   BP
U.S. No. 1...................  47.0   -0.5  97.0   -1.1    2.0   0.8  0.2   0.1  1.0   0.4  4.0   1.0       10.0
                                                                                                             0.9
U.S. No. 2...................  45.0   -0.5  94.0   -1.4    4.0   1.0  0.3   0.1  2.0   0.4  8.0   1.5       15.0
                                                                                                             0.9
U.S. No. 3...................  43.0   -0.5  90.0   -1.6    6.0   1.4  0.5   0.2  3.0   0.5       12.0       25.0
                                                                                                  1.8        1.3
U.S. No. 4...................  40.0   -0.5  85.0   -2.2    8.0   1.5  1.0   0.5  4.0   0.5       18.0       35.0
                                                                                                  1.8        1.9
U.S. No. 5...................  36.0   -0.5  75.0   -2.2   10.0   1.8  3.0   0.6  5.0   0.6       28.0       75.0
                                                                                                  2.4        2.3
----------------------------------------------------------------------------------------------------------------
\1\ Includes heat-damaged kernels. Injured-by-frost kernels and injured-by-mold kernels are not considered
  damaged kernels.


[[Page 547]]


       Table 4--Breakpoints for Barley Special Grades and Factors
------------------------------------------------------------------------
     Special grade or factor        Grade or range limit     Breakpoint
------------------------------------------------------------------------
Dockage.........................  As specified by                   0.23
                                   contract or load order.
Two-rowed Barley................  Not more than 10.0% of            1.8
                                   Six-rowed in Two-rowed.
Six-rowed Barley................  Not more than 10.0% of            1.8
                                   Two-rowed in Six-rowed.
Malting (Blue Aleurone Layers)..  Not less than 90.0%....          -1.3
Malting (White Aleurone Layers).  Not less than 90.0%....          -1.3
Smutty..........................  More than 0.20%........           0.06
Garlicky........................  3 or more in 500 grams.      2\1/3\
Ergoty..........................  More than 0.10%........           0.13
Infested........................  Same as in Sec.                   0
                                   810.107.
Blighted........................  More than 4.0%.........           1.1
Injured-by-Frost Kernels........  Not more than 1.9%.....           0.1
Injured-by-Heat Kernels.........  Not more than 0.2%.....           0.04
Frost-damaged Kernels...........  Not more than 0.4%.....           0.05
Heat-damaged Kernels............  Not more than 0.1%.....           0.1
Other Grains....................  Not more than 25.0%....           2.4
Moisture........................  As specified by                   0.5
                                   contract or load order
                                   grade.
------------------------------------------------------------------------


                            Table 5--Grade Limits (GL) and Breakpoints (BP) for Corn
----------------------------------------------------------------------------------------------------------------
                                                                                Maximum limits of--
                                                                 -----------------------------------------------
                                                   Minimum test                   Damaged kernels
                                                    weight per   -----------------------------------------------
                      Grade                           bushel                                        Broken corn
                                                     (pounds)      Heat-damaged        Total        and foreign
                                                                      kernels        (percent)       material
                                                                     (percent)                       (percent)
----------------------------------------------------------------------------------------------------------------
                                                      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1......................................    56.0    -0.4    0.1      0.1    3.0      1.0    2.0      0.2
U.S. No. 2......................................    54.0    -0.4    0.2      0.2    5.0      1.3    3.0      0.3
U.S. No. 3......................................    52.0    -0.4    0.5      0.3    7.0      1.5    4.0      0.3
U.S. No. 4......................................    49.0    -0.4    1.0      0.5   10.0      1.8    5.0      0.4
U.S. No. 5......................................    46.0    -0.4    3.0      0.9   15.0      2.1    7.0      0.4
----------------------------------------------------------------------------------------------------------------


                            Table 6--Breakpoints for Corn Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
         Special grade or factor                          Grade limit                         Breakpoint
----------------------------------------------------------------------------------------------------------------
Flint...................................  95 percent or more of flint corn..........  -1.0
Flint and Dent..........................  More than 5 percent, but less than 95       1.0 or -1.0
                                           percent of flint corn.
Infested................................  Same as in Sec.  810.107..................  0
Corn of other colors:
  White.................................  Not more than 2.0 percent.................  0.8
  Yellow................................  Not more than 5.0 percent.................  1.0
Waxy....................................  95 percent or more........................  -3.0
High BCFM...............................  As specified by contract or load order      10 percent of the load
                                           grade.                                      order grade
Moisture................................  As specified by contract or load order      0.4
                                           grade.
----------------------------------------------------------------------------------------------------------------


                          Table 7--Grade limits (GL) and Breakpoints (BP) for Flaxseed
----------------------------------------------------------------------------------------------------------------
                                                                                     Maximum limits of-damaged
                                                                   Minimum test               kernels
                                                                    weight per   -------------------------------
                              Grade                                   bushel       Heat-damaged
                                                                     (pounds)         kernels          Total
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                                                      GL      BP      GL      BP      GL      BP
U.S. No. 1......................................................    49.0    -0.1    0.2      0.1   10.0      0.9
U.S. No. 2......................................................    47.0    -0.1    0.5      0.1   15.0      1.1
----------------------------------------------------------------------------------------------------------------


      Table 8--Breakpoints for Flaxseed Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factor            Grade limit          Breakpoint
------------------------------------------------------------------------
Moisture.......................  As specified by load               0.4
                                  order or contract
                                  grade.
Dockage........................  0.99 percent or above..            0.32
------------------------------------------------------------------------


[[Page 548]]


                         Table 9--Grade Limits (GL) and Breakpoints (BP) for Mixed Grain
----------------------------------------------------------------------------------------------------------------
                                                                                Maximum Limits of--
                                                                 -----------------------------------------------
                                                                                          Damaged kernels
                              Grade                                              -------------------------------
                                                                     Moisture                      Heat-damaged
                                                                     (percent)         Total          kernels
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                                                                      GL      BP      GL      BP
U.S. Mixed Grain................................................            16.0   15.0      0.6    3.0      0.4
----------------------------------------------------------------------------------------------------------------
 Note: There is no tolerance for U.S. Sample grade Mixed Grain.


    Table 10--Breakpoints for Mixed Grain Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factor            Grade limit          Breakpoint
------------------------------------------------------------------------
Smutty.........................  15 or more in 250 grams            6
                                  (wheat, rye, or
                                  triticale
                                  predominates).
                                 More than 0.2% (all                0.05
                                  other mixtures).
Ergoty.........................  More than 0.30% (rye               0.13
                                  wheat predominates).
                                 More than 0.10% (all               0
                                  other mixtures).
Garlicky.......................  2 or more per 1,000                1
                                  grams (wheat, rye, or
                                  triticale
                                  predominates).
                                 4 or more per 500 grams            2
                                  (all other mixtures).
Infested.......................  Same as in Sec.                    0
                                  810.107.
Blighted.......................  More than 4.0% (barley             1.1
                                  predominates).
Treated........................  Same as in Sec.                    0
                                  810.805.
Moisture.......................  As specified by                    0.5
                                  contract or load order
                                  grade.
------------------------------------------------------------------------


                            Table 11--Grade Limits (GL) and Breakpoints (BP) for Oats
----------------------------------------------------------------------------------------------------------------
                                        Minimum limits of--                     Maximum limits of--
                                 -------------------------------------------------------------------------------
              Grade                 Test weight                    Heat-damaged       Foreign
                                    per bushel      Sound Oats        kernels        material        Wild Oats
                                     (pounds)        (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                      GL      BP      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1......................    36.0    -0.5    97.0    -0.8    0.1      0.1    2.0      0.4    2.0      0.6
U.S. No. 2......................    33.0    -0.5    94.0    -1.2    0.3      0.4    3.0      0.4    3.0      0.8
U.S. No. 3 \1\..................    30.0    -0.5    90.0    -1.4    1.0      0.5    4.0      0.5    5.0      1.1
U.S. No. 4 \2\..................    27.0    -0.5    80.0    -1.9    3.0      0.8    5.0      0.5   10.0      1.4
----------------------------------------------------------------------------------------------------------------
\1\ Oats that are Slightly Weathered shall be graded not higher than U.S. No. 3.
\2\ Oats that are Badly Stained or Materially Weathered shall be graded not higher than U.S. No. 4.


        Table 12--Breakpoints for Oats Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factors           Grade limit          Breakpoint
------------------------------------------------------------------------
Heavy..........................  38 pounds or more......           -0.5
Extra Heavy....................  40 pounds or more......           -0.5
Moisture.......................  As specified by                    0.5
                                  contract or load order
                                  grade.
Thin...........................  More than 20.0%........            0.5
Smutty.........................  More than 0.2%.........            0.05
Ergoty.........................  More than 0.10%........            0.10
Garlicky.......................  4 or more in 500 grams.       2\1/3\
Infested.......................  Same as in Sec.                    0
                                  810.107.
Bleached.......................  Same as in Sec.                    0
                                  810.1005.
------------------------------------------------------------------------


                                                Table 13--Grade Limits (GL) and Breakpoints (BP) for Rye
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Maximum limits of--
                                                                         -------------------------------------------------------------------------------
                                                                                 Foreign Material            Damaged kernels(percent)
                                                          Minimum test   ----------------------------------------------------------------
                         Grade                             weight per     Foreign matter                                                     Thin rye
                                                         bushel (pounds)    other than         Total       Heat-damaged        Total         (percent)
                                                                               wheat         (percent)       (percent)       (percent)
                                                                             (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           GL         BP      GL      BP      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1............................................    56.0      -0.5    1.0      0.4    3.0      0.8    0.2      0.1    2.0      0.8   10.0      0.6
U.S. No. 2............................................    54.0      -0.5    2.0      0.5    6.0      1.1    0.2      0.1    4.0      1.1   15.0      0.8
U.S. No. 3............................................    52.0      -0.5    4.0      0.8   10.0      1.4    0.5      0.4    7.0      1.4   25.0      0.9
U.S. No. 4............................................    49.0      -0.5    6.0      0.8   10.0      1.4    3.0      0.8   15.0      2.0  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 549]]


        Table 14--Breakpoints for Rye Special Grades and Factors
------------------------------------------------------------------------
    Special grade or factor            Grade limit          Breakpoint
------------------------------------------------------------------------
Moisture.......................  As specified by                    0.3
                                  contract or load order
                                  grade.
Light Garlicky.................  2 or more per 1,000           1\1/3\
                                  grams.
Garlicky.......................  More than 6 per 1,000         7\1/3\
                                  grams.
Ergoty.........................  More than 0.30%........            0.10
Plump..........................  Not more than 5.0%                 0.5
                                  through 0.064 x 3/8
                                  sieve.
Light Smutty...................  More than 14 per 250               6
                                  grams.
Smutty.........................  More than 30 per 250              10
                                  grams.
Infested.......................  Same as in Sec.                    0
                                  810.107.
Dockage........................  As specified by                    0.2
                                  contract or load order
                                  grade.
------------------------------------------------------------------------


                          Table 15--Grade Limits (GL) and Breakpoints (BP) for Sorghum
----------------------------------------------------------------------------------------------------------------
                                                                        Maximum limits of--
                                                 ---------------------------------------------------------------
                                   Minimum test           Damaged kernels           Broken kernels and foreign
                                    weight per   --------------------------------            material
              Grade                   bushel                                     -------------------------------
                                     (pounds)      Heat-damaged        Total                          Foreign
                                                     (percent)       (percent)         Total         material
                                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                      GL      BP      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1......................    57.0    -0.4      0.2    0.1      2.0    1.1      4.0    0.3      1.5    0.3
U.S. No. 2......................    55.0    -0.4      0.5    0.4      5.0    1.8      7.0    0.4      2.5    0.4
U.S. No. 3 \1\..................    53.0    -0.4      1.0    0.5     10.0    2.3     10.0    0.5      3.5    0.5
U.S. No. 4......................    51.0    -0.4      3.0    0.8     15.0    2.8     13.0    0.6      4.5    0.6
----------------------------------------------------------------------------------------------------------------
\1\ Sorghum which is distinctly discolored shall be graded not higher than U.S. No. 3.


                          Table 16--Breakpoints for Sorghum Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
        Special grade or factors                          Grade limit                         Breakpoint
----------------------------------------------------------------------------------------------------------------
Class Tannin............................  Not less than 90.0%.......................  -1.9
Sorghum.................................  Not less than 97.0%.......................  -1.0
White...................................  Not less than 98.0%.......................  -0.9
Smutty..................................  20 or more in 100 grams...................  8
Infested................................  Same as in Sec.  810.107..................  0
Dockage.................................  0.99% and above...........................  0.32
Moisture................................  As specified by contract or load order      0.5
                                           grade.
----------------------------------------------------------------------------------------------------------------


                                              Table 17--Grade Limits (GL) and Breakpoints (BP) for Soybeans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Maximum limits of--
                                                           Minimum test  -------------------------------------------------------------------------------
                                                            weight per            Damaged kernels
                          Grade                               bushel     --------------------------------     Foreign         Splits        Soybeans of
                                                             (pounds)      Heat-damaged        Total         material        (percent)     other colors
                                                                             (percent)       (percent)       (percent)                       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              GL      BP      GL      BP      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1..............................................    56.0    -0.4    0.2      0.2    2.0      0.8    1.0      0.2   10.0      1.6    1.0      0.7
U.S. No. 2..............................................    54.0    -0.4    0.5      0.3    3.0      0.9    2.0      0.3   20.0      2.2    2.0      1.0
U.S. No. 3 \1\..........................................    52.0    -0.4    1.0      0.5    5.0      1.2    3.0      0.4   30.0      2.5    5.0      1.6
U.S. No. 4 \2\..........................................    49.0    -0.4    3.0      0.9    8.0      1.5    5.0      0.5   40.0      2.7   10.0      2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Soybeans which are purple mottled or stained shall be graded not higher than U.S. No. 3.
\2\ Soybeans which are materially weathered shall be graded not higher than U.S. 4.


                          Table 18--Breakpoints for Soybean Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
            Special grade or factor                                 Grade limit                      Breakpoint
----------------------------------------------------------------------------------------------------------------
Garlicky.......................................  5 or more per 1,000 grams.......................            2
Infested.......................................  Same as in Sec.  810.107........................            0
Soybeans of other colors.......................  Not more than 10.0%.............................            2.3
Moisture.......................................  As specified by contract or load order grade....            0.3
----------------------------------------------------------------------------------------------------------------


[[Page 550]]


                       Table 19--Grade Limits (GL) and Breakpoints (BP) for Sunflower Seed
----------------------------------------------------------------------------------------------------------------
                                                                                Maximum limits of--
                                                   Minimum test  -----------------------------------------------
                                                    weight per        Damaged sunflower seed
                      Grade                           bushel     --------------------------------  Dehulled seed
                                                     (pounds)      Heat-damaged        Total         (percent)
                                                                     (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
                                                      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1......................................    25.0    -0.5    0.5      0.4    5.0      1.3    5.0      1.3
U.S. No. 2......................................    25.0    -0.5    1.0      0.6   10.0      1.8    5.0      1.3
----------------------------------------------------------------------------------------------------------------


                       Table 20--Breakpoints for Sunflower Seed Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
            Special grade or factor                                Grade limit                      Breakpoint
----------------------------------------------------------------------------------------------------------------
Moisture......................................  As specified by contract or load order grade....            0.5
Foreign Material..............................  1.25% and less..................................            0.27
                                                1.26% and above.................................            0.39
Admixture.....................................  As specified by contract or load order grade....            0.6
----------------------------------------------------------------------------------------------------------------


                                             Table 21--Grade Limits (GL) and Breakpoints (BP) for Triticale
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Maximum limits of--
                                                         -----------------------------------------------------------------------------------------------
                                           Minimum test           Damaged kernels                Foreign material
                  Grade                     weight per   ----------------------------------------------------------------  Shrunken and
                                              bushel                                      Material other                  broken kernels    Defects \3\
                                             (percent)     Heat-damaged      Total \1\     than wheat or     Total \2\       (percent)       (percent)
                                                             (percent)       (percent)     rye (percent)     (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              GL      BP      GL      BP      GL      BP      GL      BP      GL      BP      GL      BP      GL      BP
U.S. No. 1..............................    48.0    -0.5    0.2      0.1    2.0      0.8    1.0      0.4    2.0      0.6    5.0      0.8    5.0      1.3
U.S. No. 2..............................    45.0    -0.5    0.2      0.1    4.0      1.1    2.0      0.5    4.0      0.9    8.0      0.8    8.0      1.3
U.S. No. 3..............................    43.0    -0.5    0.5      0.4    8.0      1.5    3.0      0.6    7.0      1.2   12.0      1.6   12.0      2.3
U.S. No. 4..............................    41.0    -0.5    3.0      0.8   15.0      2.0    4.0      0.8   10.0      1.4   20.0      2.3   20.0      2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes heat-damaged kernels.
\2\ Includes material other than wheat or rye.
\3\ Defects includes damaged kernels (total), foreign material (total), and shrunken and broken kernels. The sum of these three factors may not exceed
  the limit for defects for each numerical grade.


                         Table 22--Breakpoints for Triticale Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
            Special grade or factor                                Grade limit                      Breakpoint
----------------------------------------------------------------------------------------------------------------
Garlicky......................................  2 or more per 1,000 grams.......................       1\1/3\
Ergoty........................................  More than 0.10%.................................            0.1
Smutty........................................  More than 14 per 250 grams......................            6
Infested......................................  Same as in Sec.  810.107........................            0
Dockage.......................................  0.99% or above..................................            0.32
Moisture......................................  As specified by contract or load order grade....            0.5
----------------------------------------------------------------------------------------------------------------


                                               Table 23--Grade Limits (GL) and Breakpoints (BP) for Wheat
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Minimum limits of--                                 Maximum limits of--
                                                --------------------------------------------------------------------------------------------------------
                                                 Test weight per bushel     Damaged kernels                                       Wheat of other classes
                                                ----------------------------------------------                                              \4\
                                                  Hard red                                                 Shrunken              -----------------------
                     Grade                         spring     All other    Heat-                Foreign      and     Defects \3\
                                                  wheat or     classes    damaged   Total \2\   material    broken    (percent)   Contrasting
                                                 white club      and      kernels   (percent)  (percent)   kernels                  classes    Total \5\
                                                  wheat \1\  subclasses  (percent)                        (percent)                (percent)   (percent)
                                                  (pounds)    (pounds)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      GL BP       GL BP      GL BP      GL BP      GL BP      GL BP       GL BP        GL BP       GL BP
U.S. No. 1.....................................   58.0 -0.3   60.0 -0.3    0.2 0.2    2.0 1.0    0.4 0.2    3.0 0.3     3.0 0.7      1.0 0.7     3.0 1.6

[[Page 551]]

 
U.S. No. 2.....................................   57.0 -0.3   58.0 -0.3    0.2 0.2    4.0 1.5    0.7 0.3    5.0 0.4     5.0 0.9      2.0 1.0     5.0 2.1
U.S. No. 3.....................................   55.0 -0.3   56.0 -0.3    0.5 0.3    7.0 1.9    1.3 0.4    8.0 0.5     8.0 1.2      3.0 1.3    10.0 2.9
U.S. No. 4.....................................   53.0 -0.3   54.0 -0.3    1.0 0.4   10.0 2.3    3.0 0.6   12.0 0.6    12.0 1.4     10.0 2.3    10.0 2.9
U.S. No. 5.....................................   50.0 -0.3   51.0 -0.3    3.0 0.7   15.0 2.7    5.0 0.7   20.0 0.7    20.0 1.5     10.0 2.3   10.0 2.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ These requirements also apply when Hard Red Spring or White Club wheat predominate in a sample of Mixed wheat.
\2\ Includes heat-damaged kernels.
\3\ Defects include damaged kernels (total), foreign material, and shrunken and broken kernels. The sum of these factors may not exceed the limit for
  defects for each numerical grade.
\4\ Unclassed wheat of any grade may contain not more than 10.0 percent of wheat of other classes.
\5\ Includes contrasting classes.


                           Table 24--Breakpoints for Wheat Special Grades and Factors
----------------------------------------------------------------------------------------------------------------
          Special grade or factor                                  Grade limit                        Breakpoint
----------------------------------------------------------------------------------------------------------------
Moisture...................................  As specified by contract or load order grade...........        0.3
Garlicky...................................  More than 2 bulblets per 1,000 grams...................   1\1/3\
Light smutty...............................  More than 5 smut balls per 250 grams...................        3
Smutty.....................................  More than 30 smut balls per 250 grams..................       10
Infested...................................  Same as in Sec.  810.107...............................        0
Ergoty.....................................  More than 0.05%........................................        0.03
Treated....................................  Same as in Sec.  810.2204..............................        0
Dockage....................................  As specified by contract or load order grade...........        0.2
Protein....................................  As specified by contract or load order grade...........        0.5
 
             Class and Subclass
Hard red spring:
  DNS......................................  75% or more DHV........................................       -5.0
  NS.......................................  25% or more DHV but less than 75% DHV..................       -5.0
Durum:
  HADU.....................................  75% or more HVAC.......................................       -5.0
  ADU......................................  60% or more HVAC but less than 75% of HVAC.............       -5.0
Soft white:
  SWH......................................  Not more than 10% white club wheat.....................        2.0
  WHCB.....................................  Not more than 10% of other soft white wheat............        2.0
  WWH......................................  More than 10% WHCB and more than 10% of other soft            -3.0
                                              white wheat.
----------------------------------------------------------------------------------------------------------------

    (3) Grain accepted by the inspection plan. Grain which is offered 
for inspection as part of a single lot and accepted by a statistical 
acceptance sampling and inspection plan according to the provisions of 
this section and procedures prescribed in the instructions shall be 
certificated as a single lot provided it was sampled in a reasonably 
continuous operation. Official factor and official criteria information 
shown on the certificate shall be based on the weighted or mathematical 
averages of the analysis of sublots.
    (4) Grain rejected by the inspection plan. When grain which is 
offered for inspection as part of a single lot is rejected by the plan 
or is not sampled in a reasonably continuous operation, the grain in 
each portion shall be certificated separately. If any portion of grain 
is not accepted by the plan and designated a material portion, the 
applicant shall be promptly notified and have the option of:
    (i) Removing the material portion from the carrier; or
    (ii) Requesting the material portion be separately certificated; or
    (iii) Requesting either a reinspection or an appeal inspection of 
the material portion; or
    (iv) Requesting a reinspection service and/or an appeal inspection 
service on the entire lot.

[[Page 552]]

    (5) Reinspection service and appeal inspection service. A 
reinspection or an appeal inspection may be requested on a material 
portion. A Board appeal inspection may also be requested on a material 
portion after the reinspection or appeal inspection. A reinspection, an 
appeal inspection, and a Board appeal inspection may be requested on the 
total sublots in the lot.
    (i) Material portions. A material portion designated by the plan may 
be reinspected or appeal inspected once in the field, but not both, and 
once at the Board of Appeals and Review. The reinspection or appeal 
inspection result shall, unless a material error is found, be averaged 
with the original inspection determination. The Board appeal inspection 
result shall, unless a material error is found, be averaged with the 
previous inspection result. The inspection plan tolerances shall be 
reapplied to the material portion grain to determine acceptance or 
rejection. If a material error is found, the reinspection or appeal 
inspection result shall replace the original inspection result or the 
Board appeal result shall replace the previous inspection result. For 
purposes of this section, a material error is defined as results 
differing by more than two standard deviations. Acceptance or rejection 
of that portion of grain shall be based on the reinspection or appeal 
inspection and on the Board appeal inspection result alone when a 
material error is found.
    (ii) Entire lot. The applicant may request a reinspection service, 
an appeal inspection service, and a Board appeal inspection service on 
the entire lot. Inspection results for these services shall replace the 
previous inspection results. The tolerances shall be reapplied to all 
portions of the entire lot to determine acceptance or rejection.
    (d) Infested grain. (1) Available options. If gain or any portion of 
grain in a single shiplot, unit train, or lash barge lot is found to be 
infested, according to the provisions of the Official U.S. Standards for 
Grain, the applicant shall be promptly notified and have the option of:
    (i) Unloading the portion of infested grain from the lot and an 
additional amount of other grain in common stowage with the infested 
grain; or
    (ii) When applicable, completing the loading and treating all 
infested grain in the lot; or
    (iii) When applicable, treating the infested grain for the purpose 
of destroying the insects, subject to subsequent examination by official 
personnel; or
    (iv) Continue loading without treating the infested grain, in which 
case all of the infested grain in the lot and all grain in common 
stowage areas with the infested grain will be officially certificated as 
infested according to the provisions of the Official U.S. Standards for 
Grain.
    (2) Exception. If infested grain in loaded into common stowage with 
a lot, or a portion of a lot, which has not been officially certificated 
as being infested, the applicant loading the infested grain may not use 
the option in paragraph (d)(1)(i) of this section.
    (3) With treatment. If infested grain is treated with a fumigant in 
accordance with the instructions and the treatment is witnessed by 
official personnel, the official sampling, inspection, grading, and 
certification of the lot shall continue as though the infested condition 
did not exist.
    (e) Special certification procedures. (1) Rejected grain. When grain 
is rejected by the inspection plan under paragraph (c)(4) of this 
section, the official inspection certificate for each different portion 
of different quality shall show:
    (i) A statement that the grain has been loaded aboard with grain of 
other quality;
    (ii) The grade, location, or other identification and approximate 
quanity of grain in the portions; and
    (iii) Other information required by the regulations and the 
instructions.

The requirement of paragraph (e)(1)(i) of this section does not apply to 
grain that is inspected as it is unloaded from the carrier or to 
portions loaded in separate carriers or stowage space.
    (2) Common stowage. (i) Without separation. When bulk grain is 
offered for official inspection as it is loaded aboard a ship and is 
loaded without separation in a stowage area with other grain or another 
commodity, the official inspection certificate for the grain in each lot 
shall show the kind, the grade, if known, and the location of

[[Page 553]]

the other grain, or the kind and location of the other commodity in the 
adjacent lots.
    (ii) With separation. When separations are laid between lots, the 
official inspection certificates shall show the kind of material used in 
the separations and the locations of the separations in relation to each 
lot.
    (iii) Exception. The common stowage requirements of this paragraph 
are not applicable to the first lot in a stowage area unless a second 
lot is loaded, in whole or in part, in the stowage area prior to issuing 
the official inspection certificate for the first lot.
    (3) Protein. A special statement indicating the actual protein range 
of a lot shall be shown on the official inspection certificate if the 
difference between the lowest and highest protein determinations for the 
lot exceeds 1.0 percent when protein is officially determined and a 
specific range limit is not established by the contract grade.
    (4) Part lot. If part of a lot of grain in an inbound carrier is 
unloaded and part is left in the carrier, the unloaded grain shall be 
officially inspected and certificated in accordance with the provisions 
of Sec. 800.84(g).
    (5) Official mark. If the grain in a single lot is officially 
inspected for grade as it is being loaded, upon request, the following 
official mark shall be shown on the inspection certificate: ``Loaded 
under continuous official inspection.''

[55 FR 24042, June 13, 1990; 55 FR 46131, Nov. 1, 1990; 56 FR 4675, Feb. 
5, 1991; 57 FR 58965, 58970, Dec. 14, 1992; 61 FR 18490, Apr. 26, 1996; 
63 FR 20056, Apr. 23, 1998; 64 FR 6783, Feb. 11, 1999]



Sec. 800.87  New inspections.

    (a) Identity lost. An applicant may request official personnel to 
perform a new original inspection service on an identified lot of grain, 
or on an identified carrier or container, if the identity of the lot or 
the carrier or container has been lost.
    (b) Identity not lost. If the identity of the grain or the carrier 
or container is not lost, a new original inspection shall not be 
performed on the same identified lot of grain or carrier or container in 
the same assigned area of responsiblity within 5 business days after the 
last official inspection.

[50 FR 49674, Dec. 4, 1985]



Sec. 800.88  Loss of identity.

    (a) Lots. Except as noted in paragraph (d) of this section, the 
indentity of a lot of grain shall be considered lost if (1) a portion of 
the grain is unloaded, transferred, or otherwise removed from the 
carrier or container in which the grain was located at the time of the 
original inspection; or (2) a portion of grain or other material, 
including additives, is added to the lot after the orginal inspection 
was performed, unless the addition of the additive was performed in 
accordance with the regulations and the instructions. At the option of 
official personnel performing a reinspection, appeal inspection, or 
Board appeal inspection service, the identity of grain in a closed 
carrier or container shall be considered lost if the carrier or 
container is not sealed or if the seal record is incomplete.
    (b) Carriers and containers. The indentity of a carrier or container 
shall be considered lost when (1) the stowage area is cleaned, painted, 
treated, fumigated, or fitted after the original inspection was 
performed; or (2) the identification of the carrier or container has 
been changed since the original inspection was performed.
    (c) Submitted samples. The identity of a submitted sample of grain 
shall be considered lost when (1) the identifying number, mark, or 
symbol for the sample is lost or destroyed or (2) the samples have not 
been retained and protected by official personnel as prescribed in the 
instructions.
    (d) Additives.\1\ If additives are applied during loading to 
outbound, including export, grain after sampling or during unloading to 
inbound grain before sampling for the purpose of insect or fungi 
control, dust suppression, or identification, the inspection certificate 
shall show a statement showing the type and

[[Page 554]]

purpose of the additive application, except that no statement is 
required to be shown when the additive is a fumigant applied for the 
purpose of insect control.
---------------------------------------------------------------------------

    \1\ Elevators, other handlers of grain, and their agents are 
responsible for the additive's proper usage and application. Compliance 
with this section does not excuse compliance with applicable Federal, 
State, and local laws.

[52 FR 6495, Mar. 4, 1987, as amended at 58 FR 3212, Jan. 8, 1993; 59 FR 
52077, Oct. 14, 1994]

                   Weighing Provisions and Procedures



Sec. 800.95  Methods and order of performing weighing services.

    (a) Methods. All Class X or Class Y weighing, checkweighing, 
checkloading, stowage examination, and other weighing services shall be 
performed by official personnel or approved weighers using approved 
weighing equipment and according to procedures prescribed in the 
regulations and the instructions.
    (b) Order of service. Weighing services shall be performed, to the 
extent practicable, in the order in which requests are received. 
Official personnel must mark or stamp the date received on each written 
request for service. Precedence will be given to requests for weighing 
required by sections 5(a)(1) or 5(a)(2) of the Act.

[52 FR 6495, Mar. 4, 1987]



Sec. 800.96  Weighing procedures.

    (a) Inbound. Inbound grain that is to be weighed must be routed 
directly from the carrier and cannot be cleaned, dried, or otherwise 
processed to remove or add other grain or material en route. Except as 
noted in paragraph (c) of this section, the identity of an inbound lot 
shall be considered lost when a portion of the lot is transferred or 
otherwise removed prior to weighing or a portion of grain or other 
material is added to the lot prior to weighing. When loss of identity 
occurs, no amount shall be shown in the ``Net Weight'' portion of the 
weight certificate for the lot.
    (b) Outbound. Outbound grain that has been weighed must be routed 
directly from the scale to the carrier and cannot be cleaned, dried, or 
otherwise processed to remove or add other grain or material en route. 
Except as noted in paragraph (c) of this section, the identity of an 
outbound lot will be considered lost if a portion of the lot is 
transferred or otherwise removed from the lot after weighing or a 
portion of grain or other material is added to the lot after weighing. 
When loss of identity occurs, no amount shall be shown in the ``Net 
Weight'' portion of the weight certificate for the lot.
    (c) Exceptions. (1) Spills. (i) Outbound. (A) Replaced. If a spill 
occurs in handling and loading of outbound grain and the spilled grain 
is retrieved, or is replaced in kind, and is loaded on board during the 
loading operations, the weight certificate shall show the weight of the 
grain that was physically loaded on board. Upon request of the 
applicant, an additional certificate may be issued by the agency or the 
field office to show the weight of the additional grain that was used to 
replace a spill.
    (B) Not replaced. If a spill occurs in the handling and loading of 
outbound grain and the spilled grain is not retrieved or is not replaced 
during the loading operation, the weight certificate shall show the 
weight of the grain that was actually weighed, minus the estimated 
amount of the grain that was spilled. Upon request of the applicant, an 
additional certificate may be issued showing the estimated amount of 
grain that was spilled. The applicant may, upon request, have the total 
amount that was weighed shown on the weight certificate with the 
estimated amount of the spilled grain noted.
    (ii) Inbound. If a spill occurs in the handling of inbound grain and 
the grain is not retrieved and weighed, the weight certificate shall 
show the weight of the grain that was actually unloaded from the carrier 
and a statement regarding the spill as prescribed in the instructions.
    (2) Additives. \1\ If additives are applied during loading to 
outbound, including export, grain after weighing or during unloading to 
inbound grain before weighing for the purpose of insect or fungi 
control, dust suppression, or identification, the weight certificate 
shall show the actual weight of the

[[Page 555]]

grain after the application of the additive for inbound grain or the 
actual weight of the grain prior to the application of the additive for 
outbound or export grain and a statement showing the type and purpose of 
the additive application, except that no statement is required to be 
shown when the additive is a fumigant applied for the purpose of insect 
control.
---------------------------------------------------------------------------

    \1\ Elevators, other handlers of grain, and their agents are 
responsible for the additive's proper usage and application. Compliance 
with this section does not excuse compliance with applicable Federal, 
State, and local laws.
---------------------------------------------------------------------------

    (3) Dust. If dust is removed during the handling of grain, the 
weight certificate shall not be adjusted to reflect the weight of the 
removed dust.
    (4) Commingled carriers. If grain from two or more identified 
carriers becomes mixed, (i) the combined weight of the grain shall be 
shown in the ``Net Weight'' block of one certificate with all carrier 
identification shown in the identification of carrier section of the 
certificate, or (ii) upon request of the applicant, a certificate shall 
be issued for each carrier with the ``Net Weight'' block crossed out, 
and with the total combined weight unloaded and the identification of 
the other carrier(s) shown in the ``Remarks'' section.
    (5) Unremoved grain. If, after unloading an inbound carrier, there 
is sound grain remaining in the carrier that could have been removed 
with reasonable effort, the weight certificate shall show the weight of 
the grain that was actually unloaded from the carrier and a statement 
regarding the grain remaining in the carrier.

[52 FR 6495, Mar. 4, 1987, as amended at 58 FR 3212, Jan. 8, 1993; 59 FR 
52077, Oct. 14, 1994]



Sec. 800.97  Weighing grain in containers, land carriers, barges, and shiplots.

    (a) General. The weighing of grain loaded or unloaded from any 
carrier shall be conducted according to this section and the 
instructions.
    (b) Procedure. (1) General. If grain in a carrier is offered for 
inspection or weighing service as one lot, the grain shall be weighed 
and certificated as one lot. The identification of the carrier shall be 
recorded on the scale tape or ticket and the weight certificate.
    (2) Sacked grain. If sacked grain is offered for weighing and the 
grain is not fully accessible, the request for weighing service shall be 
dismissed.
    (3) Part lots. If a portion of an inbound lot of grain is unloaded 
and a portion is left in the carrier because it is not uniform in 
quality or condition, or the lot is unloaded in other than a reasonably 
continuous operation, the portion that is removed and the portion 
remaining in the carrier shall be considered as part lots and shall be 
weighed and certificated as part lots.
    (c) Certification of trucklots, carlots, and bargelots. (1) Basic 
requirement. One official certificate shall be issued for the weighing 
of the grain in each truck, trailer, truck/trailer(s) combination, 
railroad car, barge, or similarly sized carrier. This requirement shall 
not be applicable to grain weighed as a combined lot under Sec. 800.98.
    (2) Part-lot weight certificates. A part-lot weight certificate 
shall show (i) the weight of the portion that is unloaded and (ii) the 
following statement: ``Part-lot: The net weight stated herein reflects a 
partial unload.''
    (d) Certification of shiplot grain. (1) Basic requirement. The 
certificate shall show (i) if applicable, a statement that the grain has 
been loaded aboard with other grain, (ii) the official weight, (iii) the 
stowage or other identification of the grain, and (iv) other information 
required by the regulations and the instructions.
    (2) Common stowage. (i) Without separation. If bulk grain is offered 
for weighing as it is being loaded aboard a ship and is loaded without 
separation in a stowage area with other grain or another commodity, the 
weight certificate for the grain in each lot shall show that the lot was 
loaded aboard with other grain or another commodity without separation 
and the relative location of the grain.
    (ii) With separation. If separations are laid between adjacent lots, 
the weight certificates shall show the kind of material used in the 
separations and the location of the separations in relation to each lot.
    (iii) Exception. The common stowage requirements of this paragraph 
shall not be applicable to the first lot in a stowage area unless a 
second lot has been loaded, in whole or in part, in the stowage area 
before issuing the official weight certificate for the first lot.

[[Page 556]]

    (3) Official mark. If the grain is officially weighed in a 
reasonably continuous operation, upon request by the applicant, the 
following statement may be shown on the weight certificate: ``Loaded 
under continuous official weighing.''

[52 FR 6496, Mar. 4, 1987]



Sec. 800.98  Weighing grain in combined lots.

    (a) General. The weighing of bulk or sacked grain loaded aboard, or 
being loaded aboard, or unloaded from two or more carriers as a combined 
lot shall be conducted according to this section and the instructions.
    (b) Weighing procedure. (1) Single lot weighing. Single lots of 
grain that are to be weighed as a combined lot shall be weighed in one 
location. The grain loaded into or unloaded from each carrier must be 
weighed in accordance with procedures prescribed in the instructions. In 
the case of sacked grain, a representative weight sample shall be 
obtained from the grain in each carrier unless otherwise specified in 
the instructions.
    (2) Recertification. Grain that has been weighed and certificated as 
two or more single lots may be recertificated as a combined lot provided 
that (i) the grain in each single lot has been weighed in one location, 
(ii) the original weight certificates issued for the single lots have 
been or will be surrendered to the appropriate agency or field office, 
(iii) the official personnel who performed the weighing service for the 
single lots and the official personnel who are to recertificate the 
grain as a combined lot determine that the weight of the grain in the 
lots has not since changed and, in the case of sacked grain, that the 
weight samples used as a basis for weighing the single lots were 
representative at the time of the weighing.
    (3) Grain uniform in quality. An applicant may request that grain be 
weighed and certificated as a combined lot whether or not the grain is 
uniform in quality for the purpose of inspection under the Act.
    (c) Certification procedures. (1) General. Each certificate for a 
combined-lot Class X or Class Y weighing service shall show the 
identification for the ``Combined lot'' or, at the request of the 
applicant, the identification of each carrier in the combined lot. The 
identification and any seal information for the carriers may be shown on 
the reverse side of the weight certificate, provided the statement ``See 
reverse side'' is shown on the face of the certificate in the space 
provided for remarks.
    (2) Recertification. If a request for a combined-lot Class X or 
Class Y weighing service is filed after the grain in the single lots has 
been weighed and certificated, the combined-lot weighing certificate 
shall show (i) the date of weighing the grain in the combined lot (if 
the single lots were weighed on different dates, the latest of the dates 
shall be shown); (ii) a serial number, other than the serial numbers of 
the weight certificates that are to be superseded; (iii) the name of the 
elevator from which or into which the grain in the combined lot was 
loaded or unloaded; (iv) a statement showing the weight of the grain in 
the combined lot; (v) a completed statement showing the identification 
of any superseded certificate as follows: ``This combined-lot 
certificate supersedes certificate Nos. ________, dated ________; and 
(vi) if at the time of issuing the combined-lot weight certificate the 
superseded certificates are not in the custody of the agency or field 
office, the statement ``The superseded certificates identified herein 
have not been surrendered'' shall be clearly shown, in the space 
provided for remarks, beneath the statement identifying the superseded 
certificates. If the superseded certificates are in the custody of the 
agency or field office, the superseded certificates shall be clearly 
marked ``Void.''
    (3) Part lot. If a part of a combined lot of grain in inbound 
carriers is unloaded and a part is left in the carriers, the grain that 
is unloaded shall be certificated in accordance with the provisions in 
Sec. 800.97(c)(2).
    (4) Official mark. When grain is weighed as a combined lot in one 
continuous operation, upon request by the applicant, the following 
statement shall be shown on the weight certificate: ``Loaded under 
continuous official weighing,'' or ``Loaded under continuous official 
inspection and weighing.''

[[Page 557]]

    (5) Further combining. After a combined-lot weight certificate has 
been issued, there shall be no further combining and no dividing of the 
certificate.
    (6) Limitations. No combined-lot weight certificate shall be issued 
(i) for any weighing service other than as described in this section or 
(ii) which shows a weight of grain different from the total of the 
combined single lot.

[52 FR 6496, Mar. 4, 1987]



Sec. 800.99  Checkweighing sacked grain.

    (a) General. Each checkweighing service performed on a lot of sacked 
grain to determine the weight of the grain shall be made on the basis of 
one or more official weight samples obtained from the grain by official 
personnel according to this section and procedures prescribed in the 
instructions.
    (b) Representative sample. No official weight sample shall be 
considered to be representative of a lot of sacked grain unless the 
sample is of the size prescribed in the instructions and has been 
obtained and weighed according to the procedures prescribed in the 
instructions.
    (c) Protecting samples and data. Official personnel and other 
employees of an agency or the Service shall protect official weight 
samples and data from manipulation, substitution, and improper and 
careless handling which might deprive the samples and sample data of 
their representativeness.
    (d) Restriction on weighing. No agency shall weigh any lot of sacked 
grain unless at the time of obtaining the official weight sample the 
grain from which the sample was obtained was located within the area of 
responsibility assigned to the agency. Upon good cause shown by the 
agency, the Administrator may grant an exception to this rule on a case-
by-case basis.
    (e) Equipment and labor. Each applicant for weighing services shall 
provide necessary labor for obtaining official weight samples and place 
the samples in a position for weighing and shall supply suitable 
weighing equipment approved by the Service, pursuant to the regulations 
and the instructions.
    (f) Disposition of official weight samples. In weighing sacked grain 
in lots, the grain in the official weight samples shall be returned to 
the lots from which the samples were obtained.
    (g) Provisions by kinds of service. (1) ``IN'' movements. Each 
checkweighing on an ``IN'' movement of sacked grain shall be based on an 
official weight sample obtained while the grain is at rest in the 
carrier or during unloading, in accordance with procedures prescribed in 
the instructions.
    (2) ``OUT'' movements (export). Each checkweighing of sacked export 
grain shall be based on an official weight sample obtained as the grain 
is being loaded aboard the final carrier, as the grain is being sacked, 
or while the grain is at rest in a warehouse or holding facility, in 
accordance with procedures prescribed in the instructions.
    (3) ``OUT'' movements (other than export). Each checkweighing of an 
``OUT'' movement of nonexport sacked grain shall be based on an official 
weight sample obtained from the grain as the grain is being loaded in 
the carrier, or while the grain is at rest in the carrier, or while the 
grain is at rest in a warehouse or holding facility, or while the grain 
is being sacked, in accordance with procedures prescribed in the 
instructions.
    (4) ``LOCAL'' weighing. Each checkweighing of a ``LOCAL'' movement 
of sacked grain shall be based on an official weight sample obtained 
while the grain is at rest or while the grain is being transferred, in 
accordance with procedures prescribed in the instructions.

[52 FR 6497, Mar. 4, 1987]

                            Original Services



Sec. 800.115  Who may request original services.

    (a) General. Any interested person may request original inspection 
and weighing services. The kinds of inspection and weighing services are 
described in Sec. 800.75.
    (b) Class Y weighing services. A request for Class Y weighing 
services at an export elevator at an export port location shall cover 
all lots shipped or received in a specific type of carrier. At all other 
elevators, the request shall

[[Page 558]]

cover all lots shipped from or to a specific location in a specific type 
of carrier. Each request shall be for a contract period of at least 3 
months, but a facility may, upon satisfactory notification, exempt 
specific unit trains from the request.
    (c) Contract services. Any interested person may enter into a 
contract with an agency or the Service whereby the agency or Service 
will provide original services for a specified period and the applicant 
will pay a specified fee.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45393, Oct. 31, 1985]



Sec. 800.116  How to request original services.

    (a) General. Requests shall be filed with the agency or field office 
responsible for the areas in which the original service is to be 
performed. All requests shall include the information specified in 
Sec. 800.46. Verbal requests shall be confirmed in writing when 
requested by official personnel, as specified in Sec. 800.46. Copies of 
request forms may be obtained from the agency or field office upon 
request. If at the time the request is filed, the information specified 
by Sec. 800.46 is not available official personnel may at their 
discretion, withhold service pending receipt of the required 
information. An official certificate shall not be issued unless (1) the 
information as required by Sec. 800.46 has been submitted or (2) 
official personnel determine that sufficient information has been made 
available so as to perform the requested service. A record that 
sufficient information was made available must be included in the record 
of the official service.
    (b) Request requirements. Requests for original services, other than 
submitted sample inspections, must be made with the agency or field 
office responsible for the area in which the service will be provided. 
Requests for submitted sample inspections may be made with any agency, 
or any field office that provides original inspection service. Requests 
for inspection or Class X weighing of grain during loading, unloading, 
or handling must be received in advance of loading so official personnel 
can be present. All requests will be considered filed when the request 
is received by official personnel. A record shall be maintained for all 
requests. All requests for service that is to be performed outside 
normal business hours must be received by 2 p.m. the preceding day.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45393, Oct. 31, 1985]



Sec. 800.117  Who shall perform.

    Original services shall be performed by the agency or field office 
assigned the area in which the service will be provided.

[50 FR 45393, Oct. 31, 1985]



Sec. 800.118  Certification.

    Official certificates shall be issued according to Sec. 800.160. 
Upon request, a combination inspection and Class X weighing certificate 
may be issued when both services are performed in a reasonably 
continuous operation at the same location by the same agency or field 
office.

[50 FR 45393, Oct. 31, 1985]

     Official Reinspection Services and Review of Weighing Services



Sec. 800.125  Who may request reinspection services or review of weighing services.

    (a) General. Any interested person may request a reinspection or 
review of weighing service, except as provided for in Sec. 800.86(c)(5). 
Only one reinspection service or review of weighing service may be 
performed on any original service. When more than one interested person 
requests a reinspection or review of weighing service, the first person 
to file is the applicant of record.
    (b) Kind and scope of request. The kind and scope of a reinspection 
or review of weighing service will be limited to the kind and scope of 
the original service. If the request specifies a different kind or 
scope, the request will be dismissed. The request may be resubmitted as 
a request for original services. Official criteria are considered 
separately from official grade or official factors when determining the 
kind and scope. When requested, a reinspection for official grade or 
official factors and official criteria may be handled separately even

[[Page 559]]

though both sets of results are reported on the same certificate. 
Moreover, a reinspection or review of weighing may be requested on 
either the inspection or Class X weighing results when both results are 
reported on a combination inspection and Class X weight certificate. 
Reinspections for grade shall include a review of all official factors 
that (1) may determine the grade; or (2) are reported on the original 
certificate; and (3) are required to be shown.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45393, Oct. 31, 1985, as amended at 54 FR 5924, Feb. 7, 1989; 55 
FR 24048, June 13, 1990]



Sec. 800.126  How to request reinspection or review of weighing services.

    (a) General. Requests shall be made with the agency or field office 
that performed the original service. All requests shall include the 
information specified in Sec. 800.46. Verbal requests shall be confirmed 
in writing when requested by official personnel. Copies of request forms 
may be obtained from the agency or field office. If at the time the 
request is filed the documentation required by Sec. 800.46 is not 
available, official personnel may, at their discretion, withhold 
services pending the receipt of the required documentation. A 
reinspection certificate or the results of a review of weighing service 
shall not be issued unless (1) the documentation requested under 
Sec. 800.46 has been submitted or (2) official personnel determine 
sufficient information has been made available so as to perform the 
requested service. A record that sufficient information was made 
available shall be included in the record of the official service.
    (b) Request requirements. Requests will be considered filed on the 
date they are received by official personnel. A record shall be 
maintained for all requests.
    (1) Reinspection services. Requests shall be received (i) before the 
grain has left the specified service point where the grain was located 
when the original inspection was performed; (ii) no later than the close 
of business on the second business day following the date of the 
original inspection; and (iii) before the identity of the grain has been 
lost. If a representative file sample, as prescribed in Sec. 800.82, is 
available, official personnel may waive the requirements pursuant to 
this subparagraph. The requirements of paragraph (b)(1)(i) of this 
section may be waived only upon written consent of the applicant and all 
interested persons. The requirements of paragraph (b)(1)(ii) and (iii) 
of this section may be waived at the request of the applicant or other 
interested persons. The requirement of paragraph (b)(1)(ii) of this 
section may also be waived upon satisfactory showing by an interested 
person of evidence of fraud or that because of distance or other good 
cause, the time allowed for filing was not sufficient. A record of each 
waiver shall be included in the record of the reinspection service.
    (2) Review of weighing services. Requests shall be received no later 
than 90 calendar days after the date of the original Class X or Class Y 
weighing service.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45394, Oct. 31, 1985]



Sec. 800.127  Who shall perform reinspection or review of weighing services.

    Reinspection or review of weighing services shall be performed by 
the agency or field office that performed the original service.

[50 FR 45394, Oct. 31, 1985]



Sec. 800.128  Conflicts of interest.

    Official personnel cannot perform or participate in performing or 
issue an official certificate for a reinspection or a review of weighing 
service if they participated in the original service unless there is 
only one qualified person available at the time and place of the 
reinspection or review of weighing.

[50 FR 45394, Oct. 31, 1985]



Sec. 800.129  Certificating reinspection and review of weighing results.

    (a) General. Except as provided in paragraph (a)(1) of this 
paragraph, official certificates shall be issued according to 
Sec. 800.160 and the instructions. Except as provided in paragraph 
(b)(2) of this section, only the result of the reinspection service 
shall be reported.

[[Page 560]]

    (1) Results of material portion sublots. When results of a 
reinspection on a material portion do not detect a material error, they 
shall be averaged with the original inspection results. For purposes of 
this section, a material error is defined as results differing by more 
than two standard deviations. The averaged inspection results shall 
replace the original inspection results recorded on the official 
inspection log. Reinspection results shall replace the original 
inspection results recorded on the official inspection log if a material 
error is detected. No certificates will be issued unless requested by 
the applicant or deemed necessary by official personnel.
    (2) Reporting review of weighing results. When the review of 
weighing service results indicate that the original weighing results 
were correct, the applicant will be notified in writing. When the 
original weighing service results are incorrect, a corrected weight 
certificate or, if applicable, a corrected combination inspection and 
Class X weight certificate will be issued according to the provisions of 
Sec. 800.165.
    (b) Required statements on reinspection certificates. Each 
reinspection certificate shall show the statements required by this 
section, Sec. 800.161, and applicable instructions.
    (1) Each reinspection certificate must clearly show (i) the term 
``Reinspection'' and (ii) a statement identifying the superseded 
certificate. The superseded certificate will be considered null and void 
as of the date of the reinspection certificate.
    (2) When official grade or official factors, Class X weighing 
results, and official criteria are reported on the same certificate, the 
reinspection certificate shall show a statement indicating that the 
reinspection results are based on official grade, or official factors, 
or official criteria and that all other results are those of the 
original service.
    (3) If the superseded certificate is in the custody of the agency or 
field office, the superseded certificate shall be marked ``Void.'' If 
the superseded certificate is not in the custody of the agency or field 
office at the time the reinspection certificate is issued, a statement 
indicating that the superseded certificate has not been surrendered 
shall be shown on the reinspection certificate.
    (4) As of the date of issuance of the official certificate, the 
superseded certificate for the original service will be void and shall 
not be used to represent the grain.
    (5) When certificates are issued under paragraph (a)(1) of this 
section, the reinspection certificate shall show a statement indicating 
that the results replaced the original results and that the reinspection 
certificate is not valid for trading purposes.

[50 FR 45394, Oct. 31, 1985, as amended at 55 FR 24048, June 13, 1990]

                       Appeal Inspection Services



Sec. 800.135  Who may request appeal inspection services.

    (a) General. Any interested person may request appeal inspection or 
Board appeal inspection services, except as provided for in 
Sec. 800.86(c)(5). When more than one interested person requests an 
appeal inspection or Board appeal inspection service, the first person 
to file is the applicant of record. Only one appeal inspection may be 
obtained from any original inspection or reinspection service. Only one 
Board appeal inspection may be obtained from an appeal inspection. Board 
appeal inspections will be performed on the basis of the official file 
sample. Board appeal inspections are not available on stowage 
examination services.
    (b) Kind and scope of request. The kind and scope of an appeal 
inspection service will be limited to the kind and scope of the original 
inspection, or reinspection, or, in the case of a Board appeal 
inspection service, the appeal inspection service. If the request 
specifies a different kind or scope, the request shall be dismissed. It 
may, however, be resubmitted as a request for original services. 
Official criteria is considered separately from official grade or 
official factors when determining kind and scope. When requested, an 
appeal inspection for grade, or official factors, and official criteria 
may be handled separately even though both results are reported on the 
same certificate. Moreover, an appeal inspection may be requested on the 
inspection results when both inspection and

[[Page 561]]

Class X weighing results are reported on a combination inspection and 
Class X weight certificate. An appeal inspection for grade shall include 
a review of all official factors that (1) may determine the grade; or 
(2) are reported on the original, reinspection, or in the case of a 
Board appeal inspection, the appeal inspection certificate; and (3) are 
required to be shown on a certificate of grade.

(The information collection requirements contained in this section were 
approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45395, Oct. 31, 1985, as amended at 55 FR 24048, June 13, 1990]



Sec. 800.136  How to request appeal inspection services.

    (a) General. Requests shall be filed with the field office 
responsible for the area in which the original service was performed. 
Requests for Board appeal inspections may be filed with the Board of 
Appeals and Review or the field office that performed the appeal 
inspection. All requests shall include the information specified in 
Sec. 800.46. Verbal requests shall be confirmed in writing when 
requested by official personnel as specified in Sec. 800.46. Copies of 
request forms may be obtained from the field office upon request. If at 
the time the request is filed the documentation required by Sec. 800.46 
is not available, official personnel may, at their discretion, withhold 
service pending the receipt of the required documentation. An appeal 
inspection certificate will not be issued unless (1) documentation 
requested under Sec. 800.46 has been submitted or (2) office personnel 
determine that sufficient information has been made available so as to 
perform the request. A record that sufficient information has been made 
available must be included in the record of the official service.
    (b) Filing requirements. Requests will be considered filed on the 
date they are received by official personnel. A record shall be 
maintained for all requests. Requests must be filed (1) before the grain 
has left the specified service point where the grain was located when 
the original inspection was performed, (2) no later than the close of 
business on the second business day following the date of the last 
inspection, and (3) before the identity of the grain has been lost. If a 
representative file sample as prescribed in Sec. 800.82 is available, 
official personnel may waive the requirements pursuant to this 
paragraph. The requirements of paragraph (b)(1) of this section may be 
waived only upon written consent of the applicant and all interested 
persons. The requirements of paragraphs (b)(2) and (b)(3) of this 
section may be waived at the request of the applicant or other 
interested persons. The requirement of paragraph (b)(2) of this section 
may also be waived upon satisfactory showing by an interested person of 
evidence of fraud or that because of distance or other good cause, the 
time allowed for filing was not sufficient. A record of each waiver 
shall be included in the record of the appeal inspection service.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[50 FR 45395, Oct. 31, 1985, as amended at 54 FR 5924, Feb. 7, 1989]



Sec. 800.137  Who shall perform appeal inspection services.

    (a) Appeal. Appeal inspection services shall be performed by the 
field office responsible for the area in which the original inspection 
was performed.
    (b) Board appeal. Board appeal inspection services shall be 
performed only by the Board of Appeals and Review. The field office that 
performed the appeal inspection service will act as a liaison between 
the Board of Appeals and Review and the applicant.

[50 FR 45395, Oct. 31, 1985]



Sec. 800.138  Conflict of interest.

    Official personnel cannot perform or participate in performing or 
issue an official certificate for an appeal inspection if they 
participated in the original inspection, reinspection, or, in the case 
of a Board appeal inspection, the appeal inspection service unless there 
is only one qualified person available at the time and place of the 
appeal inspection.

[50 FR 45395, Oct. 31, 1985]

[[Page 562]]



Sec. 800.139  Certificating appeal inspections.

    (a) General. Except as provided in paragraphs (b) of this section, 
official certificate shall be issued according to Sec. 800.160 and the 
instructions. Except as provided in paragraph (c)(2) of this section, 
only the results of the appeal inspection service shall be reported.
    (b) Results of material portion sublots. When results of an appeal 
inspection performed by a field office or the Board of Appeals and 
Review on a material portion do not detect a material error, they shall 
be averaged with the previous inspection results recorded on the 
official inspection log for the identified sample. For purposes of this 
section, a material error is defined as results differing by more than 
two standard deviations. The appeal or Board appeal inspection result 
shall replace the previous inspection results recorded on the official 
inspection log for the identified sample if a material error is 
detected. No certificate will be issued unless requested by the 
applicant or deemed necessary by inspection personnel.
    (c) Required statements. Each appeal certificate shall show the 
statements required by this section, Sec. 800.161, and applicable 
instructions.
    (1) Each appeal inspection certificate shall clearly show (i) the 
term ``Appeal'' or ``Board appeal'' and (ii) a statement identifying the 
superseded certificate. The superseded certificate will be considered 
null and void as of the date of the appeal inspection certificate.
    (2) When official grade or official factors, Class X weighing 
results, and official criteria are reported on the same certificate, the 
appeal inspection certificate shall show a statement indicating that 
appeal or Board appeal inspection results are based on official grade, 
official factors, or official criteria and that all other results are 
those of the original, reinspection, or, in the case of a Board appeal, 
the appeal inspection results.
    (3) Superseded certificates held by the Service shall be marked 
``Void.'' If the superseded certificate is not in the custody of the 
Service at the time the appeal certificate is issued, a statement 
indicating that the superseded certificate has not been surrendered 
shall be shown on the appeal certificate.
    (4) As of the date of issuance of the appeal or Board appeal 
certificate, the superseded certificate for the original, reinspection, 
or appeal inspection service will be void and shall not be used to 
represent the grain.
    (5) When certificates are issued under paragraph (b) of this 
section, the appeal inspection certificate shall show a statement 
indicating that the results replace the original inspection, 
reinspection, or, in the case of a Board appeal, the appeal inspection 
results and that the appeal inspection certificate is not valid for 
trading purposes.
    (d) Finality of Board appeal inspections. A Board appeal inspection 
will be the final appeal inspection service.

[50 FR 45395, Oct. 31, 1985, as amended at 55 FR 24048, June 13, 1990]

                  Official Records and Forms (General)

    Source: Sections 800.145 through 800.159 appear at 50 FR 18986, May 
6, 1985, unless otherwise noted.



Sec. 800.145  Maintenance and retention of records--general requirements.

    (a) Preparing and maintaining records. The records specified in 
Secs. 800.146--800.159 shall be prepared and maintained in a manner that 
will facilitate (1) the daily use of records and (2) the review and 
audit of the records to determine compliance with the Act, the 
regulations, the standards, and the instructions.
    (b) Retaining records. Records shall be retained for a period not 
less than that specified in Secs. 800.146-800.159. In specific 
instances, the Administrator may require that records be retained for a 
period of not more than 3 years in addition to the specified retention 
period. In addition, records may be kept for a longer time than the 
specified retention period at the option of the agency, the contractor, 
the approved scale testing organization, or the individual maintaining 
the records.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[[Page 563]]



Sec. 800.146  Maintenance and retention of records issued by the Service under the Act.

    Agencies, contractors, and approved scale testing organizations 
shall maintain complete records of the Act, regulations, the standards, 
any instructions issued by the Service, and all amendments and revisions 
thereto. These records shall be maintained until superseded or revoked.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.147  Maintenance and retention of records on delegations, designations, contracts, and approval of scale testing organizations.

    Agencies, contractors, and approved scale testing organizations 
shall maintain complete records of their delegation, designation, 
contract, or approval. These records consist of a copy of the delegation 
or designation documents, a copy of the current contract, or a copy of 
the notice of approval, respectively, and all amendments and revisions 
thereto. These records shall be maintained until superseded, terminated, 
revoked, or cancelled.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.148  Maintenance and retention of records on organization, staffing, and budget.

    (a) Organization. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of their organization. 
These records shall consist of the following documents: (1) If it is a 
business organization, the location of its principal office; (2) if it 
is a corporation, a copy of the articles of incorporation, the names and 
addresses of officers and directors, and the names and addresses of 
shareholders; (3) if it is a partnership or an unincorporated 
association, the names and addresses of officers and members, and a copy 
of the partnership agreement or charter; and (4) if it is an individual, 
the individual's place of residence. These records shall be maintained 
for 5 years.
    (b) Staffing. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of their employees. These 
records consist of (1) the name of each current employee, (2) each 
employee's principal duty, (3) each employee's principal duty station, 
(4) information about the training that each employee has received, and 
(5) related information required by the Service. These records shall be 
maintained for 5 years.
    (c) Budget. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of their budget. These 
records consist of actual income generated and actual expenses incurred 
during the current year. Complete accounts for receipts from (1) 
official inspection, weighing, equipment testing, and related services; 
(2) the sale of grain samples; and (3) disbursements from receipts shall 
be available for use in establishing or revising fees for services under 
the Act. Budget records shall also include detailed information on the 
disposition of grain samples obtained under the Act. These records shall 
be maintained for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.149  Maintenance and retention of records on licenses and approvals.

    (a) Licenses. Agencies, contractors, and approved scale testing 
organizations shall maintain complete records of licenses. These records 
consist of current information showing (1) the name of each licensee, 
(2) the scope of each license, (3) the termination date of each license, 
and (4) related information required by the Service. These records shall 
be maintained for the tenure of the licensee.
    (b) Approvals. Agencies shall maintain complete records of approvals 
of weighers. These records consist of current information showing the 
name of each approved weigher employed by or at each approved weighing 
facility in the area of responsibility assigned to an agency or field 
office. These records shall be maintained for the tenure of the 
weigher's employment as an approved weigher.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[[Page 564]]



Sec. 800.150  Maintenance and retention of records on fee schedules.

    Agencies, contractors, and approved scale testing organizations 
shall maintain complete records on fee schedules. These records consist 
of (a) a copy of the current fee schedule; (b) in the case of an agency, 
data showing how the fees in the schedule were developed; (c) superseded 
fee schedules; and (d) related information required by the Service. 
These records shall be maintained for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.151  Maintenance and retention of records on space and equipment.

    (a) Space. Agencies shall maintain complete records on space. These 
records consist of (1) a description of space that is occupied or used 
at each location, (2) the name and address of the owner of the space, 
(3) financial arrangements for the space, and (4) related information 
required by the Service. These records shall be maintained for 5 years.
    (b) Equipment. Agencies shall maintain complete records on 
equipment. These records consist of (1) the description of each piece of 
equipment used in performing official inspection or Class X or Class Y 
weighing services under the Act, (2) the location of the equipment, (3) 
the name and address of the owner of the equipment, (4) the schedules 
for equipment testing and the results of the testing, and (5) related 
information required by the Service. These records shall be maintained 
for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.152  Maintenance and retention of file samples.

    (a) General. The Service and agencies shall maintain complete file 
samples for their minimum retention period (calendar days) after the 
official function was completed or the results otherwise reported.
    (b) Minimum retention period.

(1) Trucks
      In...........................................................    3
      Out..........................................................    5
(2) Railcars
      In...........................................................    5
      Out..........................................................   10
(3) Barges (river)
      In...........................................................    5
      Out..........................................................   25
(4) Ships and barges (lake or ocean)
      In...........................................................    5
      Out..........................................................   25
      Export (sublot samples)......................................   60
(5) Bins and tanks.................................................    3
(6) Submitted samples..............................................    3
 


Upon request by an agency and with the approval of the Service, 
specified file samples or classes of file samples may be retained for 
shorter periods of time.
    (c) Special retention periods. In specific instances, the 
Administrator may require that file samples be retained for a period of 
not more than 90 calendar days. File samples may be kept for a longer 
time than the regular retention period at the option of the Service, the 
agency, or the individual maintaining the records.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.153  Maintenance and retention of records on official inspection, Class X or Class Y weighing, and equipment testing service.

    Agencies and approved scale testing organizations shall maintain 
complete detailed official inspection work records, copies of official 
certificates, and equipment testing work records for 5 years.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.154  Availability of official records.

    (a) Availability to officials. Each agency, contractor, and approved 
scale testing organization shall permit authorized representatives of 
the Comptroller General, the Secretary, or the Administrator to have 
access to and to copy, without charge, during customary business hours 
any records maintained under Secs. 800.146-800.159.
    (b) Availability to the public--(1) Agency, contractor, and approved 
scale testing organization records. The following official records will 
be available, upon request by any person, for public inspection during 
customary business hours: (i) Copies of the Act, the regulations, the 
standards, and the instructions; (ii) the delegation, designation, 
contract,

[[Page 565]]

or approval issued by the Service; (iii) organization and staffing 
records; (iv) a list of licenses and approvals; and (v) the approved fee 
schedule of the agency, if applicable.
    (2) Service records--Records of the Service are available in 
accordance with the Freedom of Information Act (5 U.S.C. 552(a)(3)) and 
the regulations of the Secretary of Agriculture (7 CFR, part 1, subpart 
A).
    (c) Locations where records may be examined or copied--(1) Agency, 
contractor, and approved scale testing organization records. Records of 
agencies, contractors, and approved scale testing organizations 
available for public inspection shall be retained at the principal place 
of business of the agency, contractor, or approved scale testing and 
certification organization.
    (2) Service records. Records of the Service available for public 
inspection shall be retained at each field office and at the 
headquarters of the Service in Washington, D.C.



Sec. 800.155  Detailed work records--general requirements.

    (a) Preparation. Detailed work records shall be prepared for each 
official inspection, Class X or Class Y weighing, and equipment testing 
service performed or provided under the Act. The records shall (1) be on 
standard forms prescribed in the instructions; (2) be typed or legibly 
written in English; (3) be concise, complete, and accurate; (4) show all 
information and data that are needed to prepare the corresponding 
official certificates or official report; (5) show the name or initials 
of the individual who made each determination; and (6) show other 
information required by the Service to monitor or supervise the service 
provided.
    (b) Use. Detailed work records shall be used as a basis for (1) 
issuing official certificates or official forms, (2) approving 
inspection and weighing equipment for the performance of official 
inspection or Class X or Class Y weighing services, (3) monitoring and 
supervising activities under the Act, (4) answering inquiries from 
interested persons, (5) processing complaints, and (6) billing and 
accounting. These records may be used to report results of official 
inspection or Class X or Class Y weighing services in advance of issuing 
an official certificate.
    (c) Standard forms. The following standard forms shall be furnished 
by the Service to an agency: Official Export Grain Inspection and Weight 
Certificates (singly or combined), official inspection logs, official 
weight loading logs, official scale testing reports, and official volume 
of work reports. Other forms used by an agency in the performance of 
official services, including certificates, shall be furnished by the 
agency.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.156  Official inspection records.

    (a) Pan tickets. The record for each kind of official inspection 
service identified in Sec. 800.76 shall, in addition to the official 
certificate, consist of one or more pan tickets as prescribed in the 
instructions. Activities that are performed as a series during the 
course of an inspection service may be recorded on one pan ticket or on 
separate pan tickets. The original copy of each pan ticket shall be 
retained by the agency or field office that performed the inspection.
    (b) Inspection logs. The record of an official inspection service 
for grain in a combined lot and shiplot shall include the official 
inspection log as prescribed in the instructions. The original copy of 
each inspection log shall be retained by the agency or field office that 
performed the inspection. If the inspection is performed by an agency, 
one copy of the inspection log shall be promptly sent to the appropriate 
field office.
    (c) Other forms. Any detailed test that cannot be completely 
recorded on a pan ticket or an inspection log shall be recorded on other 
forms prescribed in the instructions. If the space on a pan ticket or an 
inspection log does not permit showing the full name for an official 
factor or an official criteria, an approved abbreviation may be used.
    (d) File samples--(1) General. The record for an official inspection 
service based, in whole or in part, on an examination of a grain in a 
sample shall include one or more file samples as prescribed in the 
instructions.
    (2) Size. Each file sample shall consist of an unworked portion of 
the official

[[Page 566]]

sample or warehouseman's sample obtained from the lot of grain and shall 
be large enough to permit a reinspection, appeal inspection, or Board 
appeal inspection for the kind and scope of inspection for which the 
sample was obtained. In the case of a submitted sample inspection, if an 
undersized sample is received, the entire sample shall be retained.
    (3) Method. Each file sample shall be retained in a manner that will 
preserve the representativeness of the sample from the time it is 
obtained or received by the agency or field office until it is 
discarded. High moisture samples, infested samples, and other problem 
samples shall be retained according to the instructions.
    (4) Uniform system. To facilitate the use of file samples, agencies 
shall establish and maintain a uniform file sample system according to 
the instructions.
    (5) Forwarding samples. Upon request by the supervising field office 
or the Board of Appeals and Review, each agency shall furnish file 
samples (i) for field appeal or Board appeal inspection service, or (ii) 
for monitoring or supervision. If, at the request of the Service, an 
agency locates and forwards a file sample for an appeal inspection, the 
agency may, upon request, be reimbursed at the rate prescribed in 
Sec. 800.71 by the Service.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.157  Official weighing records.

    (a) Scale ticket, scale tape, or other weight records. In addition 
to the official certificate, the record for each Class X or Class Y 
weighing service shall consist of a scale ticket, a scale tape, or any 
other weight record prescribed in the instructions.
    (b) Weighing logs. The record of a Class X or Class Y weighing 
service performed on bulk grain in a combined lot or bulk shiplot grain 
shall include the official weighing log as prescribed in the 
instructions. The original copy of each weighing log shall be retained 
by the field office or agency that performed the weighing.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.158  Equipment testing work records.

    The record for each official equipment testing service or activity 
consists of an official equipment testing report as prescribed in the 
instructions. Upon completion of each official equipment test, one or 
more copies of the completed testing report may, upon request, be issued 
to the owner or operator of the equipment. The testing report shall show 
the (a) date the test was performed, (b) name of the organization and 
personnel that performed the test, (c) names of the Service employees 
who monitored the testing, (d) identification of equipment that was 
tested, (e) results of the test, (f) names of any interested persons who 
were informed of the test results, (g) number or other identification of 
the approval tag or label affixed to the equipment, and (h) other 
information required by the instructions.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.159  Related official records.

    (a) Volume of work report. Field offices and agencies shall prepare 
periodic reports showing the kind and the volume of inspection and 
weighing services that they performed. The report shall be prepared and 
copies shall be submitted to the Service according to the instructions.
    (b) Record of withdrawals and dismissals. Field offices and agencies 
shall maintain a complete record of requests for official inspection or 
weighing services that are withdrawn by the applicant or that are 
conditionally withheld or dismissed. The record shall be prepared and 
maintained according to the instructions.
    (c) Licensee record. Licensees, including licensed warehouse 
samplers, shall (1) keep the license issued to them by the Service and 
(2) keep or have reasonable access to a complete record of the Act, the 
standards, the regulations, and the instructions.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[[Page 567]]

                          Official Certificates

    Source: Sections 800.160 through 800.166 appear at 50 FR 45396, Oct. 
31, 1985, unless otherwise noted.



Sec. 800.160  Official certificates; issuance and distribution.

    (a) Required issuance. An official certificate shall be issued for 
each inspection service and each weighing service except as provided 
Secs. 800.84, 800.129, and 800.139 and paragraph (b) of this section.
    (b) Distribution--(1) General--(i) Export. The original and at least 
three copies of each certificate will be distributed to the applicant or 
applicant's order. One copy of each certificate shall be retained by the 
agency, field office, or Board of Appeals and Review.
    (ii) Nonexport. The original and at least one copy of each 
certificate will be distributed to the applicant or to the applicant's 
order. In the case of inbound trucklot grain, one copy shall be 
delivered by the applicant to the person who owned the grain at the time 
of delivery. One copy of each certificate shall be retained by the 
agency, field office, or Board of Appeals and Review.
    (iii) Local movements of shiplot grain. When shiplot grain is 
offered for inspection as a single lot and a portion of the lot is 
returned to the elevator, certificates representing the inspection 
service shall not be issued unless (A) requested by the applicant or (B) 
deemed necessary by official personnel.
    (2) Reinspection and appeal inspection services. In addition to the 
distribution requirements of paragraph (b) of this section, one copy of 
each reinspection or appeal inspection certificate shall be distributed 
to each interested person of record or the interested person's order and 
to the agency or field office that issued the superseded certificate.
    (3) Additional copies. Additional copies of certificates will be 
furnished to the applicant or interested person upon request. Fees for 
extra copies may be assessed according to the fee schedules established 
by the agency or the Service.
    (c) Prompt issuance. The results of the inspection or weighing 
service shall be reported to the applicant on the date the inspection or 
weighing service is completed. Certificates shall be issued as soon as 
possible, but no later than the close of business on the next business 
day. Upon request of an agency or a field office, the requirements of 
this paragraph may be waived by the Service when results have been 
reported before issuing the certificate.
    (d) Who may issue certificates--(1) Authority. Certificates for 
inspection or Class X weighing services may be issued only be official 
personnel who are specifically licensed or authorized to perform and 
certify the results reported on the certificate. Certificates for Class 
Y weighing services may be issued only by individuals who are licensed 
or authorized or are approved to perform and certify the results.
    (2) Exception. The person in the best position to know whether the 
service was performed in an approved manner and that the determinations 
are accurate and true should issue the certificate. If the service is 
performed by one person, the certificate should be issued by that 
person. If the service is performed by two or more persons, the 
certificate should be issued by the person who made the majority of the 
determinations or the person who makes the final determination. 
Supervisory personnel may issue a certificate when the individual is 
licensed or authorized to perform the service being certificated.
    (e) Name requirement. On export certificates, the typewritten name 
and signature of the individual issuing the certificate shall appear on 
the original and all copies. On all other certificates, the name or 
signature of the individual issuing the certificate shall appear on the 
original and all copies. Upon request by the applicant, the name and 
signature may be shown on all other certificates.
    (f) Authorization to affix names--(1) Requirements. The name or 
signature of official personnel may be affixed to official certificates 
which are prepared from work records signed or initialed by the person 
whose name will be shown. An agent affixing the name and signature shall 
(i) be employed by the agency or Service; (ii) have been designated to 
affix names and signatures; and (iii) hold a power of attorney from the 
person whose name and signature

[[Page 568]]

will be affixed. The power of attorney shall be on file with the agency 
or Service.
    (2) Initialing. When a name or signature is affixed by an authorized 
agent, the initials of the agent shall appear directly below or 
following the signature of the person.
    (g) Advance information. Upon request, the contents of an official 
certificate may be furnished in advance to the applicant and any other 
interested party, or to their order, and any additional expense shall be 
borne by the requesting party.
    (h) Certification after dismissal. An official certificate cannot be 
issued for a service after the request has been withdrawn or dismissed.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 45396, Oct. 31, 1985, as amended at 57 FR 11428, Apr. 3, 1992]



Sec. 800.161  Official certificate requirements.

    (a) General. Official certificates shall show the information and 
statements required by Sec. 800.161 through Sec. 800.165 and the 
instructions. The Administrator shall approve any other information and 
statements reported. Information shall be reported in a uniform, 
accurate, and concise manner, be in English, be typewritten or 
handwritten in ink, and be clearly legible.
    (b) Required format. Official certificates shall be uniform in size, 
shape, color, and format and conform to requirements prescribed in the 
instructions. Upon request and for good cause, the Service may approve 
special design certificates. All information and statements shall be 
shown on the front of the certificate, except that on domestic grain 
certificates, (1) approved abbreviations for official factors and 
official criteria, with their meanings, may be shown on the back and (2) 
the identification of carriers or containers in a combined-lot 
inspection may be shown on the back if ample space is not available on 
the front. When information is recorded on the back of the certificate, 
the statement ``See reverse side'' must be shown on the front.
    (c) Required information. Each official certificate shall show the 
following information in accordance with the instructions: (1) For an 
agency issuing export certificates or the Federal Grain Inspection 
Service, ``United States Department of Agriculture--Federal Grain 
Inspection Service;'' (2) for a designated agency, the name of the 
agency, as applicable; (3) captions identifying the kind of service; (4) 
a preprinted serial number and lettered prefix; (5) ``original'' or 
``copy,'' as applicable; (6) ``divided lot,'' ``duplicate,'' or 
``corrected,'' as applicable; (7) the identification of the carrier or 
container; (8) the date the service was performed; (9) the date and 
method of sampling; (10) the kind of movement and the level of service 
performed; (11) the grade and kind or ``Not Standardized Grain,'' as 
applicable; (12) the results of the service performed; (13) the location 
of the issuing office; (14) the location of the grain when the service 
was performed; (15) a space for remarks; (16) whether a reinspection or 
appeal inspection service was based in whole or in part on file samples 
when file samples are used; (17) a statement reflecting the results of a 
stowage examination, when applicable; (18) seal records, when 
applicable; and (19) the name of the person issuing the certificate.
    (d) Required statements. Each official certificate shall include the 
following statements according to the instructions: (1) A statement that 
the certificate is issued under the authority of the United States Grain 
Standards Act; (2) a nonnegotiability statement; (3) a warning 
statement; and (4) a statement referencing the certificate number and 
date. Each official certificate for an official sample-lot inspection 
service shall include a caption ``U.S. Grain Standards Act'' and a USDA-
FGIS shield ghosted across the front. Each official certificate for a 
warehouseman's sample-lot inspection, a submitted sample inspection, or 
Class Y weighing service shall include a statement that the certificate 
does not meet the requirements of section 5 of the Act of warehouseman's 
sample-lot inspection, the word ``QUALIFIED;'' for submitted sample 
inspections, the words ``Not Officially Sampled;'' for Class Y weighing, 
the words ``Class Y Weighing'' screened across the front.

[[Page 569]]

    (e) Permissive information and statements--(1) Certificates. 
Information and statements requested by the applicant but not required 
by the regulations or instructions may be shown on the certificate if 
the information or statements have been approved in the instructions or 
on a case-by-case basis by the Administrator.
    (2) Letterhead. Information and statements requested by the 
applicant but not required by the regulations or instructions may be 
shown on letterhead stationary of the Service or an agency when (i) 
ample space is not available for reporting the information or statements 
on the certificate, (ii) letterhead stationary is determined to be more 
suitable than the official certificate, and (iii) the certificate is 
referenced on the letterhead stationary and distributed according to 
Sec. 800.160. Letterhead stationary of the Service shall be used for all 
export grain.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.162  Certification of grade; special requirements.

    (a) General. Each official certificate for grade shall show (1) the 
grade and factor information required by the Official U.S. Standards for 
Grain; (2) the test weight of the grain, if applicable; (3) the moisture 
content of the grain; (4) the results for each official factor for which 
a determination was made; (5) the result for each official factor that 
determined the grade when the grain is graded other than U.S. No. 1; (6) 
any other factor information considered necessary to describe the grain; 
and (7) any additional factor results requested by the applicant for 
official factors defined in the Official U.S. Standards for Grain.
    (b) Cargo shipments. Each official certificate for grade 
representing a cargo shipment shall show, in addition to the 
requirements of paragraph (a) of this section, the results of all 
official grade factors defined in the Official United States Standards 
for Grain for the type of grain being inspected.
    (c)  [Reserved]
    (d) Aflatoxin test for corn. Official corn export certificates shall 
show, in addition to the requirements of paragraphs (a), (b), and (c) of 
this section, the official aflatoxin test results if required under 
Sec. 800.15(b).

(Approved by the Office of Management and Budget under control number 
0580-0011)

[50 FR 45396, Oct. 31, 1985, as amended at 52 FR 24437, June 30, 1987; 
57 FR 2439, Jan. 22, 1992; 57 FR 3273, Jan. 29, 1992; 57 FR 56439, Nov. 
30, 1992]



Sec. 800.163  Divided-lot certificates.

    (a) General. When shiplot grain is offered for inspection or Class X 
weighing as a single lot and is certificated as a single lot, the 
applicant may exchange the official certificate for two or more divided-
lot certificates. This applies to original inspection, reinspection, 
appeal inspection, Board appeal inspection, and Class X weighing 
services.
    (b) Application. Requests for divided-lot certificates shall be made 
(1) in writing; (2) by the applicant who filed the inital request; (3) 
to the office that issued the outstanding certificate; (4) within 5 
business days of the outstanding certificate date; and (5) before the 
identity of the grain has been lost.
    (c) Quantity restrictions. Divided-lot certificates shall not show a 
aggregate quantity different than the total quantity shown on the 
superseded certificate.
    (d) Surrender of certificate. The certificate that will be 
superseded shall (1) be in the custody of the agency or the Service; (2) 
be marked ``Void;'' and (3) show the identification of the divided-lot 
certificates.
    (e) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the superseded 
certificate shall be shown on each divided-lot certificate. Divided-lot 
certificates shall show (1) a statement indicating the grain was 
inspected or weighed as an undivided lot; (2) the terms ``Divided Lot-
Original,'' and the copies shall show ``Divided Lot-Copies;'' (3) the 
same serial number with numbered suffix (for example, 1764-1, 1764-2, 
1764-3, and the like); and (4) the quantity specified by the request.
    (f) Issuance and distribution. Divided-lot certificates shall be 
issued no later than the close of business on the next business day 
after the request and be distributed according to Sec. 800.160.

[[Page 570]]

    (g) Limitations. No divided-lot certificate can be issued (1) for 
grain in any shipment other than shiplot grain inspected or weighed as a 
single lot or (2) for an export certificate which has been superseded by 
another export certificate. After divided-lot certificates have been 
issued, further dividing or combining is prohibited except with the 
approval of the Service.
    (h) Use of superseded certificate prohibited. As of the date of the 
divided-lot certificate, the superseded certificate will be void and 
shall not be used or represent the grain.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.164  Duplicate certificates.

    Upon request, a duplicate certificate may be issued for a lost or 
destroyed official certificate.
    (a) Application. Requests for duplicate certificates shall be filed: 
(1) in writing; (2) by the applicant who requested the service covered 
by the lost or destroyed certificate; and (3) with the office that 
issued the initial certificate.
    (b) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the lost or 
destroyed certificate shall be shown on the duplicate certificate. 
Duplicate certificates shall show (1) the terms ``Duplicate-Original'' 
and the copies shall show ``Duplicate-Copies'' and (2) a statement that 
the certificate was issued in lieu of a lost or destroyed certificate.
    (c) Issuance. Duplicate certificates shall be issued as promptly as 
possible and distributed according to Sec. 800.160.
    (d) Limitations. Duplicate certificates will not be issued for 
certificates that have been superseded.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.165  Corrected certificates.

    (a) General. The accuracy of the statements and information shown on 
official certificates shall be verified by the individual whose name or 
signature is shown on the certificate, or by the authorized agent who 
affixed the name or signature. Errors found during this process shall be 
corrected according to this section.
    (b) Who may correct. Only official personnel or their authorized 
agents may make corrections, erasures, additions, or other changes to 
official certificates.
    (c) Corrections prior to issuance--(1) Export certificates. No 
corrections, erasures, additions, or other changes can be made to an 
export certificate. If any error is found prior to issuance, a new 
certificate shall be prepared and issued and the incorrect certificate 
marked ``Void.''
    (2) Other than export certificates. No corrections, erasures, 
additions, or other changes shall be made to other than export 
certificates which involve identification, grade, gross, tare, or net 
weight. If errors are found, a new certificate shall be prepared and 
issued and the incorrect certificate marked ``Void.'' Otherwise, errors 
may be corrected provided that (i) the corrections are neat and legible, 
(ii) each correction is initialed by the individual who corrects the 
certificate, and (iii) the corrections and initials are shown on the 
original and all copies.
    (d) Corrections after issuance--(1) General. If errors are found on 
a certificate at any time up to a maximum of 1 year after issuance, the 
errors shall be corrected by obtaining the incorrect certificate and 
replacing it with a corrected certificate. When the incorrect 
certificate cannot be obtained, a corrected certificate can be issued 
superseding the incorrect one.
    (2) Certification requirements. The same statements and information, 
including permissive statements, that were shown on the incorrect 
certificate, along with the correct statement or information, shall be 
shown on the corrected certificate. According to this section and the 
instructions, corrected certificates shall show (i) the terms 
``Corrected-Original'' and ``Corrected-Copy;'' (ii) a statement 
identifying the superseded certificate and the corrections; (iii) a 
statement indicating the superseded certificate was not surrended if the 
incorrect certificate was not surrendered; and (iv) a new serial number. 
In addition, the incorrect certificate shall be marked ``Void'' when 
submitted.
    (e) Limitations. Corrected certificates cannot be issued for a 
certificate that

[[Page 571]]

has been superseded by another certificate or on the basis of a 
subsequent analysis for quality.
    (f) Use of superseded certificate prohibited. As of the date of 
issuance of the corrected certificate, the superseded certificate will 
be void and shall not be used to represent the grain.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 800.166  Reproducing certificates.

    Official certificates may be photo copied or similarly reproduced.

(Approved by the Office of Management and Budget under control number 
0580-0011)

           Licenses and Authorizations (For Individuals Only)



Sec. 800.170  When a license or authorization or approval is required.

    (a) Requirement. (1) Any individual who performs or represents that 
he or she is licensed or authorized to perform any or all inspection or 
Class X weighing services under the Act must be licensed or authorized 
by the Service to perform each service. (2) Any individual who performs 
or represents that he or she is licensed or authorized, or an approved 
weigher, to perform Class Y weighing services under the Act must be 
licensed or authorized, or approved, by the Service to perform this 
service.
    (b) Excepted activities. A license or authorization, or approval for 
weighing, under the Act and regulations is not required for (1) opening 
or closing a carrier or container of grain, or transporting or filing 
official samples, or similar laboring functions; (2) typing or filing 
official inspection and weighing certificates or other official forms or 
performing similar clerical functions; (3) performing official equipment 
testing functions with respect to official inspection equipment; (4) 
performing inspection, weighing, or scale testing functions that are not 
conducted for the purposes of the Act; or (5) performing scale testing 
functions by a State or municipal agency or by the employees of such 
agencies.
    (c) 30-day waiver. A prospective applicant for a license as a 
sampler, inspection technician, or weighing technician may, for a period 
of time not to exceed 30 calendar days, help perform those official 
sampling, inspection, or Class X or Class Y weighing services for which 
the applicant desires to be licensed, under the direct physical 
supervision of an individual who is licensed to perform the services. 
The supervising individual shall be fully responsible for each function 
performed by the prospective applicant and shall initial any work form 
prepared by the prospective applicant.
    (d) No fee by Service. No fee will be assessed by the Service for 
licensing an individual employed by an agency or contractor.
    (e) Fee by agency. At the request of the Service, an agency may help 
examine an applicant for a warehouse sampler's license for competency 
and may assess a fee in accordance with the provisions of Sec. 800.70. 
The fee shall be paid by the applicant or by the elevator that employs 
the applicant.

(Secs. 9, 18, Pub. L. 94-582, 90 Stat. 2875 and 2884 (7 U.S.C. 79a and 
87e))

[45 FR 15810, Mar. 11, 1980, as amended at 46 FR 30325, June 5, 1981]



Sec. 800.171  Who may be licensed or authorized.

    (a) Prohibitions. No person may be licensed or authorized who has a 
conflict of interest as defined in section 11 of the Act or specified in 
Sec. 800.187.
    (b) Exceptions to prohibitions--(1) Conflict by agency. An employee 
of an agency that has a conflict of interest that is waived by the 
Administrator under section 11(b)(5) of the Act may be licensed: 
Provided, That the employee has no conflict of interest other than the 
agency conflict of interest.
    (2) Warehouse samplers. A qualified employee of an elevator may be 
licensed to perform specified sampling services under the Act in 
accordance with the provisions of Sec. 800.174(a)(2).
    (c) General qualifications--(1) Inspection and weighing. To obtain a 
license to perform inspection or weighing services under the Act, an 
individual must be employed by an agency to perform the services and 
must otherwise be found competent in accordance with this section and 
Sec. 800.173.
    (2) Specified technical services. To obtain a license to perform 
specified sampling, inspection testing, weighing, and

[[Page 572]]

similar services under the Act, an individual must (i) be employed by an 
agency to perform the services, or (ii) enter into or be employed under 
a contract with the Service to perform the services, and (iii) otherwise 
be found competent in accordance with this section and Sec. 800.173.
    (3) Warehouse sampler. To obtain a warehouse sampler's license, an 
applicant must be employed by an elevator to perform sampling services 
and otherwise be found competent in accordance with this section and 
Sec. 800.173.
    (4) Requirements. To be considered competent, an individual must (i) 
meet the qualifications specified in Sec. 800.173; and (ii) have 
available the equipment and facilities necessary to perform the services 
for which the individual is to be licensed.
    (d) Competency determinations--(1) Agency samplers and technicians. 
The competency of an applicant for a license as a sampler, inspection 
technician, or weighing technician shall be determined by (i) the chief 
inspector or the chief weighmaster, as applicable, of the agency that 
employs the applicant or, in the case of a warehouse sampler, the agency 
that is assigned the area in which the elevator that employs the sampler 
is located, and (ii) the field office supervisor.
    (2) Inspectors, weighers, contract samplers, and technicians. The 
competency of an applicant for a license as an inspector or weigher or 
any license issued under the terms of a contract with the Service shall 
be determined by the Service.
    (3) Examinations. A determination of competency of an applicant for 
a license shall include an evaluation of the results of examinations or 
reexaminations under Sec. 800.173.

[45 FR 15810, Mar. 11, 1980, as amended at 49 FR 36072, Sept. 14, 1984]



Sec. 800.172  Applications for licenses.

    (a) General. An application for a license, the renewal of a license, 
or the return of a suspended license shall be made to the Service on 
forms furnished by the Service. Each application shall (1) be in 
English, (2) be typewritten or legibly written in ink, (3) show all 
information prescribed by the application form, and (4) be signed by the 
applicant.
    (b) Additional information. An applicant shall furnish any 
additional information considered necessary by the Service for 
consideration of an application.
    (c) Withdrawal. An application for a license may be withdrawn by an 
applicant at any time.
    (d) Review of applications--(1) General procedure. Each application 
shall be reviewed to determine whether the applicant and the application 
comply with the Act and the regulations.
    (2) Application and applicant in compliance. If it is determined 
that the applicant and the application comply with the Act and the 
regulations, the requested license shall be granted.
    (3) Application not in compliance. If an application does not comply 
with this section and the noncompliance prevents a satisfactory review 
by the Service, the applicant shall be provided an opportunity to submit 
any needed information. If the needed information is not submitted by 
the applicant within a reasonable time, the application may be 
dismissed.
    (4) Applicant not in compliance. If it is determined that an 
applicant does not comply with the provisions of the Act and 
Secs. 800.171, 800.173, and 800.187 at the time the application is 
submitted, the applicant shall be provided an opportunity to comply. If 
the applicant cannot comply within a reasonable period of time, the 
application shall be dismissed.
    (e) Procedure for dismissal. If a dismissal involves an application 
for a renewal of a license or for the return of a suspended license, the 
dismissal shall be performed in accordance with the provisions of 
Sec. 800.179. All other dismissals shall be performed by promptly 
notifying the applicant and the employer of the applicant of the reasons 
for the dismissal.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[45 FR 15810, Mar. 11, 1980, as amended at 48 FR 44453, Sept. 29, 1983; 
54 FR 5924, Feb. 7, 1989]

[[Page 573]]



Sec. 800.173  Examinations and reexaminations.

    (a) General. Applicants for a license and individuals who are 
licensed to perform any or all official inspection or Class X or Class Y 
weighing services shall, at the discretion of the Service, submit to 
examinations or reexaminations to determine their competency to perform 
the official inspection or weighing functions for which they desire to 
be, or are, licensed.
    (b) Time and place of examinations and reexaminations. Examinations 
or reexaminations under this section shall be conducted by official 
personnel designated by the Service and shall be given at a reasonable 
time and place in accordance with the instructions.
    (c) Scope of examinations and reexaminations. Examinations or 
reexaminations may include oral or written tests on the applicable 
provisions of the Act, the regulations, the Official U.S. Standards for 
Grain, the procedures for the inspection and weighing of grain under the 
Act, the instructions, on-site performance evaluations, and vision or 
olfactory examinations.
    (d) Competency standards--(1) Inspection. An individual may be found 
to be incompetent to perform official inspection services if the 
individual (i) has a color-vision deficiency; (ii) cannot meet the 
physical requirements necessary to perform the functions; (iii) cannot 
readily distinguish between the different kinds and classes of grain, or 
the different conditions in grain, including heating, musty, sour, 
insect infestation, and smut; (iv) cannot demonstrate a technical 
ability to operate grain sampling, testing, and grading equipment; (v) 
does not have a working knowledge of applicable provisions of the Act, 
the regulations, the Official U.S. Standards for Grain, and the 
instructions; (vi) cannot determine work-related mathematical 
computations; or (vii) cannot prepare legible records in English.
    (2) Weighing. An individual may be found to be incompetent to 
perform Class X or Class Y weighing services under the Act if the 
individual (i) does not meet the requirements of paragraphs (d)(1)(ii), 
(v), (vi), and (vii) of this section or (ii) cannot demonstrate a 
technical ability to operate grain weighing equipment.



Sec. 800.174  Issuance and possession of licenses and authorizations.

    (a) Scope of licenses and authorizations. Subject to the provisions 
of Sec. 800.171, eligible individuals may be licensed or authorized by 
the Service to perform one or more services specified in this paragraph.
    (1) Official samplers. Individuals employed by an agency or the 
Service or employed under the terms of a contract with the Service may 
be licensed or authorized, as applicable, to perform or supervise the 
performance of stowage examinations, grain sampling, and related 
technical services and to issue official certificates for the services 
performed by them.
    (2) Licensed warehouse samplers. Elevator or warehouse employees may 
be licensed to sample grain and perform stowage examinations. No 
elevator employee shall be licensed to (i) sample export grain for 
inspection under the Act, (ii) test or grade grain, or (iii) certify the 
results of any inspection service under the Act.
    (3) Official inspection technicians. Individuals employed by an 
agency or the Service or employed under the terms of a contract with the 
Service may be licensed or authorized to perform or supervise the 
performance of stowage examinations, grain sampling, or all or specified 
noninterpretive laboratory-testing services and to issue official 
certificates for the services performed by them.
    (4) Official inspectors. Individuals employed by an agency or the 
Service may be licensed or authorized to perform and supervise the 
performance of stowage examinations, sampling, laboratory-testing, 
grading, and related services and to issue official certificates for the 
services performed by them.
    (5) Official weighing technicians. Individuals who are employed by 
an agency or the Service to observe the loading, unloading, and handling 
of grain that has been or is to be weighed under the Act may be licensed 
or authorized to perform and supervise the performance of grain handling 
and stowage examination services and to issue official

[[Page 574]]

certificates for the services performed by them.
    (6) Official weighers. Individuals employed by an agency or the 
Service may be licensed or authorized to perform and supervise the 
performance of grain handling, stowage examination, official weighing 
(Class X), and supervision of weighing (Class Y), and related services 
and to issue official certificates for the services performed by them.
    (7) Authorized scale tester. Individuals employed by the Service may 
be authorized to test and supervise the testing of scales used for Class 
X and Class Y weighing services and to approve and certify scales based 
on the results of these tests.
    (b) Condition for issuance--(1) Compliance with the Act. Each 
license is issued on the condition that the licensee will, during the 
term of the license, comply with the Act, the regulations, and the 
instructions.
    (2) Possession of license. Each license shall be the property of the 
Service, but each licensee shall have the right to possess the license 
subject to the provisions of Secs. 800.173, 800.186, and 800.187.
    (c) Duplicate license. Upon satisfactory proof of the loss or 
destruction of a license, a duplicate will be issued by the Service.
    (d) Retention of licenses. Each license shall be retained by the 
holder of the license in a manner that the license can be examined upon 
request by service personnel.



Sec. 800.175  Termination of licenses.

    (a) Term of license. Each license shall terminate in accordance with 
the termination date shown on the license and as specified in paragraph 
(b) of this section. The termination date for a license shall be no less 
than 3 years or more than 4 years after the issuance date for the 
initial license; thereafter, every 3 years. Upon request of a licensee 
and for good cause shown, the termination date may be advanced or 
delayed by the Administrator for a period not to exceed 60 days.
    (b) Termination schedule for licenses. Subject to the provisions of 
paragraph (a) of this section, licenses shall terminate on the last day 
of the month shown in the following schedule:

------------------------------------------------------------------------
         Last names beginning with                Termination date
------------------------------------------------------------------------
A.........................................  January.
B.........................................  February.
C, D......................................  March.
E, F, G...................................  April.
H, I, J...................................  May.
K, L......................................  June.
M.........................................  July.
N, O, P, Q................................  August.
S.........................................  September.
R, T, U, V................................  October.
W.........................................  November.
X, Y, Z...................................  December.
------------------------------------------------------------------------

    (c) Termination notices. The Service shall issue notice of 
termination to licensees and to their employers at least 60 days before 
the termination date. The notice shall (1) provide detailed instructions 
for requesting renewal of licenses; (2) state whether a reexamination 
will be required; and (3) if a reexamination will be required, show the 
nature and scope of the reexamination. Failure to receive a notice from 
the Service shall not exempt a licensee from the responsibility of 
having the license renewed on or before the termination date.
    (d) Renewal of licenses. Licenses that are renewed shall show the 
permanent license number, the date of renewal, and the word ``Renewed.''
    (e) Termination of suspended licenses. Any suspension of a license, 
including voluntary suspension or suspension by change in employment, 
shall not affect the termination date of the license. If a licensee 
applies for renewal of the license prior to the termination date, the 
license will not terminate during the period of suspension.
    (f) Surrender of license. Each license that is terminated, 
suspended, or canceled under the provisions of Secs. 800.175 through 
800.178 or is suspended, revoked, or not renewed for cause under the 
provisions of Sec. 800.179 shall be promptly surrendered to the field 
office.
    (g) Marking terminated, canceled, or revoked licenses. Each 
terminated, canceled, or revoked license surrendered to the Service 
shall be marked ``Canceled.''

[[Page 575]]



Sec. 800.176  Voluntary cancellation or suspension of licenses.

    Upon request by a licensee, the Service may cancel a license or 
suspend a license for a period of time not to exceed 1 year. A license 
that has been voluntarily suspended shall be returned by the Service 
upon request by the licensee within 1 year, subject to the provisions of 
Sec. 800.172; a license that has been cancelled shall be considered void 
and shall not be subject to return or renewal.



Sec. 800.177  Automatic suspension of license by change in employment.

    A license issued to an individual who is employed by an agency shall 
be automatically suspended when the individual ceases to be employed by 
the agency. If the individual is reemployed by the agency or employed by 
another agency within 1 year of the suspension date and the license has 
not terminated in the interim, upon request of the licensee, the license 
will be reinstated subject to the provisions of Secs. 800.172 and 
800.173.



Sec. 800.178  Summary revocation of licenses.

    Licenses may be summarily revoked upon a finding that the licensee 
has been convicted of any offense either prohibited by section 13 of the 
Act or prohibited by Title 18 of the United States Code, with respect to 
the performance of services under the Act.



Sec. 800.179  Refusal of renewal, suspension, or revocation of licenses for cause.

    (a) General. A license may be suspended or revoked or may be refused 
renewal or return (if suspended) for causes prescribed in section 9 of 
the Act.
    (b) Procedure for summary action. Under section 9 of the Act, any 
license may, without first affording the licensee (hereafter in this 
section the ``respondent'') an opportunity for a hearing, be summarily 
suspended pending final determination, whenever the action is considered 
to be in the best interest of the official inspection system. Such 
action shall be effective upon receipt of notice from the Service by the 
respondent. Within 30 calendar days after issuing a notice of summary 
action, the Service shall afford the respondent an opportunity for a 
hearing as provided under paragraph (c) of this section. Pending final 
determination, the Service may terminate the action if alternative 
employment arrangements satisfactory to the Service can be and are made 
for the respondent by the employer of the respondent.
    (c) Procedure for other than summary action. Except as provided for 
in paragraph (a) of this section, before the Service refuses to renew, 
or suspends or revokes a license, or refuses to return a suspended 
license, the respondent shall be (1) notified of the proposed action and 
the reasons therefor, and (2) afforded (i) an opportunity to express 
his/her views on the proposed action in an informal manner, or (ii) at 
the request of the respondent, a hearing in accordance with the 
provisions of the Rules of Practice Governing Formal Adjudicatory 
Proceedings Instituted by the Secretary under Various Statutes (7 CFR, 
part 1, subpart H).



Sec. 800.180  Summary cancellation of licenses.

    A license may be summarily canceled when (a) the license has been 
under voluntary or automatic suspension for a period of 1 year and there 
has been no request for return of the license or a request for return of 
the license has been dismissed in accordance with Sec. 800.172; or (b) 
the licensee has died or fails to surrender the license in accordance 
with Sec. 800.175(f).

         Duties and Conduct of Licensed and Authorized Personnel



Sec. 800.185  Duties of official personnel and warehouse samplers.

    (a) General. Official personnel and warehouse samplers shall, when 
performing official services or duties under the Act, comply with the 
Act, the regulations, and the instructions.
    (b) Inspection and weighing services. Official personnel shall 
perform requested official inspection and Class X and Class Y weighing 
services (1) without discrimination, (2) as soon as practicable, and (3) 
in accordance with methods and procedures prescribed in the 
instructions.

[[Page 576]]

    (c) Sealing carriers or containers. Upon request, or in accordance 
with the instructions, official personnel shall (1) when feasible, affix 
security seals to doors, hatch covers, and similar openings on carriers 
or containers that contain grain that has been officially inspected or 
Class X or Class Y weighed under the Act and (2) show seal records on 
certificates and other official forms in accordance with the provisions 
of Sec. 800.161.
    (d) Scope of operations. Official personnel and warehouse samplers 
shall (1) operate only within the scope of the services specified on 
their license or authorization and (2) operate only within the area of 
responsibility assigned to the applicable agency, field office, or 
contractor which employs them. Official personnel and warehouse samplers 
may perform official inspection or weighing services in a different area 
of responsibility with the specific consent of the Service.
    (e) Working materials. Official personnel and warehouse samplers 
shall be responsible for maintaining a working knowledge of the 
applicable provisions of the Act, the regulations, the Official U.S. 
Standards for Grain, the instructions, and all amendments and revisions 
thereto.
    (f) Observation of services. Official personnel and warehouse 
samplers shall permit any person (or the person's agent) who has a 
financial interest in grain that is being inspected or weighed under the 
Act, or in equipment that is being tested under the Act, to observe the 
performance of any or all official inspection, or Class X or Class Y 
weighing. Appropriate areas in the elevator may be specified by the 
Service in conjunction with the elevator management for observing each 
service. The areas shall be safe, shall afford a clear and unobstructed 
view of the performance of the services, but shall not permit a close 
over-the-shoulder type of observation by the interested person or the 
person's agent.
    (g) Reporting violations. Official personnel and warehouse samplers 
shall in accordance with the instructions promptly report (1) 
information which shows or tends to show a violation of any provision of 
the Act, the regulations, or the instructions, and (2) information on 
any instructions which have been issued to them by any official 
personnel or other persons which are contrary to the Act, the 
regulations, or the instructions.
    (h) Related duties. Official personnel and warehouse samplers shall, 
when practicable, assist in training other employees who desire to 
become licensed.
    (i) Instructions by Service. Official personnel and warehouse 
samplers shall carry out all written instructions or oral directives 
issued to them by the Service and, upon request, inform the Service 
regarding inspection, weighing, or equipment testing services performed 
by them. Oral directives from the Service not found in written 
instructions shall be confirmed in writing, upon request.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
48 FR 44453 and 44454, Sept. 29, 1983; 54 FR 5924, Feb. 7, 1989]



Sec. 800.186  Standards of conduct.

    (a) General. Official personnel and warehouse samplers must maintain 
high standards of honesty, integrity, and impartiality to assure proper 
performance of their duties and responsibilities and to maintain public 
confidence in the services provided by them.
    (b) Prohibited conduct; official personnel and warehouse samplers. 
No official personnel or warehouse sampler shall:
    (1) Perform any official inspection, Class X or Class Y weighing, or 
equipment testing service unless licensed or authorized to do so;
    (2) Engage in criminal, dishonest, or notoriously disgraceful 
conduct, or other conduct prejudicial to the Department or the Service;
    (3) Report for duty in an intoxicated or drugged condition, or 
consume intoxicating beverages or incapacitating drugs while on duty;
    (4) Smoke in prohibited areas in elevators or perform official 
services in an unsafe manner that could endanger official personnel 
working on or about the premises;

[[Page 577]]

    (5) Make unwarranted criticisms or accusations against other 
official personnel, warehouse samplers, or employees of the Department; 
and
    (6) Refuse to testify or respond to questions in connection with 
official inquiries or investigations.
    (7) Coerce or attempt to coerce any person into providing any 
special or undue benefit to official personnel, approved weighers, or 
warehouse samplers.
    (c) Prohibited conduct; official personnel. In addition to the 
conduct prohibited by paragraph (b) of this section, no official 
personnel shall:
    (1) Solicit contributions from other official personnel or warehouse 
samplers for an employee of the Service, or make such a contribution. 
Nothing in this paragraph shall preclude the occasional voluntary giving 
or acceptance of gifts of a nominal value on special occasions;
    (2) Take any action that might (i) create the appearance of a loss 
of impartiality or (ii) adversely affect the confidence of the public in 
the integrity of the inspection, weighing, or equipment testing services 
performed under the Act;
    (3) Except as provided in Sec. 800.76(a), engage in any outside 
(unofficial) work or activity that:
    (i) may impair their efficiency in performing official functions; or
    (ii) consists in whole or in part of unofficial acts of sampling, 
stowage examination, inspection testing, equipment testing, inspection, 
or weighing services similar to the official services for which the 
employing agency is designated; or
    (iii) may result in the acquisition of property interests that could 
create a conflict of interest as defined in section 11 of the Act; or
    (iv) may tend to bring criticism on or otherwise embarrass the 
Department or the Service;
    (4) Issue to other official personnel, warehouse samplers, or 
approved weighers any instructions or directives inconsistent with the 
Act, the regulations, the Official U.S. Standards for Grain, or the 
instructions;
    (5) Organize or help establish a general or specialized farm 
organization, or act as an officer or business agency in, recruit 
members for, or accept office space or contributions from such an 
organization;
    (6) Advocate that any general or specialized farm organization 
better represents the interest of farmers than any other organization or 
individual, or recommend that the responsibilities of any government 
agency be carried out through a general or specialized farm 
organization. Nothing in paragraph (c)(5) of this section shall prevent 
official personnel from holding membership in a general or specialized 
farm organization or prohibit official personnel from participating in 
the operation of local groups or organizations that conduct government-
authorized programs.

[45 FR 15810, Mar. 11, 1980, as amended at 48 FR 44454, Sept. 29, 1983; 
60 FR 65235, Dec. 19, 1995; 63 FR 45677, Aug. 27, 1998]



Sec. 800.187  Conflicts of interest

    (a) General. Warehouse samplers are exempt from the conflict-of-
interest provisions of this section.
    (b) What constitutes a gratuity. For the purposes of these 
regulations, the term ``gratuity'' shall include any favor, 
entertainment, gift, tip, loan, payment for unauthorized or fictitious 
work, unusual discount, or anything of monetary value. The term shall 
not include (1) the occasional exchange of a cup of coffee or similar 
social courtesies of nominal value in a business or work relationship if 
the exchange is wholly free of any embarrassing or improper 
implications; (2) the acceptance of unsolicited advertising material 
such as pencils, pens, and note pads of nominal value if the material is 
wholly free of any embarrassing or improper implications; and (3) the 
exchange of the usual courtesies in an obvious family or personal 
relationship (including those between official personnel and their 
parents, spouses, children, or close personal friends) when the 
circumstances make it clear that the exchange is the result of the 
family or personal relationship, rather than a business or work 
relationship.
    (c) Conflicts. In addition to the conflicts of interest prohibited 
by section 11 of the Act, the activities specified in this paragraph 
shall also be considered

[[Page 578]]

to be a conflict of interest. Accordingly, no official personnel shall, 
during the term of their license or authorization (including any period 
of suspension):
    (1) Accept any gratuity.
    (2) Accept any fee or charge or other thing of monetary value, in 
addition to the published fee or charge, for the performance of official 
inspection or weighing services under circumstances in which the 
acceptance could result, or create the appearance of resulting, in (i) 
the use of their office or position for undue private gain, (ii) an 
undertaking to give undue preferential treatment to any group or any 
person, or (iii) any other loss of independence or impartiality in the 
performance of official inspection or Class X or Class Y weighing 
services.
    (3) Knowingly perform, or participate in performing, an inspection 
or weighing service on grain in which they have a direct or indirect 
financial interest.
    (4) Engage in the business by buying, selling, transporting, 
cleaning, elevating, storing, binning, mixing, blending, drying, 
treating, fumigating, or other preparation of grain (other than a grower 
of grain, or in the disposition of inspection samples); or in the 
business of cleaning, treating, or fitting carriers or containers for 
transporting or storing grain; the merchandising for nonfarm use of 
equipment for cleaning, drying, treating, fumigating, or otherwise 
processing, handling, or storing grain; or the merchandising of grain 
inspection or weighing equipment (other than buying or selling by 
official personnel of the equipment for use in the performance of their 
official services).
    (5) Seek or hold any appointive or elective office in a grain 
industry organization or association. This provision does not apply to 
organizations of official inspectors or official weighers.
    (6) Participate in any transaction involving the purchase or sale of 
corporate stocks or bonds, grain or grain-related commodities, or other 
property for speculative or income purposes if the transaction could 
reasonably be construed to interfere with the proper and impartial 
performance of official inspection for Class X or Class Y weighing 
services. Official personnel are not prohibited from (i) producing grain 
as a grower and selling the grain; (ii) making bona fide investments in 
governmental obligations, banking institutions, savings and loan 
associations, and other tangibles and intangibles that are clearly not 
involved in the production, transportation, storage, marketing, or 
processing of grain; or (iii) borrowing money from banks or other 
financial institutions on customary terms.
    (d) Reports of interests. Official personnel shall report 
information regarding their employment or other business or financial 
interests which may be required by the Service.
    (e) Avoiding conflicts of interest. Official personnel shall not 
acquire any financial interest or engage in any activity that would 
result in a violation of this Sec. 800.187, or Sec. 800.186, or section 
11 of the Act and shall not permit their spouses, minor children, or 
blood relatives who reside in their immediate households to acquire any 
such interest or engage in any such activity. For the purpose of this 
section, the interest of a spouse, minor child, or blood relative who is 
a resident of the immediate household of official personnel shall be 
considered to be an interest of the official personnel.
    (f) Disposing of a conflict of interest--(1) Remedial action. Upon 
being informed that a conflict of interest exists and that remedial 
action is required, an applicant for a license and official personnel 
shall take immediate action to end the conflict of interest and inform 
the Service of the action taken.
    (2) Hardship cases. Applicants and official personnel who believe 
that remedial action will cause undue personal hardship may request an 
exception by forwarding to the Service a written statement setting forth 
the facts, circumstances, and reasons for requesting an exception.
    (3) Failure to terminate. If a final determination is made by the 
Service that a conflict of interest does exist and should not be 
excepted, failure to terminate the conflict of interest shall subject: 
(i) An applicant for a license to a dismissal of the application; (ii) 
An employee of the Service to disciplinary

[[Page 579]]

action; and (iii) A licensee to license revocation.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[45 FR 15810, Mar. 11, 1980, as amended at 48 FR 44453 and 44454, Sept. 
29, 1983; 54 FR 5924, Feb. 7, 1989]



Sec. 800.188  Crop year, variety, and origin statements.

    No official personnel shall certify or otherwise state in writing 
(a) the year of production of grain, including use of terms such as 
``new crop'' or ``old crop''; (b) the place or geographical area where 
the grain was grown; or (c) the variety of the grain.



Sec. 800.189  Corrective actions for violations.

    (a) Criminal prosecution. Official personnel and warehouse samplers 
who commit an offense prohibited by section 13 of the Act are subject to 
criminal prosecution in accordance with section 14 of the Act.
    (b) Administrative action--(1) Other than Service employees. In 
addition to possible criminal prosecution, licensees and warehouse 
samplers are subject to administrative action in accordance with 
sections 9 and 14 of the Act.
    (2) Service employees. In addition to possible criminal prosecution, 
employees of the Service are subject to disciplinary action by the 
Service.

   Delegations, Designations, Approvals, Contracts, and Conflicts of 
                                Interest

    Authority: Sections 800.195 through 800.199 were issued under secs. 
8, 9, 10, 13, and 18, Pub. L. 94-582, 90 Stat. 2870, 2875, 2877, 2880, 
and 2884, 7 U.S.C. 79, 79a, 79b, 84, 87, and 87e.



Sec. 800.195  Delegations.

    (a) General. Eligible States may be delegated authority to perform 
official services (excluding appeal inspection) at export port locations 
within their respective States.
    (b) Restrictions. Only the Service or the delegated State may 
perform official inspection, Class X, and Class Y weighing services at 
an export port location within the State. If official inspection 
services, at export port locations within the State, are performed by 
the Service, only the Service may perform Class X and Class Y weighing 
services at the locations. If official inspection services are performed 
by a delegated State, either the State or the Service may perform Class 
X and Class Y weighing services at the export port locations within the 
State.
    (c) Who can apply. States which: (1) Were performing official 
inspection at an export port location under the Act on July 1, 1976, or; 
(2)(i) performed official inspection at an export port location at any 
time prior to July 1, 1976; (ii) were designated under section 7(f) of 
the Act on December 22, 1981, to perform official inspections; and (iii) 
operate in a State from which total annual exports of grain do not 
exceed, as determined by the Administrator, 5 per centum of the total 
amount of grain exported from the United States annually may apply to 
the Service for a delegation.
    (d) When and how to apply. A request for authority to operate as a 
delegated State should be filed with the Service not less than 90 
calendar days before the State proposes to perform the official service. 
A request for authority to operate as a delegated State shall show: (1) 
The export port location(s) where the State proposes to perform official 
inspection, Class X, and Class Y weighing services; (2) the estimated 
annual volume of inspection and weighing services for each location; and 
(3) the schedule of fees the State proposes to assess. A request for a 
revision to a delegation shall (i) be filed with the Service not less 
than 90 calendar days before the desired effective date, and (ii) 
specify the change desired.
    (e) Review of eligibility and criteria for delegation. Each 
applicant for authority to operate as a delegated State shall be 
reviewed to determine whether the applicant meets the eligibility 
conditions contained in paragraph (c) of this section and the criteria 
contained in section 7(f)(1)(A) of the Act. The requested delegation may 
be granted if the Service determines that the applicant meets the 
eligibility conditions and criteria. If an application is dismissed, the 
Service shall notify the applicant promptly, in writing, of the 
reason(s) for the dismissal.

[[Page 580]]

    (f) Responsibilities. (1) Providing official services. Each 
delegated State shall be responsible for providing each official service 
authorized by the delegation at all export elevators at export port 
locations in the State. The State shall perform each official service 
according to the Act, regulations, and instructions.
    (2) Staffing, licensing, and training. Delegated States shall employ 
official personnel on the basis of job qualifications rather than 
political affiliations. The State shall employ sufficient personnel to 
provide the services normally requested in an accurate and timely 
manner. The State shall only use personnel licensed by the Service for 
the performance of official services and shall train and assist its 
personnel in acquiring and maintaining the necessary skills. The State 
shall keep the Service informed of the employment status of each of its 
licensees and any substantial change in a licensee's duties.
    (3) Rotation of personnel. Where feasible, each delegated State 
shall rotate licensees among elevators and other facilities as is 
necessary to preserve the integrity of the official inspection and 
weighting systems.
    (4) Supervision. The State and its officials shall be responsible 
for the actions of the official personnel employed by the State, for 
direct supervision of the daily activities of such personnel, and for 
the conduct of official services and related activities in the State. 
The State shall supervise official activities according to the Act, 
regulations, and instructions and shall take action necessary to ensure 
that its employees are not performing prohibited functions and are not 
involved in any action prohibited by the Act, regulations, or 
instructions. Each State shall report to the Service information which 
shows or may show a violation of any provision of the Act, regulations, 
or instructions and information on any instructions which have been 
issued to State personnel by Service personnel or by any other person 
which are contrary to or inconsistent with the Act, regulations, or 
instructions.
    (5) Conflict of interest. (i) General. The delegated State and any 
commissioner, director, employee, or other related person or entity 
shall not have a conflict of interest, as defined in section 11 of the 
Act and Sec. 800.199 of the regulations. A conflict of interest may be 
waived pursuant to Sec. 800.199(d).
    (ii) Unofficial activities. The delegated State or personnel 
employed by the State shall not perform any unofficial service that is 
the same as any of the official services covered by the delegation.
    (6) Fees. The delegated State shall charge fees according to 
Sec. 800.70.
    (7) Facilities and equipment. (i) General. The laboratory and office 
facilities of each delegated State shall be: Located; equipped; and 
large enough so that requested services are provided in an orderly and 
timely manner.
    (ii) Equipment testing. Each delegated State shall test the 
equipment that it uses for official services according to the 
instructions.
    (8) Security. Each delegated State shall provide sufficient security 
to assure that official samples, records, equipment, and forms are 
reasonably secure from theft, alteration, or misuse.
    (9) Certificate control system. Each delegated State shall establish 
a certificate control system for all official certificates it receives, 
issues, voids, or otherwise renders useless. The system shall provide 
for: (i) Recording the numbers of the official certificates printed or 
received; (ii) protecting unused certificates from fraudulent or 
unauthorized use; and (iii) maintaining a file copy of each certificate 
issued, voided, or otherwise rendered useless in a manner that would 
permit retrieval.
    (10) Records. Each delegated State shall maintain the records 
specified in Secs. 800.145 through 800.159.
    (g) Termination. (1) Automatic termination. Failure to pay the user 
fees prescribed by the Service for supervisory costs related to official 
inspection and weighing services within 30 days after due shall result 
in the automatic termination of the delegation. The delegation shall be 
reinstated if fees currently due, plus interest and any further expenses 
incurred by the Service because of the termination, are paid within 60 
days after the termination.

[[Page 581]]

    (2) Voluntary cancellation. A State may request that its delegation 
be canceled by giving 90 days written notice to the Service.
    (3) Revocation. (i) Without hearing. The Administrator may revoke 
the delegation of a State without first affording the State opportunity 
for a hearing. Unless otherwise provided, the revocation shall be 
effective when the State receives a notice from the Service regarding 
the revocation and the reason(s) therefor.
    (ii) Informal conference. At the discretion of the Administrator, 
before the delegation of a State is revoked under paragraph (g)(3)(i) of 
this section, the Service may (A) notify the State of the proposed 
action and the reason(s) therefor, and (B) afford the State an 
opportunity to express its views in an informal conference before the 
Administrator.
    (h) Provision of services following termination. If a State's 
delegation is terminated, official services at the export port locations 
in the State shall be provided by the Service.

(The information collection requirements contained in paragraph (d) were 
approved by the Office of Management and Budget under control number 
0580-0012; paragraphs (f)(2) and (f)(4) were approved under control 
number 0580-0011)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 18988, May 6, 1985; 54 
FR 5924, Feb. 7, 1989; 60 FR 65236, Dec. 19, 1995]



Sec. 800.196  Designations.

    (a) General. Eligible persons or governmental agencies may be 
designated to perform official services (excluding appeal inspection) 
within a specified area (other than export port locations).
    (b) Restrictions. (1) General. If official inspection services are 
performed in an area by a designated agency, Class X and Class Y 
weighing services in that area may be performed only by the designated 
agency if the agency applies for designation to provide weighing 
services and is found qualified by the Service. If the agency designated 
to provide official inspection services is found not qualified or does 
not apply, the Class X and Class Y weighing services may be performed by 
another available agency that is found qualified and is designated by 
the Service, or the official services may be performed by the Service.
    (2) Interim authority. (i) By agency. A designated agency may 
perform official services outside its assigned area on an interim basis 
when authorized by the Service.
    (ii) By Service. Official inspection services and/or Class X and 
Class Y weighing services may be performed by the Service in an area 
(other than export port locations) on an interim basis in accordance 
with sections 7(h) and 7A(c) of the Act.
    (c) Who can apply. Any State or local governmental agency or any 
person may apply, subject to sections 7 and 7A of the Act, to the 
Service for designation as an official agency to perform official 
inspection services (excluding appeal inspection) and/or Class X and 
Class Y weighing services in a given area (other than export port 
locations) in the United States.
    (d) When and how to apply. An application for designation should be 
filed with the Service, according to the provisions of the Federal 
Register notice which requests applicants for designation to perform 
official services in existing or new geographic areas. The application 
for designation: (1) Shall be submitted on a form furnished by the 
Service; (2) shall be typewritten or legibly written in English; (3) 
shall show or be accompanied by documents which show all information 
requested on the form, or otherwise required by the Service; and (4) 
shall be signed by the applicant or its chief operating officer.
    (e) Review of conditions and criteria for designation. (1) 
Application. Each application for a designation shall be reviewed to 
determine whether it complies with paragraph (d) of this section. If an 
application is not in compliance, the applicant shall be provided an 
opportunity to submit the needed information. If the needed information 
is not submitted within a reasonable time, as determined by the Service, 
the application may be dismissed. When an application is dismissed, the 
Service shall notify the applicant, in writing, of the reason(s) for the 
dismissal.
    (2) Applicant. Each applicant for authority to operate as as 
designated agency shall be reviewed to determine

[[Page 582]]

whether the applicant meets the conditions and criteria contained in 
sections 7(f)(1)(A) and (B) of the Act, Sec. 800.199 of the regulations, 
and paragraph (g) of this section. The requested designation may be 
granted if the Service determines that: (i) The requested action is 
consistent with the need for official services; (ii) the applicant meets 
the conditions and criteria specified in the Act and regulations; and 
(iii) the applicant is better able than any other applicant to provide 
official services.
    (f) Area of responsibility. (1) General. Each agency shall be 
assigned an area of responsibility by the Service. Each area shall be 
identified by geographical boundaries and, in the case of a State or 
local government, shall not exceed the jurisdictional boundaries of the 
State or the local government, unless otherwise approved by the Service. 
The area of responsibility may not include any export elevators at 
export port locations or any portion of an area of responsibility 
assigned to another agency that is performing the same functions. A 
designated agency may perform official services at locations outside its 
assigned area of responsibility only after obtaining approval from the 
Service.
    (2) Amending. A request for an amendment to an assigned area of 
responsibility shall (i) be submitted to the Service in writing; (ii) 
specify the change desired; (iii) be signed by the applicant or its 
chief operating officer; and (iv) be accompanied by the fee prescribed 
by the Service. The assigned area may be amended if the Service 
determines that the amendment is consistent with the provisions and 
objectives of the Act, regulations, and instructions. Upon a finding of 
need, the Service may initiate action to change an assigned area of 
responsibility.
    (3) Specified service points. An agency may change its specified 
service points by notifying the Service in advance. Interested persons 
may obtain a list of specified service points within an agency's area of 
responsibility by contacting the agency. The list shall include all 
specified service points and shall identify each specified service point 
which operates on an intermittent or seasonal basis.
    (g) Responsibilities. (1) Providing official services. Insofar as 
practicable, each agency shall be responsible for providing at all 
locations in its assigned area each service authorized by the 
designation. An agency may, subject to Service approval, make 
arrangements with a neighboring agency to provide official services 
requested infrequently. The agency shall perform all official services 
according to the Act, regulations, and instructions in effect at the 
time of designation or which may be promulgated subsequently.
    (2) Fees. The agency shall charge fees according to Sec. 800.70.
    (3) Staffing, licensing, and training. (i) General. The agency shall 
employ sufficient personnel to provide the official services normally 
requested in an accurate and timely manner. Each agency shall only use 
personnel licensed by the Service for the performance of official 
services and shall train and assist its personnel in acquiring and 
maintaining the necessary skills. Each agency shall keep the Service 
informed of the employment status of each of its licensees and any 
substantial change in a licensee's duties.
    (ii) State agencies. State agencies shall employ official personnel 
on the basis of job qualifications rather than political affiliations.
    (4) Rotation of personnel. Where feasible, each agency shall rotate 
licensees among elevators and other facilities as is necessary to 
preserve the integrity of the official inspection and weighing systems.
    (5) Supervision. The agency and its officials shall be responsible 
for the actions of the official personnel employed by the agency, for 
direct supervision of the daily activities of such personnel, and for 
the conduct of official services and related activities at the agency. 
The agency shall supervise official activities, in accordance with the 
Act, regulations, and instructions, and shall take action necessary to 
ensure that its employees are not performing prohibited functions and 
are not involved in any action prohibited by the Act, regulations, or 
instructions. Each agency shall report to the responsible field office 
information which shows or may show a violation of any provision of the 
Act, regulations, or instructions and information on any instructions

[[Page 583]]

which have been issued to agency personnel by Service personnel or by 
any other person which are inconsistent with the Act, regulations, or 
instructions.
    (6) Conflict of interest. (i) General. Each agency and any officer, 
director, stockholder, employee, or other related entity shall not have 
a conflict of interest, as defined in Section 11 of the Act and 
Sec. 800.199 of the regulations. A conflict of interest may be waived 
pursuant to Sec. 800.199(d). The agency shall advise the Service 
immediately of any proposed change in name, ownership, officers or 
directors, or control of the agency and, if a trust, any change 
affecting the trust agreement.
    (ii) Unofficial activities. Except as provided in Sec. 800.76(a), 
the agency or personnel employed by the agency shall not perform any 
unofficial service that is the same as the official services covered by 
the designation.
    (7) Facilities and equipment. (i) General. The laboratory and office 
facilities of each agency shall be: Located; equipped; and large enough 
so that requested services are provided in an orderly and timely manner.
    (ii) Equipment testing. Each agency shall test the equipment it uses 
for official services according to the instructions.
    (8) Security. Each agency shall provide sufficient security to 
ensure that official samples, records, equipment, and forms are 
reasonably secure from theft, alteration, or misuse.
    (9) Certificate control system. Each agency shall establish a 
certificate control system for all official certificates it receives, 
issues, voids, or otherwise renders useless. The system shall provide 
for (i) recording the numbers of the official certificates printed or 
received; (ii) protecting unused certificates from fraudulent or 
unauthorized use; and (iii) maintaining a file copy of each certificate 
issued, voided, or otherwise rendered useless in a manner that would 
permit retrieval.
    (10) Records. Each agency shall maintain the records specified in 
Secs. 800.145 through 800.159.
    (h) Termination and renewal. (1) Triennial. (i) Termination. A 
designation shall terminate at a time specified by the Administrator, 
but not later than 3 years after the effective date of the designation. 
A notice of triennial termination shall be issued by the Service to a 
designated agency at least 120 calendar days in advance of the 
termination date. The notice shall provide instructions for requesting 
renewal of the designation. Failure to receive a notice from the Service 
shall not exempt a designated agency from the responsibility of having 
its designation renewed on or before the specified termination date.
    (ii) Renewal. Designations may be renewed, upon application, in 
accordance with criteria and procedures for designation prescribed in 
section 7(f) of the Act and this section of the regulations. The 
Administrator may decline to renew a designation if: (A) The requesting 
agency fails to meet or comply with any of the criteria for designation 
set forth in the Act, regulations, and instructions, of (B) the 
Administrator determines that another qualified applicant is better able 
to provide official services in the assigned area.
    (2) Automatic termination. Failure to pay the user fees prescribed 
by the Service for supervisory costs related to official inspection and 
weighing services within 30 days after due shall result in the automatic 
termination of the designation. The designation shall be reinstated if 
fees currently due, plus interest and any further expenses incurred by 
the Service because of the termination, are paid within 60 days after 
the termination.
    (3) Voluntary cancellation. An agency may request that its 
designation be canceled by giving 90 days written notice to the Service.
    (4) Suspension or revocation of designation. (i) General. A 
designation is subject to suspension or revocation, under section 
7(g)(3) of the Act, by the Service, whenever the Administrator 
determines that: (A) The agency has failed to meet one or more of the 
criteria specified in section 7(f) of the Act or the regulations for the 
performance of official functions, or otherwise has not complied with 
any provision of the Act, regulations, or instructions, or (B) has been 
convicted of any violation of other Federal law involving the handling 
or official inspection of grain.

[[Page 584]]

    (ii) Summary suspension. The Service may, without first affording 
the agency (hereafter referred to in this paragraph as the 
``respondent'') an opportunity for a hearing, suspend a designation or 
refuse to reinstate a designation when the suspension period has 
expired, pending final determination of the proceeding whenever the 
Service has reason to believe there is cause for revocation of the 
designation and considers such action to be in the best interest of the 
official inspection and weighing system. A suspension or refusal to 
reinstate a suspended designation shall be effective upon the 
respondent's receipt of a notice from the Service. Within 30 calendar 
days following the issuance of a notice of such action, the Service 
shall afford the respondent an opportunity for a hearing under paragraph 
(h)(4)(iii) of this section. The Service may terminate the action if it 
finds that alternative managerial, staffing, financial, or operational 
arrangements satisfactory to the Service can be and are made by the 
respondent.
    (iii) Other than summary suspension. Except as provided in paragraph 
(h)(4)(ii) of the section, before the Service revokes or suspends a 
designation, the respondent shall be: (A) Notified by the Service of the 
proposed action and the reason(s) therefor, and (B) afforded an 
opportunity for a hearing in accordance with the Rules of Practice 
Governing Formal Adjudicatory Proceedings Instituted by the Secretary 
Under Various Statutes (7 CFR part 1, subpart H). Before initiating 
formal adjudicatory proceedings, the Service may, at its discretion, 
afford the respondent an opportunity to present its views on the 
proposed action and the reason(s) therefor in an informal conference. 
If, as a result of the informal conference, a consent agreement is 
reached, no formal adjudicatory proceedings shall be initiated.
    (i) Provision of services following suspension or termination. If 
the designation of an agency is suspended, terminated, or the renewal of 
a designation is not granted, the Service shall attempt, upon a finding 
of need, to arrange for a replacement agency. If a qualified replacement 
agency cannot be designated on a timely basis, a qualified agency, if 
available, shall be designated on an interim basis. If a qualified 
agency is not available on an interim basis, the Service shall provide 
needed services on an interim basis.

(The information collection requirements contained in paragraph (d) were 
approved by the Office of Management and Budget under control number 
0580-0012; paragraphs (g)(3) and (g)(5) were approved under control 
number 0580-0011)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 18989, May 6, 1985; 54 
FR 5924, Feb. 7, 1989; 60 FR 65236, Dec. 19, 1995; 63 FR 45677, Aug. 27, 
1998]



Sec. 800.197  Approval as a scale testing and certification organization.

    (a) Who may apply. Any State, local government, or person may 
request approval to perform scale testing and certification under the 
Act.
    (b) When and how to apply. A request for approval to perform scale 
testing and certification under the Act should be filed with the Service 
not less than 90 calendar days before the requested action's effective 
date. A request for approval to perform scale testing and certification 
shall: (1) Show or be accompanied by documents which show all 
information required by the Service; (2) certify that each employee 
scheduled to perform official scale testing and certification services 
is competent to test weighing equipment and has a working knowledge of 
the regulations and instructions applicable to such services; (3) be 
accompanied by the fee prescribed in Sec. 800.71; and (4) be signed by 
the applicant or its chief operating officer.
    (c) Review of applicant. The review of an applicant for authority to 
perform scale testing and certification shall include an evaluation of 
the applicant's policies and procedures for testing and certifying 
scales for Class X and Class Y weighing.
    (d) Termination. (1) Voluntary. A scale testing and certification 
organization may request cancellation of its approval by notifying the 
Service.
    (2) Suspension or revocation of approval. (i) General. An approval 
is subject to suspension or revocation whenever the Administrator 
determines that the approved organization has violated any provision of 
the Act or regulations, or has been convicted of any

[[Page 585]]

violation involving the handling, weighing, or inspection of grain under 
Title 18 of the United States Code.
    (ii) Summary suspension. The Service may, without first affording 
the organization an opportunity for a hearing, suspend an approval or 
refuse to reinstate an approval when the suspension period has expired, 
pending final determination of the proceeding whenever the Service has 
reason to believe there is cause for revocation of the approval and 
considers such action to be in the best interest of the official 
weighing system. A suspension or refusal to reinstate a suspended 
approval shall be effective when the organization receives a notice from 
the Service. Within 30 calendar days following the issuance of a notice 
of such action, the Service shall give the organization an opportunity 
for a hearing under paragraph (d)(2)(iii) of this section. The Service 
may terminate its action if it finds that alternative managerial, 
staffing, or operational arrangements satisfactory to the Service can be 
and are made by the organization.
    (iii) Other than summary suspension. Except as provided in paragraph 
(d)(2)(ii) of this section, before the Service revokes or suspends an 
approval, the organization shall be notified by the Service of the 
proposed action and the reason(s) therefor and shall be given an 
opportunity for a hearing. Before the Service initiates a hearing, it 
may, at its discretion, give the organization an opportunity to present 
its views on the proposed action and the reason(s) therefor in an 
informal conference. If a consent agreement is reached during the 
informal conference, no formal adjudicatory proceedings shall be 
initiated.

(The information collection requirements contained in paragraph (b) were 
approved by the Office of Management and Budget under control number 
0580-0012)

[49 FR 30915, Aug. 2, 1984, as amended at 54 FR 5924, Feb. 7, 1989]



Sec. 800.198  Contracts.

    (a) Services contracted and who may apply. The Service may enter 
into a contract with any person, State, or governmental agency to 
perform on an occasional basis: (1) Specified official sampling, 
laboratory testing, or other similar objective technical activities 
involved in the testing of grain for official factors or official 
criteria, and (2) monitoring activities in foreign ports with respect to 
export grain that has been inspected and weighed under the Act.
    (b) Restrictions. (1) Conflict of interest. A person, State or 
governmental agency with a conflict of interest prohibited by section 11 
of the Act or Sec. 800.199 shall not be eligible to enter into a 
contract with the Service.
    (2) Appeal service. An agency or employees of agencies shall not be 
eligible to enter into a contract with the Service to obtain samples 
for, or to perform other services involved in appeal inspection or Board 
appeal inspection services. However, agencies may forward file samples 
to the Service in accordance with Sec. 800.156(d).
    (3) Monitoring services. Agencies, employees of agencies, 
organizations, employees of organizations, and other persons that 
regularly provide official services to persons who export grain from the 
United States are eligible to enter into a contract with the Service to 
perform monitoring services on export grain in foreign ports only if 
they are under Service employees' direct supervision during monitoring 
activities.
    (c) When and how to apply. An application for a contractual 
arrangement shall: (1) Be typewritten or legibly written in English; (2) 
conform to the invitation to bid or other instructions issued by the 
Service or be filed on a form furnished by the Service; (3) show or be 
accompanied by documents which show any information requested by the 
Service; and (4) be signed by the applicant or its chief operating 
officer. All contracts shall be issued by the Department and shall 
follow Departmental procedures.
    (d) Termination and renewal. A contract with the Service shall 
terminate annually unless othewise provided in the contract. A contract 
may be renewed in accordance with Departmental procedures.
    (e) Cancellation. A contract may, upon request of the governmental 
agency or person that entered into the contract with the Service, be 
canceled by the Department in accordance with

[[Page 586]]

the terms of the contract or Departmental procedures and regulations.

(The information collection requirements contained in paragraph (c) were 
approved by the Office of Management and Budget under control number 
0580-0012)

[49 FR 30915, Aug. 2, 1984, as amended at 50 FR 18989, May 6, 1985; 54 
FR 5924, Feb. 7, 1989]



Sec. 800.199  Conflict-of-interest provisions.

    (a) Meaning of terms. For the purpose of this section, the following 
terms shall have the meaning given for them below:
    (1) Grain business. The term ``grain business'' shall include (i) 
any entity that is engaged in the commercial transportation, storage, 
merchandising or other commercial handling of grain, which includes: The 
commercial buying, selling, transporting, cleaning, elevating, storing, 
binning, mixing, blending, drying, treating, fumigating, or other 
preparation of grain (other than as a grower of grain or the disposition 
of inspection samples); the cleaning, treating, or fitting of carriers 
or containers for transporting or storing of grain; the merchandising of 
equipment for cleaning, drying, treating, fumigating, or other 
processing, handling, or storing of grain; the merchandising of grain 
inspection and weighing equipment (other than the buying or selling by 
an agency or official personnel of the equipment for their exclusive use 
in the performance of their official inspection or Class X or Class Y 
weighing services); and the commercial use of official inspection and 
Class X or Class Y weighing services and (ii) any board of trade, 
chamber of commerce, grain exchange, or other trade group composed, in 
whole or in part, of one or more such entities.
    (2) Interest. The term ``interest'' when used with respect to an 
individual, shall include the interest of a spouse, minor child, or 
blood relative who resides in the immediate household of the individual.
    (3) Related. The term ``related'' when used in reference to a 
business or governmental entity means an entity that owns or controls 
another entity, or is owned or controlled by another entity, or both 
entities are owned or controlled by another entity.
    (4) Substantial stockholder. The term ``substantial stockholder'' 
means any person holding 2 per centum or more, or 100 shares or more of 
the voting stock of the corporation, whichever is the lesser interest.
    (b) Prohibited conflicts of interest. Unless waived on a case-by-
case basis by the Administrator under section 11(b)(5) or the Act, the 
following conflicts of interest for a business or association are 
prohibited:
    (1) Agency and contractor. No agency or contractor, or any member, 
director, officer, or employee thereof, and no business or governmental 
entity related to any such agency or contractor, shall be employed in or 
otherwise engaged in, or directly or indirectly have any stock or other 
financial interest in, any grain business or otherwise have any conflict 
of interest specified in Sec. 800.187(b).
    (2) Grain business. No grain business or governmental entity 
conducting any such business, or any member, director, officer, or 
employee thereof, and no other business or governmental entity related 
to any such entity, shall operate or be employed by, or directly or 
indirectly have any stock or other financial interest in, any agency or 
contractor.
    (3) Stockholder in any agency or contractor. No substantial 
stockholder in any agency or contractor shall be employed in or 
otherwise engaged in, or be a substantial stockholder in, any grain 
business, or directly or indirectly have any other kind of financial 
interest in any such business or otherwise have any conflict of interest 
specified in Sec. 800.187(b).
    (4) Stockholder of a grain business. No substantial stockholder in 
any grain business shall operate or be employed by or be a substantial 
stockholder in, or directly or indirectly have any other kind of 
financial interest in an incorporated agency or contractor.
    (5) Gratuity. No person described in paragraph (b)(1) of this 
section shall give to or accept from a person described in paragraph 
(b)(2) of this section any gratuity, and no person described in 
paragraph (b)(2) of this section shall give to or accept from a person 
described in paragraph (b)(1) of this

[[Page 587]]

section any gratuity. A ``gratuity'' is defined in Sec. 800.187(a).
    (c) Exempt conflicts of interest. (1) Agency and contractor. An 
agency or contractor may use laboratory or office space or inspection, 
weighing, transportation, or office equipment that is owned or 
controlled, in whole or in part, by a grain business or related entity 
when the use of the space or equipment is approved by the Service for 
the performance of onsite official services under the Act.
    (2) Financial institution. A bona fide financial institution that 
has a financial relationship with one or more grain businesses or 
related entities may have a financial relationship with an agency, 
contractor, or related agency.
    (3) Grain business. A grain business or related entity may furnish 
laboratory or office space or inspection, weighing, transportation, or 
office equipment for use by an agency, contractor, or field office when 
use of the space or equipment is approved by the Service for the 
performance of onsite official inspection or weighing services.
    (d) Disposition of a conflict of interest. Upon being informed that 
a prohibited conflict of interest exists in the ownership, management, 
or operation of an agency and that remedial action is required, the 
agency shall take immediate action to resolve that conflict of interest 
and inform the Service of the action taken. An agency which believes 
that remedial action will cause undue economic hardship or other 
irreparable harm may request a waiver by forwarding to the Service a 
written statement setting forth the facts, the circumstances, and the 
reasons for requesting a waiver.

[49 FR 30915, Aug. 2, 1984]

             Supervision, Monitoring, and Equipment Testing



Sec. 800.215  Activities that shall be supervised.

    (a) General. Supervision of the activities described in this section 
shall be performed in accordance with the instructions.
    (b) Administrative activities. Administrative activities subject to 
supervision include but are not limited to (1) providing staffing, 
equipment, and facilities for performing authorized services; (2) 
dismissing requests for services and withholding requested services; (3) 
maintaining official records; (4) assessing and collecting fees; (5) 
rotating official personnel; (6) implementing instructions for (i) 
recruiting official personnel, (ii) training and supervising official 
and approved personnel, (iii) work performance and work production 
standards; and (7) supervising and monitoring.
    (c) Technical activities. (1) Equipment testing activities. 
Equipment testing activities subject to supervision include but are not 
limited to (i) implementing (A) the equipment performance requirements 
in parts 801 and 802 of this chapter and (B) the instructions for the 
operation of equipment used under the Act and for performing equipment-
testing activities and (ii) performing equipment-testing activities by 
official personnel or by approved scale testing organizations.
    (2) Inspection activities. Inspection activities subject to 
supervision include but are not limited to (i) implementing (A) the 
Official U.S. Standards for Grain, (B) official criteria, and (C) 
instructions for the performance of inspection activities and (ii) 
performing stowage examination, sampling, laboratory testing, grading, 
and certification activities by official personnel.
    (3) Weighing activities. Weighing activities subject to supervision 
include but are not limited to (i) implementing (A) uniform weighing 
procedures and (B) instructions for the performance of weighing 
activities and (ii) performing (A) stowage examination, sampling (sacked 
grain), weighing, and certification activities by official personnel and 
(B) by approved weighers of weighing activities.
    (4) Testing of prototype equipment activities. Prototype or proposed 
equipment is tested to determine whether the equipment will improve the 
performance of activities under the Act. Prototype equipment-testing 
activities subject to supervision include but are not limited to (i) 
implementing instructions for the testing of prototype equipment, (ii) 
testing prototype equipment by official personnel, and (iii) approving 
or denying the use of

[[Page 588]]

prototype equipment for use under the Act.



Sec. 800.216  Activities that shall be monitored.

    (a) General. Each of the administrative and technical activities 
identified in Sec. 800.215 and the elevator and merchandising activities 
identified in this section shall be monitored in accordance with the 
instructions.
    (b) Grain merchandising activities. Grain merchandising activities 
subject to monitoring for compliance with the Act include but are not 
limited to (1) failing to promptly forward an export certificate; (2) 
describing grain by other than official grades; (3) falsely describing 
export grain; (4) falsely making or using official certificates, forms, 
or marks; (5) making false quality or quantity representations about 
grain; and (6) selling export grain without a certificate of 
registration.
    (c) Grain handling activities. Grain handling activities subject to 
monitoring for compliance with the Act include but are not limited to 
(1) shipping export grain without inspection or weighing; (2) 
transferring grain from intercompany barges into an export elevator at 
an export port location without Class X weighing; (3) violating any 
Federal law with respect to the handling, weighing, or inspection of 
grain; (4) deceptively loading, handling, weighing, or sampling grain; 
and (5) exporting grain without a certificate of registration.
    (d) Recordkeeping activities. Elevator and merchandising 
recordkeeping activities subject to monitoring for compliance with the 
Act include those that are identified in section 12(d) of the Act and 
Sec. 800.25 of the regulations.
    (e) Other activities. Other activities subject to monitoring for 
compliance with the Act include but are not limited to (1) resolving 
conflicts of interest by official agencies or their employees; (2) 
providing access to elevator facilities and records; (3) improperly 
influencing or interfering with official personnel; (4) falsely 
representing that a person is official personnel; (5) using false means 
in filing an application for services under the Act; and (6) preventing 
interested persons from observing the loading, Class X or Class Y 
weighing, or official sampling of grain.

[45 FR 15810, Mar. 11, 1980; 45 FR 55119, Aug. 18, 1980, as amended at 
50 FR 2273, Jan. 16, 1985]



Sec. 800.217  Equipment that shall be tested.

    (a) General. Testing of equipment and prototype equipment described 
in this section shall be performed in accordance with the instructions.
    (b) Inspection equipment. Each unit of equipment used in the 
official sampling, testing, or grading of grain, or in monitoring the 
official inspection of grain, shall be examined to determine whether the 
equipment is functioning in an approved manner. In addition, each unit 
of equipment for which official performance requirements have been 
established shall be tested for accuracy. For the purpose of this 
paragraph, diverter-type mechanical samplers used in obtaining 
warehouseman's samples shall be considered to be official inspection 
equipment used under the Act.
    (c) Weighing equipment. Each unit of equipment used in the Class X 
or Class Y weighing of grain or in monitoring the Class X or Class Y 
weighing of grain, each related grain handling system, and each related 
computer system shall be examined to determine whether it is functioning 
in an approved manner. In addition, each unit of equipment for which 
official performance requirements have been established shall be tested 
for accuracy.
    (d) Prototype equipment. (1) At request of interested party. Upon 
request of a financially interested party and with the concurrence of 
the Administrator, prototype grain inspection or weighing equipment may 
be tested by the Service for official use.
    (2) Determination by Service. Upon a determination of need, the 
Service may develop, contract for, or purchase and test prototype grain 
inspection or weighing equipment for official use.



Sec. 800.218  Review of rejection or disapproval of equipment.

    Any person desiring to complain of a rejection or disapproval of 
equipment by official personnel or of any alleged

[[Page 589]]

discrepancy in the testing of equipment under the Act by official 
personnel or by approved scale testing organizations may file a 
complaint with the Service.



Sec. 800.219  Conditional approval on use of equipment.

    (a) Approval. Equipment that is in use under the Act on the 
effective date of this section shall be considered conditionally to have 
been adopted and approved by the Service.
    (b) Limitation on approval. This conditional approval shall not bar 
a later rejection or disapproval of the equipment by the Service upon a 
determination that the equipment (1) should be rejected for official 
use, or (2) is not functioning in an approved manner, or (3) is not 
producing results that are accurate within prescribed tolerances, or (4) 
is producing results that are otherwise not consistent with the 
objectives of the Act.



PART 801--OFFICIAL PERFORMANCE REQUIREMENTS FOR GRAIN INSPECTION EQUIPMENT--Table of Contents




Sec.
801.1  Applicability.
801.2  Meaning of terms.
801.3  Tolerances for barley pearlers.
801.4  Tolerances for dockage testers.
801.5  Tolerances for diverter-type mechanical samplers.
801.6  Tolerances for moisture meters.
801.7  Reference methods and tolerances for near-infrared spectroscopy 
          (NIRS) analyzers.
801.8  Tolerances for sieves.
801.9  Tolerances for test weight apparatuses.
801.10  Tolerance for dividers.
801.11  Related design requirements.
801.12  Design requirements incorporated by reference.

    Authority: Pub. L. 94-582, 90 Stat. 2867, as amended, (7 U.S.C. 71 
et seq.).

    Source: 51 FR 7050, Feb. 28, 1986, unless otherwise noted.



Sec. 801.1  Applicability.

    The requirements set forth in this part 801 describe certain 
specifications, tolerances, and other technical requirements for 
official grain inspection equipment and related sample handling systems 
used in performing inspection services under the Act.



Sec. 801.2  Meaning of terms.

    (a) Construction. Words used in the singular form in this part shall 
be considered to imply the plural and vice versa, as appropriate.
    (b) Definitions. The definitions of terms listed in the part 800 
shall have the same meaning when the terms are used in this part 801. 
For the purposes of this part, the following terms shall have the 
meanings given for them below.
    (1) Avoirdupois weight. A unit of weight based on a pound of 16 
ounces.
    (2) Barley pearler. An approved laboratory device used to 
mechanically dehull kernels of barley or other grain.
    (3) Deviation from standard. In testing inspection equipment for 
accuracy, the variation between (i) the individual test result from the 
equipment that is being tested and (ii) the reference standard or the 
individual test result from the standard (or National standard) 
equipment, as applicable.
    (4) Direct comparison method. An equipment testing procedure wherein 
transfer standards are tested at the same time and place to compare the 
performance of two or more units of the same inpsection equipment. One 
unit of the equipment used in the test shall be standard inspection 
equipment. (See also sample exchange method).
    (5) Diverter-type mechanical sampler (primary). An approved device 
used to obtain representative portions from a flowing stream of grain.
    (6) Diverter-type mechanical sampler (secondary). An approved device 
used to subdivide the portions of grain obtained with a diverter-type 
mechanical sampler (primary).
    (7) Divider. An approved laboratory device used to mechanically 
divide a sample of grain into two or more representative portions.
    (8) Dockage tester. An approved laboratory device used to 
mechanically separate dockage and/or foreign material from grain.
    (9) Maintenance tolerance. An allowance established for use in 
determining whether inspection equipment should

[[Page 590]]

be approved for use in performing official inspection services.
    (10) Mean deviation from standard. In testing inspection equipment 
for accuracy, the variation between (i) the average for the test results 
from the equipment that is being tested and (ii) the reference standard 
or the average of the test results from the standard (or National 
standard) equipment, as applicable.
    (11) Metric weight. A unit of weight based on the kilogram of 1,000 
grams.
    (12) Moisture meter. An approved laboratory device used to indicate 
directly or through conversion and/or correction tables the moisture 
content of grain including cereal grains and oil seeds.
    (13) National standard inspection equipment. A designated approved 
unit of inspection equipment used as the reference in determining the 
accuracy of standard inspection equipment.
    (14) Official inspection equipment. Equipment approved by the 
Service and used in performing official inspection services.
    (15) Sample exchange method. An equipment testing procedure wherein 
transfer standards are tested to compare the performance of two or more 
units of the same inspection equipment installed at different locations. 
One unit of the equipment used in the test shall be standard inspection 
equipment. (See also direct comparison method.)
    (16) Sieves. Approved laboratory devices with perforations for use 
in separating particles of various sizes.
    (17) Standard inspection equipment. An approved unit of inspection 
equipment that is designated by the Service for use in determining the 
accuracy of official inspection equipment.
    (18) Test weight. The avoirdupois weight of the grain or other 
material in a level-full Winchester bushel.
    (19) Test weight apparatus. An approved laboratory device used to 
measure the test weight (density) of a sample of grain.
    (20) Transfer standard. The medium (device or material) by which 
traceability is transferred from one inspection equipment standard unit 
to another unit.
    (21) Winchester bushel. A container that has a capacity of 2,150.42 
cubic inches (32 dry quarts).



Sec. 801.3  Tolerances for barley pearlers.

    The maintenance tolerances for barley pearlers used in performing 
official inspection services shall be:

------------------------------------------------------------------------
                 Item                               Tolerance
------------------------------------------------------------------------
Timer switch:
  0 to 60 seconds.....................  5 seconds, deviation
                                         from standard clock
  61 to 90 seconds....................  7 seconds, deviation
                                         from standard clock
  Over 90 seconds.....................  10 seconds,
                                         deviation from standard clock
Pearled portion.......................  1.0 gram, mean
                                         deviation from standard barley
                                         pearler using barley
------------------------------------------------------------------------



Sec. 801.4  Tolerances for dockage testers.

    The maintenance tolerances for dockage testers used in performing 
official inspection services shall be:

------------------------------------------------------------------------
                 Item                               Tolerance
------------------------------------------------------------------------
Air separation........................  0.10 percent, mean
                                         deviation from standard dockage
                                         tester using Hard Red Winter
                                         wheat
Riddle separation.....................  0.10 percent, mean
                                         deviation from standard dockage
                                         tester using Hard Red Winter
                                         wheat
Sieve separation......................  0.10 percent, mean
                                         deviation from standard dockage
                                         tester using Hard Red Winter
                                         wheat
Total dockage separation..............  0.15 percent, mean
                                         deviation from standard dockage
                                         tester using Hard Red Winter
                                         wheat
------------------------------------------------------------------------



Sec. 801.5  Tolerance for diverter-type mechanical samplers.

    The maintenance tolerance for diverter-type mechanical samplers 
(primary, or primary and secondary in combination) used in performing 
official inspection services shall be 10 percent, mean 
deviation from standard sampling device using corn or the same type of 
grain that the system will be used to sample.



Sec. 801.6  Tolerances for moisture meters.

    (a) The maintenance tolerances for Motomco 919 moisture meters used 
in performing official inspection services shall be:
    (1) Headquarters standard meters:

[[Page 591]]



----------------------------------------------------------------------------------------------------------------
                                                                   Tolerance
       Moisture range        -----------------------------------------------------------------------------------
                                          Direct comparison                          Sample exchange
----------------------------------------------------------------------------------------------------------------
Low.........................  0.05 percent moisture, mean
                               deviation from National standard
                               moisture meter using Hard Red Winter
                               wheat
Mid.........................  0.05 percent moisture, mean
                               deviation from National standard
                               moisture meter using Hard Red Winter
                               wheat
High........................  0.05 percent moisture, mean
                               deviation from National standard
                               moisture meter using Hard Red Winter
                               wheat
----------------------------------------------------------------------------------------------------------------

    (2) All other than Headquarters standard meters:

----------------------------------------------------------------------------------------------------------------
                                                                   Tolerance
       Moisture range        -----------------------------------------------------------------------------------
                                          Direct comparison                          Sample exchange
----------------------------------------------------------------------------------------------------------------
Low.........................  0.15 percent moisture, mean   0.20 percent moisture, mean
                               deviation from standard moisture meter    deviation from standard moisture meter
                               using Hard Red Winter wheat               using Hard Red Winter wheat
Mid.........................  0.10 percent moisture, mean   0.15 percent moisture, mean
                               deviation from standard moisture meter    deviation from standard moisture meter
                               using Hard Red Winter wheat               using Hard Red Winter wheat
High........................  0.15 percent moisture, mean   0.20 percent moisture, mean
                               deviation from standard moisture meter    deviation from standard moisture meter
                               using Hard Red Winter wheat               using Hard Red Winter wheat
----------------------------------------------------------------------------------------------------------------

    (b) The maintenance tolerances for GAC 2100 moisture meters used in 
performing official inspection services shall be:
    (1) Headquarters standard meters. By direct comparison using mid-
range Hard Red Winter wheat, 0.05% mean deviation for the 
average of the Headquarters standard moisture meters.
    (2) All other than Headquarters standard meters. By sample exchange 
using mid-range Hard Red Winter wheat, 0.15% mean deviation 
from the standard meter.

[63 FR 34554, June 25, 1998]



Sec. 801.7  Reference methods and tolerances for near-infrared spectroscopy (NIRS) analyzers.

    (a) Reference methods. (1) The chemical reference protein 
determinations used to reference and calibrate official NIRS instruments 
shall be performed in accordance with ``Comparison of Kjeldahl Method 
for Determination of Crude Protein in Cereal Grains and Oilseeds with 
Generic Combustion Method: Collaborative Study,'' July/August 1993, 
Ronald Bicsak, Journal of AOAC International Vol. 76, No. 4, 1993, and 
subsequently approved by the AOAC International as the Combustion 
method, AOAC International Method 992.23. This incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be 
obtained from Director, Technical Services Division, Federal Grain 
Inspection Service, 10383 North Executive Hills Blvd., Kansas City, MO 
64153-1394. Copies may be inspected at the above address or at the 
Office of the Federal Register, 800 North Capitol Street, NW., 7th 
Floor, Suite 700, Washington, DC 20408.
    (2) The chemical reference starch determination used to reference 
and calibrate official NIRS instruments shall be performed in accordance 
with the Corn Refiners Association Method A-20, Analysis for Starch in 
Corn, Second revision, April 15, 1986, Standard Analytical Methods of 
the Member Companies of the Corn Refiners Association, Inc. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
may be obtained from Director, Technical Services Division, Federal 
Grain

[[Page 592]]

Inspection Service, 10383 North Executive Hills Blvd., Kansas City, MO 
64153-1394. Copies may be inspected at the above address or at the 
Office of the Federal Register, 800 North Capitol Street, NW., 7th 
Floor, Suite 700, Washington, DC 20408.
    (b) Tolerances--(1) NIRS wheat protein analyzers. The maintenance 
tolerances for the NIRS analyzers used in performing official 
inspections for determination of wheat protein content shall be 
0.15 percent mean deviation from the national standard NIRS 
instruments, which are referenced and calibrated to the Combustion 
method, AOAC International Method 992.23.
    (2) NIRS soybean oil and protein analyzers. The maintenance 
tolerances for the NIRS analyzers used in performing official 
inspections for determination of soybean oil shall be 0.20 
percent mean deviation from the national standard NIRS instruments, 
which are referenced and calibrated to the FGIS solvent oil extraction 
method; and for determination of protein content shall be 
0.20 percent mean deviation from the national standard NIRS 
instruments, which are referenced and calibrated to the Combustion 
method, AOAC International Method 992.23.
    (3) NIRS corn oil, protein, and starch analyzers. The maintenance 
tolerances for the NIRS analyzers used in performing official 
inspections for determination of corn oil shall be 0.20 
percent mean deviation from the national standard NIRS instruments, 
which are referenced and calibrated to the FGIS solvent oil extraction 
method; for determination of protein content shall be 0.30 
percent mean deviation from the national standard NIRS instruments, 
which are referenced and calibrated to the Combustion method, AOAC 
International Method 992.23; and for determination of starch content 
shall be 0.35 percent mean deviation from the national 
standard NIRS instruments, which are referenced and calibrated to the 
Starch method, Corn Refiners Association Method A-20.

[63 FR 35505, June 30, 1998]



Sec. 801.8  Tolerances for sieves.

    The maintenance tolerances for sieves used in performing official 
inspection services shall be:
    (a) Thickness of metal: 0.0015 inch.
    (b) Accuracy of perforation: 0.001 inch from design 
specification.
    (c) Sieving accuracy:

------------------------------------------------------------------------
                                                  Tolerance
         Sieve description         -------------------------------------
                                    Direct comparison   Sample exchange
------------------------------------------------------------------------
.064 x \3/8\ inch oblong..........  0.2    0.3
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using wheat.       using wheat
\5/64\ x \3/4\ inch slotted.......  0.3    0.5
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using barley.      using barley
5\5/64\ x \3/4\ inch slotted......  0.5    0.7
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using barley.      using barley
\6/64\ x \3/4\ inch slotted.......  0.7    1.0
                                     percent, mean      percent, mean
                                     deviation from     deviation from
                                     standard sieve     standard sieve
                                     using barley.      using barley
------------------------------------------------------------------------



Sec. 801.9  Tolerances for test weight apparatuses.

    The maintenance tolerances for test weight per bushel apparatuses 
used in performing official inspection services shall be:

------------------------------------------------------------------------
                  Item                              Tolerance
------------------------------------------------------------------------
Beam/scale accuracy....................  0.10 pound per
                                          bushel deviation at any
                                          reading, using test weights
Overall accuracy.......................  0.15 pound per
                                          bushel, mean deviation from
                                          standard test weight apparatus
                                          using wheat
------------------------------------------------------------------------



Sec. 801.10  Tolerance for dividers.

    The maintenance tolerance for dividers used in performing official 
inspection services shall be 1.0 percent, mean deviation 
from target value using wheat.



Sec. 801.11  Related design requirements.

    (a) Suitability. The design, construction, and location of official 
sampling and inspection equipment and related

[[Page 593]]

sample handling systems shall be suitable for the official sampling and 
inspection activities for which the equipment is to be used.
    (b) Durability. The design, construction, and material used in 
official sampling and inspection equipment and related sample handling 
systems shall assure that, under normal operating conditions, operating 
parts will remain fully operable, adjustments will remain reasonably 
constant, and accuracy will be maintained between equipment test 
periods.
    (c) Marking and identification. Official sampling and inspection 
equipment for which tolerances have been established shall be 
permanently marked to show the manufacturer's name, initials, or 
trademark; the serial number of the equipment; and the model, the type, 
and the design or pattern of the equipment. Operational controls for 
mechanical samplers and related sample handling systems, including but 
not limited to pushbuttons and switches, shall be conspicuously 
identified as to the equipment or activity controlled by the pushbutton 
or switch.
    (d) Repeatability. Official inspection equipment when tested in 
accordance with Secs. 800.217 and 800.219 shall, within the tolerances 
prescribed in Secs. 801.3 through 801.10, be capable of repeating its 
results when the equipment is operated in its normal manner.
    (e) Security. Mechanical samplers and related sample handling 
systems shall provide a ready means of sealing to deter unauthorized 
adjustments, removal, or changing of component parts or timing sequence 
without removing or breaking the seals; and otherwise be designed, 
constructed, and installed in a manner to prevent deception by any 
person.
    (f) Installation requirements. Official sampling and inspection 
equipment and related sample handling systems shall be installed (1) at 
a site approved by the Service, (2) according to the manufacturer's 
instructions, and (3) in such a manner that neither the operation nor 
the performance of the equipment or system will be adversely affected by 
the foundation, supports, or any other characteristic of the 
installation.



Sec. 801.12  Design requirements incorporated by reference.

    (a) Moisture meters. All moisture meters approved for use in 
official grain moisture determination and certification shall meet 
applicable requirements contained in the FGIS Moisture Handbook and the 
General Code and Grain Moisture Meters Code of the 1991 edition of the 
National Institute of Standards and Technology's (NIST) Handbook 44, 
``Specifications, Tolerances, and Other Technical Requirements for 
Weighing and Measuring Devices.'' Pursuant to the provisions of 5 U.S.C. 
552(a), the materials in Handbook 44 are incorporated by reference as 
they exist on the date of approval and a notice of any change in these 
materials will be published in the Federal Register.
    The NIST Handbook is for sale by the Superintendent of Documents, 
U.S. Government Printing Office, Washington, DC 20403. It is also 
available for inspection at the Office of the Federal Register, 800 
North Capitol Street, NW., suite 700, Washington, DC.
    The following Handbook 44 requirements are not incorporated by 
reference:
General Code (1.10.)
    G-S.5.5. Money Values, Mathematical Agreement
    G-T.1. Acceptance Tolerances
    G-UR.3.3. Position of Equipment
    G-UR.3.4. Responsibility, Money-Operated Devices
Grain Moisture Meters (5.56.)
    N.1.1. Transfer Standards
    N.1.2. Minimum Test
    N.1.3. Temperature Measuring Equipment
    T.2. Tolerance Values
    T.3. For Test Weight Per Bushel Indications or Recorded 
Representations
    UR.3.2. Other Devices not used for Commercial Measurement
    UR.3.7. Location
    UR.3.11. Posting of Meter Operating Range
    (b) [Reserved]

[57 FR 2673, Jan. 23, 1992]



PART 802--OFFICIAL PERFORMANCE AND PROCEDURAL REQUIREMENTS FOR GRAIN WEIGHING EQUIPMENT AND RELATED GRAIN HANDLING SYSTEMS--Table of Contents




Sec.
802.0  Applicability.

[[Page 594]]

802.1  Qualified laboratories.

    Authority: Pub. L. 94-582, 90 Stat. 2867, as amended (7 U.S.C. 71 et 
seq.).



Sec. 802.0  Applicability.

    (a) The requirements set forth in this part 802 describe certain 
specifications, tolerances, and other technical requirements for grain 
weighing equipment and related grain handling systems used in performing 
Class X and Class Y weighing services, official inspection services, and 
commercial services under the Act. All scales used for official grain 
weight and inspection certification services provided by FGIS shall meet 
applicable requirements contained in the FGIS Weighing Handbook, the 
General Code, the Scales Code, the Automatic Bulk Weighing Systems Code, 
and the Weights Code of the 1994 edition of National Institute of 
Standards and Technology (NIST) Handbook 44, ``Specifications, 
Tolerances, and Other Technical Requirements for Weighing and Measuring 
Devices'' (Handbook 44); and NIST HANDBOOK 105-1 (1990 Edition), 
``Specifications and Tolerances for Reference Standards and Field 
Standard Weights and Measures'' (Handbook 105-1). These requirements are 
confirmed to be met by having National Type Evaluation Program or 
Federal Grain Inspection Service type approval. Scales used for 
commercial purposes will be required to meet only the applicable 
requirements of the 1994 edition of the NIST Handbook-44. Pursuant to 
the provisions of 5 U.S.C. 552(a), with the exception of the Handbook 44 
requirements listed in paragraph (b) of this section, the materials in 
Handbooks 44 and 105-1 are incorporated by reference as they exist on 
the date of approval and a notice of any change in these materials will 
be published in the Federal Register. The NIST Handbooks are for sale by 
the Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20403. They are also available for inspect at the Office 
of the Federal Register, 800 North Capitol Street, NW., suite 700, 
Washington, DC.
    (b) The following Handbook 44 requirements are not incorporated by 
reference:

                           Scales Code (2.20)

S.1.8.  Computer Scales
S.1.8.2.  Money-Value Computation
S.1.8.3.  Customer's Indications
S.1.8.4.  Recorded Representations, Point of Sale
S.2.5.2.  Jeweler's, Prescription, & Class I & II Scales
S.3.3.  Scoop Counterbalance
N.1.3.2  Dairy-Product Test Scales
N.1.5.  Discrimination Test (Not adopted for Grain Test Scales only)
N.1.8.  Material Tests
N.3.1.2.  Interim Approval
N.3.1.3.  Enforcement Action for Inaccuracy
N.4.  Coupled-in-Motion Railroad Weighing Systems
N.5.  Nominal Capacity of Prescription Scales
T.1.2.  Postal and Parcel Post Scales
T.2.3.  Prescription Scales
T.2.4.  Jewelers' Scales (all sections)
T.2.5.  Dairy--Product-Test Scales (all sections)
T.N.3.9.  Materials Test on Customer-Operated Bulk-Weighing Systems for 
Recycled Materials
UR.1.4.  Grain Test Scales: Value of Scale Divisions
UR.3.1.  Recommended Minimum Load
UR.3.1.1.  Minimum Load, Grain Dockage
Automatic Bulk Weighing Systems (2.22): UR.1.1.  Selection Requirements 
for Systems Used to Weight Grain.

[60 FR 31910, June 19, 1995]



Sec. 802.1  Qualified laboratories.

    (a) Metrology laboratories. (1) Any State metrology laboratory 
currently approved by the NBS ongoing certification program having 
auditing capability is automatically approved by the Service.
    (2) Any county or city weights and measures jurisdiction approved by 
NBS or by their respective NBS-Certified State laboratory as being 
equipped with appropriate traceable standards and trained staff to 
provide valid calibration is approved by the Service. The State approval 
may be documented by a certificate or letter. The jurisdiction must be 
equipped to provide suitable certification documentation.
    (3) Any commercial industrial laboratory primarily involved in the 
business of sealing and calibrating test weights (standards) will be 
approved by the Service provided:
    (i) It requests written authority to perform tolerance testing of 
weights used within the Service's program(s)

[[Page 595]]

through their approved State jurisdiction. Copies of its request and 
written reference regarding the State decision shall be provided to the 
Service. A positive decision by the State will be required as a 
prerequisite to the Service's granting approval to any commercial 
laboratory to tolerance test the weights used in testing scales under 
the jurisdiction of the Service;
    (ii) It has NBS traceable standards (through the State) and trained 
staff to perform calibrations in a manner prescribed by NBS and/or the 
State;
    (iii) It is equipped to provide suitable certification 
documentation;
    (iv) It permits the Service to make onsite visits to laboratory 
testing space.
    (4) Approval of the commercial industrial laboratory will be at the 
Service's discretion. Once it has obtained approval, the commercial 
industrial laboratory maintains its site in a manner prescribed by the 
State and the Service.
    (b) Type evaluation laboratories. Any State measurement laboratory 
currently certified by NBS in accordance with its program for the 
Certification of Capability of State Measurement Laboratories to conduct 
evaluations under the National Type Evaluation Program is approved by 
the Service.

(Approved by the Office of Management and Budget under control number 
0580-0011)

[51 FR 7052, Feb. 28, 1986, as amended at 54 FR 5925, Feb. 7, 1989]



PART 810--OFFICIAL UNITED STATES STANDARDS FOR GRAIN--Table of Contents




                      Subpart A--General Provisions

                              Terms Defined

Sec.
810.101  Grains for which standards are established.
810.102  Definition of other terms.

            Principles Governing the Application of Standards

810.103  Basis of determination.
810.104  Percentages.

           Grades, Grade Requirements, and Grade Designations

810.105  Grades and grade requirements.
810.106  Grade designations.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

810.107  Special grades and special grade requirements.
810.108  Special grade designations.

              Subpart B--United States Standards for Barley

                              Terms Defined

810.201  Definition of barley.
810.202  Definition of other terms.

            Principles Governing the Application of Standards

810.203  Basis of determination.

                      Grades and Grade Requirements

810.204  Grades and grade requirements for Six-rowed Malting barley and 
          Six-rowed Blue Malting barley.
810.205  Grades and grade requirements for Two-rowed Malting barley.
810.206  Grades and grade requirements for barley.

              Special Grades and Special Grade Requirements

810.207  Special grades and special grade requirements.

      Subpart C--United States Standards for Canola--Terms Defined

810.301  Definition of canola.
810.302  Definitions of other terms.

            Principles Governing the Application of Standards

810.303  Basis of determination.

                      Grades and Grade Requirements

810.304  Grades and grade requirements for canola.

              Special Grades and Special Grade Requirements

810.305  Special grades and special grade requirements.

                          Nongrade Requirements

810.306  Nongrade requirements.

               Subpart D--United States Standards for Corn

                              Terms Defined

810.401  Definition of corn.
810.402  Definition of other terms.

            Principles Governing the Application of Standards

810.403  Basis of determination.

[[Page 596]]

                      Grades and Grade Requirements

810.404  Grades and grade requirements for corn.

              Special Grades and Special Grade Requirements

810.405  Special grades and special grade requirements.

             Subpart E--United States Standards for Flaxseed

                              Terms Defined

810.601  Definition of flaxseed.
810.602  Definition of other terms.

            Principles Governing the Application of Standards

810.603  Basis of determination.

                      Grades and Grade Requirements

810.604  Grades and grade requirements for flaxseed.

           Subpart F--United States Standards for Mixed Grain

                              Terms Defined

810.801  Definition of mixed grain.
810.802  Definition of other terms.

            Principles Governing the Application of Standards

810.803  Basis of determination.

                      Grades and Grade Requirements

810.804  Grades and grade requirements for mixed grain.

              Special Grades and Special Grade Requirements

810.805  Special grades and special grade requirements.

               Subpart G--United States Standards for Oats

                              Terms Defined

810.1001  Definition of oats.
810.1002  Definition of other terms.

            Principles Governing the Application of Standards

810.1003  Basis of determination.

                      Grades and Grade Requirements

810.1004  Grades and grade requirements for oats.

              Special Grades and Special Grade Requirements

810.1005  Special grades and special grade requirements.

               Subpart H--United States Standards for Rye

                              Terms Defined

810.1201  Definition of rye.
810.1202  Definition of other terms.

            Principles Governing the Application of Standards

810.1203  Basis of determination.

                      Grades and Grade Requirements

810.1204  Grades and grade requirements for rye.

              Special Grades and Special Grade Requirements

810.1205  Special grades and special grade requirements.

             Subpart I--United States Standards for Sorghum

                              Terms Defined

810.1401  Definition of sorghum.
810.1402  Definition of other terms.

            Principles Governing the Application of Standards

810.1403  Basis of determination.

                      Grades and Grade Requirements

810.1404  Grades and grade requirements for sorghum.

              Special Grades and Special Grade Requirements

810.1405  Special grades and special grade requirements.

             Subpart J--United States Standards for Soybeans

                              Terms Defined

810.1601  Definition of soybeans.
810.1602  Definition of other terms.

            Principles Governing the Application of Standards

810.1603  Basis of determination.

                      Grades and Grade Requirements

810.1604  Grades and grade requirements for soybeans.

[[Page 597]]

              Special Grades and Special Grade Requirements

810.1605  Special grades and special grade requirements.

          Subpart K--United States Standards for Sunflower Seed

                              Terms Defined

810.1801  Definition of sunflower seed.
810.1802  Definition of other terms.

            Principles Governing the Application of Standards

810.1803  Basis of determination.

                      Grades and Grade Requirements

810.1804  Grades and grade requirements for sunflower seed.

            Subpart L--United States Standards for Triticale

                              Terms Defined

810.2001  Definition of triticale.
810.2002  Definition of other terms.

            Principles Governing the Application of Standards

810.2003  Basis of determination.

                      Grades and Grade Requirements

810.2004  Grades and grade requirements for triticale.

              Special Grades and Special Grade Requirements

810.2005  Special grades and special grade requirements.

              Subpart M--United States Standards for Wheat

                              Terms Defined

810.2201  Definition of wheat.
810.2202  Definition of other terms.

            Principles Governing the Application of Standards

810.2203  Basis of determination.

                      Grades and Grade Requirements

810.2204  Grades and grade requirements for wheat.

              Special Grades and Special Grade Requirements

810.2205  Special grades and special grade requirements.

    Authority: Pub. L. 94-582, 90 Stat. 2867, as amended (7 U.S.C. 71 et 
seq.).

    Source: 52 FR 24418, June 30, 1987, unless otherwise noted.



                      Subpart A--General Provisions

    Note: Compliance with the provisions of these standards does not 
excuse failure to comply with the provisions of the Federal Food, Drug, 
and Cosmetic Act, or other Federal laws.

                              Terms Defined



Sec. 810.101  Grains for which standards are established.

    Grain refers to barley, canola, corn, flaxseed, mixed grain, oats, 
rye, sorghum, soybeans, sunflower seed, triticale, and wheat. Standards 
for these food grains, feed grains, and oilseeds are established under 
the United States Grain Standards Act.

[57 FR 3274, Jan. 29, 1992]



Sec. 810.102  Definition of other terms.

    Unless otherwise stated, the definitions in this section apply to 
all grains. All other definitions unique to a particular grain are 
contained in the appropriate subpart for that grain.
    (a) Distinctly low quality. Grain that is obviously of inferior 
quality because it is in an unusual state or condition, and that cannot 
be graded properly by use of other grading factors provided in the 
standards. Distinctly low quality includes the presence of any objects 
too large to enter the sampling device; i.e., large stones, wreckage, or 
similar objects.
    (b) Moisture. Water content in grain as determined by an approved 
device according to procedures prescribed in FGIS instructions.
    (c) Stones. Concreted earthy or mineral matter and other substances 
of similar hardness that do not disintegrate in water.
    (d) Test weight per bushel. The weight per Winchester bushel 
(2,150.42 cubic inches) as determined using an approved device according 
to procedures prescribed in FGIS instructions. Test weight per bushel in 
the standards for corn, mixed grain, oats, sorghum, and soybeans is 
determined on the original sample. Test weight per bushel in the 
standards for barley, flaxseed, rye, sunflower seed, triticale, and 
wheat is determined after mechanically cleaning

[[Page 598]]

the original sample. Test weight per bushel is recorded to the nearest 
tenth pound for corn, rye, triticale, and wheat. Test weight per bushel 
for all other grains, if applicable, is recorded in whole and half 
pounds with a fraction of a half pound disregarded. Test weight per 
bushel is not an official factor for canola.
    (e) Whole kernels. Grain with \1/4\ or less of the kernel removed.

[52 FR 24418, June 30, 1987, as amended at 60 FR 61196, Nov. 29, 1995]

            Principles Governing the Application of Standards



Sec. 810.103  Basis of determination.

    (a) Distinctly low quality. The determination of distinctly low 
quality is made on the basis of the lot as a whole at the time of 
sampling when a condition exists that may or may not appear in the 
representative sample and/or the sample as a whole.
    (b) Certain quality determinations. Each determination of rodent 
pellets, bird droppings, other animal filth, broken glass, castor beans, 
cockleburs, crotalaria seeds, dockage, garlic, live insect infestation, 
large stones, moisture, temperature, an unknown foreign substance(s), 
and a commonly recognized harmful or toxic substance(s) is made on the 
basis of the sample as a whole. When a condition exists that may not 
appear in the representative sample, the determination may be made on 
the basis of the lot as a whole at the time of sampling according to 
procedures prescribed in FGIS instructions.
    (c) All other determinations. The basis of determination for all 
other factors is contained in the individual standards.



Sec. 810.104  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure; e.g., report 8.34 as 8.3, and 1.22 as 1.2.
    (b) Recording. The percentage of dockage in flaxseed and sorghum is 
reported in whole percent with fractions of a percent being disregarded. 
Dockage in barley and triticale is reported in whole and half percent 
with a fraction less than one-half percent being disregarded. Dockage in 
wheat and rye is reported in whole and tenth percents to the nearest 
tenth percent. Foreign material in sunflower seed is reported to the 
nearest one-half percent. Ranges of sunflower seed foreign material are 
reported as follows: 0.0 to 0.24 is reported as 0.0 percent, 0.25 to 
0.74 as 0.5 percent, 0.75 to 1.24 as 1.0 percent, and the like. Foreign 
material and fines in mixed grain is reported in whole percent. The 
percentage of smut in barley, sclerotinia and stones in canola, and 
ergot in all grains is reported to the nearest hundredth percent. The 
percentage when determining the identity of all grains is reported to 
the nearest whole percent. Also reported to the nearest whole percent 
are the classes and subclasses in wheat; flint corn; flint and dent 
corn; waxy corn; classes in barley; and the percentage of each kind of 
grain in mixed grain. Plump barley shall be expressed in terms of the 
range in which it falls. Ranges shall be: Below 50 percent, 50 to 55 
percent, 56 to 60 percent, 61 to 65 percent, and the like. All other 
percentages are reported in tenths percent.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987, as amended at 
54 FR 24157, June 6, 1989; 57 FR 3274, Jan. 29, 1992; 59 FR 10573, Mar. 
7, 1994; 61 FR 18491, Apr. 26, 1996; 63 FR 20056, Apr. 23, 1998]

           Grades, Grade Requirements, and Grade Designations



Sec. 810.105  Grades and grade requirements.

    The grades and grade requirements for each grain (except mixed 
grain) and shown in the grade table(s) of the respective standards. 
Mixed grain grade requirements are not presented in tabular form.



Sec. 810.106  Grade designations.

    (a) Grade designations for grain. The grade designations include in 
the following order:
    (1) The letters ``U.S.'';

[[Page 599]]

    (2) The abbreviation ``No.'' and the number of the grade or the 
words ``Sample grade'';
    (3) When applicable, the subclass;
    (4) The class or kind of grain;
    (5) When applicable, the special grade(s) except in the case of 
bright, extra heavy, and heavy oats or plump rye, the special grades, 
``bright'', ``extra heavy'', ``heavy'' and ``plump'' will precede the 
word ``oats'' or ``rye'' as applicable; and
    (6) When applicable, the word ``dockage'' together with the 
percentage thereof.

When applicable, the remarks section of the certificate will include in 
the order of predominance; in the case of a mixed class, the name and 
approximate percentage of the classes; in the case of sunflower seed, 
the percentage of admixture; in the case of mixed grain, the grains 
present in excess of 10.0 percent of the mixture and when applicable, 
the words Other grains followed by a statement of the percentage of the 
combined quantity of those kinds of grains, each of which is present in 
a quantity less than 10.0 percent; in the case of barley, if requested, 
the word ``plump'' with the percentage range thereof; in the case of 
wheat, if requested, the percentage of protein content.
    (b) Optional grade designations. In addition to paragraph (a) of 
this Section, grain may be certificated under certain conditions as 
described in FGIS instructions when supported by official analysis, as 
``U.S. No. 2 or better (type of grain)'', ``U.S. No. 3 or better (type 
of grain)'', and the like.

[52 FR 24418, June 30, 1987, as amended at 53 FR 15017, Apr. 27, 1988]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec. 810.107  Special grades and special grade requirements.

    A special grade serves to draw attention to a special factor or 
condition present in the grain and, when applicable, is supplemental to 
the grade assigned under Sec. 810.106. Except for the special grade 
``infested,'' the special grades are identified and requirements are 
established in each respective grain standards.
    (a) Infested wheat, rye, and triticale. Tolerances for live insects 
responsible for infested wheat, rye, and triticale are defined according 
to sampling designations as follows:
    (1) Representative sample. The representative sample consists of the 
work portion, and the file sample if needed and when available. These 
grains will be considered infested if the representative sample (other 
than shiplots) contains two or more live weevils, or one live weevil and 
one or more other live insects injurious to stored grain, or two or more 
live insects injurious to stored grain.
    (2) Lot as a whole (stationary). The lot as a whole is considered 
infested when two or more live weevils, or one live weevil and one or 
more other live insects injurious to stored grain, or two or more other 
live insects injurious to stored grain are found in, on, or about the 
lot (excluding submitted samples and shiplots).
    (3) Sample as a whole (continuous loading/unloading of shiplots and 
bargelots). The minimum sample size for bargelots and shiplots is 500 
grams per each 2,000 bushels of grain. The sample as a whole is 
considered infested when a component (as defined in FGIS instructions) 
contains two or more live weevils, or one live weevil and one or more 
other live insects injurious to stored grain, or two or more other live 
insects injurious to stored grain.
    (b) Infested barley, canola, corn, oats, sorghum, soybeans, 
sunflower seed, and mixed grain. Tolerances for live insects responsible 
for infested barley, canola, corn, oats, sorghum, soybeans, sunflower 
seed, and mixed grain are defined according to sampling designations as 
follows:
    (1) Representative sample. The representative sample consists of the 
work portion, and the file sample if needed and when available. These 
grains will be considered infested if the representative sample (other 
than shiplots) contains two or more live weevils, or one live weevil and 
five or more other live insects injurious to stored grain, or ten or 
more other live insects injurious to stored grain.

[[Page 600]]

    (2) Lot as a whole (stationary). The lot as a whole is considered 
infested when two or more live weevils, or one live weevil and five or 
more other live insects injurious to stored grain, or ten or more other 
live insects injurious to stored grain are found in, on, or about the 
lot (excluding submitted samples and shiplots).
    (3) Sample as a whole (continuous loading/unloading of shiplots and 
bargelots). The minimum sample for shiplots and bargelots is 500 grams 
per each 2,000 bushels of grain. The sample as a whole is considered 
infested when a component (as defined in FGIS instructions) contains two 
or more live weevils, or one live weevil and five or more other live 
insects injurious to stored grain, or ten or more other live insects 
injurious to stored grain.

[52 FR 24441, June 30, 1987, as amended at 57 FR 3274, Jan. 29, 1992]



Sec. 810.108  Special grade designations.

    Special grade designations are shown as prescribed in Sec. 810.106. 
Multiple special grade designations will be listed in alphabetical 
order. In the case of treated wheat, the official certificate shall show 
whether the wheat has been scoured, limed, washed, sulfured, or 
otherwise treated.



              Subpart B--United States Standards for Barley

                              Terms Defined



Sec. 810.201  Definition of barley.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of whole kernels of cultivated barley (Hordeum vulgare L.) and not 
more than 25 percent of other grains for which standards have been 
established under the United States Grain Standards Act. The term 
``barley'' as used in these standards does not include hull-less barley 
or black barley.



Sec. 810.202  Definition of other terms.

    (a) Black barley. Barley with black hulls.
    (b) Broken kernels. Barley with more than \1/4\ of the kernel 
removed.
    (c) Classes. There are two classes of barley: Malting barley and 
Barley.
    (1) Malting barley. Barley of a six-rowed or two-rowed malting type. 
The class Malting barley is divided into the following three subclasses:
    (i) Six-rowed Malting barley. Barley that has a minimum of 95.0 
percent of a six-rowed suitable malting type that has 90.0 percent or 
more of kernels with white aleurone layers that contains not more than 
1.9 percent injured-by-frost kernels, 0.4 percent frost-damaged kernels, 
0.2 percent injured-by-heat kernels, and 0.1 percent heat-damaged 
kernels. Six-rowed Malting barley shall not be infested, blighted, 
ergoty, garlicky, or smutty as defined in Sec. 810.107(b) and 
Sec. 810.206.
    (ii) Six-rowed Blue Malting barley. Barley that has a minimum of 
95.0 percent of a six-rowed suitable malting type that has 90.0 percent 
or more of kernels with blue aleurone layers that contains not more than 
1.9 percent injured-by-frost kernels, 0.4 percent frost-damaged kernels, 
0.2 percent injured-by-heat kernels, and 0.1 percent heat-damaged 
kernels. Six-rowed Blue Malting barley shall not be infested, blighted, 
ergoty, garlicky, or smutty as defined in Sec. 810.107(b) and 
Sec. 810.206.
    (iii) Two-rowed Malting barley. Barley that has a minimum of 95.0 
percent of a two-rowed suitable malting type that contains not more than 
1.9 percent injured-by-frost kernels, 0.4 percent frost-damaged kernels, 
0.2 percent injured-by-heat kernels, 0.1 percent heat-damaged kernels, 
1.9 percent injured-by-mold kernels, and 0.4 percent mold-damaged 
kernels. Two-rowed Malting barley shall not be infested, blighted, 
ergoty, garlicky, or smutty as defined in Sec. 810.107(b) and 
Sec. 810.206.
    (2) Barley. Any barley of a six-rowed or two-rowed type. The class 
Barley is divided into the following three subclasses:
    (i) Six-rowed barley. Any Six-rowed barley that contains not more 
than 10.0 percent of two-rowed varieties.
    (ii) Two-rowed barley. Any Two-rowed barley with white hulls that 
contains not more than 10.0 percent of six-rowed varieties.
    (iii) Barley. Any barley that does not meet the requirements for the 
subclasses Six-rowed barley or Two-rowed barley.

[[Page 601]]

    (d) Damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are badly ground-damaged, badly weather-
damaged, diseased, frost-damaged, germ-damaged, heat-damaged, injured-
by-heat, insect-bored, mold-damaged, sprout-damaged, or otherwise 
materially damaged.
    (e) Dockage. All matter other than barley that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of barley kernels removed in properly separating the 
material other than barley and that cannot be recovered by properly 
rescreening or recleaning.
    (f) Foreign material. All matter other than barley, other grains, 
and wild oats that remains in the sample after removal of dockage.
    (g) Frost-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are badly shrunken and distinctly discolored 
black or brown by frost.
    (h) Germ-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that have dead or discolored germ ends.
    (i) Heat-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are materially discolored and damaged by 
heat.
    (j) Injured-by-frost kernels. Kernels and pieces of barley kernels 
that are distinctly indented, immature or shrunken in appearance or that 
are light green in color as a result of frost before maturity.
    (k) Injured-by-heat kernels. Kernels, pieces of barley kernels, 
other grains, and wild oats that are slightly discolored as a result of 
heat.
    (l) Injured-by-mold kernels. Kernels, pieces of barley kernels 
containing slight evidence of mold.
    (m) Mold-damaged kernels. Kernels, pieces of barley kernels, other 
grains, and wild oats that are weathered and contain considerable 
evidence of mold.
    (n) Other grains. Black barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, triticale, and wheat.
    (o) Plump barley. Barley that remains on top of a \6/64\  x  \3/4\ 
slotted-hole sieve after sieving according to procedures prescribed in 
FGIS instructions.
    (p) Sieves. (1) \5/64\  x  \3/4\ slotted-hole sieve. A metal sieve 
0.032 inch thick with slotted perforations 0.0781 (\5/64\) inch by 0.750 
(\3/4\) inch.
    (2) 5-\1/2\ \6/64\  x  \3/4\ slotted-hole sieve. A metal sieve 0.032 
inch thick with slotted perforations 0.0895 (5-\1/2\/64) inch by 0.750 
(\3/4\) inch.
    (3) \6/64\  x  \3/4\ slotted-hole sieve. A metal sieve 0.032 inch 
thick with slotted perforations 0.0937 (\6/64\) inch by 0.750 (\3/4\) 
inch.
    (q) Skinned and broken kernels. Barley kernels that have one-third 
or more of the hull removed, or that the hull is loose or missing over 
the germ, or broken kernels, or whole kernels that have a part or all of 
the germ missing.
    (r) Sound barley. Kernels and pieces of barley kernels that are not 
damaged, as defined under (d) of this section.
    (s) Suitable malting type. Varieties of malting barley that are 
recommended by the American Malting Barley Association and other malting 
type(s) used by the malting and brewing industry. The varieties are 
listed in GIPSAs instructions.
    (t) Thin barley. Thin barley shall be defined for the appropriate 
class as follows:
    (1) Malting barley. Six-rowed Malting barley that passes through a 
\5/64\  x  \3/4\ slotted-hole sieve and Two-rowed Malting barley which 
passes through a \5.5\/64  x  \3/4\ slotted-hole sieve in 
accordance with procedures prescribed in GIPSAs instructions.
    (2) Barley. Six-rowed barley, Two-rowed barley, or Barley that 
passes through a \5/64\  x  \3/4\ slotted-hole sieve in accordance with 
procedures prescribed in GIPSAs instructions.
    (u) Wild oats. Seeds of Avena fatua L. and A. sterilis L.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987; 61 FR 18491, 
Apr. 26, 1996]

[[Page 602]]

            Principles Governing the Application of Standards



Sec. 810.203  Basis of determination.

    All other determinations. Each determination of heat-damaged 
kernels, injured-by-heat kernels, and white or blue aleurone layers in 
Six-rowed barley is made on pearled, dockage-free barley. Other 
determinations not specifically provided for under the General 
Provisions are made on the basis of the grain when free from dockage, 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements


 Sec. 810.204    Grades and grade requirements for Six-rowed Malting 
        barley and Six-rowed Blue Malting barley.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Minimum limits of--                          Maximum limits of--
                                                              ------------------------------------------------------------------------------------------
                                                                  Test                                                               Skinned
                            Grade                                weight    Suitable     Sound      Damaged     Foreign     Other       and        Thin
                                                                  per      malting   barley \1\  kernels \1\   material    grains     broken     barley
                                                                 bushel     types     (percent)   (percent)   (percent)  (percent)   kernels   (percent)
                                                                (pounds)  (percent)                                                 (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................       47.0       95.0        97.0         2.0         0.5        2.0        4.0        7.0
U.S. No. 2...................................................       45.0       95.0        94.0         3.0         1.0        3.0        6.0       10.0
U.S. No. 3...................................................       43.0       95.0        90.0         4.0         2.0        5.0        8.0       15.0
U.S. No. 4...................................................       43.0       95.0        87.0         5.0         3.0        5.0       10.0       15.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered against sound barley.


    Notes: Malting barley shall not be infested in accordance with 
Sec. 810.107(b) and shall not contain any special grades as defined in 
Sec. 810.206. Six-rowed Malting barley and Six- rowed Blue Malting 
barley varieties not meeting the requirements of this section shall be 
graded in accordance with standards established for the class Barley.
[61 FR 18492, Apr. 26, 1996]


Sec. 810.205    Grades and grade requirements for Two-rowed Malting 
        barley.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Minimum limits of--                           Maximum limits of--
                                                              ------------------------------------------------------------------------------------------
                                                                              Suitable                                          Skinned and
                            Grade                              Test weight    malting       Sound      Wild oats     Foreign       broken    Thin barley
                                                                per bushel     types      barley \1\   (percent)     material     kernels     (percent)
                                                                 (pounds)    (percent)    (percent)                 (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................         50.0         97.0         98.0          1.0          0.5          5.0          5.0
U.S. No. 2...................................................         48.0         97.0         98.0          1.0          1.0          7.0          7.0
U.S. No. 3...................................................         48.0         95.0         96.0          2.0          2.0         10.0         10.0
U.S. No. 4...................................................         48.0         95.0         93.0          3.0          3.0         10.0         10.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels or considered against sound barley.


    Notes: Malting barley shall not be infested in accordance with 
Sec. 810.107(b) and shall not contain any special grades as defined in 
Sec. 810.206. Two-rowed Malting barley varieties not meeting the 
requirements of this section shall be graded in accordance with 
standards established for the class Barley.
[61 FR 18492, Apr. 26, 1996]


Sec. 810.206    Grades and grade requirements for barley.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Minimum limits of--                          Maximum Limits of--
                                                              ------------------------------------------------------------------------------------------
                                                                                                          Heat
                            Grade                              Test weight     Sound       Damaged      damaged      Foreign       Broken    Thin barley
                                                                per bushel     barley    kernels \1\    kernels      material     kernels     (percent)
                                                                 (pounds)    (percent)    (percent)    (percent)    (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................         47.0         97.0          2.0          0.2          1.0          4.0         10.0
U.S. No. 2...................................................         45.0         94.0          4.0          0.3          2.0          8.0         15.0
U.S. No. 3...................................................         43.0         90.0          6.0          0.5          3.0         12.0         25.0
U.S. No. 4...................................................         40.0         85.0          8.0          1.0          4.0         18.0         35.0

[[Page 603]]

 
U.S. No. 5...................................................         36.0         75.0         10.0          3.0          5.0         28.0         75.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. Sample Grade:
U.S. Sample grade shall be barley that:
(a) Does not meet the requirements for the grades 1, 2, 3, 4, or 5; or
(b) Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces of
  glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more caster beans (Ricinus communis L.), 4 or more particles of unknown foreign substance(s)
  or commonly recognized harmful or toxic substance(s), 8 or more cocklebur (Xanthium spp.) or similar seeds singly or in combination, 10 or more rodent
  pellets, bird droppings, or equivalent quantity of other animal filth per 1\1/8\ to 1\1/4\ quarts of barley; or
(c) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
(d) Is heating or otherwise of distinctly low quality.
\1\ Includes heat-damaged kernels. Injured-by-frost kernels and injured-by-mold kernels are not considered damaged kernels.

[61 FR 18492, Apr. 26, 1996]

              Special Grades and Special Grade Requirements



Sec. 810.207  Special grades and special grade requirements.

    (a) Blighted barley. Barley that contains more than 4.0 percent of 
fungus-damaged and/or mold-damaged kernels.
    (b) Ergoty barley. Barley that contains more than 0.10 percent 
ergot.
    (c) Garlicky barley. Barley that contains three or more green garlic 
bulblets, or an equivalent quantity of dry or partly dry bulblets in 500 
grams of barley.
    (d) Smutty barley. Barley that has kernels covered with smut spores 
to give a smutty appearance in mass, or which contains more than 0.20 
percent smut balls.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



      Subpart C--United States Standards for Canola--Terms Defined

    Source: 57 FR 3274, Jan. 29, 1992, unless otherwise noted.



Sec. 810.301  Definition of canola.

    Seeds of the genus Brassica from which the oil shall contain less 
than 2 percent erucic acid in its fatty acid profile and the solid 
component shall contain less than 30.0 micromoles of any one or any 
mixture of 3-butenyl glucosinolate, 4-pentenyl glucosinolate, 2-hydroxy-
3-butenyl, or 2-hydroxy-4-pentenyl glucosinolate, per gram of air-dried, 
oil free solid. Before the removal of dockage, the seed shall contain 
not more than 10.0% of other grains for which standards have been 
established under the United States Grain Standards Act.



Sec. 810.302  Definitions of other terms.

    (a) Conspicuous Admixture. All matter other than canola, including 
but not limited to ergot, sclerotinia, and stones, which is conspicuous 
and readily distinguishable from canola and which remains in the sample 
after the removal of machine separated dockage. Conspicuous admixture is 
added to machine separated dockage in the computation of total dockage.
    (b) Damaged kernels. Canola and pieces of canola that are heat-
damaged, sprout-damaged, mold-damaged, distinctly green damaged, frost 
damaged, rimed damaged, or otherwise materially damaged.
    (c) Distinctly green kernels. Canola and pieces of canola which, 
after being crushed, exhibit a distinctly green color.
    (d) Dockage. All matter other than canola that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of canola kernels that cannot be recovered by properly 
rescreening or recleaning. Machine separated dockage is added to 
conspicuous admixture in the computation of total dockage.
    (e) Ergot. Sclerotia (sclerotium, sing.) of the fungus, Claviceps 
species, which are associated with some seeds other

[[Page 604]]

than canola where the fungal organism has replaced the seed.
    (f) Heat-damaged kernels. Canola and pieces of canola which, after 
being crushed, exhibit that they are discolored and damaged by heat.
    (g) Inconspicuous admixture. Any seed which is difficult to 
distinguish from canola. This includes, but is not limited to, common 
wild mustard (Brassica kaber and B. juncea), domestic brown mustard 
(Brassica juncea), yellow mustard (B. hirta), and seed other than the 
mustard group.
    (h) Sclerotia (Sclerotium, sing.). Dark colored or black resting 
bodies of the fungi Sclerotinia and Claviceps.
    (i) Sclerotinia. Genus name which includes the fungus Sclerotinia 
sclerotiorum which produces sclerotia. Canola is only infrequently 
infected, and the sclerotia, unlike sclerotia of ergot, are usually 
associated within the stem of the plants.

            Principles Governing the Application of Standards



Sec. 810.303  Basis of determination.

    Each determination of conspicuous admixture, ergot, sclerotinia, 
stones, damaged kernels, heat-damaged kernels, distinctly green kernels, 
and inconspicuous admixture is made on the basis of the sample when free 
from dockage. Other determinations not specifically provided for under 
the general provisions are made on the basis of the sample as a whole, 
except the determination of odor is made on either the basis of the 
sample as a whole or the sample when free from dockage. The content of 
glucosinolates and erucic acid is determined on the basis of the sample 
according to procedures prescribed in FGIS instructions.

                      Grades and Grade Requirements



Sec. 810.304  Grades and grade requirements for canola.

------------------------------------------------------------------------
                                                   Grades, U.S. Nos.
               Grading factors                --------------------------
                                                  1        2        3
------------------------------------------------------------------------
                                                 Maximum percent limits
                                                          of:
 
----------------------------------------------
Damaged kernels:
    Heat damaged.............................     0.1      0.5      2.0
    Distinctly green.........................     2.0      6.0     20.0
      Total..................................     3.0     10.0     20.0
Conspicuous admixture:
    Ergot....................................     0.05     0.05     0.05
    Sclerotinia..............................     0.05     0.10     0.15
    Stones...................................     0.05     0.05     0.05
      Total..................................     1.0      1.5      2.0
Inconspicuous admixture......................     5.0      5.0      5.0
------------------------------------------------------------------------
                                                Maximum count limits of:
----------------------------------------------
 
Other material:
    Animal filth.............................     3        3        3
    Glass....................................     0        0        0
    Unknown foreign substance................     1        1        1
------------------------------------------------------------------------
U.S. Sample grade Canola that:
    (a) Does not meet the requirements for
     U.S. Nos. 1, 2, 3; or
    (b) Has a musty, sour, or commercially
     objectionable foreign odor; or
    (c) Is heating or otherwise of distinctly
     low quality.
------------------------------------------------------------------------

              Special Grades and Special Grade Requirements



Sec. 810.305  Special grades and special grade requirements.

    Garlicky canola. Canola that contains more than two green garlic 
bulblets or an equivalent quantity of dry or partly dry bulblets in 
approximately a 500 gram portion.

                          Nongrade Requirements



Sec. 810.306  Nongrade requirements.

    Glucosinolates. Content of glucosinolates in canola is determined 
according to procedures prescribed in FGIS instructions.



               Subpart D--United States Standards for Corn

                              Terms Defined



Sec. 810.401  Definition of corn.

    Grain that consists of 50 percent or more of whole kernels of 
shelled dent corn and/or shelled flint corn (Zea mays L.) and not more 
than 10.0 percent of other grains for which standards have been 
established under the United States Grain Standards Act.



Sec. 810.402  Definition of other terms.

    (a) Broken corn. All matter that passes readily through a 12/64 
round-hole sieve and over a 6/64 round-hole

[[Page 605]]

sieve sample according to procedures prescribed in FGIS instructions.
    (b) Broken corn and foreign material. All matter that passes readily 
through a \12/64\ round-hole sieve and all matter other than corn that 
remains in the sieved after sieving according to procedures prescribed 
in FGIS instructions.
    (c) Classes. There are three classes for corn: Yellow corn, White 
corn, and Mixed corn.
    (1) Yellow corn. Corn that is yellow-kerneled and contains not more 
than 5.0 percent of corn of other colors. Yellow kernels of corn with a 
slight tinge of red are considered yellow corn.
    (2) White corn. Corn that is white-kerneled and contains not more 
than 2.0 percent of corn of other colors. White kernels of corn with a 
slight tinge of light straw or pink color are considered white corn.
    (3) Mixed corn. Corn that does not meet the color requirements for 
either of the classes Yellow corn or White corn and includes white-
capped Yellow corn.
    (d) Damaged kernels. Kernels and pieces of corn kernels that are 
badly ground-damaged, badly weather-damaged, diseased, frost-damaged, 
germ-damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, 
or otherwise materially damaged.
    (e) Foreign material. All matter that passes readily through a 6/64 
round-hole sieve and all matter other than corn that remains on top of 
the 12/64 round-hole sieve according to procedures prescribed in FGIS 
instructions.
    (f) Heat-damaged kernels. Kernels and pieces of corn kernels that 
are materially discolored and damaged by heat.
    (g) Sieves. (1) 12/64 round-hole sieve. A metal sieve 0.032 inch 
thick with round perforations 0.1875 (12/64) inch in diameter which are 
1/4 inch from center to center. The perforations of each row shall be 
staggered in relation to the adjacent row.
    (2) 6/64 round-hole sieve. A metal sieve 0.032 inch thick with round 
perforations 0.0937 (6/64) inch in diameter which are 5/32 inch from 
center to center. The perforations of each row shall be staggered in 
relation to the adjacent row.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24437, June 30, 1987; 
52 FR 28534, July 31, 1987]

            Principles Governing the Application of Standards



Sec. 810.403  Basis of determination.

    Each determination of class, damaged kernels, heat-damaged kernels, 
waxy corn, flint corn, and flint and dent corn is made on the basis of 
the grain after the removal of the broken corn and foreign material. 
Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain as a whole, except the 
determination of odor is made on either the basis of the grain as a 
whole or the grain when free from broken corn and foreign material.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

                      Grades and Grade Requirements


Sec. 810.404    Grades and grade requirements for corn.

----------------------------------------------------------------------------------------------------------------
                                                                                     Maximum limits of
                                                                          --------------------------------------
                                                                Minimum         Damaged kernels
                                                              test weight -------------------------- Broken corn
                            Grade                              per bushel      Heat                  and foreign
                                                                (pounds)     damaged       Total       material
                                                                             kernels     (percent)    (percent)
                                                                            (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1..................................................         56.0          0.1          3.0          2.0
U.S. No. 2..................................................         54.0          0.2          5.0          3.0
U.S. No. 3..................................................         52.0          0.5          7.0          4.0
U.S. No. 4..................................................         49.0          1.0         10.0          5.0
U.S. No. 5..................................................         46.0          3.0         15.0          7.0
----------------------------------------------------------------------------------------------------------------
U.S. Sample Grade
  U.S. Sample grade is corn that:

[[Page 606]]

 
    (a) Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, 4, or 5; or
    (b) Contains stones with an aggregate weight in excess of 0.1 percent of the sample weight, 2 or more pieces
  of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or
  more particles of an unknown foreign substance(s)or a commonly recognized harmful or toxic substance(s), 8 or
  more cockleburs (Xanthium spp.), or similar seeds singly or in combination, or animal filth in excess of 0.20
  percent in 1,000 grams; or
    (c) Has a musty, sour, or commercially objectionable foreign odor; or
    (d) Is heating or otherwise of distinctly low quality.

[60 FR 61196, Nov. 29, 1995]

              Special Grades and Special Grade Requirements



Sec. 810.405  Special grades and special grade requirements.

    (a) Flint corn. Corn that consists of 95 percent or more of flint 
corn.
    (b) Flint and dent corn. Corn that consists of a mixture of flint 
and dent corn containing more than 5.0 percent but less than 95 percent 
of flint corn.
    (c) Waxy corn. Corn that consists of 95 percent or more waxy corn, 
according to procedures prescribed in FGIS instructions.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987; 
52 FR 28534, July 31, 1987]



             Subpart E--United States Standards for Flaxseed

                              Terms Defined



Sec. 810.601  Definition of flaxseed.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of common flaxseed (Linum usitatissimum L.) and not more than 20 
percent of other grains for which standards have been established under 
the United States Grain Standards Act and which, after the removal of 
dockage, contains 50 percent or more of whole flaxseed.



Sec. 810.602  Definition of other terms.

    (a) Damaged kernels. Kernels and pieces of flaxseed kernels that are 
badly ground-damaged, badly weather-damaged, diseased, frost-damaged, 
germ-damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, 
or otherwise materially damaged.
    (b) Dockage. All matter other than flaxseed that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of flaxseed kernels removed in properly separating the 
material other than flaxseed and that cannot be recovered by properly 
rescreening or recleaning.
    (c) Heat-damaged kernels. Kernels and pieces of flaxseed kernels 
that are materially discolored and damaged by heat.
    (d) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, guar, hull-less barley, nongrain sorghum, oats, Polish wheat, 
popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, spelt, 
sunflower seed, sweet corn, triticale, wheat, and wild oats.

            Principles Governing the Application of Standards



Sec. 810.603  Basis of determination.

    Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain when free from dockage, 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements



Sec. 810.604  Grades and grade requirements for flaxseed.

------------------------------------------------------------------------
                                                      Maximum limits of
                                           Minimum    damaged kernels--
                                            test   ---------------------
                  Grade                    weight      Heat
                                             per     damaged     Total
                                           bushel    kernels   (percent)
                                          (pounds)  (percent)
------------------------------------------------------------------------
U.S. No. 1..............................      49.0        0.2       10.0
U.S. No. 2..............................      47.0        0.5       15.0

[[Page 607]]

 
U.S. Sample grade--
  U.S. Sample grade is flaxseed that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1 or 2;
     or
    (b) Contains 8 or more stones which have an aggregate weight in
     excess of 0.2 percent of the sample weight, 2 or more pieces of
     glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more
     castor beans (Ricinus communis L.), 4 or more particles of an
     unknown foreign substance(s) or a commonly recognized harmful or
     toxic substance(s), 10 or more rodent pellets, bird dropping, or
     equivalent quantity of other animal filth per 1\1/8\ to 1\1/4\
     quarts of flaxseed; or
    (c) Has musty, sour, or commercially objectionable foreign odor
     (except smut or garlic odor), or
    (d) Is heating or otherwise of distinctly low quality.
------------------------------------------------------------------------



           Subpart F--United States Standards for Mixed Grain

                              Terms Defined



Sec. 810.801  Definition of mixed grain.

    Any mixture of grains for which standards have been established 
under the United States Grain Standards Act, provided that such mixture 
does not come within the requirements of any of the standards for such 
grains; and that such mixture consists of 50 percent or more of whole 
kernels of grain and/or whole or broken soybeans which will not pass 
through a \5/64\ triangular-hole sieve and/or whole flaxseed that passes 
through such a sieve after sieving according to procedures prescribed in 
FGIS instructions.



Sec. 810.802  Definition of other terms.

    (a) Damaged kernels. Kernels and pieces of grain kernels for which 
standards have been established under the Act, that are badly ground-
damaged, badly weather-damaged, diseased, frost-damaged, germ-damaged, 
heat-damaged, insect-bored, mold-damaged, sprout-damaged, or otherwise 
materially damaged.
    (b) Foreign material and fines. All matter other than whole flaxseed 
that passes through a \5/64\ triangular-hole sieve, and all matter other 
than grains for which standards have been established under the Act, 
that remains in the sieved sample.
    (c) Grades. U.S. Mixed Grain, or U.S. Sample grade Mixed Grain, and 
special grades.
    (d) Heat-damaged kernels. Kernels and pieces of grain kernels for 
which standards have been established under the Act, that are materially 
discolored and damaged by heat.
    (e) Sieve--\5/64\ triangular-hole sieve. A metal sieve 0.032 inch 
thick with equilateral triangular perforations the inscribed circles of 
which are 0.0781 (\5/64\) inch in diameter.

            Principles Governing the Application of Standards



Sec. 810.803  Basis of determination.

    Each determination of damaged and heat-damaged kernels, and the 
percentage of each kind of grain in the mixture is made on the basis of 
the sample after removal of foreign material and fines. Other 
determinations not specifically provided for under the general 
provisions are made on the basis of the grain as a whole, except the 
determination of odor is made on either the basis of the grain as a 
whole or the grain when free from foreign material and fines.

                      Grades and Grade Requirements



Sec. 810.804  Grades and grade requirements for mixed grain.

    (a) U.S. Mixed Grain (grade). Mixed grain with not more than 15.0 
percent of damaged kernels, and not more than 3.0 percent of heat-
damaged kernels, and that otherwise does not meet the requirements for 
the grade U.S. Sample grade Mixed Grain.
    (b) U.S. Sample grade Mixed Grain. Mixed grain that:
    (1) Does not meet the requirements for the grade U.S. Mixed Grain; 
or
    (2) Contains more than 16.0 percent moisture; or
    (3) Contains 8 or more stones that have an aggregate weight in 
excess of 0.2 percent of the sample weight, 2 or more pieces of glass, 3 
or more Crotalaria seeds (Crotalaria spp.), 2 or more castor beans 
(Ricinus communis L.), 8 more cockleburs (Xanthium spp.) or similar 
seeds singly or in combination, 4 or more pieces of an unknown

[[Page 608]]

foreign substance(s) or a recognized harmful or toxic substance(s), 10 
or more rodent pellets, bird droppings, or an equivalent quantity of 
other animal filth per 1,000 grams of mixed grain; or
    (4) Is musty, sour, or heating; or
    (5) Has any commercially objectionable foreign odor except smut or 
garlic; or
    (6) Is otherwise of distinctly low quality.

              Special Grades and Special Grade Requirements



Sec. 810.805  Special grades and special grade requirements.

    (a) Blighted mixed grain. Mixed grain in which barley predominates 
and that contains more than 4.0 percent of fungus-damaged and/or mold-
damaged barley kernels.
    (b) Ergoty mixed grain. (1) Mixed grain in which rye or wheat 
predominates and that contains more than 0.30 percent ergot, or
    (2) Any other mixed grain that contains more than 0.10 percent 
ergot.
    (c) Garlicky mixed grain. (1) Mixed grain in which wheat, rye, or 
triticale predominates, and that contains 2 or more green garlic 
bulblets, or an equivalent quantity of dry or partly dry bulblets in 
1,000 grams of mixed grain; or
    (2) Any other mixed grain that contains 4 or more green garlic 
bulblets, or an equivalent quantity of dry or partly dry bulblets, in 
500 grams of mixed grain.
    (d) Smutty mixed grain. (1) Mixed grain in which rye, triticale, or 
wheat predominates, and that contains 15 or more average size smut 
balls, or an equivalent quantity of smut spores in 250 grams of mixed 
grain, or
    (2) Any other mixed grain that has the kernels covered with smut 
spores to give a smutty appearance in mass, or that contains more than 
0.2 percent smut balls.
    (e) Treated mixed grain. Mixed grain that has been scoured, limed, 
washed, sulfured, or treated in such a manner that its true quality is 
not reflected by the grade designation U.S. Mixed Grain or U.S. Sample 
grade Mixed Grain.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



               Subpart G--United States Standards for Oats

                              Terms Defined



Sec. 810.1001  Definition of oats.

    Grain that consists of 50 percent or more of oats (Avena sativa L. 
and A. byzantina C. Koch) and may contain, singly or in combination, not 
more than 25 percent of wild oats and other grains for which standards 
have been established under the United States Grain Standards Act.



Sec. 810.1002  Definition of other terms.

    (a) Fine seeds. All matter that passes through a \5/64\ triangular-
hole sieve after sieving according to procedures prescribed in FGIS 
instructions.
    (b) Foreign material. All matter other than oats, wild oats, and 
other grains.
    (c) Heat-damaged kernels. Kernels and pieces of oat kernels, other 
grains, and wild oats that are materially discolored and damaged by 
heat.
    (d) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, Polish wheat, 
popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, spelt, 
sunflower seed, sweet corn, triticale, and wheat.
    (e) Sieves--(1) \5/64\ triangular-hole sieve. A metal sieve 0.032 
inch thick with equilateral triangular perforations the inscribed 
circles of which are 0.0781 (\5/64\) inch in diameter.
    (2) 0.064  x  \3/8\ oblong-hole sieve. A metal sieve 0.032 inch 
thick with oblong perforations 0.064 inch by 0.375 (\3/8\) inch.
    (f) Sound oats. Kernels and pieces of oat kernels (except wild oats) 
that are not badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (g) Wild oats. Seeds of Avena fatua L. and A. sterillis L.

[[Page 609]]

            Principles Governing the Application of Standards



Sec. 810.1003  Basis of determination.

    Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain as a whole.

                      Grades and Grade Requirements


Sec. 810.1004    Grades and grade requirements for oats.

----------------------------------------------------------------------------------------------------------------
                                                     Minimum limits--                 Maximum limits--
                                                ----------------------------------------------------------------
                                                                              Heat-
                     Grade                       Test weight   Sound oats    damaged      Foreign     Wild oats
                                                  per bushel   (percent)     kernels      material    (percent)
                                                   (pounds)                 (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1.....................................         36.0         97.0          0.1          2.0          2.0
U.S. No. 2.....................................         33.0         94.0          0.3          3.0          3.0
U.S. No. 3 \1\.................................         30.0         90.0          1.0          4.0          5.0
U.S. No. 4 \2\.................................         27.0         80.0          3.0          5.0         10.0
U.S. Sample grade--
  U.S. Sample grade are oats which:
    (a) Do not meet the requirements for the grades U.S. Nos. 1, 2, 3, or 4; or
    (b) Contain 8 or more stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2
     or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus
     communis L.), 4 or more particles of an unknown foreign substance(s) or a commonly recognized harmful or
     toxic substance(s), 8 or more cocklebur (Xanthium spp.) or similar seeds singly or in combination, 10 or
     more rodent pellets, bird droppings, or equivalent quantity of other animal filth per 1\1/8\ to 1\1/4\
     quarts of oats; or
    (c) Have a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
    (d) Are heating or otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------
\1\ Oats that are slightly weathered shall be graded not higher than U.S. No. 3.
\2\ Oats that are badly stained or materially weathered shall be graded not higher than U.S. No. 4.

              Special Grades and Special Grade Requirements



Sec. 810.1005  Special grades and special grade requirements.

    (a) Bleached oats. Oats that in whole or in part, have been treated 
with sulfurous acid or any other bleaching agent.
    (b) Bright oats. Oats, except bleached oats, that are of good 
natural color.
    (c) Ergoty oats. Oats that contain more than 0.10 percent ergot.
    (d) Extra-heavy oats. Oats that have a test weight per bushel of 40 
pounds or more.
    (e) Garlicky oats. Oats that contain 4 or more green garlic bulblets 
or an equivalent quantity of dry or partly dry bulblets in 500 grams of 
oats.
    (f) Heavy oats. Oats that have a test weight per bushel of 38 pounds 
or more but less than 40 pounds.
    (g) Smutty oats. Oats that have kernels covered with smut spores to 
give a smutty appearance in mass, or that contain more than 0.2 percent 
of smut balls.
    (h) Thin oats. Oats that contain more than 20.0 percent of oats and 
other matter, except fine seeds, that pass through a 0.064  x  \3/8\ 
oblong-hole sieve but remain on top of a \5/64\ triangular-hole sieve 
after sieving according to procedures prescribed in FGIS instructions.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



               Subpart H--United States Standards for Rye

                              Terms Defined



Sec. 810.1201  Definition of rye.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of common rye (Secale cereale L.) and not more than 10 percent of 
other grains for which standards have been established under the United 
States Grain Standards Act and that, after

[[Page 610]]

the removal of dockage, contains 50 percent or more of whole rye.



Sec. 810.1202  Definition of other terms.

    (a) Damaged kernels. Kernels, pieces of rye kernels, and other 
grains that are badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (b) Dockage. All matter other than rye that can be removed from the 
original sample by use of an approved device in accordance with 
procedures prescribed in FGIS instructions. Also, underdeveloped, 
shriveled, and small pieces of rye kernels removed in properly 
separating the material other than rye and that cannot be recovered by 
properly rescreening and recleaning.
    (c) Foreign material. All matter other than rye that remains in the 
sample after the removal of dockage.
    (d) Heat-damaged kernels. Kernels, pieces of rye kernels, and other 
grains that are materially discolored and damaged by heat.
    (e) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, triticale, wheat, and wild oats.
    (f) Sieve--0.064  x  \3/8\ oblong-hole sieve. A metal sieve 0.032 
inch thick with oblong perforations 0.064 by 0.375 (\3/8\) inch.
    (g) Thin rye. Rye and other matter that passes through a 0.064  x  
\3/8\ oblong-hole sieve after sieving according to procedures prescribed 
in FGIS instructions.

            Principles Governing the Application of Standards



Sec. 810.1203  Basis of determination.

    Other determinations not specifically provided for under the general 
provisions are made on the basis of the grain when free from dockage, 
except the determination of odor is made on either the basis of the 
grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements


Sec. 810.1204    Grades and grade requirements for rye.

----------------------------------------------------------------------------------------------------------------
                                                                       Maximum limits of--
                                                ----------------------------------------------------------------
                                                     Foreign material           Damaged kernels
                                      Minimum   ----------------------------------------------------
               Grade                test weight    Foreign
                                     per bushel     matter                     Heat                    Thin Rye
                                      (pounds)    other than     Total       damaged       Total      (percent)
                                                    wheat      (percent)    (percent)    (percent)
                                                  (percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1........................         56.0          1.0          3.0          0.2          2.0         10.0
U.S. No. 2........................         54.0          2.0          6.0          0.2          4.0         15.0
U.S. No. 3........................         52.0          4.0         10.0          0.5          7.0         25.0
U.S. No. 4........................         49.0          6.0         10.0          3.0         15.0  ...........
U.S. Sample grade--
  U.S. Sample grade is rye that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, or 4; or
    (b) Contains 8 or more stones or any numbers of stones which have an aggregate weight in excess of 0.2
     percent of the sample weight, 2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or
     more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign substance(s) or a
     commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent
     quantity of other animal filth per 1\1/8\ to 1\1/4\ quarts of rye; or
    (c) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
    (d) Is heating or otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------


[[Page 611]]

              Special Grades and Special Grade Requirements



Sec. 810.1205  Special grades and special grade requirements.

    (a) Ergoty rye. Rye that contains more than 0.30 percent of ergot.
    (b) Garlicky rye. Rye that contains in a 1,000-gram portion more 
than six green garlic bulblets or an equivalent quantity of dry or 
partly dry bulblets.
    (c) Light garlicky rye. Rye that contains in a 1,000-gram portion 
two or more, but not more than six, green garlic bulblets or an 
equivalent quantity of dry or partly dry bulblets.
    (d) Light smutty rye. Rye that has an unmistakable odor of smut, or 
that contains in a 250-gram portion smut balls, portions of smut balls, 
or spores of smut in excess of a quantity equal to 14 smut balls but not 
in excess of a quantity equal to 30 smut balls of average size.
    (e) Plump rye. Rye that contains not more than 5.0 percent of rye 
and other matter that passes through a 0.064 x \3/8\ oblong-hole sieve.
    (f) Smutty rye. Rye that contains in a 250-gram portion smut balls, 
portions of smut balls, or spores of smut in excess of a quantity equal 
to 30 smut balls of average size.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



             Subpart I--United States Standards for Sorghum

                              Terms Defined



Sec. 810.1401  Definition of sorghum.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of whole kernels of sorghum (Sorghum bicolor (L.) Moench) excluding 
nongrain sorghum and not more than 10.0 percent of other grains for 
which standards have been established under the United States Grain 
Standards Act.



Sec. 810.1402  Definition of other terms.

    (a) Broken kernels. All matter which passes through a 5/64 
triangular-hole sieve and over a 2-1/2/64 round-hole sieve according to 
procedures prescribed in FGIS instructions.
    (b) Broken kernels and foreign material. The combination of broken 
kernels and foreign material as defined in paragraph (a) and (f) of this 
section.
    (c) Classes. There are four classes of sorghum: Sorghum, Tannin 
sorghum, White sorghum, and Mixed sorghum.
    (1) Sorghum. Sorghum which is low in tannin content due to the 
absence of a pigmented testa (subcoat) and contains less than 98.0 
percent White sorghum and not more than 3.0 percent Tannin sorghum. The 
pericarp color of this class may appear white, yellow, pink, orange, 
red, or bronze.
    (2) Tannin sorghum. Sorghum which is high in tannin content due to 
the presence of a pigmented testa (subcoat) and contains not more than 
10.0 percent non-Tannin sorghum. The pericarp color of this class is 
usually brown but may also be white, yellow, pink, orange, red, or 
bronze.
    (3) White sorghum. Sorghum which is low in tannin content due to the 
absence of a pigmented testa (subcoat) and contains not more than 2.0 
percent sorghum of other classes. The pericarp color of this class is 
white or translucent and includes sorghum containing spots that, singly 
or in combination, cover 25.0 percent or less of the kernel.
    (4) Mixed sorghum. Sorghum which does not meet the requirements for 
any of the classes Sorghum, Tannin sorghum, or White sorghum.
    (d) Damaged kernels. Kernels, pieces of sorghum kernels and other 
grains that are badly ground damaged, badly weather damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (e) Dockage. All matter other than sorghum that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of sorghum kernels removed in properly separating the 
material other than sorghum.
    (f) Foreign material. All matter, except sorghum, which passes over 
the number 6 riddle and all matter other than sorghum that remains on 
top of the 5/64 triangular-hole sieve according to procedures prescribed 
in FGIS instructions.

[[Page 612]]

    (g) Heat-damaged kernels. Kernels, pieces of sorghum kernels, and 
other grains that are materially discolored and damaged by heat.
    (h) Nongrain sorghum. Seeds of broomcorn, Johnson-grass, Sorghum 
almum Parodi, sorghum-sudangrass hybrids, sorgrass, sudangrass, and 
sweet sorghum (sorgo).
    (i) Pericarp. The pericarp is the outer layers of the sorghum grain 
and is fused to the seedcoat.
    (j) Sieves.
    (1) 1.98 mm (5/64 (0.0781) inches) triangular-hole sieve. A metal 
sieve 0.81 mm (0.032 inches) thick with equilateral triangular 
perforations the inscribed circles of which are 1.98 mm (0.0781 inches) 
in diameter.
    (2) 0.99 mm (2 1/2 /64 (0.0391) inches) round-hole sieve. A metal 
sieve 0.81 mm (0.032 inch) thick with round holes 0.99 mm (0.0391 
inches) in diameter.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24437, June 30, 1987; 
52 FR 28534, July 31, 1987; 57 FR 58971, Dec. 14, 1992]

            Principles Governing the Application of Standards



Sec. 810.1403  Basis of determination.

    Each determination of broken kernels and foreign material is made on 
the basis of the grain when free from dockage. Each determination of 
class, damaged kernels, heat-damaged kernels, and stones is made on the 
basis of the grain when free from dockage and that portion of the broken 
kernels, and foreign material that will pass through a 1.98 mm (5/64 
inches) triangular-hole sieve. Other determinations not specifically 
provided for in the general provisions are made on the basis of the 
grain as a whole except the determination of odor is made on either the 
basis of the grain as a whole or the grain when free from dockage, 
broken kernels, and foreign material removed by the 1.98 mm (5/64 
inches) triangular-hole sieve.

[57 FR 58971, Dec. 14, 1992]

                      Grades and Grade Requirements


Sec. 810.1404    Grades and grade requirements for sorghum.

----------------------------------------------------------------------------------------------------------------
                                                                              Grades U.S. Nos.\1\
                       Grading factors                       ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
                                            Minimum pound limits of:
 
----------------------------------------------------------------------------------------------------------------
Test weight per bushel......................................         57.0         55.0         53.0         51.0
 
----------------------------------------------------------------------------------------------------------------
                                           Maximum percent limits of:
 
----------------------------------------------------------------------------------------------------------------
Damaged kernels:
  Heat (part of total)......................................          0.2          0.5          1.0          3.0
    Total...................................................          2.0          5.0         10.0         15.0
                                                             ---------------------------------------------------
Broken kernels and foreign material:
  Foreign material (part of total)..........................          1.5          2.5          3.5          4.5
                                                             ---------------------------------------------------
    Total...................................................          4.0          7.0         10.0         13.0
 
----------------------------------------------------------------------------------------------------------------
                                            Maximum count limits of:
 
----------------------------------------------------------------------------------------------------------------
Other material:
  Animal filth..............................................            9            9            9            9
  Castor beans..............................................            1            1            1            1
  Crotalaria seeds..........................................            2            2            2            2
  Glass.....................................................            1            1            1            1
  Stones \2\................................................            7            7            7            7
  Unknown foreign substance.................................            3            3            3            3
  Cockleburs................................................            7            7            7            7

[[Page 613]]

 
U.S. Sample grade is Sorghum that:
  (a) Does not meet the requirements for U.S. Nos. 1, 2, 3, or 4; or
  (b) Has a musty, sour or commercially objectionable foreign odor (except smut odor); or
  (c) Is badly weathered, heating or distinctly low quality.
----------------------------------------------------------------------------------------------------------------
\1\ Sorghum which is distinctly discolored shall not grade higher than U.S. No. 3.
\2\ Aggregate weight of stones must also exceed 0.2 percent of sample weight.


[57 FR 58971, Dec. 14, 1992]

              Special Grades and Special Grade Requirements



Sec. 810.1405  Special grades and special grade requirements.

    Smutty sorghum. Sorghum that has kernels covered with smut spores to 
give a smutty appearance in mass, or that contains 20 or more smut balls 
in 100 grams of sorghum.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



             Subpart J--United States Standards for Soybeans

                              Terms Defined



Sec. 810.1601  Definition of soybeans.

    Grain that consists of 50 percent or more of whole or broken 
soybeans (Glycine max (L.) Merr.) that will not pass through an \8/64\ 
round-hole sieve and not more than 10.0 percent of other grains for 
which standards have been established under the United States Grain 
Standards Act.



Sec. 810.1602  Definition of other terms.

    (a) Classes. There are two classes for soybeans: Yellow soybeans and 
Mixed soybeans.
    (1) Yellow soybeans. Soybeans that have yellow or green seed coats 
and which in cross section, are yellow or have a yellow tinge, and may 
include not more than 10.0 percent of soybeans of other colors.
    (2) Mixed soybeans. Soybeans that do not meet the requirements of 
the class Yellow soybeans.
    (b) Damaged kernels. Soybeans and pieces of soybeans that are badly 
ground-damaged, badly weather-damaged, diseased, frost-damaged, germ-
damaged, heat-damaged, insect-bored, mold-damaged, sprout-damaged, 
stinkbug-stung, or otherwise materially damaged. Stinkbug-stung kernels 
are considered damaged kernels at the rate of one-fourth of the actual 
percentage of the stung kernels.
    (c) Foreign material. All matter that passes through an \8/64\ 
round-hole sieve and all matter other than soybeans remaining in the 
sieved sample after sieving according to procedures prescribed in FGIS 
instructions.
    (d) Heat-damaged kernels. Soybeans and pieces of soybeans that are 
materially discolored and damaged by heat.
    (e) Purple mottled or stained. Soybeans that are discolored by the 
growth of a fungus; or by dirt; or by a dirt-like substance(s) including 
nontoxic inoculants; or by other nontoxic substances.
    (f) Sieve--\8/64\ round-hole sieve. A metal sieve 0.032 inch thick 
perforated with round holes 0.125 (\8/64\) inch in diameter.
    (g) Soybeans of other colors. Soybeans that have green, black, 
brown, or bicolored seed coats. Soybeans that have green seed coats will 
also be green in cross section. Bicolored soybeans will have seed coats 
of two colors, one of which is brown or black, and the brown or black 
color covers 50 percent of the seed coats. The hilum of a soybean is not 
considered a part of the seed coat for this determination.
    (h) Splits. Soybeans with more than \1/4\ of the bean removed and 
that are not damaged.

            Principles Governing the Application of Standards



Sec. 810.1603  Basis of determination.

    Each determination of class, heat-damaged kernels, damaged kernels, 
splits, and soybeans of other colors is made on the basis of the grain 
when free from foreign material. Other determinations not specifically 
provided for under the general provisions are

[[Page 614]]

made on the basis of the grain as a whole.

                      Grades and Grade Requirements


Sec. 810.1604    Grades and grade requirements for soybeans.

----------------------------------------------------------------------------------------------------------------
                                                                               Grades U.S. Nos.
                       Grading factors                       ---------------------------------------------------
                                                                   1            2            3          4--s4
----------------------------------------------------------------------------------------------------------------
                                                                           Minimum pound limits of:
 
                                                             ---------------------------------------------------
Minimum test weight per bushel..............................         56.0         54.0         52.0         49.0
 
                                                             ---------------------------------------------------
                                                                          Maximum percent limits of:
 
                                                             ---------------------------------------------------
Damaged kernels:
    Heat (part of total)....................................          0.2          0.5          1.0          3.0
    Total...................................................          2.0          3.0          5.0          8.0
    Foreign material........................................          1.0          2.0          3.0          5.0
    Splits..................................................         10.0         20.0         30.0         40.0
    Soybeans of other colors \1\............................          1.0          2.0          5.0         10.0
 
                                                             ---------------------------------------------------
                                                                           Maximum count limits of:
 
                                                             ---------------------------------------------------
Other material:
    Animal filth............................................            9            9            9            9
    Castor beans............................................            1            1            1            1
    Crotalaria seeds........................................            2            2            2            2
    Glass...................................................            0            0            0            0
    Stones \2\..............................................            3            3            3            3
    Unknown foreign substance...............................            3            3            3            3
    Total \3\...............................................           10           10           10           10
----------------------------------------------------------------------------------------------------------------
U.S. Sample grade Soybeans that:
    (a) Do not meet the requirements for U.S. Nos. 1, 2, 3, or 4; or
    (b) Have a musty, sour, or commercially objectionable foreign odor (except garlic odor); or
    (c) Are heating or of distinctly low quality.
\1\ Disregard for Mixed soybeans.
\2\ In addition to the maximum count limit, stones must exceed 0.1 percent of the sample weight.
\3\ Includes any combination of animal filth, castor beans, crotalaria seeds, glass, stones, and unknown foreign
  substances. The weight of stones is not applicable for total other material.


[59 FR 10573, Mar. 7, 1994]

              Special Grades and Special Grade Requirements



Sec. 810.1605  Special grades and special grade requirements.

    (a) Garlicky soybeans. Soybeans that contain 5 or more green garlic 
bulblets or an equivalent quantity of dry or partly dry bulblets in a 
1,000 gram portion.
    (b) Purple mottled or stained soybeans. Soybeans with pink or purple 
seed coats as determined on a portion of approximately 400 grams with 
the use of an FGIS Interpretive Line Photograph.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987; 
59 FR 10573, Mar. 7, 1994]



          Subpart K--United States Standards for Sunflower Seed

                              Terms Defined



Sec. 810.1801  Definition of sunflower seed.

    Grain that, before the removal of foreign material, consists of 50.0 
percent or more of cultivated sunflower seed (Helianthus annuus L.) and 
not more than 10.0 percent of other grains for which standards have been 
established under the United States Grain Standards Act.



Sec. 810.1802  Definition of other terms.

    (a) Cultivated sunflower seed. Sunflower seed grown for oil content. 
The term seed in this and other definitions

[[Page 615]]

related to sunflower seed refers to both the kernel and hull which is a 
fruit or achene.
    (b) Damaged sunflower seed. Seed and pieces of sunflower seed that 
are badly ground-damaged, badly weather-damaged, diseased, frost-
damaged, heat- damaged, mold-damaged, sprout-damaged, or otherwise 
materially damaged.
    (c) Dehulled seed. Sunflower seed that has the hull completely 
removed from the sunflower kernel.
    (d) Foreign material. All matter other than whole sunflower seeds 
containing kernels that can be removed from the original sample by use 
of an approved device and by handpicking a portion of the sample 
according to procedures prescribed in FGIS instructions.
    (e) Heat-damaged sunflower seed. Seed and pieces of sunflower seed 
that are materially discolored and damaged by heat.
    (f) Hull (Husk). The ovary wall of the sunflower seed.
    (g) Kernel. The interior contents of the sunflower seed that are 
surrounded by the hull.

            Principles Governing the Application of Standards



Sec. 810.1803  Basis of determination.

    Each determination of heat-damaged kernels, damaged kernels, test 
weight per bushel, and dehulled seed is made on the basis of the grain 
when free from foreign material. Other determinations not specifically 
provided for in the general provisions are made on the basis of the 
grain as a whole, except the determination of odor is made on either the 
basis of the grain as a whole or the grain when free from foreign 
material.

                      Grades and Grade Requirements


Sec. 810.1804    Grades and grade requirements for sunflower seed.

----------------------------------------------------------------------------------------------------------------
                                                                                    Maximum limits of--
                                                                          --------------------------------------
                                                                Minimum     Damaged Sunflower Seed
                            Grade                             test weight --------------------------   Dehulled
                                                               per bushel      Heat                      seed
                                                                (pounds)     Damaged       Total      (percent)
                                                                            (percent)    (Percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1..................................................         25.0          0.5          5.0          5.0
U.S. No. 2..................................................         25.0          1.0         10.0          5.0
U.S. Sample grade--
  U.S. Sample grade is sunflower seed that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1 or 2; or
    (b) Contains 8 or more stones which have an aggregate weight in excess of 0.20 percent of the sample weight,
     2 or more pieces of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus
     communis L.), 4 or more particles of an unknown foreign substance(s), or a commonly recognized harmful or
     toxic substance(s), 10 or more rodent pellets, bird droppings, or equivalent quantity of other animal filth
     per 600 grams of sunflower seed; or
    (c) Has a musty, sour, or commercially objectionable foreign odor; or
    (d) Is heating or otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------



            Subpart L--United States Standards for Triticale

                              Terms Defined



Sec. 810.2001  Definition of triticale.

    Grain that, before the removal of dockage, consists of 50 percent or 
more of triticale (X Triticosecale Wittmack) and not more than 10 
percent of other grains for which standards have been established under 
the United States Grain Standards Act and that, after the removal of 
dockage, contains 50 percent or more of whole triticale.



Sec. 810.2002  Definition of other terms.

    (a) Damaged kernels. Kernels, pieces of triticale kernels, and other 
grains that are badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (b) Defects. Damaged kernels, foreign material, and shrunken and 
broken

[[Page 616]]

kernels. The sum of these three factors may not exceed the limit for the 
factor defects for each numerical grade.
    (c) Dockage. All matter other than triticale that can be removed 
from the original sample by use of an approved device according to 
procedures prescribed in FGIS instructions. Also, underdeveloped, 
shriveled, and small pieces of triticale kernels removed in properly 
separating the material other than triticale and that cannot be 
recovered by properly rescreening or recleaning.
    (d) Foreign material. All matter other than triticale.
    (e) Heat-damaged kernels. Kernels, pieces of triticale kernels, and 
other grains that are materially discolored and damaged by heat.
    (f) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, wheat, and wild oats.
    (g) Shrunken and broken kernels. All matter that passes through a 
0.064 x 3/8 oblong-hole sieve after sieving according to procedures 
prescribed in FGIS instructions.
    (h) Sieve--0.064  x  \3/8\ oblong-hole sieve. A metal sieve 0.032 
inch thick with oblong perforations 0.064 inch by 0.375 (3/8) inch.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

            Principles Governing the Application of Standards



Sec. 810.2003  Basis of determination.

    Each determination of heat-damaged kernels, damaged kernels, 
material other than wheat or rye, and foreign material (total) is made 
on the basis of the grain when free from dockage and shrunken and broken 
kernels. Other determinations not specifically provided for under the 
general provisions are made on the basis of the grain when free from 
dockage except the determination of odor is made on either the basis of 
the grain as a whole or the grain when free from dockage.

                      Grades and Grade Requirements


Sec. 810.2004    Grades and grade requirements for triticale.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Maximum limits of--
                                                                           -----------------------------------------------------------------------------
                                                                                 Damaged Kernels          Foreign material
                                                                 Minimum   ----------------------------------------------------
                            Grade                              test weight                              Material                  Shrunken
                                                                per bushel      Heat                   other than                and broken  Defects \3\
                                                                 (pounds)     damaged     Total \1\     wheat or    Total \2\     kernels     (percent)
                                                                             (percent)    (percent)       rye       (percent)    (percent)
                                                                                                       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...................................................         48.0          0.2          2.0          1.0          2.0          5.0          5.0
U.S. No. 2...................................................         45.0          0.2          4.0          2.0          4.0          8.0          8.0
U.S. No. 3...................................................         43.0          0.5          8.0          3.0          7.0         12.0         12.0
U.S. No. 4...................................................         41.0          3.0         15.0          4.0         10.0         20.0         20.0
U.S. Sample grade--
  U.S. Sample grade is triticale that:
    (a) Does not meet the requirements for the grades U.S. Nos. 1, 2, 3, or 4; or
    (b) Contains 8 or more stones or any number of stones which have an aggregate weight in excess of 0.2 percent of the sample weight, 2 or more pieces
     of glass, 3 or more crotalaria seeds (Crotalaria spp.), 2 or more castor beans (Ricinus communis L.), 4 or more particles of an unknown foreign
     substance(s) or a commonly recognized harmful or toxic substance(s), 2 or more rodent pellets, bird droppings, or equivalent quantity of other
     animal filth per 1\1/8\ to 1\1/4\ quarts of triticale; or
    (c) Has a musty, sour, or commercially objectionable foreign odor (except smut or garlic odor); or
    (d) Is heating or otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes heat-damaged kernels.
\2\ Includes material other than wheat or rye.
\3\ Defects include damaged kernels (total), foreign material (total) and shrunken and broken kernels. The sum of these three factors may not exceed the
  limit for defects for each numerical grade.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

[[Page 617]]

              Special Grades and Special Grade Requirements



Sec. 810.2005  Special grades and special grade requirements.

    (a) Ergoty triticale. Triticale that contains more than 0.10 percent 
of ergot.
    (b) Garlicky triticale. Triticale that contains in a 1,000 gram 
portion more than six green garlic bulblets or an equivalent quantity of 
dry or partly dry bulblets.
    (c) Light garlicky triticale. Triticale that contains in a 1,000 
gram portion two or more, but not more than six, green garlic bulblets 
or an equivalent quantity of dry or partly dry bulblets.
    (d) Light smutty triticale. Triticale that has an unmistakable odor 
of smut, or that contains in a 250 gram portion smut balls, portions of 
smut balls, or spores of smut in excess of a quantity equal to 14 smut 
balls, but not in excess of a quantity equal to 30 smut balls of average 
size.
    (e) Smutty triticale. Triticale that contains in a 250 gram portion 
smut balls, portions of smut balls, or spores of smut in excess of a 
quantity equal to 30 smut balls of average size.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24441, June 30, 1987]



              Subpart M--United States Standards for Wheat

                              Terms Defined



Sec. 810.2201  Definition of wheat.

    Grain that, before the removal of dockage, consists of 50 percent or 
more common wheat (Triticum aestivum L.), club wheat (T. compactum 
Host.), and durum wheat (T. durum Desf.) and not more than 10 percent of 
other grains for which standards have been established under the United 
States Grain Standards Act and that, after the removal of the dockage, 
contains 50 percent or more of whole kernels of one or more of these 
wheats.



Sec. 810.2202  Definition of other terms.

    (a) Classes. There are eight classes for wheat: Durum wheat, Hard 
Red Spring wheat, Hard Red Winter wheat, Soft Red Winter wheat, Hard 
White wheat, Soft White wheat, Unclassed wheat, and Mixed wheat.
    (1) Durum wheat. All varieties of white (amber) durum wheat. This 
class is divided into the following three subclasses:
    (i) Hard Amber Durum wheat. Durum wheat with 75 percent or more of 
hard and vitreous kernels of amber color.
    (ii) Amber Durum wheat. Durum wheat with 60 percent or more but less 
than 75 percent of hard and vitreous kernels of amber color.
    (iii) Durum wheat. Durum wheat with less than 60 percent of hard 
vitreous kernels of amber color.
    (2) Hard Red Spring wheat. All varieties of Hard Red Spring wheat. 
This class shall be divided into the following three subclasses.
    (i) Dark Northern Spring wheat. Hard Red Spring wheat with 75 
percent or more of dark, hard, and vitreous kernels.
    (ii) Northern Spring wheat. Hard Red Spring wheat with 25 percent or 
more but less than 75 percent of dark, hard, and vitreous kernels.
    (iii) Red Spring wheat. Hard Red Spring wheat with less than 25 
percent of dark, hard, and vitreous kernels.
    (3) Hard Red Winter wheat. All varieties of Hard Red Winter wheat. 
There are no subclasses in this class.
    (4) Soft Red Winter wheat. All varieties of Soft Red Winter wheat. 
There are no subclasses in this class.
    (5) Hard White wheat. All hard endosperm white wheat varieties. 
There are no subclasses in this class.
    (6) Soft White wheat. All soft endosperm white wheat varieties. This 
class is divided into the following three subclasses:
    (i) Soft White wheat. Soft endosperm white wheat varieties which 
contain not more than 10 percent of white club wheat.
    (ii) White Club wheat. Soft endosperm white club wheat varieties 
containing not more than 10 percent of other soft white wheats.
    (iii) Western White wheat. Soft White wheat containing more than 10 
percent of white club wheat and more than 10 percent of other soft white 
wheats.
    (7) Unclassed wheat. Any variety of wheat that is not classifiable 
under other criteria provided in the wheat standards. There are no 
subclasses in this class. This class includes any

[[Page 618]]

wheat which is other than red or white in color.
    (8) Mixed wheat. Any mixture of wheat that consists of less than 90 
percent of one class and more than 10 percent of one other class, or a 
combination of classes that meet the definition of wheat.
    (b) Contrasting classes. Contrasting classes are:
    (1) Durum wheat, Hard White wheat, Soft White wheat, and Unclassed 
wheat in the classes Hard Red Spring wheat and Hard Red Winter wheat.
    (2) Hard Red Spring wheat, Hard Red Winter wheat, Hard White wheat, 
Soft Red Winter wheat, Soft White wheat, and Unclassed wheat in the 
class Durum wheat.
    (3) Durum wheat and Unclassed wheat in the class Soft Red Winter 
wheat.
    (4) Durum wheat, Hard Red Spring wheat, Hard Red Winter wheat, Soft 
Red Winter wheat, and Unclassed wheat, in the classes Hard White wheat 
and Soft White wheat.
    (c) Damaged kernels. Kernels, pieces of wheat kernels, and other 
grains that are badly ground-damaged, badly weather-damaged, diseased, 
frost-damaged, germ-damaged, heat-damaged, insect-bored, mold-damaged, 
sprout-damaged, or otherwise materially damaged.
    (d) Defects. Damaged kernels, foreign material, and shrunken and 
broken kernels. The sum of these three factors may not exceed the limit 
for the factor defects for each numerical grade.
    (e) Dockage. All matter other than wheat that can be removed from 
the original sample by use of an approved device according to procedures 
prescribed in FGIS instructions. Also, underdeveloped, shriveled, and 
small pieces of wheat kernels removed in properly separating the 
material other than wheat and that cannot be recovered by properly 
rescreening or recleaning.
    (f) Foreign material. All matter other than wheat that remains in 
the sample after the removal of dockage and shrunken and broken kernels.
    (g) Heat-damaged kernels. Kernels, pieces of wheat kernels, and 
other grains that are materially discolored and damaged by heat which 
remain in the sample after the removal of dockage and shrunken and 
broken kernels.
    (h) Other grains. Barley, corn, cultivated buckwheat, einkorn, 
emmer, flaxseed, guar, hull-less barley, nongrain sorghum, oats, Polish 
wheat, popcorn, poulard wheat, rice, rye, safflower, sorghum, soybeans, 
spelt, sunflower seed, sweet corn, triticale, and wild oats.
    (i) Shrunken and broken kernels. All matter that passes through a 
0.064  x  \3/8\ oblong-hole sieve after sieving according to procedures 
prescribed in the FGIS instructions.
    (j) Sieve--0.064  x  \3/8\ oblong-hole sieve. A metal sieve 0.032 
inch thick with oblong perforations 0.064 inch by 0.375 (\3/8\) inch.

[52 FR 24418, June 30, 1987, as amended at 54 FR 48736, Nov. 27, 1989; 
57 FR 58966, Dec. 14, 1992]

            Principles Governing the Application of Standards



Sec. 810.2203  Basis of determination.

    Each determination of heat-damaged kernels, damaged kernels, foreign 
material, wheat of other classes, contrasting classes, and subclasses is 
made on the basis of the grain when free from dockage and shrunken and 
broken kernels. Other determinations not specifically provided for under 
the general provisions are made on the basis of the grain when free from 
dockage, except the determination of odor is made on either the basis of 
the grain as a whole or the grain when free from dockage.

[52 FR 24418, June 30, 1987; 52 FR 28534, July 31, 1987]

                      Grades and Grade Requirements


Sec. 810.2204    Grades and grade requirements for wheat.

[[Page 619]]



------------------------------------------------------------------------
                                                Grades U.S. Nos.
           Grading Factors            ----------------------------------
                                         1      2      3      4      5
------------------------------------------------------------------------
                        Minimum pound limits of:
 
------------------------------------------------------------------------
Test weight per bushel:
    Hard Red Spring wheat or White      58.0   57.0   55.0   53.0   50.0
     Club wheat......................
    All other classes and subclasses.   60.0   58.0   56.0   54.0   51.0
 
------------------------------------------------------------------------
                       Maximum percent limits of:
 
------------------------------------------------------------------------
Defects:
    Damaged kernels..................
        Heat (part of total).........    0.2    0.2    0.5    1.0    3.0
                                      ----------------------------------
            Total....................    2.0    4.0    7.0   10.0   15.0
    Foreign material.................    0.4    0.7    1.3    3.0    5.0
    Shrunken and broken kernels......    3.0    5.0    8.0   12.0   20.0
                                      ----------------------------------
            Total \1\................    3.0    5.0    8.0   12.0   20.0
Wheat of other classes:\2\
    Contrasting classes..............    1.0    2.0    3.0   10.0   10.0
                                      ----------------------------------
            Total \3\................    3.0    5.0   10.0   10.0   10.0
Stones...............................    0.1    0.1    0.1    0.1    0.1
 
------------------------------------------------------------------------
                        Maximum count limits of:
 
------------------------------------------------------------------------
Other material:
    Animal filth.....................      1      1      1      1      1
    Castor beans.....................      1      1      1      1      1
    Crotalaria seeds.................      2      2      2      2      2
    Glass............................      0      0      0      0      0
    Stones...........................      3      3      3      3      3
    Unknown foreign substance........      3      3      3      3      3
                                      ----------------------------------
            Total \4\................      4      4      4      4      4
Insect-damaged kernels:
    In 100 grams.....................     31     31     31     31     31
 
------------------------------------------------------------------------
U.S. Sample grade is Wheat that:
    (a) does not meet the requirements for U.S. Nos. 1, 2, 3, 4, or 5;
     or
    (b) has a musty, sour or commercially objectionable foreign odor
     (except smut or garlic odor); or
    (c) is heating or of distinctly low quality.
------------------------------------------------------------------------
\1\ Includes damaged kernels (total), foreign material, shrunken and
  broken kernels.
\2\ Unclassed wheat of any grade may contain not more than 10.0 percent
  of wheat of other classes.
\3\ Includes contrasting classes.
\4\ Includes any combination of animal filth, castor beans, crotalaria
  seeds, glass, stones, and unknown foreign substance.

    (b) Grades and grade requirements for Mixed wheat. Mixed wheat is 
graded according to the U.S. numerical and U.S. Sample grade 
requirements of the class of wheat that predominates in the mixture, 
except that the factor wheat of other classes is disregarded.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24442, June 30, 1987; 
57 FR 58966, Dec. 14, 1992]

              Special Grades and Special Grade Requirements



Sec. 810.2205  Special grades and special grade requirements.

    (a) Ergoty wheat. Wheat that contains more than 0.05 percent of 
ergot.
    (b) Garlicky wheat. Wheat that contains in a 1,000 gram portion more 
than two green garlic bulblets or an equivalent quantity of dry or 
partly dry bulblets.
    (c) Light smutty wheat. Wheat that has an unmistakable odor of smut, 
or which contains, in a 250-gram portion, smut balls, portions of smut 
balls, or spores of smut in excess of a quantity

[[Page 620]]

equal to 5 smut balls, but not in excess of a quantity equal to 30 smut 
balls of average size.
    (d) Smutty wheat. Wheat that contains, in a 250 gram portion, smut 
balls, portions of smut balls, or spores of smut in excess of a quantity 
equal to 30 smut balls of average size.
    (e) Treated wheat. Wheat that has been scoured, limed, washed, 
sulfured, or treated in such a manner that the true quality is not 
reflected by either the numerical grades or the U.S. Sample grade 
designation alone.

[52 FR 24418, June 30, 1987, as amended at 52 FR 24442, June 30, 1987; 
57 FR 58967, Dec. 14, 1992]



PART 868--GENERAL REGULATIONS AND STANDARDS FOR CERTAIN AGRICULTURAL COMMODITIES--Table of Contents




                         Subpart A--Regulations

                               Definitions

Sec.
868.1  Meaning of terms.

                             Administration

868.5  Administrator.
868.6  Nondiscrimination--policy and provisions.
868.7  Procedures for establishing regulations and standards.
868.8  Complaints and reports of alleged violations.
868.9  Provisions for hearings.
868.10  Information about the Service, Act, and regulations.
868.11  Public information.
868.12  Identification.
868.13  Regulations not applicable for certain purposes.

             Conditions for Obtaining or Withholding Service

868.20  Availability of services.
868.21  Requirements for obtaining service.
868.22  Withdrawal of request for inspection service by applicant.
868.23  Dismissal of request for inspection service.
868.24  Conditional withholding of service.
868.25  Denial or withdrawal of service.
868.26  Expenses of the cooperator or the Service.

                    Inspection Methods and Procedures

868.30  Methods and order of performing inspection service.
868.31  Kinds of inspection services.
868.32  Who shall inspect commodities.
868.33  Sample requirements; general.
868.34  Partial inspection.
868.35  Sampling provisions by level of service.
868.36  Loss of identity.

                       Original Inspection Service

868.40  Who may request original inspection service.
868.41  Contract service.
868.42  How to request original inspection service.
868.44  New original inspection.

                        Retest Inspection Service

868.50  Who may request retest inspection service.
868.51  How to request retest inspection service.
868.52  Certificating retest inspection results.

                        Appeal Inspection Service

868.60  Who may request appeal inspection service.
868.61  How to request appeal inspection service.
868.62  Who shall perform appeal inspection service.
868.63  Certificating appeal inspection results.

                          Official Certificates

868.70  Official certificates; issuance and distribution.
868.71  Official certificate requirements.
868.72  Certification of results.
868.73  Corrected certificates.
868.74  Divided-lot certificates.
868.75  Duplicate certificates.

             Licensed Inspectors, Technicians, and Samplers

868.80  Who may be licensed.
868.81  Licensing procedures.
868.82  Voluntary cancellation or suspension of license.
868.83  Automatic suspension of license by change in employment.
868.84  Suspension or revocation of license.

                                  Fees

868.90  Fees for certain Federal inspection services.
868.91  Fees for certain Federal rice inspection services.
868.92  Explanation of service fees and additional fees.

                     Subpart B--Marketing Standards

868.101  General information.
868.102  Procedures for establishing and revising grade standards.
868.103  Public notification of grade standards action.

[[Page 621]]

            Subpart C--United States Standards for Rough Rice

                              Terms Defined

868.201  Definition of rough rice.
868.202  Definition of other terms.

              Principles Governing Application of Standards

868.203  Basis of determination.
868.204  Interpretive line samples.
868.205  Milling requirements.
868.206  Milling yield determination.
868.207  Moisture.
868.208  Percentages.
868.209  Information.

           Grades, Grade Requirements, and Grade Designations

868.210  Grades and grade requirements for the classes of rough rice. 
          (See also Sec. 868.212.)
868.211  Grade designation.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

868.212  Special grades and requirements.
868.213  Special grade designation.

    Subpart D--United States Standards for Brown Rice for Processing

                              Terms Defined

868.251  Definition of brown rice for processing.
868.252  Definition of other terms.

              Principles Governing Application of Standards

868.253  Basis of determination.
868.254  Broken kernels determination.
868.255  Interpretive line samples.
868.256  Milling requirements.
868.257  Milling yield determination.
868.258  Moisture.
868.259  Percentages.
868.260  Information.

           Grades, Grade Requirements, and Grade Designations

868.261  Grades and grade requirements for the classes of brown rice for 
          processing. (See also Sec. 868.263.)
868.262  Grade designation.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

868.263  Special grades and special grade requirements.
868.264  Special grade designation.

           Subpart E--United States Standards for Milled Rice

                              Terms Defined

868.301  Definition of milled rice.
868.302  Definition of other terms.

              Principles Governing Application of Standards

868.303  Basis of determination.
868.304  Broken kernels determination.
868.305  Interpretive line samples.
868.306  Milling requirements.
868.307  Moisture.
868.308  Percentages.
868.309  Information.

           Grades, Grade Requirements, and Grade Designations

868.310  Grade and grade requirements for the classes Long Grain Mixed 
          Rice, Mixed Grain Miller Rice, Short Grain Miller Rice, and 
          Mixed Miller Rice. (See also Sec. 868.315.)
868.311  Grades and grade requirements for the class Second Head Milled 
          Rice. (See also Sec. 868.315.)
868.312  Grades and grade requirements for the class Screenings Milled 
          Rice. (See also Sec. 868.315.)
868.313  Grades and grade requirements for the class Brewers Milled 
          Rice. (See also Sec. 868.315.)
868.314  Grade designations.

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations

868.315  Special grades and special grade requirements.
868.316  Special grade designation.

    Authority: Secs. 202-208, 60 Stat. 1087, as amended (7 U.S.C. 1621 
et seq.).



                         Subpart A--Regulations

    Source: 53 FR 3722, Feb. 9, 1988, unless otherwise noted. 
Redesignated at 60 FR 16364, Mar. 30, 1995.

                               Definitions



Sec. 868.1  Meaning of terms.

    (a) Construction. Words used in the singular form are considered to 
imply the plural and vice versa, as appropriate.
    (b) Definitions. For the purpose of these regulations, unless the 
context requires otherwise, the following terms have the meanings given 
for them in this paragraph.

[[Page 622]]

    (1) Act. The Agricultural Marketing Act of 1946, as amended (secs. 
202-208, 60 Stat. 1087, as amended, 7 U.S.C. 1621 et seq.).
    (2) Administrator. The Administrator of the Grain Inspection, 
Packers and Stockyards Administration or any person to whom the 
Administrator's authority has been delegated.
    (3) Appeal inspection service. A review by the Service of the 
results of an original inspection or retest inspection service.
    (4) Applicant. An interested person who requests any inspection 
service with respect to a commodity.
    (5) Authorized inspector. A Department employee authorized by the 
Administrator to inspect a commodity in accordance with the Act, 
regulations, standards, and instructions.
    (6) Board appeal inspection service. A review by the Board of 
Appeals and Review of the results of an original inspection or appeal 
inspection service on graded commodities.
    (7) Board of Appeals and Review or Board. The Board of Appeals and 
Review of the Service that performs Board appeal inspection services.
    (8) Business day. The established field office working hours, any 
Monday through Friday that is not a holiday, or the working hours and 
days established by a cooperator.
    (9) Carrier. A truck, trailer, truck/trailer(s) combination, 
railroad car, barge, ship, or other container used to transport bulk, 
sacked, or packaged commodity.
    (10) Commodity. Agricultural commodities and products thereof that 
the Secretary has assigned to the Service for inspection under the Act, 
including but not limited to dry beans, grain, hops, lentils, oilseeds, 
dry peas, split peas, and rice.
    (11) Continuous inspection. The conduct of inspection services in an 
approved plant where one or more official inspection personnel are 
present during the processing of a commodity to make in-process 
examinations of the preparation, processing, packing, and warehousing of 
the commodity and to determine compliance with applicable sanitation 
requirements.
    (12) Contract service. Any service performed under a contract 
between an applicant and the Service.
    (13) Contractor. Any person who enters into a contract with the 
Service or with a cooperator to perform specified inspection services.
    (14) Cooperator. An agency or department of the Federal Government 
which has an interagency agreement or State agency which has a 
reimbursable agreement with the Service.
    (15) Cooperator inspection service. The inspection service provided 
by a cooperator under the regulations. Under this service, inspection 
certificates are issued by the cooperator and all fees and charges are 
collected by the cooperator, except as provided in the agreement.
    (16) Department. The United States Department of Agriculture.
    (17) Factor. A quantified physical or chemical property identified 
in official standards, specifications, abstracts, contracts, or other 
documents whose measurement describes a specific quality of a commodity.
    (18) Field office. An office of the Service designated to perform, 
monitor, or supervise inspection services.
    (19) Grade. A grade designating a level of quality as defined in the 
commodity standards promulgated pursuant to the Act.
    (20) Graded commodity. Commodities for which the Service has 
promulgated Standards under the Act and commodities which are tested by 
the Service at a field office or by a cooperator for specific physical 
factors using approved equipment and an inspector's interpretation of 
visual conditions.
    (21) Holiday. The legal public holidays specified in paragraph (a) 
of section 6103, title 5, of the United States Code (5 U.S.C. 6103(a)) 
and any other day declared to be a holiday by Federal Statute or 
Executive Order. Under section 6103 and Executive Order 10357, as 
amended, if the specified legal public holiday falls on a Saturday, the 
preceding Friday shall be considered to be the holiday, or if the 
specified legal public holiday falls on a Sunday, the following Monday 
shall be considered to be the holiday.

[[Page 623]]

    (22) Inspection certificate. A written or printed official document 
which is approved by the Service and which shows the results of an 
inspection service performed under the Act.
    (23) Inspection service. (i) Applying such tests and making 
examinations of a commodity and records by official personnel as may be 
necessary to determine the kind, class, grade, other quality 
designation, the quantity, or condition of commodity; performing 
condition of container, carrier stowage examinations; and any other 
services as related to commodities, as necessary; and (ii) issuing an 
inspection certificate.
    (24) Instructions. The Notices, Instructions, Handbooks, and other 
directives issued by the Service.
    (25) Interagency agreement. An agreement between the Service and 
other agencies or departments of the Federal Government to conduct 
commodity inspection services as authorized in the Act.
    (26) Interested person. Any person having a contract or other 
financial interest in a commodity as the owner, seller, purchaser, 
warehouseman, carrier, or otherwise.
    (27) Licensee. Any person licensed by the Service.
    (28) Nongraded commodity. Nonprocessed commodities which are 
chemically tested for factors not included in the Standards under the 
Act or the U.S. Grain Standards Act (7 U.S.C. 71 et seq.) and processed 
commodities.
    (29) Nonregular workday. Any Sunday or holiday.
    (30) Official inspector. Any official personnel who performs, 
monitors, or supervises the performance of inspection service and 
certifies the results of inspection of the commodity.
    (31) Official personnel. Any authorized Department employee or 
person licensed by the Administrator to perform all or specified 
functions under the Act.
    (32) Official sampler. Any official personnel who performs, 
monitors, or supervises the performance of sampling of a commodity.
    (33) Official technician. Any official personnel who performs, 
monitors, or supervises the performance of specified inspection services 
and certifies the results thereof, other than certifying the grade of a 
commodity.
    (34) Origin. The geographical area or place where the commodity is 
grown.
    (35) Original inspection service. An initial inspection of a 
community.
    (36) Person. Any individual, partnership, association, corporation, 
or other business entity.
    (37) Plant. The premises, buildings, structure, and equipment 
(including but not limited to machines, utensils, vehicles, and fixtures 
located in or about the premises) used or employed in the preparation, 
processing, handling, transporting, and storage of commodities.
    (38) Regular workday. Any Monday through Saturday that is not a 
holiday.
    (39) Regulations. The regulations in this part.
    (40) Reimbursable agreement. An agreement between the Service and 
State agencies to conduct commodity inspection services authorized 
pursuant to the Act.
    (41) Retest inspection service. To test, using the same laboratory 
procedures, a factor(s) of nongraded commodities previously tested.
    (42) Secretary. The Secretary of Agriculture of the United States or 
any person to whom the Secretary's authority has been delegated.
    (43) Service. The Federal Grain Inspection Service of the Grain 
Inspection, Packers and Stockyards Administration of the United States 
Department of Agriculture.
    (44) Service representative. An employee authorized by the Service 
or a person licensed by the Administrator.
    (45) Specification. A document which clearly and accurately 
describes the essential and technical requirements for items, materials, 
or services including requested inspection procedures.
    (46) Standards. The commodity standards in this part that describe 
the physical and biological condition of a commodity at the time of 
inspection.
    (47) Submitted sample. A sample submitted by or for an applicant for 
inspection.
    (48) Test. A procedure to measure a factor using specialized 
laboratory equipment involving the application of

[[Page 624]]

established scientific principles and laboratory procedures.

[53 FR 3722, Feb. 9, 1988, as amended at 60 FR 5835, Jan. 31, 1995. 
Redesignated at 60 FR 16364, Mar. 30, 1995, and amended at 63 FR 29531, 
June 1, 1998]

                             Administration



Sec. 868.5  Administrator.

    The Administrator, under the authority delegated by the Secretary, 
is charged with administering the programs and functions authorized 
under the Act and the regulations concerning those commodities assigned 
by the Secretary to the Service.



Sec. 868.6  Nondiscrimination--policy and provisions.

    In implementing, administering, and enforcing the Act and the 
regulations, standards, and instructions, it is the policy of the 
Service to promote adherence to the provisions of the Civil Rights Act 
of 1964 (42 U.S.C. 2000a et seq.).



Sec. 868.7  Procedures for establishing regulations and standards.

    Notice of proposals to prescribe, amend, or revoke regulations and 
standards shall be published in accordance with applicable provisions of 
the Administrative Procedures Act (5 U.S.C. 551 et seq.). Any interested 
person desiring to file a petition for the issuance, amendment, or 
revocation of regulations or standards may do so in accordance with 7 
CFR 1.28 of the regulations of the Office of the Secretary of 
Agriculture.



Sec. 868.8  Complaints and reports of alleged violations.

    (a) General. Except as provided in paragraph (b) of this section, 
complaints and reports of violations involving the Act or the 
regulations, standards, and instructions issued under the Act should be 
filed with the Service in accordance with 7 CFR 1.133 of the regulations 
of the Office of the Secretary of Agriculture and these regulations and 
the instructions.
    (b) Retest inspection and appeal inspection service. Complaints 
involving the results of inspection services shall, to the extent 
practicable, be submitted as requests for retest inspection, appeal 
inspection, or Board appeal inspection services as set forth in these 
regulations.

(Approved by the Office of Management and Budget under control number 
0580-0011)



Sec. 868.9  Provisions for hearings.

    Opportunities shall be provided for hearings either in accordance 
with the Rules of Practice Governing Formal Adjudicatory Proceedings 
Instituted by the Secretary under Various Statutes (7 CFR part 1, 
subpart H) or in accordance with FGIS procedures as appropriate.



Sec. 868.10  Information about the Service, Act, and regulations.

    Information about the Service, Act, regulations, standards, rules of 
practice, instructions, and other matters related to the inspection of 
commodities may be obtained by telephoning or writing the U.S. 
Department of Agriculture, Federal Grain Inspection Service, P.O. Box 
96454, Washington, DC 20090-6454, or any field office or cooperator.



Sec. 868.11  Public information.

    (a) General. This section is issued in accordance with Secs. 1.1 
through 1.23 of the regulations of the Secretary in part 1, subpart A, 
of subtitle A of title 7 (7 CFR 1.1 through 1.23), and appendix A 
thereto, implementing the Freedom of Information Act (5 U.S.C. 552). The 
Secretary's regulations, as implemented by this section, govern the 
availability of records of the Service to the public.
    (b) Public inspection and copying. Materials maintained by the 
Service, including those described in 7 CFR 1.5, will be made available, 
upon a request which has not been denied, for public inspection and 
copying at the U.S. Department of Agriculture, Federal Grain Inspection 
Service, 1400 Independence Avenue SW., Washington, DC 20250. The public 
may request access to these materials 8:00 a.m.-4:30 p.m. Monday through 
Friday except for holidays.
    (c) Indexes. The Service shall maintain an index of all material 
required to be made available in 7 CFR 1.5. Copies of these indexes will 
be maintained at the location given in paragraph (b) of this section. 
Notice is hereby given

[[Page 625]]

that quarterly publication of these indexes is unnecessary and 
impracticable because the material is voluminous and does not change 
often enough to justify the expense of quarterly publication. However, 
upon specific request, copies of any index will be provided at a cost 
not to exceed the direct cost of duplication.
    (d) Requests for records. Requests for records under 5 U.S.C. 
552(a)(3) shall be made in accordance with 7 CFR 1.6 and shall be 
addressed as follows: Office of the Administrator, Federal Grain 
Inspection Service, FOIA Request, U.S. Department of Agriculture, P.O. 
Box 96454, Washington, DC 20090-6454.
    (e) FOIA Appeals. Any person whose request, under paragraph (d) of 
this section, is denied shall have the right to appeal such denial in 
accordance with 7 CFR 1.13. Appeals shall be addressed to the 
Administrator, Federal Grain Inspection Service, FOIA Appeal, U.S. 
Department of Agriculture, P.O. Box 96454, Washington, DC 20090-6454.
    (f) Disclosure of information. FGIS employees or persons acting for 
FGIS under the Act shall not, without the consent of the applicant, 
divulge or make known in any manner any facts or information acquired 
pursuant to the Act, regulations, or instructions except as authorized 
by the Administrator, by a court of competent jurisdiction, or otherwise 
by law.

[53 FR 3722, Feb. 9, 1988, as amended 54 FR 5923, Feb. 7, 1989. 
Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.12  Identification.

    All official personnel shall have in their possession and present 
upon request, while on duty, the means of identification furnished to 
them by the Department.



Sec. 868.13  Regulations not applicable for certain purposes.

    These regulations do not apply to the inspection of grain under the 
United States Grain Standards Act, as amended (7 U.S.C. 71 et seq.) or 
the inspection of commodities under the United States Warehouse Act, as 
amended (7 U.S.C. 241 et seq.).

             Conditions for Obtaining or Withholding Service



Sec. 868.20  Availability of services.

    (a) Original inspection service. Original inspection services are 
available according to this section and Secs. 868.40 through 868.44.
    (b) Retest inspection and appeal inspection services. Retest 
inspection, appeal inspection, and Board appeal inspection services are 
available according to Secs. 868.50 through 868.52 and Secs. 868.60 
through 868.63.
    (c) Proof of authorization. A cooperator or the Service may request 
satisfactory proof that an applicant is an interested person or their 
authorized agent.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.21  Requirements for obtaining service.

    (a) Consent and agreement by applicant. In submitting a request for 
inspection service, the applicant and the owner of the commodity consent 
to the requirements specified in paragraphs (b) through (j) of this 
section.
    (b) Written confirmation. Verbal requests for inspection service 
shall be confirmed in writing upon request. Each written request shall 
be made in English and shall include:
    (1) The date filed;
    (2) The identification, quantity, and location of the commodity;
    (3) The type of service(s) requested;
    (4) The name and mailing address of the applicant and, if made by an 
authorized agent, the agent's name and mailing address; and
    (5) Any other relevant information that the official with whom the 
application is filed may request.

A written request or a written confirmation of a verbal request shall be 
signed by the applicant or a duly authorized agent.
    (c) Names and addresses of interested persons. When requested, each 
applicant for inspection service shall show on the application form the 
name and mailing address of each known interested person.
    (d) Surrender of superseded certificates. Superseded certificates 
must be promptly surrendered.

[[Page 626]]

    (e) Accessibility. (1) Commodities. Each commodity lot inspected 
shall be arranged so the entire lot may be examined or, if necessary, a 
representative sample, as appropriate, can be obtained. If the entire 
lot is not accessible for examination or a representative sample cannot 
be obtained, the inspection shall be restricted to an examination or 
sampling of the accessible portion and the results certified as stated 
in Sec. 868.34.
    (2) Origin records. When an applicant requests origin inspection, 
the records indicating the origin of the commodity to be inspected shall 
be made accessible for examination and verification by official 
personnel.
    (f) Plant examination. Plant surveys shall be performed upon 
request. Survey results shall be reported in writing to a designated 
plant official. If the plant is approved as a result of the survey, 
inspection service may begin or continue at a time agreed upon by the 
plant management and the cooperator or Service. If the plant is not 
approved as a result of the survey, inspection service shall be 
conditionally withheld pursuant to the procedures in Sec. 868.24.
    (g) Working space. An applicant must provide adequate and separate 
space when inspection service is performed at a plant.
    (h) Loading and unloading conditions. Each applicant for inspection 
service shall provide or arrange for suitable conditions in the--
    (1) Loading and unloading areas and the truck and railroad holding 
areas;
    (2) Pier or dock areas;
    (3) Deck and stowage areas of a carrier;
    (4) Other service areas; and
    (5) Equipment used in loading or unloading, processing, and handling 
the commodity.

Suitable conditions are those which will facilitate accurate inspection, 
maintain the quantity and the quality of the commodity that is to be 
inspected, and not be hazardous to the health and safety of official 
personnel as prescribed in the instructions.
    (i) Timely arrangements. Requests for inspection service shall be 
made in a timely manner; otherwise, official personnel may not be 
available to provide the requested service. ``Timely manner'' shall mean 
not later than 2 p.m., local time, of the preceding business day.
    (j) Payment of bills. Each applicant for inspection service shall 
pay bills for the service pursuant to Secs. 868.90-868.92.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.22  Withdrawal of request for inspection service by applicant.

    An applicant may withdraw a request for inspection service any time 
before official personnel release results, either verbally or in 
writing. Reimbursement of expenses, if any, shall be made pursuant to 
Sec. 868.26.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.23  Dismissal of request for inspection service.

    (a) Conditions for dismissal. (1) General. A cooperator or the 
Service shall dismiss requests for inspection service when:
    (i) Performing the requested service is not practicable or possible.
    (ii) The cooperator or the Service lacks authority under the Act or 
regulations to provide the inspection service requested or is unable to 
comply with the Act, regulations, standards, or instructions.
    (iii) Sufficient information is not available to make an accurate 
determination.
    (2) Original inspection service. A request for original inspection 
service shall be dismissed if an original inspection has already been 
performed and circumstances do not prevent a retest inspection, appeal 
inspection, or Board appeal inspection from being performed on the same 
lot.
    (3) Retest inspection service. A request for a retest inspection 
service shall be dismissed by official personnel when:
    (i) The factor requested was not tested during the original 
inspection;
    (ii) The condition of the commodity has undergone a material change;
    (iii) A representative file sample is not available;
    (iv) The applicant requests that a new sample be obtained;

[[Page 627]]

    (v) The request is for a graded commodity; or
    (vi) The reasons for the retest inspection are frivolous.
    (4) Appeal inspection service. A request for an appeal inspection 
service shall be dismissed by official personnel when:
    (i) The scope is different from the scope of the original inspection 
service;
    (ii) The condition of the commodity has undergone a material change;
    (iii) The request specifies a file sample and a representative file 
sample is not available;
    (iv) The applicant requests that a new sample be obtained and a new 
sample cannot be obtained; or
    (v) The reasons for the appeal inspection are frivolous.
    (5) Board appeal inspection service. A request for a Board appeal 
inspection service shall be dismissed by official personnel when:
    (i) The scope is different from the scope of the original inspection 
service;
    (ii) The condition of the commodity has undergone a material change;
    (iii) A representative file sample is not available;
    (iv) The applicant requests that a new sample be obtained; or
    (v) The reasons for the Board appeal inspection are frivolous.
    (b) Procedure for dismissal. The cooperator or the Service shall 
notify the applicant of the proposed dismissal of service. If 
correctable, the applicant will be afforded reasonable time to take. 
corrective action or to demonstrate there is no basis for the dismissal. 
If corrective action has not been adequate, the applicant will be 
notified of the decision to dismiss the request for service, and any 
results of service shall not be released.



Sec. 868.24  Conditional withholding of service.

    (a) Conditional withholding. A cooperator or the Service shall 
conditionally withhold service when an applicant fails to meet any 
requirement prescribed in Sec. 868.21.
    (b) Procedure for withholding. The cooperator or the Service shall 
notify the applicant of the reason for the proposal to conditionally 
withhold service. The applicant will then be afforded reasonable time to 
take corrective action or to demonstrate that there is no basis for 
withholding service. If corrective action has not been adequate, the 
applicant will be notified of the decision to withhold service; and any 
results of service shall not be released.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.25  Denial or withdrawal of service.

    (a) General. Service may be denied or withdrawn because of (1) any 
willful violation of the Act, regulations, standards, or instructions or 
(2) any interference with or obstruction of any official personnel in 
the performance of their duties by intimidation, threat, assault, or any 
other improper means.
    (b) The Rules of Practice Governing Formal Adjudicatory Proceedings 
Instituted by the Secretary under Various Statutes (7 CFR part 1, 
subpart H) shall be followed in the denial or withdrawal of service.



Sec. 868.26  Expenses of the cooperator or the Service.

    For any request that has been withdrawn, dismissed, or withheld 
under Secs. 868.22, 868.23, or 868.24, respectively, each applicant 
shall pay expenses incurred by the cooperator or the Service.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

                    Inspection Methods and Procedures



Sec. 868.30  Methods and order of performing inspection service.

    (a) Methods. (1) General. All sampling and inspection services 
performed by official personnel shall be made in accordance with the 
regulations, standards, and the instructions.
    (2) Lot inspection service. A lot inspection service shall be based 
on official personnel obtaining representative samples, examining the 
commodity in the entire lot, and making an accurate analysis of the 
commodity on the basis of the samples.
    (3) Submitted sample inspection service. A submitted sample 
inspection service shall be based on a submitted sample of

[[Page 628]]

sufficient size to enable official personnel to perform an accurate, 
complete analysis. The sample size will be prescribed in the 
instructions. If a complete analysis cannot be performed because of an 
inadequate sample size or other conditions, the request shall be 
dismissed or a factor only inspection may be performed upon request.
    (b) Order of service. Inspection services shall be performed, to the 
extent practicable, in the order in which requests for service are 
received.
    (c) Recording receipt of documents. Each document submitted by or on 
behalf of an applicant for inspection service shall be promptly stamped 
or similarly marked by official personnel to show the date of receipt.
    (d) Conflicts of interest. (1) Official personnel shall not perform 
or participate in performing an inspection service on a commodity or a 
carrier or container in which the official personnel have a direct or 
indirect financial interest.
    (2) Official personnel shall not perform, participate in performing, 
or issue a certificate if the official personnel participated in a 
previous inspection or certification of the lot unless there is only one 
authorized person available at the time and place of the requested 
inspection service.



Sec. 868.31  Kinds of inspection services.

    (a) General. The inspection of commodities shall be according to 
the--
    (1) Standards of class, grade, other quality designation, quantity, 
or condition for such commodities promulgated by the Administrator; or
    (2) Specifications prescribed by Federal agencies; or
    (3) Specifications of trade associations or organizations; or
    (4) Other specifications as requested by applicant; or
    (5) The instructions.

The kinds of services provided and the basis for performing the services 
include those specified in paragraphs (b) through (m) of this section. 
Some or all of these services are provided when performing a complete 
inspection service.
    (b) Quality inspection service. This service consists of official 
personnel--
    (1) Obtaining representative sample(s) of an identified commodity 
lot;
    (2) Examining, grading, or testing the sample(s);
    (3) Examining relevant records for the lot; and
    (4) Certifying the results.
    (c) Submitted sample inspection service. This service consists of 
official personnel grading or testing a sample submitted by the 
applicant and certifying the results.
    (d) Examination service. This service consists of official personnel 
examining supplies without the use of special laboratory equipment or 
procedures to determine conformance to requirements requested by the 
applicant and certifying the results.
    (e) Checkweighing service (container). This service consists of 
official personnel--
    (1) Weighing a selected number of containers from a commodity lot;
    (2) Determining the estimated total gross, tare, and net weights or 
the estimated average gross or net weight per filled container; and
    (3) Certifying the results.
    (f) Bulk weighing service. This service consists of official 
personnel--
    (1) Completely supervising the loading or the unloading of an 
identified lot of bulk or containerized commodity,
    (2) Physically weighing or completely supervising the weighing of 
the commodity; and
    (3) Certifying the results.
    (g) Checkloading service. This service consists of official 
personnel--
    (1) Performing a stowage examination;
    (2) Computing the number of filled commodity containers loaded 
aboard the carrier;
    (3) Observing the condition of commodity containers loaded aboard 
the carrier;
    (4) If practicable, sealing the carrier; and
    (5) Certifying the results.
    (h) Checkcounting service. This service consists of official 
personnel determining the total number of filled outer containers in a 
lot to determine that the number of containers shown by the applicant is 
correct and certifying the results.
    (i) Condition inspection service. This service consists of official 
personnel determining the physical condition of

[[Page 629]]

the commodity by determining whether an identifiable commodity lot is 
water damaged, fire damaged, or has rodent or bird contamination, insect 
infestation, or any other deteriorating condition and certifying the 
results.
    (j) Condition of food containers service. This service consists of 
official personnel determining the degree of acceptability of the 
containers with respect to absence of defects which affect the 
serviceability, including appearance as well as usability, of the 
container for its intended purpose and certifying the results.
    (k) Observation of loading service. This service consists of 
official personnel determining that an identified lot has been moved 
from a warehouse or carrier and loaded into another warehouse or carrier 
and certifying the results.
    (l) Plant approval service.\1\ This service consists of official 
personnel performing a plant survey to determine if the plant premises, 
facilities, sanitary conditions, and operating methods are suitable to 
begin or continue inspection service.
---------------------------------------------------------------------------

    \1\ Compliance with the requirements in this paragraph does not 
excuse failure to comply with all applicable sanitation rules and 
regulations of city, county, State, Federal, or other agencies having 
jurisdiction over such plants and operations.
---------------------------------------------------------------------------

    (m) Stowage examination service. This service consists of official 
personnel visually determining if an identified carrier or container is 
clean; dry; free of infestation, rodents, toxic substances and foreign 
odor; and suitable to store or carry commodities and certifying the 
results.



Sec. 868.32  Who shall inspect commodities.

    Official commodity inspections shall be performed only by official 
personnel.



Sec. 868.33  Sample requirements; general.

    (a) Samples for lot inspection service. (1) Original lot inspection 
service. The sample(s) on which the original inspection is determined 
shall be--
    (i) Obtained by official personnel;
    (ii) Representative of the commodity in the lot;
    (iii) Protected by official personnel from manipulation, 
substitution, and improper or careless handling; and
    (iv) Obtained within the prescribed area of responsibility of the 
cooperator or field office performing the inspection service.
    (2) Retest lot inspection service. The sample(s) on which the retest 
is determined shall meet the requirements of paragraph (a)(1) of this 
section. The retest inspection shall be performed on the basis of a file 
sample(s), and the samples shall meet the requirements prescribed in 
Sec. 868.35(e).
    (3) Appeal lot inspection service. For an appeal lot inspection 
service, the sample(s) on which the appeal is determined shall meet the 
requirements of paragraph (a)(1) of this section. If the appeal 
inspection is performed on the basis of a file sample(s), the samples 
shall meet the requirements prescribed in Sec. 868.35(e). In accordance 
with Sec. 868.61(b), an applicant may request that a new sample be 
obtained and examined as part of the appeal inspection service.
    (4) Board appeal lot inspection service. A Board appeal lot 
inspection service shall be performed on the basis of file sample.
    (b) Sampler requirement. An official sampler shall sample 
commodities and forward the samples to the appropriate cooperator or 
field office or other location as specified. A sampling report signed by 
the sampler shall accompany each sample. The report shall include the 
identity, quantity, and location of the commodity sampled; the name and 
mailing address of the applicant; and all other information regarding 
the lot as may be required.
    (c) Representative sample. A sample shall not be considered 
representative of a commodity lot unless the sample--
    (1) Has been obtained by official personnel;
    (2) Is of the size prescribed in the instructions; and
    (3) Has been obtained, handled, and submitted in accordance with the 
instructions.
    (d) Protecting samples. Official personnel shall protect samples 
from manipulation, substitution, and improper

[[Page 630]]

and careless handling which would deprive the samples of their 
representativeness or which would change the physical and chemical 
properties of the commodity from the time of sampling until inspection 
services are completed and file samples have been discarded.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.34  Partial inspection.

    When the entire lot is not accessible for examination or a 
representative sample cannot be obtained from the entire lot, the 
certificate shall state the estimated quantity of the commodity in the 
accessible portion and the quantity of the entire lot. The inspection 
shall be limited to the accessible portion. In addition, the words 
``Partial Inspection'' shall be printed or stamped on the certificate.



Sec. 868.35  Sampling provisions by level of service.

    (a) Original inspection service. (1) Lot inspection service. Each 
original lot inspection service shall be made on the basis of one or 
more representative samples obtained by official personnel from the 
commodity in the lot and forwarded to the appropriate location.
    (2) Submitted sample service. Each original submitted sample 
inspection service shall be performed on the basis of the sample as 
submitted.
    (b) Retest inspection service. Each retest inspection service 
performed on a commodity lot or a submitted sample shall be based on an 
analysis of the file sample.
    (c) Appeal inspection service. (1) Lot inspection service. Each 
appeal inspection service on a commodity lot shall be made on the basis 
of a file sample or, upon request, a new sample.
    (2) Submitted sample service. Each appeal inspection service on the 
commodity in a submitted sample shall be based on an analysis of the 
file sample.
    (d) Board appeal inspection service. Each Board appeal inspection 
service performed on a commodity lot or submitted sample shall be based 
on an analysis of the file sample.
    (e) Use of file samples. (1) Requirements for use. A file sample 
that is retained by official personnel in accordance with the procedures 
prescribed in the instructions shall be considered representative for 
retest inspection, appeal inspection, and Board appeal inspection 
service if: (i) The file samples have remained at all times in the 
custody and control of the official personnel that performed the 
inspection service and (ii) the official personnel who performed the 
inspection service in question and those who are to perform the retest 
inspection, the appeal inspection, or the Board appeal inspection 
service determines that the samples were representative of the commodity 
at the time the inspection service was performed and that the quality or 
condition of the commodity in the samples has not since changed.
    (2) Certificate statement. The certificate for a retest inspection, 
appeal inspection, or Board appeal inspection service which is based on 
a file sample shall show the statement ``Results based on file sample.''



Sec. 868.36  Loss of identity.

    (a) Lots. The identity of a packaged lot, bulk lot, or sublot of a 
commodity shall be considered lost if:
    (1) A portion of the commodity is unloaded, transferred, or 
otherwise removed from the carrier or location after the time of 
original inspection, unless the identity is preserved; or
    (2) More commodity or other material, including a fumigant or 
insecticide, is added to the lot after the original inspection was 
performed, unless the addition of the fumigant or insecticide was 
performed in accordance with the instructions; or
    (3) At the option of official personnel performing an appeal 
inspection or Board appeal inspection service, the identity of a 
commodity in a closed carrier or container may be considered lost if the 
carrier or container is not sealed or the seal record is incomplete.
    (b) Carriers and containers. The identity of a carrier or container 
shall be considered lost if (1) the stowage area is cleaned, treated, 
fumigated, or fitted after the original inspection was performed or (2) 
the identification has been changed since the original inspection.
    (c) Submitted sample. The identity of a submitted sample of a 
commodity shall be considered lost if:

[[Page 631]]

    (1) The identifying number, mark, or symbol for the sample is lost 
or destroyed; or
    (2) The sample has not been retained and protected by official 
personnel as prescribed in the regulations and the instructions.

                       Original Inspection Service



Sec. 868.40  Who may request original inspection service.

    Any interested person may apply for inspection service.



Sec. 868.41  Contract service.

    Any interested person may enter into a contract with a cooperator or 
the Service whereby the cooperator or Service will provide original 
inspection services for a specified period, and the applicant will pay a 
specific fee.



Sec. 868.42  How to request original inspection service.

    (a) General. Requests may be made verbally or in writing. Verbal 
requests shall be confirmed in writing when requested by official 
personnel. All written requests shall include the information specified 
in Sec. 868.21. Copies of request forms may be requested from the 
cooperator or the Service. If all required documentation is not 
available when the request is made, it shall be provided as soon as it 
is available. At their discretion, official personnel may withhold 
inspection service pending receipt of the required documentation.
    (b) Request requirements. Requests for original inspection service, 
other than submitted sample inspections, must be made with the 
cooperator or the Service responsible for the area in which the service 
will be provided. Requests for submitted sample inspections may be made 
with any cooperator or any field office that provides original 
inspection service. Requests for inspection of commodities during 
loading, unloading, handling, or processing shall be received far enough 
in advance so official personnel can be present.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.44  New original inspection.

    When circumstances prevent a retest inspection, appeal inspection, 
or Board appeal inspection, an applicant may request a new original 
inspection on any previously inspected lot; except that a new original 
inspection may not be performed on an identifiable commodity lot which, 
as a result of a previous inspection, was found to be contaminated with 
filth, other than insect fragments in nongraded processed products, or 
to contain a deleterious substance. A new original inspection shall be 
based on a new sample and shall not be restricted to the scope of any 
previous inspection. A new original inspection certificate shall not 
supersede any previously issued certificate.

                        Retest Inspection Service



Sec. 868.50  Who may request retest inspection service.

    (a) General. Any interested person may request a retest inspection 
service on nongraded commodities. When more than one interested person 
requests a retest inspection service, the first interested person to 
file is the applicant of record. Only one retest inspection service may 
be performed on any original inspection service.
    (b) Scope of request. A retest inspection service may be requested 
for any or all quality factors tested but shall be limited to analysis 
of the file sample.

(Approved by the Office of Management and Budget under control number 
0580-0012)



Sec. 868.51  How to request retest inspection service.

    (a) General. Requests shall be made with the field office 
responsible for the area in which the original inspection service was 
performed. Verbal requests shall be confirmed in writing, upon request, 
as specified in Sec. 868.21. Copies of request forms may be obtained 
from the field office upon request. If at the time the request is filed 
and the documentation required by Sec. 868.21 is not available, official 
personnel may, at their discretion, withhold service pending the receipt 
of the required documentation.

[[Page 632]]

    (b) Request requirements. Requests will be considered filed on the 
date they are received by official personnel.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.52  Certificating retest inspection results.

    (a) General. Retest inspection certificates shall be issued 
according to Sec. 868.70 and instructions. The certificate shall show 
the results of the factor(s) retested and the original results not 
included in the retest service.
    (b) Required statements on retest certificates. Each retest 
inspection certificate shall show the statements required by this 
section, Sec. 868.71, and the instructions.
    (1) Each retest inspection certificate shall clearly show the term 
``Retest'' and a statement identifying the superseded original 
certificate. The superseded certificate shall be considered null and 
void as of the date of the retest certificate. When applicable, the 
certificate shall also show a statement as to which factor(s) result is 
based on the retest inspection service and that all other results are 
those of the original inspection service.
    (2) If the superseded certificate is in the custody of the Service, 
the superseded certificate shall be marked ``Void.'' If the superseded 
certificate is not in the custody of the Service at the time the retest 
certificate is issued, a statement indicating that the superseded 
certificate has not been surrendered shall be shown on the retest 
certificate.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

                        Appeal Inspection Service



Sec. 868.60  Who may request appeal inspection service.

    (a) General. Any interested person may request appeal inspection or 
Board appeal inspection service. When more than one interested person 
requests an appeal inspection or Board appeal inspection service, the 
first interested person to file is the applicant of record. Only one 
appeal inspection may be obtained from any original inspection or retest 
inspection service for nongraded commodities. Only one Board appeal 
inspection may be obtained from any original or appeal inspection 
service for graded commodities. Board appeal inspection shall be 
performed on the basis of the file sample.
    (b) Kind and scope of request. When the results for more than one 
kind of service are reported on a certificate, an appeal inspection or 
Board appeal inspection service, as applicable, may be requested on any 
or all kinds of services reported on the certificate. The scope of an 
appeal inspection service will be limited to the scope of the original 
inspection or, in the case of a Board appeal inspection service, the 
original or appeal inspection service. A request for appeal inspection 
of a retest inspection will be based upon the scope of the original 
inspection. If the request specifies a different scope, the request 
shall be dismissed. An appeal inspection for grade shall include a 
review of all factors that: (1) Determine the grade and (2) are reported 
on the original or, in the case of a Board appeal inspection, the 
original or appeal inspection certificate.

(Approved by the Office of Management and Budget under control number 
0580-0012)



Sec. 868.61  How to request appeal inspection service.

    (a) General. Requests shall be made with the field office 
responsible for the area in which the original service was performed. 
Requests for Board appeal inspections may be made with the Board of 
Appeals and Review or the field office that performed the appeal 
inspection. Verbal requests must be confirmed in writing, upon request, 
as specified in Sec. 868.21. Copies of request forms may be obtained 
from the field office upon request. If at the time the request is made 
the documentation required by Sec. 868.21 is not available, official 
personnel may, at their discretion, withhold service pending the receipt 
of the required documentation.
    (b) Request requirements. (1) This subparagraph is applicable to 
rice inspection only. Except as may be agreed upon by the interested 
persons, the application shall be made: (i) Before the rice has left the 
place where the inspection being appealed was performed and

[[Page 633]]

(ii) no later than the close of business on the second business day 
following the date of the inspection being appealed. However, the 
Administrator may extend the time requirement as deemed necessary.
    (2) Subject to the limitations of paragraph (b)(3) of this section, 
the applicant may request that an appeal inspection be based on: (i) The 
file sample or (ii) a new sample. However, an appeal inspection shall be 
based on a new sample only if the lot can positively be identified by 
official personnel as the one that was previously inspected and the 
entire lot is available and accessible for sampling and inspection. 
Board appeals shall be on the basis of the file sample.
    (3) An appeal inspection shall be limited to a review of the 
sampling procedure and an analysis of the file sample when, as a result 
of a previous inspection, the commodity was found to be contaminated 
with filth (other than insect fragments in nongraded processed products) 
or to contain a deleterious substance. If it is determined that the 
sampling procedures were improper, a new sample shall be obtained if the 
lot can be positively identified as the lot which was previously 
inspected and the entire lot is available and accessible for sampling 
and inspection.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.62  Who shall perform appeal inspection service.

    (a) Appeal. For graded commodities, the appeal inspection service 
shall be performed by the field office responsible for the area in which 
the original inspection was performed. For nongraded commodities, the 
appeal inspection service shall be performed by the Service's Commodity 
Testing Laboratory.
    (b) Board appeal. Board appeal inspection service shall be performed 
only by the Board of Appeals and Review. The field office will act as a 
liaison between the Board of Appeals and Review and the applicant.



Sec. 868.63  Certificating appeal inspection results.

    (a) General. An appeal inspection certificate shall be issued 
according to Sec. 868.70 and instructions. Except as provided in 
paragraph (b)(2) of this section, only the results of the appeal 
inspection or Board appeal inspection service shall be shown on the 
appeal inspection certificate.
    (b) Required statements. Each appeal inspection certificate shall 
show the statements required by this section, Sec. 868.71, and 
instructions.
    (1) Each appeal inspection certificate shall clearly show: (i) The 
term ``Appeal'' or ``Board Appeal'' and (ii) a statement identifying the 
superseded certificate. The superseded certificate shall be considered 
null and void as of the date of the appeal inspection or Board appeal 
inspection certificate.
    (2) When the results for more than one kind of service are reported 
on a certificate, the appeal or Board appeal inspection certificate 
shall show a statement of which kind of service(s) results are based on 
the appeal or Board appeal inspection service and that all other results 
are those of the original inspection, retest inspection, or appeal 
inspection service.
    (3) If the superseded certificate is in the custody of the Service, 
the superseded certificate shall be marked ``Void.'' If the superseded 
original inspection, retest inspection, or appeal inspection certificate 
is not in the custody of the Service at the time the appeal certificate 
is issued, a statement indicating that the superseded certificate has 
not been surrendered shall be shown on the appeal certificate.
    (c) Finality of Board appeal inspection. A Board appeal inspection 
shall be the final appeal inspection service except that for nongraded 
commodities an appeal shall be the final appeal inspection.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

                          Official Certificates



Sec. 868.70  Official certificates; issuance and distribution.

    (a) Required issuance. An inspection certificate shall be issued to 
show the

[[Page 634]]

results of each kind and each level of inspection service.
    (b) Distribution--(1) Original. The original and one copy of each 
inspection certificate shall be distributed to the applicant or the 
applicant's order. In addition, one copy of each inspection certificate 
shall be filed with the office providing the inspection; and, if the 
inspection is performed by a cooperator, one copy shall be forwarded to 
the appropriate field office. If requested by the applicant prior to 
issuance of the inspection certificate, additional copies not to exceed 
a total of three copies will be furnished at no extra charge.
    (2) Retest and appeal inspection service. In addition to the 
distribution requirements in paragraph (b)(1) of this section, one copy 
of each retest or appeal inspection certificate will be distributed to 
each interested person of record or the interested person's order and to 
the cooperator or field office that issued the superseded certificate.
    (3) Additional copies. Additional copies of certificates will be 
furnished to the applicant or interested person upon request. Fees for 
extra copies in excess of three may be assessed according to the fee 
schedules established by the cooperator or the Service.
    (c) Prompt issuance. An inspection certificate shall be issued 
before the close of business on the business day following the date the 
inspection is completed.
    (d) Who may issue a certificate. (1) Authority. Certificates for 
inspection services may be issued only by official personnel who are 
specifically authorized or licensed to perform and certify the results 
reported on the certificate.
    (2) Exception. The person in the best position to know whether the 
service was performed in an approved manner and that the determinations 
are accurate and true should issue the certificate. If the inspection is 
performed by one person, the certificate should be issued by that 
person. If an inspection is performed by two or more persons, the 
certificate should be issued by the person who makes the majority of the 
determinations or the person who makes the final determination. 
Supervisory personnel may issue a certificate when the individual is 
licensed or authorized to perform the inspection being certificated.
    (e) Name requirement. The name or the signature, or both, of the 
person who issued the inspection certificate shall be shown on the 
original and all copies of the certificate.
    (f) Authorization to affix names. (1) Requirements. The names or the 
signatures, or both, of official personnel may be affixed to official 
certificates which are prepared from work records signed or initialed by 
the person whose name will be shown. The agent affixing the name or 
signature, or both, shall: (i) Be employed by a cooperating agency or 
the Service, (ii) have been designated to affix names or signatures, or 
both, and (iii) hold a power of attorney from the person whose name or 
signature, or both, will be affixed. The power of attorney shall be on 
file with the employing cooperating agency or the Service as 
appropriate.
    (2) Initialing. When a name or signature, or both, is affixed by an 
authorized agent, the initials of the agent shall appear directly below 
or following the name or signature of the person.
    (g) Advance information. Upon request, the contents of an official 
certificate may be furnished in advance to the applicant and any other 
interested person, or to their order, and any additional expense shall 
be borne by the requesting party.
    (h) Certification; when prohibited. An official certificate shall 
not be issued for service after the request for an inspection service 
has been withdrawn or dismissed.



Sec. 868.71  Official certificate requirements.

    Official certificates shall--
    (a) Be on standard printed forms prescribed in the instructions;
    (b) Be in English;
    (c) Be typewritten or handwritten in ink and be clearly legible;
    (d) Show the results of inspection services in a uniform, accurate, 
and concise manner;
    (e) Show the information required by Secs. 868.70-868.75; and
    (f) Show only such other information and statements of fact as are 
provided

[[Page 635]]

in the instructions authorized by the Administrator.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.72  Certification of results.

    (a) General. Each official certificate shall show the results of the 
inspection service.
    (b) Graded commodities. Each official certificate for graded 
commodities shall show--
    (1) The class, grade, or any other quality designation according to 
the official grade standards;
    (2) All factor information requested by the applicant; and
    (3) All grade determining factors for commodities graded below the 
highest quality grade.



Sec. 868.73  Corrected certificates.

    (a) General. The accuracy of the statements and information shown on 
official certificates must be verified by the individual whose name or 
signature, or both, is shown on the official certificate or by the 
authorized agent who affixed the name or signature, or both. Errors 
found during this process shall be corrected according to this section.
    (b) Who may correct. Only official personnel or their authorized 
agents may make corrections, erasures, additions, or other changes to 
official certificates.
    (c) Corrections prior to issuance. No corrections, erasures, 
additions, or other changes shall be made which involve identification, 
quality, or quantity. If such errors are found, a new official 
certificate shall be prepared and issued and the incorrect certificate 
marked ``Void.'' Otherwise, errors may be corrected provided that--
    (1) The corrections are neat and legible;
    (2) Each correction is initialed by the individual who corrects the 
certificate; and
    (3) The corrections and initials are shown on the original and all 
copies.
    (d) Corrections after issuance. (1) General. If errors are found on 
an official certificate at any time up to a maximum of 1 year after 
issuance, the errors shall be corrected by obtaining the incorrect 
certificate and replacing it with a corrected certificate. When the 
incorrect certificate cannot be obtained, a corrected certificate can be 
issued superseding the incorrect one.
    (2) Certification requirements. The same statements and information, 
including permissive statements, that were shown on the incorrect 
certificate, along with the correct statement or information, shall be 
shown on the corrected certificate. According to this section and the 
instructions, corrected certificates shall show--
    (i) The terms ``Corrected Original'' and ``Corrected Copy,''
    (ii) A statement identifying the superseded certificate and the 
corrections,
    (iii) A statement indicating the superseded certificate was not 
surrendered when the incorrect certificate was not submitted; and
    (iv) A new serial number.

In addition, the incorrect certificate shall be marked ``Void'' when 
submitted.
    (e) Limitations. Corrected certificates cannot be issued for a 
certificate that has been superseded by another certificate or on the 
basis of a subsequent analysis for quality.



Sec. 868.74  Divided-lot certificates.

    (a) General. When commodities are offered for inspection and are 
certificated as a single lot, the applicant may exchange the inspection 
certificate for two or more divided-lot certificates.
    (b) Application. Requests for divided-lot certificates shall be 
made--
    (1) In writing;
    (2) By the applicant who made the initial request;
    (3) To the office that issued the outstanding certificate;
    (4) Within 5 business days of the outstanding certificate date; and
    (5) Before the identity of the commodity has been lost.
    (c) Quantity restrictions. Divided-lot certificates shall not show 
an aggregate quantity different than the total quantity shown on the 
superseded certificate.
    (d) Surrender of certificate. The certificate that will be 
superseded shall--
    (1) Be in the custody of the cooperator or the Service;
    (2) Be marked ``Void,'' and

[[Page 636]]

    (3) Show the identification of the divided-lot certificates.
    (e) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the superseded 
certificate shall be shown on each divided-lot certificate. Divided-lot 
certificates shall show--
    (1) A statement indicating the commodity was inspected as an 
undivided lot;
    (2) The terms ``Divided-Lot Original,'' and the copies shall show 
``Divided-Lot Copy;''
    (3) The same serial number with numbered suffix (for example, 1764-
1, 1764-2, 1764-3, and so forth); and
    (4) The quantity specified by the request.
    (f) Issuance and distribution. Divided-lot certificates shall be 
issued no later than the close of business on the next business day 
after the request and be distributed according to Sec. 868.70(b).
    (g) Limitations. After divided-lot certificates have been issued, 
further dividing or combining is prohibited except with the approval of 
the Service.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.75  Duplicate certificates.

    Upon request, a duplicate certificate may be issued for a lost or 
destroyed official certificate.
    (a) Application. Requests for duplicate certificates shall be 
filed--
    (1) In writing;
    (2) By the applicant who requested the service covered by the lost 
or destroyed certificate; and
    (3) With the office that issued the initial certificate.
    (b) Certification requirements. The same information and statements, 
including permissive statements, that were shown on the lost or 
destroyed certificate shall be shown on the duplicate certificate. 
Duplicate certificates shall show: (1) The terms ``Duplicate Original,'' 
and the copies shall show ``Duplicate Copy'' and (2) a statement that 
the certificate was issued in lieu of a lost or destroyed certificate.
    (c) Issuance. Duplicate certificates shall be issued as promptly as 
possible and distributed according to Sec. 868.70(b).
    (d) Limitations. Duplicate certificates shall not be issued for 
certificates that have been superseded.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]

             Licensed Inspectors, Technicians, and Samplers



Sec. 868.80  Who may be licensed.

    (a) Inspectors. The Administrator may license any person to inspect 
commodities and to perform related services if the individual--
    (1) Is employed by a cooperator, is a contractor, or is employed by 
a contractor;
    (2) Possesses the qualifications prescribed in the instructions; and
    (3) Has no interest, financial or otherwise, direct or indirect in 
merchandising, handling, storing, or processing the kind of commodities 
or related products to be inspected.

The Administrator may require applicants to be examined for competency 
at a specific time and place and in a prescribed manner.
    (b) Technicians or samplers. The Administrator may license any 
person as a technician to perform official specified laboratory 
functions, including sampling duties and related services, or as a 
sampler to draw samples of commodities and perform related services if 
the individual: (1) Possesses proper qualifications as prescribed in the 
instructions and (2) has no interest, financial or otherwise direct or 
indirect in merchandising, handling, storing, or processing the kind of 
commodities or related products to be chemically analyzed, mechanically 
tested, sampled, and so forth. The Administrator may require applicants 
to be examined for competency at a specific time and place and in a 
prescribed manner.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995; 63 FR 29531, June 1, 1998]

[[Page 637]]



Sec. 868.81  Licensing procedures.

    (a) Application. An application for a license, the renewal of a 
license, or the return of a suspended license shall be submitted to the 
Service on forms furnished by the Service. Each application shall be in 
English, be typewritten or legibly written in ink, show all information 
prescribed by the application form, and be signed by the applicant.
    (b) Examinations and reexaminations. Applicants for a license and 
individuals who are licensed to perform any or all inspection services 
shall, at the discretion of the Service, submit to examinations or 
reexaminations to determine their competency to perform the inspection 
functions for which they desire to be or are licensed.
    (c) Termination. (1) Procedure. Each license shall terminate 
according to the termination date shown on the license and as specified 
by the schedule in this paragraph. The termination date for a license 
shall be no less than 3 years or more than 4 years after the issuance 
date for the initial license; thereafter, every 3 years. Upon request of 
a licensee and for good cause shown, the termination date may be 
advanced or delayed by the Administrator for a period not to exceed 60 
days.

                          Termination Schedule
------------------------------------------------------------------------
         Last name beginning with                 Termination date
------------------------------------------------------------------------
A........................................  January.
B........................................   February.
C, D.....................................   March.
E, F, G..................................   April.
H, I, J..................................   May.
K, L.....................................   June.
M........................................   July.
N, O, P, Q...............................   August.
R........................................   September.
S, T, U, V...............................   October.
W........................................   November.
X, Y, Z..................................   December.
------------------------------------------------------------------------


The Service shall issue a termination notice 60 days before the 
termination date. The notice shall give detailed instructions for 
requesting renewal of license, state whether a reexamination is 
required, and, if a reexamination is required, give the scope of the 
examination. Failure to receive a notice from the Service shall not 
exempt a licensee from the responsibility of having the license renewed 
by the termination date.
    (2) Exception. The license of an individual under contract with the 
Service shall terminate upon termination of the contract.
    (d) Surrender of license. Each license that is terminated or which 
is suspended or revoked under Sec. 868.84 shall be promptly surrendered 
to the Administrator or other official of the Service designated by the 
Administrator.

(Approved by the Office of Management and Budget under control number 
0580-0012)

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, Mar. 
30, 1995]



Sec. 868.82  Voluntary cancellation or suspension of license.

    Upon request by a licensee, the Service may cancel a license or 
suspend a license for a period of time not to exceed 1 year. A license 
that has been voluntarily suspended shall be returned by the Service 
upon request by the licensee within 1 year, subject to the provisions of 
Sec. 868.81(a) and (b); a license that has been cancelled shall be 
considered void and shall not be subject to return or renewal.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]



Sec. 868.83  Automatic suspension of license by change in employment.

    A license issued to an individual shall be automatically suspended 
when the individual ceases to be employed by the cooperator. If the 
individual is reemployed by the cooperator or employed by another 
cooperator within 1 year of the suspension date and the license has not 
terminated in the interim, upon request of the licensee, the license 
will be reinstated subject to the provisions of Sec. 868.81(a) and (b).

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]



Sec. 868.84  Suspension or revocation of license.

    (a) General. (1) An inspector's, technician's, or sampler's license 
may be suspended or revoked if the licensee: (i) Willfully, carelessly, 
or through incompetence fails to perform the duties specified in the 
Act, regulations, standards, or the instructions or (ii) becomes 
incapable of performing required duties.

[[Page 638]]

    (2) A license may not be suspended or revoked until the individual: 
(i) Has been served notice, in person or by registered mail, that 
suspension or revocation of the license is under consideration for 
reasons set out in the notice and (ii) has been given an opportunity for 
a hearing.
    (b) Procedure for summary action. In cases where the public health, 
interest, or safety require, the Administrator may summarily suspend an 
inspector's, technician's, or sampler's license without prior hearing. 
In such cases, the licensee shall be advised of the factors which appear 
to warrant suspension or revocation of the license. The licensee shall 
be accorded an opportunity for a hearing before the license is finally 
suspended or revoked.
    (c) Procedures for other than summary action. Except in cases of 
willfulness or those described in paragraph (b) of this section, the 
Administrator, before instituting proceedings for the suspension or 
revocation of a license, shall provide the licensee an opportunity to 
demonstrate or achieve compliance with the Act, regulations, standards, 
and instructions. If the licensee does not demonstrate or achieve 
compliance, the Administrator may institute proceedings to suspend or 
revoke the license.

(The information collection requirements contained in paragraph (c) have 
been approved by the Office of Management and Budget under control 
number 0580-0012)

                                  Fees



Sec. 868.90  Fees for certain Federal inspection services.

    (a) The fees shown in table 1 apply to Federal Commodity Inspection 
Services specified below.

                                          Table 1--Hourly Rates \1, 3\
                              [Fees for Inspection of Commodities Other Than Rice]
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Hourly Rates (per service representative):
  Monday to Friday --$33.00
  Saturday, Sunday, and Holidays--$42.80
Miscellaneous Processed Commodities \2\:
  (1) Additional Tests (cost per test, assessed in
   addition to the hourly rate):
      (i) Aflatoxin Test (Thin Layer Chromatography)...  $51.40
      (ii) Falling Number..............................  $12.00
      (iii) Aflatoxin Test Kit.........................  $7.50
Graded Commodities (Beans, Peas, Lentils, Hops, and
 Pulses):
  (1) Additional Tests--Unit Rates (Beans, Peas,
   Lentils):
      (i) Field run (per lot or sample)................  $22.70
      (ii) Other than field run (per lot or sample)....  $13.50
      (iii) Factor analysis (per factor)...............  $5.50
  (2) Additional Tests--Unit Rates (Hops):
      (i) Lot or sample (per lot or sample)............  $29.00
  (3) Additional Tests--Unit Rates (Nongraded
   Nonprocessed Commodities):
      (i) Factor analysis (per factor).................  $5.50
  (4) Stowage examination (service-on- request) \4\
      (i) Ship (per stowage space).....................  Sec.  50.00 (minimum $250 per ship)
      (ii) Subsequent ship examinations (same as         (minimum $150 per ship)
       original).
      (iii) Barge (per examination)....................  $40.00
      (iv) All other carriers (per examination)........  $15.00
----------------------------------------------------------------------------------------------------------------
\1\ Fees for original commodity inspection and appeal inspection services include, but are not limited to,
  sampling, grading, weighing, stowage examinations, pre-inspection conferences, sanitation inspections, and
  other services requested by the applicant and that are performed within 25 miles of the field office. Travel
  and related expenses (commercial transportation costs, mileage, and per diem) will be assessed in addition to
  the hourly rate for service beyond the 25-mile limit. Refer to Sec.  868.92, Explanation of service fees and
  additional fees, for all other service fees except travel and per diem.
\2\ When performed at a location other than the Commodity Testing Laboratory.
\3\ Faxed and extra copies of certificates will be charged at $1.50 per copy.
\4\ If performed outside of normal business, 1\1/2\ times the applicable unit fee will be charged.

    (b) In addition to the fees, if any, for sampling or other requested 
service, a fee will be assessed for each laboratory test (original, 
retest, or appeal) listed in table 2 of this section.
    (c) If a requested test is to be reported on a specified moisture 
basis, a fee for a moisture test will also be assessed.
    (d) Laboratory tests referenced in table 2 of this section will be 
charged at the applicable laboratory fee when performed at field 
locations other than at the applicant's facility.

[[Page 639]]



             Table 2--Fees for Laboratory Test Services \1\
------------------------------------------------------------------------
                        Laboratory tests                           Fees
------------------------------------------------------------------------
(1) Alpha monoglycerides.......................................   $18.00
(2) Aflatoxin test (other than TLC or Minicolumn method).......    22.50
(3) Aflatoxin (TLC)............................................    48.00
(4) Aflatoxin (Minicolumn method)..............................    25.00
(5) Appearance & odor..........................................     3.00
(6) Ash........................................................     8.50
(7) Bacteria count.............................................    10.00
(8) Baking test (cookies)......................................    28.00
(9) Bostwick (cooked)..........................................    12.60
(10) Bostwick (uncooked/cook test/dispersibility)..............     6.50
(11) Brix......................................................     8.00
(12) Calcium...................................................    12.50
(13) Carotenoid color..........................................    12.50
(14) Cold test (oil)...........................................    10.00
(15) Color test (syrups).......................................     6.50
(16) Cooking test (other than corn soy blend)..................     7.00
(17) Crude fat.................................................    10.00
(18) Crude fiber...............................................    13.00
(19) Dough handling (baking)...................................     8.50
(20) E. coli...................................................    19.00
(21) Falling number............................................    12.00
(22) Fat (acid hydrolysis).....................................    14.00
(23) Fat stability (A.O.M.)....................................    27.00
(24) Flash point (open & close cup)............................    14.00
(25) Free fatty acid...........................................    12.00
(26) Hydrogen ion activity (ph)................................     9.50
(27) Iron enrichment...........................................    15.00
(28) Iodine number/value.......................................     9.50
(29) Linolenic acid (fatty acid profile).......................    50.00
(30) Lipid phosphorous.........................................    47.00
(31) Livibond color............................................    10.00
(32) Margarine (nonfat solids).................................    23.60
(33) Moisture..................................................     6.00
(34) Moisture average (crackers)...............................     4.00
(35) Moisture & volatile matter................................     8.50
(36) Performance test (prepared bakery mix)....................    32.00
(37) Peroxide value............................................    13.50
(38) Phosphorus................................................    14.00
(39) Popcorn kernels (total defects)...........................    19.00
(40) Popping ratio/value popcorn...............................    19.00
(41) Potassium bromate.........................................    20.00
(42) Protein...................................................     7.50
(43) Rope spore count..........................................    31.50
(44) Salmonella................................................    40.00
(45) Salt or sodium content....................................    12.50
(46) Sanitation (filth light)..................................    24.00
(47) Sieve test................................................     5.00
(48) Smoke point...............................................    22.00
(49) Solid fat index...........................................    85.00
(50) Specific volume (bread)...................................    21.80
(51) Staphylococcus aureus.....................................    24.50
(52) Texture...................................................     6.50
(53) Tilletia controversa kuhn (TCK) (Qualitative).............    25.20
(54) Tilletia controversa kuhn (TCK) (Quantitative)............    76.00
(55) Unsaponifiable matter.....................................    25.00
(56) Urease activity...........................................    12.50
(57) Visual exam (hops pellet).................................     7.50
(58) Visual exam (insoluable impurities oils & shortenings)....     5.00
(59) Visual exam (pasta).......................................    10.50
(60) Visual exam (processed grain products)....................    12.00
(61) Visual exam (total foreign material other than cereal          6.50
 grains).......................................................
(62) Vitamin enrichment........................................     7.00
(63) Vomitoxin (TLC)...........................................    40.00
(64) Vomitoxin (Qualitative)...................................    30.00
(65) Vomitoxin (Quantitative)..................................    40.00
(66) Water activity............................................    20.00
(67) Wiley melting point.......................................    12.50
(68) Other laboratory tests....................................      \2\
------------------------------------------------------------------------
\1\ When laboratory test service is provided for GIPSA by a private
  laboratory, the applicant will be assessed a fee which, as nearly as
  practicable, covers the costs to GIPSA for the service provided.
\2\ Fees for other laboratory tests not referenced in this table will be
  based on the applicable hourly rate listed in table 1 of this section.


[61 FR 66535, Dec. 18, 1996]



Sec. 868.91  Fees for certain Federal rice inspection services.

    The fees shown in Tables 1 and 2 apply to Federal rice inspection 
services.

                Table 1.--Hourly Rates/Unit Rate Per CWT
               [Fees for Federal Rice Inspection Services]
------------------------------------------------------------------------
                                              Regular       Nonregular
                                              workday         workday
               Service \1\                   (Monday-        (Sunday-
                                             Saturday)       Holiday)
------------------------------------------------------------------------
Contract (per hour per Service                   $42.80          $59.60
 representative)........................
Noncontract (per hour per Service                 52.40           72.40
 representative)........................
Export Port Services (per hundredweight)            .052            .052 
 \2\....................................
------------------------------------------------------------------------
\1\ Original and appeal inspection services include: Sampling, grading,
  weighing, and other services requested by the applicant when performed
  at the applicant's facility.
\2\ Services performed at export port locations on lots at rest.


                                              Table 2.--Unit Rates
 
----------------------------------------------------------------------------------------------------------------
                                                                                  Brown rice for
                        Service \1,\ \3\                            Rough rice      processing      Milled rice
----------------------------------------------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample inspection)..          $34.50          $29.80          $21.20
Factor analysis for any single factor (per factor):
    (a) Milling yield (per sample)..............................           26.75           26.75              --
    (b) All other factors (per factor)..........................           12.70           12.70           12.70

[[Page 640]]

 
Total oil and free fatty acid...................................              --           42.00           42.00
Interpretive line samples: \2\
    (a) Milling degree (per set)................................              --              --           89.20
    (b) Parboiled light (per sample)............................              --              --           22.35
Extra copies of certificates (per copy).........................            3.00            3.00           3.00
----------------------------------------------------------------------------------------------------------------
\1\ Fees apply to determinations (original or appeals) for kind, class, grade, factor analysis, equal to type,
  milling yield, or any other quality designation as defined in the U.S. Standards for Rice or applicable
  instructions, whether performed singly or in combination at other than at the applicant's facility.
\2\ Interpretive line samples may be purchased from the U.S. Department of Agriculture, GIPSA, FGIS, Technical
  Services Division, 10383 North Executive Hills Boulevard, Kansas City, Missouri 64153-1394. Interpretive line
  samples also are available for examination at selected FGIS field offices. A list of field offices may be
  obtained from the Director, Field Management Division, USDA, GIPSA, FGIS, 1400 Independence Avenue, SW, STOP
  3630, Washington, DC 20250-3630. The interpretive line samples illustrate the lower limit for milling degrees
  only and the color limit for the factor ``Parboiled Light'' rice.
\3\ Fees for other services not referenced in table 2 will be based on the noncontract hourly rate listed in
  Sec.  868.90, table 1.

[65 FR 16788, Mar. 30, 2000]



Sec. 868.92  Explanation of service fees and additional fees.

    (a) Costs included in the fees. Fees for official services in 
Secs. 868.90 and 868.91 include--
    (1) The cost of performing the service and related supervision and 
administrative costs;
    (2) The cost of per diem, subsistence, mileage, or commercial 
transportation to perform the service for rice inspection only in 
Sec. 868.91, table 1. See Sec. 868.90, table 1, footnote 1, for fees for 
inspection of commodities other than rice.
    (3) The cost of first-class mail service;
    (4) The cost of overtime and premium pay; and
    (5) The cost of certification except as provided in Sec. 868.92(c).
    (b) Computing hourly rates. Hourly fees will be assessed in quarter 
hour increments for--
    (1) Travel from the FGIS field office or assigned duty location to 
the service point and return; and
    (2) The performance of the requested service, less mealtime.
    (c) Additional fees. Fees in addition to the applicable hourly or 
unit fee will be assessed when--
    (1) An applicant requests more than the original and three copies of 
a certificate;
    (2) An applicant requests onsite typing of certificates or typing of 
certificates at the FGIS field office during other than normal working 
hours; and
    (3) An applicant requests the use of express-type mail or courier 
service.
    (d) Application of fees when service is delayed by the applicant. 
Hourly fees will be assessed when--
    (1) Service has been requested at a specified location;
    (2) A Service representative is on duty and ready to provide service 
but is unable to do so because of a delay not caused by the Service; and
    (3) FGIS officials determine that the Service representative(s) 
cannot be utilized elsewhere or cannot be released without cost to the 
Service.
    (e) Application of fees when an application for service is withdrawn 
or dismissed. Hourly fees will be assessed to the applicant for the 
scheduled service if the request is withdrawn or dismissed after the 
Service representative departs for the service point or if the request 
for service is not withdrawn or dismissed by 2 p.m. of the business day 
preceding the date of scheduled service. However, hourly fees will not 
be assessed to the applicant if FGIS officials determine that the 
Service representative can be utilized elsewhere or if the Service 
representative can be released without cost to the Service.
    (f) To whom fees are assessed. Fees for official services including 
additional fees as provided in Sec. 868.92(c) shall be assessed to and 
paid by the applicant for the Service.
    (g) Advance payment. As necessary, the Administrator may require 
that fees shall be paid in advance of the performance of the requested 
service. Any fees paid in excess of the amount due shall be used to 
offset future billings,

[[Page 641]]

unless a request for a refund is made by the applicant.
    (h) Time and form of payment. (1) Fees for Federal inspection 
service. Bills for fees assessed under the regulations for official 
services performed by FGIS shall be paid by check, draft, or money 
order, payable to U.S. Department of Agriculture, Federal Grain 
Inspection Service.
    (2) Fees for cooperator inspection service. Fees for inspection 
services provided by a cooperator shall be paid by the applicant to the 
cooperator in accordance with the cooperator's fee schedule.

[53 FR 3722, Feb. 9, 1988. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995; 61 FR 66536, Dec. 18, 1996]



                     Subpart B--Marketing Standards

    Source: 62 FR 6706, Feb. 13, 1997, unless otherwise noted.



Sec. 868.101  General information.

    The Grain Inspection, Packers and Stockyards Administration (GIPSA) 
of the U.S. Department of Agriculture (USDA) facilitates the fair and 
efficient marketing of agricultural products by maintaining voluntary 
grade standards for Beans, Whole Dry Peas, Split Peas, and Lentils, 
which provide a uniform language for describing the quality of these 
commodities in the marketplace. These standards may cover (but are not 
limited to) terms, classes, quality levels, performance criteria, and 
inspection requirements. Procedures contained in this part set forth the 
process which GIPSA will follow in developing, issuing, revising, 
suspending, or terminating the U.S. standards for Beans, Whole Dry Peas, 
Split Peas, and Lentils. Communications about GIPSA standards in general 
should be addressed to the Administrator, GIPSA, USDA, 1400 Independence 
Avenue, S.W., Washington, D.C. 20250-3601.



Sec. 868.102  Procedures for establishing and revising grade standards.

    (a) GIPSA will develop, revise, suspend, or terminate grade 
standards if it determines that such action is in the public interest. 
GIPSA encourages interested parties to participate in the review, 
development, and revision of grade standards. Interested parties include 
growers, producers, processors, shippers, distributors, consumers, trade 
associations, companies, and State or Federal agencies. Such persons may 
at any time recommend that GIPSA develop, revise, suspend, or terminate 
a grade standard. Requests for action should be in writing, and should 
be accompanied by a draft of the suggested change, as appropriate.
    (b) GIPSA will:
    (1) Determine the need for new or revised standards;
    (2) Collect technical, marketing, or other appropriate data;
    (3) Conduct research regarding new or revised standards, as 
appropriate; and
    (4) Draft the proposed standards.
    (c) If GIPSA determines that new standards are needed, existing 
standards need to be revised, or the suspension or termination of 
existing standards is justified, GIPSA will undertake the action with 
input from interested parties.



Sec. 868.103  Public notification of grade standards action.

    (a) After developing a standardization proposal, GIPSA will publish 
a notice in the Federal Register proposing new or revised standards or 
suspending or terminating existing standards. The notice will provide a 
sufficient comment period for interested parties to submit comments.
    (b) GIPSA will simultaneously issue a news release about these 
actions, notifying the affected industry and general public. GIPSA will 
also distribute copies of proposals to anyone requesting a copy or to 
anyone it believes may be interested, including other Federal, State, or 
local government agencies.
    (c) All comments received within the comment period will be made 
part of the public record maintained by GIPSA, will be available to the 
public for review, and will be considered by GIPSA before final action 
is taken on the proposal.
    (d) Based on the comments received, GIPSA's knowledge of standards, 
grading, marketing, and other technical factors, and any other relevant 
information, GIPSA will decide whether the

[[Page 642]]

proposed actions should be implemented.
    (e) If GIPSA concludes that the changes as proposed or with 
appropriate modifications should be adopted, GIPSA will publish the 
final changes in the Federal Register as a final notice. GIPSA will make 
the grade standards and related information available in printed form 
and electronic media.
    (f) If GIPSA determines that proposed changes are not warranted, or 
otherwise are not in the public interest, GIPSA will either publish in 
the Federal Register a notice withdrawing the proposal, or will revise 
the proposal and again seek public input.



            Subpart C--United States Standards for Rough Rice

    Note to the Subpart: Compliance with the provisions of these 
standards does not excuse failure to comply with the provisions of the 
Federal Food, Drug, and Cosmetic Act, or other Federal laws.

    Source: 42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, 
unless otherwise noted.

                              Terms Defined



Sec. 868.201    Definition of rough rice.

    Rice (Oryza sativa L.) which consists of 50 percent or more of paddy 
kernels (see Sec. 868.202(i)) of rice.

[34 FR 7863, May 17, 1969. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]



Sec. 868.202  Definition of other terms.

    For the purposes of these standards, the following terms shall have 
the meanings stated below:
    (a) Broken kernels. Kernels of rice which are less than three-
fourths of whole kernels.
    (b) Chalky kernels. Whole or large broken kernels of rice which are 
one-half or more chalky.
    (c) Classes. The following four classes:
Long Grain Rough Rice
Medium Grain Rough Rice
Short Grain Rough Rice
Mixed Rough Rice

Classes shall be based on the percentage of whole kernels, large broken 
kernels, and types of rice.
    (1) ``Long grain rough rice'' shall consist of rough rice which 
contains more than 25 percent of whole kernels and which after milling 
to a well-milled degree, contains not more than 10 percent of whole or 
broken kernels of medium or short grain rice.
    (2) ``Medium grain rough rice'' shall consist of rough rice which 
contains more than 25 percent of whole kernels and which after milling 
to a well-milled degree, contains not more than 10 percent of whole or 
large broken kernels of long grain rice or whole kernels of short grain 
rice.
    (3) ``Short grain rough rice'' shall consist of rough rice which 
contains more than 25 percent of whole kernels and which, after milling 
to a well-milled degree, contains not more than 10 percent of whole or 
large broken kernels of long grain rice or whole kernels of medium grain 
rice.
    (4) ``Mixed rough rice'' shall consist of rough rice which contains 
more than 25 percent of whole kernels and which, after milling to a 
well-milled degree, contains more than 10 percent of ``other types'' as 
defined in paragraph (h) of this section.
    (d) Damaged kernels. Whole or broken kernels of rice which are 
distinctly discolored or damaged by water, insects, heat, or any other 
means, and whole or large broken kernels of parboiled rice in non-
parboiled rice. ``Heat-damaged kernels'' (see paragraph (e) of this 
section) shall not function as damaged kernels.
    (e) Heat-damaged kernels. Whole or large broken kernels of rice 
which are materially discolored and damaged as a result of heating, and 
whole or large broken kernels of parboiled rice in nonparboiled rice 
which are as dark as, or darker in color than, the interpretive line for 
heat-damaged kernels.
    (f) Milling yield. An estimate of the quantity of whole kernels and 
total milled rice (whole and broken kernels combined) that are produced 
in the milling of rough rice to a well-milled degree.
    (g) Objectionable seeds. Seeds other than rice, except seeds of 
Echinochloa crusgalli (commonly known as barnyard grass, watergrass, and 
Japanese millet).
    (h) Other types. (1) Whole kernels of: (i) Long grain rice in medium 
or short grain rice, (ii) medium grain rice in long or short grain rice, 
(iii) short

[[Page 643]]

grain rice in long or medium grain rice, and (2) Large broken kernels of 
long grain rice in medium or short grain rice and large broken kernels 
of medium or short grain rice in long grain rice.
    Note: Broken kernels of medium grain rice in short grain rice and 
large broken kernels of short grain rice in medium grain rice shall not 
be considered other types.
    (i) Paddy kernels. Whole or broken unhulled kernels of rice.
    (j) Red rice. Whole or large broken kernels of rice on which there 
is an appreciable amount of red bran.
    (k) Seeds. Whole or broken seeds of any plant other than rice.
    (l) Smutty kernels. Whole or broken kernels of rice which are 
distinctly infected by smut.
    (m) Types of rice. The following three types:
Long grain
Medium grain
Short grain

Types shall be based on the length-width ratio of kernels of rice that 
are unbroken and the width, thickness, and shape of kernels of rice that 
are broken as prescribed in FGIS instructions.
    (n) Ungelatinized kernels. Whole or large broken kernels of 
parboiled rice with distinct white or chalky areas due to incomplete 
gelatinization of the starch.
    (o) Whole and large broken kernels. Rice (including seeds) that (1) 
passes over a 6 plate (for southern production), or (2) remains on top 
of a 6 sieve (for western production).
    (p) Whole kernels. Unbroken kernels of rice and broken kernels of 
rice which are at least three-fourths of an unbroken kernel.
    (q) 6 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0938 (\6/64\) inch in diameter.
    (r) 6 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina 0.051-inch thick, perforated with rows of round holes 0.0938 (\6/
64\) inch in diameter, and a bottom lamina 0.091-inch thick, without 
perforations.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989; 54 FR 51344, Dec. 
14, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

              Principles Governing Application of Standards



Sec. 868.203  Basis of determination.

    The determination of seeds, objectionable seeds, heat-damaged 
kernels, red rice and damaged kernels, chalky kernels, other types, 
color, and the special grade Parboiled rough rice shall be on the basis 
of the whole and large broken kernels of milled rice that are produced 
in the milling of rough rice to a well-milled degree. When determining 
class, the percentage of (a) whole kernels of rough rice shall be 
determined on the basis of the original sample, and (b) types of rice 
shall be determined on the basis of the whole and large broken kernels 
of milled rice that are produced in the milling of rough rice to a well-
milled degree. Smutty kernels shall be determined on the basis of the 
rough rice after it has been cleaned and shelled as prescribed in FGIS 
instructions, or by any method that is approved by the Administrator as 
giving equivalent results. All other determinations shall be on the 
basis of the original sample. Mechanical sizing of kernels shall be 
adjusted by handpicking as prescribed in FGIS instructions, or by any 
method that is approved by the Administrator as giving equivalent 
results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
60 FR 16364, Mar. 30, 1995]



Sec. 868.204  Interpretive line samples.

    Interpretive line samples showing the official scoring line for 
factors that are determined by visual examinations shall be maintained 
by the Federal Grain Inspection Service, U.S. Department of Agriculture, 
and shall be available for reference in all inspection offices that 
inspect and grade rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982. Redesignated at 54 FR 21403, May 18, 1989, 
and 60 FR 16364, Mar. 30, 1995]



Sec. 868.205  Milling requirements.

    In determining milling yield (see Sec. 868.202(f)) in rough rice, 
the degree of milling shall be equal to, or better

[[Page 644]]

than, that of the interpretive line sample for ``well-milled'' rice.

[42 FR 40869, Aug. 12, 1977. Redesignated at 54 FR 21413, May 18, 1989. 
Further redesignated and amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec. 868.206  Milling yield determination.

    Milling yield shall be determined by the use of an approved device 
in accordance with procedures prescribed in FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the McGill 
Miller No. 3 and any other equipment that is approved by the 
Administrator as giving equivalent results.
    Note: Milling yield shall not be determined when the moisture 
content of the rough rice exceeds 18.0 percent.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; Redesignated and amended at 54 FR 21403, May 
18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.207  Moisture.

    Water content in rough rice as determined by an approved device in 
accordance with procedures prescribed in the FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the Motomco 
Moisture Meter and any other equipment that is approved by the 
Administrator as giving equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982. Redesignated at 54 FR 21403, May 18, 1989; 
54 FR 51344, Dec. 14, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.208  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure; e.g., report 8.34 as 8.3 and 1.22 as 1.2.
    (b) Recording. All percentages, except for milling yield, are stated 
in whole and tenth percent to the nearest tenth percent. Milling yield 
is stated to the nearest whole percent.

[54 FR 21403, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.209  Information.

    Requests for the Rice Inspection Handbook, Equipment Handbook, or 
for information concerning approved devices and procedures, criteria for 
approved devices, and requests for approval of devices should be 
directed to the U.S. Department of Agriculture, Federal Grain Inspection 
Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office 
or cooperator.

[54 FR 21404, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 645]]

           Grades, Grade Requirements, and Grade Designations


Sec. 868.210    Grades and grade requirements for the classes of Rough 
        Rice. (See also Sec. 868.212.)

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Maximum limits of--
                                          --------------------------------------------------------------------------------
                                             Seeds and heat-damaged kernels                Chalky kernels \1\
                                          ------------------------------------  Red rice           \2\
                                             Total     Heat-damaged               and    ----------------------
                  Grade                     (singly    kernels and     Heat-    damaged                           Other        Color requirements \1\
                                               or     objectionable   damaged   kernels    In long   In medium  types \3\            (minimum)
                                           combined)  seeds (singly   kernels   (singly     grain     or short  (Percent)
                                            (Number    or combined)   (Number      or        rice      grain
                                             in 500     (Number in    in 500   combined)  (Percent)     rice
                                             grams)     500 grams)    grams)   (Percent)             (Percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1...............................          4            3           1        0.5        1.0        2.0        1.0  Shall be white or creamy.
U.S. No. 2...............................          7            5           2        1.5        2.0        4.0        2.0  May be slightly gray.
U.S. No. 3...............................         10            8           5        2.5        4.0        6.0        3.0  May be light gray.
U.S. No. 4...............................         27           22          15        4.0        6.0        8.0        5.0  May be gray or slight rosy.
U.S. No. 5...............................         37           32          25        6.0       10.0       10.0       10.0  May be dark gray or rosy.
U.S. No. 6...............................         75           75          75   \4\ 15.0       15.0       15.0       10.0  May be dark gray or rosy.
U.S. Sample grade
    U.S. Sample grade shall be rough rice which: (a) does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 6, inclusive; (b)
     contains more than 14.0 percent of moisture; (c) is musty, or sour, or heating; (d) has any commercially objectionable foreign odor; or (e) is
     otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled rough rice, see Sec.  868.212(b).
\2\ For the special grade Glutinous rough rice, see Sec.  868.212(d).
\3\ These limits do not apply to the class Mixed Rough Rice.
\4\ Rice in grade U.S. No. 6 shall contain not more than 6.0 percent of damaged kernels.

[56 FR 55978, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



Sec. 868.211  Grade designation.

    (a) The grade designation for all classes of rough rice, except 
Mixed Rough Rice, shall include in the following order: (1) The letters 
``U.S.''; (2) the number of the grade or the words ``Sample grade,'' as 
warranted; (3) the words ``or better'' when applicable and requested by 
the applicant prior to inspection; (4) the class; (5) each applicable 
special grade (see Sec. 868.213); and (6) a statement of the milling 
yield.
    (b) The grade designation for the class Mixed Rough Rice shall 
include, in the following order: (1) The letters ``U.S.''; (2) the 
number of the grade or the words ``Sample grade,'' as warranted; (3) the 
words ``or better,'' when applicable and requested by the applicant 
prior to inspection; (4) the class; (5) each applicable special grade 
(see Sec. 868.213); (6) the percentage of whole kernels of each type in 
the order of predominance; (7) the percentage of large broken kernels of 
each type in the order of predominance; (8) the percent of material 
removed by the No. 6 sieve or the No. 6 sizing plate; (9) when 
applicable, the percentage of seeds; and (10) a statement of the milling 
yield.
    Note: Large broken kernels other than long grain, in Mixed Rough 
Rice, shall be certificated as ``medium or short grain.''

[42 FR 40869, Aug. 12, 1977, as amended at 54 FR 51344, Dec. 14, 1989. 
Redesignated and amended at 60 FR 16364, 16365, Mar. 30, 1995]

[[Page 646]]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec. 868.212  Special grades and requirements.

    A special grade, when applicable, is supplemental to the grade 
assigned under Sec. 868.210. Such special grades for rough rice are 
established and determined as follows:
    (a) Infested rough rice. Tolerances for live insects for infested 
rough rice are defined according to sampling designations as follows:
    (1) Representative sample. The representative sample consists of the 
work portion, and the file sample if needed and when available. The 
rough rice (except when examined according to paragraph (a)(3) of this 
section will be considered infested if the representative sample 
contains two or more live weevils, or one live weevil and one or more 
other live insects injurious to stored rice or five or more other live 
insects injurious to stored rice.
    (2) Lot as a whole (stationary). The lot as a whole is considered 
infested when two or more live weevils, or one live weevil and one or 
more other live insects injurious to stored rice, or five or more other 
live insects injurious to stored rice, or 15 or more live Angoumois 
moths or other live moths injurious to stored rice are found in, on, or 
about the lot.
    (3) Sample as a whole during continuous loading/unloading. The 
minimum sample size for rice being sampled during continuous loading/
unloading is 500 grams per each 100,000 pounds of rice. The sample as a 
whole is considered infested when a component (as defined in FGIS 
instructions) contains two or more live weevils, or one live weevil and 
one or more other live insects injurious to stored rice, or five or more 
other live insects injurious to stored rice.
    (b) Parboiled rough rice. Parboiled rough rice shall be rough rice 
in which the starch has been gelatinized by soaking, steaming, and 
drying. Grades U.S. No. 1 to U.S. No. 6 inclusive, shall contain not 
more than 10.0 percent of ungelatinized kernels. Grades U.S. No. 1 and 
U.S. No. 2 shall contain not more than 0.1 percent, grades U.S. No. 3 
and U.S. No. 4 not more than 0.2 percent, and grades U.S. No. 5 and U.S. 
No. 6 not more than 0.5 percent of nonparboiled rice. If the rice is: 
(1) Not distinctly colored by the parboiling process, it shall be 
considered ``Parboiled Light''; (2) distinctly but not materially 
colored by the parboiling process, it shall be considered ``Parboiled''; 
(3) materially colored by the parboiling process, it shall be considered 
``Parboiled Dark.'' The color levels for ``Parboiled Light,'' 
``Parboiled,'' and ``Parboiled Dark'' rice shall be in accordance with 
the interpretive line samples for parboiled rice.
    Note: The maximum limits for ``Chalky kernels,'' ``Heat-damaged 
kernels,'' ``Kernels damaged by heat,'' and the ``Color requirements'' 
shown in Sec. 868.210 are not applicable to the special grade 
``Parboiled rough rice.''
    (c) Smutty rough rice. Smutty rough rice shall be rough rice which 
contains more than 3.0 percent of smutty kernels.
    (d) Glutinous rough rice. Glutinous rough rice shall be special 
varieties of rice (Oryza sativa L. glutinosa) which contain more than 50 
percent chalky kernels. Grade U.S. No. 1 shall contain not more than 1.0 
percent of nonchalky kernels, grade U.S. No. 2 not more than 2.0 percent 
of nonchalky kernels, grade U.S. No. 3 not more than 4.0 percent of 
nonchalky kernels, grade U.S. No. 4 not more than 6.0 percent of 
nonchalky kernels, grade U.S. No. 5 not more than 10.0 percent of 
nonchalky kernels, and grade U.S. No. 6 not more than 15.0 percent of 
nonchalky kernels.
    Note: The maximum limits for ``Chalky kernels'' in Sec. 868.210 are 
not applicable to the special grade ``Glutinous rough rice.''
    (e) Aromatic rough rice. Aromatic rough rice shall be special 
varieties of rice (Oryza sativa L. scented) that have a distinctive and 
characteristic aroma; e.g., basmati and jasmine rice.

[42 FR 40869, Aug. 12, 1977, as amended at 54 FR 21406, May 18, 1989; 56 
FR 55978, Oct. 31, 1991; 58 FR 68016, Dec. 23, 1993. Redesignated and 
amended at 60 FR 16364, 16365, Mar. 30, 1995]

[[Page 647]]



Sec. 868.213  Special grade designation.

    The grade designation for infested, parboiled, smutty, glutinous, or 
aromatic rough rice shall include, following the class, the word(s) 
``Infested,'' ``Parboiled Light,'' ``Parboiled,'' ``Parboiled Dark,'' 
``Smutty,'' ``Glutinous,'' or ``Aromatic,'' as warranted, and all other 
information prescribed in Sec. 868.211.

[58 FR 68016, Dec. 23, 1993. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



    Subpart D--United States Standards for Brown Rice for Processing

    Note to the Subpart: Compliance with the provisions of these 
standards does not excuse failure to comply with the provisions of the 
Federal Food, Drug, and Cosmetic Act, or other Federal laws.

    Source: 42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, 
unless otherwise noted. Redesignated at 60 FR 16364, Mar. 30, 1995.

                              Terms Defined



Sec. 868.251  Definition of brown rice for processing.

    Rice (Oryza sativa L.) which consists of more than 50.0 percent of 
kernels of brown rice, and which is intended for processing to milled 
rice.



Sec. 868.252  Definition of other terms.

    For the purposes of these standards, the following terms shall have 
the meanings stated below:
    (a) Broken kernels. Kernels of rice which are less than three-
fourths of whole kernels.
    (b) Brown rice. Whole or broken kernels of rice from which the hulls 
have been removed.
    (c) Chalky kernels. Whole or broken kernels of rice which are one-
half or more chalky.
    (d) Classes. There are four classes of brown rice for processing.
Long Grain Brown Rice for Processing.
Medium Grain Brown Rice for Processing.
Short Grain Brown Rice for Processing.
Mixed Brown Rice for Processing.

Classes shall be based on the percentage of whole kernels, broken 
kernels, and types of rice.
    (1) ``Long-grain brown rice for processing'' shall consist of brown 
rice for processing which contains more than 25.0 percent of whole 
kernels of brown rice and not more than 10.0 percent of whole or broken 
kernels of medium- or short-grain rice.
    (2) ``Medium-grain brown rice for processing'' shall consist of 
brown rice for processing which contains more than 25.0 percent of whole 
kernels of brown rice and not more than 10.0 percent of whole or broken 
kernels of long-grain rice or whole kernels of short-grain rice.
    (3) ``Short-grain brown rice for processing'' shall consist of brown 
rice for processing which contains more than 25.0 percent of whole 
kernels of brown rice and not more than 10.0 percent of whole or broken 
kernels of long-grain rice or whole kernels of medium-grain rice.
    (4) ``Mixed brown rice for processing'' shall be brown rice for 
processing which contains more than 25.0 percent of whole kernels of 
brown rice and more than 10.0 percent of ``other types'' as defined in 
paragraph (i) of this section.
    (e) Damaged kernels. Whole or broken kernels of rice which are 
distinctly discolored or damaged by water, insects, heat, or any other 
means (including parboiled kernels in nonparboiled rice and smutty 
kernels). ``Heat-damaged kernels'' (see paragraph (f) of this section) 
shall not function as damaged kernels.
    (f) Heat-damaged kernels. Whole or broken kernels of rice which are 
materially discolored and damaged as a result of heating and parboiled 
kernels in nonparboiled rice which are as dark as, or darker in color 
than, the interpretive line for heat-damaged kernels.
    (g) Milling yield. An estimate of the quantity of whole kernels and 
total milled rice (whole and broken kernels combined) that is produced 
in the milling of brown rice for processing to a well-milled degree.
    (h) Objectionable seeds. Whole or broken seeds other than rice, 
except seeds of Echinochloa crusgalli (commonly known as barnyard grass, 
watergrass, and Japanese millet).
    (i) Other types. (1) Whole kernels of: (i) Long grain rice in medium 
or short grain rice and medium or short grain rice in long grain rice, 
(ii) medium

[[Page 648]]

grain rice in long or short grain rice, (iii) short grain rice in long 
or medium grain rice, (2) broken kernels of long grain rice in medium or 
short grain rice and broken kernels of medium or short grain rice in 
long grain rice.
    Note: Broken kernels of medium grain rice in short grain rice and 
broken kernels of short grain rice in medium grain rice shall not be 
considered other types.
    (j) Paddy Kernels. Whole or broken unhulled kernels and whole or 
broken kernels of rise having a portion or portions of the hull 
remaining which cover one-half (\1/2\) or more of the whole or broken 
kernel.
    (k) Red rice. Whole or broken kernels of rice on which the bran is 
distinctly red in color.
    (l) Related material. All by-products of a paddy kernel, such as the 
outer glumes, lemma, palea, awn, embryo, and bran layers.
    (m) Seeds. Whole or broken seeds of any plant other than rice.
    (n) Smutty kernels. Whole or broken kernels of rice which are 
distinctly infected by smut.
    (o) Types of rice. There are three types of brown rice for 
processing:
Long grain
Medium grain
Short grain

Types shall be based on the length/width ratio of kernels of rice that 
are unbroken and the width, thickness, and shape of kernels of rice that 
are broken as prescribed in FGIS instructions.
    (p) Ungelantinized kernels. Whole or broken kernels of parboiled 
rice with distinct white or chalky areas due to incomplete gelatization 
of the starch.
    (q) Unrelated material. All matter other than rice, related 
material, and seeds.
    (r) Well-milled kernels. Whole or broken kernels of rice from which 
the hulls and practically all of the embryos and the bran layers have 
been removed.
    (s) Whole kernels. Unbroken kernels of rice and broken kernels of 
rice which are at least three-fourths of an unbroken kernel.
    (t) 6 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina 0.051-inch thick, perforated with rows of round holes 0.0938 (\6/
64\) inch in diameter, and a bottom lamina 0.091-inch thick, without 
perforations.
    (u) 6\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.1016 (6\1/2\/64) inch in diameter.

[13 FR 9479, Dec. 31, 1948, as amended at 44 FR 73008, Dec. 17, 1979; 47 
FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989; 54 FR 51344, 
Dec. 14, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

              Principles Governing Application of Standards



Sec. 868.253  Basis of determination.

    The determination of kernels damaged by heat, heat-damaged kernels, 
parboiled kernels in nonparboiled rice, and the special grade Parboiled 
brown rice for processing shall be on the basis of the brown rice for 
processing after it has been milled to a well-milled degree. All other 
determinations shall be on the basis of the original sample. Mechanical 
sizing of kernels shall be adjusted by handpicking as prescribed in FGIS 
instructions, or by any method which gives equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989. 
Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.254  Broken kernels determination.

    Broken kernels shall be determined by the use of equipment and 
procedures prescribed in FGIS instructions, or by any method which gives 
equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.255  Interpretive line samples.

    Interpretive line samples showing the official scoring line for 
factors that are determined by visual observation shall be maintained by 
the Federal Grain Inspection Service, U.S. Department of Agriculture, 
and shall be available for reference in all inspection offices that 
inspect and grade rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 649]]



Sec. 868.256  Milling requirements.

    In determining milling yield (see Sec. 868.252(g)) in brown rice for 
processing, the degree of milling shall be equal to, or better than, 
that of the interpretive line sample for ``well-milled'' rice.

[42 FR 40869, Aug. 12, 1977. Redesignated at 21406, May 18, 1989. 
Redesignated and amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec. 868.257  Milling yield determination.

    Milling yield shall be determined by the use of an approved device 
in accordance with procedures prescribed in FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the McGill 
Miller No. 3 and any other equipment that is approved by the 
Administrator as giving equivalent results.
    Note: Milling yield shall not be determined when the moisture 
content of the brown rice for processing exceeds 18.0 percent.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989. Further redesignated at 60 FR 16364, Mar. 30, 
1995]



Sec. 868.258  Moisture.

    Water content in brown rice for processing as determined by an 
approved device in accordance with procedures prescribed in FGIS 
instructions. For the purpose of this paragraph, ``approved device'' 
shall include the Motomco Moisture Meter and any other equipment that is 
approved by the Administrator as giving equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989. Further redesignated at 60 FR 16364, Mar. 30, 
1995]



Sec. 868.259  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure, e.g., report 8.34 as 8.3 and 1.22 and 1.2.
    (b) Recording. All percentages, except for milling yield, are stated 
in whole and tenth percent to the nearest whole percent. Milling yield 
is stated to the nearest whole percent.

[54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.260  Information.

    Requests for the Rice Inspection Handbook, Equipment Handbook, or 
for information concerning approved devices and procedures, criteria for 
approved devices, and requests for approval of devices should be 
directed to the U.S. Department of Agriculture, Federal Grain Inspection 
Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office 
or cooperator.

[54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30,1995]

[[Page 650]]

           Grades, Grade Requirements, and Grade Designations


Sec. 868.261    Grade and grade requirements for the classes of brown 
        rice for processing. (See also Sec. 868.263.)

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Maximum limits of--
                                       -----------------------------------------------------------------------------------------------------------------
                                           Paddy kernels      Seeds and heat-damaged kernels
                                       --------------------------------------------------------  Red rice                 Broken
                                                              Total                                and                   kernels
                 Grade                                       (singly     Heat-                   damaged      Chalky     removed              Wellmilled
                                                   Number       or      damaged  Objectionable   kernels   kernels \1,    by a 6     Other      kernels
                                         Percent   in 500   combined)   kernels  seeds (number   (singly        2\       plate or  types \4\   (percent)
                                                    grams    (number    (number  in 500 grams)      or      (percent)    a 6\1/2\
                                                              in 500    in 500                  combined)               sieve \3\
                                                              grams)    grams)                  (percent)               (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1............................        --        20         10         1            2          1.0         2.0         1.0        1.0        1.0
U.S. No. 2............................       2.0        --         40         2           10          2.0         4.0         2.0        2.0        3.0
U.S. No. 3............................       2.0        --         70         4           20          4.0         6.0         3.0        5.0       10.0
U.S. No. 4............................       2.0        --        100         8           35          8.0         8.0         4.0       10.0       10.0
U.S. No. 5............................       2.0        --        150        15           50         15.0        15.0         6.0       10.0       10.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


U.S. Sample grade...........  U.S. Sample grade shall be brown rice for
                               processing which (a) does not meet the
                               requirements for any of the grades from
                               U.S. No. 1 to U.S. No. 5, inclusive; (b)
                               contains more than 14.5 percent of
                               moisture; (c) is musty, or sour, or
                               heating; (d) has any commercially
                               objectionable foreign odor; (e) contains
                               more than 0.2 percent of related material
                               or more than 0.1 percent of unrelated
                               material; (f) contains two or more live
                               weevils or other live insects; or (g) is
                               otherwise of distinctly low quality.
\1\ For the special grade Parboiled brown rice for processing, see Sec.
  868.263(a).
\2\ For the special grade Glutinous brown rice for processing, see Sec.
  868.263(c).
\3\ Plates should be used for southern production rice and sieves should
  be used for western production rice, but any device or method which
  gives equivalent results may be used.
\4\ These limits do not apply to the class Mixed Brown Rice for
  Processing.

[56 FR 55979, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



Sec. 868.262  Grade designation.

    (a) The grade designation for all classes of brown rice for 
processing, except Mixed Brown Rice for Processing, shall include in the 
following order: (1) The letters ``U.S.''; (2) the number of the grade 
or the words ``Sample grade,'' as warranted; (3) the words ``or 
better,'' when applicable and requested by the applicant prior to 
inspection; (4) the class; and (5) each applicable special grade (see 
Sec. 868.264).
    (b) The grade designation for the class Mixed Brown Rice for 
Processing shall include in the following order: (1) The letters 
``U.S.''; (2) the number of the grade or the words ``Sample grade,'' as 
warranted; (3) the words ``or better,'' when applicable and requested by 
the applicant prior to inspection; (4) the class; (5) each applicable 
special grade (see Sec. 868.264); (6) the percentage of whole kernels of 
each type in the order of predominance; and when applicable; (7) the 
percentage of broken kernels of each type in the order of predominance; 
and (8) the percentage of seeds, related material, and unrelated 
material.
    Note: Broken kernels other than long grain, in Mixed Brown Rice for 
Processing, shall be certificated as ``medium or short grain.''

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977. Redesignated 
and amended at 60 FR 16364, 16365, Mar. 30, 1995]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec. 868.263  Special grades and special grade requirements.

    A special grade, when applicable, is supplemental to the grade 
assigned under Sec. 868.262. Such special grades for brown rice for 
processing are established and determined as follows:
    (a) Parboiled brown rice for processing. Parboiled brown rice for 
processing shall be rice in which the starch has been gelatinized by 
soaking, steaming, and drying. Grades U.S. Nos. 1 to 5, inclusive, shall 
contain not more than 10.0 percent of ungelatinized kernels. Grades U.S. 
No. 1 and U.S. No. 2 shall contain not more than 0.1 percent, grades 
U.S. No. 3 and U.S. No. 4 not more than 0.2 percent, and grade U.S.

[[Page 651]]

No. 5 not more than 0.5 percent of nonparboiled rice.
    Note: The maximum limits for ``chalky kernels,'' ``Heat-damaged 
kernels,'' and ``Kernels damaged by heat'' shown in Sec. 868.261 are not 
applicable to the special grade ``Parboiled brown rice for processing.''
    (b) Smutty brown rice for processing. Smutty brown rice for 
processing shall be rice which contains more than 3.0 percent of smutty 
kernels.
    (c) Glutinous brown rice for processing. Glutinous brown rice for 
processing shall be special varieties of rice (Oryza sativa L. 
glutinosa) which contain more than 50 percent chalky kernels. Grade U.S. 
No. 1 shall contain not more than 1.0 percent of nonchalky kernels, 
grade U.S. No. 2 not more than 2.0 percent of nonchalky kernels, grade 
U.S. No. 3 not more than 4.0 percent of nonchalky kernels, grade U.S. 
No. 4 not more than 6.0 percent of nonchalky kernels, and grade U.S. No. 
5 not more than 10.0 percent of nonchalky kernels.
    Note: The maximum limits for ``Chalky kernels'' in Sec. 868.261 are 
not applicable to the special grade ``Glutinous brown rice for 
processing.''
    (d) Aromatic brown rice for processing. Aromatic brown rice for 
processing shall be special varieties of rice (Oryza sativa L. scented) 
that have a distinctive and characteristic aroma; e.g., basmati and 
jasmine rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
56 FR 55979, Oct. 31, 1991; 58 FR 68016, Dec. 23, 1993. Redesignated and 
amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec. 868.264  Special grade designation.

    The grade designation for parboiled, smutty, glutinous, or aromatic 
brown rice for processing shall include, following the class, the 
word(s) ``Parboiled,'' ``Smutty,'' ``Glutinous,'' or ``Aromatic,'' as 
warranted, and all other information prescribed in Sec. 868.262.

[58 FR 68016, Dec. 23, 1993. Redesignated and amended at 60 FR 16364, 
Mar. 30, 1995]



           Subpart E--United States Standards for Milled Rice

    Note to the Subpart: Compliance with the provisions of these 
standards does not excuse failure to comply with the provisions of the 
Federal Food, Drug, and Cosmetic Act, or other Federal laws.

    Source: 42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, 
unless otherwise noted. Redesignated at 60 FR 16364, Mar. 30, 1995.

                              Terms Defined



Sec. 868.301  Definition of milled rice.

    Whole or broken kernels of rice (Oryza sativa L.) from which the 
hulls and at least the outer bran layers have been removed and which 
contain not more than 10.0 percent of seeds, paddy kernels, or foreign 
material, either singly or combined.

[48 FR 24859, June 3, 1983. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.302  Definition of other terms.

    For the purposes of these standards, the following terms shall have 
the meanings stated below:
    (a) Broken kernels. Kernels of rice which are less than three-
fourths of whole kernels.
    (b) Brown rice. Whole or broken kernels of rice from which the hulls 
have been removed.
    (c) Chalky kernels. Whole or broken kernels of rice which are one-
half or more chalky.
    (d) Classes. There are seven classes of milled rice. The following 
four classes shall be based on the percentage of whole kernels, and 
types of rice:
Long Grain Milled Rice.
Medium Grain Milled Rice.
Short Grain Milled Rice.
Mixed Milled Rice.

The following three classes shall be based on the percentage of whole 
kernels and of broken kernels of different size:
Second Head Milled Rice.
Screenings Milled Rice.
Brewers Milled Rice.
    (1) ``Long grain milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and in 
U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken 
kernels of medium or short grain rice. U.S. No. 5 and U.S. No. 6 long 
grain milled rice shall contain not more than 10.0 percent of whole 
kernels of medium or short grain milled rice (broken kernels do not 
apply).

[[Page 652]]

    (2) ``Medium grain milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and in 
U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken 
kernels of long grain rice or whole kernels of short grain rice. U.S. 
No. 5 and U.S. No. 6 medium grain milled rice shall contain not more 
than 10.0 percent of whole kernels of long or short grain milled rice 
(broken kernels do not apply).
    (3) ``Short grain milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and in 
U.S. Nos. 1 through 4 not more than 10.0 percent of whole or broken 
kernels of long grain rice or whole kernels of medium grain rice. U.S. 
No. 5 and U.S. No. 6 short grain milled rice shall contain not more than 
10.0 percent of whole kernels of long or medium grain milled rice 
(broken kernels do not apply).
    (4) ``Mixed milled rice'' shall consist of milled rice which 
contains more than 25.0 percent of whole kernels of milled rice and more 
than 10.0 percent of ``other types'' as defined in paragraph (i) of this 
section. U.S. No. 5 and U.S. No. 6 mixed milled rice shall contain more 
than 10.0 percent of whole kernels of ``other types'' (broken kernels do 
not apply).
    (5) ``Second head milled rice'' shall consist of milled rice which, 
when determined in accordance with Sec. 868.303, contains:
    (i) Not more than (a) 25.0 percent of whole kernels, (b) 7.0 percent 
of broken kernels removed by a 6 plate, (c) 0.4 percent of broken 
kernels removed by a 5 plate, and (d) 0.05 percent of broken kernels 
passing through a 4 sieve (southern production); or
    (ii) Not more than (a) 25.0 percent of whole kernels, (b) 50.0 
percent of broken kernels passing through a 6\1/2\ sieve, and (c) 10.0 
percent of broken kernels passing through a 6 sieve (western 
production).
    (6) ``Screenings milled rice'' shall consist of milled rice which, 
when determined in accordance with Sec. 868.303, contains:
    (i) Not more than (a) 25.0 percent of whole kernels, (b) 10.0 
percent of broken kernels removed by a 5 plate, and (c) 0.2 percent of 
broken kernels passing through a 4 sieve (southern production); or
    (ii) Not more than (a) 25.0 percent of whole kernels and (b) 15.0 
percent of broken kernels passing through a 5\1/2\ sieve; and more than 
(c) 50.0 percent of broken kernels passing through a 6\1/2\ sieve and 
(d) 10.0 percent of broken kernels passing through a 6 sieve (western 
production).
    (7) ``Brewers milled rice'' shall consist of milled rice which, when 
determined in accordance with Sec. 868.303, contains not more than 25.0 
percent of whole kernels and which does not meet the kernel-size 
requirements for the class Second Head Milled Rice or Screenings Milled 
Rice.
    (e) Damaged kernels. Whole or broken kernels of rice which are 
distinctly discolored or damaged by water, insects, heat, or any other 
means, and parboiled kernels in nonparboiled rice. ``Heat-damaged 
kernels'' (see paragraph (g) of this section) shall not function as 
damaged kernels.
    (f) Foreign material. All matter other than rice and seeds. Hulls, 
germs, and bran which have separated from the kernels of rice shall be 
considered foreign material.
    (g) Heat-damaged kernels. Whole or broken kernels of rice which are 
materially discolored and damaged as a result of heating and parboiled 
kernels in nonparboiled rice which are as dark as, or darker in color 
than, the interpretive line for heat-damaged kernels.
    (h) Objectionable seeds. Seeds other than rice, except seeds of 
Echinochloa crusgalli (commonly known as barnyard grass, watergrass, and 
Japanese millet).
    (i) Other types. (1) Whole kernels of: (i) Long grain rice in medium 
or short grain rice, (ii) medium grain rice in long or short grain rice, 
(iii) Short grain rice in long or medium grain rice, and (2) broken 
kernels of long grain rice in medium or short grain rice and broken 
kernels of medium or short grain rice in long grain rice, except in U.S. 
No. 5 and U.S. No. 6 milled rice. In U.S. No. 5 and U.S. No. 6 milled 
rice, only whole kernels will apply.
    Note: Broken kernels of medium grain rice in short grain rice and 
broken kernels of short grain rice in medium grain rice shall not be 
considered other types.

[[Page 653]]

    (j) Paddy Kernels. Whole or broken unhulled kernels of rice; whole 
or broken kernels of brown rice, and whole or broken kernels of milled 
rice having a portion or portions of the hull remaining which cover one-
eighth (\1/8\) or more of the whole or broken kernel.
    (k) Red rice. Whole or broken kernels of rice on which there is an 
appreciable amount of red bran.
    (l) Seeds. Whole or broken seeds of any plant other than rice.
    (m) Types of rice. There are three types of milled rice as follows:
Long grain.
Medium grain.
Short grain.

Types shall be based on the length-width ratio of kernels of rice that 
are unbroken and the width, thickness, and shape of kernels that are 
broken, prescribed in FGIS instructions.
    (n) Ungelatinized kernels. Whole or broken kernels of parboiled rice 
with distinct white or chalky areas due to incomplete gelatinization of 
the starch.
    (o) Well-milled kernels. Whole or broken kernels of rice from which 
the hulls and practically all of the germs and the bran layers have been 
removed.
    Note: This factor is determined on an individual kernel basis and 
applies to the special grade Undermilled milled rice only.
    (p) Whole kernels. Unbroken kernels of rice and broken kernels of 
rice which are at least three-fourths of an unbroken kernel.
    (q) 5 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina, 0.051-inch thick, perforated with rows of round holes 0.0781 
(\5/64\) inch in diameter, \5/32\ inch from center to center, with each 
row staggered in relation to the adjacent rows, and a bottom lamina 
0.091-inch thick, without perforations.
    (r) 6 plate. A laminated metal plate 0.142-inch thick, with a top 
lamina 0.051-inch thick, perforated with rows of round holes 0.0938 (\6/
64\) inch in diameter, \5/32\ inch from center to center, with each row 
staggered in relation to the adjacent rows, and a bottom lamina 0.091-
inch thick, without perforations.
    (s) 2\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.0391 (2\1/2\/64) inch in diameter, 0.075-inch from 
center to center, with each row staggered in relation to the adjacent 
rows.
    (t) 4 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0625 (\4/64\) inch in diameter, \1/8\ inch from center to 
center, with each row staggered in relation to the adjacent rows.
    (u) 5 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0781 (\5/64\) inch in diameter, \5/32\ inch from center to 
center, with each row staggered in relation to the adjacent rows.
    (v) 5\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.0859 (5\1/2\/64) inch in diameter, \9/64\ inch 
from center to center, with each row staggered in relation to the 
adjacent rows.
    (w) 6 sieve. A metal sieve 0.032-inch thick, perforated with rows of 
round holes 0.0938 (\6/64\) inch in diameter, \5/32\ inch from center to 
center, with each row staggered in relation to the adjacent rows.
    (x) 6\1/2\ sieve. A metal sieve 0.032-inch thick, perforated with 
rows of round holes 0.1016 (6\1/2\/64) inch in diameter, \5/32\ inch 
from center to center, with each row staggered in relation to the 
adjacent rows.
    (y) 30 sieve. A woven wire cloth sieve having 0.0234-inch openings, 
with a wire diameter of 0.0153 inch, and meeting the specifications of 
American Society for Testing and Materials Designation E-11-61, 
prescribed in FGIS instructions.

[13 FR 9479, Dec. 31, 1948, as amended at 44 FR 73008, Dec. 17, 1979; 47 
FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989; 54 FR 51345, 
Dec. 14, 1989. Redesignated and amended at 60 FR 16364, Mar. 30, 1995]

              Principles Governing Application of Standards



Sec. 868.303  Basis of determination.

    All determinations shall be on the basis of the original sample. 
Mechanical sizing of kernels shall be adjusted by handpicking, as 
prescribed in FGIS instructions, or by any method which gives equivalent 
results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, 21406, May 18, 1989. 
Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 654]]



Sec. 868.304  Broken kernels determination.

    Broken kernels shall be determined by the use of equipment and 
procedures prescribed in FGIS instructions or by any method which gives 
equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989 and 60 FR 16364, Mar. 30, 1995]



Sec. 868.305  Interpretive line samples.

    Interpretive line samples showing the official scoring line for 
factors that are determined by visual observation shall be maintained by 
the Federal Grain Inspection Service, U.S. Department of Agriculture, 
and shall be available for reference in all inspection offices that 
inspect and grade rice.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982. Redesignated at 54 FR 21406, May 18, 1989 
and 60 FR 16364, Mar. 30, 1995]



Sec. 868.306  Milling requirements.

    The degree of milling for milled rice; i.e., ``well milled,'' 
``reasonably well milled,'' and ``lightly milled'' shall be equal to, or 
better than, that of the interpretive line samples for such rice.

[42 FR 40869, Aug. 12, 1977. Redesignated at 54 FR 21406, May 18, 1989 
and 60 FR 16364, Mar. 30, 1995]



Sec. 868.307  Moisture.

    Water content in milled rice as determined by an approved device in 
accordance with procedures prescribed in FGIS instructions. For the 
purpose of this paragraph, ``approved device'' shall include the Motomco 
Moisture Meter and any other equipment that is approved by the 
Administrator as giving equivalent results.

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
47 FR 34516, Aug. 10, 1982; 54 FR 21403, May 18, 1989. Redesignated at 
54 FR 21406, May 18, 1989 and 60 FR 16364, Mar. 30, 1995]



Sec. 868.308  Percentages.

    (a) Rounding. Percentages are determined on the basis of weight and 
are rounded as follows:
    (1) When the figure to be rounded is followed by a figure greater 
than or equal to 5, round to the next higher figure; e.g., report 6.36 
as 6.4, 0.35 as 0.4, and 2.45 as 2.5.
    (2) When the figure to be rounded is followed by a figure less than 
5, retain the figure, e.g., report 8.34 as 8.3 and 1.22 and 1.2.
    (b) Recording. The percentage of broken kernels removed by a 5 plate 
in U.S. Nos. 1 and 2 Milled Rice and the percentage of objectionable 
seeds in U.S. No. 1 Brewers Milled Rice is reported to the nearest 
hundredth percent. The percentages of all other factors are recorded to 
the nearest tenth of a percent.

[54 FR 21406, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]



Sec. 868.309  Information.

    Requests for the Rice Inspection Handbook, Equipment Handbook, or 
for information concerning approved devices and procedures, criteria for 
approved devices, and requests for approval of devices should be 
directed to the U.S. Department of Agriculture, Federal Grain Inspection 
Service, P.O. Box 96454, Washington, DC 20090-6454, or any field office 
or cooperator.

[54 FR 21407, May 18, 1989. Redesignated at 60 FR 16364, Mar. 30, 1995]

[[Page 655]]

           Grades, Grade Requirements, and Grade Designations

Sec. 868.310  Grade and grade requirements for the classes Long Grain 
Mixed Rice, Mixed Grain Miller Rice, Short Grain Miller Rice, and Mixed 
Miller Rice. (See also Sec. 868.315.)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Maximum limits of--
                               ---------------------------------------------------------------------------------------------------------------------------
                                 Seeds, heat damaged,               Chalky kernels \1\,                Broken kernels                   Other types \4\
                                   and paddy kernels     Red rice           \2\         ------------------------------------------------------------------
                                 (singly or combined)      and    ----------------------
             Grade             ------------------------  damaged                                                                                           Color requirements   Minimum milling
                                          Heat damaged   kernels    In long   In medium              Removed    Removed   Through a    Whole    Whole and          \1\          requirements \5\
                                 Total    kernels and    (singly     grain     or short    Total      by a 5     by a 6    6 Sieve    kernels     broken
                                (Number  objectionable      or        rice      grain    (percent)  plate \3\  plate \3\     \3\     (percent)   kernels
                                 in 500  seeds (Number  combined)  (percent)     rice               (percent)  (percent)  (percent)             (percent)
                                 grams)  in 500 grams)  (percent)             (percent)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1....................      2           1           0.5        1.0        2.0        4.0      0.04        0.1        0.1         --        1.0     Shall be white or   Well milled.
                                                                                                                                                            creamy.
U.S. No. 2....................      4           2           1.5        2.0        4.0        7.0      0.06        0.2        0.2         --        2.0     May be slightly     Well milled.
                                                                                                                                                            gray.
U.S. No. 3....................      7           5           2.5        4.0        6.0       15.0       0.1        0.8        0.5         --        3.0     May be light gray.  Reasonably well
                                                                                                                                                                                milled.
U.S. No. 4....................     20          15           4.0        6.0        8.0       25.0       0.4        2.0        0.7         --        5.0     May be gray or      Reasonably well
                                                                                                                                                            slightly rosy.      milled.
U.S. No. 5....................     30          25       \5\ 6.0       10.0       10.0       35.0       0.7        3.0        1.0       10.0         --     May be dark gray    Lightly milled.
                                                                                                                                                            or rosy.
U.S. No. 6....................     75          75       \6\ 15.0      15.0       15.0       50.0       1.0        4.0        2.0       10.0         --     May be dark gray    Lightly milled.
                                                                                                                                                            or rosy.
 
 
    U.S. Sample grade: U.S. Sample grade small be milled rice of any of these classes which: (a) does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 6, inclusive;
     (b) contains more than 15.0 percent of moisture; (c) is musty or sour, or heating; (d) has any commercially objectionable foreign odor; (e) contains more than 0.1 percent of foreign
     material; (f) contains two or more live or dead weevils or other insects, insect webbing, or insect refuse; or (g) is otherwise of distinctly low quality.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.  868.315(c).
\2\ For the special grade Glutinous milled rice, see Sec.  868.315(e).
\3\ Plates should be used for southern production rice; and sieves should be used for western production rice, but any device or method which gives equivalent results may be used.
\4\ These limits do not apply to the class Mixed Milled Rice.
\5\ For the special grade Undermilled milled rice, see Sec.  868.315(d).
\6\ Grade U.S. No. 6 shall contain not more than 6.0 percent of damaged kernels.

[56 FR 55979, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]

[[Page 656]]

Sec. 868.311    Grades and grade requirements for the class Second Head 
        Milled Rice. (See also Sec. 868.305.)

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Maximum limits of--
                                     ----------------------------------------------------------
                                       Seeds, heat-damaged, and
                                       paddy kernels (singly or
                                               combined)            Red rice
                Grade                ---------------------------- and damaged   Chalky kernels     Color requirements \1\          Minimum milling
                                                    Heat-damaged    kernels        \1\ \3\                                         requirements \2\
                                         Total      kernels and    (singly or     (percent)
                                       (Number in  objectionable   combined)
                                       500 grams)  seeds (Number   (percent)
                                                   in 500 grams)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1..........................           15             5           1.0            4.0    Shall be white or creamy...  Well milled.
U.S. No. 2..........................           20            10           2.0            6.0    May be slightly gray.......  Well milled.
U.S. No. 3..........................           35            15           3.0           10.0    May be light gray..........  Reasonably well milled.
U.S. No. 4..........................           50            25           5.0           15.0    May be gray or slightly      Reasonably well milled.
                                                                                                 rosy.
U.S. No. 5..........................           75            40          10.0           20.0    May be dark gray or rosy...  Lightly milled.
 
 
U.S. Sample grade
    U.S. Sample grade shall be milled rice of this class which: (a) does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 5,
     inclusive; (b) contains more than 15.0 percent of moisture; (c) is musty or sour, or heating; (d) has any commercially objectionable foreign odor;
     (e) contains more than 0.1 percent of foreign material; (f) contains two or more live or dead weevils or other insects, insect webbing, or insect
     refuse; or (g) is otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.  868.315(c).
\2\ For the special grade Undermilled milled rice, see Sec.  868.315(d).
\3\ For the special grade Glutinous milled rice, see Sec.  868.315(e).

[56 FR 55980, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]


Sec. 868.312    Grades and grade requirements for the class Screenings 
        Milled Rice. (See also Sec. 868.315.)

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Maximum limits of--
                                         --------------------------------------------
                                            Paddy kernels and seeds
                                         ----------------------------
                  Grade                      Total                        Chalky           Color requirements \1\       Minimum milling requirements \2\
                                           (singly or  Objectionable  kernels\1\ \3\
                                           combined)   seeds (number     (percent)
                                           (number in  in 500 grams)
                                           500 grams)
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S. No. 1 \4\ \5\......................           30            20             5.0   Shall be white or creamy........  Well milled.
U.S. No. 2 \4\ \5\......................           75            50             8.0   May be slightly gray............  Well milled.
U.S. No. 3 \4\ \5\......................          125            90            12.0   May be light gray or slightly     Reasonably well milled.
                                                                                       rosy.
U.S. No. 4 \4\ \5\......................          175           140            20.0   May be gray or rosy.............  Reasonably well milled.
U.S. No. 5..............................          250           200            30.0   May be dark gray or very rosy...  Lightly milled.
U.S. Sample grade--
    U.S. Sample grade shall be milled rice of this class which: (a) does not meet the requirements for any of the grades from U.S. No. 1 to U.S. No. 5,
     inclusive; (b) contains more than 15.0 percent of moisture; (c) is musty, or sour, or heating; (d) has any commercially objectionable foreign odor;
     (e) has a badly damaged or extremely red appearance; (f) contains more than 0.1 percent of foreign material; (g) contains two or more live or dead
     weevils or other insects, insect webbing, or insect refuse; or (h) is otherwise of distinctly low quality.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.  868.315(c).
\2\ For the special grade Undermilled milled rice, see Sec.  868.315(d).
\3\ For the special grade Glutinous milled rice, see Sec.  868.315(e).
\4\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 3.0 percent of heat-damaged kernels, kernels damaged by heat and/or
  parboiled kernels in nonparboiled rice.
\5\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 1.0 percent of material passing through a 30 sieve.

[56 FR 55981, Oct. 31, 1991. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]

[[Page 657]]

Sec. 868.313    Grades and grade requirements for the class Brewers 
        Milled Rice. (See also Sec. 868.315.)

----------------------------------------------------------------------------------------------------------------
                                      Maximum limits of--Paddy
                                          kernels and seeds
                                     --------------------------
                                        Total                                                Minimum milling
                Grade                  (singly   Objectionable   Color requirements\1\       requirements \2\
                                          or         seeds
                                      combined)    (Percent)
                                      (Percent)
----------------------------------------------------------------------------------------------------------------
U.S. No. 1 3, 4.....................      0.5         0.05      Shall be white or        Well milled.
                                                                 creamy.
U.S. No. 2 3, 4.....................      1.0          0.1      May be slightly gray...  Well milled.
U.S. No. 3 3, 4.....................      1.5          0.2      May be light gray or     Reasonably well milled.
                                                                 slightly rosy.
U.S. No. 4 3, 4.....................      3.0          0.4      May be gray or rosy....  Reasonably well milled.
U.S. No. 5..........................      5.0          1.5      May be dark gray or      Lightly milled.
                                                                 very rosy.
U.S. Sample Grade shall be milled rice of this class which: (a) Does not meet the requirements for any of the
 grades from U.S. No. 1 to U.S. No. 5 inclusive; (b) contains more than 15.0 percent of moisture; (c) is musty,
 or sour, or heating; (d) has any commercially objectionable foreign odor; (e) has a badly damaged or extremely
 red appearance; (f) contains more than 0.1 percent of foreign material; (g) contains more than 15.0 percent of
 broken kernels that will pass through a 2\1/2\ sieve; (h) contains two or more live or dead weevils or other
 insects, insect webbing or insect refuse; or (i) is otherwise of distinctly low quality.
----------------------------------------------------------------------------------------------------------------
\1\ For the special grade Parboiled milled rice, see Sec.  868.315(c).
\2\ For the special grade Undermilled milled rice, see Sec.  868.315(d).
\3\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 3.0 percent of heat-damaged kernels,
  kernels damaged by heat and/or parboiled kernels in nonparboiled rice.
\4\ Grades U.S. No. 1 to U.S. No. 4, inclusive, shall contain not more than 1.0 percent of material passing
  through a 30 sieve. This limit does not apply to the special grade Granulated brewers milled rice.

[42 FR 40869, Aug. 12, 1977, as amended at 54 FR 21407, May 18, 1989. 
Redesignated and amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec. 868.314  Grade designations.

    (a) The grade designation for all classes of milled rice, except 
Mixed Milled Rice, shall include in the following order: (1) The letters 
``U.S.''; (2) the number of the grade or the words ``Sample grade'', as 
warranted; (3) the words ``or better,'' when applicable and requested by 
the applicant prior to inspections; (4) the class; and (5) each 
applicable special grade (see Sec. 868.316).
    (b) The grade designation for the class Mixed Milled Rice shall 
include, in the following order: (1) The letters ``U.S.''; (2) the 
number of the grade or the words ``Sample grade'', as warranted; (3) the 
words ``or better,'' when applicable and requested by the applicant 
prior to inspection; (4) the class; (5) each applicable special grade 
(see Sec. 868.316); (6) the percentage of whole kernels of each type in 
the order of predominance and when applicable; (7) the percentage of 
broken kernels of each type in the order of predominance; and (8) the 
percentage of seeds and foreign material.
    Note: Broken kernels other than long grain, in Mixed Milled Rice, 
shall be certificated as ``medium or short grain.''

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977. Redesignated 
and amended at 60 FR 16364, Mar. 30, 1995]

     Special Grades, Special Grade Requirements, and Special Grade 
                              Designations



Sec. 868.315  Special grades and special grade requirements.

    A special grade, when applicable, is supplemental to the grade 
assigned under Sec. 868.314. Such special grades for milled rice are 
established and determined as follows:
    (a) Coated Milled Rice. Coated milled rice shall be rice which is 
coated, in whole or in part, with substances that are safe and suitable 
as defined in the regulation issued pursuant to the Federal Food, Drug, 
and Cosmetic Act at 21 CFR 130.3(d).
    (b) Granulated brewers milled rice. Granulated brewers milled rice 
shall be milled rice which has been crushed or granulated so that 95.0 
percent or more will pass through a 5 sieve, 70.0 percent or more will 
pass through a 4 sieve, and

[[Page 658]]

not more than 15.0 percent will pass through a 2\1/2\ sieve.
    (c) Parboiled milled rice. Parboiled milled rice shall be milled 
rice in which the starch has been gelatinized by soaking, steaming, and 
drying. Grades U.S. No. 1 to U.S. No. 6, inclusive, shall contain not 
more than 10.0 percent of ungelatinized kernels. Grades U.S. No. 1 and 
U.S. No. 2 shall contain not more than 0.1 percent, grades U.S. No. 3 
and U.S. No. 4 not more than 0.2 percent, and grades U.S. No. 5 and U.S. 
No. 6 not more than 0.5 percent of nonparboiled rice. If the rice is: 
(1) Not distinctly colored by the parboiling process, it shall be 
considered ``Parboiled Light''; (2) distinctly but not materially 
colored by the parboiling process, it shall be considered ``Parboiled''; 
(3) materially colored by the parboiling process, it shall be considered 
``Parboiled Dark.'' The color levels for ``Parboiled Light,'' 
``Parboiled,'' and ``Parboiled Dark'' shall be in accordance with the 
interpretive line samples for parboiled rice.
    Note: The maximum limits for ``Chalky kernels,'' ``Heat-damaged 
kernels,'' ``Kernels damaged by heat,'' and the ``Color requirements'' 
in Secs. 868.310, 868.311, 868.312, and 868.313 are not applicable to 
the special grade ``Parboiled milled rice.''
    (d) Undermilled milled rice. Undermilled milled rice shall be milled 
rice which is not equal to the milling requirements for ``well milled,'' 
``reasonably well milled,'' and ``lightly milled'' rice (see 
Sec. 868.306). Grades U.S. No. 1 and U.S. No. 2 shall contain not more 
than 2.0 percent, grades U.S. No. 3 and U.S. No. 4 not more than 5.0 
percent, grade U.S. No. 5 not more than 10.0 percent, and grade U.S. No. 
6 not more than 15.0 percent of well-milled kernels. Grade U.S. No. 5 
shall contain not more than 10.0 percent of red rice and damaged kernels 
(singly or combined) and in no case more than 6.0 percent of damaged 
kernels.
    Note: The ``Color and milling requirements'' in Secs. 868.310, 
868.311, 868.312, and 868.313 are not applicable to the special grade 
``Undermilled milled rice.''
    (e) Glutinous milled rice. Glutinous milled rice shall be special 
varieties of rice (Oryza sativa L. glutinosa) which contain more than 50 
percent chalky kernels. For long grain, medium grain, and short grain 
milled rice, grade U.S. No. 1 shall contain not more than 1.0 percent of 
nonchalky kernels, grade U.S. No. 2 not more than 2.0 percent of 
nonchalky kernels, grade U.S. No. 3 not more than 4.0 percent of 
nonchalky kernels, grade U.S. No. 4 not more than 6.0 percent of 
nonchalky kernels, grade U.S. No. 5 not more than 10.0 percent of 
nonchalky kernels, and grade U.S. No. 6 not more than 15.0 percent of 
nonchalky kernels. For second head milled rice, grade U.S. No. 1 shall 
contain not more than 4.0 percent of nonchalky kernels, grade U.S. No. 2 
not more than 6.0 percent of nonchalky kernels, grade U.S. No. 3 not 
more than 10.0 percent of nonchalky kernels, grade U.S. No. 4 not more 
than 15.0 percent of nonchalky kernels, and grade U.S. No. 5 not more 
than 20.0 percent of nonchalky kernels. For screenings milled rice, 
there are no grade limits for percent of nonchalky kernels. For brewers 
milled rice, the special grade ``Glutinous milled rice'' is not 
applicable.
    Note: The maximum limits for ``Chalky kernels,'' shown in 
Secs. 868.310, 868.311, and 868.312 are not applicable to the special 
grade ``Glutinous milled rice.''
    (f) Aromatic milled rice. Aromatic milled rice shall be special 
varieties of rice (Oryza sativa L. scented) that have a distinctive and 
characteristic aroma; e.g., basmati and jasmine rice.

(Secs. 203, 205, 60 Stat. 1087, 1090 as amended; 7 U.S.C. 1622, 1624)

[42 FR 40869, Aug. 12, 1977; 42 FR 64356, Dec. 23, 1977, as amended at 
48 FR 24859, June 3, 1983; 54 FR 21403, 21407, May 18, 1989; 56 FR 
55981, Oct. 31, 1991; 58 FR 68016, Dec. 23, 1993. Redesignated and 
amended at 60 FR 16364, 16365, Mar. 30, 1995]



Sec. 868.316  Special grade designation.

    The grade designation for coated, granulated brewers, parboiled, 
undermilled, glutinous, or aromatic milled rice shall include, following 
the class, the word(s) ``Coated,'' ``Granulated,'' ``Parboiled Light,'' 
``Parboiled,'' ``Parboiled Dark,'' ``Undermilled,'' ``Glutinous,'' or 
``Aromatic,'' as warranted, and all other information prescribed in 
Sec. 868.314.

[58 FR 68016, Dec. 23, 1993. Redesignated and amended at 60 FR 16364, 
16365, Mar. 30, 1995]


[[Page 659]]



                              FINDING AIDS




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

  A list of 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 661]]

            Material Approved for Incorporation by Reference

                     (Revised as of January 1, 2001)

  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 700-899)

GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION (FEDERAL GRAIN 
INSPECTION SERVICE), DEPARTMENT OF AGRICULTURE
                                                                   7 CFR


Corn Refiners Association, Inc.

  Available from: Federal Grain Inspection 
  Service, Director, Technical Services Center, 
  10383 North Executive Hills Blvd., Kansas City, 
  MO 64153-1394
Corn Refiners Association Method A-20, Analysis                    801.7
  for Starch in Corn, Second revision, April 15, 
  1986, Standard Analytical Methods of the Member 
  Companies of the Corn Refiners Association, 
  Inc..


Federal Grain Inspection Service, Quality Assurance and Research 
Division

  10383 North Executive Hills Blvd., Kansas City, 
  MO 64153-1394
``Comparison of Kjeldahl Method for Determination                  801.7
  of Crude Protein in Cereal Grains and Oilseeds 
  with Generic Combustion Method: Collaborative 
  Study'', July/August 1993, Ronald Bicsak, 
  Journal of AOAC International Vol. 76, No. 4, 
  1993 (subsequently approved by the AOAC 
  International as the Combustion method, AOAC 
  International Method 992.23).


National Institute of Standards and Technology (formerly National Bureau 
of Standards)

  Publications available from: U.S. Government 
  Printing Office, Washington, DC 20403
Handbook 44--``Specifications, Tolerances, and                     802.0
  Other Technical Requirements for Weighing and 
  Measuring Devices'' (1990 ed.).
Handbook 105-1--``Specifications and Tolerances                    802.0
  for Field Standard Weights'' (Revised 1990).



[[Page 663]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2001)

                      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)

                   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)
         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)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)

[[Page 664]]

       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)
    LXXIII  Department of Agriculture (Part 8301)
     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 6--[Reserved]

              

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture

[[Page 665]]

         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        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)

[[Page 666]]

    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     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--599)

                 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)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      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)

[[Page 667]]

        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)
         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)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    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)

[[Page 668]]

        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)
        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)

[[Page 669]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       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 (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (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 670]]

                          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 Housing and 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 671]]

                           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 (Parts 1000--1199)
       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 672]]

       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)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)

[[Page 673]]

         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       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)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       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)

               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 674]]

                        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)
        XV  Oklahoma City National Memorial Trust (Part 1501)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States 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)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

[[Page 675]]

          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)
        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)
       102  Federal Management Regulation (Parts 102-1--102-299)
       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 (Part 303-70)
       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

[[Page 676]]

         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       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)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)

[[Page 677]]

       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          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  Broadcasting Board of Governors (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)

[[Page 678]]

        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)
        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 Motor Carrier Safety 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)

[[Page 679]]

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        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 681]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2001)

                                                  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 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                            5, LXXIII
  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
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 682]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
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
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
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
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, United States      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; 
                                                  40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51

[[Page 683]]

  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
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
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, IV, VII
  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 684]]

Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
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
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 Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
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
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  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
[[Page 685]]

  Relocation Allowances                           41, 302
  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
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  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
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
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 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

[[Page 686]]

  Minerals Management Service                     30, II
  Mines, Bureau of                                30, VI
  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 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; 40, IV
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  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 687]]

Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
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 and Community Service, Corporation for   45, XII, XXV
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 Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
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
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
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
Oklahoma City National Memorial Trust             36, XV
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, United States        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

[[Page 688]]

  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  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 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
  Federal Motor Carrier Safety Administration     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

[[Page 689]]

  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  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; 
                                                  31, IX
  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 691]]



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 VII
701  Authority citation revised....................................12985
701.73  (b) revised; (c) removed...................................12985
704  Added; interim.................................................8782
704.10  (b)(2) corrected; (f) added; interim.......................17168
713  Revised; interim...............................................8438
    Technical correction...........................................11419
    Authority citation revised.......................21831, 36782, 39482
    Revised........................................................36905
713.2  (f) added; interim..........................................39482
713.3  (e)(2)(v) and (vi) redesignated as (e)(2)(vi) and (vii); 
        new (e)(2)(v), (m-1), (r-1), and (r-2) added; (d), 
        (e)(2)(iv), and (r) revised; interim.......................21831
    (d) introductory text republished; (d)(1) and (e)(2)(vii) 
revised; (d)(2) through (4) removed; (d)(5) through (10) 
redesignated as (d)(2) through (7); (e)(4) added; interim..........36782
    (d)(1) and (e)(2)(vii) revised; (e)(3) added; (d) introductory 
text republished; interim..........................................39482
713.11  (d) removed; (a)(1) revised; interim.......................36782
713.12  (a)(1) revised; (d) removed; interim.......................39482
713.58  Added; interim.............................................36782
    Added; interim (republication).................................39482
713.63  (a) and (c)(1) revised; interim............................21832
    (a) and (c)(2) revised; interim................................36783
    (a) and (c)(2) revised; interim (republication)................39483
713.97  (a) revised; (e) and (f) added; interim....................21832
713.100  (a) revised; interim......................................36783
    (a) revised; interim (republication)...........................39483
713.102  Revised; interim..........................................21832
713.105  (d) revised; interim......................................21833
713.108  (b) heading and (2) and (c) revised; (e) added; interim 
                                                                   21833
713.155  Revised; interim..........................................36783
    Revised; interim (republication)...............................39483
717  Authority citation revised....................................10609
717.21  (d) added; interim.........................................10609
724  Authority citation revised....................................22269
724.36  Removed; interim...........................................22269
724.57  (b)(1)(i)(b) and (c) revised; (b)(1)(i)(d) and (2)(ii) 
        added; interim.............................................22269
724.62  Introductory text amended; (c)(7) and (9) removed; (c)(8) 
        redesignated as (c)(7); interim............................22269
724.69  (n) amended; interim.......................................22269
724.70  (w) revised; interim.......................................22269
724.72  (b) amended; interim.......................................22269
724.81  (d) and (e) revised; (f) removed; interim..................22269
725  Authority citation revised....................................22270
725.51  (e-1)(2)(iv) and (v) revised; (e-1)(2)(vi) added; (k) 
        amended; interim...........................................22270
725.60  (b)(3) and (4) revised; (b)(5) added; interim..............22270

[[Page 692]]

725.72  (d)(3)(viii) and (e)(4)(i) amended; interim................22270
725.73  (a) revised; interim.......................................22270
725.87  (a)(2) and (f)(1), (2), and (4) amended; (f)(3) revised; 
        interim....................................................22270
725.91  (a) amended; interim.......................................22270
725.95  (a), (b), (d), and (e) amended; (f) revised; interim.......22270
725.99  (a)(4)(x), (b), and (c)(1), (2), and (3) amended; interim 
                                                                   22270
725.100  (a)(1)(viii), (b)(1) and (3), and (c)(7) amended; interim
                                                                   22270
725.103  (a) and (h) amended; interim..............................22270
725.104  (a) amended; interim......................................22270
725.107  (b) amended; interim......................................22270
725.115  (a)(2)(iv) and (b)(4) amended; interim....................22270
726  Authority citation revised....................................22271
726.51  (aa)(3) and (4) and (ff)(1)(vi) revised; (aa)(5) added; 
        (i) amended; interim.......................................22271
726.68  (e)(4) revised; interim....................................22271
726.81  (a)(2) and (f)(1), (2), and (4) amended; (f)(3) revised; 
        interim....................................................22271
726.85  (a) amended; interim.......................................22271
726.89  (a), (b), (d), (e), and (f) amended; interim...............22271
726.93  (a)(4)(vii), (b)(1), and (c)(1), (2), and (3) amended; 
        interim....................................................22271
726.94  (b)(1) and (3) and (c)(5) and (7) amended; interim.........22271
726.98  (b) amended; interim.......................................22271
726.105--726.107  Undesignated center heading removed; interim.....22271
726.105  (h) amended; interim......................................22271
726.106  (a) amended; interim......................................22271
726.107  (a)(2)(iv) and (b)(4) amended; interim....................22271
729.311--729.378 (Subpart)  Added..................................22487
729.313  (b)(1) correctly designated; (b)(2) corrected.............26685
729.352  (c) added; interim........................................32621
729.353  (c) added; interim........................................32621
729.385--729.387  Undesignated center heading added; interim.......32051
729.385  Added; interim............................................32051
729.386  Added; interim............................................32051
729.387  Added; interim............................................32052
729.393--729.404  Undesignated center heading added; interim.......32052
729.393--729.396  Added; interim...................................32052
729.397--729.401  Added; interim...................................32053
729.402--729.404  Added; interim...................................32054
729.416--729.417  Undesignated center heading added; interim.......32054
729.416  Added; interim............................................32054
729.417  Added; interim............................................32054
729.420--729.429  Undesignated center heading added; interim.......32054
729.420  Added; interim............................................32054
729.421  Added; interim............................................32054
729.422--729.425  Added; interim...................................32055
729.426--729.429  Added; interim...................................32056
736.42  Revised; interim...........................................17306
760.2  (k)(1) and (2), (l), and (o) amended; interim...............12986
760.8  Amended; interim............................................12986
760.23  (c) added; interim.........................................12987
770  Revised; interim........................................8452, 21833
    Technical correction...........................................11419
    Revised........................................................36921
770.4  (g)(2) revised; interim.....................................28922
    (f) revised; interim...........................................43580
781.3  (a) revised.................................................25993
795  Authority citation revised.....................................8453
    Technical correction...........................................11419
795.2  (c) and (d) added; interim...................................8453
    Confirmed......................................................36905
795.5  Revised; interim............................................21836
    Confirmed......................................................36905
795.15  Revised; interim............................................8454
    Confirmed......................................................36905
795.24  Added; interim..............................................8454
    Confirmed......................................................36905
796  Revised; interim...............................................8454
    Technical correction...........................................11419
    Revised........................................................36923
Chapter VIII
800.25  Revised; OMB number.........................................1768
800.26  Revised.....................................................1768
800.50  Heading, (a), and (b) revised; (d), (e), and (f) added.....12830
800.71  (a) Schedules A and B and Schedule C Table 2 revised; eff. 
        1-5-87.....................................................43724
801  Revised........................................................7050
802  Revised........................................................7052
810.305  (b) revised; eff. 5-1-87..................................30325

[[Page 693]]

                                  1987

7 CFR
                                                                   52 FR
                                                                    Page
Chapter VII
701  Authority citation revised....................................19716
701.23  Revised....................................................19716
702  Added; interim................................................16741
704  Revised........................................................4269
704.7  (a)(3) and (c) revised; (a)(4) and (5) removed; (a)(6) 
        redesignated as (a)(4); interim............................27537
    Correctly eff. 7-22-87.........................................29836
704.21  (b)(3) revised; interim....................................27537
    Correctly eff. 7-22-87.........................................29836
704.22  (a)(2) revised; (a)(3) amended; interim....................27537
    Correctly eff. 7-22-87.........................................29836
713  Authority citation revised....................................30886
713.2  (f) addition confirmed......................................10727
713.3  (d)(1) revision and (e)(3) addition confirmed; (d)(1)(v) 
        and (e)(2)(vii) revised....................................10727
713.12  (a)(1) revision and (d) removal confirmed..................10727
713.55  Revised....................................................25354
713.58  Addition confirmed.........................................10727
713.63  (a) and (c)(2) revision confirmed..........................10727
    (a) revised; interim...........................................30886
713.97  (e)(1) and (2) revised; (e)(3) added; interim..............30886
713.100  (a) revised...............................................10728
713.102  (f) revised; interim......................................30886
713.108  (b)(2)(i) revised; interim................................30886
713.155  Revision confirmed........................................10727
717.21  (d) addition confirmed.....................................10727
724.36  Removal confirmed..........................................10727
724.57  (b)(1)(i)(b) and (c) revisions and (b)(1)(i)(d) and 
        (2)(ii) additions confirmed................................10727
724.62  Introductory text amendment, (c)(7) and (9) removal, and 
        (c)(8) redesignation as (c)(7) confirmed...................10727
724.69  (n) amendment confirmed....................................10727
724.70  (w) revision confirmed.....................................10727
    (m) revised; interim...........................................22288
724.72  (b) amendment confirmed....................................10727
724.81  (d) and (e) revision and (f) removal confirmed.............10727
725.51  (e-1)(2)(iv) and (v) revision, (e-1)(2)(vi) addition, and 
        (k) amendment confirmed....................................10727
    (s) revised; (oo-1) added......................................35228
725.60  (b)(3) and (4) revision and (b)(5) addition confirmed......10727
725.72  (d)(3)(viii) and (e)(4)(i) amendment confirmed.............10727
    (d)(5)(i) revised; (d)(5)(vi) added; interim...................22288
725.73  (a) revision confirmed.....................................10727
725.87  (a)(2) and (f)(1), (2), and (4) amendment and (f)(3) 
        revision confirmed.........................................10727
725.91  (a) amendment confirmed....................................10727
725.94  (c) revised; (i) added.....................................35229
725.95  (a), (b), (d), and (e) amendment and (f) revision 
        confirmed..................................................10727
725.99  (a)(4)(x), (b), and (c)(1), (2), and (3) amendment 
        confirmed..................................................10727
725.100  (a)(1)(viii), (b)(1) and (3), and (c)(7) amendment 
        confirmed..................................................10727
    (g) removed....................................................35229
725.101  (b) and (c) revised.......................................35229
725.103  (a) and (h) amendment confirmed...........................10727
725.104  (a) amendment confirmed...................................10727
725.107  (b) amendment confirmed...................................10727
725.115  (a)(2)(iv) and (b)(4) amendment confirmed.................10727
726.51  (aa)(3) and (4) and (ff)(1)(vi) revision, (aa)(5) 
        addition, and (i) amendment confirmed......................10727
    (r) revised; (nn-1) added......................................35229
726.68  (e)(4) revision confirmed..................................10727
    (d)(5)(vi) and (vii) added; interim............................22288
726.81  (a)(2) and (f)(1), (2), and (4) amendment and (f)(3) 
        revision confirmed.........................................10727
726.85  (a) amendment confirmed....................................10727
726.88  (c) revised; (i) added.....................................35229
726.89  (a), (b), (d), (e), and (f) amendment confirmed............10727
726.93  (a)(4)(vii), (b)(1), and (c)(1), (2), and (3) amendment 
        confirmed..................................................10727
726.94  (b)(1) and (3) and (c)(5) and (7) amendment confirmed......10727
    (e)(2), (3), and (4) revised; (h) removed......................35230
726.98  (b) amendment confirmed....................................10727

[[Page 694]]

726.105--726.107  Undesignated center heading removal confirmed....10727
726.105  (h) amendment confirmed...................................10727
726.106  (a) amendment confirmed...................................10727
726.107  (a)(2)(iv) and (b)(4) amendment confirmed.................10727
736.2  (w), (x), (y) and (z) added.................................37126
736.6  (d) and (f) revised; (i) added..............................37126
736.7  Amended.....................................................37127
736.9  (a) amended.................................................37127
736.13  Revised....................................................37127
736.14  (c) revised................................................37127
736.16  Revised....................................................37127
736.42  Revised.....................................................8057
760.2  (k)(1) and (2), (l) and (o) amended.........................17935
760.8  Amendment confirmed.........................................17935
760.23  (c) addition confirmed.....................................17935
770.4  (f) revision confirmed......................................10727
    (c) and (g)(1) amended; (f) revised; interim...................45607
795  Authority citation revised....................................26295
795.2  Undesignated center heading removed.........................26295
795.3--795.4  Undesignated center heading removed..................26295
795.3  Revised.....................................................26295
795.4  Revised.....................................................26295
795.5--795.13  Undesignated center heading removed.................26295
795.14--795.16  Undesignated center heading removed................26295
795.17  Undesignated center heading removed........................26295
795.20--795.24  Undesignated center heading removed................26295
Chapter VIII
800.0  (b)(2) through (105) redesignated as (b)(3) through (106); 
        new (b)(2) added............................................6495
800.60--600.61  Undesignated center heading revised................24437
800.61  Added......................................................24437
800.88  Revised.....................................................6495
800.95  Revised.....................................................6495
800.96  Revised.....................................................6495
800.97  Revised.....................................................6496
800.98  Revised.....................................................6496
800.99  Revised.....................................................6497
800.100  Removed....................................................6497
800.101  Removed....................................................6497
800.102  Removed....................................................6497
800.103  Removed....................................................6497
800.162  (b) redesignated as (c) and revised; new (b) added........24437
810  Revised.......................................................24418
    Table of contents corrected....................................28534
810.104  (b) corrected.............................................28534
810.107  Revised; eff. 5-1-88......................................24441
810.202  (c)(2)(i) and (t) corrected...............................28534
810.204  Table footnote 1 corrected................................28534
810.205  Table footnote 1 corrected................................28534
810.206  Table corrected...........................................28534
810.207  (d) removed; (e) redesignated as (d); eff. 5-1-88.........24441
810.402  (a) through (e) redesignated as (b), (c), (d), (f), and 
        (g); new (a) and (e) added; (g) revised....................24437
    (a) corrected..................................................28534
810.403  Corrected.................................................28534
810.404  Table corrected...........................................28534
810.405  (c) removed; (d) redesignated as (c); eff. 5-1-88.........24441
    (d) corrected..................................................28534
810.805  (d) removed; (e) and (f) redesignated as (d) and (e); 
        eff. 5-1-88................................................24441
810.1005  (g) removed; (h) and (i) redesignated as (g) and (h); 
        eff. 5-1-88................................................24441
810.1205  (c) removed; (d) through (g) redesignated as (c) through 
        (f); eff. 5-1-88...........................................24441
810.1402  (a) through (i) redesignated as (b) through (e) and (g) 
        through (k); new (a) and (f) added.........................24437
    (d) and (i) corrected..........................................28534
810.1405  (a) removed; (b) designation removed; eff. 5-1-88........24441
810.1604  Table corrected..........................................28534
810.1605  (b) removed; (a) designation removed; eff. 5-1-88........24441
810.1805  Removed; eff. 5-1-88.....................................24441
810.2002  (a) corrected............................................28534
810.2004  Table corrected..........................................28534
810.2005  (c) removed; (d), (e), and (f) redesignated as (c), (d), 
        and (e); eff. 5-1-88.......................................24441
810.2203  Corrected................................................28534
810.2204  (a) table amended; eff. 5-1-88...........................24442

[[Page 695]]

810.2205  (c) removed; (d), (e), and (f) redesignated as (c), (d), 
        and (e); eff. 5-1-88.......................................24442

                                  1988

7 CFR
                                                                   53 FR
                                                                    Page
Chapter VII
701  Authority citation revised....................................15657
701.2  (e) revised.................................................15657
704.7  (c) revised; (d) added; interim...............................734
704.16  (c) amended................................................29570
713  Redesignated as Part 1413; interim............................20290
    Redesignation as Part 1413 confirmed...........................47659
713.1  (a) amended; (b) revised; interim............................3858
713.12  (d) revised; interim........................................3858
713.50  (a) revised; (b) redesignated as (c); new (b) added; 
        interim.....................................................3858
713.63  (a) revised; interim........................................3859
713.102  (e) introductory text and (f) revised; interim.............3859
713.108  (a)(4) amended; (b)(2)(i) and (ii), (d)(5)(i), (ii), and 
        (iii) and (e) revised; interim..............................3859
713.109  Revised; interim...........................................3859
719  Authority citation revised..............................6121, 52624
719.1  Revised; interim.............................................6121
719.2  (a), (g) and (n) revised; (bb), (cc), (dd), and (ee) added; 
        interim.....................................................6121
    (f)(2), (3), and (4) revised; (ff) added; interim..............52624
719.3  (b)(1) and (2) revised; (b)(7) and (d)(7) added; interim.....6122
    (b)(3) and (7) and (d)(1) and (3) revised; (d)(7) redesignated 
as (d)(9) and revised; (b)(8) and (d)(7) and (8) added; interim....52625
719.4  (g) added; interim...........................................6122
719.5  Revised; interim.............................................6122
719.6  Revised; interim.............................................6122
719.7  (a), (b)(1), and (c) revised; interim........................6122
    (b)(1)(iv) revised; (b)(4) added; interim......................52625
719.8  Revised; interim.............................................6123
    (c)(4)(i) and (iii) and (d)(2) revised; interim................52625
719.9  Revised; interim.............................................6125
719.10  Revised; interim.....................................6125, 52626
719.11  (a), (d) through (i), (j)(1) introductory text, (2) and 
        (4) through (8), (k), (l) and (m) revised; interim..........6125
719.13  Removed; new 719.13 redesignated from 719.14 and revised; 
        interim.....................................................6128
719.14  Redesignated as 719.13; new 719.14 added; interim...........6128
724.51  (j)(4) added................................................1606
724.70  (m) revised................................................12675
724.91  (a)(1) revised..............................................1606
725  Authority citation revised....................................43846
725.51  (qq) revised; interim......................................43846
725.56  (b) revised................................................29221
725.57  (a)(1) revised.............................................29221
725.72  (d)(5)(i) and (vi) revised.................................12676
    (d)(1) and (2), (f), (g), (l), (n) and (o) removed; (d)(3), 
(4), (5), and (6) redesignated as (d)(1), (2), (3), and (4); (a), 
new (d)(1) and (2), and (e)(4)(i) revised; (q) amended.............29221
726  Authority citation revised....................................43846
726.51  (pp)(2) revised; interim...................................43846
726.68  (d)(5)(i) revised; (d)(5)(vi) and (vii) removed............12676
    (a), (d)(2) and (4), (e)(4), and (f) revised; (d)(3)(iv) 
added; interim.....................................................43846
729.311--729.429 (Subpart)  Authority citation revised.............15544
729.322  (c) added; interim........................................15544
    (c) addition confirmed.........................................40205
729.343  Amended...................................................40205
729.352  (c) addition confirmed....................................40205
729.353  (a) and (b) revised; interim..............................15544
    (a) and (b) revision and (c) addition confirmed................40205
729.385--729.387  Undesignated center heading addition confirmed 
                                                                   40205
729.385  Addition confirmed........................................40205
729.386  Addition confirmed........................................40205
729.387  Addition confirmed........................................40205
729.393--729.404  Undesignated center heading addition confirmed 
                                                                   40205
729.393--729.396  Addition confirmed...............................40205
729.396  (c) revised; interim......................................15545
    (c) revision confirmed.........................................40205
729.397--729.401  Addition confirmed...............................40205

[[Page 696]]

729.402--729.404  Addition confirmed...............................40205
729.416--729.417  Undesignated center heading addition confirmed 
                                                                   40205
729.416  Addition confirmed........................................40205
729.417  Addition confirmed........................................40205
    Amended........................................................40205
729.420--729.429  Undesignated center heading addition confirmed 
                                                                   40205
729.420  Addition confirmed........................................40205
729.421  Addition confirmed........................................40205
729.422--729.425  Addition confirmed...............................40205
729.426--729.429  Addition confirmed...............................40205
729.428  Revised; interim..........................................15545
    Revision confirmed.............................................40205
735.2  (x), (y), (z) and (aa) added................................27148
735.4  Amended.....................................................27148
735.5  Revised.....................................................27148
735.7  (a) amended.................................................27149
735.11  Revised....................................................27149
735.12  Revised....................................................27150
735.14  Revised....................................................27150
735.40  Revised....................................................27150
735.93  Added......................................................27151
736.9  (g) correctly revised........................................2477
736.103  Corrected..................................................2477
736.111  Corrected..................................................2477
760.2  (k)(1) and (2), (l), and (o) amended........................44001
770  Redesignated as Part 1470; interim............................20290
    Redesignation as Part 1470 confirmed...........................47659
780  Revised.......................................................45074
795.2  (e) added...................................................29570
795.11  Revised; interim...........................................21410
Chapter VIII
800.71  (a) Schedule B revised.....................................21792
802.0  Revised.....................................................37728
810.106  (a) revised...............................................15017

                                  1989

7 CFR
                                                                   54 FR
                                                                    Page
Chapter VII
701.86  Added......................................................41819
704.7  (e) added; interim............................................803
709  Removed.......................................................52878
725  Authority citation revised....................................22412
725.51  Regulation at 53 FR 43846 confirmed.........................3583
725.91  (d) revised................................................22412
725.93  Amended....................................................22412
725.99  (e) revised................................................22412
725.100  (c)(1) revised............................................22412
725.108  Revised...................................................22412
726  Authority citation revised....................................22413
726.51  Regulation at 53 FR 43846 confirmed.........................3583
726.68  Regulation at 53 FR 43846 confirmed.........................3583
726.85  (d) revised................................................22413
726.87  Amended....................................................22413
726.93  (e) revised................................................22413
726.94  (c)(1) revised.............................................22413
726.99  Revised....................................................22413
760.2  Regulation at 53 FR 44001 confirmed.........................11693
Chapter VIII
800.1  Revised......................................................9197
800.5  (c) amended..................................................5924
800.7  Amended......................................................5924
800.8  (a), (b), (c), (d), and (e) amended..........................5924
800.31  Amended (OMB number)........................................5924
800.32  Amended (OMB number)........................................5924
800.33  Amended (OMB number)........................................5924
800.37  Amended (OMB number)........................................5924
800.45  Amended (OMB number)........................................5924
800.46  Amended (OMB number)........................................5924
800.60  Amended (OMB number)........................................5924
800.73  (c) amended.................................................5924
800.125  OMB number.................................................5924
800.136  OMB number.................................................5924
800.172  Amended (OMB number).......................................5924
800.185  Amended (OMB number).......................................5924
800.187  Amended (OMB number).......................................5924
800.195  Amended (OMB number).......................................5924
800.196  Amended (OMB number).......................................5924
800.197  Amended (OMB number).......................................5924
800.198  Amended (OMB number).......................................5924
801.7  Revised; interim............................................36751
802.1  Amended (OMB number).........................................5925
810.104  (b) amended...............................................24157
810.2202  (a) and (b) revised; eff. 5-1-90.........................48736

[[Page 697]]

                                  1990

7 CFR
                                                                   55 FR
                                                                    Page
Chapter VII
704.7  Regulations at 52 FR 27537, 53 FR 734 and 54 FR 803 
        confirmed..................................................19244
704.21  Regulation at 52 FR 27537 confirmed........................19244
704.22  Regulation at 52 FR 27537 confirmed........................19244
719  Authority citation revised.....................................1570
719.2  (t) revised; interim.........................................1570
719.3  (d)(3) revised; interim......................................1570
723  Revised.......................................................39914
724  Removed.......................................................39913
725  Removed.......................................................39913
726  Removed.......................................................39913
793  Authority citation revised.....................................1570
793.2  Amended; interim.............................................1570
Chapter VIII
800.0  (b)(55) revised.............................................24041
800.86  Revised....................................................24042
    (c)(2) corrected...............................................46131
800.125  (a) revised...............................................24048
800.129  (a)(1) revised............................................24048
800.135  (a) revised...............................................24048
800.139  (b) revised...............................................24048
801.7  Revised.......................................................839

                                  1991

7 CFR
                                                                   56 FR
                                                                    Page
Chapter VII
701  Authority citation revised....................................46367
701.51  Revised....................................................46367
701.70  Revised....................................................46368
704  Heading and authority citation revised........................15985
704.1  (c) added...................................................15985
718  Revised.......................................................16165
719  Authority citation revised....................................16171
719.2  Regulation at 55 FR 1570 confirmed............................480
    Revised........................................................16171
719.3  Regulation at 55 FR 1570 confirmed............................480
    Revised........................................................16172
719.4  Revised.....................................................16173
719.5  Revised.....................................................16173
719.6  Revised.....................................................16173
719.7  Revised.....................................................16173
719.8  Revised.....................................................16174
723  Authority citation revised....................................21441
723.104  (b) amended...............................................21441
723.201  (b)(5) and (6) added......................................21441
723.208  (b) revised...............................................21441
723.216  (a)(1)(i), (ii), (iii), (e)(5)(iv), (6)(i), (7)(i) 
        introductory text, (iii), (8)(ii), (iii), (f)(6)(i) 
        introductory text and (7)(iii) revised; (e)(5)(ix), 
        (7)(vii), (viii) and (8)(v) added..........................21441
723.219  (c)(1), (2) and (h) revised; (d)(3)(iii) added............21442
723.220  (e)(1), (2) and (k) revised...............................21442
723.401  (c) added.................................................21443
723.404  (b)(1)(viii), (c)(2)(iii), (3)(ii), (d)(5) introductory 
        text, (6) and (8) revised; (d)(9) added....................21443
723.406  (e) added.................................................21443
723.407  (b)(7), (d) and (f)(3) revised............................21443
723.410  (g) revised...............................................21444
723.414  (c) added.................................................21444
729  Revised; interim..............................................16211
    Regulation at 56 FR 16211 comfirmed............................38327
729.103  (b) amended...............................................38327
729.201  Amended...................................................38328
729.204  (f)(1), (2) and (4)(i) revised............................38328
729.316  (b)(1) amended............................................38328
736.2  (aa) added..................................................40220
736.19  (c) revised................................................40220
736.106  Removed...................................................40220
736.107  Removed...................................................40220
760  Authority citation revised.....................................1358
760.2  (k)(1), (2), (l) and (o) amended.............................1358
760.100  Removed....................................................1358
760.101  Removed....................................................1358
760.102  Removed....................................................1358
760.103  Removed....................................................1358
760.104  Removed....................................................1358
760.105  Removed....................................................1358
760.106  Removed....................................................1358
760.107  Removed....................................................1358
760.108  Removed....................................................1358
760.109  Removed....................................................1358
760.110  Removed....................................................1358
760.111  Removed....................................................1358
760.112  Removed....................................................1358
760.113  Removed....................................................1358
760.114  Removed....................................................1358
760.115  Removed....................................................1358
760.116  Removed....................................................1358
760.117  Removed....................................................1358
760.118  Removed....................................................1358
760.119  Removed....................................................1358

[[Page 698]]

777  Added.........................................................25346
780  Revised; interim..............................................59208
793.2  Regulation at 55 FR 1570 confirmed............................480
Chapter VIII
800.71  (a) Schedule A revised..............................12335, 15804
800.86  (c)(2) corrected............................................4675
802.0  Revised.....................................................56293

                                  1992

7 CFR
                                                                   57 FR
                                                                    Page
Chapter VII
703  Added.........................................................23914
718  Authority citation revised....................................14460
718.2  Revised; interim............................................14460
    Regulation at 57 FR 14460 confirmed............................34203
718.3  (b) amended; interim........................................14460
    Regulation at 57 FR 14460 confirmed............................34203
718.10  (c) amended; interim.......................................14460
    Regulation at 57 FR 14460 confirmed............................34203
718.13  Revised; interim...........................................14460
    Regulation at 57 FR 14460 confirmed............................34203
718.22  (a) introductory text revised; interim.....................14461
    Regulation at 57 FR 14461 confirmed............................34203
718.40  Heading, (a), (b) and (c) revised; introductory text 
        added; interim.............................................14461
    Regulation at 57 FR 14461 confirmed............................34203
718.42  Heading, (b), (c), (d), (e) introductory text and (f) 
        revised; interim...........................................14461
    Regulation at 57 FR 14461 confirmed............................34203
719.2  Amended; interim............................................14461
    Regulation at 57 FR 14461 confirmed; amended...................34203
719.8  (i) through (l) redesignated as (j) through (m); new (i) 
        added; interim.............................................14462
    Regulation at 57 FR 14462 confirmed............................34203
720  Authority citation revised....................................34203
720.2  Added.......................................................34203
723  Authority citation revised....................................43580
723.104  (b) amended...............................................43581
723.311  Revised...................................................43581
723.401  Heading, (b) and (c) revised; (d) and (e) added...........43581
723.403  (k)(3)(i) revised; (k)(5)(iv) added.......................43582
723.404  (d)(5)(v) added; (d)(7) amended...........................43582
723.406  (a) revised...............................................43582
723.408  (a)(3) added..............................................43582
723.409  (b) heading revised; (b)(4) added; (f) amended............43583
723.410  Heading revised; (n) added................................43583
729.103  (b) amended...............................................27144
729.204  (d)(2) amended............................................27144
729.212  (a)(2) and (e)(1)(iii)(B) revised.........................27144
729.214  Added.....................................................46479
736.21  (b) revised; (c) added; eff. 1-6-93........................57648
736.24  Revised; eff. 1-6-93.......................................57649
Chapter VIII
800.0  (b)(42) revised..............................................3273
800.15  (b)(1) revised..............................................2439
800.16  (a) revised.................................................2439
800.84  (c) revised; interim.......................................11428
    Regulation at 57 FR 11428 confirmed............................40302
800.86  (c)(2) tables 23 and 24 revised; eff. 5-1-93...............58965
    (c)(2) tables 15 and 16 revised; eff. 6-1-93...................58970
800.160  (a) revised; interim......................................11428
    Regulation at 57 FR 11428 confirmed............................40302
800.162  (d) added..................................................2439
    (a)(2) revised..................................................3273
    (b) removed; (c) redesignated as (b) and revised...............56439
801.12  Added.......................................................2673
810  Authority citation revised.....................................3274
810.101  Revised....................................................3274
810.102  (d) amended................................................3274
810.104  (b) amended................................................3274
810.107  (b) introductory text revised..............................3274
Subparts C--L redesignated as subparts D--M.........................3274
810.301--810--306 (Subpart C)  Added................................3274
810.1402  (b) and (c) revised; (i) removed; (j) and (k) 
        redesignated as (i) and (j); new (i) and new (j) 
        republished; eff. 6-1-93...................................58971
810.1403  Revised; eff. 6-1-93.....................................58971
810.1404  Revised; eff. 6-1-93.....................................58971

[[Page 699]]

810.2202  (a)(7) revised; eff. 5-1-93..............................58966
810.2204  (a) revised; eff. 5-1-93.................................58966
810.2205  (a) and (c) revised; eff. 5-1-93.........................58967

                                  1993

7 CFR
                                                                   58 FR
                                                                    Page
Chapter VII
702  Authority citation revised....................................11785
702.2  (a)(6) amended; (a)(11) through (28) redesignated as 
        (a)(12) through (29); new (a)(11) added....................11785
702.5  (a) and (b) revised; (c) and (d) added......................11785
702.9  Second (e) through (i) redesignated as (f) through (j); new 
        (f) and (h) revised........................................11785
702.13  (a) and (c)(3) revised; last (c) redesignated as (d).......11786
702.18  (d) revised................................................11786
723  Authority citation revised....................................11960
723.111  Added.....................................................11962
723.112  Added.....................................................36859
723.113  Added.....................................................36857
723.114  Added.....................................................36857
723.115  Added.....................................................36857
723.116  Added.....................................................36857
723.117  Added.....................................................36857
723.118  Added.....................................................36857
723.216  (i)(4) revised............................................11960
729.214  (c) added.................................................11964
729.316  (a) revised...............................................57718
781.2  (b) revised.................................................48274
Chapter VIII
800.71  (a) Schedule A revised......................................3214
    Regulation at 58 FR 3214 postponed; interim.....................5255
    (a) Schedule A revised; interim................................49422
800.88  (d) revised.................................................3212
800.96  (c)(2) revised..............................................3212

                                  1994

7 CFR
                                                                   59 FR
                                                                    Page
Chapter VII
Chapter  VII  Heading revised; nomenclature change.................60299
    Heading  correctly revised; nomenclature change................66438
703  Authority citation revised.....................................3773
703.1  Revised; interim.............................................3773
    Regulation  at 59 FR 3773 confirmed; (a) and (b) amended.......60299
703.2  (f)(1) and (2) amended; interim..............................3774
    Regulation  at 59 FR 3774 confirmed............................60299
703.3  (b) amended; interim.........................................3774
    Regulation  at 59 FR 3774 confirmed; (b) amended...............60299
703.5  Revised; interim.............................................3774
    Regulation  at 59 FR 3774 confirmed............................60299
703.6  Revised.....................................................60299
703.7  (a)(1)(i), (2)(i), (ii) and (iii) revised; interim...........3774
    Regulation  at 59 FR 3774 confirmed; (a)(1)(i), (2)(i) and 
(d)(2) revised.....................................................60299
703.8  (a) amended; interim.........................................3774
    Regulation  at 59 FR 3774 confirmed............................60299
    (b)  amended...................................................60300
703.9  (b) revised; interim.........................................3774
    Regulation  at 59 FR 3774 confirmed............................60299
703.10  Revised; interim............................................3774
    Regulation  at 59 FR 3774 confirmed............................60299
703.11  Heading, (b)(1), (2), (c) and (d) revised; interim..........3775
    Regulation  at 59 FR 3775 confirmed............................60299
703.12  (a) introductory text, (1)(iv), (v), (13), (14), (17) and 
        (18) revised; (a)(1)(vi) and (19) added; interim............3775
    Regulation  at 59 FR 3775 confirmed............................60299
703.13  (c)(4) removed; (c)(5) redesignated as (c)(4); (c)(1) and 
        new (4) revised; (e) added; interim.........................3775
    Regulation  at 59 FR 3775 confirmed............................60299
    (a)  introductory text amended.................................60300
703.15  (a), (b)(2) and (d) revised; interim........................3775
    Regulation  at 59 FR 3775 confirmed............................60299
703.16  Amended....................................................60300
703.17  (c) revised; interim........................................3775
    Regulation  at 59 FR 3775 confirmed............................60299
703.25  (c) added; interim..........................................3775

[[Page 700]]

    Regulation  at 59 FR 3775 confirmed............................60299
718.1  Revised; OMB number; interim................................59287
718.2  Revised; interim............................................59287
718.3  (b) amended; interim........................................59287
718.10  (a)(4) revised; (a)(7) and (d) added; interim..............59287
718.12  (a)(2) and (b) introductory text revised; interim..........59287
718.13  (a)(3) revised; interim....................................59288
718.21  (b) revised; (e) added; interim............................59288
718.22  Revised; interim...........................................59288
718.24  Introductory text revised; (d) through (g) added; interim 
                                                                   59288
718.25  (a) revised; interim.......................................59289
718.26  (a), (b)(3) through (8) and (c) revised; (b)(9) and (10) 
        added; interim.............................................59289
718.40  (d)(1), (2) and (e)(1) revised; interim....................59289
718.42  (b)(2) revised; (b)(3) added; interim......................59289
718.43  (a)(2) and (3) revised; (b) redesignated as (c); new (b) 
        added; new (c) revised; interim............................59289
718.45  Revised; interim...........................................59289
718.46  Revised; interim...........................................59289
718.47  (a), (b)(1)(i) and (ii) revised; (d) removed; interim......59290
723  Authority citation revised....................................28210
723.111  Existing text designated as (a); (b) added.................6866
723.112  Existing text designated as (a); (b) added................22725
723.113  Existing text designated as (a); (b) added................27220
723.114  Existing text designated as (a); (b) added................27220
723.115  Existing text designated as (a); (b) added................27220
723.116  Existing text designated as (a); (b) added................27220
723.117  Existing text designated as (a); (b) added................27220
723.118  Existing text designated as (a); (b) added................27220
723.501--723.508 (Subpart  E) Added................................28210
729.214  (d) added..................................................9068
735  Authority citation revised.............................15038, 51358
735.2  (bb) through (ii) added.....................................15038
735.16  (h) added..................................................15038
735.50  Revised....................................................51358
735.51  Revised....................................................51358
735.100--735.105  Undesignated center heading added................15038
735.100  Added.....................................................15038
735.101  Added.....................................................15038
735.102  Added.....................................................15039
735.103  Added.....................................................15039
735.104  Added.....................................................15039
735.105  Added.....................................................15039
736  Authority citation revised....................................51358
736.57  Revised....................................................51358
736.58  Revised....................................................51358
737  Authority citation revised....................................51358
737.48  Revised....................................................51358
737.49  Revised....................................................51358
738  Authority citation revised....................................51358
738.46  Revised....................................................51358
738.47  Revised....................................................51358
739  Authority citation revised....................................51358
739.55  Revised....................................................51358
739.56  Revised....................................................51358
740  Authority citation revised....................................51358
740.56  Revised....................................................51358
740.57  Revised....................................................51358
741  Authority citation revised....................................51358
741.48  Revised....................................................51358
741.49  Revised....................................................51358
742  Authority citation revised....................................51358
742.58  Revised....................................................51358
742.59  Revised....................................................51358
790  Revised; interim..............................................59290
791  Revised; interim..............................................59290
792  Added.........................................................15829
Chapter VIII
800.61  (b)(3) added; (d)(4) revised; eff. 2-11-95.................52077
800.71  Regulation at 58 FR 49422 confirmed........................13866
    (a)  Schedule A revised........................................52656
800.88  (d)(ii) removed; (d)(i) redesignated as (d); eff. 2-11-95 
                                                                   52077
800.96  (c)(2)(ii) removed; (c)(2)(i) redesignated as (c)(2); eff. 
        2-11-95....................................................52077
801.7  Revised.....................................................31506
810.104  (b) amended...............................................10573
810.1604  Revised..................................................10573
810.1605  Existing text designated as (a); (b) added...............10573

[[Page 701]]

                                  1995

7 CFR
                                                                   60 FR
                                                                    Page
Chapter VII
Chapter  VII Heading revised; nomenclature change..................64297
701.76  Revised; interim; eff. 1-16-96.............................67316
702.20  Revised; interim; eff. 1-16-96.............................67316
704.20  (a)(4) added; interim......................................22458
718.1  Regulation at 59 FR 59287 confirmed.........................33331
718.2  Regulation at 59 FR 59287 confirmed.........................33331
718.3  Regulation at 59 FR 59287 confirmed.........................33331
    (b) amended; interim...........................................44257
718.10  Regulation at 59 FR 59287 confirmed........................33331
718.12  Regulation at 59 FR 59287 confirmed........................33331
718.13  Regulation at 59 FR 59288 confirmed........................33331
718.21  Regulation at 59 FR 59288 confirmed........................33331
    (e) revised; interim...........................................44257
718.22  Regulation at 59 FR 59288 confirmed........................33331
    (d) removed; (e), (f) and (g) redesignated as (d), (e) and 
(f); interim.......................................................44257
718.24  Regulation at 59 FR 59288 confirmed........................33331
718.25  Regulation at 59 FR 59289 confirmed........................33331
718.26  Regulation at 59 FR 59289 confirmed........................33331
718.40  (a)(1) and (b)(3) removed; (a)(2) and (b)(4) redesignated 
        as (a)(1) and (b)(3); (c) introductory text, (1) and (2) 
        introductory text revised; interim.........................44257
    Regulation at 59 FR 59289 confirmed............................33331
    Corrected......................................................48203
718.42  Regulation at 59 FR 59289 confirmed........................33331
718.43  Regulation at 59 FR 59289 confirmed........................33331
718.45  Regulation at 59 FR 59289 confirmed........................33331
718.46  Regulation at 59 FR 59289 confirmed........................33331
718.47  Regulation at 59 FR 59290 confirmed........................33331
723.111  (c) added.................................................22460
723.112  (c) added.................................................27868
723.113  (c) added.................................................38234
723.114  (c) added.................................................38234
723.115  (c) added.................................................38234
723.116  (c) added.................................................38234
723.117  (c) added.................................................38234
723.118  (c) added.................................................38234
723.509  Added.....................................................61194
729.214  (e) added..................................................7430
752.28  Revised; interim; eff. 1-16-96.............................67316
780  Revised; interim; eff. 1-16-96................................67316
781.5  (b)(3) revised; (c), (d) and (e) removed; (f), (g) and (h) 
        redesignated as (d), (e) and (f); new (c) added; interim; 
        eff. 1-16-96...............................................67318
782  Added..........................................................5089
790  Regulation at 59 FR 59290 confirmed...........................33331
791  Regulation at 59 FR 59290 confirmed...........................33331
792.7  (l) revised.................................................43706
Chapter VIII
Chapter  VIII Heading revised.......................................5835
    Policy statement...............................................10303
800.0  (b)(3) and (91) revised; Footnote 1 removed..................5835
800.2  Revised......................................................5835
800.7  Revised......................................................5836
800.8  (b), (d) and (e) revised.....................................5836
800.76  (a) revised.........................................39243, 65235
800.186  (c)(3) introductory text revised...................39243, 65235
800.195  (f)(5)(ii) revised.................................39243, 65235
800.196  (g)(6)(ii) revised.................................39243, 65236
802.0  Revised.....................................................31910
    Regulation at 60 FR 31910 eff. date confirmed..................42429
810.102  (d) revised; eff. 9-1-96..................................61196
810.108  Reinstated; CFR correction................................51667
810.404  Revised; eff. 9-1-96......................................61196
868  Redesignated from Part 68; new Part 868 heading revised.......16364
868.20  (a) and (b) amended........................................16364
868.21  (e), (f) and (j) amended...................................16364
868.22  Amended....................................................16364
868.24  (a) amended................................................16364
868.26  Amended....................................................16364
868.33  (a)(2) and (3) amended.....................................16364
868.42  (a) amended................................................16364
868.43  Amended....................................................16364
868.51  (a) amended................................................16364
868.52  (a) and (b) amended........................................16364

[[Page 702]]

868.61  (a) amended................................................16364
868.71  (e) amended................................................16364
868.74  (f) amended................................................16364
868.75  (c) amended................................................16364
868.81  (d) amended................................................16364
868.82  Amended....................................................16365
868.83  Amended....................................................16365
868.90  Amended; (a), (b) and (c) revised..........................36029
868.92  (a) introductory text, (5) and (f) amended.................16365
868.103  Amended...................................................16365
868.134  Revised...................................................36030
868.140  Revised...................................................36031
868.141  Amended...................................................16365
868.201  Amended...................................................16365
868.205  Amended...................................................16365
868.211  (a)(5) and (b)(5) amended.................................16365
868.212  Introductory text, (b) note and (d) note amended..........16365
868.256  Amended...................................................16365
868.262  (a)(5) amended............................................16365
868.263  Introductory text and (c) note amended....................16365
868.310  Heading, Footnotes 1, 2 and 5 amended.....................16365
868.311  Heading, Footnotes 1, 2 and 3 amended.....................16365
868.312  Heading, Footnotes 1, 2 and 3 amended.....................16365
868.313  Heading, Footnotes 1 and 2 amended........................16365
868.315  Heading, (c) note, (d) note and (e) note amended..........16365
868.316  Amended...................................................16365
868.403  (b) amended...............................................16365
868.406  Amended...................................................16365
868.408  Amended...................................................16365
868.409  Amended...................................................16365
868.502  (b) amended...............................................16365
868.503  Amended...................................................16365
868.507  Amended...................................................16365
868.601  (c) and (d) amended.......................................16365
868.603  Amended...................................................16365
868.604  Amended...................................................16365
868.607  Amended...................................................16365
868.611  Amended...................................................16365

                                  1996

7 CFR
                                                                   61 FR
                                                                    Page
Chapter VII
Chapter  VII Forums................................................52671
703  Removed.......................................................26424
704.1  Amended; interim............................................43944
704.2  (a)(12) through (24) redesignated as (a)(13) through (25); 
        new (a)(12) added; interim.................................10672
    (a)(23) amended; interim.......................................43944
704.3  (a), (b) and (d) amended; interim...........................43944
704.7  (a)(3)(ii), (d)(4), (e)(1) and (8) amended; interim.........43944
704.9  (a), (b) and (d) amended; interim...........................43944
704.18  Amended; interim...........................................43945
704.20  (a)(4) amended; interim....................................10672
    (a)(4) revised; (b) amended; interim...........................43945
704.24  Amended; interim...........................................43945
704.26  Amended; interim...........................................43945
704.27  (b) amended; interim.......................................43945
704.30  (c) added; interim.........................................43945
718  Revised.......................................................37552
718.206  Corrected.................................................49049
719  Removed.......................................................37566
720  Removed.......................................................37566
723.111  (d) added.................................................37673
723.112  (d) added.................................................50425
723.113  (d) added.................................................63702
723.114  (d) added.................................................63702
723.115  (d) added.................................................63702
723.116  (d) added.................................................63702
723.117  (d) added.................................................63702
723.118  (d) added.................................................63702
729  Authority citation revised....................................36999
729.102  Amended; interim..........................................36999
729.103  Amended; interim..........................................36999
729.104  (a) revised; (c) amended; interim.........................36999
729.108  Amended; interim..........................................36999
729.201  Amended; interim..........................................36999
729.204  Redesignated as 729.206; new 729.204 added; interim.......36999
729.205  Redesignated as 729.207; interim..........................36999
    Added; interim.................................................37000
729.206  Redesignated as 729.208; new 729.206 redesignated from 
        729.204; interim...........................................36999
    (f) heading, (1), (3) and (7) amended; interim.................37000
729.207  Redesignated as 729.209; new 729.207 redesignated from 
        729.205; interim...........................................36999
    (c), (d)(1)(ii)(B) and (2) amended; interim....................37000
729.208  Redesignated as 729.210; new 729.208 redesignated from 
        729.206; interim...........................................36999
    (d) revised; interim...........................................37000

[[Page 703]]

729.209  Redesignated as 729.211; new 729.209 redesignated from 
        729.207; interim...........................................36999
729.210  Redesignated as 729.212; new 729.210 redesignated from 
        729.208; interim...........................................36999
    (a)(1) revised; interim........................................37000
729.211  Redesignated as 729.213; new 729.211 redesignated from 
        729.209; interim...........................................36999
729.212  Redesignated as 729.214; new 729.212 redesignated from 
        729.210; interim...........................................36999
729.213  Redesignated as 729.215; new 729.213 redesignated from 
        729.211; interim...........................................36999
    Revised; interim...............................................37000
729.214  Redesignated as 729.216; new 729.214 redesignated from 
        729.212; interim...........................................36999
    (a)(2) amended; (d) through (l) redesignated as (e) through 
(m); (c), new (f)(1)(iii)(A), new (3)(i) and new (l) revised; new 
(d) added; interim.................................................37001
729.215  Redesignated from 729.213; interim........................36999
    (f)(2) amended; interim........................................37001
729.216  Redesignated from 729.214; interim........................36999
    Revised; interim...............................................37001
    (a) amended; (c) added.........................................60510
729.316  Revised...................................................37565
729.317  Added.....................................................37566
760.1--760.34  (Subpart) Authority citation revised................18485
    Authority citation revised.....................................64601
760.2  (k)(1), (2), (l) and (o) revised............................18485
782  Nomenclature change...........................................32643
782.2  Amended.....................................................32643
782.4  Revised (OMB number)........................................32643
782.12  (a) introductory text amended; (a)(8) removed; (a)(9), 
        (10), (b), (c) and (d) redesignated as (a)(8), (9), (d), 
        (e) and (f); new (b) and new (c) added; new (e) revised....32643
782.13  (b) and (c) redesignated as (c) and (d); new (d) amended; 
        new (b) added..............................................32643
782.15  (a)(1) amended; (e), (f) and (g) added.....................32643
782.17  (b) redesignated as (c); new (b) added.....................32643
790  Removed.......................................................37566
791  Removed.......................................................37566
793  Removed.......................................................37566
796  Removed.......................................................37566
Chapter VIII
800.71  Regulation at 58 FR 3214 withdrawn; (a) amended............43303
800.72  Revised....................................................43305
800.73  Revised....................................................43305
800.86  (c)(2) Tables 1 through 4 amended..........................18490
    Regulation at 61 FR 18490 eff. date delayed to 6-1-97..........24669
810.104  (b) amended...............................................18491
    Regulation at 61 FR 18491 eff. date delayed to 6-1-97..........24669
810.202  (s) removed; (t), (u) and (v) redesignated as (s), (t) 
        and (u); (c), new (s), new (t) and new (u) revised.........18491
    Regulation at 61 FR 18491 eff. date delayed to 6-1-97..........24669
810.204  Revised...................................................18492
    Regulation at 61 FR 18492 eff. date delayed to 6-1-97..........24669
810.205  Revised...................................................18492
    Regulation at 61 FR 18492 eff. date delayed to 6-1-97..........24669
810.206  Revised...................................................18492
    Regulation at 61 FR 18492 eff. date delayed to 6-1-97..........24669
868.90  Revised; eff. 2-18-97......................................66535
868.91  Revised....................................................34715
868.92  (a)(2) revised; eff. 2-18-97...............................66536
868.101--868.142 (Subpart B)  Removed; interim......................7688
868.401--868.410 (Subpart F)  Removed; interim......................7688
868.501--868.510 (Subpart G)  Removed; interim......................7688
868.601--868.611 (Subpart H)  Removed; interim......................7688

                                  1997

7 CFR
                                                                   62 FR
                                                                    Page
Chapter VII
701  Authority citation revised....................................40930
701.21  (c)(7)(ii)(C) revised......................................40930
704  Removed........................................................7625
718.11  (b) revised................................................25437
723  Nomenclature change; interim..................................15600
723.111  (e) added.................................................24800
723.112  (e) added.................................................30230
723.113  (e) added.................................................43922

[[Page 704]]

723.114  (e) added.................................................43922
723.115  (e) added.................................................43922
723.116  (e) added.................................................43922
723.117  (e) added.................................................43922
723.208  (b)(6)(v) added; interim..................................15600
723.209  (c) added; interim........................................15600
729.102  Regulation at 61 FR 36999 confirmed.......................25437
729.103  Regulation at 61 FR 36999 confirmed.......................25437
    (b) amended....................................................25438
729.104  Regulation at 61 FR 36999 confirmed.......................25437
    (d)(3) amended.................................................25438
729.108  Regulation at 61 FR 36999 confirmed.......................25437
729.201  Regulation at 61 FR 36999 confirmed.......................25437
729.204  Regulation at 61 FR 36999 confirmed.......................25437
    (e) added......................................................25438
729.205  Regulations at 61 FR 36999 and 37000 confirmed............25437
    (a)(1) amended; (c) redesignated as (e); (a)(2)(ii), (b) and 
new (e) revised; new (c) and (d) added.............................25438
729.206  Regulations at 61 FR 36999 and 37000 confirmed............25437
729.207  Regulations at 61 FR 36999 and 37000 confirmed............25437
729.208  Regulations at 61 FR 36999 and 37000 confirmed............25437
729.209  Regulation at 61 FR 36999 confirmed.......................25437
729.210  Regulations at 61 FR 36999 and 37000 confirmed............25437
729.211  Regulation at 61 FR 36999 confirmed.......................25437
729.212  Regulation at 61 FR 36999 confirmed.......................25437
729.213  Regulations at 61 FR 36999 and 37000 confirmed............25437
729.214  (l) correctly designated...................................2719
    Regulations at 61 FR 36999 and 37001 confirmed.................25437
    (b)(5)(ii) amended.............................................25438
    (d)(2)(iv), (e)(1), (f)(1)(iii)(A) and (l) amended; (f)(3)(i) 
and (m) revised....................................................25439
729.215  Regulations at 61 FR 36999 and 37001 confirmed............25437
729.216  Regulations at 61 FR 36999 and 37001 confirmed............25437
    (c) revised....................................................62692
735  Nomenclature change...........................................33540
735.2  (gg), (hh) and (ii) amended.................................33540
735.35  Revised....................................................33540
735.46  Removed....................................................33540
735.52  Amended....................................................33540
735.87  Revised....................................................33540
735.100  Amended...................................................33540
735.101  (k) amended; (n) removed; (o), (p) and (q) redesignated 
        as (n), (o) and (p)........................................33540
735.102  (b) amended...............................................33540
736  Nomenclature change...........................................33540
736.5  Removed.....................................................33540
736.22  Revised....................................................33540
736.32  Revised....................................................33540
736.33  (f) revised................................................33540
736.59  Amended....................................................33540
737  Nomenclature change...........................................33540
737.19  Revised....................................................33540
737.42  Revised....................................................33540
737.46  Revised....................................................33540
737.47  Removed....................................................33540
737.50  Amended....................................................33540
737.76  Revised....................................................33541
738  Nomenclature change...........................................33540
738.19  Revised....................................................33541
738.30  Revised....................................................33541
738.32  Removed....................................................33541
738.45  Revised....................................................33541
738.48  Amended....................................................33541
738.70  Revised....................................................33541
739  Nomenclature change...........................................33540
739.19  Revised....................................................33541
739.40  Revised....................................................33541
739.52  Removed....................................................33541
739.53  Revised....................................................33541
739.57  Amended....................................................33541
739.78  Revised....................................................33541
740  Nomenclature change...........................................33540
740.21  Revised....................................................33541
740.27  Revised....................................................33541
740.49  Removed....................................................33541
740.54  Revised....................................................33541
740.58  Amended....................................................33541
741  Nomenclature change...........................................33540
741.19  Revised....................................................33541
741.36  Revised....................................................33542
741.46  Revised....................................................33542
741.50  Amended....................................................33542
741.71  Revised....................................................33542
742  Nomenclature change...........................................33540
742.20  Revised....................................................33542
742.43  Revised....................................................33542
742.49  Reinstated; CFR correction.................................33339
742.55  Revised....................................................33542

[[Page 705]]

742.60  Amended....................................................33542
742.82  Revised....................................................33542
743  Removed.......................................................33542
760.1--760.34  (Subpart) Authority citation revised................68142
783  Added; interim................................................50850
Chapter VIII
800.71  Amended....................................................31702
    (a) amended.............................................34342, 48939
868.101--868.103 (Subpart B)  Added.................................6706

                                  1998

7 CFR
                                                                   63 FR
                                                                    Page
Chapter VII
723 Regulation at 62 FR 15600 confirmed.............................9128
    Nomenclature change............................................11585
723.103 Regulation at 62 FR 15600 confirmed; (d) amended............9128
723.104 Amended....................................................11582
723.111 (f) added..................................................55938
723.112 (f) added..................................................55940
723.209 Regulation at 62 FR 15600 confirmed; heading revised; (c) 
        amended.....................................................9128
    Heading and (c) revised; interim...............................26714
    Regulation at 63 FR 26714 confirmed............................59205
723.210 (d) added..................................................11582
723.213 (c) removed; (d) redesignated as new (c)...................11582
723.216 (a) introductory text, (2)(ii)(A) and (iii)(A) revised.....11582
723.308 Amended....................................................11582
723.309 Introductory text amended..................................11582
723.409 Heading, (a), (b), (e)(1), (2) introductory text and (f) 
        revised; (g) removed.......................................11582
723.410 Introductory text revised..................................11583
723.501--723.504 (Subpart E) Revised...............................11583
737.2 Introductory text and (j) revised............................60204
737.4 Revised......................................................60204
737.34 Revised.....................................................60204
783.8 (c) revised...................................................3791
Chapter VIII
800.0 (b)(59) correctly revised; CFR correction....................55321
800.71 (a) amended..........................................32715, 70992
    (a) amended; interim...........................................35504
    Schedules B and C reinstated; CFR correction...................43289
800.76 (a) revised.................................................45677
800.86 (c)(2) Table 14 amended; eff. 6-1-99........................20056
800.186 (c)(3) introductory text revised...........................45677
800.196 (g)(6)(ii) revised.........................................45677
801.6 Revised; interim.............................................34554
801.7 Revised; interim.............................................35505
810.104 (b) amended; eff. 6-1-99...................................20056
868.1 (b)(13) revised..............................................29531
868.80 (a)(1) revised..............................................29531

                                  1999

7 CFR
                                                                   64 FR
                                                                    Page
Chapter VII
723.111  (g) added.................................................66718
723.113  (f) added.................................................15295
723.114  (f) added.................................................15295
723.115  (f) added.................................................15295
723.116  (f) added.................................................15295
723.117  (f) added.................................................15295
729.216  (c) revised...............................................48942
735.16  (a)(5), (9), (b) and (e) revised...........................54510
735.19  Revised....................................................54510
735.21  Revised....................................................54510
735.31  Revised....................................................54510
735.32  (b) revised; (c) amended...................................54510
735.33  Revised....................................................54510
735.38  (a) revised................................................54511
735.40  (b)(3) revised.............................................54511
735.44  Revised....................................................54511
735.47  Revised....................................................54511
735.49  Revised....................................................54511
735.77  Revised....................................................54511
735.101  (b) removed; (c) through (p) redesignated as (b) through 
        (o)........................................................54511
735.102  (d)(4) and (f) revised....................................54511
759  Redesignated from 761; interim................................62565
760.1--760.34  (Subpart) Authority citation revised.........17942, 66096
761  Added; interim.................................................6496
    Redesignated as 759; interim...................................62565
    Added..........................................................62567
761.4  Amended; interim............................................47099
761.5  Amended; interim............................................47099
761.6  Revised; interim............................................47099
761.7  (d)(1) correctly added......................................69322
762  Added..........................................................7378

[[Page 706]]

762.106  (g)(2)(ix) correctly revised..............................38298
762.122  (a)(1), (4) and (c)(1) correctly revised..................38298
762.127  (d) introductory text amended.............................62568
762.145  (e)(7) corrected..........................................38298
762.150  (e)(2) correctly revised; (g)(4) and (7) corrected........38298
762.160  (a)(2)(ii) correctly revised..............................38298
782.2  Amended.....................................................12885
782.12  (a) introductory text revised; (a)(6) through (9) 
        redesignated as (a)(8) through (11); new (a)(6) and (7) 
        added......................................................12885
Chapter VIII
800.71  (a) amended.................................................6783
    Regulation at 63 FR 35504 confirmed............................19022
800.86  (c)(2) Table 4 revised......................................6783
801.6  Regulation at 63 FR 34554 confirmed...........................731
801.7  Regulation at 63 FR 35505 confirmed.........................19022
868.91  Revised.....................................................7058

                                  2000

7 CFR
                                                                   65 FR
                                                                    Page
Chapter VII
718  Authority citation revised.....................................7953
718.105  Heading revised; (a) amended; (e) added; interim...........8246
    Regulation at 65 FR 8246 confirmed.............................64595
718.201  (a)(4)(ii)(A) revised......................................7953
718.205  (c)(5) revised............................................65722
723.104  (h) amended................................................7953
723.112  (h) added.................................................78407
723.113  (g) added.................................................41556
    (h) added......................................................64594
723.114  (g) added.................................................41556
    (h) added......................................................64594
723.115  (g) added.................................................41556
    (h) added......................................................64594
723.116  (g) added.................................................41556
    (h) added......................................................64594
723.117  (g) added.................................................41556
    (h) added......................................................64594
723.216  (e)(5)(iv) and (f)(1) revised; (f)(7)(ii) removed..........7953
723.220  (c) and (d) removed........................................7953
729  Authority citation revised.....................................8247
729.103  Amended; interim...........................................8247
    Regulation at 65 FR 8247 confirmed.............................64595
729.202  Revised; interim...........................................8247
    Regulation at 65 FR 8247 confirmed.............................64595
729.204  (e) amended; interim.......................................8247
    Regulation at 65 FR 8247 confirmed.............................64595
729.207  (a) amended; interim.......................................8247
    Regulation at 65 FR 8247 confirmed.............................64595
729.208  (b) amended; interim.......................................8247
    Regulation at 65 FR 8247 confirmed.............................64595
729.214  (b)(4) and (f)(3)(i) amended; interim......................8247
    Regulation at 65 FR 8247 confirmed.............................64595
729.216  (c)(4) added..............................................16118
729.305  (b) amended; interim.......................................8247
    Regulation at 65 FR 8247 confirmed.............................64595
735.2  (jj) added..................................................63767
735.200--735.202  Undesignated center heading added................63767
761.7  (a) and (d) revised.........................................14433
762.127  (d) introductory text amended.............................14433
773  Added.........................................................76117
774  Added.........................................................76119
784  Added; interim................................................38412
Chapter VIII
800.71  (a) amended................................................16785
868.91  Revised....................................................16788


                                  
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